patrick.net

Welcome back, Randy!

What sucks is that we’re all going to be waiting longer because of it. Japan Redux.

Yep. Japan but without the good sushi.

I think prices should get within 10% of the true bottom in about a year, but they may stay there for another few years.

This year should be a great year for traders.

Not investment advice.

Keeping people in failing mortgages will not help them. They are still stuck with bad assets. If they are allowed to foreclosure at least they will have more cash to spend in the economy.

I haven't been trading much lately. I'm busier now than anytime ever in the past 19 years. The worse things get, the more my consulting seems to be in demand. It's a bittersweet reward.

I still don't see a "bottom" in housing until 2011-2012, and then a half decade of slogging along the bottom +/- inflation/deflation.

The worse things get, the more my consulting seems to be in demand. It’s a bittersweet reward.

Why bittersweet? Schadenfreude is bittersweet. Being in demand is super sweet in any day. :)

Screw the world. It asked for its own troubles.

Let's hope our fine Republicans in the state senate are able to hold off those outrageous tax hikes. I rather see complete annihilation than tax hikes!!!

Housing will be in a zombie mode due to strong government intervention.

But overall economy wise, we are not going to be Japan. What will happen is, lots of banks are holding phantom housing inventory with low transaction volume for years, so as to protect their "book value" of asset. But people in the real world still need to eat, drink, poo and pee, and that real world economy cannot possibly drag on for much longer.

Btw, I found Valentine Day weekend to be extraordinarily busy both at shopping mall or restaurants, is it an indication of short-term bottom, or an indication of desperation of our kind to secure good sex?

Btw, I found Valentine Day weekend to be extraordinarily busy both at shopping mall or restaurants, is it an indication of short-term bottom, or an indication of desperation of our kind to secure good sex?

Perhaps they are just trying to rage, rage against the dying of the light. :)

(Though wise men at their end know dark is right)

or was it just the long weekend with valentine day?

The Silly Valley has yet to feel the wrath of the recession.

I think it is coming soon, I can feel it in my bones.

I can feel it in my eyes. Do you guys have ways to relax a strained eye?

Dunno, maybe less computer time helps.

Dunno, maybe less computer time helps.

I wish.

http://www.spiegel.de/international/world/0,1518,607840,00.html

Here is another reason why globalization has gone too far and must be put to a stop.

I need to get a geiger counter for all my appliances and recently acquired stainless steel stuff. Used to think made-in-Germany should be fine, but nowadays you can trust nobody except for the food you grow yourself.

Here is another reason why globalization has gone too far and must be put to a stop.

No, it is not.

Caveat emptor. With globalization or not.

I believe unemployment and underemployment still have far to go and together with continued tightening of credit subsequently will put much more downward pressure on prices.

I'm shorting S&P and financials in general and some specific names. I don't
see a bottom coming in this year unless of course Obama et al come to their senses.

OO says,

lots of banks are holding phantom housing inventory

What exactly do you mean? Are they holding less then they claim? What advantage is it to do so?

What is the best strategy to avoid getting short-squeezed? Do you guys use trailing stops? Or do you just buy gamma? How do you manage your trading psychology?

phantom housing inventory = inventory inaccessible to home buyers ?

I definitely use buy stops and I also look at short interest and days to cover as indicators. For financials in general and S&P, I simply use SKF and SDS with stop limits. Not very sophisticated at all I know, but it has served me well the past few years.

OO,

I would be very concerned about the radio active Cobalt in that steel. That Cobalt is a gamma emitter that is one of the worst radio isotopes you can run into. The problem with Cobalt is the energy of the gamma is low enough to interfere with biologic tissue, but high enough in energy to do lots of damage. The higher energy gammas will actually do less damage because they tend to go right through you.

I actually laughed when I saw people concerned about the granite counter tops. That radiation is harmless if it remains an external source (don't eat the granite).

Not very sophisticated at all I know, but it has served me well the past few years.

Hey, simplicity works. :)

Do you trade every down swing or do you tend to hold on for weeks?

Do you trade every down swing or do you tend to hold on for weeks?

No general rule there... depends on the name and circumstances at the time.

For instance, SKF was a great buy recently at ~120 and is a good buy right now with the [almost] inevitable nationalization of Citi and BofA on the horizon (and don't forget all the smaller banks yet to go under).

S&P500 at 800 is just plain insane and I feel comfortable holding SDS for as long as it takes to realize at least an additional 50% increase from here.

phantom housing inventory are those houses technically in foreclosure but kept off the foreclosure through re-org, interest forgiveness, government buy-out, or simple neglect by the banks. They won't be auctioned off.

It is like the bad corporate loans in Japan. As long as the debtor doesn't fold, even if he is not paying a cent, banks will still classify such as a "performing loan". By the same token, US banks will try their best with the help of government to classify all near default or already-defaulted mortgage as "performing mortgage". That's why all the TPTBs are talking about "KEEPING people in their homes". The verbage is very interesting here, why not encourage, why not facilitate, but keep?

Stainless steel: It should perhaps be pointed out that stainless steel is not inherently radioactive. The background story appears to be that there have been three batches of *contaminated* stainless steel that was manufactured in India, and now has to some extent spread around the globe.

Apologies for not following the original link before posting.

I read the rest of the posting (by OO) as being a complaint about the quality of German Geiger counters. I realize now that was not the intent :-).

There have been cases in the USA where a radioactive source was "scrapped" and created a huge mess. The amount of money required to clean up these big messes are much larger than what most companies could afford to pay for.

It is like taking a big smelly piece of dog shit and throwing it in with the peanut butter mixing equipment. It just gets mixed up in the batter and contaminates the whole batch.

I was watching Charlie Rose earlier and they were talking about the 75B bailout for housing. A couple of the guests on the show agreed that they will eventually write down the principle of the mortgage but first there will be a push to get folks into a better loan. Common sense tells most people that this wont work but it's clear that it's a political move by Obama. He plans to move fast enough that people wont have time to think.
I'm starting to think that we are watching the colapse of capitalism.
Obama is starting to look like a very dangerous man.

The smug Obama loving liberals that like to throw money at their problems are going to get a lesson on how to really throw money around.
It's ironic that the middle to upper middle class liberals are the ones that will pay the bill for this.

Within the next two years, the goverment is going to step in and forgive the debt owed on houses that is above the value of the home. House that are "underwater" will be re-valued at whatever the current market is. The owner will be issued a new mortgage based on that current market value.

It seems to me that by then, the goverment will own the banks and therefore own the housing. It will be the way Russia was in that you will pay for government housing. Instead of living in the projects, like the south side of Chicago, you will live in the suburbs of Pheonix(Mesa) or the central valley of California.

So why buy a house now?

empty_houses:

Dude, it was the Republican party that presided over, and indeed brought on, the collapse of capitalism. Obama unfortunately got the ugly job of cleaning up the mess and healing a very sick patient.

And there is nothing smug about it. There are VERY few people that are pleased about what happened. It is an absolute disaster, and I for one would much rather have seen the housing bubble never occurring in the first place.

Nationalizing the banks? Yes, it appears to be the only way out that does not permanently stick the taxpayers with the bill. Even "Easy Al" Greenspan and prominent Republicans are now talking about following the swedish model.

The losses of the banks must be paid from future profits. When banks have worked off their losses, they can go private again, but this time under proper regulation.

Not to mention the new private banks that will naturally be formed.

What I've always been thinking is, where did the scrap metal for Russian nuclear plants go? Particularly after the USSR breakdown, like someone was going to enforce the safety guidelines in the cleanup?

The Indian contamination was obviously caused by their sloppy enforcement, and noticed the iron ore price just a year ago? Scrap metal price went through the roof and I won't be surprised that someone there just thought reselling scrap metal from nuclear plants was a "profitable" idea.

Now, if iron ore price was going to rise again (for some strange reason) in the not-so-distant future, with a global depression in place, you can count on nuclear plants scrap metal going into circulation in a big way again, and the US won't be spared, not because we import, but because there are enough poor people out there stealing rail track, public signboard for the scrap metal value.

Maybe switching to clay pot is not a bad idea

in firefox: ctrl- +

Thanks!

This guy says that if we let Citi and BofA die, we could bail out the rest of the banks with the original TARP funds:

http://seekingalpha.com/article/121245-rating-the-top-12-u-s-banks-from-hidden-gems-to-zombies

Anyone who wants to discuss the Irresponsible Homedebtors Act of 2009 is invited to my Capitalism 2.0 thread on it.

The only thing we should do about the flood of foreclosures is to speed up the processing of foreclosures. Get the National Guard involved and throw non-paying homedebtors on the street.

The only way we can see a bottom soon is for us to allow the market to face reality as quickly as possible.

As I have said before, 8 more years of Bush would be vastly superior to 4 years of Obama. But anyway...

Can we fast forward to 2012 please? I rather have Prez Palin.

Justme
I just think that the market would equalize on it's own. Obama is playing a game that is going to make things worse. His idea's wont work and they've been tried before. Politics have taken over. It's all about paying people off and securing the next election. He's going to have trouble soon though. He blew his chance to reach across the aisle. He's got some major programs coming up soon that he will need support for from the republicans.
I realize that as a politician he had to do something. He could not set back and watch the laws of economics take their course. The people that elected him had too many expectations. Now, people are trying to figure out where the handouts are. They want to know what line to get in and where the line is going to be.

I gave up Obama after he agreed to vote on TARP without any safeguard to tax payers. Of course he is already talking about 2012. That is his only job.

The responsibility for the big holes in the TARP lie with Henry "3-page" Paulson and George Bush. Lest anyone forgets.

OO Says:

> Btw, I found Valentine Day weekend to be extraordinarily
> busy both at shopping mall or restaurants, is it an indication
> of short-term bottom, or an indication of desperation of
> our kind to secure good sex?

I was up in the Napa Valley over Valentine's Day weekend and I have never seen it this dead. We were at Meadowood and the place felt about 25% full with very few diners with us for lunch in the grill and dinner upstairs on Friday night. There was a good crowd at Martini House on Valentines Day, but not a lot of people around on Saturday and Sunday in St. Helena and Yountvill (even with the extra people out to watch the TOC roll through)...

P.S. Welcome back Randy (and it would be nice if we got new threads more than twice a month)...