patrick.net

schmitz_kris says

Question for you: Where do you think the gold price would’ve gone had Volker not increased interest rates to 21%+?

ANOTHER question for you: When do you think Bernanke/the Fed will be able to raise rates to even a paltry 5-6%? HINT: Once you go ZIRP it’s EXTREMELY difficult to go back up without imploding the entire system.

So I guess you are saying that Japanese did great buying gold, right after their central bank tried to inflate their way out of a very similar situation.

schmitz_kris says

When do you think Bernanke/the Fed will be able to raise rates to even a paltry 5-6%

IT seems like you are arguing that if we are going to have a gold situation similar to '79-'80, it is many years off, that is after inflation very slowly builds and interest rates follow. Maybe I'll write my post for 10 years from now. I'm going to title it "2020 hindsight."

Well, in those days it was Japan going down, not the entire world. They (the Japanese) had their pick of the USD, GBP, AUD, other Euro currencies, etc. which were being respected at the time (relatively decent interest rates). Paper is far more convenient and mainstream than gold. These days the whole world seems to be in a race to the bottom with currency debasement and trashing. I guess you could argue the tiny ozzie buck is an exception, but guess what commodity that currency is intimately tied to? Yep, gold.

Man sounds like Larry Yun's spin.

tmgbooks.com says

Someday that chicken has got to come home to roost and when it does I believe we will see even more bank failures.

yeah, I've been tracking FAZ every day I don't know if $13 is the bottom, but I do expect it to hit $100.

Well, not "expect" but I wouldn't be surprised to see a total repeat of March 2009 again.

This is not a normal "recession" where we dust ourselves off and the machines come back on.

^ no, I have no money short at this time, and have not been short since early 2009.

FAZ is of course a timing play. I've been watching it bounce between $13 and $18 for months now. Can't pull the trigger, just watching it for fun to see if I can mentally call the corner before it is confirmed.

^ IYF is + 0.5%, SKF is -20% and FAZ is -30% YTD.

Clearly the solution here is to eliminate medicare. All the tea partiers will then die. Two birds, one stone.

I haven't read the whole thread but aren't the numbers of sales per month at record lows? Wouldn't this allow quite large movements in prices based on a very small number of sales? I just don't see the fundamentals (jobs, wages, etc) recovering enough to give long-term price stability.

Are you freaking kidding me? OH man, Man, it is clearly NOT GETTING better, it is getting worse. These manipulated numbers (reporting has changed, come on man)

Rates are still very high by traditional standards but the trend is very clear and in the right direction

It certainly will not vanish to zero overnight. You can still look forward with more forclosures occuring into several years. What ever number went into foreclosure from bottom to peak 1,2,3,4,5% we will simple repeat during the decline, 5,4,3,2,1% for several years.

If n Million homes went into foreclosure, you can bet you will see the another n Million repeating.

There were a large number of foreclosure hitting the market back in mid90s even though the recession was over years prior.

PPete says

how did two companies with cute little names like Fannie and Freddie come to destroy the entire US economy???

They are a symptom but they weren't the agents of destruction.

The bubble and bust was caused by people becoming able to borrow more than they could service.

stated income / stated asset, interest only, "pick a pay" / negative amortization, teaser rates with early refi penalties.

None of this was the GSEs doing, this was a deregulated industry reaching for the brass ring 2002-2006.

Countrywide, Washington Mutual, S&P/Fitch/Moody's, and Wall Street making the CDOs to grease the skids to hell.

http://research.stlouisfed.org/fred2/series/HHMSDODNS

http://en.wikipedia.org/wiki/Fannie_Mae

http://en.wikipedia.org/wiki/Us_housing_bubble#Causes

Here's reality folks.

From CR:

Economist Patrick Newport of IHs Global: “The second homebuyers’ tax credit pumped up demand, and helped stabilize house prices. Now that the tax credits are behind us, the evidence is accumulating that demand for housing is extremely weak. Existing home sales collapsed in July and remained near a 15-year low in August, while new home sales were at near record lows in July and August. The Mortgage Bankers Association’s Purchases Index, which covers activity through mid September, indicates that home sales in September will be nearly as bad as they were in August. Weak demand, combined with a massive housing glut and a high foreclosure rate, will translate into house prices declining about 6-8% over the next year.”

I know that homes in my home town have rebounded, and that there is 3 yrs worth of applications for new housing in front of the planning board right now. We limit the number of new construction homes, so a builder has to get in line early. I'm guessing its just wishfull thinking on their part, they'd rather eat the $200 than be told they just lost a buyer. This is a different pattern than the last 3 years, however, when NOTHING was going on.

There's no way real estate is going up in the next 5-7 years. The idea that foreign investors are going to swoop in and pluck loser homes off the market is a fantasy of a kind I'm not familiar with. The big piles of money are real, but the last time they tried investing in housing it was something safe, like mortgages insured with CDOs. Nothing could go wrong with that. They will invest in real estate in their own country. Rents here will only go as high as people can afford/willing to pay, and that's just about where they are now.

shrekgrinch says

So, home prices are still overpriced.

Gerneralizations like that are not productive. Comparing price to rent for any particular area is useful--do it on a case by case basis.

shrekgrinch says

Renting is still the way to go…only to be re-evaluated when all the mess clears up or when interest rates rise (because that will lower prices sellers can actually get across the board) or both, in my opinion.

Maybe, maybe not. Historically there hasn't been a strong correlation between interest rates and housing prices. Maybe it will change in the future, but it's by no means a sure thing...

For example, homes will NEVER drop below $230,000 on Carey Drive in Concord.
Are you going to the auction on October 13? I know you don't like the home, but are you curious what it will go for (or if the bank just takes it back)?

shrekgrinch says

In 1968, median California homes were selling for $23,210. Adjusted for inflation, that is $145,604.07 today. That was 2.49 times annual household income (calculated with then median household income $9,302).

$318,660 is 5.22 times annual household income today (calculated with current median household income $61,000).

Back in the late 60s banks would only look at the man's income. Mortgage rates were over 7%.

This is not to say that $320,000 isn't too much for a $60,000 income, though the this loan has a monthly outgo of $2200. But not counting principal repayments, its total cost of ownership is only $1200/mo on average over the 30 yr life of the loan.

Buying a house never makes sense unless you consider a large part of the price the premium for escaping the rent escalator.

At any given time renting may be "cheaper" than buying, but EVERY DECADE so far rents have gone UP, making the buy side's speculative premium pay off.

One problem I see with this picture now is that our governmental processes at the state and national level is simply falling apart. Minarchists cheer this on, but I think it's going to bring a lot of pain and outright wealth destruction this decade as much of America gets to find out what a banana republic is all about.

http://www.bloomberg.com/news/2010-09-28/median-household-income-in-u-s-falls-second-year-to-50-221-census-says.html?source=patrick.net#related_categories_tags_top

US median household income has been GOING DOWN for several years in a row now. Census data just out this week shows the most recent decline (last twelve months).

Last year it went down by another 3% on average. Some places in the Rust Belt, such as Michigan, experienced losses of greater than 6% in just the last twelve months.

Those wage stats are correct; however, when millions are laid off and an economy begins to experience high unemployment, wage numbers are not as meaningful (the lower-paid, low-end workers lose their jobs which distorts averages).

For meaningful work it's best to use the US median income numbers.

Additionally, poverty is rising very quickly in the US (most recent report was dire - no getting around it).

Also to consider: Number of Medicaid recipients soars to new record

http://news.yahoo.com/s/ap/20100930/ap_on_bi_ge/us_medicaid

All of the record-breaking these days seems to be on the side of the bears. Or to the bulls if you are talking contrarian investments.

And Closer to home, pulling it out of Ass, BusinessWeek article...

Silicon Valley Wages Decline 14% Since Dot-Com Boom (Correct)
February 02, 2010, 5:52 PM EST

Even after the declines, Silicon Valley’s technology workers earned about 61 percent more than people in the same industry in the rest of the nation in 2008, according to the report.

Silicon Valley Struggling to Keep Competitive Edge, Study Says
February 11, 2010, 4:16 PM EST

“What do we do? A call to action -- so that as we come out of this recession, around technology, talent and policy, we can compete to continue to be the innovation capital,” he said

Thomas, I dunno.

The commute traffic is getting a lot worse around San Jose.

thomas.wong1986 says

The average salary for technology jobs was $103,850 in 2008,
Technology employment in the region about 436,000 in 2008.
Silicon Valley’s technology workers earned about 61 percent more than people in the same industry in the rest of the nation

Sounds pretty good to me.

And for comic relief,
thomas.wong1986 says

Silicon Valley, may lose its competitive advantage to emerging Huntsville, Alabama

Study Finds Sharp Rise in Mortgages 90-Plus Days Delinquent

tatupu70 says

Wages have been going up.
“Real average hourly earnings rose 0.5 percent, seasonally adjusted, from August 2009 to August 2010.”
From http://www.njfac.org/Wage%20report.htm
I know you guys like to state things as fact when you pull it out of your ass, but let’s try to resist the urge..

What a load of nonsense.

U.S. Household Income Falls for 2nd Straight Year, Census Says

sybrib says

And for comic relief,
thomas.wong1986 says

Silicon Valley, may lose its competitive advantage to emerging Huntsville, Alabama

Crap happens!

gameisrigged says

tatupu70 says

Wages have been going up.
“Real average hourly earnings rose 0.5 percent, seasonally adjusted, from August 2009 to August 2010.”
From http://www.njfac.org/Wage%20report.htm
I know you guys like to state things as fact when you pull it out of your ass, but let’s try to resist the urge..

What a load of nonsense.
U.S. Household Income Falls for 2nd Straight Year, Census Says

Nonsense? Of course. The Bureau of Labor Statistics is another fly by night operation.

I agree with Kris though--you have to be careful which numbers you use because you are measuring different things. People who have jobs are still getting raises, but with the high levels of unemployment the median is going down.

tatupu70 says

Wages have been going up.

“Real average hourly earnings rose 0.5 percent, seasonally adjusted, from August 2009 to August 2010.”

From http://www.njfac.org/Wage%20report.htm

I know you guys like to state things as fact when you pull it out of your ass, but let’s try to resist the urge..

Did you read down to the bottom of your own article, the part about household income falling 1% since 2000? Also I really don't believe .5% wage hourly (is the article referring to only hourly workers? what about salaried? this is not at all clear, could you check your own anal orifice please) increase per year represents a true impact on affordability of housing.

bob2356 says

tatupu70 says

Wages have been going up.
“Real average hourly earnings rose 0.5 percent, seasonally adjusted, from August 2009 to August 2010.”
From http://www.njfac.org/Wage%20report.htm
I know you guys like to state things as fact when you pull it out of your ass, but let’s try to resist the urge..

Did you read down to the bottom of your own article, the part about household income falling 1% since 2000? Also I really don’t believe .5% wage hourly (is the article referring to only hourly workers? what about salaried? this is not at all clear, could you check your own anal orifice please) increase per year represents a true impact on affordability of housing.

Like I said--the exact term you use makes a big difference. You said wages. So I posted what wages have done. If you want to talk about household income, that's a different statistic. There is a link to the BLS report on the website which explains their methodology in detail.

I think the headline should read "reported" delinquencies continue to fall". There are more than enough shenanigans in the housing markets to distort the numbers to the optimistic side. Reference http://boombustblog.com/reggie-middleton/2010/07/27/a-new-spin-on-bank-fraud-banks-defrauding-their-invesors-auditors-and-regulators-which-also-helps-delinquent-mortgagees/ which shows one such methodology.

If you compare the banking situation now with that of the Great Depression, you will see more than enough similarities to convince an objective person that we are in the throes of a "banking" depression. Reference http://boombustblog.com/reggie-middleton/2010/10/01/are-we-in-a-banking-depression/ and notice towards the bottom of the article is further evidence that financial institutions are padding the books to prevent further inventory price declines which, if occurred as the market would have it, would invariably spur further delinquencies.

No such thing will be avaliable. Democrats hate affordabe health insurance. It gets in the way of socialized medicine if people can actually afford it.

tatupu70 says

bob2356 says

tatupu70 says

Wages have been going up.

“Real average hourly earnings rose 0.5 percent, seasonally adjusted, from August 2009 to August 2010.”

From http://www.njfac.org/Wage%20report.htm

I know you guys like to state things as fact when you pull it out of your ass, but let’s try to resist the urge..

Did you read down to the bottom of your own article, the part about household income falling 1% since 2000? Also I really don’t believe .5% wage hourly (is the article referring to only hourly workers? what about salaried? this is not at all clear, could you check your own anal orifice please) increase per year represents a true impact on affordability of housing.

Like I said–the exact term you use makes a big difference. You said wages. So I posted what wages have done. If you want to talk about household income, that’s a different statistic. There is a link to the BLS report on the website which explains their methodology in detail.

No offense, but you are fucking retarded.

Anyone who says wages have risen is a fucking retard.

thomas.wong1986 says

sybrib says

And for comic relief,

thomas.wong1986 says

Silicon Valley, may lose its competitive advantage to emerging Huntsville, Alabama

Crap happens!

Comic huh? Laugh while Rome burns I suppose. I lived and worked there on and off twelve years. There is a huge amount of IT going on down there, NASA in the form of Marshall Space Flight center, for example. It's not emerging, it emerged with the space race and Apollo program. The biggest issue is getting people from elsewhere to get over "it's Alabama, like George Wallace, you know ALABAMA!". Often once relocated, they stay for life and love it. I am a wanderer so I have come and gone from there twice. May go back someday. I think it was actually more vibrant in the 90's. But, really there remains a vibrant IT world and at one point the town had the most PhDs per capita in America, all engineers for the most part.

Sanmina-SCI was once SCI and Sanmina separately. SCI was / is a hugely successful Huntsville corporation. Adtran, that's another.

Wow--seems like I hit a nerve there. If you'd like to call the Bureau of Labor Statistics retarded (or fucking retarded), be my guest. Here's their contact info:

http://www.bls.gov/bls/contact.htm

I know you prefer not to deal with actual facts and figures so they are a thorn in your side...

thunderlips11 says

theoakman says

Keiser

…is no mere entertainer, although he is entertaining. He has a host of accomplishments, not the least being an incredibly successful broker and formulating the system for the Hollywood Stock Exchange. He is a gadfly to the pompous assertions made by the usual suspects.
He called the collapse of the Carry Trade and the Icelandic “Geyser” in advance, and did a show on the BBC and Al Jeezera about it:

http://www.youtube.com/watch?v=JjglR2KYz5o&feature=player_embedded
What’s great is this show aired BEFORE the collapse. And several people in it are now in hiding. Notice the arrogance of the Icelandic Free Traders… “We work longer hours… are smarter… have lots of cod.”

Keiser doesn't call anything. He simply follows the predictions of guys that do make the right calls. I didn't say he was a hack. But if you are going to refer to him for predictions, he's simply ripping off the predictions of most of his guests. I usually like to go to the original source when giving someone credit.

thunderlips11 says

Looks like Monetarists around the world are desperately trying to out do each other in currency devaluation. Feel bad for the Swiss.

Monetarists don't preach currency devaluation. They believe that in the end, a nation that devalues their currency through pegging and manipulation will be ultimately force to let the currency rise when inflation kicks in and people vote with their feet. Of course, they are wrong. They never considered the case of the poor 3rd world worker who earns a nickel an hour. These people can hold out for generations before they demand their currency/wages rise. China is going on about 30 years now? According to the Monetarists, this was only supposed to last a few years at most and the Chinese and Mexican workers would be thriving in equality with the American middle class.

The big fans of currency devaluation are Keynesians. They love an engine of government spending (which is what the printing press is) and they believe the benefit is threefold. They believe it is beneficial to wipe out debt through inflation and they also believe that currency devaluation is always the path to recovery because it can allow you to export your problems away by subsidizing your export market. Of course, they are wrong as well. They never considered the case of the poor 3rd world worker who earns a nickel an hour. The Keynesian solution won't work until their actions bring the American worker's wage down to a nickel an hour as well.

These are your university professors and so called experts. They put forth untested theories based on completely false dogma and manipulated statistics. They completely lack common sense. Yet, they are here to stay and indoctrinate future university students teaching them that the solution to the 6 billion body problem involves a total of 4 variables, one of which we can assume to be fixed. How they ever managed to gain any sort of credibility is beyond my ability to comprehend.

I think it's pretty hard for us to see the whole picture. The big picture. What if what's best for the year 2150, or 2500, or 3000, isn't what's best for certain groups right now ? Not that anyone is actually looking at that.
And while I don't claim to know the answer, it seems to me that the question of whether globalism is good, or whether we should practice protectionism is actually a long term question.

That is, either a somewhat united world, under a global umbrella government is inevitable or it's not.

For some, I think the idea of Armageddon happening in the next century or two is far more appealing. It makes it easy for them to not even consider such troubling long term questions.

theoakman says

According to the Monetarists, this was only supposed to last a few years at most and the Chinese and Mexican workers would be thriving in equality with the American middle class.

Sure. Like it's possible for several billion to live and consume (long term) the way that we have. Maybe you could show us where Friedman ever said anything so silly. Not that I'm a big fan.

not calif - but she's quite conservative from what i hear.

theoakman says

Less we forget George Bush, Bill Clinton, and Al Gore dragging Ross Perot’s name through the mud while he was trying to save the jobs of America.

Ross was a heck of guy! Scared the crap of the dingbats politicans. We could use a guy like that right now.