johngonole

How to Prepare for the Inevitable Correction

Nuts to the guy who thinks the increase is a correction. The first 2/3 of the upswing maybe. But we are closing in on DOW 10000. I remember when the DOW first crossed that number and the economy and its future outlook was much better than now.

Interview: Economist Michael Pento Finds the Fed 'Completely Unnecessary'

Fractional Reserve banking is a huge part of the problem. The Federal Reserve was created in part to deal with runs on the banks. The allowed leverage ratios are way to high. The Fed I think stupidly tries to manage the economy. In addition to inflation, unemployment, etc....they must also account for banks (who are using high leverage ratios) wiping themselves out with bad loans. This creates huge whipsaws and basically the money supply changes that are made can never be efficiently enacted to maintain stable prices. Now that all the big gold strikes have been found we'd have more stable prices tying the money supply to gold again.

Ultimately whatever the monetary system is like we must have one that yields stable prices. Businesses now are more likely to live or die based on their speculation skills (when to borrow debt, when to scale back debt) and hedging abilities than skills in their craft. Just recently metal building companies were having to bid on projects that once awarded (several months down the road mind you) could become effective contracts with the price of steel 20% higher or lower. Easy credit also can cause certain markets to become quickly overcrowded. Those with the lowest debt cost basis WIN even though they may not operate the best.

This is, in part, what Mises meant that inflation would cause misallocations of assets and resources that later all leads to a bust. Think housing market.....

Why the Bulls Are Skating on Thin Ice

I've been quite perplexed myself at the strong stock market surge since March. I've been so perplexed that I've even in my head entertained the notion of a coordinated effort between media, govt, etc.. to convice everyone that things are improving. Could the stock markets rise be engineered by those who need things to improve? Is the FED buying stocks too. Kind of like a way of convincing people to spend again.

I can't help but notice how when republicans are in power we have talk through out the media of just how awful things are (even when unemployment was below the natural rate of employment and people were crashing over the border for all the under the table jobs) yet here we are with the worst numbers I can remember and the media puts a positive spin on everything. All the sudden there is a silver lining in all dark clouds. Where as before any small spot of clouds in the sky on a bright sunny day was repeated over and over.

Of course media bias is one thing we've all known about for a long time. But the stock market rise can't just be from the media's positive spin. I'm just wondering if the govt and/or Fed having been spending their capital buying stocks.

For Dawson Shareholders, Now Is When to Hold On

Agreed! For months I've been thinking the market would have a sustained pullback. We are now approaching DOW 10000. I'm certainly not buying here but I've missed out on most of the run upwards.

Perhaps living in Florida has clouded my judgement. Perhaps other areas are seeing a real pick up. Here in Florida things seems to still be worsening a bit and certainly there hasn't been a pick up.

Where Are Housing Prices Headed Now?

I think the author was trying to say that housing's ultimate floor and long term price trend will mirror that of how much it cost to build a home. If prices go too high supply will increase. If they go too low supply will dry up. (by supply I mean homebuilding).

I agree with the above premise for the long term. I also agree with the poster about lack of data. How do we know immigrants are still coming into this country. I've actually heard that because of unemployment (which would be much higher if we counted the illegals) illegals are leaving the US. This might be true but who has the data.

I think the easist measurem will be the supply of homes figure

One Good Thing About Estimated Current Housing Values: Reality

Libertarians would say that if we would just let the credit card companies and banks who loaned to those who can't or won't manage their debts properly fail, then there would no longer be financial institutions left to loan again to those folks. The brutal realities of a free market won't allow irresponsibility. But everytime we take another step in relieving people of their responsibilities the failures just get larger and larger.

I need a beer. This isn't rocket science.

Four Important Housing Charts

Things usually don't go straight up or down. To early to call a small turn up a trend. CNBC, financial media in general are always biased on the positive side of things. For about two months now all I hear is that things are turning around. But it only seems to be turning around in the paper markets. Real demand for all kinds of goods and services is down. Unemployment is still rising.

More Good Housing News

Unemployment is still high in Florida in most counties. Enrollment of children in elementary schools is dropping. This indicates that young families are still moving out of the state.

I think once the 8000 tax credit expires (and even if renewed) we will see a drop in demand. Not to mention that the almost regular stock market retreat in the fall will give people pause.

Two for One for Bloomberg Against the Secretive Fed

Boy I wish the federal governement would grant me the power to print money and by stuff that yields interest without end.

In all seriousness I would rather have this power private than in the hands of the government. On the otherhand the books should be open and transparent since manipulations of the money supply effect macro economics of our country in a big way.

Now jumping off the deep end what would be really nice would be to have a monetary systems without fractional reserve banking of any kind. Then we wouldn't have any more bank failures, no fed, no federal deficit spending, etc...

Housing: Strong Recovery Ahead

Author is correct that with such a low build rate there will be plenty of construction capacity to jump back online when ready. From lots to labor supply is ready.

His thesis of a build up of demand is weak however. In Florida we've heard and seen that many of the illegals have left to go back home. In fact I think the recession has been longer than most people know. The unemployment rate lagged reality because it failed to reflect the fact that many of the first laid off employees were illegal. Especially the contraction that occured in the construction and hospitality industries.

Shadow inventory will suppress what demand there is. Prices can't be expected to rise too much. If home prices begin to rise that is when you will see the homebuilding explode. Why buy old when you can buy new. The only case against this thesis of mine is if commodity prices explode due to recovering economies elsewhere or another lending explosion.

The other thing I would argue is that home prices are still out of reach for a lot of people (and obviously in areas where unemployment is high) compared to their income. Rental rates are dropping in many places which also indicates spare capacity.

I think think housing, bankin, and the stock market in general will head lower till say November or December. The plunge protection team can't keep buying forever. Fundemetals will eventually rule

Rethinking the Baltic Dry Index

Someone should overlay the BDI with the M3 money supply. My guess is that when M3 explodes due to increase bank lending then the BDI goes higher. When M3 shrinks the BDI goes much lower. My guess is that the BDI follows the Austrian theory of the busniess cycle. When money in cheap and easily borrowed demand exceeds supply. Just when the new ships come online then demand drops off as the one time blast of borrowing ends. Wild swings are probably lagging a bit behind the M3.

Why Do Equity Markets Disagree with the Data?

About a month ago I read the trim tabs was betting on a market drop. Long term their liquidity theory has been pretty right on over the medium term.

Could it be the plunge protection team in action taking advantage of low liquidity. The Fed can buy whatever they want these days....why not some stock? Heck the Fed could buy the whole S&P 500 with paper money and it would be legal. The market cap of MSFT and GE are around 350B combined. Seems like chump change these days.

Prime Mortgages Are Also Going Sour

Two points to make from a person living in Florida. Houses are selling because of the short term 8000 first time buyer stimulus. Banks are in fact sitting on homes. Like the guy above I know a guy who technically allowed his construction loan to laspe without locking in a rate. The bank won't give him a mortgage because the value of the home has dropped. Yet they haven't moved to foreclose on him either. Another person I know was actually coached by his real estate agent into missing payments on purpose. He had lost his job and relocated. Renting of course. Instead of paying the difference (on the home now worth less) he was told to miss two or three payments so he could start the short sale process. I'm not surprised that Florida is in bad shape. Some counties are in worse shape than others. Population is actually leaving the state on a net basis which has never happened before. Builders are still building slowly. The math says that the malaise in Florida will continue.

I do believe that a second wave of foreclosures is in the works. I think the stock market quite frankly is being pumped. Ocassionaly we have a down day. On the days it drifts lower there is always a rally second half of day. Up days stay up but most of the days that start out down do not. I suspect the plunge protection team, govt, and Fed have figured out that this is the cheapest way to convince Americans that everything is going to be OK so please go back to your negative savings ways.

I read an article a few months ago here on seeking alpha positing that the unemployment rate would not be a lagging indicator this time. I think I agree. The housing crisis while not the whole economy is a huge part of the slow down. This part will not be fixed without stable employment.

My fear is that buy the time this is all over we will have even more people standing by their shovels for the government...I mean working for the govt.

Cap-and-Trade: The Only Alternative to EPA's Power Grab?

One more link.

www.ethicalatheist.com...

Cap-and-Trade: The Only Alternative to EPA's Power Grab?

Socrateazz,

Careful the ancients knew the world was round. The very premise of your argument that a vast majority of medival people were stupid and held on to the belief that the world is flat is actually a myth. I first came to know this by watching a show on the history channel. The below links except for one are apolgia sites for christian and atheist groups. Setting that aside the history channel (or maybe discovery) show had portraits of Jesus holding the earth in his hands.....IT WAS ROUND that far predated Columbus. Anyway anyone that has ever gone to the beach can see the arch of the world on the horizon. It wasn't hidden knowledge. So while I agree with your overall premise how can you ever know ALL that you don't know.

www.ethicalatheist.com...
nabataea.net/flatearth...
www.bede.org.uk/flatea...
www.lewrockwell.com/wo...





On Aug 16 02:03 PM socrateazz wrote:

> Religion is right! Fools start to believe something and they will
> not give up that belief for any reason. The world was still Flat
> for up to fifty years after it was proved to be a sphere. But those
> in charge believed they were being buffaloed by fools. If you believe
> somebody has an dumb belief, check out the reasons for that belief
> and the reasons for your beliefs. You might have been propagandized
> and do not even know it. I agree Carbon dioxide is an invented fear
> for control purposes. And people like to control!