The Housing Bubble

cash or no, it’ll be the kind that likes buying into rising inventories and falling prices.

I’d tend to agree in terms of the market as a whole, but I’ve also started to see cash-positive real estate investments in a variety of neighborhoods in Lake County, Illinois. I monitor rents, property taxes, and recent permit requests (for maintenance issues such as re-roofing, etc), and I’ve located over a dozen homes in the area that have a purchase price of 75x rent, including property tax deductions from the rent portion. Under 80x is generally an excellent buy as long as rents are relatively stabilized.

Rents in the area have seen an uptick as the number of homeowners looking to rent has gone up, and the amount of new homes released on the market has dropped significantly. Almost all new construction is stalled completely within a 12 mile radius of the home I own.

Will I buy? No. I don’t want to maintain any more properties. But for those with cash, we’re talking about buying a 3bd/2ba home, built in the 60s or 70s, for $80k or so that rents for $1100 to $1300 per month. The past 5 houses I saw for rent are already rented, within 30 days of going on the market. Homeowners with families are desperate to keep their kids in the same schools.

A month ago I spoke with a new tenant on the same block as the home I own. He’s paying $1300 for a 3bd/1.5ba home that is for rent. His previous house was 4 blocks away, 2bd/2ba, and his mortgage+taxes+insurance was around $2200/month. He lost it when rates adjusted upwards, I believe he said he couldn’t pay $2600/month.

Yesterday a new rental on that street hit the market (for rent). I’m watching closely to see what happens: the homedebtor moved out 6 months ago, and can’t sell. They’re asking TOO MUCH, so it’ll be interesting to see if anyone takes the bait, or if it joins the foreclosure list.

One note: if I see a home that sells for 50X rent, I may actually buy it. $60,000 is not a lot of money to lose, and considering what I made in gold over the past 7 years, I’d have no problem liquidating a little bit of hard money for an “investment” that could generate a decent return with little risk. After taxes and maintenance, I’d say such a return could generate $10,000 per year profit, and if I ignore the time-value of my money, it would turn “positive” it under 9 years.

It’s been often said lately that we are in uncharted waters.. meaning that we’re lost. The RE market is an angry, frightened and desperate entity, has escaped from it’s cage, and we have no way to predict what it might do or where it might go.

In that context, aside from having some historical validity, what significance do traditional rent capitalizations have?
I like to gamble as much as the next guy, but to maximize my odds i’d try to remember that rules of thumb may or may not be valid in the days to come.

It’s been often said lately that we are in uncharted waters.. meaning that we’re lost. The RE market is an angry, frightened and desperate entity, has escaped from it’s cage, and we have no way to predict what it might do or where it might go.

I fully agree that we’re in uncharted waters, which is exactly the place that real risk takers want to be. For me, if I take a risk using leverage, I put myself in a VERY dangerous place. In my life, I’ve only taken a leveraged bet once, and lost my ass. Never again.

If I take a risk with cash, and I lose, I’m out the cash. I don’t gamble what I can’t afford to lose. I’ve lost, I’ve won, and in the end I’m definitely ahead of the game (versus S&P or other market indexes).

When markets are cloudy because the mainstream populous and press is contrarian to that market, I tend to believe there are always diamonds in the rough. I’m seeing such diamonds now, for the first time in 5+ years.

In that context, aside from having some historical validity, what significance do traditional rent capitalizations have?

I don’t use traditional rent caps to diagnose the investment validity of a property. I don’t use any traditional caps regarding purchasing any depreciating assets for investment purposes. I use my own “simple” analysis using “worst-case scenario” values to try to ascertain the risk/reward ratio.

Why do I see investment potential in the two handfuls of homes I’ve plotted? First, if I invest using pure cash, my risk potential is probably not 100%. If I buy a home at $80,000 that can rent to day for $1200, and the property taxes are $3000 per year with a maintenance set-aside of $2500, my worst case scenario is an annual loss of $5500 on average if it doesn’t rent, minus depreciation. This isn’t a terrible risk, honestly. Even if I lose $25,000 holding it for 2 years, it’s a better risk than market indexes, in my opinion. Considering how fast houses priced correctly are renting at the moment, and also considering that the families in the region have other family connections plus kids in school, I would venture a risk that they’d want to stay in the area. I know where the majority of these people work, and a great many work for Abbott Labs or one of the health care conglomerates in the area: relatively stable work (Abbott does lay off upper end management regularly, but the working class has had an uptick in employment).

The upside of the investment is a heckuva lot of profit. Since the majority of families in the area are hispanic, and I’ve rented a lot to hispanic families in the past, I’ve noticed that my hispanic and Polish tenants have tended to self-maintain their properties. This has been a lower burden of management that renting to “I’m too good to fix my own toilet” white folk. So I also take that into account.

I like to gamble as much as the next guy, but to maximize my odds i’d try to remember that rules of thumb may or may not be valid in the days to come.

True. If the dollar sees deflation, which it could, real estate would seem to be a TERRIBLE gamble based purely on dollar value. But this is a lie. Even if the price depreciates on the asset value and return, the dollar value of the rent paid in the future may be MORE than the dollar’s fall in value overall. It is hard to ascertain a return-on-investment in a deflationary economy because you have to look at the dollar’s actual and current value versus your lifestyle basket of goods.

I don’t mind getting FEWER dollars in the future if those dollars are worth more than before.

I’ve said it before here: I’ve been buying gold and silver for almost a decade. I price that gold and silver not in dollars, but in my own basket of goods that I create monthly based on my living needs. This includes auto fuel, insurance, utilities, food costs, etc. In the 10 years I’ve been hoarding metals, I would say that I have not really “made” much on my “investment.” This is why I don’t call gold or silver a good investment, they’re just a generally-safe store of value. The fact that my hoarding has gone up in dollar value but stayed relatively stable in my lifestyle basket-of-good value is just good news for me: I haven’t lost out in purchasing power in the long run. Stability is better for me that huge profits.

At last count there were about 1.3 million foreclosed homes in the US.. by all accounts the number should easily reach 2 million within the next couple years.

Assuming they average 75 feet long, the 2M homes laid end to end would circle the equator and overlap by a few thousand miles.
To me that seems like a whole lot of property for sale, and i feel no urgency to buy at this time.

“lifestyle basket”. I like that. That’s really what it’s all about not how much something costs in numbers. I can buy a nice dress now for less than I could when I was in high school 40 years ago. Admittedly 40 years ago that dress would have been made in this country, but 30 years ago i gave up on most American made textiles because the work was so shoddy.

That’s funny, I’ve found American made clothing to be far superior to what’s made in China. I try to buy clothing made here, but it’s getting harder and harder to find.

“One note: if I see a home that sells for 50X rent, I may actually buy it. $60,000 is not a lot of money to lose, and considering what I made in gold over the past 7 years,….”

So I interpret that you have sold your gold in the high market and now have the money in a secure place. Otherwise, your profit is still vaporware, just as the rising equity was in houses held for “investment”, i.e. until you cash out, you are just holding ownership to stuff.

it is like hitting a hit jackpot to be able to buy an 80k house and rent it for 1200/mo. I never thought that could be possible.

Where exactly are these 80k 3bd/2ba in Lake County? In western Dupage there are 3bd/2ba homes that rent for 1300 - 1500 but they would sell for $250k or more. (Definitely overpriced, but the market here hasn’t capitulated yet.)

These industries were never “deregulated”, that’s just a phrase de jour for the time. The regulations may have changed, that’s about it.

Deregulation led to repeal of regulated rates, routes, etc. for airlines. I didn’t say there was a removal of ALL laws governing the industry. However, the conservatives of the time mostly got their wish.

I disagree that it was deregulation that caused the airlines to have problems: it was reduced risk as the airlines knew they had a Congressional backstop. They increased risky measures knowing they’d be bailed out. If Congress would stop bailing out any big market, those markets would take less risks.

For energy, deregulation of the industry led to Enron and abuses. Everyone knows the sweetheart deals the big oil companies Bush has fought for since he got into office.

There was absolutely NO deregulation regarding Enron. Enron was actually given a full monopoly status by the governments, and then they were harmed when their friends in government turned around and backstabbed them. The accounting fraud was irrelevant to Enron’s ability to withstand true market forces. Deregulating one price while overregulating another price is what killed Enron.

Deregulation of banking and removal of the Glass-Steagall act, creation of exotic derivatives, etc….well, unless you are blind, deaf, and dumb you know what that led to.

No, derivatives stabilize the market. The problem with banking is that the government lets the bank leverage their assets, and the banks got greedy doing exactly what government wants the banks to do: introduce liquidity. Fractional reserve banking is what killed the industry, not derivatives. In a full reserve banking market, derivatives would be chosen that are the least risky, with good borrowers in mind.

Are things better?

Only in the areas where government has stayed out, yet. The organic food industry is great (little to no regulation). The computer industry is great (little to no regulation). The print/marketing industry is exploding (little to no regulation).

Is it bad to question that it isn’t better?

My income is up 40% YOY this year. My income last year went up nearly 30% YOY. I see opportunities at every corner. I see people who I’d hire in a heart beat if I had the time to manage more work. We were just notified by one of our largest clients that they’re going to expand 30-40% over the next 2 years (health care industry), and we’ll grow with them.

Things are better, if you don’t risk your future by entering markets primarily controlled by TPB. I ignore those markets, generally, because without cronyism, they can’t flourish. In markets where I have cronies, I’ll happily take advantage and utilize my opportunities to the maximum, while understanding the long term risk is great.

Yes, they’re better than they would have been had Hilbilly Carter been re-elected. I can’t even imagine the disasters he would have perpetuated or created new. And who can forget Walter Mondale, try hard as we might?

I disagree that it was deregulation that caused the airlines to have problems: it was reduced risk as the airlines knew they had a Congressional backstop. They increased risky measures knowing they’d be bailed out. If Congress would stop bailing out any big market, those markets would take less risks.

There have been over 150+ airlines disappear since 1978. Many names very familiar and had been around since the beginning of the airline industry ( Pan Am, Eastern, Braniff, etc) failed to negotiate the unregulated waters.

There were no bailouts until 9/11.

Dada, are you sure you meant that about derivatives stabilizing the market?

Maybe for certain players, for a while, until things really get hairy. Then … counterparty risk!

What good is it to buy insurance when the insurer goes BK?

The market plunge that accompanied that avalanche of credit default swaps blowing up in Bear Stearns’ face sure didn’t sound like stability to me.

Your comments on RE investing seem sound. You should stick with what you know.

Dada, your short answers carry too many implicit assumptions, and since I’m getting the nasties going after me simply for questioning some of their cherished assumptions, I can’t give your post the attention it deserves. Let me just focus instead on the financial deregulation part since I can go into better detail.

The problem with banking is that the government lets the bank leverage their assets

Isn’t that the very definition of deregulation…you actually make the point that they should have been more transparent about leveraging and banned from doing so.

Fractional reserve banking is what killed the industry, not derivatives.

I agree about FRB, and I should have used correct terminology instead of ‘derivatives’: I meant innovations like collateralized debt obligations and tranching of high risk products, and of course the slovenly vetting of these instruments by Moodys, S&P, etc. and conflicts of interest in buying them and rating them at the same time. Regulation might have helped that.

I don’t deny that the promises of accounting reform after the Enron/Arthur Andersen debacle were poorly implemented (e.g. Sarbanes-Oxley), but that doesn’t negate that they still may have prevented some corporations from perpetrating abuses that were far worse. I even think that reducing regulation is a good thing, as long as transparency and accountability are preserved for ventures that are “too big to fail”.

I’d say a roll back of regulation has played a prominent roll in our current financial state

http://www.marketwatch.com/news/story/story.aspx?guid=%7B3AA33D85%2DAD38%2D41B4%2DB300%2D033235B5734A%7D&siteid=rss

http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

“may have prevented some corporations from perpetrating abuses that were far worse.”

Dada you say Enron only fell cause they were back stabbed?
Their abuses are still to clear to us Californians..’ turn it off so Ca grannies won’t get their electricity’…
Manipulations, fraud, and outright chicanry to others in other states.

If we get a series of airplane crashes because of shoddy maintenance the cause will be lack of enforcement of existing rules & regulations, not for lack thereof. Lack of enforcement of existing laws is a pretty common theme when observing the various problems around our country,IMO.

Aladinsane:

Death is a good motivator for govmint workers. You almost never see any action taken till people are sacrificied for gov incompetence.

You know where the dangerous curves roads and intersections are but will till a kid get splatted on the pavement and within 7-10 days lights will be up signs will be up streets will be painted , i seen this too many times in my life.

How many people die every year on govt roads? If that was a private company, these anti-freemarket types would be having a conniption.

There are several stopsigns in odd places in residential neighborhoods that I refer to as “Memorial Stopsigns.” I only know this history of one of them, but I presume the others there there for the same reason: some kid got hit there once.

The recent issue with cracks in Southwest Airlines’ planes shows that regulation isn’t the problem, ENFORCEMENT of regulations already on the books is the problem. The regs are already there.

Folks, it’s the engineer’s mindset. They can’t stick out from the pack, even if a new method might be safer. Better to be part of the herd, that way when somebody dies you can argue in court that it was SOP.

In some cases (especially curve layouts) we also have inferior road building because the road crews are poorly educated and refuse to use any but the simplest and most familiar methods. It is my understanding that parabolic curves are favored in Europe, but American crews will simply refuse to follow such site plans.

Here in Gainesville I can’t begin to tell you about the lack of crowning and banking, or poorly done crowning–even though this region floods regularly.

PS–If you have ever seen a stop or traffic signal warrant, it is very clear that in many cases, someone DOES have to die before they’ll put one in. They’re more focused on the volume of traffic than, say, visibility or geometry. Incidently, I don’t know of any research into whether there is any relationship between the criteria on the warrant and actual safety. Like the Catholic Church, in road engineering tradition is all.

The “Regs are there” is only as good as the entities that enforce them, which they are not. Cronyism is alive and well, in the airline industry and friends in the FAA.
So, I guess you can all feel ‘comfortable ‘ all you want, if you knew what really is going on, you wouldn’t.
And that is only the airline industry.
Lets talk about the trucking industry that has just been unloosed via letting mexican companies truck through the US. Ever been to another country and seen their infrastructure/vehicles?

Folks, it’s the engineer’s mindset. They can’t stick out from the pack, even if a new method might be safer. Better to be part of the herd, that way when somebody dies you can argue in court that it was SOP.

You know this is hard to answer. Its kind of an unwritten rule that if it ain’t broke you don’t fix it. It is very very easy to make changes that I/we/you believe to be simple and find out terrible problems later.

Something simple like “solder the ends of wire leads that go into pressure contacts”. You do something like that to keep wire strands from shorting. Seems like a good idea. What happens is over time the solder relaxes and the connections become loose. In my case the result was a technician got shocked.

Another one that should be effecting aviation in the ROHS initiative. All those parts are soldered with materials like pure tin. Less of an enviromental hazzard than lead. What does that cause? Tin whiskers grow from the pure tin and cause electrical shorts. Nearly caused a reactor meltdown in the US and took out a Boeing telecom sat. They learned to put lead into the tin back in the 50s and its probably going to return to haunt us next few years and a bunch of people will pay with their lives.

Anyhow, we engineers try like heck not to get people killed and sure there is some sarcasm about ending up in court. However, there are plenty of people who outsmart themselves and cause massive damage. More often its a choice on risks and what cost people are willing to stand.

The good thing in aviation and space is we still have a very good failure analysis and reliability people. We pick out very obscure failure mechanisms and try to fix them as much as possible. Overall the industry seems to be doing a pretty good job.

I worry about those european birds and the tin whisker problems in a few years though.

He made some substantive points, why don’t you address them instead of “…foaming at the mouth and repeating recycled…sound bites…”

You seem more interested in advancing your political agenda instead of evaluating the effects of an historical set of legislative reforms. Reforms can be good or bad by the way…why don’t you calm down a little bit and use your big-boy indoor voice, mmmkay?

I think too many times people thought of “deregulation” as “no regulation,” which is a mistake.

I think too many times people thought of “deregulation” as “no regulation,” which is a mistake.

But that is what it has turned out to be, by virtue of
the entities allowed to look the other way, to use several sets of books- one for them, one for oversight, and one for the american public. Then they can also look the other way, cause they are allowed to do that, by virtue of paying off someone via K Street/lobbying.
But if you and I were to do the same things, we would get squashed.Thrown into the hooskow.
Wealthy/connected individuals (think Scooter LIbberated etc).

Some people think any regulation is worse than no regulation. I think a happy medium exists.

If I have money and I want fuel then that IS demand. Who are you to say what is “valid” or “fair” demand. The fuel was up for auction and I won! With your mindset prices should be fixed. Besides, your demand for fuel to go from point A to point B pushed up the price I had to pay too; therefore, you stole from me (by your logic)!

Party A has gas, you and I want gas. You would force A to limit how much gas I can buy so you can buy some at a lower price? This is stealing from Party A and me who have the right to trade on what ever terms we decide.

If you care about “actual human beings” then you cannot steal from them, even by majority vote. You cannot tell them what to do with their property and they cannot use their property to damage your property or harm your person.

Fundamentally, if you agree that theft is wrong then you cannot steal by government proxy (taxation/regulation).

Another way to view the regulation debate is to realize that ownership means you can do what you want with your property (so long as it doesn’t hurt another’s property). Regulation IMPLIES that the government owns your property, time, money, and relationships. The government does not have the AUTHORITY to regulate 99% of the stuff it attempts to regulate.

“Fundamentally, if you agree that theft is wrong then you cannot steal by government proxy”(taxation/regulation).

So you think that the investment banks disguising toxic mortgage products as AAA debt was perfectly legitimate…but the government oversight that would have prevented it from happening would have ’stolen’ from the brokers, RE agents and CEOs who promoted these Ponzi schemes?

Who’s side are you on?

i would guess, on the side where he could make more money so he can outbid you and me.

Sadly, you fail to realize that it is REGULATION that keeps small companies from competing with big companies and enables big companies to get bigger! You also fail to notice that the banks lobby for “banking regulation”, “Big Milk” lobbies for milk regulation, “Big Sugar” lobbies for sugar regulation. ISP’s lobby for internet regulation. Child seat manufactures lobby for child seat regulation (to sell more car seats). Car manufactures lobby for seat belt regulation.

Regulation means that responsibility shifts from the private parties to the government. (If you are going to tell me how to “run” my business via regulations, then YOU are responsible when it fails).

Regulation == Theft of the thing being regulated and leads to the tragedy of the commons (when it becomes owned by the government).

The only “regulation” that is necessary is “thou shalt not steal, kill, or destroy that which belongs to another” in which case we need to enforce that regulation on the government.

So maybe we should disolve the government created thing called a corporation.

The politicians are ultimately the final level of regulation. The regulators therefore are the one’s who create and continue to support this thing you call the “biggest risk to democracy.” By that logic then, shouldn’t you be condeming the same people you are instead realying on to make things right?

In the sliding scale of regulation, it’s common for you and your ilk to hold up the most heavily regulated industries as “failures of deregulation” or “failures of the free market”. That seems dishonest.

If you want to evaluate more vs. less regulation or regulated markets vs free markets, that’s fine. But to hold airlines, utilities, medical as examples of free markets is dishonest. Those are futher to the side of regulated and are better held as “regulated” or “heavily regulated” examples.

Fair enough.

Yep.

The founding fathers were on to this, which is why they wisely chose to “bind them with the chains of the constitution” - removing as much power from politicians as possible. Unfortunately the chains are rusting, and the beast is wriggling free.

No, the voters unlocked it. They had the chance to say “no” and they passed it up.

The ‘voters’ have also been duped by double talk, media spin, the self interested parties that make those new laws sound so damn confusing.
And the fact that the parents today do not enforce the ideas that it is important to vote,to be educated as to what is going on. Generations ago, it was damn important to pass that on.
It was your Patriotic Duty to vote.
And now we have women who do not understand how hard it was to get the vote. To get rights under the law for all people. Women, young, middle aged just don’t remember. My mother does, and so do all the women her age. They Want to vote. They are glad to Have the vote.

Unfortunately, the wind blows East and the money saved by not having EPA restrictions comes back in our face.

Yep. Also due to the weakness of the dollar.

That will be one positive to come out of this mess. Americans will be learning how to manufacture again.

Sorry for the late reply as I’ve been out all day. Computers are so annoying.

Anyway I vote for Calvin Coolidge as the last president with socialist tendencies. Just search for any of his quotes. Underrated president in my opinon. Hoover had was certainly a socialist, as I agree with Rothbard.

“The wise and correct course to follow in taxation and in all other economic legislation is not to destroy those who have already secured success, but to create conditions under which everyone will have a better chance to be successful.”

We’ve been a socialist country since ‘33. Some presidents since then have not liked that fact, but have had to play along with what was been handed to them. Obama wants to be BHO ala FDR.

I’d say Ross Perot is the captain of that team.

“…the truth is we have a corporate ‘nanny state,’ constructed to benefit the rich and multi-national corporations at every turn. Unfortunately 98% + of our citizenry has been purposefully excluded from this great largesse.”

That alleged 2% percent employs a vast percentage of the American populace. Without the “rich and multi-national corporations,” who would most Americans work for? The government? I get pissed at giant corporations too, and wealthy people showing off, but take them away, and what do you have? The old Soviet Union, and everybody poor.

The complaining masses would starve if they had to employ themselves (candle-making boutiques, anyone?) Hence, our government’s financial favoritism towards Big Business. Big Business puts up the money to run companies, assumes the risk of running companies (bailouts excluded), and takes on the responsibility of hiring people and providing benefits for them and their families (eg. health insurance). Most Americans could not do any of this.

Government employees better pray Wall-Mart never goes belly-up, because their salaries depend on corporate America and all the millions of incomes it produces, and if they ever lose their (mostly useless) government positions, who else but Wall-Mart would be willing to hire them?

That alleged 2% percent employs a vast percentage of the American populace. Without the “rich and multi-national corporations,” who would most Americans work for?

The point is that those two demographics receive all sorts of protectionism and corporate welfare, our society simply chooses to dress the policies in different terms. They’re consistently coddled and pampered.

The distribution of wealth can be much more equitable and still be profitable, sustainable and capitalist-friendly. Aping the excesses of more corrupt, more stratified societies is the wrong strategy.

Without the “rich and multi-national corporations,” who would most Americans work for? The government? I get pissed at giant corporations too, and wealthy people showing off, but take them away, and what do you have?

You have the middle class, that’s what.

You don’t need rich people to have capitalism. All you need is people with savings. That’s what stock markets are all about.

“Like George Washington, Jefferson also grew marijuana. He invented a machine that could turn hemp into fiber. He also invented the Lazy Susan, so he could display his hemp. He also applied the Lazy Susan concept to the chair, and invented the first swivel chair. Thomas was one sharp Vice President.”

christers dot net and various other links -

Possibly. The question is where does the momentum start.
I break telecom into three pieces
1. Equipment suppliers: JDSU, AVNX, BKHM, etc
2. Equipment makers: CSCO, JNPR, ALU, etc
3. Service providers: Cox, Time Warner, Comcast, etc

The only one I can see momentum starting is #3. Clearing the bodies is happening at a glacial pace, as you point out.

right, my favorites are no. 1

How did they get to be your favorite? I’m assuming a correlation with your brokerage account.

and fyi, I used to live the life of #1 myself.

I just understand those businesses the best.

I would think that #3 may be in some trouble, as people reduce their monthly nut in hard times or switch to cheaper alternatives. And there was that court case that forced the DSL providers, at least in the Southeast, to offer a $18/mo service. (Cable internet followed to keep their customers… I’m using it now. How sweet it is.)

I keep hearing about people canceling their cable to make ends meet. There’s a lot of competition with satellite internet, vonage phone, naked DSL, and services like Netflix and those $1 DVDs at McD’s. Broadcast going digital means local comes in as hifi as cable.

Please make a bullish case for Cox, et al, before I stake a lot of money on shorting them! *grin*

Please make a bullish case for Cox

They can cut their spend in response to subscriber loss.
People will cut internet service last.
Their suppliers are dying for business.

OK, there it is. A weak case at best (I agree with you that it is an interesting short) but I figure SOMEBODY has to make the case.

Whatever money they make has to be plowed back into endless upgrades in their eternal fight over market share.

The latest gee whiz products are great for customers but not for providers.

Service providers + csco are in the best positions to make money. In many locations, the service providers effectively have monopolies.

FYI: I haven’t been able to segment the banking market like telecoms above. Would love to hear opinions.

Service providers + csco are in the best positions to make money. In many locations, the service providers effectively have monopolies.

Within 10 years the cell phone companies are going to abandon their voice portions and become wireless internet providers with the added benefit of having the technical capability to provision dedicated IP bandwith specifically for VoIP calls. It will be cheaper for the cell phone companies and the end users will gain a better experience. This additional competition will force the local wire-based providers to adapt.

The iPhone has started the ball rolling and the upcoming phones using the Google Android platform will prevent any turning back. Keep a good eye on them, they are game changers. If you haven’t heard of Google Android, look it up. Google bought the startup a few years ago and they are on pace to release around the end of 2008. Most of the major handset manufacturers and about half of the current cell phone service providers are committed to rolling it out.

I used to work for Motorola in the division that makes all their cell phone infrastructure equipment. By the time I left the company (almost 3 years ago) they had already bet the business on this transformation. Traditional cellular equipment has become too complicated and too costly with all the add-ons made over the last 20 years. The entire market is gunning for a complete overhaul.

Yes, though not Cisco… Juniper.

The phone companies are locked in constant struggle with the cables, and neither one will prevail. The struggle arises because both are evolving into mere bitstream providers.

This struggle is relatively new. The telcos used to have their own turf - telephone service - and had built up a vast infrastructure to serve their customers.

The cables also had their own turf - TV subscribers - and built up THEIR infrastructure to serve THEIR customers.

But technology evolved to the point where each provider can offer both telephone an TV services, plus internet services. And each has a vast infrastructure in place to offer these services.

This is why they are screwed. Nobody with any sense would build an expensive infrastructure in someone else’s turf who already has an expensive infrastructure in place to offer the same services. Nobody planned on this happening but it happened anyway.

So now, because the telcos and the cables find it increasingly harder to differentiate themselves and the the services they offer, they are comdemned to a continous battle over market share, and price is the only effective weapon they have.

Thus continous upgrades and price cut are their future, IMO

Well I suppose I could do VOip for phone now, but I use the phone company for my internet connection, so what difference does it make. Or, I could do it through cable, but then I have to subscribe to nearly the most expensive digital service to get that, and here I hardly watch what channels I have.

There needs to be a cheap broadband-only service. Maybe there is but it’s not in MT yet that I know of.

If you have a decent-enough internet connection, you are your own telecom company. How can anyone compete with free VoIP?

You may want to read your latest user agreement. Most telcos and cable companies are the process of putting in limits per month on downloads because peer to peer networks are screwing up their networks. I imagine we will see increases and different usage models be introduced. With the boom in video and IP/HDTV come 2009, we will be lucky if the current internet doesn’t crash. There’s another carrier boom in the works. A slowing economy and more people sitting at home on the internet and working will drastically alter network usage trends and models.

right, more interesting trading in the fall. summer is usually a waste, I have last year beat already and not looking to give any of it back

smart girl.

Trading rule number 8 - Sudden Danger

Have been riding UWPIX since early October and not ready to unwind it yet as well as FXF FXY GLD which I sold yesterday (more so as I just don’t have as clear a picture anymore - apparently missed the peak with that but still in the black = happy). Was considering taking that money and possibly putting it towards TBT or RRPIX (short LT bond ETF and a rising rates fund… less secure about rising rates than short LT bond). Any opinions?

While the correction in housing is obvoiusly upon us, its still not right in Monmouth Co NJ. Went around to a dozen open houses on Sunday… Example: Realtors flat out state please negotiate. Many of the same houses reentering the market AT a lower price but WITH significant renovations done. However… coming down in price still doesn’t what I see as the proper price. In one case, the 1995 price was 125K. Yes, definitely 100K+ in renovations to the house recently but presuming using only inflation from then, the house would be 200k without improvements, minus depreciation, plus the improvements but they were looking for 500k. Ah well, eventually… just have to deal with the significant other who is becoming less patient as she wants a house and kids…

I was watching “flip this house” this past weekend. It was one of the funniest episodes I have seen yet.

The flipper was a cool guy who had a band, drove a Maserati, and lived in a camper van(!).

He bought a house for $345k, put in (if I remember correctly) only $5k in renovations. It looked like him and his friends did all of the work themselves, but it already had granite countertops, so there wan’t much to do.

One month later, he goes to put it on the market and his realtor friend tells him the house is now worth $300k.

Yes, his flip lost $50k in one month!

He of course was not going to take a lose, so he decided to rent it out for $1500/mnth (according to the show that covered his PITI) until the market comes back.

Seeing as he’s bleeding at least 1K a month on that, my guess is he either made 0 downpayment, doesn’t have any money to bring to closing, or a combination of the two.

Iran will never attack US assets. Iran’s leadership has been informed of our response. The US will take out their entire electric grid. Plants and powerlines. We will not invade, we will not use nukes. They will be left sitting in the heat. Europe has already OK’ed the plan.

It would be easy for Iran to sink a US carrier. Have you forgotton about the USS Cole? Our ships, like our WTC are not designed with a defense against the suicide bombe.

The attack on the Cole worked once. It can’t work again because now the Navy knows they are dealing with suicide bombers and small craft. The enemy changes tactics and we adapt to them. We regularly deploy our own fast attack craft to patrol for and intercept other small craft. Now it’s shoot first, ask questions later…

BTW, there is a big difference between attacking an Arleigh-Burke class missle destroyer moored at port and a Nimitz class supercarrier at sea surrounded by her escorts whose only job at sea is to defend the carrier.

The Brits so underestimated the Japanese, that they sent out their flagship Prince Of Wales & battle cruiser Repulse w/o air cover, and both ships made it to their final destination, Davy Jones Locker.

Things Change…

The Brits so underestimated the Japanese, that they sent out their flagship Prince Of Wales & battle cruiser Repulse w/o air cover, and both ships made it to their final destination, Davy Jones Locker.

The Brits didn’t get the memo about carriers and airpower being the new weapon of choice, replacing the battleship as the dominate weapon at sea. I agree 100% that arrogance and overconfidence played a role. So to did it do in the Germans and their pride of the Navy, the Bismark.

Things do change. The question isn’t whether the Supercarrier is obsolete in a world of “relatively cheap” guided missles. The question is whose missle technology is better? The Iranians (and by proxy, the Russians and Chinese) or the US… both sides have them. I’m willing to bet that the untested Russian technology isn’t as good as the Iranians think it is. Same goes for their supposed air-defense net bought from the Russians. What good is radar and SAMS when stealth fighters, stealth bombers and ship or submarine-based cruise missles destroy your all your radar sites and power generation infrastructure?

We’ve had two wars and seventeen years to get it right… How long have the Iranians had? War in the 21st century isn’t about a single weapon system providing advantage anymore (like missles vs. carriers). It’s about each piece integrated, networked, working together and sharing information. It’s about fluid fronts, being able to strike the enemy from many directions using different platforms. The Iranians have numbers to their advantage. Our technology is a force multiplier. Iraq fell militarily in days… that was and is still shocking to the military powers of the world.

And like it or not, we now have a veteran and battle-hardened military commanded by officers who have been tested in battle and weapon systems and tactics continuously refined through actual combat. The Iranians have nothing but some history from the 80’s with Iraq to fall back on and their Russion and Chinese advisors…

Who would have believed that a near bankrupt Argentina using an Exocet missile, could take out the HMS Sheffield, 25 years ago?

The British Navy during the Falklands campaign is not the US Navy, now or then… if I recall correctly, the Sheffield wasn’t even equipped with surface to air missles or close-in missle defense (like Phalanx).

You know the old saying “You don’t bring a knife to a gun fight”…

Did GPS exist in 1982?

Did GPS exist in 1982?

Probably, but it would have been classified US military technology and/or still in the DARPA research and testing phase.

GPS doesn’t make a difference when engaging a carrier battle group… the location of the target is not in question. The question is whether Iran can launch enough missles in a short-enough time span to increase the odds of at least one getting through the networked Ageis missle defense systems of the carrier and her escorts and any CAP fighters above. The ideal time that an attack would occur is when the battle group is close to Iranian territory, i.e. going through the Straits of Hormuz. This would allow for closer engagement distances and reduce the reaction time of the battlegroup’s crew and systems.

What do you think the readiness level is of a carrier battle group traveling through the Straits of Hormuz? How difficult do you think it would be for Iran to deploy that many launch systems within engagement range without the US or Israeli intelligence noticing a buildup or movement of weapons and men?

If I recall correctly, the HMS Sheffield was made primarily of aluminum…

Non-Recyclable aluminum

It’s all contained.

Levees, y’know.

Sorry about the bold…

“Never fight a war on two fronts.”

Like say, Afghanistan & Iraq?

My HS friends husband was just redeployed last month to Afghanistan. 2 wks later. He is gone. Before he was killed he said we were severaly undermanned/supported.

“Never fight a war on two fronts.”

Like say, Afghanistan & Iraq?

Have you taken a look at a map of the region lately? Iran is geographically in between Iraq and Afghanistan. Do I need to explain the strategic and tactical importance of being able to launch attacks from either region? Or the Persian Gulf for that matter? Iran is effectively surrounded by US military forces. It’s Iran that will have to defend itself against multiple directions of attack, splitting it’s forces against the threat of attack from any direction.

When I said don’t fight a war on two fronts, I was referring to the idea of two seperate theaters of operation, the Middle-east and Asia-Pac. I’m quite sure the war-planners at the Pentagon learned a thing or two from WWII in that regard. Whether it be two simultaneous campaigns in Europe and the Pacific or Germany opening up the eastern front against the Soviets while war still waged in Western Europe against Great Britain (and eventually the US).

If the end goal was to set up US forces to be able to launch attacks against Iran from three fronts (Iraq, Afghanistan, and the Persian Gulf), the plan of the last five years worked admirably.

I was under the impression that Afghanistan and Iraq were quite a fair distance from one-another, but perhaps you’ve been using a really small map of the world, and it appears that they are only a few inches apart?

I was under the impression that Afghanistan and Iraq were quite a fair distance from one-another

Looks to me about 1000 miles or so seperate the two…

I was under the impression our aircraft could fly great distances with the aid of mid-air refueling tankers and US and Allied military bases spread throughout the region.

Afghanistan and Iraq? They are indeed only a few inches apart, perhaps less. Separated by a tiny country called Iran.

But seriously, one of the things pressuring Iran is that they have Americans on both their west and their northeast frontiers. The question is who will be more disadvantaged with the two-front situation, Iran or the USA. Given the air power that the Americans can probably use to cut supply lines, Iran might be in a tough spot.

Yet when it comes down to it, would the US actually invade Iran even if it did attack? Given American recent history, and how wishy-washy American policy can be, I’d not be betting my life on it (literally) if I were an Iranian dissident.

That however, stretches our military too thin to wage a simultaneous war in Asia.

The reason the US has left North Korea alone is because it can fight back. Hard.

North Korea has been working on nuclear weapons for a long time, and that’s been no secret. The US has avoided a military confrontation because it would be too costly. It has already fought a war with North Korea and didn’t win that one.

When Americans are starving because we sent 1/2 a million tons of wheat to North Korea, we’ll have to revisit this topic.

When Americans are starving because we sent 1/2 a million tons of wheat to North Korea, we’ll have to revisit this topic.

I don’t disagree with you on that. I don’t support what I think the Pentagon is doing at the behest of the Bush Administration… I’m just calling it as I see it.

So I guess then my next question is: whose money is in the CLOs? Depositors? Or is it ALL leveraged against the low reserve requirements set forth by the FedRes?

I’ll never understand why the average person isn’t aghast at the fractional reserve banking system. I’ll also never understand why the cheerleaders aren’t also angry at the perversely low percentage held for reserves. 10% (or less, considering some reserves may be non-cash assets!) is crazy. How can anyone defend it, ever?

If there is one market I think has a boom potential, it’s a full reserve bank. Seriously. I would believe that EVERY SINGLE PERSON HERE would deposit their money into a bank that guarantees full reserve status, 100%, with public third party audits of the accounts regularly.

Your return on investment would be higher. Your risk would be lower as the bank would ascertain risk properly.

I guess prosper dot com is sort of like a full reserve bank, which is why I have money in prosper. I’ve actually made money there (about 9.7% I believe, over 2 years). I’m considering gambling more this year, since I like the fact that prosper does NOT use banking leverage to create more liquidity.

I lend at prosper, too. I call it my private economic indicator. How’s your delinquency rate? I lend rather conservatively, and my one-month-or-more late rate is currently at 7%, about double from six months ago. I’m curious as to what others are seeing.

I guess prosper dot com is sort of like a full reserve bank, which is why I have money in prosper. I’ve actually made money there (about 9.7% I believe, over 2 years).

Thanks a pretty interesting business model they have. Thanks for the reference, I’d never heard of ‘em before.

Thanks a pretty interesting business model they have.

Uh.

That’s a pretty interesting business model they have.

Quantum materiae materietur marmota monax si marmota monax materiam possit materiari?

Hey, you guys, this ain’t Latin America…

“I was recently on a tour of Latin America, and the only regret I have was that I didn’t study Latin harder in school so I could converse with those people.”
Vice President Dan Quayle

(Mr. Quayle never really said that, but it was attributed to the schmuck and stuck)

But he could’ve said it.

I’m done for the day. Don’t care what it does.

Maybe we’re just listening in. To someone who’s not so smug and preachy.

I’ve been buying small amounts of bullion (Krugerrands mostly because they have the least amount of overhead) continuously for the past couple of years–thanks to the advice of folks on this message board.

I buy enough at a time to get the sales-tax exemption (which usually means buying 2 oz). The Krugerrand, because they have some copper in them, look different than, say, buffaloes. I’m not so sure I’d be able to tell esp. if the coin legitimately has a percent of some other metal to improve wearability, etc.

Why bother with 22k Gold?

Asians prefer 24k, and they are gonna be calling the shots, soon.

How do you get a sales tax exemption?

In California, if you buy more than $1000 worth of “coins” at any one time–which includes krugerands–you don’t have to pay state sales tax. So I’ve been buying 2 every other month to get over $1000 (in addition to buying larger amounts of exchange traded gold, like Streetracks GLD).

Krugerrands have the smallest markup over the oz price of gold. Having to pay 8.25% sales tax would make it not worth buying.

I don’t see gold as an “investment”, just protection against a sinking dollar and having some physical gold for when all hell breaks loose.

Thanks!

Are you serious, txchick? I thought you were joking in the first reply.

I don’t have access to Limbaugh, nor the desire to hear his vitriol. But I’ll be happy to hear what you or other posters here think of Clark’s questions (as in, what is the answer to those questions, specifics..).

OK, I’ll bite. What did Limbaugh say regarding this?

that this is a not so transparent attempt by the Obmaa campaign through its surrogates to inflict low blows while still claiming to stay above such “politics of personal destruction.” Hence, the messiah’s disavowment of the Clark remarks while still allowing Clark (supposedly a VP candidate) to continue to babble on TV, along with that other tool, Jim Webb.

Obama, the former “community organizer.” Why is this guy even being considered? He would not be if he were not black. Geraldine Ferraro was right.

I cannot help but think that all of the TV shows/movies with “good” “black presidents” (24) has created a subconscious connection in the minds of the public between Obama and these fictional presidents. I know that there is some irrational/subconscious pull in that direction for myself that is only offset by a strong foundation of study and a realization of what lies beneath the surface of these scum bags for President.

In other words, if I can identify that irrational bias in myself, then I know it is strongly affecting many in the public who are not so aware of *why* they think they link Obama.

Organizing communities and bringing people together is hard work and great preparation for higher office. The only black that matters here is in the hearts of extremists who identified with the old and now defunct political order that brought us to where we are today.

that this is a not so transparent attempt by the Obmaa campaign through its surrogates to inflict low blows while still claiming to stay above such “politics of personal destruction.” Hence, the messiah’s disavowment of the Clark remarks while still allowing Clark (supposedly a VP candidate) to continue to babble on TV, along with that other tool, Jim Webb.

Obama, the former “community organizer.” Why is this guy even being considered? He would not be if he were not black. Geraldine Ferraro was right.

Chick, thx for the summary of the Limbaugh argument. I don’t know the behind-the-scenes dynamic of the Obama and McCain campaigns, but if McCain can’t answer a simple due diligence on his resume, he’s not looking too good.

Let’s not go where Ferraro went.

Organizing communities and bringing people together is hard work and great preparation for higher office. The only black that matters here is in the hearts of extremists who identified with the old and now defunct political order that brought us to where we are today.

This point about organizing communities being hard work is actually an important one. It doesn’t count for real work to the likes of Mitt Romney but is an incredibly important public service. By the logic of Romney and some on this blog, service in the Peace Corps is a worthless idea, too.

The election is incredibly interesting. We have a candidate who has the ‘wrong’ name and skin color, although he’s an expert on constitutional law and defeated the Clinton machine (something the Republicans couldn’t do in their ‘best’ 8 years), and people are saying he’s where he is because he’s black. I must have slepth through the inaugurations and administrations of Shirley Chisholm and Jesse Jackson.

Obama seems to be moving to the center since clinching the nomination, which makes sense, but his criticism of Clark is incomprehensible.

I’m particularly fond of McCain’s 58K a year disability pay….. Hey - I don’t mind rewarding a guy for an unspeakable experience….. But given the circumstances, this is nuts.

I don’t know why Obama is criticizing Clark for simple resume-checking.

Good question!

Mary Lee -

AFAIK there’s no income means test on disability pay. So he gives back the 58k per annum, does that make him any less of a millionaire? How much of his yearly income would he have to give back to the “community” to satisfy you?

Bob Dole was also a veteran who served with honor. When he ran for President he never had to endure these kinds of attacks from the Clinton camp because he was never perceived as a threat.

that’s the least of his problems. Condi Rice is black, so is Clarence Thomas, so is Colin Powell.

Do you think they only got there by being black? Bec. that’s what you just said about Obama.

All i can say is i am big picture guy. I have been to France, I have been to Brazil and Mexico. And i like France better. With McCain, the US goes more third world, with Obama a little more socialist, which i prefer.

And i think he will bury McCain this year whatever we say, just my feeling.

Because Obama is black, he gets to play the race card and then accuse the other side of doing it. No matter what criticism is aimed at him, it will be characterized by the media as racist ranting. Anyone daring to point out his lack of any executive experience, extremely liberal voting record in the Senate, very sketchy past, lack of any foreign policy bona fides and shady associations, etc. will be branded a racist hater.

I think McCain will bury him. So I guess we differ.

Condi Rice is black, so is Clarence Thomas, so is Colin Powell.

And none of them have ever been elected to anything.

I guess he gets to play “race card”, but I haven’t seen him do it. You brought up his race.

Didn’t you know that by BEING black he’s playing the race card? What do you think that terrorist fist jab was all about? HE WAS PLAYING THE RACE CARD!

tee hee.. tough for many conservatives to understand that there are a lot of people out here who really don’t care about race or religion or sexual orientation huh? and they’re all going to crawl out and vote Obama. Interesting times anyway.

“And none of them have ever been elected to anything.”

Not relevant. Republicans went apeshit over the prospect of first Powell and then Rice running for president. And I run with that crowd. They’d lean over and whisper, “if only Condi Rice would run!” In 2000 Powell was the dream-candidate to die for.

Now that was irrational - because as you say they haven’t run for anything and no one really knew their views.

Race had nothing to do with this until the D’s started to exploit it.

The catalyst for the latest move was General Motors’ (GM 12.47, +0.97) report that its sales in North America declined only 8.3% in June versus a market expectation that they would decline 21.0%. This news is relatively good news, but it goes to show how pessimistic the market had gotten that it would rally on a report that sales declined less than expected, which is much different than saying sales actually increased.

http://finance.yahoo.com/marketupdate/overview?u

go to marketswing.com

been following Don’s signals since 1997

Thanks!!

I’m going to wait for Cramer to panic. That would be the bottom like it was the last time a few years ago.