Zeev's Turnips Patch-No Politics (ZEEV)

[hightecheast]

Zeev ... you can blame Dan for getting me thinking about this ... [g]

Is the American economy in trouble? ... assuming you might be inclined to think about such things ... [g]

(1)... from The Wall Street Journal, Wednesday, May 25, 2005 - today ...

The National Association of Realtors said sales of existing homes rose 4.5% from the month earlier (April) to a seasonally adjusted annual rate of 7.18 million units, the fastest pace on record. … At the same time, the national median home price was up 15.1% from a year earlier to $206,000. … It was the biggest increase since November 1980. Back then, home prices were being driven by broad, economy wide inflation. Today, by contrast, economy wide inflation is relatively dormant, meaning home-price gains in real terms are soaring at an especially astonishing pace. When Fed officials met earlier this month, they expected home-price appreciation to moderate in the months ahead, according to minutes of their May 3 monetary policy meeting1 released yesterday. The latest housing report shows no sign of that happening, and indicates price gains may even be accelerating nationally.

http://online.wsj.com/article/0,,SB111694166117541666,00.html?mod=us_business_whats_news

(2) ... Attached is a URL (from the basser) for an interactive chart of price inventory of residential condos in downtown San Diego. I recommend you take a close look at it. Is "a picture sometimes worth a thousand words?" ... you betcha!... run your cursor over the dark blue for 2004 and compare it to the red for 2005 ... YIKES!!!

http://www.sdcondo.com/graph.html

(3) ... A few comments ...

Last Friday, Alan Greenspan said, "We don’t perceive there is a national (housing) bubble, but it’s hard not to see a lot of local bubbles."

Mr Greenspan ..... if San Diego, Los Angeles, Phoenix, Miami, Boston, New York City and Washington-Baltimore all have housing bubbles, and there is strong evidence to that, then how can ‘your’ Federal Reserve continue to increase short term interest rates at a measured pace?

And even if the Fed stopped raising short term interest rates completely, how safe is it for American investors to continue to have their money invested in the US stock market, corporate bond markets and the 10 year and 30 year Treasury markets?

In February, 2000, as technology stocks and the Nasdaq Composite exploded to the upside, I said to a close friend of many years, Dave ... "Dave, this is nuts and can not continue" ... and then sold most all of my stocks … and by late July I was selling the S&P 500 ‘short.’

While time may prove me wrong, I now say ... "IT IS FEBRUARY 2000 ALL OVER AGAIN."

Do you believe in déjà vu? ... [g]

Ken Wilson