patrick.net

It will be a tough year.
I think by the time 2010 is done, Iran get the bomb and Citibank goes bankrupt.
The government continues to props up market, prices stay mostly flat, or decline slowly.
No economic recovery in sight.

Bernanke does not abandon QE but doubles down with QE2, pushing 30-year fixed mortgage rates to 2.5%.

2010 Affordable Homes Act turns mortgage interest from a deduction to a straight tax credit, raises the FHA limit to $2M, sets required down payment at 2%, which is provided directly by the Fed not the buyer.

This results in a $750,000 property having a PITI of under $3000 and thus raises 2009 values up $200,000 across the board. And the housing market is saved as nobody is under water any more, not even Casey Serin.

Unfortunately, only the lower middle class and the middle upper class need to pay income taxes any more and the $1T deficit becomes $2T.

Worst decade ever? Not for long.

Not investment advice.

In May 2000 I moved back from Japan. Not one of my smoother moves, not that Japan is doing any great shakes now.

As we stand ready to enter the 2010s, two great forces are in collision -- deflation and inflation.

It is a battle of pricing power. Some producers have it -- OPEC, doctors, lawyers, accountants, gummint workers, but J6P certainly doesn't.

Certainly every consumer goods producer has tons of surplus capacity now. The question is whether they can or will lower prices. A walk through the grocery store tells me they are quite hesitant to do so, and so their products have fewer turns.

Whither J6P's wages? It is the story of the decade. MZM more than doubled this past decade:

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

yet J6p didn't see any of this money. It can double again, and he prolly won't see any of /that/ either.

It's a loveless Wagon. I understand the Lefts demented thinking, but I am disappointed in the constituents. The Democrats in Washington want to ride History on Obama's coat tails, they will try to pass anything that will get their name the bill that changed America. They know with the fullest heart that this Bill in it's current incarnation is the biggest terd yet. The Dems rejected far better ideas from the Reps and Reps have refuse far better versions from the Dems. The Dems are trying to give this bill an extra punch by affording history the ability to say, "Obama got done in the first year" Now the sad pathetic part is, constituents and politicians alike actually believe that a Mandated insurance premium on the Middle class. Will actually lead to National health care system down the road. This is the same Mentality that thought House prices only go up and never goes down, and Gold will be 2000. We're a disappointing sad and pathetic lot. The past few years have helped me tremendously. I've been walking through life with a genuine disdain for most of my fellow Americans. It's like 50 years of eating paint chips has finally caught up with the gene pool. I've been told that, it is not healthy going through life with a perplexed magnanimity. But it's O.K. I'm on a deserted island.

I did support the idea, but it feels like "whatever" rignt now. The bill has been tossed a lot and I don't know what the bill is about any more.

I support Universal Health Care with high deductibles. More regulations on a broken system will break it some more. We need Tort Reform.

thunderlips11 says

Just to add, typically at the bottom of a Bear Market the average P/E ratios decline significantly, usually well below 15.

Yes, but this is obviously not the bottom anymore--stocks have risen 30+% over the lowpoint of the bear market...

And you can get an FCC enforcement team to descend on you for federal crimes if you use it!

staynumz says

Wow, the CDC recalls 800,000 swine flu shots because they are weak. CDC, is that a federal agency? I wonder why they would be recalling this? Homo? Anything?

The article pretty clearly answers your questions--did you read it?

^ LOL. You don't really seem to understand the situation of the nation's fisc last January.

From 2003-2007, we collectively borrowed $850 billion PER YEAR more on our houses than we were paying down. Most of this wasn't secured by wealth-creation but just redirected into the economy via mortgage and HELOC.

$850B per year / $50K per job is around 17 MILLION jobs directly or indirectly driven by nothing but debt drawdowns on fairy-tale home valuations. This was unsustainable -- in 2008 total mortgage debt DECLINED $100B, and it will decline a bit more for 2009. This loss of several hundred billion of fake buying consumer power is entirely why we're so screwed now.

If the gummint weren't deficit spending like Reaganites on eightballs -- the national debt has risen $1.4 trillion this year -- the economy would have imploded in a series of cross-defaults that would have made 1930 look good.

http://seekingalpha.com/article/179121-so-much-for-those-4-bad-bears

This wasn't so much a "soft-landing" as a controlled crash.

I'm not optimistic about where we go from here, but I *do* know I couldn't have done anything one bit better than the present team in office.

The situation left by the previous administration was simply parlous, as if they were intentionally trying to destroy the country's fisc.

Troy says

I’m not optimistic about where we go from here, but I *do* know I couldn’t have done anything one bit better than the present team in office.

Well put Troy, that I can believe.

Troy says

I’m not optimistic about where we go from here, but I *do* know I couldn’t have done anything one bit better than the present team in office.

I mostly agree with Troy this time except the above.

Anyway, ecomony in this year is strange. Dow went up while we're seeing people losing home, job and money. Companies make profit not by sales but by cutting costs. Banks get profit not by investing but by getting TARP and increasing fees. Retailers sell more not by regular sales but by discounts. They can't do like this forever. So what is so shocking about the news?

Nomograph says

bigger fool you make yourself out to be.

spoken like a man who knows, a load of personal experience and growing every moment. the biggest christmas miracle would be NOMO going home for the holidays to his cave and out of internet access. he works so tirelessly on this site almost like he has internet access even in that cave. More power to you, jolly holiday man.

Gotta love Ad Hominem.

AdHominem says

Gotta love Ad Hominem.

I'm glad that you love you. I guess that a good example of a recall where a public agency is involved, besides the h1n1 vaccine, would be the USDA recalling beef. http://www.fsis.usda.gov/recalls/ They didn't make the beef. They didn't go to someone's farm, kill a cow, cut it up & package it, and distribute it to the masses. But they do have the ability to recall (or order a recall) on a product that isn't up to standards. Ad hom, once again I must ask why you get your feelings hurt when someone points out that your info is incorrect and you are a reactionary conservative who asserts himself to be a victim of the liberal media per your multiple statements. You then claim that you're a victim of mine & Nomo's and that you don't have a tinfoil hat lying around to protect you from liberal thoughts & soundwaves - and claim that we're mean to you, after which you make asinine comments about Nomo living in a cave? You can't have it both ways - oh, wait. In Adhominem world, you do swing both ways. I realize that you're not happy when people disagree with you - but you must be an unhappy person. This thread is indicative of your lack of independent thinking. The more you say, the less informed you appear. We're having fun at your expense, dear Adhom. It's easy, because you give us so much ammunition.

Defending against and paying malpractice torts is a pimple on the ass of the problem of affordable health care for all in this country.

elliemae says

We’re having fun at your expense, dear Adhom.

Actually all the fun you are having is at your own expense. Unless you are on public assistance? That is what is so great about a free society. And aint it great we can expect you to waste more of your time and energy arguing with me? I like to call this experiment the waste a bunch of socialists time initiative. So far a brilliant success. Could not have done it without you. but thanks for calling me dear, I think it brought a tear to my eye. Which is pretty rare for a "reactionary conservative victim of liberal media tinfoil hat wearing, non independent thinking unhappy, and less informed appearing" one such as you describe.

Haters Gonna Hate

Arch heels have tapped out souls. I say shine it on and give them the boot for horning in on the toe jam, since they're out of step when they're hell bent for leather.

That photo looks more like the final frame of Rocky Three, than the Cha Cha Cha.

I can't comment on the sterling place. But we've been looking at houses in the Fairfield area for four long years now, from the 'buy now or you'll be priced out forever!' to the 'OMG! Our neighbors were fired!' shocks. Prices are still way up there if you ask me. Psychologists will tell you that it's all about the fact that people need much more time to accept sudden losses (but my neighbor flipped her house back in 2007 for 999K!) than sudden gains. There is also a time lag: the places that were first to crash like Phoenix, Vegas, Florida etc. will be the first to o so slowly recover. The NYC metropolitan region to which Fairfield belongs did not get hit by the recession until much, much later. So it takes more time for prices to come down. But the tidal wave of foreclosures is creating such pressure, they will continue to go down into well into 2010. People that buy now in Fairfield county are just throwing money away. The best 'test' is to do a own/rent comparison in the area and see how much you could save (and invest) by renting instead of paying off a mortgage, property taxes, insurance, water bills etc. Not to mention the fact that, once you buy something you're stuck - very hard to sell in case your neighbors suck, for instance...

Nomograph says

AdHominem says

I like to call this experiment the waste a bunch of socialists time initiative. So far a brilliant success. Could not have done it without you.

Folks, keep in mind that Patrick.net is a real estate chat forum. AdH simply labeled a bunch of complete strangers talking about real estate as ’socialists’, and is having a fake Internet battle with his imaginary enemies. Let’s hope he keeps up the fight

Really is that what I said. Or is it just what NOMO wants you to believe to stroke his own ego and make him feel superior? Probably so. Wouldn't be the first time either.

waterbaby says

how does zillow attain its #s??

I'm totally convinced they make them up out of thin air

staynumz says

So, the gubnent regulates the beef industry but not the medical industry? Wow.

Are you really this clueless or are you just playing?

Interesting, gold had a nice pop today. I think the end of the year doldrums were just fund managers taking profits. Now it's time to see how far this bubble will go.

Long way to go.

I'm with staynumz, above. Gold is mostly a speculative instrument not an industrial commodity. $50 an ounce or $5000, it really doesn't matter. But it is pretty. Wish I had been buying up these . . .

http://www.pandaamerica.com/details.asp?item=6219&grp=1&categ=29

At worst case with each folder I'd have a month's living expenses in solid yen for living in Japan, plus the glod.

Gold was never an industrial commodity. It's the only form of money that is immune from debasement. That's all. Deflationists should love gold. For some reason, they insist that it should behave as an industrial commodity. During all the deflationary episodes of the 1800s, paper currencies did exist and gold still gained on all of those currencies while increasing its own purchasing power.

theoakman says

Gold was never an industrial commodity. It’s the only form of money that is immune from debasement.

Huh? Gold is an industrial commodity--it is used in several industries, not the least of which is electronics.

It's immune from debasement? How do you figure? What happens when we mine more of it?

Money is a medium that serves to facilitate the exchange of goods and services. Nothing more, nothing less.

"Huh? Gold is an industrial commodity–it is used in several industries, not the least of which is electronics.

It’s immune from debasement? How do you figure? What happens when we mine more of it?

Money is a medium that serves to facilitate the exchange of goods and services. Nothing more, nothing less."

Industry has never significantly even dented the above ground gold supply and we've yet to find any industrial applications that will consume it. Your computer has about 50 cents worth of gold in it.

As far as mining goes, I suggest you study the mining sector. They haven't made any significant dents in the gold supply in well...forever. It takes years to open a mine.

Money is not just a medium of exchange. It is also a store of value. Paper money is losing its function as a store of value. Gold never lost its function as a store of value.

theoakman says

As far as mining goes, I suggest you study the mining sector. They haven’t made any significant dents in the gold supply in well…forever. It takes years to open a mine.

That's because there was no incentive to do so. Gold prices have been relatively low for awhile. That would change if gold became currency.

theoakman says

Gold never lost its function as a store of value

Not sure what that means. Gold prices go up and down just as the dollar does. Or silver, or copper, or platinum. Or any industrial commodity. How is gold any different? Other than it's prettier...

"That’s because there was no incentive to do so. Gold prices have been relatively low for awhile. That would change if gold became currency."

No...it didn't even happen when gold made it's run in the 1970s. You have an above ground supply of 2000 years worth of mining sitting in bank vaults. You'll never put a dent in that supply. 2.5% is the amount of new gold they bring to the market every time. You also completely ignored the fact that it takes years to open new mines. Btw...the old ones that are in operation are running out.

"Not sure what that means. Gold prices go up and down just as the dollar does. Or silver, or copper, or platinum. Or any industrial commodity. How is gold any different? Other than it’s prettier…"

I know you don't know what that means. I'm trying to teach you. Gold prices go up and down, but over time, they retain their purchasing power. The dollar goes up and down, but over time, it just goes down.

theoakman says

I know you don’t know what that means. I’m trying to teach you. Gold prices go up and down, but over time, they retain their purchasing power. The dollar goes up and down, but over time, it just goes down.

lol--thanks professor. My point is that gold doesn't retain it's purchasing power. You're wrong.

"lol–thanks professor. My point is that gold doesn’t retain it’s purchasing power. You’re wrong."

Actually, it's just Mr. right now. I'll be professor once Obama's stimulus package to my University's grant runs out. As for gold not retaining it's purchasing power, I have read quite a few academic papers that traced gold's purchasing power against land, commodities, and labor going back over 700 years for all price data they could find within Europe. Over that time, prices have been flat. Sure, you get 30% fluctuations every now and then but the crucial point is that it never goes to zero. On the other hand, every single fiat currency has always gone down to zero within a matter of decades.

Over very long periods of time, perhaps. But few of us live for more than 100 years.

An ounce of gold today buys several times what it could buy ten years ago.
But it buys less than half of what it could buy in 1980.
That is a very wide range for something that "holds it's value."

Of course, paper money can go to zero.

And, believe it or not, paper money can increase in value. All it takes is for the velocity of money to fall. Money moving more slowly is in effect deflation.

You said it yourself: "I consider real estate to be a non-traditional bubble"

Look at Tokyo land prices. 18 years on, and it's still not climbing.

The big difference about gold, stocks, collectibles, and many other classes of bubble assets is that they have no "fundamental" value, or are very hard to value. What's the current value of Google's future income stream? Hell if I know. Metrics for the fundamental value of home prices are readily available.

Bubbles in commodities are also different. We had a speculative bubble in commodities in 2008, but speculative bubbles are always looking for a greater fool to sell to. In the case of consumable commodities, the buyer of gasoline, or bread, or what have you will in very short order be asked to become the greatest fool, since the holder of commodities contracts must sell them. A speculative bubble in commodities futures can't sustain very long. Stocks and gold are not very much consumed so the sky is kind of the limit... perhaps 500% as you say. I think oil is not a speculative bubble for the most part, but is simply supply and demand. If the world economy gets back on it's feet, it will be right back well over $100.

I'm sort of with you on Gold. We got a nice run recently, but I'd hardly say we've had a manic spike like usually happens before a crash. I'd give even odds that it will bubble and break in 2010 or 2011.

I would love to see this bet work, but I think we may be a year early on this. 2011 and the Age of Aquarius stuff like that.

Gold is yesterdays news. Transmutation/alchemy is where it's at.

http://chemistry.about.com/cs/generalchemistry/a/aa050601a.htm