Here's some charts that should 1) disgust you and 2) make you worry for the fate of the US economy

August 25, 2006

Here's some charts that should 1) disgust you and 2) make you worry for the fate of the US economy

51 comments:

Anonymous said...: Thankyou very much Alan Greenturd; August 25, 2006 3:50 PM
Anonymous said...: They won't be able to foreclose on all those houses. So those people will live for free in their house As always, these no saving, living above their means will slid through. In the 1930s the banks came out to the farms and homes and said "we can't take it because what are we to do with it, so take care of it and we'll talk later" My grandfather talks about this all the time. He also said most kids can back to the family farm and lived off the produce of the farm. Try that in your condo or stucco crap box.; August 25, 2006 4:18 PM
Anonymous said...: Hunter,

This is a good one to show to your friend Gary.; August 25, 2006 4:41 PM
Anonymous said...: I've read in this blog (can't remember which post) about one blogger sharing his experience in Texas during the housing crash of the 80's. If you look at the first chart, it is obvious that the volume of debt is way low compare to what we have now.

This is going to get ugly.; August 25, 2006 4:45 PM
Bill said...: Weekend @ Greenbacks

http://tinyurl.com/fd726

Personaly I have jumped on the silver wagon for the last few weeks.

No not the ETF the actual kind you hold in your hand COIN! ..best of luck out there folks, this is not "doom & Gloom" talk this is reality.

Like the writer says summer is coming to an end Housing is tanked and no matter what the fed does at this point the dollar is set to fall..it has no other way to go..so if you have the cash treat yourself to a little metal..you might just need it.; August 25, 2006 4:52 PM
Anonymous said...: not your typical ponzi scheme, no. this was a margin-account fueled ponzi scheme, where fools bought the asset with borrowed money, not their own

People, get ready for the greatest depression; August 25, 2006 4:53 PM
Anonymous said...: When you are allowed to borrow a million dollars from the bank, you don't sleep well at night.

When you are allowed to borrow a billion dollars from the bank, the banker doens't sleep well at night.; August 25, 2006 5:15 PM
Anonymous said...: Wow!! The reversion to the mean is going to be a real bitch.; August 25, 2006 5:24 PM
Anonymous said...: Some Wise Words From Jim Willie:

The USFed does influence the money supply, thus their desire to remove it from the public radar. Games are surely being played, illicit without a shadow of doubt. Given the slowdown in progress, the governors and the board absolutely must keep the monetary spigot flowing. Given the housing decline in progress, the official managers of bond liquidity infusions cannot afford a mistake. Chairman Bernanke has boasted incessantly about his willingness to flood the USEconomy, to drop money via helicopters, to resist a recession. Well, now is his chance. But if he and his merry band of charlatans actually believe their official Jobs Report fiction, and act upon it falsehoods, they might fall down on the job and send the USS America toward the shoals, if not icebergs. They must resist the building downward momentum in money destruction from debt default and erosion in home equity.

The total housing stock value is on the order of $20 trillion inside the United States. A typical decline could shave a few trillion dollars. The impact to spendable cash floating around would and will be massive, certain to spill onto financial markets. The USFed must counter this, and NOT BE LATE. They must not time their requisite anticipated rescue incorrectly. They must not miscalculate. They must not fall victim to the nonsensical manure-laden propaganda issued within Jobs Reports. Their news releases read like a political promotional paid blurbs, the 60-second spot clips. They must not permit the fire in the monetary press engines to go dim. They must offset the gargantuan money destruction in progress. Now is the time for the governors to make sure they stop talking tough and actually keep the monetary engines running without abatement.

Once the housing decline gets a deeper grip in its downward momentum, it will be incredibly difficult to stop, and even harder to reverse. The numerous rate hikes by the USFed have had an horrendous impact on adjustable rate mortgages (ARM). Their repricing has set off shock waves. Distressed property sales will flood the system soon, if not already. Stories are widespread, common, universal of enormous monthly payment increases, of sales with inadequate funds to cover mortgages upon sale (called “short sales”), of fast rising inventory of unsold properties (especially condominiums), of homeowners from recent purchases realizing they are underwater suddenly. An estimated 40% of home buyers in 2005 and 2006 are underwater, owing more than their equity. A disaster is upon us. A tough talking USFed is counter-productive in such a climate, since inflation is not the pressing issue, but rather debt deflation and asset deflation.; August 25, 2006 5:45 PM
Anonymous said...: I have silver which I bought some time ago, both coins and bars, but I'm not buying any more until I get storage where there are no stairs. I have some concerns about the gummamint confiscating silver for "emergency national need" - even if the bars are stored under your name at the crimex. Are we going to have a scenario where the gummamint tries to print their way out a la Zimbabwe/Weimar, or will we have a super deflationary event? It's gonna be interesting. I don't know if the gummamint can print faster than furriners can unload treasuries and toxic GSE paper.; August 25, 2006 5:59 PM
Anonymous said...: It has happened before that private ownership of precious metals has been outlawed.

Some people who are racked with worry probably haven't taken a solid shit in weeks.; August 25, 2006 6:09 PM
Anonymous said...: I remember these charts.
They were the ones published in the obits section of the paper.

I recall the cause of death was suicide with some mention of receiving the Darwin Award.; August 25, 2006 6:16 PM
Anonymous said...: Treasury yield curve:

http://finance.yahoo.com/bonds/composite_bond_rates

Short term rates above all but the 30 year (they're expecting long term inflation, despite economic weakness).

Notice what the talking heads have stopped talking about?

Yuppers, the INVERTED YIELD CURVE.

All they are yabbering about is "When will Ben be done" just to push the financial stocks One Last Time.; August 25, 2006 6:19 PM
Anonymous said...: Chairman Bernanke has boasted incessantly about his willingness to flood the USEconomy, to drop money via helicopters, to resist a recession.

Ben didn't actually say that. He said that he'd strongly resist deflation.; August 25, 2006 6:21 PM
Anonymous said...: Those holding real estate are going to get hit from both directions. Value will be declining but their property taxes and insurance rates may remain the same or even go up. Squeezed from both sides. Towns that can't get the citzenry to cave in on a property tax increase "for the kids" (schools) or a bigger library or pool are going to float bonds instead and pass the cost on to the future homeowners. Or people will come out of their collective haze and demand better for the money they spend.; August 25, 2006 6:59 PM
Bill said...: autofx in Phx said...

Be very careful with beliefs like this. Buffett and Gates bet big on the dollar dropping and lost a great deal of money in 2005. Everyone "knew" the dollar was going to fall, but it didn't.

I apreciate what you are saying Auto, but with the Yuan gaining the past few days and the news coming in like a tidal wave about the housing market, one has to woander if we will see the dollar @ 80 in the coming months.

I by no means am an expert at currency trading, but we are at such an uneven curve one has to wonder where the heck we are going.

Is this part of the goverments game plan or what?; August 25, 2006 7:16 PM
Anonymous said...: How safe are commodities and oil as investments given that a global slowdown will push down demand for them? Also, given that gold and oil move in tandem (since gold does silver does move in tandem with oil)...so if oil goes down dont all commodities and precious metals go down....foodgrains and related commodities may not be linked to this.

Any comments please.

Thanks.
Rao.; August 25, 2006 7:51 PM
Anonymous said...: From Inman News -
Any publicity is good publicity
As he launches his new career as a fraud prevention expert, former loan officer and real estate agent Michael Richardson can read about himself in the local paper. An article in today's Denver Post details the downfall of his mortgage company and three others blamed for a quarter of all bad FHA-backed loans in Colorado the last two years. Richardson's company, Primero LLC, pushed loans through the pipeline that defaulted at seven times the rate of loans originated by other FHA-approved lenders in Colorado. Some 41 percent were in default within one year. (Stats you can verify at HUD's "Neighborhood Watch" Web site, a nifty tool for checking up on FHA-approved lenders)

Richardson told the Post that Primero "got infiltrated by a mortgage-fraud ring" that put him out of business in seven months. He says he fired five of his employees in a single day after discovering they were falsifying information on loan applications. (Richardson said one employee was responsible for the carnage when he talked to Inman News last year).

Over on Richardson's Web site, he's hawking his book on mortgage fraud, "An American Epidemic," for $16.95. He's scheduled to hold a $99.95 Fraud Solutions workshop in Dallas today, and he'll be in Houston, Chicago, Seattle, San Francisco, Las Vegas and Phoenix in coming months. Or just sign up for his 6-hour online course for $75.

Richardson's Web site promises "his personal experiences with mortgage fraud along with 25 years of business experience, which you'll learn about, have given him a doctoral degree from the school of hard knocks. Much like you, he 'never thought it could happen to me.' "
NATION OF HUCKSTERS; August 25, 2006 7:52 PM
The Thinker said...: Silver isn’t an investment, its cutlery.

Autofx in Phx is a troll out to promote a get-rich-quick investment scheme designed to speed the separation of the fool and his money, I’ve seen this scheme peddled to the gullible on Sunday afternoon infomercials. I am willing to bet all of The Great Mamboni’s silver on the fact that Autofx in Phx works for a marketing firm hired to promote Forex on blogs.; August 25, 2006 8:01 PM
Anonymous said...: http://www.nytimes.com/2006/08/25/business/25cnd-ford.html?hp&ex=1156564800&en=d0f1d6fa5b7ff2d1&ei=5094&partner=homepage

Rubin jumps a sinking ship...former treasury secretary quits as Ford's board member.

Rao.; August 25, 2006 8:05 PM
Bill said...: This comment has been removed by a blog administrator.; August 25, 2006 8:06 PM
Bill said...: This comment has been removed by a blog administrator.; August 25, 2006 8:06 PM
Bill said...: OT:

Did anyone read the speech from BB today? Someone at the fed please tell Ben that class is over and it is time for a break.

Sheesh talk about Dodge Ball. We are in trouble with dribble like this.

NIZE NOTES:

Bernanke Ignores Current State of Economy in Speech
Mr. Open Communications, Fed chairman Ben Bernanke, did not mention the current state of the economy in his speech at the Kansas City Federal Reserve Bank's annual conference in Jackson Hole, Wyoming.

While traders marked time waiting for comment on the economy, Bernanke gave a meandering speech on global integration that included this insightful comment: "Further progress in global integration should not be taken for granted." Forgive us for yawning.

Reuters described the embarrassing speech succinctly: Bernanke's "remarks, which offered a wide overview of the history of economic integration from the Roman Empire on, did not touch on the current outlook for the U.S. economy or Fed policy."

With housing in a downward spiral, the stagflation noose is clearly making it difficult for Bernanke to talk. If he announces he is fighting inflation, the stock market tanks and confidence about the real estate market sinks further. If he announces he will respond to the crashing housing market, commodity prices soar.

It's better for him to stick to the mundane, and he does so by giving a speech that could be mistaken for a college sophmore's Econ101 paper on global trade, a bit to cute and not very insightful:

When geographers study the earth and its features, distance is one of the basic measures they use to describe the patterns they observe. Distance is an elastic concept, however. The physical distance along a great circle from Wausau, Wisconsin to Wuhan, China is fixed at 7,020 miles...By almost any economically relevant metric, distances have shrunk considerably in recent decades. As a consequence, economically speaking, Wausau and Wuhan are today closer and more interdependent than ever before. Economic and technological changes are likely to shrink effective distances still further in coming years, creating the potential for continued improvements in productivity and living standards and for a reduction in global poverty.; August 25, 2006 8:06 PM
Bill said...: Silver isn’t an investment, its cutlery.

Silver is a personal choice (the coin)
is the real value for me, as i have been collecting coins since my youth passed on from my father..but if silver does climb i get the best of both worlds.; August 25, 2006 8:12 PM
Anonymous said...: looking at those graphs make me sick; August 25, 2006 8:43 PM
Anonymous said...: Bendover is going to inflate us out of this one. Those who are hardworking and prudent are going to be the ones who get hurt the most.....; August 25, 2006 9:15 PM
Anonymous said...: When you have economic integration with people with wildly different (ahem) philosophies towards freedom and liberty, is that a good idea?

"The capitalists will sell us the rope we'll use to hang them" -- V.I. Lenin; August 25, 2006 9:46 PM
Anonymous said...: I heard those St. Joe statues only work if the buyer shoves them up his or her ass.; August 25, 2006 10:27 PM
Anonymous said...: "STAGFLATION is:
Increasing costs and decreasing business activity = lower corporate profits and individual income = lower tax revenues plus temporary exemption of the many from the Alternative Minimum Tax category = in the face of continue high spending an explosion in the US Federal budget deficit = in the face of a continuing US Trade deficit and a runaway US Current Account deficit = a severely lower US dollar = significantly higher gold prices = $1650 for gold!"

Jim Sinclair

www.jsmineset.com; August 25, 2006 10:45 PM
Anonymous said...: When you see a lot mortgages that are only a year or two old being foreclosed upon, you know something is wrong. I found a first (for our office) in the public records around St. Louis today. House mortgaged in January 2006 and it's going to foreclosure sale in early September. Never got out of the gate.; August 25, 2006 10:47 PM
Anonymous said...: Right! And World War 3 has begun!; August 25, 2006 11:04 PM
Anonymous said...: Yo Bork A Fatty,

I think there is some debate over the
housing crash = market crash = weak dollar.
If the US market crash causes world markets
to crash harder, there may be a run to the
dollar from ALL markets. To those of you that say the FED will sacrifice the dollar, I say not yet. Not with our superpower status on the line. If the dollar goes, we lose our global position. This is comming, but I think Bush and co will defend this, at least through Nov.

I think this defence of the dollar will lead to the KA in KA-POOM.
Now I like silver. ALOT. But, I think
it is prudent to keep some cash ready for
the KA, which should temporarily lower
silver and gold etc.

So I am bear funds, metals and cash. Hopefully the KA wont be so short lived
that I cant get out of bear funds and into metals with my IRA cash account.

Thoughts on that?

-El Maha; August 25, 2006 11:42 PM
blogger said...: Anyone else get the sense that something really changed this week?

I do. I also sold my few remaining stocks today except my COP options. So I'm left with US$ cash earning 5%, and pretty good short positions via Jan '07 put options on nine stocks - retailers mainly - which are doing incredible (5 have 100%+ gains already); August 26, 2006 12:09 AM
Anonymous said...: Manboni,
Imagine trillions in paper asset value vaporizing. What capital will chase speculative metals? The safe haven will be Swiss Francs, Dollars, Euros, and Yen. The question is what order to put them in.; August 26, 2006 12:37 AM
Anonymous said...: Keith and others strongly in the
deflation camp:

If you really believe in cash, shouldnt
you keep some outside of the bank? If
the sh&t hits, you better be really sure
that 5% account is rock solid.

-El Maha; August 26, 2006 12:48 AM
Anonymous said...: I personally do not believe in banks. only enough to pay bills in the account. the rest is notes in a plastic bag transplanted in my dog's butt.; August 26, 2006 12:52 AM
Roccman said...: Where to make money

1.) Rail investments (not as quick to be nationalized as oil and gas).

2.) Oil and gas drilling service companies. Their equipment is going
to be in high demand, and it won't be nationalized, unlike oil and gas
itself.

3.) Uranium companies, especially ones that are building mines.
Uranium has a huge mining-supply-demand deficit. At any time, the
sale of Russian Uranium and Plutonium (from old nukes) could stop.

We are likely going to see a large scale growth in the construction of
nuclear power plant, especially in India and China.

Uranium companies in Canada and Australia would be best, IMO.

4.) Solid gold and silver. Can't be nationalized. Will grow in value
as the cascading collapse of the entire world's financial system goes
forward.

5.) Mortgaged properties. During the depression, the U.S. made laws
that said that people who go bankrupt can't be evicted from their
homes. Expect something similar to that after we start seeing massive
numbers of people, especially babyboomers, who have owned homes for
decades, going bankrupt. It will probably take a few years to come
into force, so only do this if you have some assets to carry you over
for a few years.

Also, in the 30s, we never had a derivative bubble. In this case, the
derivative bubble is going to necessitate printing large quatities of
money, inflating away the value of the debt. What ever you do, fixed
interest rates for all mortgages and loans.

6.) An orchard in an agricultural area where there is a regional
shortage of the fruit.

7.) Insulation for your home.

8.) A green house or hydroponic grow room for your home. Nobody can
steel food that is grown indoors (as long as they don't come inside).

9.) A law degree. After the crash, civil lawsuits will skyrocket as
people start defaulting on all debt. Crime will skyrocket too.

10.) A medical degree. There will always be demand for doctors and
nurses. In Canada, we're headed for a massive shortage when the
babyboomer doctors start retiring.

11.) A high-efficiency motor vehicle. How about a used dirt-bike?; August 26, 2006 1:38 AM
Anonymous said...: Good suggestions Richard. Unfortuantely I have a very non-marketable edumacation (theoretical physics/statistics).

Oil Service stocks: I own an oil service ETF, PXJ

I also own shares of a utility ETF: PUI

Solid physical gold can be effectively 'nationalized' by preventing any financial institution from trading money for it. You might get something on the black market but you could just as easily get jacked by somebody with a gun when you want to trade.

Australian and Canadian dollars might be better.

Uranium? Not many solid companies except Cameco (CCJ), but it has a high valuation and sold forward its uranium years ago, so the upward uranium prices won't help for some time. Maybe Uranium participation corp? Only on Toronto exchange.

Well, here in kalyeefornya if you start asking about greenhouses and 'grow lights' they're pretty sure your interested in a certain kind of herb which doesn't go onto pasta.

Motor vehicle? www.egovehicles.com {I commute with one, and I now have to get gasoline for my car only once a month.}

The most valuable, which is the most difficult : A Canadian or Australian passport. High resource, low population countries.; August 26, 2006 2:44 AM
Anonymous said...: So when is the stock market going to notice what even the main stream media is now acknowledging?

The real estate market is toast, the economy is slowing markedly, and oil is still over $70/barrel. Most Americans have seen no growth in their income for several years and prices are way up.

Yet the market barely budges. I don't get it. What is holding this market up?; August 26, 2006 2:51 AM
Anonymous said...: I viewed a chart by a technical investment firm.I their own words.We have seen every chart related to the US economy going back a century,and,"Folks WE have never seen anything like this,or this or this"Referring to the RE SUPER SPIKE,BONDS,and DERIVITIVES.The great Depression was only 55%GDP,this one 80% and the numbers were probably Massaged.DiD any of you notice that the drought in the Midwest is approaching that of 1950,next comes the 30s.; August 26, 2006 7:14 AM
blogger said...: "Yet the market barely budges. I don't get it. What is holding this market up?"

-I think this is a historic chance to short the market, especially consumer-driven sectors that will get slaughtered, if you have courage. I have about 10% courage myself; August 26, 2006 9:01 AM
Anonymous said...: "Yet the market barely budges. I don't get it. What is holding this market up?"

I think the foreign investments (China, Japan, India, etc.)

As long as they keep us lending and we keep borrowing, the market will hold - only for a while. The moment they pull the plug, the rest will be history.; August 26, 2006 3:10 PM
Anonymous said...: This time its different logic is partly responsible for holding up teh market and the fact that all the global players, asians, the us, europeans gulf oil producers....no one wants to upset the apple cart because they all have a stake in the dollar....the asians depend on the us markets, the gulf rulers have most of their money in the us companies and financial markets and the us itself cant afford to lose the dominance of the dollar and the europeans...am not sure but maybe they dont have the inclination to take the euro to become the dominant currency....they will have to print an awful lot of euros for that...that may upset their local economiies...

Rao; August 26, 2006 4:20 PM
Bill said...: PLUNGE TEAM of course.; August 26, 2006 4:29 PM
Anonymous said...: True about the Plunge Team a possibility...

But they will have a hard time accomodating the below if it snowballs...all bets off it does do so.

Iran Opens Plant That Can Produce Plutonium

http://www.nytimes.com/2006/08/26/world/middleeast/26cnd-iran.html?hp&ex=1156651200&en=e19f34c3ee80e8f4&ei=5094&partner=homepage

Russia Says It Opposes U.N. Sanctions on Iran

http://www.nytimes.com/2006/08/26/world/middleeast/26russia.html

Rao; August 26, 2006 4:39 PM
Bill said...: Hmm Maybe I had a preminision

NIZE NOTES:

Russians Dump Dollar For Ruble
It's not only Central Bankers that are abandoning the dollar. It's private holders of dollars as well. According to RIA Novosti via DJ,: Russians abandoned the dollar at an unprecedented rate in the first half of this year, Central Bank deputy chairman Alexei Ulyukayev said.

Ulyukayev told a press conference - to which foreign press weren't invited - that dollar assets held by the population had fallen by $5.1 billion in the first half of this year - three times the rate seen in the corresponding period in 2005.

This is not a good sign in the sense that to the degree private foreign dollar holders across the global decide to abandon the dollar, downward pressure on the dollar could be enormous--ultimately resulting in major inflation in the United States.; August 26, 2006 6:07 PM
Anonymous said...: Yet the market barely budges. I don't get it. What is holding this market up?

There has been a large transfer of wealth from average consumers to the owners of capital. All the productivity improvements and extra hard work by normal people have gone into the pockets of the ultra-rich who own most everything except real estate. This is also why there's a "global savings glut" despite the fact that average people are so stretched: the really rich are just so stupendously overloaded with money there just isn't enough place to put it.

Example:
Young physicians now are no dumber than doctors were 40 years ago, but they have to work egregiously hard with extreme patient loads, all to benefit the hospitals and insurance cmpanies.

And they are, comparatively, one of the privileged ones.; August 26, 2006 6:22 PM
Roccman said...: "This is not a good sign in the sense that to the degree private foreign dollar holders across the global decide to abandon the dollar, downward pressure on the dollar could be enormous--ultimately resulting in major inflation in the United States."

And that is why not only Coal, but Gold is King.

Add to this list of countries leaving the dollar - Venezuela (35 billion) - Syria - South Korea - and probably many more.; August 26, 2006 6:36 PM
Anonymous said...: Wish they had a chart to show the clench factor of my Ass. I own in Vegas and Phoenix!; August 27, 2006 5:27 AM
Anonymous said...: Anon 5:27:43,

It's good that you are opnely talking about it. We live and learn. The most important thing is that you're confronting it. The worst is when you're in denial, as it will just prolong the agony, not to mention losing focus on how to remedy the situation.

Now I don't know your mortgage situation, but if you can get out now and perhaps take a small loss, you'll be better off in the long run.; August 27, 2006 7:02 AM
Anonymous said...: Good info. Thanks.

Regards,

ETF & Stock Trader
Learn ETF trading; September 22, 2006 2:31 PM

HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008

August 25, 2006

Here's some charts that should 1) disgust you and 2) make you worry for the fate of the US economy

51 comments:

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