Stephen Kanitz

The 'Own Your Own Home' Policy: A Relatively New Thing

No one mentions Mortgage Interest Tax Deductions ? Dont they realise that allowing NOMINAL interest rates on mortgages to be deducted from taxes, is a double incentive and has made America most indedted nation in the world, with the lowest downpayment financial system in the world. And it seems not one is learning from governments mistake. Another disaster 20 years from now.

Inverse Correlation of Stocks vs. Dollar at a Glance

"but since most Americans only live in a nominal world"

Finally someone had the courage to say it. That means profits are overvalued, equity and assets are understated, return on investment and equity overstated.

This whole crisis is a nominal mistake. Lehman's net equity and retained earnings were stated in 1933 dolars to 2007 dollars without adjusting to 50 years of inflation. Loans outstanding were in 2008 real dollars. Highly leveraged ? No way, just divide by the real net equity and you get a different figure, But not if you live in a Nominal world.
Read the blog Real Economics
economics.melhores.com...

Brazil: Do Olympics Make It a Better Investment?

Othon Hotels rose 70% today on announcement. With Chicagoans protesting on the street, Tokyo and Spain in the dumps, I am amazed no one bought the leading hotel chain in Rio.
Betting on Brazil. brazil.melhores.com.br

What's Driving Single Family Home Investors?

No one pays taxes anymore ?
Mortgage Interest Tax Deductions are 30% government subsidies, since nominal rates are deductible not the real interest rate, which are practically negative.
Pay half price, negative real interest rates, and have a 30% deduction on nominal rates, what more do you want ?
A school system that teaches math.

What's Interesting About the World's 50 Safest Banks

Canada's tax incentives does not include Mortgage Interest Tax Deductions, which means Canadian Banks do not over leverage in real estate, Canadians do not beg for second mortgages or equity carve outs so they can continue to have interest deductions.

Other than that, Canada and US are nearly mirror countries, and it is amazing how American economists are blaming hedge funds, bankers, greedy alpha seeking investors, and forgetting government subsidies as the real culprit of this crisis.

Talking About a Housing Revolution: Predictions for the Sector

Postponing house purchase means postponing Mortgage Interest Tax Deductions, which for some brackets means a 30% to 42% tax deduction. I did not see this "opportunity cost" factored in your analysis.

Household Net Worth's Big Declines - Why a Graph Tells a Better Story

Great example of how to lie with statistics. It leads people to beleive that their home net worth is 50% less than it used to. It is 50 % less from its 2008 bubble value. Factor in all those positive changes since 1950, and you get a totally different picture.

Unemployment as a Lagging Indicator: Not This Time

In April the US government hired 90.000, state intervention, which is distorting your analysis. The comeback is 90.000 stronger than it seems.

17 Million to Be Unemployed in 30 Days?

Furthemore, these 3,2 have not lost a job, nor income, they will not reduce GDP, as the 13 million actually have. And those retired will continue to receive income, their pensions, so spending will go up, if part of those 3,2 get a job, which many will. Mark Anthony, your comment is on the mark.


On May 12 01:01 PM Mark Anthony wrote:

> Your argument is incorrect. It is true that 3.2 million kids will
> graduate from high school. Some of them will enter colleges but just
> to replace those who graduate this year. So overall there will be
> 3.2 million looking for a job.
> But that is just part of the aging process of the youth growing up
> and the old growing older. 3.2 million is barely 1.1% of the population.
> There will likely be 3.5 million people also retiring in a normal
> year, making the job positions available.
> So the fact that high school graduations happen by itself do not
> add to the unemployment statistics.

Brazil Stock Market Reaches a 6-Month High

Average PE Ratios around 5, if you exclude dividend stocks like Eletrobras.
Real interest rates have plummeted from 9% to 4%, which means Brazilian pension funds will have to increase stocks from 20% to 60% of their portfolio. Same bondholders. Dividend yields in Brazil are around 4% a year.
So by 2019, earnings should double, minimum, and PE ratios may become developed country style, say 20. That is a 10 fold increase in 10 years.
So let be go on record saying that Brazilian Shares will increase 600% in 10 years, to be conservative, versus 35% in treasury bills.

Housing: Where Is the Bottom?

One thing missing. Mortgage Interest Tax Deductions. If you factor in that 100% of NOMINAL interest is tax deductible and americans know about this tax deduction, you should:
1. Either increase family incomes to include this tax deduction
2. Reduce the present value of the house, my calculations comes to nearly 30% of the home.
This means families lose tax benefits if they wait and see for too long, and your target date may be sooner by 3 to 4 months,

The New Unwind

GDP has not fallen 6,2%, only 1,4%, from 14,4 trillion to 14.2 trillion this IV th quarter. Up from 14 trillion a year ago. Get your numbers before spreading doom and making all of this a self fulfilling prophecy.

Annualising to get everybody's attention is bellow the belt economics, unless you are predicting 3 more quarters liked it, with more of the same analysis as you have done.

What's the Better Solution - Inflation or Deflation?

" If we deflate, the value of all the outstanding debt faced by consumers and the U.S. government will begin to increase, and increase substantially."

So you propose increasing everybody's debt without even asking them if they agree ? What school of economics are we talking about here?

Any lawyers around to explain this guy the "rebus sic standibus" clause ?

Supply and Demand: Housing Sales Increase in California and Florida

It makes a lot of sense. Latinos , due to years of inflation in their home countries, detect negative interest rates when they see them. And if you think house prices are near bottom, future real interest rates will be definetely negative. Negative interest rates is a misnomer, because it actually means BANKS pay you interest, rather than vice versa. Plus you get Mortage Interest Tax Deduction on the nominal interest rates.

If this spreads around, there will not be a housing problem as I predicted in my Seeking Alpha in November.

Jobless Claims as Percent of Payrolls Aren't as Bad as in Previous Recessions

Another point is that payroll's as % of GDP is also down, due to massive increase in pensions, dividends and other non-employment-income. See the article.

seekingalpha.com/artic...