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  • Housing Shortage Coming [View article]
    Chuckle chuckle.

    I'm fortunate enough to have a close friend who has been instrumental in the formation of my company and who is able, on occasion, to help with financing for capital improvements. These are strictly "handshake" deals. Without them, I would never have gotten very far. I occasionally tease my friend that he's now part of the "shadow banking system" which he and I so often decry.
    Aug 9, 2010. 08:29 AM | 1 Like Like |Link to Comment
  • Housing Shortage Coming [View article]

    I notice that you use 2006 as a baseline for a normal or "frictional" number of unoccupied homes. I believe that is a heavily skewed data point; it comes just past the height of the bubble building boom.

    US census data from 2000 shows about 10.5 million unoccuopied homes. This is probably closer to a normal "pre-bubble" vacancy rate, and would indicate an excess inventor level of perhaps 6 million more units than the value used in your analysis.

    Also, changing demographics and fewer carreer opportunities for young people suggest that the household formation rate may be lower than the historical norm for many years.

    Given these two points, I feel there is little chance that there will be a housing shortage in the near future.
    Aug 6, 2010. 01:25 PM | 1 Like Like |Link to Comment
  • Japan, The U.S., Bubbles and Deflation [View article]
    Minimum wage laws and collective bargaining probably have a lot to do with the difficulty of experiencing real deflation. Companies are forced out of business, destroying excess capacity rather than having the ability to force wage concessions and stay in business.

    The idling of workers and destruction of industrial capacity will set the stage for demand based inflation. At that point, if the banking and capital markets are impaired to the point that capacity can't be increased to meet demand hyperinflation will result.
    Aug 5, 2010. 01:40 PM | 1 Like Like |Link to Comment
  • Forget 'Manufacturing' [View article]
    You're a moron. With out 1, there is no 2; and without a whole lot of 1 and 2 there will never be 3.

    Investors are people who start a business, INVEST in it, and have a VESTED interest in it's success. Note that the words "vest" and "invest" come from the same root.

    People who sit around trying to make money with money, trying to guess which stocks or bonds or commodities to buy in to "beat the market" aren't investors; they're speculators. They have no real investment in the assets, and no vested interest in the sucess of any venture but their attempts at ill-gotten gains. These speculators and their bribes are the reason billionaire hedgies pay only 15% capital gains, but their janitors pay 15.3% total Medicair and SS on top of their state and federal income taxes.

    True investors take risks and build companies.

    Speculators are parasites.
    Aug 3, 2010. 05:26 PM | 1 Like Like |Link to Comment
  • College Loan Debt: A Big Problem for Borrowers, Lenders and Government [View article]
    WRONG. At major universities, booster orgnizations like IPTAY (Clemson's football boosters) pay not only for the facilities, staffs, etc of the revenue sports (football and basketball), but for the rest of the non-revenue sports as well, many schools' athletic programs operate at a surplus and contribute funds for general education as well.
    Aug 2, 2010. 02:26 PM | 1 Like Like |Link to Comment
  • 8 More Reasons Why a Double Dip Is Coming [View article]
    And what tools does China have to prevent the world from slipping back into recession? Are not China's mercantilist policies one of the root causes of the most recent recession?

    China financed our housing bubble by loaning money to the US at extremely low rates. They were forced to do this because the Chinese Central Bank must print Renmimbi in order to buy US$ and Euro$ from Chinese exporters at the pegged rate. Once this has been done, the CCB must figure out to what to do with the Euro's and $. About the only thing they can do is LOAN them back to the US and Europe to finance the continued importation of Chinese goods. They certainly can't let the Chinese people use the $ to purchase goods/equipment/services on the world market because this would undermine the manufacturing/labor revolution underway in China. The Chinese govornment MUST maintain 8%+ annual growth or face an overwhelming tide of public unrest.

    One of the biggest reasons the Europe and the US must continue to print $ at a furious pace is to replace the Euros and $ which the chinese central bank is hoarding. The chinese central bank has MASSIVE FX reserves.

    Accelerated Chinese growth comes at the expense of economic growth in Europe and America. In order to spur growth (and thereby prevent recession) in the US and Europe, China would need to clamp down on growth at home. And that ain't happenin'.
    Jul 29, 2010. 08:47 AM | 1 Like Like |Link to Comment
  • 8 More Reasons Why a Double Dip Is Coming [View article]
    I thought that was Mao.
    Jul 29, 2010. 08:33 AM | 1 Like Like |Link to Comment
  • A New Low in Housing Construction [View article]
    Number of homes under construction is approximately # of permits/month x # of months to complete. # of months to complete is far less than it used to be.

    Homes are under construction for a much shorter duration than they were in 1970. My grandfather was a custom home builder (OK, he was a carpenter). When he built houses, he did all the carpentry work himself with a helper or two. He hand built all the cabinets, put down the hardwood floors, did the siding, etc.. Trade contracors had the site to themselves when they worked - masons, plumbers, roofers, plasterers, etc. Typically a year or more was needed to complete the project.

    Many houses now are built in under 3 months.

    That # of homes under construction chart needs to be normed to reflect different construction time lines.
    Jul 21, 2010. 12:54 PM | 1 Like Like |Link to Comment
  • Forget 'Manufacturing' [View article]
    Hey, I resemble that remark.

    I do cut my own wood (and split it with an axe) enough to heat my home in Charlotte, NC - and I live in town.

    I do grow at least some of my own food, as much as I can, much more I purchase at the local farmer's market and preserve myself.

    And I do draw a little of my own water. OK, so it's rainwater in barrels, and I use it to water my vegetable garden, but that should count for something.

    Ah, self sufficiency. I'm not off the grid, but I'm not as dependent on it as many.
    Jul 14, 2010. 08:45 AM | 1 Like Like |Link to Comment
  • Cleveland Jobs Challenge: Wendy's Story [View article]
    Wendy may or may not be in need of a husband, that's her business and no one elses. But what Wendy does need is her family.

    Where is the father (or fathers) of her children, and why is he not helping to provide for them?

    Where are Wendy's immediate family? Even if Wendy doesn't want to live with them, a sister or brother or parent could at least take in one or both of Wendy's children. This would lower Wendy's cost of living and help her mobility.

    One of the problems facing our society today is the complete collapse of family; in times of economic stress families need to pull together to provide for each other and pool their resources. But we've had 40, 50, 60 years of the nanny state telling everyone that they need not be concerned about their futures; if some ill comes your way the only family you need is your Rich Uncle Sam.

    Faith in the welfare state has replaced self-sufficiency, charity, and family with dependence on the govornment.

    Social Security was enacted as a way of getting a LITTLE money into the hands of the elderly so that they weren't such a heavy burden on their children. In the last 75 years, people have come to view it as a pension plan, which it was never intended to be.

    AFDC and Welfare were enacted to provide for those unfortunate women faced with raising children alone. 50 years of that program, and we now have generations who feel that there is no need to even attempt a traditional family, that no matter how meager their means it is their right to have child after child even knowing that they could never raise them on their own.

    Unemployment was intended to help ease the transition from either one job to the next to provide a little cushion for those who are faced with leaving the work force. Now, its treated as a permanent income for anyone unable to find work that suits them. Note that UI recipients aren't required to take any work they can find; they are allowed to turn down anything which doesn't offer equivalent salary or for which the are overqualified.
    Jul 12, 2010. 12:57 PM | 1 Like Like |Link to Comment
  • The Dynamics of Sovereign Debt [View article]
    Thanks for the link to the Chancellor article. It's well worth the time to read.
    Jul 11, 2010. 10:29 AM | 1 Like Like |Link to Comment
  • Why Munis Don't Pose a Systemic Risk [View article]
    They real damage done by widespread defaults on munis would be to the taxing entities and their subjects. Oops, I meant citizens.

    If states and cities see their borrowing costs rise, residents will pay a lot more in taxes and receive a lot less in services.

    Between this and acutely and chronically underfunded pension obligations, not to mention investment losses on the pension holdings, states and cities are really in a world of hurt.

    Now, two years into this new enviroment all of the smoke and mirrors, rainy day funds, and (apparently) federal largesse are exhausted. Now its going to start to HURT to get these budgets balanced.
    Jul 8, 2010. 12:31 PM | 1 Like Like |Link to Comment
  • Nonfarm Payrolls: A View From the Street [View article]
    Well, the carnage 2008-2009 wrecked on a lot of boomers retirement accounts has slowed voluntary retirements to a trickle.

    And don't forget, 200,000 (average) new workers per month as kids finish school and (try to) get a job.

    The labor force participation rate is plummeting; hours worked is essentially stagnant for the last 18 months; we'll be adding millions of census, state and local gov employees and contractors to the ranks of the unemployed over the next 6-8 months; and small business credit is virtually non-existent. If small businesses can't find funding to allow expansion it will be a long, slow grind for the unemployed. Big business will offshore as much labor as possible; job creation in the US will suffer.
    Jul 5, 2010. 03:31 PM | 1 Like Like |Link to Comment
  • The Housing Collapse Intensifies [View article]
    There's a difference between Trump himself filing for personal bankruptcy and a corporation of which Trump is CEO or a major shareholder filing bankruptcy.

    The first reflect on Trump, the second reflects on the business in which Trump was involved. And if the banks and investors understand the risks in the business, what does it matter to me if it fails or not?

    The case of residential mortgages is quite different. Investment banks and individual investors either ignored or didn't understand the risks involved in MBS. Mortgage banks and brokers committed widespread fraud. Individuals who were clearly not credit worthy were given loans to speculate on wildly overvalued assets.

    I don't see the comparison to Trump's business problems as valid at all. Banks continue to invest in Trumps businesses because, even though there have been some problems, in the long run, Trump makes money.,
    Jun 25, 2010. 05:10 PM | 1 Like Like |Link to Comment
  • How to Avoid a Fiscal Panic [View article]
    It's fairly certain, at in my mind, that the US has already reached the point that any combination of spending cuts and additional revenue programs is not only politically untenable for all involved, but also, due to reduced govornment employment and/or reduced transfer payments almost certainly cause a recession.

    The one real hope the US would have would be a moderate (5-6%) sustained inflation rate - one which would reduce effectively reduce wages compared to the developing world and simultaneously reduce the value of outstanding US debt.

    We seem, however, unable to trigger inflation. Massive liquidity injections into the system aren't doing it. No matter how much demand the US has, the rest of the world seems happy to meet that demand with additional goods and services without raising prices.

    I'm not sure how this all ends, but I think it ends badly.
    Jun 21, 2010. 04:20 PM | 1 Like Like |Link to Comment