posted
I printed the news letter out, thinking i would read it in the Hot Tub at the YW tonight, but got engrossed---
Yes the markets can drop while rising, because the fundamentals are not being reported and evaluated properly. And the markets right now are a perception based crapshoot. They may be rising in the same way a flood lifts something up before it drowns it.
It is only a matter of very little time, until the true erosion of financial power will surface and can no longer be distorted by propaganda. The buyer's market has started and foreclosures en masse are to come, the people who bought houses and are paying interest only loans will have to pay their mortgage money for gas to get to work. There are few alternatives to that. The Pawn Shops are overrun at this time, first people empty out the houses, and then they lose them.
Unfortunately this spells financial trouble for the whole nation with it's middle class getting more impoverished and spread thin every day.
The newsletter confirms a lot of what ought to be obvious about what is going on around us. Unless we dont' want to see it.
The 25 year high in Gold is not only from the weak dollar, the high inflation in general and the high price of oil - it is also from just being plain scared. I see this fear of the future as world wide. ============== No fair Mike, you get to just post the link, and I'm going to have to take the heat for saying I read it. I used as little words as possible
-------------------- Myra A. Grozinger Signs Limited Winston-Salem, NC
signslimited@triad.rr.com Posts: 1244 | From: Winston-Salem, NC USA | Registered: Nov 1998
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He has some very intersting points. The only problem I have is his points about the housing boom. Talk about the how the bubble was about to burst was the samething being said a year ago in BusinessWeek and The Eonomist. How do we square what they said then and what he says now? Are we then simply creating a self-fulfilling prophesy?
And to his point about the core inflation, is it not possible that a combination of increased productivity and dramatic drops in the price of consumer electronics compensate for the inflationary pressures of energy costs? It seems to me that there have been enough offsets to account for it.
Take a look at the sign industry. In my area, the price for certain types of signage have dropped due to increased competition? A pair of magnetic signs cost less today than they did 20 years ago inspite of the fact the cost of doing business and the cost of goods have gone up.
I'm selling screen printed t-s for less than I did 15 years ago but I'm making a greater profit margin. This is due in part to a lower cost of goods and improved productivity.
posted
The prophesy is not self fulfilling, it's driven more by irresponsible lending policies of the banks and (now) rising interest rates.
In 2003/2004 one could have financed a home with interest rates as low as 4%, bankers introduced insanely long mortgages, combined with low payments for the first two years which essentially didn't even cover the interest charged, the logic being that in a hot real estate market the house could be refinanced for an even greater amount at a later date and the (equity ?) used to pay the increased payments. Even without the fancy footwork, people were buying houses with little or no down payment and counting on low interest payments to last forever. Others were borrowing against the newfound equity they found in their houses as prices went up and again counting on interest rates remaining low.
Look at this scenario: on a $225,000 mortgage at 4%, 30 yr, principal & interest would be roughly $1075 per month (+ mortgage insurance) were one have to renew that same mortgage two years later at 6.25% (balance $216,914, 28 years) the monthly payments would increase to around $1370 per month.
Many families will find that they just can't afford the increase and will be forced to sell (possibly at a loss) therefore putting a large number of houses on the market at a time that due to higher rates there are fewer buyers... Don't think the bubble will burst? - all the ingredients are there.
Eric has some strong opinions on the US governments policy of printing it's way out of financial crisis brought on by years of huge budget deficits combined with massive shortcomings in the balance of trade. His point was that if the market was compared to commodity values instead of dollars you would see that the market essentially fell by roughly 10% in a one month period of time. By anyone's definition a calamity.
I'd hate to argue with Eric, his track record is just too strong. Sprott canadian equity has averaged over 30% annually since it's inception in 1997, his other funds are also stellar, he's obviously called the shots right up to now.
[ April 27, 2006, 09:26 PM: Message edited by: Mike O'Neill ]
-------------------- Mike O'Neill
It has yet to be proven that intelligence has any survival value. - Arthur C. Clarke
posted
I don't know if I would say that "the bubble has burst". It seems to me that in the past few months there has been more of a "slow down". The other thing I question is how regional these bubbles or slowdowns are. I'm doing some work for a developer and he's convinced that our area is at the beginnings of a major boom that is expected to last the next several years.
Also, interest rates are predicted to reach 6.5% by the end of this year. I just don't see that doing much of a "pop" when you combine the fact that the unemployment rate continues to drop.
posted
I'm seeing a lot of sadness out here in the Sacramento,area where some folks who were in the flipping game are now caught with more than one property on thier hands. My payments are low compared to those who fell into the trap of equity exchange. Some of them now are looking at mid $3K payments and wondering if they will be the next one fired. I have a good friend who is a broker that is just about to lose a million dollar home that he had built for resale and it is sitting along with many many others empty and costing money instead of making it. The banks seem desperate for business with all the come on ads that are popping up as well. But eveeerything else seems to be on track and I also do think Sprock, has a nose for which he speaks.
CrazyJack
-------------------- Jack Wills Studio Design Works 1465 E.Hidalgo Circle Nye Beach / Newport, OR Posts: 2914 | From: Rocklin, CA. USA | Registered: Dec 1998
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posted
Don't sweat it! As soon as all the "undocumented immigrants" are given complete amnesty...the housing market will boom! Lets face it, they will have to have a place to live, and when all their relativews sneak into the country, one room won't be big enough...they will need a new home of their own!
-------------------- Si Allen #562 La Mirada, CA. USA
(714) 521-4810
si.allen on Skype
siallen@dslextreme.com
"SignPainters do It with Longer Strokes!"
Never mess with your profile while in a drunken stupor!!!
Brushasaurus on Chat Posts: 8831 | From: La Mirada, CA, USA | Registered: Nov 1998
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posted
This coming market correction is financially, ethically & socially 10 to 15 years behind it's safe & sane controlled corrective date. The US is in an artificially motivated market based on home ownership that has exceeded it's usefullness nationally and now globally. Artifically low interest rates and people in houses that should be renters due to lifestyle choices must be paid for somewhere. I suspect the bill's in my increasing taxes on all levels and the poor smuck in China killing himself to supplying Walmart. All in my humblest of opinions of course.
-------------------- Ron Helliar Marysville Sign 11807 51st Ave. NE Marysville, WA 98271 (360) 659-4856 Posts: 263 | From: Marysville, WA USA | Registered: Feb 1999
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