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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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innovative new mortgage product in the Netherlands: the ‘climate mortgage’. You can get a 1% discount on the standard mortgage rates (which are already extremely low over here, near four-century lows) if you buy a home with significantly lower energy use, or for home improvement that increases energy efficiency. I don’t think this will keep all Dutch homes above water in the future though, climate is changing faster than politics …
All the by products of the BOJ and its monster the Frankenstein Carry Trade.
Let’s see some realtor’s own listings and see how long their homes are languishing on the market.
one across the street from me has been on 6 months- he renovated starting in 05 when it would have sold in a day
now he has over 150k in a sunk cost listing………..
US STOCKS-Futures fall as risk aversion resumes.
Another interesting session coming up.
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070302:MTFH70852_2007-03-02_12-22-39_N02321914&type=comktNews&rpc=44
US, Stop sneezing! You’re chasing the global warming out of Europe’s markets!
I wonder if the p. C1 WSJ headline has anything to do with those falling futures:
“A ‘Brazen’ Insider Scheme Revealed
Illegal-Trading Charges Leveled Against 13; Friends’ Debt Goes Sour”
The “Greed is Good” days are definitely here again.
Also, I find the timing of this story quite interesting. Doesn’t a market correction normally start after a big insider trading scandal makes its way into the MSM? This time is different — the markets are smarter than the press now…
Right and then the hedge fund blowups start. Can’t wait.
Accelarated blow up courtesy of the end of the Japan carry trade fiasco. The BOJ, not just the stupid and incompetent FED, will have to be blamed for the coming crisis. Central Banks are parasites and scumbags. They are the main source of evil in this world. Who created in the beginning all this monetary orgy? Answer: Folks like Alan Greenspan and company.
Wonder how Greenspan will feel when they start burning him in effigy? I’d LOVE to see that.
On CNBC this morning they had a “metals analyst”. Joe Kernan talked to him about gold. He said basically that gold would trade in a pretty even trading range, maybe going as high as $725.
Joe Kernan joked that he got letters stating gold could go to $3,000. “But those usually come from bomb shelters.” Let me get this straight. Stating that gold might rise a lot higher means you are wearing a tinfoil hat. Saying some POS McMansion might keep increasing at 20% per year or some dog$hit stock might keep going to the moon on no earnings means you are an “economist” or “professional”? That cracks me up.
p.s. I walked by the famous Taco Bell last night and it is closed. They have brown paper covering the windows and little yellow signs stating that it is closed. I was so sad. In honor of the Bell I am wearing my underwear at half mast today. Nobody on the subway noticed.
You’re not nearly as sad as those rats. Where are they going to eat now.
TX, if you know that area of the Village you would realize they still have plenty of choices. The Village is a very upscale neighborhood but that one block is nasty. My wife and I always avoid it except when we needed our Tac Bell fix. The rats will be just fine.
It is sad. It might have been the landlord’s fault too, if the rats were invading from a common area. It can be hard to stop an infestation when the rats know how to get in through the toilets.
In this day and age it might be tough, they could be some of the new “guest rats” that have come into this country to eat the scraps that American rats won’t eat. We need to establish a program to help them!
They shut down all the taco bells owned by that same franchisee
http://abclocal.go.com/wabc/story?section=local&id=5080573
LMAO. It feels like we’re in the midst of some sort of carnival fun house dream, where the inmates have taken over the asylum.
Wall Street: It’s ugly and it wants to die, but they won’t disconnect the feeding tube.
Anyway, who is “they”? The Fed? The mysterious PPT? Private equity groups?
All the kids are wearing their pants at half-mast, too. Oh, wait, that’s normal these days for today’s HIP, SLACKER YOUTH waiting for Mom and/or Dad and/or “second mom” to buy them a car for their 16th.
Or waiting for mommy and daddy to give them a downpayment on a house because they themselves are too impecunious or lazy to save any money.
Gold has been shown to traditionally do poorly over inflationary times (at least modern times, the last 100 years), and to do relatively poorly in deflation too.
But it does REALLY well in times of financial crisis, severe economic uncertainty, and also in times of currency crisis.
In fact there are 2 or 3 times in modern American History when gold really did well.
1) great depression
2) stagflation of the late 70’s early 80’s.
3) also did well after Black October
In other words, Gold really shows it’s luster during economic crisis, and almost always does poorly in good economic times. (regardless of inflation/deflation).
Thus, the bomb shelter comment.
Joe is a horse’s bum, and he means it as an insult. But his statement is actually valid. The only people who are REALLY into gold (gold bugs) foresee severe economic times and are preparing for it.
This is in contrast to housing. Housing traditionally does well when people feel secure and safe, or sometimes when they WANT to feel secure and safe (post 911).
As housing goes up, it brings the economy up.
As gold goes up, it shakes the market severely.
Thus, a stock pusher is going to want housing up, stocks up, and gold down.
FWIW:
Bomb shelter and tinfoil hat are different.
Bomb shelter indicates a person who fears the future.
tinfoil hat means that someone sees conspiracy.
Sometimes they are correlated, not always.
Gold Haiku:
4 or 5 nines fine
purer than from the mine
now is your time to shine
There are people who follow GATA which argues that gold prices have been held down artificially in order to enhance trust in fiat currencies. Governments don’t want people to realize that their currencies are headed for extinction and rising gold prices does suggest that more people are preferring gold to the currencies. There is quite a bit of evidence that supports GATA.
That may or may not be true. But regardless, govt purchasing/selling is part of Gold price. If the govt has SUCCESSFULLY held Gold prices down for over 25 years, then you have to make that part of your investment strategy.
Thus, my statement holds. gold doesn’t do well in deflation or inflation, only in times of uncertainty.
Regardless of what the cause of this is (govt interference, etc).
What do you think, that suddenly all of the central banks are going to stop their “interference” with gold suddenly after this interference has worked so well for hundreds of years! hahahahah
Yeah, and if I had superpowers then I’d be superman.
I agree with you about gold not being a good correlation with inflation - it does have a strong correlation with commodities.
As to government interference in gold:
http://tinyurl.com/2ku6om
As just one example of the very large size of ECB gold operations, during the gold price increase from early April 2006 to the peak in mid May 2006, the ECB sold 1,800 metric tonnes of gold. That translates to about 58 million troy ounces.During the fall from mid May 2006 to a bottom in June 2006, they bought back 2,345 metric tonnes, which is approximately 75 million troy ounces.
The correlation between gold price and Central bank acitivity is 0.96
The European Central Bank per the Washington agreement allows for 500 metric tons of gold to be traded - I think they are over that limit.
Gemany has 3422 tons in reserves
US has 8133 tons in reserve
The IMF has 3000 tons
“Central banks stand ready to lease gold in increasing quantities should the price rise.”
– Alan Greenspan
Not! Germany is a buyer.
http://tinyurl.com/yotq8g
World gold council
One of the cable news show said that the famous Taco Bell had a health inspection the day before the video appeared. Can anybody verify that? Sure like to know how much lettuce passed thru that health inspectors hands on the way out of that inspection?
http://consumerist.com/consumer/kfc/rat-infested-kfc-passed-health-inspection-the-day-before-239647.php
My ex-boss (an ex-New Yorker) tried slippin’ the health inspector a little greenery. Didn’t work though the restaurant was sportin’ a B card that day.
How about this for a topic — in which market are people in denial to the greatest extent. I nominate New York.
On the following local real estate chatroom http://brownstoner.com/brownstoner/archives/2007/02/brooklyn_prices.php?comments=10#comments, someone asked how Brooklyn fared in the last real estate downturn.
I game one specific example of a big decline in value for identical rowhouses, another poster gave another example of the consequences of the Co-op crash.
Yet other people wrote in that prices would keep rising because New York is a world class city that is cheaper than Europe. Couldn’t dissuade them.
“Yet other people wrote in that prices would keep rising because New York is a world class city that is cheaper than Europe.”
The US seems to want to compare itself to Europe, as a justification for worsening conditions. I’ve heard “Europe” given as a reason over and over why, for example, the postal service should raise rates (because they pay a lot more in Europe for mail delivery) or why we should be paying more for gas (they pay a lot more for “petrol” in England). Didn’t we fight some sort of war back in the 1700s because we thought England sucked? Didn’t a ton of people cross the pond over the years because they thought Europe sucked?
In preparation for an upcoming trip, I was doing some research regarding prices in London. Hotel rooms are of course as obscene as ever (expect to pay at least 100 pounds/night, or nearly $200, if you want anything habitable). What floored me is that the cheapest cash fare on the London Underground (subway/tube) is now four pounds (yes, EIGHT DOLLARS!) Yes, it’s cheaper (three dollars) if you get something called an “Oyster Card,” but still. Cheapest 7-day pass, covering only the inner two zones, is 23 pounds, which is about what a MONTHLY pass costs in San Francisco.
Viciousness. I was pondering last night that this period of time in economic history seems to be characterized by the quality of viciousness, or whatever you want to call it. The greed, the fraud, the gaming of the financial system. It’s not enough for Da Boyz of Wall Street to just make some money for themselves. It seems like their money making is accompanied by a drooling, slavering desire to hurt others in doing so.
Wow, I just realized, in writing this, that this sentiment, this desire to make money while delivering as much pain as possible to the populace is now the new “gold standard”. In other words, the value of the “money” they’re making is tied to how much misery is created in doing so.
The misery index. Who knew?
–
The most important topic I consider is:
ROLE OF DECEPTION IN THE HOUSING BUBBLE AND SOCIETY IN GENERAL
People use deception for acquisition of Sex & Money. It is not new. However, its Practice & Acceptance has varied greatly over time based on societal mores.
To quote a Madison Ave. executive: American People Love to be lied to! Have Americans been trained, from birth, to love lies (who else but Madison Ave.)?
Deception is how many go about getting more Sex and more Money in America. Not all are good at the game; therefore, it is an expertise developed over time.
Greenspan and Bernanke got the jobs because they are good performers (as in acting) — to be able to lie to give wrong picture of the economy and Americans’ finances. Their only tool for economic growth has been to promote Debt, something that they can.
Jas
How prescient.
http://www.hinduonnet.com/fline/stories/20070309003802500.htm
To quote a Madison Ave. executive: American People Love to be lied to! Have Americans been trained, from birth, to love lies (who else but Madison Ave.)?
Madison Avenue refers to the advertising industry NOT Wall Street. URL: http://en.wikipedia.org/wiki/Madison_Avenue
–
“Madison Avenue refers to the advertising industry NOT Wall Street.”
And where did I say that it refers to Wall Street? Do you think that I didn’t know what Madison Ave. is a symbol of?
Jas
“Do you think that I didn’t know what Madison Ave. is a symbol of?”
Sure you did…
How about inventories? I have been expecting them to grow, but in Baltimore, inventories are flat or falling in many areas. Not falling by much, but not growing either. Are sellers a bit gun-shy and are going to hold off as long as they can, or are they just holding out until April and May? It’s taking well over 75 days to sell a home in many areas here (on average), so listing now will sell half the homes by the middle of May. Do sellers realize this, and understand it will be even longer if they’re not reasonable on their price?
I’m seeing invetories surprisingly flat here too, in Loudoun Co.
It *might* be due to the two recent big winter storms though (not being facecious actually). Now that we’re finally getting into more spring-like weather we’ll see what happens.
Invetory’s still a little higher than last year at this time, just that it’s starting it’s spring rise a little later than the last couple of years.
Inventory is MUCH higher now then this time last year (14800 vs 10600, +~40% higher), but is considerably down from it’s Sept 06 peak of almost 18,000. I suppose it’s unrealistic to see the rate of inventory growth we saw last year repeat, but I’m still anticipating surpassing the Sept peak.
I have noticed that there is a decent amount of new listings, but that homes are going inactive at the same rate or even a little faster. This is interesting–are sales really picking up enough to offset all the new listings? Are people trying to buy now before standards tighten more?
Of course, I check my zip codes this afternoon and there’s been a nice bump in listings.
Inventories haven’t budged here in Portland Or. or in Boise. I track both on a daily basis and it has been basically flat to slightly down over the last month.
Look at the alternative channels of distribution — Classifieds, FSBOs, Auction Houses, REO departments, and so on. If under water serfs cannot sell to pay off their mortgage and the realtor commission, they are going to try selling on their own for break-even OR give the home back to the lender OR continue serfing.
Inventory itself is not so significant as must-sell inventory or, at least, really-want-to-sell inventory, consisting of foreclosures, empty houses etc. Both foreclosures and the vacancy rate of houses for sale have increased a lot since last year. On the other hand, some of the inventory last year might have been supplied by sellers who wanted to cash out on the top of the market or simply test the market. We might see less of those this year.
Copying an exchange from another thread. Thought it might apply to other areas in the U.S. as well…
Comment by San Diego RE Bear
2007-03-01 18:31:04
San Diego’s dropped. From 17,5?? to 17,443. We are nowhere near our high of 23,000 last spring. Anyone know why?
Reply to this comment
Comment by tweedle-dee (not dumb)
2007-03-01 20:31:24
Realtors won’t put them on the market unless they are priced right.
(Comments wont nest below this level)
Reply here
Comment by CA renter
2007-03-02 04:17:13
Because we were ahead of the curve. The time for increased inventory from private sellers was fall of 2004 through fall of 2006. Now, there is little/no equity in 2004+ purchases, so no motivation to sell (either to cash out or move up).
From this point forward, people will choose to rent it out, ride it out, or “live free until they kick me out”, IMHO. I believe we won’t see real inventory increases until late summer when more REOs hit the streets — after the “homeowners” have been evicted. The foreclosures will likely lead the market (should be a critical mass forming) by the end of the year. When this happens, along with the mortgage problems, we will begin to see significantly lower prices — probably continue into 2009 & beyond.
Dresdner Advises Aggressive `Underweight’ in Stocks (Update2)
By Alexis Xydias
March 2 (Bloomberg) — Investors should reduce stock holdings and buy government bonds because the current market sell-off is not over, said Dresdner Kleinwort, the top-ranked strategy team in the world.
“The long and widely awaited equity correction is upon us,” wrote London-based Albert Edwards, a strategist at Dresdner, in a note today. “We are shifting our asset allocation stance to become much more aggressively underweight equities.”
http://bloomberg.com/apps/news?pid=20601087&sid=apJK4zygVGjQ&refer=home
…the top-ranked strategy team in the world…
If they say so, why not? Look out below!
Although…
“Timing has never been our strongpoint,” Edwards wrote. “But we believe `the great unwind’ has now started.”
Was down in el lay earlier in the week and it was stark raving beautiful, as a storm had been through a few days before and lots of snow on the mountains, a sucker rally day, where if this was your first visit to the city of angels, you’d think you’d found nirvana on the half shell, and might think of moving there… ha
Needed some tires for the chariot and have been buying them from a friend that has an independant tire store in the o/c, a hard working guy that is highly competitive and competent and proudly told me, “last Saturday, customers drove from as far away as Temecula”, he has such a great reputation.
He was complaining to me about his 18 year old son, and his laziness, etc. and we got talking about his employees, all long term hard working Hispanics and he told me, he wouldn’t hire a white kid, as none of them seem to have any work ethic anymore.
Imagine, what’s going to happen to all of these utterly worthless generation Y kids?… never was a generation so woefully unprepared for what’s coming at them?
Then again, what’s looking real bright in their future?
Exactly, implosion, what are any of us doing to make the future brighter for Gen Y? Which is actually a gentle, decent generation of kids. It was brilliant Gen Yers who had the guts and work ethic to put together “Loose Change”.
I’m completely disgusted with the dissing of Gen Y. I love Gen Yers. Any parent who complains about their kids to others ought to take a good, long look in the mirror.
Anyway, I’m always suspicious of people who hold themselves up as pillars of moral rectumitude, especially by comparison to their children.
It’s always a shocker to me, but I almost always find out that those who constantly brag on how moral and hardworking they are (they’ve never done a bad thing in their lives, ever) turn out to be real stinkers despite all outward appearances and saintly pronouncements. Like the neocons and religious righties who have a taste for drugs and young boys.
I totally agree with your statement. As I recall, (forgive the religious remark), way back in the day, the people who were on the receiving end of the bulk of Jesus’ wrath were the so-called hard-core religious people of the time. Basically, they were hypocrites, which is what I see a lot of today.
Nothing wrong with religion, except for some of the people involved in it.
“Writing for a penny a word is ridiculous. If a man really wants to make a million dollars, the best way would be to start his own religion”
— L. Ron Hubbard (founder of the Scientology “religion”)
It’s commonly known that this is a falsely attributed statement, made up by those who worship at the altar of vested interests.
I’ve heard that quote attributed to like a dozen different people over the years, including Gandhi.
It’s like that quote about someone not caring who runs the government, just give me the power to print the money, or some such thing. Always attributed to this banker or that banker.
Actually, L. Ron Hubbard did say something very much along these lines…had been upset for not getting any recognition for his science fiction writing…they had mercury in their batteries back in his day…must have leaked into his body from too much e-gram metering.
Well, in that this is the weekend topics thread, I really don’t think religion has played a big part in the bubble.
But if you live in West Central Florida, like I do, you’re bound to stumble over a Scientologist from time to time. And I must say, the ones I’ve bumped into are pretty decent folks and in meeting them, I certainly felt rather ashamed for any snide comments I myself might have made in the past. In fact, one fellow got me out of pretty severe jam many moons ago. And it taught me a good lesson to judge people based on their actions toward me, not by what the media says.
And that other quote about money, which has been variously attributed to Rothschild, Lehman, Loeb, etc., I find that the skinhead Nazi nutcases drag it out every time they want to bash the Jews and accuse them of controlling the world economy.
Anyway, as we have seen on this blog, no one needs to go through all the trouble of getting into religion if they want to make money. There’s lots of easier ways. Just pull it out of thin air, write some numbers down in a book and lend it, like the Fed does.
aladinsane, first I’m going to give a caveat that I usually enjoy your posts and find them to be intelligent, humorous and insightful. But this post is way off the mark, IMHO.
Tell your buddy to stop eating his young. You can’t indict an entire generation based on the opinion of one asshat who probably has systematically undermined any self-worth his son has since birth. If I were his son, I’d probably be lazy, too. After all, why do anything if you have a parent who constantly complains about how sh*tty you are compared to this person or that person? Poor kid probably doesn’t know whether he’s coming or going and the best thing he could do for his life is get the hell out from under his father and cut off all communication forever. When I hear parents complain about their kids, it is a big red flag to me as to the character of the parent, no matter how successful they may appear to be in business, which seems to be the yardstick these days to measure people. I care little how successful someone is in business if they’re reaching out a hand to prevent me from getting hurt.
I have found the Gen Y kids I know to be remarkably mature, intelligent and resilient, it always surprises me. I have a nephew who, at 13, already has a social conscience and goes to peace rallies and community meetings under his own steam. (and on his own dime, he has a part time job). Of course, his parents had to move out of LA so their children wouldn’t be beaten to a pulp by the drug-dealing, gang-banging devil spawn in the public schools.
I lived in Miami for over 20 years and lived among “Hispanics” from a number of different countries. You can’t lump them into one category, just like any other cultural group. Some are, some aren’t, hardworking. Just like anyone else. I have a couple of friends who have travelled to Mexico, Central and South America over the years on business. And countless times I’ve heard stories of their frustration over having to travel with bodyguards so as not to be kidnapped. Their frustration is increased by the fact that the business day can never be scheduled with any certainty, since the people they deal with may or may not show up for appointments, take siestas when they feel like it, etc. When I worked in Miami, the company where I worked sometimes had difficulties with some of our “Hispanic” clients, who would often schedule appointments and show up two hours later and then say “manyana”. But, not all acted that way, some did, some didn’t. Just like anyone else.
Instead of dissing Gen Y, we need to support and guide them with a combination of fairness, love and discipline. They’re worth it.
Unless they suddenly start getting paid to play video games, there’s a wake-up call coming…
We pampered the heck out of them and it will show soon.
updated lingo:
1960’s: don’t trust anybody over 30
2000’s: dont trust anybody under 30
Ah, don’t count the Gen Yers out yet. They are incredibly resourceful and many are just playing quietly dumb. Was just reading about the GenY Pirate Bay. You go, boys! They’re really sticking it to the man. They are systematically breaking down the corrupt corporate model, these gentle, skinny little pale faced kids. They’re very egalitarian, these GenYers. They believe in sharing their good fortune. And there’s NOTHING the corporate culture can do about it.
I pray for their success and hope they can Pirate Bay Wall Street. Gen Y is the phoenix rising from the ashes.
I have a nephew who, at 13, already has a social conscience and goes to peace rallies and community meetings under his own steam.
NOT encouraging. Sounds like a politician in training.
Housing stock prices are not aligned with the real housing market. So, is Wall Street ‘fixed’ OR does it simply lag/lead the real economy?
—Let’s talk about RVs—–
What happens to all the RV’s purchased with home equity? What about all those suburban outdoorsmen who will be liquidating campers, travel trailers, and pickup trucks when they can’t afford their 5/1 interest only.
Being an outdoorsman and part-time campground worker I’ve seen it all. Lots of older folks in smaller trailers but it’s easy to spot the suburbanites in their new accessories and “I know it all” attitude.
There will certainly be an economic effect from this bust. Will people actually liquidate their toys or will them MOVE into them? Most campgrounds have a 14 or 30 day stay policy. What happens to the travel industry when people have to stay home and eat ramen to pay the bills?
I can’t help but expect the RV association and GoRving.com is going to have a difficult time: Here’s their actual mission statement.
The Go RVing Coalition, formed in 1994, consists of RV manufacturers, component suppliers, dealers and campgrounds. Go RVing works to provide the public and media with pertinent information about the benefits of RV travel and to foster customer satisfaction with the RV experience through customer research conducted by the Committee on Excellence.
The Coalition was formed by representatives of Recreation Vehicle Industry Association (RVIA), Recreation Vehicle Dealers Association (RVDA), National Association of RV Parks and Campgrounds (ARVC) and leading state RV and campgrounds associations to distribute information about the benefits of RV travel and ensure the quality of RV products and services.
Saw a mammoth rv last week made by Freightliner, looked like an 18 wheeler, shocking looking really.
What becomes of all those rv’s?
In the depression, folks hopped rides on trains and lived in jungles…
The new jungles will be encampments of rv’s on a permanent basis, as the occupants squandered their weath through helocing $150k out of their house to buy their dreambox on wheels and they’ll be forced out of their homes, by foreclosure.
Out here in the rural west there many native americans and hispanics who form what are called “outfits”–groups of several RVs, trailers, hogans to form a micro-village. It’s a good way to pool resources, enhance security, etc.
I think we’re likely to see more folks emulating them in days to come.
is the yen-carry trade unwinding and what does that mean for the housing bubble blog, the stock markets and commodities?
Remarkable the resemblance to March 2000.
The following post got lost in the software. From Jon:
‘Weekend topic: what’s the next segment to short before it implodes? I was late with the HB’s…. I knew sub-prime would be next to go, but expected the market to ignore the problems for even longer than it did, so I missed that opportunity.’
‘And now I really don’t know what will be the next sector to feel the pain.’
Suggestions - Inventory Explosiion
When will the spring ramp up start, how high will it go..
Statistics as of 12:30 Pacific for the national aggregation of MLS (Single Family)
Property Statistics - Nationwide Single Family
Total Properties Today: 1,635,386
1 Week Ago: 1,609,234
Change (increase): 26,152
Average Price Today: $401,673.00
1 Week Ago: $403,037.00
Chage (decrease): ($1,364.00)
Median Price Today: $271,711.00
1 Week Ago: $273,400.00
Chage (decrease): ($1,689.00)
Average Sq Ft Today: 2,156
1 Week Ago: 2,150
Change (increase): 6
Price / Sq Ft Today: $172.00
1 Week Ago: $174.00
Change (decrease): ($2.00)
Topic:
Have you noticed anything interesting / different / unusual in retail lately? Especially in dealing with second-hand or used items? I’m looking for things that indicate consumer fear or despeartion. Where are people trying to save a buck? Where are people trying to make an extra dollar? Are they trying to sell their once-coveted toys (cars, jet skis, RV’s, etc)? Or even selling more mundane things? (Cue Dave Ramsey about selling everything not nailed down to get out of debt).
Mr. Buffet on 2006 Berkshire Hathaway annual report said the followings, (everyone ought to read the entire report):
“As our U.S. trade problems worsen, the probability that the dollar will weaken over time continues to be high. I fervently believe in real trade – the more the better for both us and the world. We had about $1.44 trillion of this honest-to-God trade in 2006. But the U.S. also had $.76 trillion of pseudo-trade last year – imports for which we exchanged no goods or services. (Ponder, for a moment, how commentators would describe the situation if our imports were $.76 trillion – a full 6% of GDP – and we had no exports.) Making these purchases that weren’t reciprocated by sales, the U.S. necessarily transferred ownership of its assets or IOUs to the rest of the world. Like a very wealthy but self-indulgent family, we peeled off a bit of what we owned in order to consume more than we produced.”
.
.
.
“– but to expect a “soft landing” seems like wishful thinking.”
When Mr. Buffet says we may not have a soft landing, I believe him. The man has tremendous credentials and integrity.
NOW, considering the events of last week in the stock market, my question is what is the probability of next Monday to be a BLACK MONDAY similar to the one in 1987?
I would give it a 15% chance.
Ben, this from the implode-o-meter site………..
Deep Thought Of The Week
~ “Bear Stearns analysts upgraded New Century (NEW) one day before the company announced it was breaching covenants with its warehouse lenders, which was also the same day it came to light that NYSE and state criminal probes had been opened against the company for trading irregularities. Bear Stearns is itself heavily involved in mortgage lending at almost all levels. How credible does all this make Bear Stearns, I wonder?”
I would like to hear bloggers comments on this subject
What does our fearless financial leader mean by the following:
Bernanke did not speak about the outlook for interest rates, economic growth or inflation during his remarks.
Nor did the central bank chairman talk about declines in U.S. stocks, which had their worst week in four years, in his text.
However, Bernanke provided a subtle reminder the Fed is not without tools to influence markets if necessary.
“Empirical studies also find that U.S. monetary policy actions retain a powerful effect on domestic stock prices,” he said.
AND…
Bernanke also told his audience the Fed agrees with studies that say government data overstates inflation data.
“I still think that there’s still some overstatement, and Federal Reserve estimates are, depending on the indicator, somewhere between half a percent and a percentage point of overstatement of the inflation rate,” he said in response to questions.
http://tinyurl.com/228sn9
Sorry if this is a re-post (not seeing it)…
What does our fearless financial leader mean by the following:
Bernanke did not speak about the outlook for interest rates, economic growth or inflation during his remarks.
Nor did the central bank chairman talk about declines in U.S. stocks, which had their worst week in four years, in his text.
However, Bernanke provided a subtle reminder the Fed is not without tools to influence markets if necessary.
“Empirical studies also find that U.S. monetary policy actions retain a powerful effect on domestic stock prices,” he said.
AND…
Bernanke also told his audience the Fed agrees with studies that say government data overstates inflation data.
“I still think that there’s still some overstatement, and Federal Reserve estimates are, depending on the indicator, somewhere between half a percent and a percentage point of overstatement of the inflation rate,” he said in response to questions.
http://tinyurl.com/228sn9
As a topic suggestion, I would like to see some discussion regarding comparisons of this RE cycle with past cycles. Specifically what the curves look like between the high and low market peaks, and the prevalent economic factors (eg interest rates, unemployement, GDP, etc.) during those cycles. It seems that most of the discussion is about the “trees” and we’re not looking at the whole “forest”.
HSBC losing alot in the US directly due to US housing market http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article1465662.ece