patrick.net

SIBA,

When things were blowing up in housing, fed came out and said things were contained. What i am trying to understand was, it didn't appear that fed was panicking when housing was deflating. They have been very agressive when the results started to show up in equities. If they understood the problem correctly, it should have been other way around.

US is the world's 4th largest exporter of rice, after Thailand, Vietnam, India. However, recently Vietnam has put a ban on rice export due to shortage of supply internally, and India is having a serious crop failure.

The US ranks only 4th in rice export not because of supply constraints but because of competition from the other exporters. Most of the American rice is grown in California. If we don't have wacky weather leading to crop failure like India and Vietnam, this could be a very profitable year for American rice farmers because they can essentially charge whatever they want.

Just after the 30% rice hike about a week ago, there will be another co-ordinated 30% price hike on rice in China next month.

Maybe we should stop thinking about buying a home, and pay more attention to Williamson Act land that is not being utilized for agriculture. Perhaps I can hire a few Latinos to grow rice for me :-)

NVR,

Dow may not end up much lower because the massive printing action is about to start.

You ain't seen nothing yet when it comes to inflation. So far we are able to export our USD overseas, particularly to developing countries in Asia that are exchanging their work and raw materials for work, and eventually, food. When that link breaks, all the USD will come home to roost, plus the helicopter action of the Congress, not BB alone. So far it is only the beginning of monetary reflation, not at full scale yet. When we get to fiscal stimulus, that will be one hell of a reflationary effort.

I keep telling you, all we need do is band together with Canada, Brazil, Argentina, and Australia and form "OFEC" - the organization of food exporting countries.

Maybe we should stop thinking about buying a home, and pay more attention to Williamson Act land that is not being utilized for agriculture.

Good idea. I doubt grains are easy to grow in small scales though.

Perhaps I can hire a few Latinos to grow rice for me

Guest worker program is essential!

You ain’t seen nothing yet when it comes to inflation.

I am still not sure if the correction in gold price has completed. :(

I keep telling you, all we need do is band together with Canada, Brazil, Argentina, and Australia and form “OFEC” - the organization of food exporting countries.

I love that idea.

But how can the OFEC export food to non-OFEC countries without oil?

Rice is still going strong:

http://quotes.ino.com/chart/?s=CBOT_RR.K08&v=d6

Again, futures investing is very risky.

easy, load those empty tankers with food for the trip home.

Yes! We will offer them a Food-for-Oil program. :)

OFEC could simply dictate some fractional parity between a barrel of oil and a bushel of wheat. Any tin-pot dictator we don't like....let them eat oil.

let them eat oil

LOL!

Oil is the new cake! :lol:

Working out a fractional parity between oil and wheat could take several forms AND it would de-couple any fiat currency effects.

For example, say a barrel of oil is X gallons and Y pounds. A bushel of wheat is W gallons and Z pounds. We could set fractional parity as A (X/W) or as B (Y/Z). And if anyone complains, we could point out that crude oil REALLY MEANS crude oil, as opposed to the finished product of wheat. Crude oil is pulled out of the ground for free after extraction costs. Wheat on the other hand requires BLUE GOLD (R), lots of farm labor, and processing along with the intellectual property value of the wheat strains.

Working out a fractional parity between oil and wheat could take several forms AND it would de-couple any fiat currency effects.

Free Market can work that out in fractions of a second.

What "free market"? Last time I checked we didn't have such a thing.

Too bad. :(

Well, we can at least worship it. ;)

I'll bet you all my gold that we can go without oil a lot longer than they can go without wheat, rice and corn. Fix the price... OFEC is a brilliant idea!

Hey guys, let's not get ahead of ourselves yet.

Food cannot not easily monopolized until...we can come up with some kind of biological weapon that can wipe out other people's crops but not ours.

sa :
What i am trying to understand was, it didn’t appear that fed was panicking when housing was deflating. They have been very agressive when the results started to show up in equities. If they understood the problem correctly, it should have been other way around.

Because the Fed doesn't care about the home prices at all. Say, if the home prices go to zero, but bank's collateral is protected by Govt. would Mr. Bernanke care about loanowners ? Fat chance. They are "banking" on the Congress to do exactly that for them. Which the congress is trying hard to do.

The Fed cannot go out and buy all the houses. But they can accept all the MBS sh1t they can, and they did exactly that.

The Fed is banker's personal bitch. It doesn't care about savers, not does it care about debtors. It only cares about banks. All types of banks - now it seems.

OO, other less-fortunate places do not have the same fertile land. They can surely try growing rice in a desert.

I think we will hit Peak Food though. LOL.

If other places were on par with U.S. agriculture techniques, we wouldn't be exporting as much as we are today.

NPR's Fresh Air program today is highly recommended to all interested in what caused this financial mess (for one, McCain's top economic advisor, Phil Graham's legislature that deregulated derivatives). Great interview on our "shadow financial system"

"Our Confusing Economy, Explained":

Perplexed by the U.S. economy? You're not alone. Law professor Michael Greenberger joins Fresh Air to explain the sub-prime mortgage crisis, credit defaults, the shaky future of other types of loans and what we can expect from the U.S. financial markets.

http://www.npr.org/templates/story/story.php?storyId=89338743

Hey, I am just trying to figure out if I need to bring my swim trunks to the housewarming party. We are invited… right?

Of course. I was already thinking of that. But I'll need to subscribe a couple of the tougher of this lot to act as bouncers in case any of the Zillow-psychos show up to rumble.

There are a lot of pools (as opposed to hot tubs) where we're looking now, though. So you know it's not Mill Valley so much anymore.

from the Fresh Air interview: student loans, auto loans, credit cards, private equity firms "have all essentially followed the same template (as the subprime lending ways). it's as if a bunch of las vegas bookies started taking bets and never bothered to write them down or record them."

I have to say I agree with Duke's prediction of 11,500 by May 21st.

Randy, I am sure you already know this, but I am still gonna repeat anyway.

Propertyshark has quite a bit of time lag on recording and doesn't always record HELOC or second loans. However, county records do. You can search by names to see if someone is taking out a second loan or a HELOC on the current home. You can just use online recorder search to get an initial result. Then if you are nosy enough about the report, you can always pay up.

Sometimes the seller has "hidden" financial skeletons in the closet that may not be fully revealed by propertyshark. And a HELOC lender can prevent the house from going into a short sale in which the HELOC lender will be left with zilch.

Hmm… more like Deliverance.

You mean like this trio?

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/05/18/DIRTBIKE.TMP

There is definitely a part of the hills where you can go too far back and you end up back in the Wild Wild West.

The Fed cannot go out and buy all the houses. But they can accept all the MBS sh1t they can, and they did exactly that.
I was wondering what Stuck was all fired up about, and then I realized it's Thursday. Time for the latest H.4.1 report from Uncle Ben and company. No helicopters (they actually sold about $40 billion in Treasuries) but what's this? Securities Lent to Dealers, Term Facility -- let the great Treasury swap meet begin. The $64 billion question: how good are the ratings on that high quality MBS collateral? Oh, and $6 billion went out the "regular" discount window and another $5 billion went to non-depositories. All and all another fine week; less than $600 billion of Treauries are now left.

There is definitely a part of the hills where you can go too far back and you end up back in the Wild Wild West.

Wrong turn! It was a tragedy.

Perhaps one should not go above 500 ft MSL in the Bay Area.

What is the projected burn rate for $600M? $100M a month?

I thought it was $600B.

$600M is like a sushi dinner to the Fed.

Duke Says:
The fact the market continues to rise on bad news just amazes me. Here is my prediction:
In 6 weeks time (May 21) the Dow will drop below 11,500. By years end it will drop Below 10,000.

DOW 10K? That sounds like really bad news, which should make the market go up, no? :-)

Back in grad school we had a professor who used to call investing, "following the bouncing lines"
According to him, you can look at events like the great depression and count on them to repeat themselves. As many here have come to call it, I think we are in the 'dead-cat' bounce.
Many are arguing that the Fed has effectively put a floor under the market. And since the market was pricing in a posssible meltdown and now they only have to price in only a recession.
Umm. No.
The Fed is blunting the worst of a rapid over shoot.
Congress is going to make the decline bi-modal with the stimulus.
But the truth is the fundamentlas stink.
There is a real destruction of the perceived wealth of credit and debt obligations. Mix in some leverging and you have a recipe for contraction. It is true that, to the extent we can, we will export some of this. But a correctly working market represents the strength of the underlying assets. Much as Thailand had no financial reserves for any market down-turn, neither do our banks and 'shadow banking' institutions. And the Fed is not large enough to cover the shortfall. In fact, only a co-ordinated effort of Central Banks can cue what ails the US.
So as for the market as the information stands today: if it growls like a bear, fishes like a bear, and eats honey like a bear. Its a bear.

"You mean like this trio?"

Jimbo, I want to be clear here. I in no way condone the actions of these people (assuming they're guilty). However this confrontation sounds very familiar to me. We lived in a rural area for years and dealing with dirt bikes/quads/off-roaders is endlessly frustrating.

The victim (and he is a victim) claims "there was never once a single complaint". I call bull.

"They were doing 20-25 mph". I call bull.

Yeah it's a little hard to register a complaint with someone that has headgear on, creating a two-story high plume of dust, cranking a 2-stroke engine at 110 decibels and doing 50-60 mph!

They strategically "gun it" when going past "un-cool" (or "problem") neighbors that haven't developed an appreciation for "their" freedom.

At 20 mph (sprinters run at 25-30mph) do you mean to tell me he couldn't SEE a 1/2" , 5/8" piece of re-bar? O.K, maybe he couldn't but with a Bell helmet and high impact face shield I doubt it would have knocked him off the bike let alone caused 500 stitches? Again I don't condone what happened but there's definitely another side. This can be what sadly unfolds when law enforcement refuses to get involved.

Gah.
I just read Patrick's link to George Soros. It seems he and I are in agremet that the market is heading south. Seems he is as spooked about leverage and contraction as I am. Of course, he still frames things in terms of currency.
Any bets as to wether or not he uses leverage?

DinOr.
I remember that event. Los Gatos hills. What was the outcome of the case? I think the 3 people who strung the wire were brought up on attempted murder charges.

I'm sure Soros uses lots of leverage. Didn't he personally buy the present majority in Congress?

With the lowering of peoples' equity, I'm wondering whether statistics on the sale of lottery tickets tracks peoples' otherwise inabilty to plan for retirement.

Bap33,

I can't speak for Cali but Oregon has so many places to ride it isn't funny. We have the dunes out on the coast (Sand Lake) and miles of dunes and other land so scraggly no self respecting cattle would ever graze there.

Have at it boys! I'm all for it.

However terrible this... assault seems, talk to emergency room physicians and they can tell TONS of horror stories of underage riders, lack of supervision and just plain stupidity. We had two young quad riders in Christmas Valley riding double and hit a sudden drop off. The 20 year old girl met a rock (lots of those out there) face first and died on the spot. The guy is a vegetable. The Consumer Federation is moving to have them outlawed. They've had their chance to act responsibly.

"the Fed is still battling a negative feedback loop of tight credit conditions, falling house prices and low consumer confidence." -- Janet Yellen, San Francisco Federal Reserve President

Aaarggghh - what the f*ck is it with economists and their inability to understand that a self-reinforcing trend is a *positive* feedback loop? This is like the third time this year that some kind of economist has been quoted in the MSM with this... someone needs to send Ms. Yellen a Control Systems textbook.

# Duke Says:
So as for the market as the information stands today: if it growls like a bear, fishes like a bear, and eats honey like a bear. Its a bear.

And continuing on that theme, if you see a Bull, it won't be long before you see some b.s. :-)

For all financials, If you are planning to take a big write down, go ahead and take it today. Market is in good mood or on crack.

Th stock market is really beging to annoy me.
Its orinigal function was to serve as a place for capital formation. You can't have a billion dollar factory if you can't raise a billion dollars. In essence, everyone was going long becasue we all wanted the billion dollar plant so, for example, Intel could make computer chips so we could all have computers.
But now.
Hedgies step in and play short all day long. They create models that say your debt burdon, your competition, and market conditions will cause your value (and therefore your price) to fall. Is the money the hedgies made shorting your company helping your competition- re-allocating resources to where they are best used? Or is it just speculation and leakange? Heck, on size alone they can drive price. And not only price, they can kill compaies too. If all hedgies pull out of, say Lehman, how long will Lehman last? Ask the CEO of Bear how fast they can be killed. 3 days.
There is too much money in too irresponsible hands. Instead of going long on another sector or on intra-sector compeition there are people just making big dollars on plain ol speculation. Very unproductive use of money.
This whole Vegas side of Wall Street has to stop. Capital formation markets should not be about winning and losing bets - it should be about putting money in the hands of companies that do something. Then rewarding them or punishing them for how well their something is received in the market.
I'll stop my rant now. I just annoyed at the waste.