First, some facts about Great Depression.
What is a Great Depression? It is technically a worldwide spiral accelerated economic downturn.
How long will it takes to recover?The last Great Depression in 1929 took more than 10 years to recover.
Where did it originate from?Great Depression is theoritically succession recessions going round in cycles introducing inexact balances between supply and demand. Consecutive mild recessions can turn the world into a one Great Depression. In 1929, the Depression was caused by economic structural factors such as massive bank failures and stock market crashes.
Where will 2008 Depression originate from?Debt will be seen as one of the causes in America. While property prices soar, banks look to cheap credit to encourage purchases by consumers which fueled strong short-term growth but created consumer and commercial debt instead. Many whom have no ability to keep up with payments are cutting spending to avoid being defaulted. Hence lowering demand for products and businesses began to suffer with consumerism plunged.
What happened then is massive layoffs and retrenchments which then lead to high rate of unemployment. Banks then began seeing more debtors being defaulted and suffered a loss of confidence from public. Depositors then attempted to withdraw deposits en mass which triggered multile bank runs. Bank failures will led to loss of billions and billions of assets and in the face of that, the surviving banks became even more conservative in lending. That will intensified deflationary pressures and once that vicious cycle developed, it will turned into a self-aggravating process which we call a Great Depression.
According to economist's prediction, this day will come sometime in October 2008 and there will be a Black Monday. I will give you my advice on how to ride through this tough period.
Your house – lose it. Give up on it (assuming you are having problems paying for it.) You can buy the same house in 2 years for 2001 prices and get it for a few hundred thousand dollars less. If you are in duress and having problems with the payment, stop paying it. Stay in the house as long as you can. Fight the foreclosure at every turn. Doing the 'right thing' by paying your bills until you go broke and lose everything anyway is not good economic sense for you and your family. If you continue to try to keep up you will not only lose the house but you will be destitute and heading towards homelessness. Pride destroys finances.
Fight the foreclosure – Answer any papers sent to you by the bank. You will have 20 days to respond, wait til 18 go by and overnight it. Complain about the loan and the company and the mortgage broker. They will have 20 days to respond. And so on and so on. This will give you 3 to 12 months in your house rent and mortgage free.
The bank is overwhelmed with properties. Law forbids them from owning too much property. Due to this, the foreclosure could be pushed off for a long time. You can even try to ‘fake’ sell it with a realtor for some real high price or some 'never going' to happen short sale.
These methods, depending on the lender could give you 2 years or more in your house with no payments. Why go broke? Save your money in a hole in the ground. Help your family survive and forget your 'honor.' The lender could not care if you lived or died. They knew what they were doing. Until someone else owns it, it is your property.
Plan for your bankruptcy- Don’t go nuts on your credit cards, but use them up if you cannot pay them. Do not go bankrupt until the month your house is going to foreclosure sale. This will give you an additional three months. Even more if you can work something out with the attorney to delay the proceedings. That is at least 3 more months of living free. Watch excessive spening on cards or huge items going back 12 months before bankruptcy. Hide your cash.
This is especially important if you lost your job. The bank will not go under if you do not pay them, but your family will starve if you feel honor bound to pay the crooks, I mean lenders and credit card companies, til you are really broke and destitute.
Realize you are talking about surviving here. You need your car and a roof over your head. You need money to live and eat for you and your family. Don’t worry about breaking the hearts of the crooks that made this mess or the credit card companies (read: loan sharks.) Worry about you.
Feel bad, like you are using the system? These scumbags have received 100s of billions of dollars of our taxpayers money for being crooks. And the CEOs made millions more. So, F#ck em, burn em back. Worry about you and your family not some billionaire. They borrowed the money to lend to you. They got it at 0.25% interest (that is a quarter point) and sold it to you on some screwed up plan that is going up to 8% or more. They will (and are) being bailed out by our loving congress and the lender still made tons on the interest they earned from you over a few years.
After your bankruptcy move into a nice rental and relax. You should have little or no debt. If you still have your job you may be on a small repayment plan, but you will be fine.
Learn how to send cease and desist orders to creditors you are going to bankrupt so they leave you alone.
