patrick.net

Or maybe the economy really isn't as fucked as you doom and gloomers think and we're simply ending a recession.

Kevin says

Or maybe the economy really isn't as fucked as you doom and gloomers think and we're simply ending a recession.

Possible too. The numbers just don't make any damn sense, but I guess that being the world's reserve currency does allow more leeway in printing cash to pay our debts. We won't really know for another 10 years or so when a really big percentage of baby boomers start trying to retire on under-funded pensions and insolvent SS/medicare.

Given the fact that the interest on our debt alone outstrips tax revenue, I'd say that something needs to change. As of now, I am pretty sure that we won't see tax increases or spending cuts. The can will be kicked down the road. Maybe we'll get lucky and everyone will just quietly accept a lower standard of living and we won't have some sort of big bad financial event. Nobody knows for sure. Based just on the numbers though, things look pretty hairy. It'll be fun to see what sort of financial wizardry is unleashed to "fix" our problems.

bmwman91 says

Kevin says

Or maybe the economy really isn't as fucked as you doom and gloomers think and we're simply ending a recession.

Possible too. The numbers just don't make any damn sense, but I guess that being the world's reserve currency does allow more leeway in printing cash to pay our debts. We won't really know for another 10 years or so when a really big percentage of baby boomers start trying to retire on under-funded pensions and insolvent SS/medicare.

But a million other things could be different then.

Unless you've figured out a good way to take advantage of the negative stuff, and can time it, just being negative all the time does nothing but put you further and further behind financially. I guess you could sell books like some people but that's pretty hard.

If you believe what Schiff is saying, put your money where your mouth is. Short stocks. Buy gold. Invest in canned meat and handguns. Whatever.

If you don't, buy a house, buy some stocks, maybe take a vacation and enjoy life.

Most of the doom and gloomers around here just seem to be people who have no money and are trying to justify their inability to make any financial investments. They're saying the same things today that they were saying when I first created my account 3 and a half years ago, despite the whole world having changed so rapidly.

I agree with Schiff's general message, but as some have said, a broken clock is right twice a day. I am suspicious of anyone that starts claiming timelines for this stuff. Something is going to have to happen to settle the budget, but the can can be kicked down the road for longer than most perma-bears think.

Being bearish on the economy certainly does not guarantee that one will be behind financially. You just invest in different things, generally things like your own skills and education. I stay out of stocks and RE because I see it as the exact same thing as going to Las Vegas and plunking cash down on red. I do max out 401k contributions since my employer matches handsomely, but I have stuff allocated in large funds that are professionally managed because I have better things to do with my time than manage money. Living life, as you say, is top priority. My wife and I stash away almost 70% of our monthly net income, after 401k contributions. When we want vacations, toys, whatever, we pay cash. When we decide to get a house, we will be putting at least 50% down. People call having cash savings and no debt foolish because of inflation. The fact that this mentality is so rampant is all the reason I need to stay out of the "smart" investments. I COULD do what some on here are doing and buy up residential RE to rent out, but that would be a full time job. I already have one that pays a hell of a lot more than that, and knowing that I will not be able to maintain my income to the same age that someone with a bunch of house rentals will, I stash most of it away since I'll need it later in life. Same net effect, different approach.

Cash might be getting boned by inflation right now, but equities are too risky too, in my opinion. The market is heavily manipulated, and over-valued in my opinion. I make enough money right now that I don't really give a shit anyway. I could quit working and live off of my cash for the next 5-7 years if I wanted to with no changes to my quality of life. That's not part of the plan though.

I'd love to have a house (actually, just a garage). Woodworking, metalworking, speaker building, engine builds, beer brewing, etc would all be much easier to do in a house. Not having shared walls is sort of a big deal given my interest in building audio equipment too. But, I look around this place that I grew up and I refuse to be a part of the insanity that is rampant here again. Boom and bust, same shit different day. I'll continue hoarding cash and make my move when the time is right. The right time is certainly not now, and probably not for another 5 years with the way things are picking up. I have enough family in the area, with full machine shops and wood shops, that I can keep renting on the cheap while getting to partake in all of my hobbies while spending quality time with those that I care about. The rest of my generation can run around with their pants on fire having money-spending battles to buy overvalued houses over the next few years, and I'll either pick one up during the next bust or move elsewhere. My wife and I weren't ready to make a move 12 months ago and we obviously missed the bottom here. I fully intend to be self-employed in the next 10 years since that's a type of investment that is directly impacted by my own hard work and effort, unlike stocks and an overpriced house, so I have that to focus on anyway.

Being bearish about the economy does not mean that one doesn't have a good time in life. Some bears are miserable bitches, but so are lots of bulls that are constantly "managing their money."

Mark D says

i already "debated" his ideas. "a broken clock is right twice a day." that's all that was needed to reveal his fraudulent scheme.

That's not debating his ideas. That's simply being dismissive.

See, as much as you accuse others of being"doomers", you can't even properly address one single point of Schiff's theory in an intelligent manner.

What does that make you?

robertoaribas says

HousingBoom says

There aren't very many experts who have a better track record than Schiff.

ridiculous statement. In just 1 minute on youtube I posted 2 videos above with him making specific statements with dates. 100% wrong in both cases. Anybody who invested based on his advice got reamed.

I bought silver since 2009 because of Schiff. I am up over 100%. ;-)

HousingBoom says

lol. It was at $49 before it corrected. I'm still up over 100% as of today. Schiff is not a trader. Silver has been my first and only investment so far. Not very many people can say that they are up over 100%. Thank you Mr. Schiff

I'm also a silver investor.

+1 for not being a dumb sheep holding worthless fiat currency.

robertoaribas says

2002 full of shiff says dow below 2000... yeah... interest through the roof...

how well did any investor listening to this dipstick in 2002 do?

I did very well with gold and silver. WTF ar you talking about?

Billybigrig says

Even if he is off by one year lets say, there is still a lot risk to hang on until that last year.

What if he's off by 20? What if he's just totally wrong like he has been in every prediction except for one?

Goran_K says

He's painting a scenario where housing will crash based on the following factors:
- Weak employment figures
- Very weak hiring forecast
- Lower than expected earnings reports
- Dollar being devalued
- Fiscal cliff coming
- Taxes rising

In 2006 we had:

1. Low unemployment and it was trending lower as we approached 2007
2. Higher than expected earnings, with stocks trending higher as we approached 2007
3. Historically low taxes

2006 was also the peak for C/S.

Is the time to buy when everything is peaches and rosy?

Greenspan handed out plums to get people to plant carrots. Now benjamin bunny harvests their carrots while they get food stamps. Maybe he will use the carrots to motivate some smart new rabbits to do something interesting. Or feed the old rabbits so they don't off him. Most likely the carrots are rotting while he hoards them. I think they euphemistically refer to it as giving them 'the business cycle'.

Goran_K says

Mark D says

i already "debated" his ideas. "a broken clock is right twice a day." that's all that was needed to reveal his fraudulent scheme.

That's not debating his ideas. That's simply being dismissive.

See, as much as you accuse others of being"doomers", you can't even properly address one single point of Schiff's theory in an intelligent manner.

What does that make you?

doesn't look like you understood what was said. lets see some receipts first and we'll talk.

HousingBoom says

robertoaribas says

HousingBoom says

There aren't very many experts who have a better track record than Schiff.

ridiculous statement. In just 1 minute on youtube I posted 2 videos above with him making specific statements with dates. 100% wrong in both cases. Anybody who invested based on his advice got reamed.

I bought silver since 2009 because of Schiff. I am up over 100%. ;-)

you forgot to mention that he advised people to buy gold at $1900 as well.

Mark D says

HousingBoom says

robertoaribas says

HousingBoom says

There aren't very many experts who have a better track record than Schiff.

ridiculous statement. In just 1 minute on youtube I posted 2 videos above with him making specific statements with dates. 100% wrong in both cases. Anybody who invested based on his advice got reamed.

I bought silver since 2009 because of Schiff. I am up over 100%. ;-)

you forgot to mention that he advised people to buy gold at $1900 as well.

I think you're just jealous that I bought silver at $13 =) Keep hating!

HousingBoom says

Mark D says

HousingBoom says

robertoaribas says

HousingBoom says

There aren't very many experts who have a better track record than Schiff.

ridiculous statement. In just 1 minute on youtube I posted 2 videos above with him making specific statements with dates. 100% wrong in both cases. Anybody who invested based on his advice got reamed.

I bought silver since 2009 because of Schiff. I am up over 100%. ;-)

you forgot to mention that he advised people to buy gold at $1900 as well.

I think you're just jealous that I bought silver at $13 =) Keep hating!

no i'm not jealous. good for you if you made money on silver. but if you are a Schiff regular listener (I used to), you can't honestly say that you would make any money if you followed his advice 100% of the time. can you?

zesta says

In 2006 we had:

1. Low unemployment and it was trending lower as we approached 2007
2. Higher than expected earnings, with stocks trending higher as we approached 2007
3. Historically low taxes

2006 was also the peak for C/S.

Is the time to buy when everything is peaches and rosy?

So put it together zesta. 2006 lead to the biggest crash in RE history because of bubble pricing, and artificially giving away easy credit. 2012 has a dying economy, and the government is artificially propping up the credit markets by buying MBS.

Both booms, the big one, and the current mini-one were fueled by cheap money. Except a crash this time would be worse (as Peter points out) because of our weakened economy.

You're actually arguing Peter's point for him.

Mark D says

no i'm not jealous. good for you if you made money on silver. but if you are a Schiff regular listener (I used to), you can't honestly say that you would make any money if you followed his advice 100% of the time. can you?

I never listened to Schiff on a daily basis but from what I do know, he likes to invest against the US dollar. His investments will lose if the US dollar rallies.

HousingBoom says

I never listened to Schiff on a daily basis but from what I do know, he likes to invest against the US dollar. His investments will lose if the US dollar rallies.

Pretty much. That's why his gold call was so successful in early 2000. The U.S has been devaluing the dollar for over a decade.

Goran_K says

Both booms, the big one, and the current mini-one were fueled by cheap money. Except a crash this time would be worse (as Peter points out) because of our weakened economy.

So if you believe cheap money is the reason that you're predicting crash, then argue that point.

Obviously unemployment figures, hiring rates, corporate profits, tax rates don't have any bearing on which way you believe housing is going; you and Schiff are bearish either way.

zesta says

So if you believe cheap money is the reason that you're predicting crash, then argue that point.

Hey genius, that's SCHIFF's entire theory, not mine (though I agree with a lot of what he said). He thinks 1) There wil be a crash because of cheap money fueling home prices just like in 2006, AND 2)the crash will be WORSE because of those weak economic factors compared to 2006 (when the economy was relatively stronger). What about his theory do you agree/disagree with?

Did you even take the time to listen to the video, or did you just come in here to flirt with me?

Obviously unemployment figures, hiring rates, corporate profits, tax rates don't have any bearing on which way you believe housing is going; you and Schiff are bearish either way.

Unemployment has been high for 4 years, earnings reports are down, and taxes are rising.

Where DO YOU think that puts the housing market's future?

It just means the bailout will be even bigger this time.

Peter P says

It just means the bailout will be even bigger this time.

I highly doubt that. We would have a full on revolution if that happened. The first bailout lead to the Occupy Movement. A second might result in nation wide rioting.

Goran_K says

HousingBoom says

I never listened to Schiff on a daily basis but from what I do know, he likes to invest against the US dollar. His investments will lose if the US dollar rallies.

Pretty much. That's why his gold call was so successful in early 2000. The U.S has been devaluing the dollar for over a decade.

it's certainly stupid to believe in a guy who has been wrong every year since the crash. there have always bad news in the economy for past few years but do they lead to a crash as Schiff predicted every year? it's common sense.

if you actually listen to his show you can certainly tell he dumbs down his audience by telling them half truths most of the time. of course most of his audience do not realize that.

how there is a small chance that he may get it right this time, but that's only he's throwing out gloom & doom predictions every year so eventually he gets one right. it doesn't mean he has Nostradamus power.

now why would anyone believe in gloom & doom predictions from a long time GOLD SELLER is beyond me.

Are you actually going to address his points in the video or are you going to just trash the guy because he doesn't support your agenda of boosting housing?

Try to inject some intellectual thought into your post. What you're doing now is the equivalent to "we don't take kindly to your kind in these parts" for Patrick.net.

Goran_K says

Are you actually going to address his points in the video or are you going to just trash the guy because he doesn't support your agenda of boosting housing?

Try to inject some intellectual thought into your post. What you're doing now is the equivalent to "we don't take kindly to your kind in these parts" for Patrick.net.

i could say the same thing about you, you are trumping him up because he supports your housing agenda. see the irony?

you need to be able to comprehend what people have been saying before you can engage in any intelligent debate. it's hard to take you seriously when you keep missing the point: why would he be right this year when he has been wrong every single year since the crash? address that. show you are capable of an intelligent discussion.

Schiff is the typical anti-government nitwit and that ideological position is preventing him from understanding reality.

The reality of our situation is that the Feds have an IMMENSE amount of power to draw this process out a very very long time. I can't begin to describe all the BS they can bring to bear.

Note I didn't say "fix this". To do that will require the American people giving up this idea that we can get $6.5T in government spending with only $5T in taxes, and that's not a dream that's going to die easy.

http://research.stlouisfed.org/fred2/graph/?g=d5d

Complicating matters is that nearly all of the ROW is as screwed up as we are.

Even Germany is screwed in its own special way.

People think Japan is screwed but who the hell really knows. They had a $6B trade deficit last month -- something of a new experience for them -- but also had $12B net income from their foreign investments to pay for it. That's a tough problem to have, more money coming in than you know what to do with.

Bellingham Bill says

Schiff is the typical anti-government nitwit and that ideological position is preventing him from understanding reality.

exactly. this is what his listeners didn't take into account. if they looked up his family history they'll know why he's so anti-gov.

here's one example of his bias: go back to his podcasts during the last two weeks, find the one where he talks about Australia and Japan devaluing their currencies and listen to his spin on that. he's saying that they did that because they "felt bad" for the U.S when the reality was that they wanted to keep/boot their exports.

his position has always been that; the U.S gov is the most horrible gov on earth, the economy is facing an eminent crash (every year) and everywhere else is so much better.

i too was impressed by his prediction of the housing crash but the more one listens to his show, the more they can see his biases against the U.S.

Mark D says

i could say the same thing about you, you are trumping him up because he supports your housing agenda. see the irony?

you need to be able to comprehend what people have been saying before you can engage in any intelligent debate. it's hard to take you seriously when you keep missing the point: why would he be right this year when he has been wrong every single year since the crash? address that. show you are capable of an intelligent discussion.

I get along well with many people on this board who are housing bulls/investors but they are at least willing to discuss points. You know, the points of discussion?

From all of your post in this thread, it's impossible to ascertain whether you actually watched the video being discussed because you have barely made reference to anything said within it. That's called trolling on many communities.

Goran_K says

Mark D says

i could say the same thing about you, you are trumping him up because he supports your housing agenda. see the irony?

you need to be able to comprehend what people have been saying before you can engage in any intelligent debate. it's hard to take you seriously when you keep missing the point: why would he be right this year when he has been wrong every single year since the crash? address that. show you are capable of an intelligent discussion.

I get along well with many people on this board who are housing bulls/investors but they are at least willing to discuss points. You know, the points of discussion?

From all of your post in this thread, it's impossible to ascertain whether you actually watched the video being discussed because you have barely made reference to anything said within it. That's called trolling on many communities.

you mean one needs to watch his video to find out what's being said in the video? really? he's been repeating the same things for many years now, along with many predictions, none of which came true. in fact, one must have some kind of memory deficiencies if they need watch the video in order to find out what he says.

most people can tell what he is going to say before he even says it. that's how predictable he is.

address my points first and you may be taken seriously. until then you are a troll wishing housing would crash so you can buy it for cheap. are you war/darrel/liarwatch?

Goran_K says

Both booms, the big one, and the current mini-one were fueled by cheap money. Except a crash this time would be worse (as Peter points out) because of our weakened economy

I didn't watch the video, I read the text article pimping his book, complete with a referral link to Amazon.

Lending standards have toughened up considerably since 2006. Foreclosures and defaults are declining.

Unemployment is improving as is consumer confidence. Real disposable personal income is up 2% YOY. Car sales are back up. The economy is improving.

Schiff's main argument for impending doom is hyperinflation, and the numbers don't bear it out.

Beyond the obviously low inflation numbers:

- The bond market is still exceptionally low, and investors are still flocking to US Treasuries.

- Since the US prints it's own currencies and is the de-facto global reserve currency, the only way we'd hyper-inflate is if people believed we'd default on our debt. Given that the US infrastructure and economy is strong, and there's still a lot more room for taxes, there's no reason to believe we're anywhere near a default.

@zesta: Goran_K is a resident troll here. he doesn't care for facts or reasons. he's like that guy war/darrel who keeps repeating the same nonsense, counter-productive arguments at this site. could be the same person.

zesta says

Unemployment is improving as is consumer confidence. Real disposable personal income is up 2% YOY. Car sales are back up. The economy is improving.

I'll agree that there are indicators showing that consumer confidence is improving, but .02 growth in disposable income is almost laughable compared to the current household debt ratio. Also none of that "confidence" is trickling into housing as the MBA Purchase mortgage index just reported another 2% down month-over-month (we're already at mid-90s levels). Buying an Apple IPad is a lot different than buying an over priced house.

On top of that hiring forecast, earnings reports, and non-existant wage growth show that this current run is highly suspect as a "true" recovery.

If I can refinance an existing debt for half the cost, I effectively have less debt.

Absolute value of debt is less important because this isn't 1920 and banks can't call notes due.

If I go from paying $2000 a month to $1000, the risk of default goes down and my disposable income goes up. Ignoring this is a great way to make terrible decisions based on the economy.

If interest rates were zero, debt would literally not matter because you'd just keep reissuing indefinitely.

Darrell In Phoenix says

When you borrow an inflated amount for a rapidly depreciating asset

Sigh. Housing does not "rapidly depreciate".

For one, the land component does not depreciate at all, unless you live on an active volcano or on an eroding seacliff (or, alas, the ghetto comes and gets your neighborhood!)

The fixed improvement -- sticks and bricks -- lasts 50+ years in most temperate areas, and inflation here tends to also mitigate depreciation.

The bottom line is that at 3% mortgage rates it makes more sense to buy a $700,000 house than rent one for $2000/mo.

Now, this will change if for some strange reason this nation decides to double the tax rate like we need to.

But we're not going to do that unless we're forced to, and nobody can make us.

Darrell In Phoenix says

Houses depreciate ALWAYS.

NOPE.

My parents paid $60,000 for their house in 1980. Worth more than that now, LOL.

And as for the fixed part, the actual decay of the materials is not "rapid" as you asserted.

The shake roof lasted 25 years for instance.

Darrell In Phoenix says

like ALL manmade items.

"Depreciate" here means goes down in value.

My parents house has not gone down in value, thanks to inflation outpacing the decay of the fixed improvements.

What was $60,000 in 1980 is $150,000 now. That's a 3% pa compounding rate of inflation. With a 50 year service life, that's a 2% pa non-compounding rate of depreciation.

Darrell In Phoenix says

ALWAYS
like ALL manmade items.

Land isn't a man made item. Or did you foget that?

When acquire title, the real value of the title is the power -- backed by the State -- to say who gets to use that real estate.

Darrell In Phoenix says

Considering 95% of the globe is undeveloped, it's essentially worthless. If you're paying more than $500-1,000/acre, you're getting ripped off.

Good point. I'm sure 1 acre lots in the Pacific Ocean are very reasonable.

Darrell In Phoenix says

Considering 95% of the globe is undeveloped, it's essentially worthless.

This guy is the biggest troll I've ever seen.

Or the most reality-challenged.

Yes, land in Gila Bend is going for under $4000 per acre:

http://www.redfin.com/AZ/Gila-Bend/0000-UNDETERMINED-85337/unit-0/home/40366054

this is because the economic potential of that land -- its NPV of all future rents, is around that.

Thing is, until either a virtual economy is perfected, or teleportation technology comes along, land has immense site value.

Site value is simply the value of whatever is OUTSIDE the lot lines. It is the value of the location, what that location can access, plus any scenic views it may possess.

What is the value of a beachside residence? How much would you pay to see the sunset off your balcony every night for the rest of your life?

More prosaicly, people also pay to be able to find work in a given local economy, and also good schools for the kids, safety at night from criminals, etc.