patrick.net

michaelsch says

Why not? I think it can unfold much faster than Eurozone crisis. But, of course, may happen much later than in 2011.

The US government is in no danger of default, and won't be for many years. USD does not have the same problems as the Euro at all.

The recent spike in the deficit is due recession related expenses (collapsing revenue, stimulus, etc.), which are a short term problem. Any dollar crisis will be from a failure to deal with long term problems (medicare)

michaelsch says

In short, u think printing presses will be slower than natural deflation. Interesting.

Printing presses are almost meaningless when interest rates are at 0%. A treasury bill, or any other government backed liability, is fungible with the newly printed cash it was exchanged for.

We already had QE1. Japan tried QE several times. What was the effect?

Unless there is a multi-trillion dollar fiscal stimulus at the same time (extremely unlikely with new congress and mood of the public), the actions of the Fed are powerless to stoke inflation.

Holy S**t that was the worst year so far! and OMG it's only getting worse.

or just more of the same slow sucking sound.

"same slow sucking sound" ......... I have a great story that goes along with that line, but I just aint allowed to tell.... dang it!

Bap33 says

“same slow sucking sound” ……… I have a great story that goes along with that line, but I just aint allowed to tell…. dang it!

LOL

Future Cash Buyer says

- average housing price will drop 5% from 2010 to 2011
- gold will hit $1500
- mortgage interest rate will hover around 5%
- unemployment will remain the same
- some municipals start to default
- Dow will be flat or a little lower
- Euro to Dollar exchange rate will stay flat
- China to have slower economy growth

All of the above and higher oil and gas prices.

toothfairy says

michaelsch says

toothfairy says

recession officially ended June 2009 and since Double Dip recessions are pretty rare I do not expect to be different this time.

More slow and steady improvements in 2011. Bears still in denial clinging to the past realization of missed housing bottom wont come in 2012.
People milking unemployment forced back into the workplace. Albeit at lower salaries but as a result average wages will go up.

Just explain to me how average can go up as the result of adding more figures on the lower end?

Let’s say You have 2 people one making $10 the other unemployed making $0. If person B gets a job making $5. Then the average wage earned by those two people has gone up.

0$ of the unemployed does not count as a wage. The average is 10$.
When B gets a job making 5$ it counts and the average now is $7.5.

Nomograph says

Bap33 says

“same slow sucking sound” ……… I have a great story that goes along with that

I hope he treated you well after, maybe bought you dinner or something.
As far as predictions, I’m pretty much in agreement with E-man.

I predict that Nomo will continue to come up with the one-liners and that the world will continue to turn. I also predict that people will continue to blame their problems on whoever occupies the white house.

If I knew the right channels, I would invest $5K in the global leader in design/build projects for desal and reverse osmosis water treatment plants. Someone who is using the methane energy (steam co-gen), as well as the cooling properties (nuke co-gen), as well as the spill-way energy (turbine co-gen) to help off set operating costs.

Storm water run-off will also soon be required to be treated by the Cal State Dept of Water Resources Control Board. This will close the hydro loop completely. And there is a State wide movement to locate and control every "water shed" too. As well as monitor every aquifer used muni, priv, or ag. This is all very smart to monitor, but the obvious end game will be "who really controls the water of "X, Y, Z"... " ... and that will spark a war because whoever controls the water, controls the state, controls the food, controls the people.... maybe .... I think. So, gaining potable municipal supply through desal and full reverse osmosis of waste water will result. I think.

1) desal is an absolute future must in all major metro areas with access to sea water (global and national). The current system of moving surface water to supply major metro's like SF, LA, SD, and even Sac, are going to stop when crops start needing more water because people start needing more food. The aquaduct and those big pipes from Hoover Dam might stop flowing when water gets scarce, or when cities/states go bankrupt.
2) Benificial re-use of treated waste water will someday result in direct use of "sewer - to - consumer" water supply in all major metro areas. This will be a perfect time to combine and use the available energy found in waste water.
3) Methane burns hot and clean and steam makes for clean energy.
4) Nuke energy needs a good cooling supply, and waste water could do that. Doing the cooling before being treated might work really well since it is the solids in water that absord heat. That also may change the state of some of the waste products and aide in treatment(?)
5) Treated water is "lifted" at some point in the process ... that means it will have gravity "energy" available at the exit of the process. Just something as simple as a water wheel could generate the energy for lighting a portion of the plant. Worth doing if the energy is already in place, right?
Treatment plants that are in big metro areas will look like office buildings from the outside. This would be a perfect place to house ALL municipal functions. City hall, Jail, HR, Accounting, whatever else, all inside on big building, where everything takes place.

So, lets find out who the big dog is in this game as a design/build engineer on the global arena and invest. And invest in whoever is the technology supply for such things. Not investment advice .... just a way for me to use you investor guys to find the channels I should look into.

Sorry for the hi-jack. Delete if you wish.

Predictions !

The hype over the Bay Area will continue into 2011 by people (aka vested interest) who bearly lived here over the past 10 years.
They will come up with new and repeat the old one liners and sound bites.

Overall, prices will continue to "recover and correct" to long term mean regardless of the hype. Those who are paying for their inflated home prices/mortgages and not had to worry about being foreclosed will eventually sell at a loss, becuase they have seen similar homes sell for less. No sense continue to overpaying for the mistake they made.

tw, I think you need to adjust that chart with:

if the PTB can keep interest rates artificially low then home prices will be supported above that trend line.

Zlxr says

Notice CA budget shortfall was originally around 20 Billion and now they’re saying something like 28 Billion

Found out yesterday, CA Pension plans are underfunded by some $34B. So tack that on!

thomaswong.1986 says

Zlxr says

Notice CA budget shortfall was originally around 20 Billion and now they’re saying something like 28 Billion

Found out yesterday, CA Pension plans are underfunded by some $34B. So tack that on!

Oh don't worry Thomas. 2011 will be much rosier for CA. We'll be out of the woods. UE rate will drop from 12.4% to just under 6% and those newly employed will pick up the tab for the much needed 6 figure pensions and free health care for life for our govt. servents.

Troy says

tw, I think you need to adjust that chart with:

As your chart correctly indicates interest rates fell from 1990 to mid decade and later to 1997 yet prices continued to decline in CA. And today interest rates fell accordingly from 2009 to today, yet prices had and are still falling.

We will certainly ponder on the relationship of interest rates and prices into 2011.

bubblesitter says

Oh don’t worry Thomas. 2011 will be much rosier for CA. We’ll be out of the woods. UE rate will drop from 12.4% to just under 6% and those newly employed will pick up the tab for the much needed 6 figure pensions and free health care for life for our govt. servents.

As the recent Census indicates, Texas is growing in population as the UE migrate out of CA. UE may fall as you state, but the tax collections in Tx will be higher.

Will see!

Foreclosures to rise from 1.8M in 2010 to 2.1 in 2011.
More inventory headed your way.

Foreclosures rise in Q3 as fewer people get help
Foreclosures spike over summer as fewer people get help lowering mortgage payments

Banks have already sorted through most delinquent borrowers and decided whether to modify their mortgages, federal officials say.

In 2011...

People will stop saying 'two thousand'. It'll be "twenty-eleven".

We will start to see a return to quality goods purchases, with fewer and fewer disposable, cheap things. This is because of rising prices of chinese exports.

Mobile phones will fully displace dedicated music players and consumer-grade GPS units.

DVD and CD sales will more or less end.

A well loved celebrity will die.

A B-list celebrity will die, and everyone will act like they were the best at whatever they did.

A congress member will be involved in a sex scandal.

The notion of 'feature phone' will disappear, and we'll stop using the term 'smartphone'.

A major scientific discovery will be made, and people will widely misinterpret what it means.

Strong anti-chinese sentiments will roll through the country, largely originating from D.C.

Gasoline will return to the $4+ range.

Inflation will pick up, but USD -> Euro and USD -> Yen exchange rates won't change much. USD will decline vs CAD and AUD, and definitely against RMB.

Obama will make an off hand remark that the GOP will latch on to.

Sarah Palin will say something glaringly stupid that the democrats will latch onto.

Sarah Palin, Mitt Romney, and Newt Gingrinch will all announce their candidacy for 2012.

Corporate profits will continue to soar, with Oil companies, tech companies, and banks leading the way.

Facebook, Zynga, and possibly Twitter will IPO, driving silicon valley housing wonks into a tizzy.

Political grandstanding will result in Julian Assange being tried for something, but he'll get off.

Stretch predictions:

Tablet computers and dedicated e-readers will become more widely used for reading than dead trees.

Unemployment will drop a full 2 percentage points.

Kevin I'm going to go out on a limb and agree with your bold prediction of 2pp drop in unemployment.

Actually this article nicely sums up what I feel is in store for 2011
http://www.bloomberg.com/news/2010-12-28/housing-starts-seen-rising-to-three-year-high-with-belated-u-s-jobs-boost.html

toothfairy says

Kevin I’m going to go out on a limb and agree with your bold prediction of 2pp drop in unemployment.
Actually this article nicely sums up what I feel is in store for 2011

http://www.bloomberg.com/news/2010-12-28/housing-starts-seen-rising-to-three-year-high-with-belated-u-s-jobs-boost.html

A lot of mumbling about nothing in that article.

2pp drop in UE? How? Because SOME of 1.4mil unemployed construction workers will maybe find a job? LOL. We have more than 40mil "boomerangs" in USA. Lots of them after some kind of college. They can't get professional jobs, because there are none in this country. (Do you think job will come back from oversees? Hey, it will take several generations of poverty in USA. Or do you think them in BRIC countries will need more managers from USA? Very unlikely.)

"Boomerangs" are constantly off and on some temporary jobs. They supply much of the UE stats. They are moving back to their parents over-sized houses en mass, and are saddled with incredible college loan debt. (11 times higher than it was 12 years ago). Does anyone seriously think these people will start buying new houses any time soon? In meantime millions of boomers will retire and whoever can will try to downsize.

In short, demographics are strongly against housing "recovery". If anything it may create some small niche demands.

you're talking about a long term secular trend which is pretty meaningless when talking about the cyclical economic recovery we're about to have in 2011.

toothfairy says

cyclical economic recovery we’re about to have in 2011

People talking 'cyclical' don't understand what's going on now.

If I may:

This:

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

broke the 'cycle'.

For the past 2 years we've been using this:

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

to keep the rubber side down, but it turns out the American people decided last month to see what will happen if we stop gummint spending our children's money now.

cyclical economic recovery my *ss.

toothfairy says

you’re talking about a long term secular trend which is pretty meaningless when talking about the cyclical economic recovery we’re about to have in 2011.

College debt is actually cyclical, of the same nature as housing bubble, and was partially caused by irresponsible policies of Bush.

However you missed my point. It was just about that article that presented tiny factors (tiny even compared with effects of long term secular trends we'll see during 2011) as something that can do a significant fix.

BTW, there is another factor that is likely to increase UE rate especially in CA. That's state and muni crisis. Even now it considerably affects UE rate. The thing is "seasonal" layoffs.

For example, many state and community colleges are reducing classes they offer. Often it works like this: in the past a college had the class offered in all four "semesters" - Fall, Winter, Spring, and Summer. Now they decide to cut on it and to offer it only in Fall and Spring. So, guess what teachers do? They file for unemployment in Winter and Summer.

Expect this kind of seasonal unemployment to spread much more in 2011 as muni financial crisis unfolds.

IMHO there is a good chance of price appreciation of 3-5% in really good school districts. But depends on how much the interest rates rise...

stock market will go through the roof (positive)

housing will crash even further (thats a positive too)

unemployment will grow (negative) - machines can replace many jobs, outsourcing is cheaper.

My biggest worry is government artificially keeping up certain industries afloat. Because once these bubbles burst it won't be fun. Healthcare bubble, education bubble, housing bubble... it will be interesting* times.

We are into 3rd year of a 10-15 year slump.

bubblesitter says

We are into 3rd year of a 10-15 year slump.

thing is, when does it end? That's the question Japan has taught me to ask.

We knocked the scuttles out of our economic ship by shifting our manufacturing to China. It's good for 80% of the population now, but totally screws 10%:

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

And as they get liquidated they're going to take people down with them.

The Y2K and dotcom jazz was a good round of reinvestment in tech, we certainly got a lot of useful capital goods and global technical leadership out of that investment.

The story since then though has been tech being bled overseas, too.

But if this chart can be believed:

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

tech is worse than retail! Maybe that's just desk support, dunno.

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

is an utter disaster, and we've got almost half the country belly-aching about government takeover of healthcare already (when what was actually passed was incredibly conservative and status-quo preserving).

Farmers, oil men, gold miners, health professionals, and conservative opinion personalities will be doing well this decade, but who else?

God forbid if we actually have to cut the $6.7T/yr of gov't spending rate we've got now. Each $100B we cut is putatively 1 million jobs directly lost, plus probably another 1M lost in second-order effects as communities lose their gummint jobs.

Total Nonfarm Payrolls: All Employees (PAYEMS) shows that THREE TRILLION of deficit spending over the past 2 years has managed to hold unemployment at the low levels of the previous recession.

If we pump another 3-4T of deficit spending into the economy over the next two years we'll probably continue to tread water. But that's not what the Republicans were sent to DC to do, LOL.

Wish I were several timezones away from this mess. Think I'll go to the beach tomorrow for the sunrise. Sunrise on the west coast is when the new year's hits Japan. Might as well get in the proper mood.

There is one bright spot I guess.

China's young adult population is going to fall 25% over the next 10 years. That will begin to reduce their consumption and raise their wages I'd bet. Not going to help 2011, LOL.

India however:

is scarier stuff. By 2050 there will be 100M people in every 5 year group age 0 to 59. Mind-boggling.

look at those numbers, and then go read my post .... see where water plays a role in hunger and population?? One of you stock market investor studs can make all of us on PatNet rich if you find the source!

naveen381 says

IMHO there is a good chance of price appreciation of 3-5% in really good school districts. But depends on how much the interest rates rise…

That chance hovers somewhere around 0.

I'm actually wiling to bet money on a 2 point drop in unemployment next year.

If I've learned anything over the last few years, it's that people grossly over estimate how bad things are going to be and how bad they already are.

Mr.Fantastic says

So people don’t grossly underestimate how bad things are?

Yep, they do. It's almost always one extreme or another. This isn't just with economics either.

Zlxr says

Kevin - I would say that all our Gov’t (Fed, State, Local) have been grossly overestimating how good things are.

Are you talking about what they actually believe, or what they say publicly?

They have an obligation to be optimistic in public. After all, "Consumer Confidence" is one of the biggest factors in the economy.

Man, Oh man, did anyone listen to the Porter Stansberry presentation? of CIRA Dec 16th
on www.endofamerica1.com I know seemly poor choice for a URL to get people to take seriously but it auto forwards you to a normal url, I think they might be keeping count.

I am UNSURE about it, so I did not to be seen as endorsing it whole heartily. but I found it at least interesting to say the least, I got the link from a podcast of Frank Curzio, I heard him make reference to him, as is only obvious as he works there. BUT Frank seems to disagree with at least the timing the Porter talks about in this about hour long website audio.

If you are open minded and like to explore things, as I then I would be very interested in what you think AFTER you listen to it. OK? (it fits in this heading as it is talking about 2011) so that is why I felt it was ok to post this here, IF anyone or enough of you don't like my doing so here, I will or Patrick can of course, retract this post. OK Then, in the mean time Happy New Year. Ok, I would enjoy hearing from anyone that listens to it, email me please, if you feel up to it.

E-man says

Existing home prices in the SF Bay Area as well as nation wide will DECLINE about 3%

Agreed that housing will have a slight drop. Will carry that further to say that the slow bleed off of what is left in the bubble will continue for some years beyond 2011. Many owners of higher tier homes have been holding off selling their homes in hopes of a reversal. At some point, movement will have to occur. The boomer population will bail out at some point. I see homes at the higher end going down 1-3% annually for the next three years....then no appreciation for quite some time. The idea of frequently trading homes is gone for the foreseeable future unless you are willing to eat that realtor fee, the closing costs and realize any lost equity.

Not sure I agree about the gold and silver sliding down. They SHOULD end down since they are inflating like a bubble (said by others previously on this blog). But, I think with the deficit continuing to grow & the debt ceiling raised this year....and with people like Beck and others hawking gold, it may get above $1500 this year. Also, it is obvious that the boomers are about to need Medicare in larger numbers. The current deficit could look small in comparison to 15 yrs from now. That kind of projection has got to be good for gold....unless I'm the only one holding that viewpoint.

Anyone take me up on the Stansberry Thing.

Cvoc13 says

Anyone take me up on the Stansberry Thing.

Man that is long - good thing I had some mindless work to do. Scary predictions - but in the end sounds like a 2AM infomercial. Buy gold, no wait better yet SILVER, oh wait there's more! Order my "Secrets to buying some shit that no one else knows about" for three easy payments of $99.99

Cvoc13 says

Anyone take me up on the Stansberry Thing.

I only made it though part of it. I think Cvoc13 solved the mystery: Stansberry is ApocalypseFuck.

EightBall says

Cvoc13 says

Anyone take me up on the Stansberry Thing.

Man that is long - good thing I had some mindless work to do. Scary predictions - but in the end sounds like a 2AM infomercial. Buy gold, no wait better yet SILVER, oh wait there’s more! Order my “Secrets to buying some shit that no one else knows about” for three easy payments of $99.99

Exactly. But one doesn't need to listen to his voice if one can read: http://www.stansberryresearch.com/pro/1011PSIENDVD/WPSILC00/PR

As a matter of fact it has a lot of well known info, a lot of simple B.S. and much more of commercial.

The main thing: it's still unclear if the whole stuff is really inflationary. It may as well turn out deflationary. That's because huge debt repayments reduce money supply.

zombie apocalypse by year end.

You all know in your hearts its inevitable, all those movies simply CANNOT be complete fiction!

Thanks Guys, I am sorry I did not know about the TEXT link, as I was saying I was not too sure about it, although I watched Zuckerman he had a lot to say about the Debt.
to http://www.cnbc.com/id/40887670

Cvoc13 says

Anyone take me up on the Stansberry Thing.

well I'm listening and trying to figure out what he's about to sell me... it's gotta be gold.