Can'tSpotABubble?

U.S. Housing Market Has Likely Bottomed

I saw the headline and thought Mark Perry was the likely author. I forgot about his Asian twin.

NY Fed Treasury Spread Model Suggests Recession Will End This Year

@PainfullyAware

You hit the nail on the head... Here's a brief synopsis of the Prof's record...

No credit crunch: seekingalpha.com/artic...

US Economy doing quite well: seekingalpha.com/artic...

We're still a long way from a banking crisis: seekingalpha.com/artic...

A little perspective, according to the world of Dr. Mark Perry:

First, there's no recession:
mjperry.blogspot.com/2...

Second, the monetary base was growing at an acceptable rate:
mjperry.blogspot.com/2...

Third, the big one, there is no credit crisis:
mjperry.blogspot.com/2...

mjperry.blogspot.com/2...

mjperry.blogspot.com/2...

Especially because, "banks are lending at record levels":
mjperry.blogspot.com/2...

NY Fed Model Suggests Economic Recovery Has Started and Recession Will End This Year

The damage to the economy is contained. We expect slower than normal growth in the future, but growth nonetheless.
</sarcasm>

Systematic Risks: Implications for Regulation and the Bailout

So to understand your comment, the government becomes a landlord of last resort? I'm sorry, but that idea is simply ridiculous.

It is time for government to step aside and let the markets correct. If they are concerned with a functioning banking system, take the $350 billion they are considering throwing down a hole and capitalize 10 new banks with $35 billion each. These banks should comply with 10:1 leverage limits. It's time to end this farce and let the "too big to fail" institutions fail. The shareholders should be wiped out, the bondholders take a haircut and let's get back to business.

The business environment will not return to normalcy until the bad debt in the system is forced into the open and defaulted. The markets cannot function normally while there is the ever present specter of government intervention in the markets looming at all times.

Will 2009 Bring Ring Three of the Financial Circus?

Steven,

Excellent article. Thank You

A Note to the Bubble-Phobes

You can't be serious? Anyone who was paying at least the slightest attention to real estate could have seen that we were headed into a bubble as early as 2002. I echo the sentiments of other posters about our "officials" looking the other way to corrupt practices.

I realized we were in a bubble in 2002, sold my house for the highest price ever in the subdivision, the day it was put on the market. In Missouri no less. They wanted to close so quickly I had to rent what I thought at the time was a short term apartment before buying another house. A month after the close, I visited a mortgage broker buddy who told me I could borrow with little or no documentation, TEN TIMES my annual income.

Thank god I had the sense to walk away and continue renting my "short term" apartment. BTW my apartment is 25% of the cost of "owning" the same space in the same neighborhood even at current prices. That only figures PITI and not other associated costs.

I also am grateful that I had the sense to get out of the market completely (with the exception of some long positions I've had almost 20 years) on the recent run up.

When real estate dips below it's historical norms, as it will since everything overshoots on the downside, I'll be standing there with a pile of cash to buy my next house outright. Meanwhile my landlord can continue to eat negative cash flow and subsidize my domicile.

I imagine the real interesting times will start when AMBAC or MBIA is finally given up for dead. Or perhaps when one of the larger financial institutions fess up about a 100 billion dollar skeleton in their closet (Citigroup).

In the mean time, get some funds out of dollars (Canadian dollar for me @ .70, a 40%+ profit at todays rate). Get anything else other than your REALLY longs under FDIC cover, buy a bit of gold, and buy staples in bulk as the prices will continue to rise.

I think that double edge sword of a Chinese proverb is coming true....
May you live in interesting times.

Preserve your capital accordingly.