Is America Headed for a Depression? (Bill Cara)

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Yes, I believe there will be a U.S. economic recession, but the elements are now in place for the first time in 80 years for America to sink into a depression. Should a depression unfold, there will be big name financial houses that will fail.

Bill Cara -- SeekingAlpha

March 13, 2007 -- For several months, some of the U.S. homebuilder companies acknowledged abnormal supply as well as pricing pressures in the marketplace.

More recently, the sub-prime mortgage companies that recklessly financed the bulk of the industry’s business discovered a problem with delinquencies and foreclosures. This is the story that will finally push the stock market from Bull to Bear, and the economy into recession.

Traders are nervous, with the upshot being a swing to cash and gold. Why gold? Under the circumstances that exist today in the financial marketplace, any rise in interest rates will certainly pass the tipping point to where millions of Americans will be forced from their homes and put out on the street.

The whole world watched TV images of the inhumane treatment of the poor of New Orleans following Hurricane Katrina. With great respect to those couple hundred thousand disadvantaged souls (as my readers know I have), I believe those ugly TV images may even look mild compared to the scenario that would follow angry mobs across America, if market interest rates rise beyond the tipping point that would collapse the entire U.S. mortgage market.

Yes, I believe there will be a U.S. economic recession, but the elements are now in place for the first time in 80 years for America to sink into a depression. Should a depression unfold, there will be big name financial houses that will fail. Accordingly, the owners and managers of wealth ought to be researching today how to protect themselves beyond FDIC-insured accounts. I shall write a lot about this in the next month.

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