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As if the banking industry wasn’t hurting enough, news surfaced recently that real estate appraisal companies colluded with lending institutions, by hand picking appraisers to inflate values of homes during the 2005 and 2006 boom.

The bust of 2007 means that consumers will suffer for years paying mortgage payments based on unrealistic values for their properties, or they will end up in foreclosure. The problem will only get worse as home prices drop dramatically in much of the country. In some parts of the country, home prices are expected to decline 35-40%. Falling home prices reduces personal wealth and that means less consumer spending.

In addition, mortgage defaults are expected to reach 2 million or more over the next two years, as many subprime loans and ARM’s begin resetting from their “teaser“ rates. Monthly payments will increase as much as $250 to $300. The bust could bring our banking industry down and our economy with it.

While the housing industry and any sector related to it are in a recession, commodity prices continue to soar with every down tick of the U.S. Dollar. Increases in commodity prices tend to drive up costs of manufactured goods.

Crude Oil closed at 95.93. Soaring Crude oil prices are causing gasoline prices to skyrocket, and we expect average gasoline prices at the pump to reach as much as $4.70 a gallon by years end. But don’t fret, because as long as the Fed excludes food and energy from the inflation figures, there is NO inflation.

The U.S. Dollar Index hit yet another all time low of 76.20 and closed at 76.28 Gold continues it’s stellar climb to equal 1980 record prices and closed at 808.10 At $14.59 an ounce, when compared to the percentage rise in Gold, silver is under priced.

In case you haven’t noticed food prices at the supermarket, I have a related short story for you. My wife and I ate at a Subway® sandwich shop over the weekend and noticed that prices were higher. I questioned the owner about it and he told me that the price of a case of meat increased two weeks ago. Ditto on the Fed excluding food and energy from the inflation figures. Again, there is NO inflation.

U.S. manufacturing slowed in October, cutting 21,000 jobs, while construction jobs were lower by 5,000 and retail payrolls were down 21,500.

Domestic auto production declined and the big three, General Motors, Ford and Chrysler, have announced over 70,000 job cuts since 2006, most of them here in the U.S..

General Motors recently announced that they are building a new research center in Shanghai, China. The research center “would focus on developing hybrid technology and other designs.“

What a slap in the face of every U.S. Citizen! We bought their OVERPRICED GAS GUZZLERS for the past 20 years while waiting for them to produce a decent vehicle that would run on any alternative energy, including hybrids. Actually, I have already seen several hybrids on the road, even last year. So why isn't EVERY car coming off the assembly line, at least, a Hybrid?

But hey! Now that the Chinese are “Good Communists“ with a population of 1.2 BILLION consumers, and seeing that most of the good paying U.S. jobs have been exported, leaving us with less expendable income, General Motors is going where the future is. I won’t tell you what to do, but for me personally, I’ll never buy another car made by G.M. regardless of where it’s made!

Predictions by DynamicTrends

• Higher futures prices on Crude and Gasoline and the plummeting U.S. Dollar will push Gasoline at the pump to $4.70 per gallon by Christmas.
• Gold as a hedge against inflation will be near $1,000 or higher, by June 2008.
• Mortgages Will be at 3% by November of 2008.
• As stagflation takes a firm grip, house prices will retreat to about 25-30% from their peak in 2006.
• Dow Jones will fall to 7700 by June 2008.

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