real estate will wreck havoc in coming months
thanks for the fine update article on RE, JWR
so many stories about Greater Boston in areas I know
it seems denial of the bubble in RE grows with the evidence itself of overextension
reminds me of a bad movie with a stinking drunk shouting:
"I AM NOT A DRUNK", with his face unshaven, his shift not tucked in, hair a mess, looking like he hadnt slept in days, and having trouble standing in balance
now speculation stories abound
I wonder which would do better: gold shares or Jan2004 FNM leap puts ???
ok ok, I get it, great to see your AlfredENewman face over here
hello DuckTail Waterboy, I realized it when I saw Harry Newton
CSCO sticking sub-10, both CSCO & INTC have PE's over 40 !!!
I have come to a weird conclusion regarding real estate
the damage from the RE bust will be more detrimental to the economy and the consumer spending patterns than to housing prices
why? because of leverage
but that is just the first stage of the blowoff
with the great 10:1 or 20:1 or infinite (from zero downpaymt) comes huge leverage in cashout REFI's
so spending will suffer with just a small drop in RE prices
talk soon will be not of "capturing low rates" but rather "uncertain jobs" to finance such debts
even flattened spending would cause problems on MainStreet
stocks would react quickly from that econ data
in the next stage, like mid-2003, RE will head lower as the economy bites harder, drooling out pinkslips
the growing glut of houses up for sale will turn into a torrent that overwhelms realtors
I will make a personal phone call to my fave REbroker in Boston, who helped me buy a house and sell three, whose daughter I liked, whose soninlaw was a friend
this all leads to bigger questions about GOVT INTERVENTION
a sad fact of life, a political reality, is that in the early 1990's we entered a new era with Clinton
that era was marked by GOVT INTERVENTION in an attempt to interrupt the natural business cycle
all financial "events" (read: failures, accidents, disasters) were dealt with political expedience, administering large amounts of clownbuck balm which later now is seen as building a bomb
"from balm to bomb in 10 easy years", compliments of THE FED
we dont accept the reality of accidents anymore
we paper them over
expect a VOLCANO over time, like real effing soon
RE prices have outpaced income 2:1 in recent years
Debts (public, corp, private) have outpaced income somewhere between 2:1 and 5:1 in recent years
WE DONT UNDERSTAND DEBT IN THIS COUNTRY
we dont attempt to understand it, instead we either lecture to it or dismiss it or redefine it
I love the redefinition as LIQUIDITY
I save the best for last
76% OF THE ENTIRE US GDP IS DIRECTLY DEBT SERVICE
in 1990 that figure was closer to 50%
we are suffocating
no way out, except to bankrupt the entire nation
saddest of all is the US Govt response
EVERY SINGLE GOVT RESPONSE WILL WORSEN THE PROBLEM
EVERY SINGLE MEASURE
take your pick, mention a response
and a monetary effect or interest rate effect will worsen it
I have been personally studying the dynamics of LIQUIDITY TRAP
we are approaching it, and accelerating toward it
I regard it to be THE FINANCIAL BLACK HOLE, with tremendous tremendous drawing power
in fact, the public absolutely begs for it
they cry for a bond rally continuation
they cry for lower rates, lower carry costs for debt
they cry for more govt foolish spending, gauranteeing more clogged financial lending
they cry for circumvented financial accidents, gauranteeing future (NOW) stagnation
lenders will not lend readily in this environment
borrowers will only rush over the edge, pursuing easy money
they are addicted to easy money
this will end with phenomenally horrible stagnation for years
that is the best case scenario
it will end with constant recession for years
that is my realistic scenario
the tide turns when the bond rally ends
that is the last piece to Sinclair's fundamentals for gold rise
the GOLD EXPLOSION will be a colossal sideshow
as stocks, bonds, debt will all be dead investments
like a grand referee, the FOREX has the final REDFLAG power
USDollar will soon head down, and force a top in bonds
just a stall will end the party and fortify GOLD
then in time, bonds will hurt and housing will suffer bigger
/ jim
p.s. my messages will be fewer but longer, given 18 daily limit
p.p.s. stripper at gentclub told me recession has hit their business!!!
oh sweet Ginger, mighty nice loins you have
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