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

[Ivan Seeking]

Billy T, is it your position that government officials like Geitner and Bernanke, and Obama for that matter, don't know what you know, or is this some kind of conspiracy in which our imminent demise is simply denied?

 

[Billy T]

The issue is more that nobody is willing to sell right now, because they're underwater. Almost all of the houses for sale, are foreclosures or short sales. Many buyers may well be waiting (I know I am), but there's still 10 buyers for every seller. The few decent houses that go on the market get listed as "sold" within, literally, hours.

Probably true that most homes actively marketed now are homes the bank took ownership of (by foreclosure or more often by negotiation with non paying mortgagee as that costs the bank less and owner´s credit is not damaged so both prefer it. It is called a "short sale", I think, as bank agrees to cancel the debt short of full payment of the mortgage.)

But I don´t believe you are correct in saying there are 10 buyers for every seller, even if we only count the sellers that are banks. (Less that true total of sellers). Any selling bank would cut a deal with any buyer willing to pay off the mortgage balance in a "New York minute."

Only way that there are 10 (or even 1,000,000) buyers for every seller, is if anyone willing to pay a dollar for the house is counted as a "buyer." Those 10 (or 10,000) are not buyers but "bottom fishers" - By definition there is one buyer for each seller, just like there is for stock trades etc.

You don´t seem to want to count as "sellers" those who would sell with 150% profit on what they paid. Why do you want to count as buyers those who want to buy with 50% discount from the current market value? Again: for every buyer there is a seller (and conversely) - You can not count as "buyers" those want to get house for less than owner is willing to sell it for. No deal was done - Number of buyers MUST be exactly the same as the number of sellers. Those dreaming about get high price for their home and those dreaming about getting nice house for low price are "dreamers" not sellers or buyers.

I will admit that one often falsely speaks (especially with stocks) of "sellers out numbering the buyers" when stock prices are falling. Thus, when home prices are falling if one wants to speak inaccurately, you should now say "sellers out number the buyers."

Thus it is totally ridiculous to make the claim you did that there are 10 buyers for every seller in the US home market, which has falling prices every month as has been the case for several years. Saying exactly the opposite is excusible, but still false.

 

[Billy T]

Billy T, is it your position that government officials like Geitner and Bernanke, and Obama for that matter, don't know what you know,(1) or is this some kind of conspiracy in which our imminent demise is simply denied?(2)

Answer to (1) is they surely know (measured in bits of information) 100,000 times more than I do. My talent, and why I am a multi-milionair haveing zero inhertance and only a salary (never owned a store, etc.) is I can often accurately foresee important changes coming long before most do. It can be costly to act on them too soon, as I have learned the hard way. You must wait until as least a few others are predicting quite similar events.

For examle, I foresaw the fall of the dollar coming more than 40 years ago, and bought shares of "Giant Yellow Knife," a Canadian gold miner, but most did not foresee the dollar collapse even 20 years ago, so after tying up my money, lossing interest for two decades, I then got out with only a small loss. I was much better later after this lesson. For examle, only a few were thinking 15 years ago that China and Brazil were the future and after establishing my positions in Brazilian company´s US listed ADRs, I began to post telling other at Sciforums that buying Brazilian ADRs was a smart move. (And it was about half a million dollar smart move for my ~ $50,000 of buying with dollars, in part becuase the Brazilain Real has doubled in value compared to the dollar, so even if the stocks did nothing, I would have doubled my money in dollars. But of course as many begain to realize they needed to diversify out of dollars the stock were driven up in Real prices.)

Also you must recognize that those you name mainly want to avoid the ship of state sinking on their watch, even if delaying disaster makes it worse when it happens. I posted that I thought Obama was too smart to run for a second term, and was wrong. I still think he is very smart, but his ego is big too and giving up POTUS is too hard to do, even if deep inside he knows he may not be able to delay the collapse of the dollar for all of his second term.

I will be voting for Romney, as I put too much effort into the civil rights movement to be part of having a black man as POTUS, when worst ever depression in US & EU is coming in less than five years.

(2) Not a "conspiracy." Probably not even denial - just big egos and excessive self confidence. I.e. a belief that somehow we will "muddle thru" to a better day.

 

[scheherazade]

Hello Billy T.

A while back, on another thread and forum, we were in discussion regarding capitalism and global economics discussing inequities and likewise making similar predictions.

The question kept coming up, of why we are not working toward a better model to better distribute the goods and services to all.

The answer given by the most experienced member at that time was that we simply do not HAVE a better model available at this time.

As you have stated that you are self made successful within the existing paradigm, I am interested in your thoughts in this regard, even though they may be biased in favor of the existing system because of your success.

 

[Billy T]

... The question kept coming up, of why we are not working toward a better model to better distribute the goods and services to all. The answer given by the most experienced member at that time was that we simply do not HAVE a better model available at this time.

Main reason we do not have a better system is the present one is near optimum (short term at least) for those in control (Corporations & the "1%ers").

There is no guarantee that a different economic model would be better, but I think that the one China has used for 30 years of ~10% annual growth would be. I am not saying it would reduce the concentration of wealth but at least it is EXPANDING, not SHRINKING the middle class. BTW, last month, for the first time in Chinese history, more than half of the Chinese now live in cities. - This is, by far, the fastest urbanization and greatest up grade of material living standards for the most people in human history!

China, from a strickily economic POV, has a much better system than the US has. They use long range planning for assuring their material needs will be met even 25 years into the future. Signing decades long, paid up front, future delivery contracts for, energy, minerals, lumber, etc. (In part because they know the dollar will collapse and want to spend as many dollars as they can before it does. They can give the dollar a shove down (if needed) anytime they want to - I.e. when they think their long term saving EVERY YEAR with US & EU not able to economically compete for these items they need, will more than compensate for the ONE TME loss they take on the dollars still unspent in their reserves. There are other things they want to do, and are rapidly doing, first. Especially focus their economy more towards the domestic market and their exports to other than US and EU, which will be broke without loans from China.)

The CCP learned from the USSR´s mistake - does not try to Centrally Plan the market place. They trust the "invisible hand" of Adam Smith, more than the US does! But occasionally that means the milk kills a few babies, etc. Sounds cruel - but so what - China has too many babies - needs to limit them one to a family with some exceptions (if your only son dies, you will not be fined for getting pregnant again.). But China did execute two men who intentionally put compound, they knew was toxic, into the milk to trick milk control testing (as it shows up in the testing machine as a protein in their watered down milk.)

Probably much of China´s better system is due the leadership selection process. No popularity contests with TV controlled thoughtless sheep voters controlled by billions of dollars of slick ads paid for by “Super Pacs” and the rich buying access to the white house / congress etc. But top ranks of CCP come only after decades of great management at lower levels. For more detail see :http://www.sciforums.com/showpost.php?p=2890696&postcount=7

This results in interesting fact that every top member of the CCP was educated in hard sciences and engineering, except one who is a geologist. Not a lawyer in the bunch!

In the US 100% of the top ranks of the administration are all lawyers and more than 90% of the Congress is. Before Tea Party put some non-lawyers in, it was approximately 95% lawyers in Congress. Most are mainly interested in projects that will get them re-elected. Fund a dam that will first generate power 17 years later like the world´s largest (Three Gorges Dam) – forget that – It is not even in my district! Only a very tiny fraction of US budget has first pay off deferred more than a decade. Some things like NIH and very basic research at universities do get taxpayer support but even then getting funds for “maybe a distant return” is hard, unless justified as training graduate students.

SUMMARY: Yes there is a demonstrated better economic system but it lacks, at present, many liberties we think important.

... As you have stated that you are self made successful within the existing paradigm, I am interested in your thoughts in this regard, even though they may be biased in favor of the existing system because of your success.

I am definitely not biased for continuation of the status quo.* It is leading to disaster as the middle class shrinks and their buying power will not support an efficient mass production system (at least when no one will lend to them for buying) – For many, most of their corporate profits already come for foreign sales and the fraction of the total profits earned by US sales is shrinking.
My main thought is that to get ahead, you need to have a low personal discount rate. I.e. be willing to work hard do with little expenditures now for greater opportunities and options in the future. In my era, getting a great education was the best sure investment you could make. Not sure it is now. (Perhaps practice long hours every day until you can put a basketball thru the hoop 90% of the time from 3 point distances etc. is now, but that does little real good for the country compare to just being a good teacher.)

*For more on why I´m anti-system, read at least the blue part of my comment in post below. Better yet read entire post for the four other things that badly need to change if US is to survivie as we know it now for our children::

Five examples of how the super rich pick the pockets of Joe American - the Middle Class which pays most of the cost of these special benefits given mainly to the very rich – The cost of this “welfare for the rich“ is a benefit of nearly $100,000 each for the top 1% built into the current tax code (which their lobbyist helped corporations write)

... (1) & (2) omitted…

(3) “…Step-up in cost basis on death allows the wealthy to pass along assets that have grown in value to their heirs without ever paying a dime of taxes on it. Step-up in basis is expected to save the wealthy (and cost Uncle Sam) $61.5 billion for fiscal 2012, according to the Office of Management and Budget.

"Not surprisingly, this tax expenditure overwhelmingly benefits those who inherit from large estates because it allows gains to escape capital gains taxes if held until death …"

Billy T comment: That benefit for the rich part of the tax code helps some in the upper middle class (the near rich). I.e. you don´t need to be very rich to benefit at Joe´s expense. My net worth is less than 3 million dollars, but many of my stocks were bought more than a decade ago. For example SBS is the ADR of Sao Paulo´s water company. It still pays about a 5% dividend despite having appreciated 420% for me. I am in late seventies so to be economically efficient for my heirs, I can´t sell it. I must die holding my 3700 shares of SBS (by edit: currently at $64.90/sh but was still below $12/sh when I first told you to buy it and other Brazilain ADRs.).

Thus not only will my heirs enjoy huge saving (at typical Joe´s expense as Joe must make up cost of these tax breaks as they are government expenditures for the rich) but also the cost basis step up, reduces the liquidity of SBS etc. in the market place, making life easier for stock manipulator, insiders etc..

Since I and my heirs will effectively receive from Joe American several hundred thousand dollars due to the current tax code, you might wonder why I want it drastically changed. (My suggested code* fits on a 3 by 5 index card, not 70,000 volumes of lobbyist written special reductions. It has: No deductions; All income taxed on the same progressive schedule; Zero corporate taxes, but they must distribute all profits within 10 years to human tax payers, most of whom will be paying the highest marginal rates. Thus corporation will be more competitive internationally, make more jobs for Joe and yet the IRS will collect more – probably enough to balance the budget.)

The reason why I want the current tax law in the trash can is my expectation of what is soon in store for the US, where all my heirs live. I.e. I would rather they inherit only half as much and have a non-collapsing economy with with sound dollar, not hungry, well armed mobs looking for food in suburban basements, etc. When the 1%´s abuse of the 99% becomes too extreme, civil society collapses into chaos as history shows because the elite think their hired police can control the food riots. Greece will probably have its “Bastille Day” food riots in less than 5 years and the US with in a decade with permanent military Martial Law replacing democracy in both countries.
.... (4) & (5) omitted…

* See details of my tax plan and three pages of discussion / clarifications of it at: http://www.sciforums.com/showpost.php?p=1792841&postcount=1

Full 5 points at: http://www.sciforums.com/showpost.php?p=2897524&postcount=85

While loooking for the link telling more of Chinese leadership selection process, I found this link on how China will challenge the dollar when ready (see link in it about role of "gold backed RMB bonds.")

... In many posts* I have noted China´s progress towards that. {becoming the world´s reserve currency - paying for imports with pieces of paper, etc.} Getting UAE to accept RMB for oil is just another step. As important and probably done within a year is the RMB becomes part of the SDR, so it will have some appreciation in its calculation base indirectly making the RMB part of reserves nations hold as they try to "get out of dollars." With Eruo future uncertain, SDR and gold are the main alternative, until China is ready for RMB appreciation (to fight inflation) with FX trading of it. ... When China is ready to "Kill the Dollar" as THE reserve currency, they can back RMB bonds with gold as they are largest producer and buyer of gold, which they do not need to have the RMB (Yuan) appreciate.
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*For example, from 23 Oct 09 post: "Russia may add a new reserve currency- RMB to its foreign exchange reserves, Russian vice-premier concurrently Minister Alexei Kudrin said. ... " read full post at: http://www.sciforums.com/showpost.php?p=2394434&postcount=192 where more details on China´s probably gold back bonds and their effect is given. ...

 

[scheherazade]

Thank you, Billy T, for a very thorough reply to my questions. Perhaps interesting that my grandfather was a member of a group of freethinkers who recognized that the greatest challenge to the Western economy would come from China in the post war era.

For my part, I have always believed in tangible assets and skill sets that can enable one to be able to provide for as many of one's basic needs as possible. Fiat currency only has the value we may assign to it and from what you have shared, that value is getting more questionable on a daily basis.

You have provided much food for thought and I appreciate your thoughtful response.

 

[Billy T]

Thank you, Billy T, for a very thorough reply to my questions. ... You have provided much food for thought and I appreciate your thoughtful response.

You are welcome. The pleasure was mine. I love to teach, explain, expond, etc. especially when I have something quite different to say from almost every one else, which is well documented by facts.

 

[scheherazade]

I find it very interesting that people will apply a great deal of time and energy in the debate of the historically irreducible questions and the ponder of cosmology, philosophy and theology yet not apply that same discipline to their own basic needs.

The old parable of the grasshopper and the ant is playing out yet again with the grasshopper enjoying the largesse of summer while the ant toils in preparation for the lean season looming.

I have been reading your take on global economics since coming to this forum, though I don't comment often as my experience is related to personal and local scales of economics.

I observe numerous things that should be reason for concern for many but I observe that our species seems more prone to 'group think' and 'living for the moment' than critical thinking and long term planning.

I quite agree that leadership (at all levels of government) should be on demonstrated capability rather than a popularity contest.

 

[scheherazade]

I came across the following article and I thought that it was a natural followup for my preceding post.

10 Key Characteristics of Debt-Free People (of Modest Means)

The other day a friend and I were discussing why some people manage to live their lives in complete control of their finances, while others are constantly trying to get out of debt fast – and usually in hock up to their eyeballs no matter how much money they make.

I’ve preached that financial freedom can be achieved by anybody regardless of their income level more times than I care to count.

So what is it that separates the financially free from the financially inept?

Why is it that there are families out there with household incomes under $40,000 comfortably making ends meet and saving for retirement with no debt on the books – or at worst, a single mortgage payment – while others who make millions per year like Sinbad, Ed McMahon, Mike Tyson, and Stephen Baldwin have trouble keeping their financial heads above water?

The more I thought about it, the more I realized there is no single trait that determines who will successfully manage their personal finances and those who won’t.

More often than not, it seems to me that people of modest means who exhibit an ability to properly manage their finances have some combination of multiple characteristics.

Here is my list of ten key characteristics that enable people of modest means to lead a debt-free life:

1. They’re Detail-Oriented

People who are in a good financial position always pay close attention to their personal finances. They know how much they earn and they keep track of how much they spend and where every penny goes. Because they’ve got a good handle on the state of their personal finances, they are less likely to buy something they can’t afford.

2. They Realize Debt Is A Mortgage on Their Future

I remember somebody once telling me that debt is a form of indentured servitude where we end up sacrificing our future earnings in exchange for instant gratification. Financially savvy people understand that, in most cases, such a trade almost always ends up being a Faustian bargain.

3. They’re Pragmatic

More often than not, folks who are debt-free are also practical people. Because they are practical, they understand the meaning of value. For example, a car is often looked at merely as means to get from point A to point B, so why buy a Lexus when a Corolla will do? In the same vein, why pay double for designer jeans that will last just as long as the no-name alternatives? Such a philosophy even stretches to the grocery store, where name-brand items often give way to their store-brand counterparts.

4. They’re Self-Reliant

Most people who work hard to maintain a life of financial freedom take pride in being self-reliant. To that aim, they make sure they always live within their means, and save as much money as they can for a rainy day or when times get lean. (They’re also quick to give when others fall on hard times.)

5. They Aren’t Addicted to Shopping

We all know there are people out there who get a high on spending money, whether they have it or not. While not physically destructive like a drug or alcohol addiction, an uncontrolled shopping habit will make it virtually impossible to remain debt free.

6. They’re Patient

People who are debt-free didn’t get there because they were impulsive shoppers, or always looking for instant gratification. If the money for something wasn’t in the budget, then they saved their money and waited.

7. They’re Self-Confident

Because they refuse to let their self-worth be defined by their possessions, the financially free never feel any pressure to spend money in order to try and keep up with the Joneses. Those who are debt-free understand that their status in life is more accurately conveyed by self-confidence, rather than dubiously deceptive displays of wealth.

8. They Realize Credit Cards Are a Double-Edged Sword

People who are in control of their personal finances aren’t afraid of credit cards. In fact, they embrace them. And while the financially savvy understand the incredible benefits that credit cards provide their owners, they also know that if they fail to pay them off in full at the end of each month, they will pay a heavy price. This knowledge fosters a healthy respect that keeps their credit cards from being abused.

9. They Believe In Personal Responsibility

Financially responsible people refuse to make excuses. If they lose their job, they know it’s their responsibility to have a rainy day fund in place – and if they don’t they’ve got no one to blame but themselves. Short of an unforeseen catastrophic medical issue or natural disaster, they also understand that when it comes to living within one’s means, they are in complete control of their own destiny.

10. They’re Not Materialistic

The pursuit of expensive toys and other possessions can certainly make life more luxurious. But at what cost? I know it’s a cliche, but most people who are debt-free understand better than most that money cannot buy lasting happiness. As such, they often tend to live simpler lives that focus on the joys of family, rather than the accumulation of material possessions.

This is by no means an exhaustive list. However, the more aforementioned characteristics that a person possesses, the more likely they are to be debt free and living a life of financial freedom. How many of them apply to you?

http://lenpenzo.com/blog/id1261-10-key-characteristics-of-debt-free-people.html

 

[Billy T]

... my grandfather was a member of a group of freethinkers who recognized that the greatest challenge to the Western economy would come from China ...

The first I know of to warn of that was Napoleon: He said someting like: "China is a sleeping dragon - be careful not to wake her."

Interestingly this is the year of the dragon - only about a week old now. Lots of time still for the dragon to show her power. I am almost sure the dragon will demand (and get) the RMB made part of the IMF´s SDR during this dragon year becuase the IMF has only about half the funds it says it needs to save the Euro.

An RMB as part of the SDR will make the SDR much more popular with central banks as currently all parts of the SDR are declining in purchasing power, but the RMB is rising in buying power.

BTW I just saw your 10 points of post 269. I am very much a follower of them. All but 2 & 8 were strongly shown in the summer I stoppped my Ph.D. research to integrate the restaurants of Baltimore after other leaders had failed in the two prior summers. I knew, as I have said in prior posts, I had the determination, the skills, the ruthlessness, the coordination* and planning ability to make great economic pain for the restaruants (on a good Sunday cost them more than $25,000 dollars in lost business). I was very pragmantic - no appeal to "justice", "morality" etc. just economic pain did the trick.

As far as 2 & 8 are concerned, I do have a credit card but it is used only a few times during my annual vists to grand children, daughters, in July each year. I put enough down on house I bought to get lowest possible interest rate, and then paid off mortgage in about five years as it was the best safe investment possible at the time. I never had any school debts, as I was a "full needs" scholar as under grad at Cornell and worked both there and in grad school as teaching assistant and still even in grad school for some meals washing dishes. I have an iron stomach and can eat once for the whole day.

Except for those five years and a purchase money morgage on 16 acres I bought along side of I-95 just inside Howard County , I have had no debts. I surveyed and sold off five home lots and then sold the remainder. Each lot sold for price greater than the mortgage. I granted a purchase money mortgage to one of the buyers some years later, and he is still paying $1700 per month with no problems for me - deposites directly into my APL Federal. Credit Union account.

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* I have given details in other posts but just note here that I had to deliver (with cars of girls of Gaucher College mainly) the first wave of sit ins people to up to 25 restuarants at the same time. During the two prior failed summer efforts, the Restaurant Association had developed a "telephone allert fan out system" which got front doors locked in only a couple of minutes after the first sit in arrived at any restaurant.

Furthermore the two whites who first went in, separately and sat at different tables as if strangers to each other and ordered about five minutes before the blacks ran in to join them, could never be sent back to that same resturant again - huge amout of record keeping, precision timing etc. but when I screwed up, they told me they had been to that resturant before.

At Normandy, Ike had it easy - at least all of his troops had watches - few of mine did, only the whites with rare exceptions.

 

[cosmictraveler]

China can be either a very good economic partner, as it has been by lending America over 2 TRILLION dollars, saving America from borrowing more money from itself which is highly illegal. Working with another equally great power can be rewarding or it can be dangerous. It seems that American companies really are cozy with China by allowing China to do their manufacturing then sending the products back into America making even more profits and destroying the middle class workers of America.

 

[quadraphonics]

But I don´t believe you are correct in saying there are 10 buyers for every seller, even if we only count the sellers that are banks. (Less that true total of sellers). Any selling bank would cut a deal with any buyer willing to pay off the mortgage balance in a "New York minute."

I'm sure they would, but the mortgage balances on such houses greatly exceed the market value. There are zero buyers at that price. To be clear: there are 10 buyers for every seller willing to sell near market price. Of course there are no buyers for those who want to sell for a big mark-up over market value - but those aren't really "sellers" in any meaningful sense. "Dreamers" would be a more accurate term.

Only way that there are 10 (or even 1,000,000) buyers for every seller, is if anyone willing to pay a dollar for the house is counted as a "buyer." Those 10 (or 10,000) are not buyers but "bottom fishers" - By definition there is one buyer for each seller, just like there is for stock trades etc.

For every entity willing to sell a decent house at market value, there are many buyers willing to pay that much. This is because loans are cheap and prices are low. Normally, the market would equalize that by driving up the prices of houses - but buyers prefer to wait rather than bid higher, because they know the market is soft. So the situation of buyers outnumbering sellers persists, for the time being. If prices are seen to begin to recover, then buyers will not have such an incentive, and the market will "clear" in short order.

You don´t seem to want to count as "sellers" those who would sell with 150% profit on what they paid.

I have no problem with counting them. It's just that such a seller would have had to have bought a long, long time ago, and so there aren't many of them to be found. And even if you aren't underwater, why sell now when prices are almost guaranteed to increase over the coming 5-10 years? There's only a handful of such people, who bought long enough ago to make a profit, but who need to sell right now rather than wait for more favorable conditions.

Why do you want to count as buyers those who want to buy with 50% discount from the current market value?

I don't. I'm only counting people who want to transact near market value. There are a lot more buyers willing to buy at market value, then there are sellers willing to sell at market value. This is because buyers are tempted by low prices and cheap loans, while sellers are deterred by the low prices and so prefer to hold out for a seller's market, if they can afford to keep making payments.

Again: for every buyer there is a seller (and conversely) - You can not count as "buyers" those want to get house for less than owner is willing to sell it for.

I don't. I'm counting people who would have payed as much, or a bit more than, the houses are selling for, but who don't get a chance because decent houses priced near market rate are selling in a matter of hours, literally. That's how you can tell that the buyers outnumber the sellers - competition between buyers for scarse sellers is really intense. It's just that it doesn't manifest as increased bidding on the price, due to the pathological conditions we are currently in.

No deal was done - Number of buyers MUST be exactly the same as the number of sellers.

You know perfectly well that "buyers" means "people looking to buy a house for a market value" and likewise with "sellers."

Those dreaming about get high price for their home and those dreaming about getting nice house for low price are "dreamers" not sellers or buyers.

Exactly - and since housing prices are at a historical low, pretty much all of those "dreamers" on the buyer side are actively in the market, looking to pay what is now a fair market price. And conversely, for the exact same reason, a lot of the "sellers" are simply "dreamers." They wouldn't really consider selling for market price.

I will admit that one often falsely speaks (especially with stocks) of "sellers out numbering the buyers" when stock prices are falling. Thus, when home prices are falling if one wants to speak inaccurately, you should now say "sellers out number the buyers."

There's nothing inaccurate about that. Nobody uses your oddball definitions of "seller" and "buyer" to mean "somebody who has already sold/bought a house." The word for somebody who has already bought a house, is "homeowner." The word for somebody who has already sold their house is "guy with a bunch of money and no house." "Buyer" and "seller" refer to people actively on the market, looking to buy/sell a house. This is all bog-standard usage, so I'm unsure why you're pursuing this inane semantic dodge.

Thus it is totally ridiculous to make the claim you did that there are 10 buyers for every seller in the US home market, which has falling prices every month as has been the case for several years. Saying exactly the opposite is excusible, but still false.

I admit that it's counter-intuitive at first glance, but I've already explained to you how this situation came about. You're talking out of your ass here, apparently out of some kind of defensiveness.

 

[Billy T]

Quad consider many “Items X” exist with current owners and the various Item Xs have almost a continuous range of prices and qualities. Some of the current item X owners MUST sell, for a variety reasons (pay for mother´s operation, etc.) at what ever price the market will let them; but almost no one must buy at the current market price and most all do not do so if they expect, based the market trends, that the price of item Xs to continue dropping.

This difference between “must sell regardless of price” and “would like to become owner at some what lower price” is what in fact drives the market price lower so the “must sell owner” can find a willing buyer by accepting a lower bid than he would like. Then, and only then, there is there both a buyer and seller for that transaction at a lower market price. Before they agree, there are only dreamers hoping to buy or sell.

This steadily declining market price is exactly what a “Bear Market” for item X consists of. I am nearly sure you agree that in a “bear market” if Item X is a stock, it is common to say: “The sellers out number the buyers.” Or “It is a buyer´s market.”

Surely you will also agree that residential real estate is in a strong “Bear Market” – Prices have been dropping for three or more years. So why, when item X is a house, do you want to say EXACTLY the OPPOSITE to when item X is a stock?

I.e. why are you saying: “Buyers out number the sellers 10 to 1” in the residential real estate market?

Do you have some magic “buyer / seller” discrimination detector you can pull out of your ass and wave over a person to tell if he is a buyer or seller?

Don´t you need to do as every one else does – look at the market price a trend and when prices are steadily declining for an extended period, most say:

“The sellers out number the buyers.” Not that: "The buyers out number the sellers 10 to 1.” (of item X).

What justification do you have for standing the normal buyer / seller numerical relationship statement as indicated by the NON-SUBJECTIVE trend in the market place on its head when item X is a house?

Is your buyer / seller discriminator out of your ass and waving around to give data exactly the opposite to the quantative, non-subjective, market place´s data? If not that, on what basis do you reverse the common MARKET TREND BASED statements TO PROCLAIM EXACTLY THE OPPOSITE?

BTW, normally I don´t speak of pulling things out of an ass, but as you did first, I feel free to reply in kind.

 

[scheherazade]

As we are in the midst of a discussion relating to housing and real estate in the current economy, perhaps there are some who would be interested in the housing market in the Yukon Territory?

The following is fairly current, CBC News Posted: Nov 24, 2011

Real estate prices in Yukon are through the roof.

In the three-month period between July and September of this year, the average home price in the territory hit a new record, at $455,000.

Gary Brown, Yukon Bureau of Statistics senior information officer, says no one knows when the prices will peak, but he says many are surprised at how fast they are going up.

“$228,000 in the third quarter of ’05 and up to $455,700, so pretty much dead on doubled over the last six years. And that has been a trend from six years ago... when the housing prices just started to head upwards,” said Brown.

Brown believes it’s basic supply and demand that's driving the record-breaking prices even higher.

He says even though the average Whitehorse area rural residential home is selling for nearly $500,000, it’s not a hot sellers’ market.

The number of homes sold in the territory over the three-month period from July to September was the lowest in 10 years.

There are plenty of people who would dearly love to own their own home, with mortgage rates quite low, but the economic uncertainty and the need for significant down payment before one can obtain a mortgage are barriers. That, and a lot of people do not have the income, even with two people working to float a mortgage of $400,000.00 and change.

 

[quadraphonics]

Some of the current item X owners MUST sell, for a variety reasons (pay for mother´s operation, etc.)

There is *nobody* that must sell. You can't pay for an operation - or anything else - by selling a house that is underwater. This is why most of the houses on the market are foreclosures or short sales - but note that the banks don't have to sell, either, and in fact hold significant quantities of foreclosed houses off the market to prevent the total collapse of their prices.

but almost no one must buy at the current market price and most all do not do so if they expect, based the market trends, that the price of item Xs to continue dropping.

That would be true if house buyers were operating purely as financial investors. But they are not. The fact that the overall average housing price might well decline further doesn't mean that the house you want to buy will be on the market at that point, or that a particular house on the market today will be a better deal tomorrow. Indeed, the lower the prices go, the fewer houses there will be on the market - so while you might get one for a lower price, it may be very difficult to find one that you really like. Many families are not willing to wait for years when they need a place with room for their new family in a good school district. If you can get a good deal today, it's not necessarily worth it to hold out for another year to try to get a slightly better deal. There's always a risk premium, even if you do expect a decline.

This difference between “must sell regardless of price” and “would like to become owner at some what lower price” is what in fact drives the market price lower so the “must sell owner” can find a willing buyer by accepting a lower bid than he would like.

That's how it works in your normal, non-bubble-recovery conditions, sure. But what drove the prices down in this case was the collapse of a speculative bubble, and what is putting houses onto the market is not that the owners need to sell, but that they get foreclosed upon. The bubble was inflated by putting people into houses they could not actually afford, so now prices are back to where they were before that occurred. There are plenty of people who can afford that, and would like to buy them, but nobody is willing to sell if they can possibly keep making the payments (because they're underwater). So it's only the small portion of the market that is falling into foreclosure that is going up for sale, and those houses tend to be pretty crap. You'll notice that I said "decent" houses in my post that you objected to.

This steadily declining market price is exactly what a “Bear Market” for item X consists of. I am nearly sure you agree that in a “bear market” if Item X is a stock, it is common to say: “The sellers out number the buyers.” Or “It is a buyer´s market.”

Yes, that is the typical way that such works. My point is exactly that the current market for houses is atypical. I understand that this is counterintuitive. That's why I've taken such pains to explain exactly what makes the current situation unique. I'd appreciate it if you'd deal with that, and not traffick in these generalities about how things would typically work in a normal situation. The current situation is not normal.

I say this because my experience shows that although it is a "buyer's market" in the sense of prices being low and rates being favorable, there are almost no good houses for sale and the few that do go on the market receive intense competition from buyers. The overall price is being held down by the huge stock of foreclosures - which tend to be in shitty condition owing to their owners being unable to afford to maintain them for years prior to foreclosure, along with the disinterest of the banks in doing so. It is true that there are many more sellers than buyers of shitty foreclosure houses, and this impacts the overall market trend. That's why I said "decent" houses.

Surely you will also agree that residential real estate is in a strong “Bear Market” – Prices have been dropping for three or more years. So why, when item X is a house, do you want to say EXACTLY the OPPOSITE to when item X is a stock?

I've already spent multiple posts explaining why this situation is atypical and works in a counterintuitive way. If you're just going to keep harping on generalities about how a typical market functions, then I have nothing else to say to you.

I.e. why are you saying: “Buyers out number the sellers 10 to 1” in the residential real estate market?

I said this was for "decent houses." And I am speaking from direct experience, not waving my hands at generalities while sitting in another hemisphere.

Do you have some magic “buyer / seller” discrimination detector you can pull out of your ass and wave over a person to tell if he is a buyer or seller?

I do have a bullshit/crank detector that alerts me to when I'm dealing with an argumentative fool who loves the sound of his own voice and drastically overestimates his knowledge and mastery of the subject. It's going off right now, as is typical when it encounters your posts.

Don´t you need to do as every one else does – look at the market price a trend and when prices are steadily declining for an extended period, most say:

“The sellers out number the buyers.” Not that: "The buyers out number the sellers 10 to 1.” (of item X).

A price trend is just a price trend. It is not always the case that a declining price trend indicates that sellers outnumber buyers. If buyers are not willing to bid up against one another, then they do not create upward pressure on prices even if they outnumber the sellers. And that's exactly what happens when the buyers expect prices to decline or remain flat for a long time. Buyers are typically only willing to bid up if they think that the price will increase even more than that if they wait, or if they absolutely have to buy the thing right now for some other reason.

What justification do you have for standing the normal buyer / seller numerical relationship statement as indicated by the NON-SUBJECTIVE trend in the market place on its head when item X is a house?

Asked and answered. You are being argumentative and obtuse, and more than a little bit disrespectful. If you don't want to deal with what I've told you already well, fine. But that also means you don't get to go around demanding I give you answers that you've already ignored.

Is your buyer / seller discriminator out of your ass and waving around to give data exactly the opposite to the quantative, non-subjective, market place´s data? If not that, on what basis do you reverse the common MARKET TREND BASED statements TO PROCLAIM EXACTLY THE OPPOSITE?

I haven't seen you provide any actual market data on the number of buyers and sellers on the market. You've simply waved your hands at a general tendency and demanded that it must hold true in all situations, everywhere and at all times.

Now how about you stop SHOUTING at me and cease directing vulgar insults at me? You're an embarassment as a moderator.

BTW, normally I don´t speak of pulling things out of an ass, but as you did first, I feel free to reply in kind.

You can take your childish pretense of moral superiority and shove it up your ass. If we're lucky, perhaps it will impede the flow of sohpomoric blather and presumption of authority that flows so ceaselessly from such.

 

[scheherazade]

Surely two gentlemen of knowledge can resolve their communication difficulties on the topic of economics without invoking terms best used in biology?

Time to retire this day.

I'll check back on the morrow.

 

[Workaholic]

Another interesting article from Paul Craig Roberts. He often likes to reference John Williams at shadowstats.com.

Part of the article:

Last Friday (January 27) the US Bureau of Economic Analysis announced its advance estimate that in the last quarter of 2011 the economy grew at an annual rate of 2.8% in real inflation-adjusted terms, an increase from the annual rate of growth in the third quarter.

Good news, right?

Wrong. If you want to know what is really happening, you must turn to John Williams at shadowstats.com.

What the presstitute media did not tell us is that almost the entire gain In GDP growth was due to “involuntary inventory build-up,” that is, more goods were produced than were sold.

The US economy cannot recover, because the US economy depends on consumer expenditures for more than 70% of its activity. The offshoring of middle class jobs has stopped the rise in middle class income and caused a drop in consumer spending power.

The Federal Reserve under Alan Greenspan compensated for the absence of US consumer income growth with a policy of easy credit and a policy of driving up home prices with low interest rates. This policy allowed people to refinance their homes and to spend the inflated equity in their homes that Greenspan’s policy created.

The consequences of a dead economy when the government is wasting trillions of dollars in wars of naked aggression and in bailouts of fraudulent financial institutions is a government budget that can only be financed by printing money.

Full article is at:
http://www.counterpunch.org/2012/02/01/economic-101/

Anyone have an opinion on this article? Is it bullsh*t or truth? Somewhere in between?

 

[scheherazade]

Another interesting article from Paul Craig Roberts. He often likes to reference John Williams at shadowstats.com.

Full article is at:
http://www.counterpunch.org/2012/02/01/economic-101/

Anyone have an opinion on this article? Is it bullsh*t or truth? Somewhere in between?

A very interesting article, Workaholic.

I reside in Canada yet I keep close watch on the U.S. economy because of the business affiliation between our nations. We have not yet been as greatly affected by the present economic downturn, in part due to quite different banking and mortgaging practices, but that may only be delaying impacts yet to come.

I observe many businesses closing or restructuring in our small northern city of Whitehorse, Yukon, and jobs are considerably fewer than in years past, although there still is work to be had.

On approved credit, one can buy many brands of vehicle with NO DOWN PAYMENT and 0% FINANCING OVER 6 YEARS. I took advantage of this previously unheard of option when my car was taken out by a hit and run drunk driver in July 2011.

If all the major players are offering this kind of incentive to move their inventory, then it does rather make the following comments from the article seem very plausible.

What the presstitute media did not tell us is that almost the entire gain In GDP growth was due to “involuntary inventory build-up,” that is, more goods were produced than were sold.

In other words, an increase in consumer indebtedness and dissavings drove the economy in the place of the missing growth in consumer incomes.

Today, consumers are too indebted to borrow, and banks are too insolvent to lend. Therefore, there is no possibility of further debt expansion as a substitute for real income growth. An offshored economy is a dead and exhausted economy.

 

[The Esotericist]

Also you must recognize that those you name mainly want to avoid the ship of state sinking on their watch, even if delaying disaster makes it worse when it happens. I posted that I thought Obama was too smart to run for a second term, and was wrong. I still think he is very smart, but his ego is big too and giving up POTUS is too hard to do, even if deep inside he knows he may not be able to delay the collapse of the dollar for all of his second term.

I will be voting for Romney, as I put too much effort into the civil rights movement to be part of having a black man as POTUS, when worst ever depression in US & EU is coming in less than five years.

I suspect there may not be an election. Look for martial law before the next election. Currently, the Federal Government has taken Mexico's side in a court case against Arizona. Likewise, there has been a complete media blackout in a case in Georgia that seeks to open up this whole nutty Obama eligibility for the presidency thing again.

No matter where one stands on it, there has been no doubt that the files that the administration released on-line to put all doubts to rest were found suspect by graphics experts right before the Osama bin Laden capture distracted the nation. Now, there is a new challenge to those documents. Not just the documents, the the Social Security number as well, along with the suspiciously scant amount of records from his high school and college days. No matter where one stands on this issue, shouting it down only seems to irritate those who want transparency. (And not the shoddy sloppy kind in a computer graphics program.)

http://www.drudge.com/news/152954/media-blackout-obama-georgia-ballot

http://www.americanthinker.com/2012/01/media_blackout_in_obama_georgia_ballot_eligibility_case.html#ixzz1kwYHBDmC


Media Blackout in Obama Georgia Ballot Eligibility Case

Last week, I noted that Obama turned his back not just on Arizona's Governor Jan Brewer, but also on the laws of the State of Georgia. I closed my column, "Georgia Ballot Challenge: Obama Walks on By," with the observation: "And most of the media has followed along right behind him."

At the time, I had just witnessed an historic hearing that actually discussed the eligibility of the sitting president of the United States to run for a second term. The president had been subpoenaed to appear, and instead of his attorney respectfully following protocol to have that subpoena recalled, both Obama and his attorney, Michael Jablonski, simply failed to show up at all or offer any defense whatsoever.

Isn't there a headline in there somewhere?

. . . It is disconcerting to see that the president, whose primary duty is to preserve, protect, and defend the Constitution of the United States, has turned his back on the rule of law of one of those states. Especially, as Sunny uncomfortably reminded us, since this is the same president who routinely sidesteps the law or places himself above it.

Even more troubling is the fact that the mainstream media not only seems to approve -- but they fail to report it at all.

Despite the spelling and grammar mistakes on this blog, I found the summary of arguments here fascinating. Not that it matters. The point really, is that power does as power wants to. If the patriots are not willing to arrest the globalists, and haven't been willing to before now in the face of obvious treasonous behavior against the constitution, why will they later?

http://theulstermanreport.com/2012/01/26/court-hearing-on-obama-eligibility-completed-now-what/
UPDATE: Judge to Rule AGAINST Obama Eligibility in Georgia? Developing…

For those who have long contested the validity of Barack Obama’s eligibility to run for President of the United States, the legal hearing in Georgia earlier today was the first true and legitimate forum upon which to prove that case. The question remains though – now what?

So why would the president be blatantly ignoring these sovereign states legal codes? Why would he be flouting the law as such? With all these problem, both in the market, and at home, why does it matter? Well, I have long that, and the recent passage of the NDAA, and the attempted passage of the SOPA and PIPA have even more made me believe that the elections may be cancelled.

Of course, they said that with Bush II as well. I suppose some event would probably have to transpire to cause this. It is the postings in this thread that have made me remember this. And a series of things that seem to be coalescing all at once this year. The tensions in the middle east, the economy in Europe tanking, we'll see what the occupy movements are doing toward that end of summer, and what how the military is using this new NDAA power. But I wouldn't be at all surprised if some October surprise was a planned event to give the administration an excuse to declare martial law.

http://theintelhub.com/2012/02/01/could-a-contempt-of-court-in-georgia-lead-to-an-obama-impeachment/
Could A Contempt of Court in Georgia Lead to an Obama Impeachment?

Let’s go back to the original subject of this article. IS it possible that because of the fact that there are plans to implement Martial Law and other such measures as manufactured Natural Disasters, there is no need to appear at a trial?

What else would explain the complete disregard of the Legal System? For the average American, there would be an Arrest Warrant and a Criminal Complaint of Contempt of Court.

This event is just one more impeachable offense to add to the list of charges that now reaches historic proportions. I guess we’ll all find out what the result of this complete disrespect and disregard for the law is and if those with a legal responsibility will have the courage and integrity to do their duty.

Lastly, in case there are people who still believe that events aren’t planned years in advance, have a look at the Brookings Institution document created in 2009 titled, WHICH PATH TO PERSIA? Options for a New American Strategy Toward Iran.

This video is from a VERY astute insider reporting on things I just don't understand very well. lol What I do understand is covert interest groups. He's on the inside and he's talking. His names Jim Sinclair. Billy T would probably be able to break down this video (recording) better than I, but what it serves to illustrate, is how we can all do well to do our own research rather than consume what the MSM feeds us.
http://www.gata.org/node/2424

I have spent many years pursuing a deeper
understanding of life than most people would realize.
To some degree, I have succeeded and in that success
I feel the pain many of you are enduring right now.

The battle between the gold bulls and the gold bears is
one of truth versus lies, honor versus deceit, honest
money versus the ever-expanding paper currency that
threatens our economic well being.

We are hated because we stand for what is right. Gold
demands balanced federal budgets and positive
balances in U.S. trade and current accounts to justify
the U.S. dollar being the world's reserve currency.

I have no worry about gold now because I know how
things end in the market even before they begin. I am
the son of one of the world's greatest traders, Bertram
J. Seligman, who like, Jesse Livermore, always knew
what was over the horizon.

I do not pretend to have all the talent of those market
giants but just some of it. Goldman Sachs, Solomon
Brothers, Lehman Brothers, and Bache were a few of
the firms started by my family. All this appears in a
book called "Our Crowd."

Here's the broadcast, a day old or so. . .
Breaking News Ellis Martin Report with Jim Sinclair

 

[The Esotericist]

From that sound of that recording? I wouldn't be surprised if it started going before summers end. QE3 is in the offing.

More productive economies such as India, Russia, China and Japan are dissatisfied with the value that their US Dollar holdings represent and therefore are trying to diversify out of the US debt market without destroying the value that their holdings still have. This is to be done through a tactically planned series of swaps, corporate acquisitions, commodity purchases, and eventually outright selling of treasury holdings. What we are witnessing are the first quantifiable steps to the end of the US Dollar hegemony around the world. For Americans, eventually this will manifest in the destruction of your currency because the only people willing to take US Dollars will be those who are forced to do so by law – which would be US citizens and US businesses.

http://thegldnrule.wordpress.com/2012/01/24/2012-the-fall-of-the-us-dollar-hegemony/