Another Potential Tipping Point For The Economy

As if everything we have going on in the world wasn’t enough, we have yet another area of concern to pay close attention to.

As we have covered in the past, we are now expecting a recession to begin this year. The signs are all there and have been in place since the end of last year. We are almost at 100% certainty.

Additionally we have the subprime mortgage meltdown which contrary to what the media heads are reporting is just beginning. Expect this contagion to spread to conventional mortgage providers as real estate values drop. Over a year ago, I quoted Sir John Templeton who believes that real estate prices will fall by better than 70%.

While it is possible if the recession becomes something worse, I do believe that real estate prices could drop 30% in certain parts of the country.

We also have the mess in the Middle East and various sources on the Internet claiming that we will see some sort of military strike on Iran in the next 7-10 days. We have already seen gas prices moving up in anticipation of this possibility. If this attack occurs, oil will go over $100.

But these are the things that we know. Now I am hearing about some sort of disease that is affecting bee colonies. Entire hives have been wiped out and now the UK’s Telegraph is warning that flower and fruit harvests are going to be devastated in Europe because of lack of pollinators.

There have been reports of hives dying off here in the US as well. This could have an effect on food prices as this problem becomes more widespread. Here at the house, I noticed we still have bees buzzing our fruit trees this weekend so the problem will not affect us this year, but the crazy thing about tipping points is that many times, the event is not recognized as a tipping point until well after the event occurs.

2007 is shaping up to be a very interesting year. Keep your ear to the ground and keep your pantry stocked. The last thing you want to do is fight a crowd at the local Wally World when TSHTF.