thiazole

Economic Reports Show Mixed Results

That is backward thinking. What kind of jobs exist (outside of the government) that don't sell something to consumers? Consumption is outpacing production (as can be seen with inventory declines) and eventually businesses will start hiring again to stop the inventory decline. As they do that, more people will have money to spend and more consumption will occur.

In the end, any long lasting recovery will need ramped up exporting business. With the weakening dollar, that is becoming more and more plausible.


On Nov 25 03:32 PM JAMES CARLINI wrote:

> Unless you "REALLY" have to have that toy or doll or latest electronic
> game, I don't see a lot of people running out and wasting a lot of
> time in long lines at midnight.
>
> Betting on the consumer to spend us out of this recession is the
> wrong bet. Good jobs that are sustainable is what it needed. Then,
> people can spend on cars, houses and other big ticket items that
> are not showing signs of real revival. Hyped sales - yes - real recovery
> - NO.

October 2009 Existing Home Sales: Government-Sponsored Surge in Home Sales Continues

Did they? If they had bought into a free fall without the stimulus, the homes they had bought might be worth 20% less than they are right now, or if it had caused more widespread financial failure, they could be down 50% more.


On Nov 24 11:30 AM billsharpe wrote:

> I totally agree. It is amazing no lots of people understand this
> picture. This is basic microeconomics 101, government tax credit
> pushed the housing prices up, the buyers got sucked into higher prices.
> They could get a much better deal without the tax credit, now they
> got screwed. For a $300,000 house, without the tax credit, they could
> get it at least 5% less at $285,000. With the tax credit, they paid
> 300,000, and got 8000 back, so the net price they paid is 292,000.
> 292,000-285,000 = 7000. They overpaid 7,000 because of this tax credit.
> First time home buyers got fleeced!

Are Markets on the Verge of a Breakout or Meltdown?

I'll counter that with "plenty of bears have derided this rally with trailing data and lagging indicators. The market will top out around the time those trailing data and lagging indicators start looking positive, and many bears will go long then as a result".


On Nov 25 10:22 AM Michael2343 wrote:

> Never confuse a bull market and a genius. Plenty of folks made money
> since march that shouldn't have; I doubt any of them will sell before
> this crashes.

Equities Drop, Treasuries Gain on Weak GDP

Continue? Has the market been performing poorly? The indexes are all near 1 year highs right now. Seems like it has been following a pretty agressive upward trend to me.


On Nov 25 04:47 AM chris coonan wrote:

> Macroeconomic news will continue to weigh on the market the next
> few months.

Single Family Homes Remain Oversupplied by Over 900,000 Units

And if the debt is inflated away as the Fed is obviously trying to do, what happens to housing then?


On Nov 25 09:34 AM Carlos Lam wrote:

>Things will not begin to "turn around" until our debt overhang is
>either liquidated or paid off. Household debt to GDP is over 100%,
>and public debt is ballooning. Things may bump along--better one
>quarter, worse another--but there will be no real organic growth
>until we work off the debt that we've accumulated.

Single Family Homes Remain Oversupplied by Over 900,000 Units

Remember how much trouble the banks were in at the beginning of the year? Take a look at some YTD charts of your favorite bank stocks. The most money can be made by buying when things seem the worst. Invest long enough, and you will find that to be true 98% of the time.


On Nov 25 05:14 AM chris coonan wrote:

> The housing market is in so much trouble right now, it is not funny.

Three Reasons for the Slow Recovery

The author stated: "1. Jobs. Nonfarm payrolls are 5.5 million, or 4.0%, lower now than it was a year ago."

AGAIN, another claim that high unemployment means slow economic recovery. Every time I see this claim, I offer the challenge: show me a recession where high unemployment prevented or dramatically slowed recovery. The last two recessions that had high unemployment were 1974 and 1982 and both were followed by V shaped recoveries. Every time I post this challenge, I get thumbs down from the angry bears (no one likes a wet towel thrown on their flawed arguments), but no one gives me any examples of high unemployment preventing a strong recovery. And don't throw in credit or any thing else. That was point number two and the only valid point made here. The challenge is, since WHEN has high unemployment caused L shaped (or whatever ridiculous shape the bears think it will be that isn't U or V) recoveries? After 1932 (the highest unemployment in the US ever), GDP grew at 10% a year for 5 years - they don't much more V shaped than that.

Unemployment by the Numbers

Could you point me to some examples where a recovery started, but high unemployment stopped the recovery? Historical examples are much more convincing that just "saying it".


On Nov 24 06:39 AM chris coonan wrote:

> What is distressing is that unemployment as a correlation to recovery,
> is not necessarily a lagging indicator. The excessive unemployment,
> as you point out, and I contend is even worse than the BLS represents,
> can stall out a recovery all together. With an importing nation,
> depending upon consumption, and credit spending....unemployment is
> a HUGE FACTOR. Credit is also the difference this time around, people
> don't have any, it has all been devoured by the housing collapse.
> That is what is different this time around, and why this time should
> be correlated more closely to 1929/1930 than to the 1973 event.<br/>
>
> I think the author is overly optimistic.

October 2009 Existing Home Sales: Government-Sponsored Surge in Home Sales Continues

If we entered an economic contraction like the Great Depression, the decrease in tax revenues combined with deflation would have made the deficit/debt MUCH MUCH worse. Again, much if not most of the stimulus $ were wasted, but any that were used to clear excessive inventories (which is mandatory for a recovery) was well spent. I don't like that they cherry picked the auto industry for stimulus (let people decide what they will spend their money on or at least pick an industry where most of the items are produced in the US). Still, businesses won't start hiring again until they need to start building inventories back up. Money spent on pet government projects have mostly been a waste, though.


On Nov 23 08:30 PM fwi wrote:

> I will never see the prudence of giving taxpayer money away to buyers
> of new cars or new houses in a time of alarming and increasing deficits.
> The whole point of free markets is that when asset prices fall enough,
> buyers will come in without the bait of other people's money. Step
> back a moment--why would we want house prices to go higher? $8000
> is not going to help--it just back-doors the house price to go up
> by $8000. And then, having bought a house with a higher price, it
> crowds out other consumption.
>
> You can call it stabilization, higher prices, whatever. But it is
> still like using a car jack to raise up the body of the car because
> the road is flooded. You may be glad that the body is drier for the
> moment, but it is going to get flooded eventually.
>
> THis is one other instance of the Federal Govt led by obama to pick
> todays' winner (the Realtor lobby) and todays' loser (the American
> taxpayer, aloong with the retailers that don't service the housing
> industry).

October 2009 Existing Home Sales: Government-Sponsored Surge in Home Sales Continues

I agree. I myself am no fan of Obama or the current legislature. But the real estate tax break was one of the few policies I cheered about. It did what it intended to do - stopped the hemorrhaging in the real estate market and allowed people time to think about just how cheap real estate had become before it caused more damage.
I sincerely believe that some bears were really looking forward to seeing the destruction of this country and were disappointed when a few good government policies (out of dozens of bad ones) kept us out of the next great depression. The only thing I'd do differently about this tax credit is end it gradually - by $2000 a month until it is gone. This will prevent some of the mad rush followed by a big lull in real estate.

On Nov 23 05:14 PM David Van Knapp wrote:

> Guess you don't like the tax credit for home sales, huh? What about
> Bush's reduced tax on dividends...was that OK withya? OK to pay less
> tax on stocks held > 1 year than < 1 year? OK withya? Do ya really
> think that the real estate business has been a good business to be
> in the last year or two? Bringin' home the bacon? Know anybody trying
> to make aliving selling houses? 'Cause that's not what they tell
> me.
>
> Tax policy has always been used to promote social and economic policies.
> Always has been, always will be. If your point is that the tax credit
> on home sales has changed home sales statistics from what they would
> have been without the tax credit, please tell us something we don't
> already know. THAT WAS THE POINT. Just like more companies began
> issuing and raising dividends when the tax on dividend income was
> cut.
>
> If you want to argue that it was a bad idea, then state your case.
> You know, maybe a cost-benefit analysis, or a philosophical piece
> about the moral hazard of assisting homebuyers in a time of severe
> recession. But just posting statistics that show the tax credit has
> impacted the number of homes sold doesn't make any point at all.
> Duh.

October 2009 Existing Home Sales: Government-Sponsored Surge in Home Sales Continues

That statistic is also very loaded as well. Housing prices have dropped precipitously since the top. Back in 2006, the mean price of a house was over $250,000. Now it is only $218,000 - so of course more houses sold for above $250,000 in 2006 than now because there weren't nearly as many houses available under that price at that time. If you want to compare apples to apples, look for the last time the median price of a house was the same as what it is now, and then compare how many houses sold in different price ranges from that period to now.


On Nov 23 02:28 PM Radardoc wrote:

> Sold,
> You stated that:
>
> "It’s important when reflecting on the sales results to consider
> that 70% of all sales were for properties priced below $250,000 while
> only 7.7% were priced at or above $500,000."
>
> Do you have any data on what the "normal" (pre-bust) distribution
> of these sales were? It would seem natural to me that those higher
> priced homes would be a smaller portion of the market, even in good
> times. It would be nice to see what the ratio was before for comparison.
>
>
> Thanks

Existing Home Sales Going Strong

The "monthly payment" argument is more myth than you think. As I recall, Paul Kasriel wrote a nice article on that showing that in fact monthly payments have been significantly more variable throughout history than house prices. For example, in the early 80s when monthly payments probably doubled or more, housing prices only dropped something like 15%.


On Nov 23 12:59 PM Wesley Mouch wrote:

> I would clarify the argument of this piece as follows: We have not
> found the price that clears the market, we have found the monthly
> payment that clears the market. To get to that monthly payment, it
> took a big price drop and a large rate reduction.
>
> These housing discussion should lead with the reminder that it has
> taken threat to currency interventions from the FED to find the rates
> we currently enjoy. The FED now is the housing market.
>
> Why should we then pretend as if the market is functioning? It has
> ceased. Done. Over. Kaput. The FED finances housing purchases at
> rates that make non-printed capital throw up in its mouth.
>
> We have reached equilibrium under the current arrangement. But Bernake
> and company will eventually have to leave the room. Then what? What
> will be the rate? What will be the price of the houses sold today?
> The house sales that this article just celebrated will join the legacy
> property underwater. What will we do then?
>
> Optimism is good and healthy, but let's start talking about our exit
> strategy.

October 2009 Existing Home Sales: Government-Sponsored Surge in Home Sales Continues

Bearish articles never state what is normal - they want to give as little pertinent data as possible.


On Nov 23 02:28 PM Radardoc wrote:

> Sold,
> You stated that:
>
> "It’s important when reflecting on the sales results to consider
> that 70% of all sales were for properties priced below $250,000 while
> only 7.7% were priced at or above $500,000."
>
> Do you have any data on what the "normal" (pre-bust) distribution
> of these sales were? It would seem natural to me that those higher
> priced homes would be a smaller portion of the market, even in good
> times. It would be nice to see what the ratio was before for comparison.
>
>
> Thanks

Still the 'Most Hated Rally in History'

Maybe if you read stuff that isn't written by permabears you'd see that many people understand this rally and explained exactly what would happen since March-April. The fundamentals DO matter, just not the fundamentals that you've been looking at.


On Nov 23 11:47 AM stockferret wrote:

> It is hated because no one seems to understand it. My theory is that
> the fundamentals don't matter at the moment. Although the Bush years
> were bad for most of America the ultra-wealthy did extremely well.
> They have a lot of money to invest and until another asset class
> pops up to absorb it (or we get a lot of IPOs to absorb that cash),
> it is going to go into the default investment: stocks.

The Dow at 4000? Don't Laugh, It Could Easily Happen

If capacity is being destroyed, then that argues that we WILL have inflation. The less capacity, the greater the marginal cost of production.


On Nov 23 11:40 AM irondoor91 wrote:


> they aren't printing them as fast as the dollar-based debt underlying
> levered illiquid assets (primarily real estate around the world and
> unusable industrial capacity) is being destroyed through foreclosures
> and bankruptcies.