Tuesday, February 21, 2006

Some Interesting Reading

A look at the personal savings rate from Contrary Investor:

'Neff Said?

Clearly there have been times over the last five plus decades where the three year moving average rate of change in household ownership of equities was well above what we now experience. Should we not have seen meaningful dips in the US savings rate as this true multiplicity of price peaks was seen again and again over time? Shouldn't we have at least seen savings rate dips when both household real estate and stock price peaks coincided, or roughly coincided throughout history? That's the logic that's being applied to the dismissal of meaning in today's savings rate calculation. So just why shouldn't that also have been true of the past? Clearly, implicit in Neff and many a pundits comments of today, whether they realize it or not, is that "it's apparently very, very different this time" when it comes to interpreting the message implicit in today's negative savings rate.


Statement given by Ron Paul to the U.S. House of Representatives:

The End of Dollar Hegemony

Once again Congress has bought into the war propaganda against Iran, just as it did against Iraq. Arguments are now made for attacking Iran economically, and militarily if necessary. These arguments are all based on the same false reasons given for the ill-fated and costly occupation of Iraq.

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the “backing” of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today’s “gold.” This is why countries that challenge the system-- like Iraq, Iran and Venezuela-- become targets of our plans for regime change.

Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar. As long as foreign recipients take our dollars for real goods and are willing to finance our extravagant consumption and militarism, the status quo will continue regardless of how huge our foreign debt and current account deficit become.


From the Daily Reckoning:

Desperate Times Call For Desperate Measures

Stocks are holding at their 1997 levels. Houses are at least twice as high. But house prices seem on the verge of tumbling. In the 1990s, houses in the Los Angeles area fell nearly 30% when the aerospace industry went into a slump. People lost jobs; house prices fell. The downturn was cushioned by falling interest rates - especially after the dot.com bubble collapsed. We have full employment - albeit at low wages - but interest rates are not falling, they're rising. And now, on about the same incomes as 10 or 20 years ago, consumers are spending twice as much on housing. One out of every five homeowners in California spends more than half his income on housing. The typical mortgage in the Bay Area is $2,867 - more than twice the typical rent of $1,324.

What will happen when the cycle turns and the ATM machine stops working in the bedroom? Will they drop their houses like dot.coms? Will the marginal buyers go back to renting? Speculators could get hit hard; house prices might drop 30% or more...and stay down.



From the Star Ledger:

Demand driving Market

This piece looks more like a "Special Advertising Section" than journalism. Here are one readers comments on this piece:

You see the star ledger "special" this week? Outlook 2006 "Housing Industry living large"
This newspaper strongly needs a reality check or should be held to some sort of accountability for their press. They need to stop coupling solely with realtors and begin doing some true journalism (Sleuthing, gathering facts, etc) instead of collecting one-sided quotes. They put in 2010 "prediction/projections" for median price value, f*cking crazy - Predicting 60-140k increases in median prices across the state.

WTF? The article by Tracey Porpora starts off "Despite the lack of available land, developers are building homes across northern NJ to try to keep up with the strong demand for new residential real estate". The first few words are enough to know that the article is garbage. This comes from a writer of such fine articles as "The Three Flirting Moves That Never Fail" and "My grandfather holds the Guinness World Record for his 475 spoon rests". This author is a frequent writer for "Contemporary Bride" and has no business reporting on Real Estate.

The whole damn thing made me sick to my stomach. It sickens me to see that the RE industry is using the press to pressure the market into irrational exuberance.

Caveat Emptor!
Grim

24 Comments:

Anonymous Anonymous said...

Ron Paul sounds like a Kook:

"This is why countries that challenge the system-- like Iraq, Iran and Venezuela-- become targets of our plans for regime change."


Did the US force Saddam to invade Kuwait in 1991? It was the UN that issued 17 UN Security Council resolutions against Iraq since 1991...

More on Ron Paul:

"He criticizes the United States' intervention in Iraq and what he charges is the use of the war on terror to curtail civil liberties. He supports the abolition of the income tax, most Cabinet departments, and the Federal Reserve, and favors the legalization of marijuana..."

http://en.wikipedia.org/wiki/Ron_Paul


The guy is off his rocker.

2/21/2006 12:39:00 PM  
Anonymous Anonymous said...

Ron Paul is a libertarian and I agree that he's a bit of a nutcase.

2/21/2006 12:41:00 PM  
Blogger grim said...

Was taking a look at some preliminary February statistics from the GSMLS this morning.

If the current pace we're seeing in February holds, sales should come in at or below 1400 for the month, a decline of 15% below last February (1587 Sales). The decline would be inline with the declines seen in the fourth quarter of last year and January of this year.

I've been hearing some anecdotal stories of sales picking up (mainly on this blog), the data does not yet currently support it. For reference, there have been approximately 985 sales this month on the GSMLS.

grim

2/21/2006 12:43:00 PM  
Anonymous Anonymous said...

From bankrate.com

"It's a seller's market transitioning to a buyer's market," says David Lereah, chief economist for the National Association of Realtors. Sellers are reluctant to drop their asking prices, but a lot of them might have to "because the buyers now have a little more control, a little more power."

2/21/2006 01:01:00 PM  
Blogger grim said...

Dr. Paul can come off as being a bit kooky at times.. However, keep in mind the guy is currently a U.S. Congressman, is a surgeon, served in the U.S.A.F., and was a presidential candidate.

2/21/2006 01:09:00 PM  
Anonymous Anonymous said...

anon 12:39--
True, Saddam did invade Kuwait in 91. However, the point you're missing is that Saddam started selling its oil in Euros right before we invaded this time. The same story will most likely play out in Iran. The US can not allow substantial sales of oil in any currency but American Dollars.

2/21/2006 01:12:00 PM  
Anonymous Anonymous said...

Grim, thanks for the Feb. 2006 update. Look forward to seeing the final numbers when they come in...

I think just because someone says there is a pickup in sales from December and January doesn't mean sales are meeting or surpassing 2005...just might be better than the previous two months which were pretty bad.

2/21/2006 01:12:00 PM  
Blogger grim said...

Just for reference:

Date - GSMLS Sales
Oct 05 - 2280
Nov 05 - 2135
Dec 05 - 2269
Jan 06 - 1705
Feb 06 - 1400 (est)

Feb 05 - 1578
Feb 04 - 1594
Feb 03 - 1578

2/21/2006 01:19:00 PM  
Blogger grim said...

Put on your Tinfoil Cap (tm) and google "Iran Oil Bourse". The conspiracy theorists have been grinding hard on this one.

True or not? Who knows. But if the expected start date is March, I have a feeling we'll be finding out soon.

grim

2/21/2006 01:22:00 PM  
Blogger Grim Ghost said...

James -- thats actual closed sales, not going into contract, right ? Going into Contract is more timely in the current market.

2/21/2006 01:38:00 PM  
Anonymous looking said...

Does the GSMLS get updated regularly and who does the updating? Is it an accurate gauge as to the house contract and selling process?
I ask because was looking through 10 listings I received in November (these homes had already been on the market) and looking back at them noted that they have aged an average of 95 days, the longest sitting for 175 days the shortest 52 days. 5 have come under contract, 1 in early jan, 1 in feb, the rest the end of Jan. None officially sold yet if the GSMLS is accurate.
When I first started house hunting beginning Dec of last year, I was a buyer. I bid on one house, didn’t get it. It’s been reduced twice, down 40k, and is 3 days from being on the market 90 days. It was also reduced prior to the realtor’s 2 reductions I note as the buyer had the price even higher – I didn’t include that in the 40k reduction.
This has been my short reality and education to this market and this blog has really helped me weigh what I’m reading against what I’m seeing. Thanks Grim!

2/21/2006 01:58:00 PM  
Anonymous Anonymous said...

Anon wrote:

"True, Saddam did invade Kuwait in 91. However, the point you're missing is that Saddam started selling its oil in Euros right before we invaded this time."

Nothing has been missed -- you're engaging in logical fallacy (cum hoc ergo propter hoc).

Saddam had many months prior to the unanimous UN vote for UNSC 1441, so it's no surprise he would attempt to undermine his enemies as a last ditch effort.

2/21/2006 02:14:00 PM  
Blogger grim said...

Closed sales.

2/21/2006 02:19:00 PM  
Blogger bubble disciple said...

"When I first started house hunting beginning Dec of last year, I was a buyer. I bid on one house, didn’t get it. It’s been reduced twice, down 40k, and is 3 days from being on the market 90 days."

Is the current list price above or below your December bid?

2/21/2006 07:12:00 PM  
Anonymous Looking said...

buble disciple,

My last (losing) bid was 44k below asking at the time. At the current listing price of the house, since it has since been reduced, the spread of my bid would be 24k.

2/21/2006 08:33:00 PM  
Anonymous Anonymous said...

In response to Grim’s posting, he/she should get the facts before personally attacking a highly-respected journalist. This colleague of mine has been writing about real estate for over 15 years, and knows more about zoning and building regulations than Grim does, I’m sure. In fact, she also probably has more college degrees than Grim could ever hope for. She’s been a well-respected college professor, and yes, she does write for women’s magazines. But I guess Grim didn’t take the time to research the multitude of articles she has written for women’s publications that are inspirational and give women, with diseases like breast cancer, hope. Grim should not make personal attacks when he/she has no clue.

4/05/2006 09:29:00 AM  
Anonymous Anonymous said...

In response to Grim’s posting, he/she should get the facts before personally attacking a highly-respected journalist. This colleague of mine has been writing about real estate for over 15 years, and knows more about zoning and building regulations than Grim does, I’m sure. In fact, she also probably has more college degrees than Grim could ever hope for. She’s been a well-respected college professor, and yes, she does write for women’s magazines. But I guess Grim didn’t take the time to research the multitude of articles she has written for women’s publications that are inspirational and give women, with diseases like breast cancer, hope. Grim should not make personal attacks when he/she has no clue.

4/05/2006 09:32:00 AM  
Anonymous Anonymous said...

Enjoyed reading some of your blog. Nice to take a break from my own real estate work. Selling homes is getting to be a challenging business right now. Good luck, and thanks for the read. Visit my site if you have a chance.

4/24/2006 12:06:00 AM  
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5/18/2006 05:18:00 PM  
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6/21/2006 05:46:00 PM  
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