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3897   thomas.wong1986   2010 Sep 18, 4:24pm  

sybrib says

Those babies are Americans, even if you don’t like their color. ***If*** we can ever organize them to vote regularly, they’ll outvote the Tea Partiers.

Drive 100 miles outside of the Bay Area area all the way to up to Montana down to Texas and across to North Carolina. YOU will see a difference. The Bay Area is not representitive of the thinking of many many Americans.

3898   Â¥   2010 Sep 18, 4:44pm  

^

Outside of the coastal enclaves, this map can tell you where the dependent minorities live in this country.

3899   Hysteresis   2010 Sep 18, 10:32pm  

a) wsj didn't call a bottom.
b) Brett Arends, who is apparently a ginormous moron, said "everyone has given up."
Anytime you say "everyone", or "nobody" you're automatically wrong.
b) basing this idiotic statement on a Time cover is even more idiotic.
c) prices in the bay area will still crash despite predictions from a twit who doesn't know his head from his ass.

3900   EastCoastBubbleBoy   2010 Sep 19, 12:51am  

The Time analogy is actually the best argument he made.

Back during the bubble, when the MSM was constantly blabbing about how great things were, the writing was on the wall that the peak was near.

Now, many in the MSM are starting to say that further declines are more and more likely. When it gets to the point that TIME switches their story...

The more I think about the moving parts that is the housing market, the more it seems that we are closer to a bottom than the top. Low rates are keeping prices from plummeting further, and if you think inflation is inevitable as we go further down the road, well - if nothing else housing is a hedge against inflation.

The stability in prices may be artificial, but its stable nonetheless, and even if there is a second leg down, I wouldn't expect it to be as severe as the initial leg down.

3901   EastCoastBubbleBoy   2010 Sep 19, 1:02am  

Depends on when you need to move. If you buy tomorrow, and move in the next three to five years, it may be tough. But you hit a point where you can either 1) sell for more than you owe or 2) rent out the house for close to your carrying cost.

3902   thomas.wong1986   2010 Sep 19, 3:35am  

Wonderful things happen when prices of home drop back to normal.

3903   marcus   2010 Sep 19, 3:56am  

theoakman says

dollar is poised to drop off the side of the cliff the second interest rates rise

Sounds backwards to me. If there is a causal relationship there, it is the dollar falling off the cliff might cause interest rates to go up.

3904   elliemae   2010 Sep 19, 4:06am  

I shoulda guessed that you were a fan of Analrapists. They be's more hily edumakated than me.

What am I a fan of, you ask?

"I’m a janitor- um, I’m a full-on rapist. Y’know? Um, Africans, dyslexics, children, that sort of thing...I help people, you know what I mean? I’m a philan- philan- philan-...It gets blocked in my mouth, I don’t say it no good." - Charlie

3905   Cvoc13   2010 Sep 19, 4:11am  

Listened to Bloomberg Podcast last night (Fridays podcast) and inflation adjusted, 1980 is the high, and to match that it (Gold) would need to go up 97% from here to about 2430 (if I recall the numbers correctly, I know I am close)

3906   Cvoc13   2010 Sep 19, 4:46am  

Crammer was saying something about the up cycle those companies are in. CAT. and DEER were both in major up cycles as the Emerging Economies are needing to mine for natural resources, and of course DEER to help the USA Farmer to feed the world. Gartman was suggesting that the mid west banks are going to benefit from the midwest farming cash inflows.

3907   Cvoc13   2010 Sep 19, 4:54am  

Troy, RIGHT ON! Good points on your post, we are in such bad shape, it is hard to see a way out. I am truly concerned and sad for USA. I have been saying for about 10-15 years, this is not the country my father fought in WWII for. He is gone now, so I can't ask him but I am sure of it!

3908   B.A.C.A.H.   2010 Sep 19, 5:14am  

I was looking up median wages on the St Louis fed website.

When the US went off gold, a median American would have to trade about 10 hrs of labor for an ounce of gold.
At $1200 in 1980, it'd have been about 170 hrs of median labor.

At $1300 in 2010 it'd be about 68 hrs of median labor.

However, I think that since we went off gold in 1971, the purchasing power of Americans' wages has declined by between about one to 1.5 % per year, disguised by gradual increase from the early 1970's to the late 1980's by sending a second wage earner to the labor force to maintain the same household spending, and later by borrowing gimmickery.

So, correcting for a decline in our standard of living, 10 hours of a 1971-American is probably worth about 17.6 hrs of a 2010-American, and 170 hrs of a 1980-American is probably worth about 262 hrs of a 2010-American.

It means that if you believe our standard of living has not declined, the American wage priced gold is at about one-third of the 1980 bubble.

If you believe that our standard of living has been declining since 1971 at a rate of about 1.45% per year, the American wage priced gold is at about between a fourth to third of the 1980 bubble.

3909   Armando148   2010 Sep 19, 6:06am  

Forget the talking heads in media , all you have to do is open your eyes.

Were will the wage growth come from or for that matter even the jobs?

Without job creation and wage growth housing will not even go up as a whole.

Our economy is in serious trouble and there are still some out there saying things
will just get better on their own. Especially the WSJ which should be pretty much
discredited in most peoples view, as for years I watched them say the housing
market was not in a bubble and that even if housing crashed it wasn't a crucial
part of the economy, and they would viciously attack any well known economist
who espoused otherwise.

Why can't people accept that the U.S economy is facing serious structural problems and
that real estate will not improve until those problems are addressed? Is it that hard
to comprehend?

3910   Armando148   2010 Sep 19, 6:09am  

Wonder how long CAT can hang on before they start exporting their
U.S manufacturing overseas.

After all the manufacturing work they do is perfect for exporting overseas
all that's missing is the quality which can't be that far off.

3911   B.A.C.A.H.   2010 Sep 19, 6:20am  

Armando148 says

Why can’t people accept that the U.S economy is facing serious structural problems and

that real estate will not improve until those problems are addressed? Is it that hard

to comprehend?

A lot of people realize this, that's one reason for "consumer deleveraging" and corporations hoarding cash.

There will always be a dissenting point of view, and you have noticed they're doggedly spending lots of time on Patrick's website ranting about why their point of view is right, and the overall premise of Patrick's "Housing Crash" website is wrong.

3912   marcus   2010 Sep 19, 6:26am  

Interesting, and good points.

The 1980 bubble was near the peak of inflation expectations. Obviously we are nowhere near that now. And yet gold seems to be discounting some significant future inflation, given that gold has more than quadrupled in the last 8 years or so.

And yet the long term securities market (bonds) reflect long term interest rates near lows for the last 50 years. Which one is wrong ? Gold or bonds ?

Who knows, but maybe part of the explanation for gold's strength is simply the amount of capital there is that needs to be parked somewhere, and t is essentially a hedge for the huge amount of capital invested in bonds (and bond like investments), and to a lesser extent other dollar denominated investments.

3913   bubblesitter   2010 Sep 19, 7:48am  

I wonder it is the construction equipments that is triggering this surge. If that is the case then builders are planning for their next move. Doesn't sound like good news for existing home sellers and banks holding the toxic assets.

3914   nope   2010 Sep 19, 8:11am  

Armando148 says

Wonder how long CAT can hang on before they start exporting their

U.S manufacturing overseas.
After all the manufacturing work they do is perfect for exporting overseas

all that’s missing is the quality which can’t be that far off.

Labor is not a meaningful component of cats cost structure.

If they move manufacturing overseas, it will be to save on shipping costs.

If they do that, though, they'll have a very hard time holding onto various government contracts that dwarf any possible savings they might get out of shipping savings.

So it will probably be a very long time.

3915   bob2356   2010 Sep 19, 8:15am  

The article doesn't say anything about how much sales went down. Up from what? Are they just coming back to a baseline or is this actually an improvement? Pretty meaningless piece of reporting even by Yahoo standards.

3916   Armando148   2010 Sep 19, 12:16pm  

Kevin says

Labor is not a meaningful component of cats cost structure.

Do you have a source for this? I confess not to know much about CAT, but would think labor would account for a significant portion of CAT costs.

3917   B.A.C.A.H.   2010 Sep 19, 3:18pm  

Time to take profit from your gold buillon while you can:

(from http://cpagroup.wordpress.com/2010/04/07/prepare-for-new-1099-misc-requirements-in-2012/ ):

The passage of the Healthcare reform bill included some of the most drastic changes to 1099 information reporting in over a decade. The bill included revenue raising provisions meant to seek greater compliance of the tax code via 1099 information reporting. General provisions included:

The elimination of the corporate exemption from 1099-MISC reporting. (Public Law 111-148)
The requirement to report payments for property (goods, materials, merchandise, supplies, etc.). (Public Law 111-148)
A six-fold increase in penalties from $250,000 to 1.5 million. (H.R.4213, H.R.4849)
A doubling of penalties per record from $50 to $100. (H.R.4213, H.R.4849)
Beginning for payments made after December 31, 2011, companies will be required to furnish and file form 1099-MISC for payments made to all for-profit companies regardless of corporate status. In addition all payments for goods, materials, merchandise, supplies, and other property will need to be reported as well. Early indications reveal that these changes will likely cause the 1099 reporting volume to increase significantly for most companies as well as the associated B-Notices.

3918   Â¥   2010 Sep 19, 4:51pm  

CAT already posted a spectacular 1H10:

Sales:
FY06: 41,517.00
FY07: 44,958.00
FY08: 51,324.00
FY09: 32,396.00

1H09: 17,123.00
1H10: 28,647.00

Not that I know anything about the primary sector of the economy, but this might have the relevance of the price of tea in China to our domestic situation.

Ie. China's sitting on $2T+ of dollar assets and wants to start flexing its overseas production muscles. I've read a bit about their moves in Latin America. This is China's century, we're going to be their little bitches as things unfold.

3919   seaside   2010 Sep 19, 5:22pm  

Is it China, huh?

At least someone is digging up while we're doing craptacular at home.
China has been grabbing money by focusing on exporting and squeezing their people dry. The nation is rich, but the people are not. Can't do the same thing forever. China is trying to turn them into spending based economy. China badly needs such transformation before people realized they are still too poor to buy even after what they've been doing for decades. Japan did this transformation in early 70's, Korea did it in late 80's, and that was what kept them going forward. I think China is taking resources out of latin america preparing for that.

When this transformation done succesfully, the plant of the world as we know of will not be there for us any more. It's not a laughing matter for US.

3920   alraaz   2010 Sep 19, 8:51pm  

I feel the entire point of the quoted article is that it was indeed a great time to buy in 1980 but not anymore. I agree with that in a sense because you have to hope everything keeps going your way for the next 25 years for housing to be a great investment. For example, we have mortgage tax deductions, we have ultra low interest rates, we have government doing all it can to support housing, banks sitting on shadow inventory, an abnormal financial system where you have option to refinance, no prepay penalty, capital gains on housing is waived, etc. All of last 25 years, US govt has done everything it can to prop up housing. And still the result of everything going its way is that housing is "just stable".

I asked my BoA mortgage broker how they can issue loans for 30 years at 4% with refi options, no pre-pay penalty and current bankruptcy laws not allowing lender to go after anything buyer has, etc. He said because they sell it to Fannie Freddie (Govt) and said that there is no way they could find buyers at 4% for these loans in free markets. I don't know whats in the next 25 years but I feel its more probable that we have higher interest rates, more taxes, govt spending cuts in the future. And that is the basic premise of the article that 1980s may have been a great time to buy an American property but do you think it will still be the case in next 25-30 years? What would be the driver? Lower rates, even lower taxes, even more govt stimulus, another tech boom (maybe)?

3921   zzyzzx   2010 Sep 20, 1:55am  

I also think that gold has a long way up to go. However, I have no idea when to sell. I bought at ~$450/oz

3922   EBGuy   2010 Sep 20, 6:59am  

But WTF happened to that area?
No BART = Not part of the Bay Area.

3923   theoakman   2010 Sep 20, 7:23am  

marcus says

oak

marcus says

theoakman says

dollar is poised to drop off the side of the cliff the second interest rates rise

Sounds backwards to me. If there is a causal relationship there, it is the dollar falling off the cliff might cause interest rates to go up.

No, it doesn't matter which one happens first. If interest rates rise and the debt keeps growing, at some point, they result to all out printing to service the debt. They stand no chance of legitimately paying it off through taxation.

3924   marcus   2010 Sep 20, 10:05am  

theoakman says

If interest rates rise and the debt keeps growing, at some point, they result to all out printing to service the debt. They stand no chance of legitimately paying it off through taxation.

I disagree. It's possible but...

All else being equal, interest rates going up causes the dollar to go up against other currencies. It's simple. Say you're money is in Euros and all the short term rates in Europe (and the US) are 2% and suddenly the rates in the US go up to 4%. Dollars suddenly got more desirable than Euros, dollar relative to the Euro goes up in price. This isn't some sort of speculation, it is the way it has always worked.

It's true that it doesn't have to work this way (that's why I said all else being equal). For example if interest rates go up because the dollar is crashing ( the fed is trying to stop the crash with higher rates ) and the perception is that the dollar will continue to crash, then I could see the dollar dropping in spite of the higher interest rates. But that would be unusual.

The question of whether we can get our act together, and start basically living within our means, that is the question of whether we can pay off our debt is a longer term question. And even if "at some point" inflation is a part of how we deal with it, that is different than what you originally said:

the second interest rates rise

But then again, everything is different than ever before this time, so who knows.

3925   tatupu70   2010 Sep 20, 10:59am  

thomas.wong1986 says

Its not a monetary gain going into someones pocket.

Uh--yes it is.

3926   BobbyS   2010 Sep 20, 6:10pm  

WHo knows what will happen. You can find numerous evidence for a rise or drop of gold prices. I myself have a very low tolerance for risk and would stay clear of gambling with gold.

3927   B.A.C.A.H.   2010 Sep 21, 2:23am  

BobbyS,
"gambling" with gold would be like speculating on the price, in whatever units you choose, (USD, Euro, "shares of Dow index", etc). Using it to hedge would be likely because of a very low tolerance for risk. You can argue if it is a good hedge or not, but using it for a hedge is not gambling. Probably not a good hedge if the cost basis is today's price. Certainly has been a great hedge for the USD up till now for folks who "un-gambled" by hedging in it earlier in the decade.

3928   EBGuy   2010 Sep 21, 2:39am  

The point I was trying to make is that the carnage increases the further out you go. It looks like Pittsburg is around a 50% fall from peak. Antioch a bit more than that; I see some of the peak prices there off by 2.5 to 3 times.

3929   theoakman   2010 Sep 21, 6:27am  

BobbyS says

WHo knows what will happen. You can find numerous evidence for a rise or drop of gold prices. I myself have a very low tolerance for risk and would stay clear of gambling with gold.

A lot of the financial communities definition of low risk is USTbills earning 2%. If you asked me, they are the riskiest assets that exist today outside of Japanese Bonds earning 0%.

3930   StillLooking   2010 Sep 21, 6:50am  

I'm heavy in gold and silver at $400 and $6(heavy for my resources anyway) and I ain't selling for the same reason I aint buying a house.

Houses are still too expensive and the government is dead set on trying to raise housing prices which will only raise gold prices.

3931   theoakman   2010 Sep 21, 8:18am  

Nomograph says

theoakman says

Once Gold goes parabolic, I’ll start selling. This has been a healthy bull run with plenty of pullbacks to prevent it from getting out of hand so far. I don’t really need to do any profit taking. I quintupled my net wealth in the past 3 years. Gold would have to fall down to about $200 an oz and someone would have to liquidate my bank account to get me back to square one.

I just replaced the word “gold” with “housing”:
“Once housing goes parabolic, I’ll start selling. This has been a healthy bull run with plenty of pullbacks to prevent it from getting out of hand so far. I don’t really need to do any profit taking. I quintupled my net wealth in the past 3 years. Housing would have to crash to get me back to square one.”

Actually you didn't.

Btw...where were all those pullbacks in the housing market during it's run from 2000-2006?

3932   theoakman   2010 Sep 21, 8:19am  

Nomograph says

theoakman says

Maybe you missed the part above where I said how fun it’s going to be to sell it to all the suckers who will be the last ones in the door. Once Gold goes parabolic, I’ll start selling.

You won’t know when gold goes parabolic until after it happens. How do you know we aren’t sitting at the top of an inverted parabola? You don’t.
An good investor would dollar-profit-average as a hedge. A gambler would try to time the market. Don’t try to make suckers out of people until you’ve assured it won’t be you, Theo.

Weren't you singing this tune around $500 dollars ago? A "good investor" would have missed out on all those gigantic gains I made in mining stocks. And yes, I did take some profit there. I put a lot of it in Potash of Saskatchewan because Marc Faber told me to. Oops. The rest of it went into my down payment.

3933   schmitz_kris   2010 Sep 21, 11:11am  

How is AU a bubble? Look at where interest rates are. Look at debt levels. Look at the various governmental responses to the economic collapse. Look at unemployment. Look at pretty much ANY genuine economic fundamental, and then come back here and tell me that increasing one's holdings of a crisis hedge does not make sense and therefore must be solely rising due to baseless speculative behavior.

3934   klarek   2010 Sep 21, 12:01pm  

I'm not saying it is, I'm saying it very well could be. It's like in 2006 someone saying "How is housing a bubble? Look at interest rates. Look at employment." Gold is extremely speculative and volatile in today's markets.

3935   Â¥   2010 Sep 21, 1:29pm  

I don't know exactly what is being argued about now but I did the math on the upper-bracket stuff.

An upper middle-class couple making $250,000K would see a tax rise of $100/mo.

Nobody gave a shit when my LL jacked my rent $150/mo in 2007 so I'm not crying over that.

An upper-upper middle-class couple making $500,000 will see see an extra $11,000 per year in tax, assuming they don't take their marginal income as dividends (20%) instead as wages (39.6% + 3% medicare).

3936   Vicente   2010 Sep 21, 1:57pm  

It seems to me the Republicans are playing from an old playbook. Before Reagan.

Barry Goldwater in the 1960's. Ultra hardline positions that win you the primary and your staunchest supporters become even more fervent and hyperactive. His most famous quote seems behind their every action these days... "I would remind you that extremism in the defense of liberty is no vice. And let me remind you also that moderation in the pursuit of justice is no virtue."

However he was drop kicked when it came down to the general election.

I find it hilarious reading that Goldwater left politics in the 80's over the increasing influence of the Christian Right in conservatives circles. The one-time ultra-conservative was no longer conservative enough because his pro-liberty stance included abortion.

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