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Property Values Set to Fall 43% from Current Depressed Levels

User above makes perfect sense. All this talk of houses dropping according to some graf is nonsense. There are four components to real estate price, and three of them are real. First is price of land (how much paid) second is cost to build house (materials plus labor). Third is builders/developer's profit. Fourth is nuttiness on part of buyer. If builder bought lot for $50,000 and built 3000 sq ft house for $300,000, price of house ought to be about $425,000--$450,000 or so. Nuttiness comes in where builder asks--and gets!--$900,000. That house is not worth that amount, and should rightly drop in value. Like user above points out, something went screwy with outrageous inflation of land value. It will all adjust itself within a few years. Some house might drop this 43%--if they were overpriced anyway. Others will drop because their "value" was being propped up by nuttiness, but not so much. Then houses will be back on track and remain a good hedge against inflation, (instead of a cash cow).

How Washington's Policymakers Are Damaging the U.S. Economy

Peaktrader; I think I'm on the verge of belaboring this, but loo, if the United States government had told its big mortgage lenders, Fanny, Freddie, Ginnie, FHA, they were not to purchase any of these screwy mortgage notes that bankers themselves knew were no good, NONE of this would have happened; there would have 1. been no housing bubble,2.no bad mortgage derivatives, 3.no credit default swaps to pay off and 4.Lehman and everybody else Merrill, Bear Sterns, etc. would still be doing business.

Now if you want to argue that they had so much money they were bound to screw up and go bankrupt, okay, that's another story. But the reason everything crashed last fall was because the U.S. government permitted, encouraged, and even mandated lenders to write mortgages they knew were probably gonna go bad; especially if there was any downturn in the economy.

How Washington's Policymakers Are Damaging the U.S. Economy

TAlk about fuzzy thinking on how this crisis happened. Peaktrader still insists: "The U.S. allowed Lehman to fail, Sept. 08, which froze the credit markets...etc. etc.

Nonsense. The proper question is, WHY did Lehman fail?

Answer: Because it owned a huge inventory of real estate "derivatives," (i.e. paper based on bad home mortages) that never should have been made into loans in the first place! Except the GOVERNMENT--OUR GOVERNMENT--not only permitted it, they actively encouraged it, and in fact MANDATED it!

Had the government not done this (in the name of do-good social policy) NONE of this would have happened, and Lehman would be with us today!

How Washington's Policymakers Are Damaging the U.S. Economy

"In other words, measures to counterbalance downturns in the private sector were appropriate provided that they did not maintain an artificial stability in the private sector over the longer term thereby preventing necessary constructive destruction of inefficiency and set the stage for an even deeper and unnecessarily destructive crisis at some later date.

These measures were not taken and the current crisis resulted. "
--from Mr. Adamson's analysis above.

Whatever all that means--and it sounds mostly like nonsense-- the plain fact is that our government ITSELF actually CAUSED the crisis by forcing a social policy,( CRA, etc.) onto its huge agencies (FHA) and quasi-agencies (FNM, FMAC,GINMA) causing them to completely abandon sound lending practices and hand out loans to people who everybody with a brain knew could not pay them back.

This resulted in the housing boom, and bust, and consequent crash of stock market after GOVERNMENT agencies sold these bad loans to the thieves/fools on Wall Street, who packaged them into "derivative investments," hedged them with insurance from other Wall Street type thieves/fools, and look what happened--the whole damn economy tanked.

All BECAUSE of a do-goody social policy instigated by the FEDERAL GOVERNMENT. None of this would have happened otherwise--NONE of IT! A president of a good sized bank remarked to me shortly after the crash, "We know good and well those loans weren't going to perform any better for Fannie Mae than they would for us, and of course we'd never have made them if they (the GOVERNMENT) hadn't wanted us to."

How Washington's Policymakers Are Damaging the U.S. Economy

It is obvious except to the most stupid that government intervention created the housing boom, but what about the dot.com boom? Was that easy money caused by government lowering rates? If so, if government tightens rates, raises interest, isn't that a government intervention too?

How Washington's Policymakers Are Damaging the U.S. Economy

Agree this is an excellent analysis, except for the suggestion that the present policy makers do not understand what they are doing to foreclose accumulation of wealth.

It is quite possible, even probable that at least some of them know exactly what they are doing, Krugman (and oh, yes, he is a policy maker too) among them. They know full well that the kind of "change" they envision cannot occur in an environment of economic stability.

As the president's resident policy czar Rahm Emanuel said last year: "Never waste a crisis, it might provide an opportunity."

Interesting line, first used by Vladamir Lenin.

Bond Market Expects Inflation to Be Only 1.75%

The only sane reason for an individual to invest in U.S. treasuries is if he has so much money that the pitiful interest will still bring in more than he can possibly spend each year. At least he will be as safe as he can probably get.

For the rest of us, my though would be, stay very, very flexible. We are being stalked by an animal that nobody has really ever seen before, and is very unpredictable.

Jim Rogers on the Next 10 Years

All this sounds pretty good and Mr. Rogers appears to be a smart man. But what I don't understand is, how come after investing in his Rogers Commodity Index a few years ago, I am still loosing my shirt in it? Has he outsmarted himself? My broker? Me? You?

Marc Faber: Equities Safer than Dollars

According to Mike from NYC, above: "People didn't stop buying American cars because they were built by union members. People stopped buying American cars because Americans were tired of buying unreliable and poorly designed cars."

In case you haven't noticed, people haven't stopped buying American cars. Sure they slowed down for the reasons you cite,
but what hit the U.S. car companies mostly (in addition to the crash) was having to pay somebody whose sole job was to screw on bumpers on automobiles $600 a day in salary and benefits. That's what hit the companies, cause they couldn't afford to produce a compeditive car, and they couldn't afford to pay all those salaries and benefits to...to? To who? UNION MEMBERS! which fact you somehow neglected to mention in your laundry list of faults.

Marc Faber: Equities Safer than Dollars

What exactly do you mean, "unless?" It is happening as we speak. Labor unions have long outlived whatever usefullness they might have had. Obama and his union pals are determined to destroy wealth and prosperity in this country, so as to substitute their own failed little economic system.

Let's look at what the Unions have done so far. They have destroyed or crippled the U.S. steel industry, automotive industry, education, maritime industry, newspaper industry, railroad industry, airline industry, postal service...God, the list could go on.

And until recently the union were on the ropes for the very reason that they so ruined the very industries and business they were involved with they had lost much of their power.

And then...and then....AND THEN...:Along comes President OBAMA!

Yeah! Hooray! Whoopy!


"But just because living standards go up in India does not mean they have to go down in the US- unless Obama and his union pals try to remove us from the global economy, in which case the rest of the world will boom while we stagnate."

The Nine Best Natural Gas, Oil Pipelines for Income and Capital Gains

"PMBIF. This company transports about 1/2 the oil produced in the western Canadian sedimentary basin, offers a current distribution yield of approximately 10%, and pays monthly. "

all of the financial stats sites I visit say PMBIF pays no dividend/yield. What's up?

Armageddon Part Two: Securitization Is Too Big to Fail

"Be that as it may; the important point is that the $2.7 trillion of "bail-out" money doesn't get into the economy until the banks start to lend it. So far they are not doing that. "

Responsible borrowers for the most part already own their own homes and do not wish to risk a bigger mortgage by "moving up" in these unsettled times. Nor do they wish to tap into "home equity" or max out their credit cards to buy consumer goods. That leaves the irresponsible borrowers, whom the banks and credit card companies no longer lend money to.

Voila! Until this is dilemma is solved, recovery will be exceedingly slow.

Coming Soon: Banking Crisis of Historic Proportions

Everybody talks about this "tsunami" of foreclosures that is upcoming, but nobody can say how much it will cost and to who, and who won't be able to afford it, etc.

The real problem is that there are too damn many banks. Its not just a bank on every streetcorner anymore--its three or four banks on every streetcorner! We are up to our asses in banks, and without enough people who know how to run them! No wonder it went haywire.

How (and Why) to Replace the A.P.

1. Good idea to get rid of AP, but article suggests doing the right thing for the wrong reasons; i.e.: best reason to get rid of AP is not because of internet access, but it has turned into an organ of the left wing. AP used to put out straight, honest news. No frills, but at least straight, honest--that was 20--thirty years ago. Now its like the NYT and similar outlets which in recent years simply can't help but sneak their leftist partisanship and biases into their news pages, so they can't be trusted anymore. Give AP a little longer and it will hang itself with its own rope, just like the NYT, et. al.

Why This Is No Time for Buy and Hold

"Give me a break. Anybody, irrespective of one's political leanings, who seriously believes that this administration (or any other one) is engaged in a "strategic" plot to destroy capitalism belongs in Disneyland. "

Well, diogeron, you might consider this, then, if you don't think this administration is out to destroy wealth in the United States:

"The way to crush the bourgeois (the capitalists--those who make money) is to grind them between the millstones of taxes and inflation"--Vladmir Lenin.

If you don't believe that the present policy of the Obama administration and the Democrat-controlled congress isn't leading us into boundlessly high taxes and unavoidably outrageous wealth-destroying inflation, then just who is it that "belongs in Disneyland?"