The Housing Bubble

Stock Market is back up to new highs. Corporate America is awash
with cash and is showing profits. Good days are back. Even if
unemployment is rising and real figures maybe upto 18-20%, and
RE prices looking at another dip, the country overall is doing great.
Why? Because stock market is the indicator of country’s economy.
As long as stock indexes are up, everything is fine.

How often do I have to refute this oft-repeated fallacy:

Lower rates result in higher prices, and a higher-priced good is less, not more, affordable. (Admittedly, I never have studied home economics, so perhaps I am missing something…)

Amy Hoak’s Home Economics

July 1, 2010, 3:19 p.m. EDT

Record-low mortgage rates: Who cares?
Only a select bunch are able or brave enough to take advantage of low rates

By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — Mortgage rates recently hit record lows, boosting affordability for homes. If you even care.

After all, there’s a limited pool of Americans who can take advantage. Many would-be buyers are worried about losing their jobs; now that the home-buyer tax credit has expired, they’re even less motivated to take the risk of buying a place.

And some existing homeowners can’t benefit because their lack of home equity prevents them from refinancing.

The 30-year fixed-rate mortgage averaged 4.58% for the week ending July 1, according to Freddie Mac’s weekly survey of conforming mortgage rates — the lowest since Freddie started keeping track in 1971. See Mortgages. Also, see story on lawmakers extend home-buyer tax credit deadline for some home buyers.

According to data going back even farther, the 20th century low was right after World War II, when the 30-year fixed-rate mortgage averaged about 4.7%, said Michael Larson, real-estate analyst with Weiss Research, citing the book “A History of Interest Rates,” by Sidney Homer and Richard Sylla.
…
“The decline we’ve seen in recent weeks is marginal in the sense that mortgage rates were already low,” McBride said. “If an $8,000 tax credit didn’t get you off the sidelines, another little dip in mortgage rates isn’t going to do it either.”

Added David Dessner, director of sales for GuardHill Financial, a New York-based mortgage firm: “If they’re not confident about job prospects in the future, it wouldn’t matter if [rates were] 1%.”
…

Abandon all hope, ye who own homes.

Myth 5: The housing market has already hit bottom.

Amy Hoak’s Home Economics

June 23, 2010, 3:18 p.m. EDT
The housing-market recession is not over
Why you shouldn’t be overly optimistic about real estate right now

By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — After years of hearing how home prices are plummeting and foreclosures are mounting, consumers want to feel hopeful about the housing market — but maybe they’re being too optimistic.

In a recent presentation to the National Association of Real Estate Editors in Austin, Texas, Stan Humphries, Zillow dot com’s chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.

The four myths:

1. The housing recession is over. It’s not, Humphries said. He estimates the bottom in home prices won’t come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation.

2. After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. “Once we hit bottom, the bottom is going to be a long and flat affair across the markets,” he said. “What we’re going to see once we hit bottom is the second phase of the housing recession… that second phase is one of being flat.</b.”

“They went from what everyone thought was a lucrative asset to something worth a lot less than they owed on it,” said Douglas Culkin, president of the National Apartment Association, in a phone interview. “We all want it to get better,” he said.
…

A CONgressman was on C-SPAN this morning promoting “Comprehensive Immigration Reform”; what an annoying term. Everytime I hear it I try to think of how such language world function in other areas of law enforcement:

(pulled over for speeding)

“Look officer, its clear the current system is broken, and thats why I fully support Comprehhensive Speed Reform; because what are we gonna do? ticket every driver who crosses the speed limit? Thats clearly impossible. So until we have comprehensive speed control, we just hafta allow people to keep on speeding”

(((shaking my head)))

‘Strategic default’ is out; ‘cash-flow management’ is in.

Real Estate Weekly
July 2, 2010, 5:12 p.m. EDT
Fewer choose ’strategic default’
By MarketWatch

Nineteen percent of mortgage delinquencies were “strategic defaults” in the second quarter of 2009, according to findings released this week from Experian and Oliver Wyman. But there’s some evidence that the strategic default phenomenon may have peaked, according to a news release from the two firms.

The research defines “strategic defaulters” as homeowners who have remained delinquent for six months after the initial date of delinquency; they have chosen to stop making mortgage payments, even though they can still afford them.

The report shows that strategic default is more prevalent in areas where home prices have suffered the steepest declines. Discouraged borrowers stop paying their mortgage payments, believing it will take too long for them to achieve positive equity.

According to the report, the absolute number of strategic defaults for the first half of 2009 was 355,000. These defaults, as well as first-time mortgage delinquencies, declined in successive quarters in 2009 and may have peaked in the fourth quarter of 2008, according to the release.

“Both delinquency and strategic default — as we define these terms — continue at high levels, but in Q2 2009 we see the first evidence of a break in the upward trend,” said Peter Carroll, partner at Oliver Wyman, in the release.

“After a seasonal reduction in both measures from Q4 2008 to Q1 2009, the Q2 numbers then declined further, breaking the historical trend of quarter-over-quarter increases; however, we will need to analyze the data from Q3 and Q4 to validate this.”

At the same time, the incidence of “cash-flow managers” rose from 20% in 2008 to 26% in the first half of 2009. These are borrowers who make occasional payments on their mortgage — and are possibly trying to get out of delinquency.

“Cash-flow managers would be better candidates for loan modification programs than strategic defaulters,” said Charles Chung, Experian’s general manager of decision sciences, in the release. “They are likely to be in temporary distress and may also have financial resources which allow them to continue to pay their non-mortgage obligations. This clearly demonstrates a willingness to pay, and a loan modification that makes their mortgage payments more affordable is likely to be very effective.”
…

Fed’s Hoenig lowers growth outlook but still wants hikes
By Jamie Coleman || July 13, 2010 at 19:05 GMT

In an interview with Reuters, the Fed’s lonesome hawk, Kansas City’s Tom Hoenig, says that he has lowered his outlook for US growth to between 2.5 and 3.0% from above 3% this year, but he still thinks the Fed should hike. He says there is not a high probability of a double-dip recession and he sees a continued modest recovery despite recent mixed data. If the Fed began to hike now it would be years before they were at a neutral level, he says. Rates near zero create imbalances and and speculation, he says. The jobs market is recovering slowly, he says.

That’s all well and good Tom, but you’re an army of one, dude…No one else on the Fed is even remotely close to voting for a hike.
…

The zany economist Bill Bonner must think his readers are 5th graders, or younger.

“You know what cures a depression, dear reader? We’ll tell you. A depression.

“A depression destroys excessive debt. Businesses with too much debt go broke. Bonds that can’t be paid go into default. Households that have spent more than they could afford go broke.

“Problem solved. Debt disappears. “Then, the economy can grow again.”

~ “Too simplistic!”It can’t work that way, not with today’s brilliant economists running the show. Besides, depressions were banned after the 1930s. The worst that is permitted is occasional mild recessions.”

Yes. We get that all the time. But when, over time, you switch to a debt-based fiat money system and allow it to skew the economy into something that can’t be sustained it eventually blows up in your face in a very substantial way.

It’s simple. Booms bust. Debt disappears. It has been a way of life for the human race for several thousand years. We should be used to it by now.

“Personal responsibility is the concordant note to individual freedom; failure is a learning process for survival, not an excuse for more government.”
~Bea Jones

* EUROPE NEWS
* JULY 14, 2010

Portugal Feels Austerity’s Bite
After Years of Budget Cuts, Its Economy Isn’t Healed; Scenario for Others in Europe

By BRIAN BLACKSTONE
[PORTUGAL] Associated Press

A woman throws flowers in early May in Lisbon as demonstrators protest Portugal’s austerity measures.

BRAGA, Portugal—Indebted European countries from Greece and Italy to Spain have in recent weeks set off down a common path toward fiscal recovery, promising to slash spending and raise taxes.

One sobering scenario of what they may be up against comes from Europe’s southwestern edge: Portugal, which embarked a decade ago on a similar journey of austerity, higher taxes and intermittent spending cuts, is still cutting—and still struggling.

On Tuesday, Moody’s Investors Service cut Portugal’s sovereign debt rating by two notches, to A1, citing the country’s sluggish growth prospects and concerns that economic reforms in areas like labor markets won’t bear fruit.

Moody’s “remains concerned about the economy’s medium-term growth potential,” said Anthony Thomas, senior analyst at the rating agency, adding that Portugal’s government debt, as a percentage of gross domestic product, has risen rapidly in the past two years.

The experience of Portugal—an early beneficiary of the euro zone’s economic benefits and one of the earliest to experience the problems of being tied to a common currency—offers what some economists call a blueprint for what could be a long road to recovery for Spain, Greece and others.

“You have to be prepared that you are in for stagnant times,” says Antonio de Sousa, who was Portugal’s central banker in the late 1990s when the euro was created.
…

Anybody besides me scratching their heads over mortgage rates still being at/near record lows, despite the Fed MBS purchase program having been done for months now?

Treasury yields are of course also very low - but they’ve been up some the last 10 days or so with no corresponding rise in mortgage rates; and they’ve still been following in lock step in their unnatural MBS-purchase driven state (mortgage rates lower than historic norms relative to treasuries).

Barclays Capital has estimated the number of homes in the hands of lenders, whether Fannie Mae ( FNM - news - people ), Freddie Mac ( FRE - news - people ) or any of the large private banks, is approaching 500,000. More than 200,000 of those homes are in the hands of the government lenders.

“They’re the fastest-growing seller of foreclosed homes in the country right now,” notes Feder

Alarmed by the 11 million or so mortgages that are reportedly delinquent, Feder and others have been lobbying government officials to consider alternative plans to rescue housing. Feder favors a plan that would allow Fannie, Freddie and other banks to convert their underwater mortgages to shared-appreciation mortgages that would carry lower monthly payments and give banks and homeowners shared equity stakes in the homes’ future appreciation.

**********************
Oh boy, the banks will have a further claim on my home’s value when I sell besides the balance of any mortgage. Yeah, sign me up for that.

Northrop May Shut Louisiana Shipyard With 5,000 Jobs.

(Bloomberg) — Northrop Grumman Corp. Chief Executive Officer Wes Bush may be giving up on one of the two U.S. Navy shipyards whose vessels were cited for defects and delays.

Governor Bobby Jindal of Louisiana said yesterday that Northrop has told the state that the yard in Avondale near New Orleans risks being shut because it lacks orders beyond 2012, putting about 5,000 employees out of work. Louisiana is in talks with possible buyers and tenants, Jindal said in a statement.

When is the Fed going to unwind all those MBS they bought to prop up the housing market and to shift the Wall Street investment banksters’ bad gambling debt on to the U.S. monetary base?

I still doubt the legality of that maneuver, though I realize the Fed generally operates above a rule of law, especially when an ongoing financial crisis is underway.

market pulse

July 14, 2010, 9:25 a.m. EDT
Fed should stay on sideline, Hoenig says
By Greg Robb

WASHINGTON (MarketWatch) — The Federal Reserve should resist the temptation to take more easing steps despite growing concerns in some quarters of a slowdown, said Thomas Hoenig, the president of the Kansas City Federal Reserve Bank on Wednesday. “I feel that monetary policy should remain on hold,” Hoenig said in an interview on the CNBC cable television channel. The Kansas City Fed president said some weak data had not shaken his basic forecast of a modest recovery this year. Hoenig, who has been eager for the Fed to raise rates and dissented from all the policy statements this year, again called for the Fed to remove its pledge to keep interest rates low for an “extended period.” The Fed should not overreact to every piece of news, either good or bad, as mixed data are part of every recovery, Hoenig said.

Re·al·tor  (ree-uhl-ter)

Definition: A dumbed-down occupation requiring little to no skills and ethical behavior is optional. Typical realtors do not demonstrate talent, expertise and dedication in any of their tasks. In order to access residential real estate, a buyer is forced to pay these talent-less reptiles a skim much like a mafia protection racket. The only difference is that “realtor” is government sanctioned. The core fundamental of this protection racket is maintaining grossly inflated prices.

It’s hot, it’s summer,…Maybe next year I’ll go participate, and check out if Oregon has any RE inventory left.:

“For kids, there’s the Crater Lake Root Beer Garden, which will dispense free homemade root beer.”

Mugging it up at the Oregon Brewers Festival
July 13, 2010

The July 22-25 event features just one beer each from about 80 craft breweries nationwide at Tom McCall Waterfront Park located on the west bank of the Willamette River. Four days of beer tasting come with live music, home-brewing demonstrations, books about beer and, of course, food.

http://latimesblogs.latimes.com/dailydish/2010/07/oregon-brewers-festival.html

MBA: Mortgage Purchase Applications lowest since December 1996

http://www.mbaa.org/NewsandMedia/PressCenter/73413.htm

Starve lying realtors….. starve.

Then, it was the Soviets & missiles,…now, it’s China & drilling rigs:

http://money.cnn.com/2006/05/09/news/economy/oil_cuba/index.htm

Who’d thunk that an large ice cube could sink a Super-Liner?

Yikes!

Doomsday: How BP Gulf disaster may have triggered a ‘world-killing’ event:

“The media has been kept away from the emergency salvage measures being taken to forestall the biggest catastrophe in human history. The federal government has warned them away from the epicenter of operations with the threat of a $40,000 fine for each infraction and the possibility of felony arrests.

Why is the press being kept away? Word is that the disaster is escalating.

Cracks and bulges…:”

http://www.helium.com/items/1882339-doomsday-how-bp-gulf-disaster-may-have-triggered-a-world-killing-event

Things are gettin’ dicey in Utarrr…

Utah agencies probe alleged illegal immigrant list:

“A letter accompanying the list demanded that those on it be deported immediately.

The list also contains highly detailed personal information such as Social Security numbers, birth dates, workplaces, addresses and phone numbers. Names of children are included, along with due dates of pregnant women on the list.

Most of the names on the list are of Hispanic origin.

In the April letter, the writers say their group “observes these individuals in our neighborhoods, driving on our streets, working in our stores, attending our schools and entering our public welfare buildings.”

“We then spend the time and effort needed to gather information along with legal Mexican nationals who infiltrate their social networks and help us obtain the necessary information we need to add them to our list,” the letter says.”

From a commenter:

And again I question what part of against the law is confusing to you? UnAmerican businessmen across the nation – your neighbors – hire illegal immigrants – which is against the law - at less than the minimum wage – which is against the law – pay them under the table – which is against the law – do not pay overtime – which is against the law – do not pay social security taxes – which is against the law – do not pay Medicare taxes – which is against the law – do not pay worker compensation – which is against the law - do not file payroll taxes – which is against the law – and treat these employees like crap – which is against the law. So the question I have is, why aren’t these serial lawbreakers busted, fined and jailed?

There’s Just No Pleasing Some Robber Barons

One of those who has been complaining is billionaire publisher Mort Zuckerman, who now finds in a White House he once supported “hostility” to the business culture he credits with the country’s greatness. I assume he is not talking about the belated efforts to hold BP accountable for the cost of the oil spill that our pro-drilling president once thought not possible.

And then there was Jeffrey Immelt, CEO of General Electric and once friendly to Obama but now alarmed by new regulations. He was one of the many CEOs cited by Fareed Zakaria in the Washington Post as evidence of “Obama’s CEO problem.” General Electric is a company that got into deep trouble when it stopped worrying about making better light bulbs and came to devote much of its business through GE capital to fancy financial products. With GE having been saved by the taxpayers, one wonders what the conglomerate has to complain about. Or Wall Street donors now stiffing the Democrats and claiming Obama is hostile to them.

All this comes at the very time that Wall Street lobbyists stand poised to win a sweeping victory preventing a reversal of the radical deregulation that made the banking debacle possible. The “Volcker rule,” restoration of the New Deal-era barrier between investment and consumer banking that Obama had pledged to support, is gutted. As a disappointed Paul Volcker told Louis Uchitelle in an interview for the New York Times, he would rate the reforms just a B and not even a B-plus. Leading Wall Street economist Henry Kaufman told the Times: “The legislation is a Rube Goldberg contraption, and there are long timelines before the Volcker rule is fully implemented.”

Game over, Wall Street won big-time, and the Bush-Obama policy has made the financiers whole while largely ignoring the deep plight of the true victims of the economic collapse, the unemployed and the foreclosed. The argument that Obama is anti-business is nothing more than the old propaganda trick that the best defense is a good offense, so blame the victims for your crimes. The high-tone intellectual argument for that position was supplied by Harvard professor Niall Ferguson, a transplanted Thatcherite, at the same Aspen, Colo., gathering where Zuckerman spoke.

At a conference on ideas paid for and attended by the rich and well-positioned, Ferguson argued that the high rate of unemployment is not due to the Wall Street high rollers whose funny-money games wiped out 8 million jobs but rather the extension of the government’s unemployment insurance program:

“The curse of long-term unemployment is that if you pay people to do nothing, they’ll find themselves doing nothing for very long periods of time. Long-term unemployment is at an all-time high in the United States, and it is a direct consequence of a misconceived public policy.”

http://www.thenation.com/article/37425/theres-just-no-pleasing-some-robber-barons

Here is a housing news story in the making…

http forums redfin com/t5/Chicago/Life-on-Hold-at-Renaissance-Lofts/td-p/113899

Life on Hold at Renaissanc​e Lofts

“Under a year ago, I purchased a one bedroom unit at the Renaissance Lofts at 1791 W. Howard Street. … I purchased my unit with their 2 year “Buy Back” Guarantee. This means that the developer has contracted to buy back my unit at the sale price, no questions asked, no later than 90 days from the date the Buy Back Guarantee is exercised. Concerning Kopley’s Buy Back Guarantee, a Chicago Magazine article by Dennis Rodkin quotes Mr. Kopley: “It’s absolute, no questions asked,” says Kopley. “I don’t care why you’re not satisfied- we’ll buy it back.”

“I first notified Mr. Kopley on June 2 that I wanted to exercise my “Buy Back Guarantee.” Since then my attorney has been in contact with Mr. Kopley’s attorney. We’ve been told that Mr. Kopley has to secure financing in order to make good on his “Buy Back Guarantee” - $160K for my unit. In the meantime, my life is “on hold” waiting for the Kopley Group to provide a closing date and contract. Will it take place within the promised 90 days? Obviously, preparing for my move and having a place to go cannot happen overnight.”

Did you really expect that they would honor such a “buyback” guarantee? Welcome to Chicago.

Yeah, things are really looking up.

Got an offer to go “on salary” the other day (contract I’ve been working since late January).

Still a “contract employee”, no benefits or insurance. 40% paycut from my previous full time job, not including benefits. $5000/year less than what I making when I took my first corporate DOM job back in 1999. Less than what I made working for one of the General Aviation OEMs in 1994.

They are going to pay for my type-specific training, that I start next Monday. If I accept it, they want a pro-rated 1 year contract to pay it back, if I go somewhere else.

The fact that we are having a full blown depression in the General Aviation business, is the only reason that I’m even considering it.

It’s getting to the point where fast food or Jiffy Lube is becoming a viable option. If all those guys with Master’s Degrees haven’t beat me to it.

Mortgage Applications For Home Purchases Hit 1996 Level

Just how bad is the U.S. housing market? After falling off a cliff in May, due to the expiration of the home buyer credit, sales continue to decline further and further. Last week, mortgage applications for home purchases fell by 3.1%, according to the Mortgage Bankers’ Association.

That broke through the worst levels seen in 1997, to hit a point not seen since 1996. They’re now down 69.1% compared to their 2005 peak.
Here’s the chart:

http://www.theatlantic.com/business/archive/2010/07/mortgage-applications-for-home-purchases-hit-1996-level/59737/

The green line represents last week’s index value. If purchase applications decline much more, by another 4%, they will hit 1995 levels.

This news is particularly incredible in light of the fact that mortgage rates hit a new all-time low last week. Despite that, Americans still aren’t buying houses. This shows very weak demand, more than two months after the home buyer credit expired.

Well it looks like Bristol Palin and Levi are going to get married. Bristol has discovered that she can make 15-30k per speaking engagement. Her topic is abstinence????

BP Solar Cuts U.S. Jobs, Moves to China

As the troubled oil giant shutters a Maryland manufacturing facility, big questions arise.

BP Solar recently announced that it is going to shut down its Maryland manufacturing facility in a move to lower costs. According to a release from BP Solar, “The company has ceased silicon casting, wafering, and cell manufacturing at its Frederick, Maryland facility. Approximately 320 great paying positions will be eliminated out of 430 positions at the Frederick location. BP Solar will maintain its U.S. presence in sales and marketing, research and technology, project development, as well as key business support activities.”

To that I ask, what about building stuff in the USA? Are we that cost noncompetitive as a country that we can’t keep the jobs here vs. China?

Barry is in so far over his head it ain’t funny.

Bill Clinton back in the White House, holds economic meeting with Obama

Burdened by low approval on the economy, President Obama brought former president Bill Clinton and investor Warren Buffett to the White House on Wednesday to talk about job creation.

White House press secretary Robert Gibbs denied that Clinton — who oversaw record surpluses and was generally seen as business-friendly — was brought in to mediate between business leaders and Obama, now under fire from corporate leaders for his economic policies.

This week, the US Chamber of Commerce issued a harsh letter complaining that the White House is burdening businesses with too much regulation and hampering job growth.

“Do I think they speak monolithically for business? No,” Gibbs said of the Chamber.

Beijing starts gating, locking migrant villages.

BEIJING – The government calls it “sealed management.” China’s capital has started gating and locking some of its lower-income neighborhoods overnight, with police or security checking identification papers around the clock, in a throwback to an older style of control.

It’s Beijing’s latest effort to reduce rising crime often blamed on the millions of rural Chinese migrating to cities for work. The capital’s Communist Party secretary wants the approach promoted citywide. But some state media and experts say the move not only looks bad but imposes another layer of control on the already stigmatized, vulnerable migrants.

So far, gates have sealed off 16 villages in the sprawling southern suburbs, where migrants are attracted to cheaper rents and in some villages outnumber permanent residents 10 to one.

“In some ways, this is like the conflict between Americans and illegal immigrants in the States. The local residents feel threatened by the influx of migrants,” Huang Youqin, an associate professor of geography at the University at Albany in New York who has studied gating and political control in China, said in an e-mail. “The risk is that the government can control people’s private life if it wants to.”

http://www.independent.co.uk/news/uk/politics/britainrsquos-debt-the-untold-story-2025979.html

“The true scale of Britain’s national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged.

“It quantifies the burden that will be placed on future generations, and it is the ONS’s first attempt to draw together the “off-balance-sheet” liabilities that have been accumulated by the state. The figures imply a huge “intergenerational transfer” – broadly in favour of today’s “baby boomer” generation at the expense of younger people and future generations.

Oh my. Just wait till today’s hell-spawn, raised mostly out of wedlock and inculcated in a corporatist societal ethos that says human beings are expendable and only youth, beauty, and income bestow value, realize the full magnitude of their screwing by the heedless, self-absorbed boomers. Something tells me a lot of oldsters are going to be getting the Dr. Kervorkian treatment rather than being allowed to be costly lingering burdens on the younger generations they so glibly shafted.

There is a sucker born every minute. The Germans are a little too late to the house price appreciation party

Is There a Global Economic Slowdown In The Works?

The German property market, in general, is up 10 percent over the same period last year. This is a result of the instability of the euro, according to Roger Schwarz, owner of the Munich real estate company Immo-Makler-Schwarz. He says German buyers are shifting the way they invest by buying property instead of stocks.

Ms. Ettwein, the listing agent for the property featured here, said people “want to put their money into houses,” adding: “They don’t want to leave it in the bank. They are a little bit afraid of what’s going on with the euro.” In particular, she said, the market has improved for properties that cost under 500,000 euros ($633,000, at $1.26 to the euro). And in the loft market, said Michael Gehring, an agent with the Munich real estate company Loft and More Immobilien, demand is even higher, as the supply of loft-convertible buildings is low.

In central Munich, homes average around 4,000 euros per square meter, Mr. Schwartz said. Farther out, the cost for new construction starts at 3,200 euros per square meter, for resale at 2,500 euros. (The house described here is about 4,530 per square meter; it is centrally located and has a loft layout, which is rare.)

“It would have been unthinkable to ask anything close to 10,000 euros a square meter a couple of years ago,” Mr. Schwarz said. “Now, it’s normal.”

http://www.nytimes.com/2010/07/14/greathomesanddestinations/14gh-househunting.html?_r=1&hp

HS Dent says Stocks gonna crash sometime between now and September and Dow will go as low as 3400 by the end of this year.

http://www.youtube.com/watch?v=BiuGrpusI7A

Hwy celebrates this American man’s birth Anniversary!
(Unlike, GoldenmanSucks, who’s too busy doin’ God’s work)

Woody Guthrie with guitar labeled:
“This Machine Kills Fascists”

“This Land Is Your Land”, in February 1940; it was subtitled “God Blessed America…”Singin’:

As I went walking, I saw a sign there,
And on the sign there, It said “no trespassing.” [In another version, the sign reads "Private Property"]
But on the other side, it didn’t say nothing!
That side was made for you and me.

In the squares of the city, In the shadow of a steeple;
By the relief office, I’d seen my people.
As they stood there hungry, I stood there asking,
Is this land made for you and me?

What do you all think of Prechter’s gloomy predictions? I almost wonder if I should sell my own meager horde of stock shares, just in case he is right?

A US stock market analyst is warning investors that they should prepare for the biggest market fall for 300 years. The bearish Robert Prechter has told the New York Times that investors should exit the equity market completely and switch their funds to cash equivalents, such as gilts (Treasury bills in the US).
…

Topic:
Great Recession
Tuesday, Jul 13, 2010 10:14 ET
The root of economic fragility and political anger
Americans who have jobs are being forced to work longer — and for lower hourly wages
By Robert Reich

Missing from almost all discussion of America’s dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June’s decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.

In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.

Meanwhile, a much smaller group of Americans’ earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.

We’re back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground.

And as long as this trend continues, we can’t get out of the shadow of the Great Recession. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing.

America’s median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class could boost its purchasing power was to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn’t pay their bills, and banks couldn’t collect.

Each of America’s two biggest economic downturns over the last century has followed the same pattern. Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation’s total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America’s total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total.

We all know what happened in the years immediately following these twin peaks—in 1929 and 2008.
…