The U.S. Economy: Stand by for more worse news

[Me-Ki-Gal]

has US housing industry recovered?

no, prices are still falling and banks have become afraid of foreclosing. Some of them have been delaying the process. Inventories are high and the lack of qualified buys continues to drive prices down. You Asian Nations out there if you continue on this same train track you will eventually have the same fate . I believe that . The best to do is wait an watch what the fall out will be . I know it can seem like the roaring 20s and life is all fine and dandy . No fear ! humans are resilient creatures .

The Banks are hiding losses . Real Estate Losses . They are massive and there is no market for the inventory as to recover any of the losses . Plus the market continues to crash. How low will it go . Well some say we are at the bottom . Not . We just sold a lot ( Greathouse Family trust ) It was worth 120,000 We took a cash offer of 60,000 . Not that we want to set a presedence in price but we wanted to pay off a 6% interest loan. That was based on the market not coming back for ten years . That is the Greathouse Family trust forecast . Now if you all help me with "Wood For Haiti" we could that baby right in half . You guys don't understand what the plan if successful could do to turn things around . Restore confidence in human activities is a huge thing . The Web Sites up an running full bore and Gary he is explaining the plan . There are you tube lectures too . Save the planet ? You want that ? It starts with Haiti . I call it the Foot cause it is like the foundation of freedom . Please wake up people . You can not keep kicking the Burning Dog

 

[Me-Ki-Gal]

Everything is falling.
Every damn thing.
Chicken Little, come back, we misjudged you.

In answer to my post #165, below, it was not the best time to buy as the FTSE went down another 100, before rising.
That 5,000 mark seems to be holding at present.

you know i love you captain . i wrote that song when i was 19 . Your the best Captain . I only propped up Stryder cause he likes being a Good Mod . He is a great guy but he will never be the Captain ! O.K. no one ever seen the lyrics and the song has not been sung for many many years . I don't even know if I can remember but I will try .
I come chicken little looking for the brook
I think you found it when you took
The money from your jeans busting at the seems
Giving some away hurry don't delay

There is lots to live
When you learn to give


Anyway when I wrote that I had no Idea the this day would come that Business would sit on the side line and hoard there cash . So you see what I mean Captain . There is money . Pend up Money . Risk is to high . If you want to survive the next decade you got to know when to hold them phalosiphy of Kenny Rogers comes heavily into play . I don't agree with it so much , but what you gonna do about rocks in boxes. Predictable human activities . Human Nature . Can we go against human nature ? I mean as a group,cause lone wolfs get exiled, As a group ?

God can anybody read symbolism but Me . It is a real language you know . It is not just made up. It tells of things to come . The whole idea of MOther GOose anyway . WTF

O.K. Disney store I think . (Lion < Thorn in Paw < Take thorn out of Lion Paw = Happy Lions
Haiti ( Called Foot < Misery abounds bigger than your life can imagine < What you going to do when they come for you ( Not Haitians stupid . The misery . What you going to do when the misery comes for you

 

[Billy T]

@ Me-Ki-Gal:
I don't completely follow your point but you do ask for help related to the housing problem, I think. I told how to fix it back when GWB was POTUS and all were supporting the nonsense Paulson was suggesting.

I told why Paulson's plan would fail, even before Congress and GWB made it law. (Namely it did not even address the cause of the problem, provided no cure and no reason why it would not all happen over again, etc.) See my post here for what might have worked:
http://www.sciforums.com/showpost.php?p=2025940&postcount=1

 

[Me-Ki-Gal]

@ Me-Ki-Gal:
I don't completely follow your point but you do ask for help related to the housing problem, I think. I told how to fix it back when GWB was POTUS and all were supporting the nonsense Paulson was suggesting.

I told why Paulson's plan would fail, even before Congress and GWB made it law. (Namely it did not even address the cause of the problem, provided no cure and no reason why it would not all happen over again, etc.) See my post here for what might have worked:
http://www.sciforums.com/showpost.php?p=2025940&postcount=1

Yeah Billy ,
That is why . That is why . I say that is why . I did not participate and make fucking fortune and tell rest of the world to fuck them selves . Why Because *I knew and know it was wrong . I say many deals Micky Moused and Micky Mouse deals have a way of catching up with you . It is so insidious and prevalent and the shift of blame is kicked around like it was a foot ball. In the hey days of the housing boom is what I am talking about . No one took responsibility for what was happening ( The fleecing of an industry for ill gotten gains, It was my family business not just a chance to make a buck . So you can get a feel for my disgruntled feeling for the business and being a witness to the Mayhem in a front row seat

*My Father and I would talk about the impending crash when Life is party time for the rest. We would look at each other and say W.T.F. even Monday and Tuesday know what W.T.F. means . Centuries of law was violated . Banking laws . We should say Bush-Frank plan . That might be a little to much denial for a progressive to face.

The way I see it it started with over inflated Tech stocks and when they could not bare reality anymore the money fled to the real estate industry by the direction of Bush . So what greedy money do . It drives up value until it is over the limit of real supply and demand , not some imaginary la di da future . What is gold going to do now ?
O.K. got to go .
Nice post Billy , Yeah . I didn't quite read the whole thing but most of it I did . Likey Likey . Now what as we look to the future . What do we do with all the hidden losses . They have to manifest in one form or another don't they .

O.K. I got to go . Love you guys Later

 

[Tiassa]

The European Effect

The European Effect

Former U.S. Labor Secretary Robert Reich explains:

The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That's no big deal.

But a default by Greece or any other of Europe's debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.

That's where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.

The Street's total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total.

And it's not just Wall Street's loans to German and French banks that are worrisome. Wall Street has also insured or bet on all sorts of derivatives emanating from Europe – on energy, currency, interest rates, and foreign exchange swaps. If a German or French bank goes down, the ripple effects are incalculable.

Get it? Follow the money: If Greece goes down, investors start fleeing Ireland, Spain, Italy, and Portugal as well. All of this sends big French and German banks reeling. If one of these banks collapses, or show signs of major strain, Wall Street is in big trouble. Possibly even bigger trouble than it was in after Lehman Brothers went down.​

It's hard to add anything to that. Of course, I suppose one can always argue with Reich's proposition. Meanwhile, globalization includes global risks. Global capitalism sounds like a great idea as long as we believe that nothing can go wrong.

And flying like Superman sounds like a fun idea until you actually jump off a building and plummet, screaming, to the ground.

Reality is just a buzzkill, eh?
____________________

Notes:

Reich, Robert. "Follow the Money: Behind Europe’s Debt Crisis Lurks Another Giant Bailout of Wall Street". October 4, 2011. RobertReich.org. October 4, 2011. http://robertreich.org/post/11033625495

 

[Michael]

Come on Greece! You can do it!!! You have 2500 years of history.... don't let the crooks steal the Parthenon!!!!

I don't know why, but this song popped into my head..... (the lyrics are little more lurid than I seemed to have remembered?)

Well this car is automatic, it's systematic, it's hydromatic
Why it's greased lightnin'!

We'll get some overhead lifters, and four barrel quads, oh yeah
Keep talkin', whoah keep talkin'
Fuel injection cut off, and chrome plated rods, oh yeah
I'll get the money, I'll see you get the money
With a four-speed on the floor, they'll be waitin' at the door
You know that ain't shit when we'll be gettin' lots of tit in greased lightnin'

Go, greased lightnin', you're burnin' up the quarter mile
Greased lightnin', go greased lightnin'
Go, greased lightnin', you're coastin' through the heat lap trials
Greased lightnin', go greased lightnin'
You are supreme, the chicks'll cream for greased lightnin'

We'll get some purple French tail lights and thirty-inch fins, oh yeah
A palomino dashboard and duel muffler twins, oh yeah
With new pistons, plugs, and shocks, I can get off my rocks
You know that I ain't braggin', she's a real pussy wagon - greased lightnin'​

 

[Billy T]

Here is video that shows much worse is coming (and near end tries to get some of your money):

http://www.investingdaily.com/glp/3...gx=d.kac,stid.12224,sid.250664,lid.4,mid.5722

This link tells that the average length of being unemployed has never, during the 60 years in which records have been kept, been a high as it is today: http://news.yahoo.com/blogs/lookout/average-length-unemployment-now-60-high-161206191.html

Points out that is forcing the older workers without jobs for years to simply give up - stop looking so they are no longer counted in the "unemployed" percentage.

 

[Billy T]

““… Last December, Sinopec had signed the deal with Chevron. The move marked the leading Asian petroleum and petrochemical company’s re-entry into Indonesia following its withdrawal in 2006. With today’s new deal, Sinopec assumes an 18% interest in the Gendalo-Gehem deepwater natural gas project off Indonesia's East Kalimantan province.

The project comprises three blocks in the Makassar Strait offshore East Kalimantan approximately under 6,000 feet water. The company expects its production to peak in 2016 at 370 thousand metric tons of equity oil and 79 billion cubic feet (Bcf) of equity gas. The recoverable reserves are estimated at 15 million barrels of crude oil and 700 Bcf of natural gas.

Also Sinopec’s recently acquired the Calgary, Alberta based oil and natural gas company, Daylight Energy Ltd. for about C$2.2 billion (US$2.1 billion). …” From: http://www.zacks.com/stock/news/62566/Sinopec+Closes+Indonesian+Deal

SUMMARY: China continues to spend its dollars for real assets. This with the rapid growth of the domestic market, ambitious infrastructure investments (For example a new coal fired electricity plant coming on line every week, world’s largest investment in “green energy” too. 100 million farmers being transformed in to urbanites living in new cities, etc.) and rapidly growing trade with other Asian nation (suppliers of the low value added components China builds into its high value added production, like cars, trucks, trains, airplanes & electronic devices) and raw materials, energy & food supplies like Brazil and Canada, it is not long before China tells the US:
“Go to Hell. – We only trade with those who don’t need to loans to buy. We will no longer finance you deficits.”

 

[Billy T]

"... Last night, Democrats in the Senate tried to pass a simple piece of President Obama's jobs plan that shouldn't be controversial: provide money to prevent further layoffs of teachers, cops, and firefighters at the local level, and pay for it by taxing the income of millionaires an extra 0.5%. ...The measure didn't come to an actual vote.

That's because every single Republican senator filibustered the bill .... Republicans have unilaterally decided not to allow even that simple majority vote on anything that might help the economy before the next election. ..."

From: White House Email I and many millions of others get. Last sentence is to sweeping be be 100% true (I hope) but it is not uncommon that the party out of power believes:

"The worse it gets, the better it is." (for our election chances.)

Such a high percentage of the population, including many with 1 million plus incomes think an extra tax of half a percent on the mount OVER one million is desirable that I think the Republican have shot them selves with this one - Too many voting mothers (not to mention many dads) will be unhappy with 40 instead of 30 kids in their already over crowed class rooms when 1 in 4 teachers is let go by next election time.

Their claim, even though true, that: "I did not vote against the aid for teachers and firemen bill." is not going to wash - unless the American voter is even dumber than I believe he is.

 

[Billy T]

Bad news is it is very likely the cost of both bread and gasoline will be going up, If only some "Canadian factors" change (many factors are involved so some could be offsetting.):

“… We should know the decision of the US government on the construction of the $7 billion Keystone XL pipeline within the next two months. The odds appear to be in favor of approval, but nothing should be taken for granted.

The Obama administration {is} in a no-win situation: If the pipeline is approved, the powerful environmental lobby—one of the President’s strongest constituencies—will be outraged, and a series of lawsuits will certainly follow. But a rejection would deliver a huge blow to the President’s credibility as a job creator and sour relations with Ottawa in numerous ways.

The New York Times, last April published an editorial opposing Keystone, arguing that its construction "poses a major threat to water supplies on both sides of the border."

The demise of Keystone would almost certainly result in a much stronger push to win approval for Enbridge’s Northern Gateway pipeline, which would carry oil-sands production from Alberta to Kitimat, BC, from where it {decades of shale oil} would be shipped to fuel-hungry Asia, and China in particular. Another consequence of rejection would be that Washington would have to stand by and watch as Canada forged closer energy ties with the Chinese. …”

{Billy T notes: Canada will become closer to China anyway – China can pay more. For example, currently ALL Canadian wheat must be sold to the “Wheat Board” which then sells it mainly to the US. Canadian farmers want to sell directly to China and have recently gotten the Wheat Board scheduled for abolishment. (At start of 2012, as I recall)}

Quote from: http://www.moneyshow.com/investing/article/29/Global-25106/Keystone:-Pipeline-or-Pipe-Dream?/

Read more here: http://www.sciforums.com/showpost.php?p=2667151&postcount=62 why US needs Keystone to make up for the heavy oil Chavez is likely to stop sending as it will be his payment to China for all they are doing in Venezuela

 

[Workaholic]

Here's an interesting article by Paul Craig Roberts (IIRC Assistant Secretary of the U.S. Treasury during Reagan's first term) regarding the latest economic data from the US.

Living in a Delusional World

Some excerpts:

For facts one has to turn to serious people, not to the presstitute media. Among those who give us real facts is John Williams of shadowstats.com. In his October 27 report, Williams exposes the happy second quarter 2011 economic growth figure of 2.5% as nonsense. Every other economic indicator contradicts the spin.

For example, personal consumption is reported to have increased 1.7%, but this surge in consumption took place despite a 1.7% collapse in consumer disposable income! In other words, if there was an increase in personal consumption, it come from drawing down savings or from incurring higher consumer debt

A country’s consumers cannot forever draw down savings or go deeper into debt. For an economy to recover, there must be growth in consumer income. That growth is nowhere to be seen in the US. A large percentage of the goods and services sold to Americans by American corporations are now produced abroad by foreign labor. Thus, Americans no longer receive incomes from the production of the goods and services that they consume. The American consumer market is on its way out.

Despite his colorful language, imo he does have a point regarding consumer spending and the offshoring of the American manufacturing base.

 

[Billy T]

To workaholic:

It is worse than your post implies /states:

"... Computers and robots will replace humans in enough jobs that they will dramatically change the economy, said industry watchers and MIT economists at a robotics symposium Monday. And, they said, the transition has already started. ..."

From: http://www.computerworld.com/s/arti...g_the_economy?source=CTWNLE_nlt_pm_2011-10-31

Hell even Foxcomm, world's largest maker of elections, is buying ONE MILLION robots to replace, not well paid (by US standards) assembly line CHINESE workers. What chance does much higher paid Joe American have of finding a job in the coming robotic era?

 

[Workaholic]

To workaholic:

It is worse than your post implies /states:

"... Computers and robots will replace humans in enough jobs that they will dramatically change the economy, said industry watchers and MIT economists at a robotics symposium Monday. And, they said, the transition has already started. ..."

From: http://www.computerworld.com/s/arti...g_the_economy?source=CTWNLE_nlt_pm_2011-10-31

Hell even Foxcomm, world's largest maker of elections, is buying ONE MILLION robots to replace, not well paid (by US standards) assembly line CHINESE workers. What chance does much higher paid Joe American have of finding a job in the coming robotic era?

I think you meant the world's largest maker of electronics (instead of elections, ). Yes, I agree that with the advance of technology the average American production worker may have no chance at all.

BTW. with regards to Foxconn, they are investing in a multi-million dollar factory to produce factory automation equipment in Taiwan.

http://moneywatch.bnet.com/investing/news/taiwans-foxconn-invests-in-automation-equipment/6323029/

 

[Workaholic]

A very nice piece with an anecdote on the fall of the dollar (in China)

http://www.counterpunch.org/2011/11/01/the-dollar’s-not-almighty-anymore/

You would think that it would be a simple matter of the parent company’s sending over the $50 million or so that it would cost to build the new plant and that would be that, but it turns out that the dollar is falling so fast against the Renminbi (RMB), the Chinese local currency, that no contractors or other vendors necessary for setting up a new facility are willing to accept it as payment. That means the company has to try and come up with the construction costs in local currency.

Today, if you’ve got dollars nobody wants them, but I’ve been told that if you have RMB, you will find the reverse situation, with just about everyone having dollars they are stuck with that they’re desperate to unload at way above the official exchange rate of 6.35 RMB to the dollar.

 

[Billy T]

To Workaholic, et. al.

For quite a few years until last month the dollar was not wanted in Brazil either. For example several years ago dollar would buy >4R$ (more than 4 Real) A couple of months ago, it would only buy 1.5 R$. This great rise in the Real vs the dollar destroyed many low value added manufactures in Brazil and costs their voting workers their jobs. Thus, periodically over the last few years, Brazil like China, has been buying up the dollars few wanted to protect its manufactures. As a result, Brazil's dollar reserves are now the fourth largest in the world. (Behind only, China, Japan, & England)

With the global uncertainty of Euro / Greece, many with investments in Brazil decided to sell and needed dollars to send back to the US. This briefly boosted demand for dollars and at the peak, a dollar would buy 1.85R$, but that only lasted for a week. Currently the dollar buys 1.7383 dollars.

As more countries recover and prosper like Brazil, Canada, China, Australia, etc. have done, there will be ever less demand for dollars. (There is limit on how many dollars their central banks are willing to take out of circulation. China & Brazil are near or at that limit now. Others are buying gold, etc. to get rid of dollars.)

At some point in time soon, most will want to sell any dollars they have for real assets. I.e. a run to get out of decreasing value dollars is coming. More than 4 years ago, I posted predictions that this run on the dollar would come on or before Halloween 2014. - I'm still very confident this will be proven true. Unfortunately I also predicted the run will quickly convert into the world's worst ever depression in US and EU, but China, and the countries it imports from will only have a bad recession.

 

[Workaholic]

To Workaholic, et. al.

For quite a few years until last month the dollar was not wanted in Brazil either. For example several years ago dollar would buy >4R$ (more than 4 Real) A couple of months ago, it would only buy 1.5 R$. This great rise in the Real vs the dollar destroyed many low value added manufactures in Brazil and costs their voting workers their jobs. Thus, periodically over the last few years, Brazil like China, has been buying up the dollars few wanted to protect its manufactures. As a result, Brazil's dollar reserves are now the fourth largest in the world. (Behind only, China, Japan, & England)

With the global uncertainty of Euro / Greece, many with investments in Brazil decided to sell and needed dollars to send back to the US. This briefly boosted demand for dollars and at the peak, a dollar would buy 1.85R$, but that only lasted for a week. Currently the dollar buys 1.7383 dollars.

As more countries recover and prosper like Brazil, Canada, China, Australia, etc. have done, there will be ever less demand for dollars. (There is limit on how many dollars their central banks are willing to take out of circulation. China & Brazil are near or at that limit now. Others are buying gold, etc. to get rid of dollars.)

At some point in time soon, most will want to sell any dollars they have for real assets. I.e. a run to get out of decreasing value dollars is coming. More than 4 years ago, I posted predictions that this run on the dollar would come on or before Halloween 2014. - I'm still very confident this will be proven true. Unfortunately I also predicted the run will quickly convert into the world's worst ever depression in US and EU, but China, and the countries it imports from will only have a bad recession.

Hi BillyT, In your opinion, what would be the new exchange rate after the run on dolloars? Something like 1USD = 0.01 R$?

 

[Billy T]

Hi BillyT, In your opinion, what would be the new exchange rate after the run on dolloars? Something like 1USD = 0.01 R$?

I have no idea - Anything I would say would be with out foundation.

Not many holding Real would want dollars but some would need to pay off old debts or new purchases, perhaps of farms in the mid west. I would expect there would be little activity in formal foreign exchange - i.e. little simple trading and speculation, so if you need $1000 one day it might cost 100R$ and next day 30R$. etc.

I bought a ~100 acre run down farm when I first came to Brazil. Then Brazil had bad inflation. I forget what the owner wanted in Real for it (and the price went up every few days). I offered $20,000 dollars which was much less than he wanted during one of my visits. (Not yet sure I wanted to sell everything I had in US and go live with the Brazilian lady I had meet in Mexico. - The farm was to be "Plan B" - A place to live in case we found we did not want / could not/ live together. - 20 years later, I am still living in her apartment - best move I ever made, financially and emotionally. After 12 years we got married. It seemed like it would workout OK.)

The farm had two small 2-bedroom houses on it and a stream damned up to make a several acre lake. In US it would have cost upwards of $200,000. He turned my offer down. But some months later on my next visit I called to ask if he had sold it. -"No but if I upped my offer to $25,000 he would sell to me." - He really wanted dollars.* I bought it for $23,000 but of course I did not have $23,000 cash in my pocket. I learned I could sell a check on US bank for that amount and had a line of credit to cover it. There was to be nothing written it the "pay to....." part of the check. I suspect I helped some drug dealers move dollars, but got my farm. The former owner was despite to get green dollars. Now only Brzilians with dollar debts will accept dollars. I worried for a few weeks until it cleared the bank that if the checked "bounced" I might be tortured or killed.

* A lot of people in Brazil hold large amounts of cash. Here all the banks, etc. and the employers report annually your assets and income to the "Brazilian IRS" and you must declare everything you own (except clothes etc.) on your tax return. If your assets increase more than consistent with your income YOU WILL BE INVESTIGATED. So all the "not declared" income money is kept as cash. I assume he had a lot of cash he could not explain to the "Brazilian IRS" and grew tired of watching its real value drop rapidly so took my dollars for his farm.

He also wanted the official sales price to be very high and I agreed. - When I sold it at good profit I thus, officially had no capital gain. He could make some of his "not declared funds" become legal funds. - Officially they were profit from the farm sale - then he could invest them to protect them from further erosion by inflation.

 

[Michael]

Billy T,

I don't think China nor Australia's economies are balanced. China invested massively into factories to make cheap shit for Europeans and Americans and have built a massive property bubble and a number of ghost cities (not towns, cities). People who live off the land can not be expected to *poof* suddenly be happy getting up at 6am and working till 9pm to return to a small box of an apartment over night AND those buildings will begin deteriorating day dot. You really need someone there to take care of them.

Australia also has a huge property bubble, some say 40% over prices and is more highly leveraged than the USA. If shit takes a tumble in the USA, AU will probably fall flat on its face. Not to mention the economy is massively skewed to favor resources. Lots of jobs in mining, not to many in IT. Then there's the baby boomers..... ....

 

[S.A.M.]

He also wanted the official sales price to be very high and I agreed

Thats interesting. Thats how it is in India as well.

Its essentially one reason why people buy and sell land and property, to make undeclared funds "white"; we used to have a very crappy taxation system about 30 years ago, now that its more fair, a lot of people are willing to pay taxes

 

[Jozen-Bo]

Wow...what a thread this is...

I agree nothing is fixed or set in stone. Unforseeen elements can quickly change long term predictions...we cannot know exactly what will happen, only what it looks like as it moves on its current course, and even that is very difficult to predict.

I recall the former president of the World Bank stating that by 2050 China and India will have 2/3 of the world's middle class... though a natural disaster can turn that around in a single day...heck...in less then an hour depending on the magnitude of the disaster... the world environment apparently isn't getting more stable...

Grab a popcorn bag and watch this drama on earth unfold!!!!!

Anyone got butter???