Economics

Here is a primer on budget issues with sources at the bottom:

Defense, Social Security, and Medicare/Medicaid are about 20% of our spending each. So that is 60% of spending. Interest is another 10%. So about 70% of our budget is tough ground politically to address. The remaining 30% is the big departments (Education, Transportation, etc.) which have some turf guardians as well. In FY 2008, pre-crisis [...]

Lets get down and dirty on how the real estate market works in China.

First, China has a system called Gong Ji Jin. This system is like a forced savings for housing. If you do not own a house this money keeps accumulating and you have no access to this money until you buy a house. It is divided into three different categories. A is about 44% of the [...]

Nevada number 1 in foreclosure filings as 1 in 94 properties received a notice.

“Had we not had a moratorium, it would have been even higher than we saw,” said Rick Sharga, vice president of marketing at RealtyTrac.com. “We’ll probably see an increase in the first quarter as well.”
http://www.cnbc.com/id/34846937
The number of listed foreclosures is actually declining here which means the banksters are holding back listing them in an attempt [...]

Of course the analysts from Goldman Sachs is going to say macroeconomic activity is improving.

Yet, when you look at the real numbers EVER economic indicator is down and still off at least 10- 15% from 2007 when the “recession” started. How can anyone from Goldman say things on their end of the world haven’t improved? IF I had an unconditional bailout from the government, was able to run up [...]

Happy New Year: 2010, The Year of The Unknowable!

The nice/bad thing about the new year, is that I always review the past years results. I get to see how “I” did, and then how my portfolios did. They are DIFFERENT! In other-words, did my actions add to or subtract from the overall results. First, I maybe the last long, buy and hold investor [...]

MHA: Making Homes Affordable.

There are only two ways to make homes affordable in America. 1) Get the government out of the prop-up business and let housing prices fall to where they become affordable. And that is a long fall still; 2) give all Americans a one-time payment of approximately $200,000 as a gift from Santa (or may from [...]

The NAR hype has already started in preparation for the Spring home buying season. If anyone is thinking of buying - BEWARE!!

Prices are going to take another leg down in 2010 in most areas and this latest batch of knife catchers who are rushing to buy - are just that - naive knife catchers.
What’s the truth? Unemployment remaing at 10% to 11% (government fake numbers) and 15% to 18% (true numbers). Stagnant incomes. Higher taxes on [...]

Important News - Dec. 11

1) Moody’s sees no threat to U.S. top rating for now

“HONG KONG (Reuters) - The top sovereign credit ratings of Britain and the United States are not under threat of a downgrade right now, but a worst case scenario foresees a cut by 2013, analysts from Moody’s Investors Service said on Friday.”

2) Federal budget deficit for [...]

Several observations in China.

1). Home size in China include walls, balcony and doorway, 130 sqm is equivalent to about 1050 sq ft in the USA while the price is based on 130 sqm, not the 96 sqm.

2). When you buy property based on listing price, you can only buy “maopi fan”, bare bone apartment, there is no window, [...]

Taking control of my life…

I was unemployed for six months after a layoff. I made soup from throwaway/expired food from friends’ and family member’s fridges. I ate the same meal every day for weeks on end. I spent nothing on nothing. I carried my coffee with me and “borrowed” the grinds from those old frozen bags left in freezers [...]

ISM Non-Manufacturing Index is not a happy report - slow recovery at best in some areas, still worsening in others.

From the report:
“The nine industries reporting growth in October based on the NMI composite index — listed in order — are: Real Estate, Rental & Leasing; Management of Companies & Support Services; Construction; Utilities; Retail Trade; Educational Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Wholesale Trade.”
“The seven industries reporting contraction [...]

It is NOT capitalism…it’s corruption!

Government access and favoritism is NOT capitalism…it’s corruption! Government is suppose to be impartial and objective, doing what’s best for those they represent…the American people, not corporate America.
Politicians of the last 30 years are clearly MORE representative of ’special interest groups’ rather than the American people. Scandals and conflicts of interest are no longer kept [...]

FYI: Jobs will be driven by a higher new homes number. It ain’t happening:

Well folks, below is my analysis of the RATIO of new homes sales to the available workforce
Year …. Ratio …. Total …. Emp (1,000)
1963 …. 0.780 …. 560 …. 71,833
1964 …. 0.773 …. 565 …. 73,091
1965 …. 0.772 …. 575 …. 74,455
1966 …. 0.608 …. 461 …. 75,770
1967 …. 0.631 …. 488 …. 77,347
1968 …. [...]

Study carefully: What is GDP?

Critics point out that the GDP measure was created during the Second World War in an effort to keep track of wartime production gains. The purpose was never to use this as a measure of our wellbeing and social progress. A report issued in 1995 by the San Francisco-based organization Redefining Progress offers a detailed [...]

A significant spike in GDP that does not mean recession over.

As the media looks forward to news in hopes of a budding recovery consumers are still panicked. GDP should show signs of expansion in the 3rd quarter and slow growth due to Federal Government expenditures. Even if that is the case and we do see a significant spike in GDP that does not mean recession [...]

Be careful: Fake rise in GDP could manipulate people to spend more.

Of course the economy will bounce back thanks to the hard working entrepreneurs and corporations along with the discretionary consumers. Credits that Obama won’t address & only credits his stimulus bill. which had nothing to do with the rise in GDP (naysayers, tell me one part of Obama’s stimulus bill that promoted growth). Be careful [...]

Housing didn’t bottomed, it just stopped declining FOR NOW.

350k houses go on the market every month, there’s no way prices can hold. More losses in prices will result more writedowns. Capital might not be enough. In august new home prices dropped 9.5% in just 1 month!!!
http://www.census.gov/const/www/newressalesindex.html
Credit cards OK
Unemployment: don’t look unemployment number, look at just the employed! Last month was the 2nd worst [...]

This nonsense of playing with interest rates going up and down like a yoyo needs to be put to a stop.

Interest rates at the Federal Funds interbank level should be set and held at a 4.25% to 5.25% and banks should again be required as they were under the Glass Steagall Act’s Regulation Q to pay savers 5.25% on all savings account.
Lowering interest rates at the Federal Funds was what created the credit bubble in [...]

Words of wisdom that will make you money in the long run and better traders.

1.) Forget about theories and being more worried about being right vs making money. For example: Theories that markets can’t go up because of employment, or you think the end of the world is coming. Basically what ever bias you have.
2.) No when you are wrong and adapt quickly
3.) Be a learning machine
4.) Make no [...]

Important News - Oct. 14

1) Pimco Has Quit CIT Bondholder Steering Committee
“NEW YORK (Dow Jones)–The future of CIT Group Inc. (CIT) grew murkier Wednesday after the disclosure that bond fund giant Pacific Investment Management Co. had quit a steering committee that’s trying to prevent the commercial lender from collapse… The move was seen as another blow as CIT struggles [...]

Can Fed and the government keep the game up forever?

The big question is: can the Fed and the government keep the bad assets locked up in the basement as it were? And if not, when will these losses finally be realized (i.e. pokes their monstrous heads out of the basement and scare the daylights out of the partygoers in the main house Wink), [...]

Important News - Oct. 08

1) Ron Paul Calls for Delay in Bernanke Confirmation
In a letter they will send to Senate Banking Committee Chairman Christopher Dodd this afternoon, Reps. Ron Paul (R., Tex.) and Alan Grayson (D., Fla.) will ask that the Senate hold off on Federal Reserve Chairman Ben Bernanke’s confirmation hearing until the central bank releases more information [...]

Must Know News - Oct. 06

Treasury clearly mis-led public about bailouts

Shock fall in industrial output

Banks brace for Latvia’s collapse

The demise of the dollar

Activist Arrested for Using Twitter During G-20 Protest

Gulf States in Talks on Replacing US Dollar for Oil: Report

Peter Schiff Vlog-Recovery or Inflation,the politics of spin

Treasury clearly mis-led public about bailouts
A Treasury [...]

NOTE: After reading #1 please read #6. They are very related and would push the unemployment numbers even higher.

1) “If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the unemployment rate rose to 17 percent, the highest on records dating from 1994.”
“The average hourly work week fell back to a record low of 33 in September. That figure is important because economists are [...]

“While disappointing, the September numbers were not catastrophic, some economists said.”

Bologna! You’d realize that the figures are HORRIBLE if you’d do your damned jobs and DIG just a tiny bit:
http://market-ticker.org/archives/1485-September-Unemployment-ACTUAL-LOSS-995k.html
Headlines: 263,000 “jobs lost” and unemployment rate up to 9.8%.
That’s not good - there goes the “second derivative” argument.
Weekly earnings are also down by $1.54, which is bad news too.
But the Household Data is VASTLY worse [...]

US Economy Is Just An Empty Vase.

Scarecrow on a wooden cross, blackbird in the barn
Four hundred empty acres that used to be my farm
I grew up like my Daddy did, my Grandpa cleared this land
When I was five I walked the fence while Grandpa held my hand
The crops we grew last summer weren’t enough to pay the loan
Couldn’t buy the seed [...]

Economy dips in 2Q and CIT Group again on brink of collapse

Only an absolute simp would think this is good news. It’s time to sell (again). There will be no mercy today.
Economy dips at 0.7 percent pace in 2Q
“The small dip in gross domestic product for the April-June quarter follows the 6.4 percent annualized drop in the first three months of this year, the worst slide [...]

America is a drunken sailor with a taste for chamagne on a beer budget.

Since the government made private health care unaffordable by under reporting inflation and keeping wages lower than the rate CPI grew, you can’t expect the government to actually manage any plan well. They under budget for Medicare because they under report CPI and thus, budget less than real world prices.
One reason health care prices rise [...]

Don’t fall into the hole Fed dug, they need to fill the hole real soon.

Forgive my ignorance but if I am not mistaken didn’t the belief that the price of houses would never fall help get us into this mess in the first place? And where are people getting the money to pay for these houses when wages are still stagnant or have simply fallen?
Anyone who buys/bought into this [...]

Outrage: Federal Reserve is not just supporting the housing market, it is the housing market!!!

From CM:
“This is important information.  What I’ve found and present below is that the Federal Reserve is not just supporting the housing market, it is the housing market.
Just as important as a person’s desire to buy a home is their ability to gain access to mortgage funding.
The mortgage market is a gigantic beast with many [...]