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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (21751)	1/19/2005 1:39:37 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

More students sold on studying real estate Like the market itself, real-estate education is hot. But some experts warn this industry is headed for a decline. By Lisa Leigh Connors \| Staff writer of The Christian Science Monitor Real-estate education is red hot, thanks to a booming real-estate market nationwide. As a result, colleges everywhere are adding new programs and building on existing ones to keep up with industry and student demand. Some experts warn, however, that the market may have hit its peak - and the field could be headed for a decline. "If you went back to the late 1990s, you probably saw very similar situations with classes in the securities industry for stockbrokers or Internet-related enterprises," says Peter Schiff, president of Euro Pacific Capital, an investment firm based in Newport Beach, Calif. "The real-estate industry is going to be one of the worst industries to be associated with in the next 10 to 20 years. We are in a major bubble." Instead, Mr. Schiff says, students should turn their attention to agriculture, horticulture, engineering, and foreign languages, such as Mandarin. csmonitor.com

To: CalculatedRisk who wrote (21751)	1/19/2005 1:47:04 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Builders Report Easing Prices, Fewer Shortages by Lew Sichelman After being hit by "a huge increase" in the cost of many building materials this summer, builders throughout the country are now reporting easing prices and fewer shortages. That doesn't mean the cost of new homes will be coming down, according to Michael Carliner, an economist with the National Association of Home Builders. But at least the pressure on builders to raise their prices won't be as great, he said at the NAHB's annual convention in Orlando last week. During the past year, new home construction has been running at a record pace, and the cost of the wood, cement and other materials needed to erect the typical single-family home has escalated significantly. In July, the NAHB said that the availability and cost of many products had become "a serious concern." In the case of lumber and cement, suppliers were being blocked by import barriers; in other instances, such as oriented strand board (OSB), which is now used in place of many plywood applications, there just wasn't enough capacity to keep up with demand. Whatever the reason, the NAHB estimated that in July, higher construction costs had pushed the price of the average house up from $5,000 to $7,000. Now, though, the situation is easing, Carliner said at the big NAHB conclave, which ended Sunday. "We won't be seeing the kinds of price increases this year that we saw last year," he told reporters. Lumber prices already are falling in anticipation that Canadian export duties will be eliminated, he said. And new OSB and wood panel factories will be coming on line soon. As of late December, supplies of concrete products were still "an issue" in 35 states, and Edward Sullivan, chief economist at the Portland Cement Association expects demand to remain strong "for the foreseeable future." But he also pointed out that domestic producers are expanding their capacity as rapidly as possible. "Fourteen major expansions" are planned in the 2005-2010 time period, he said -- and should be able to keep pace with demand going forward. [14 expansions planned after this runup. sheeesh mish] Foreign suppliers, who produce about a quarter of total U.S. consumption, will continue to be hindered by a lack of ships to bring their products to the states, Sullivan also reported. Nevertheless, thanks in part to the weak dollar abroad, he said import volumes into U.S. markets "have increased significantly" during 2004's last quarter. According to NAHB's latest poll, not as many builders are seeing shortages of cement, ready-mix concrete or concrete brick and block. The availability of such other key products as clay brick, insulation, gypsum wall board, roofing materials and windows and doors is greater than it was as recently as October, the survey also found. Builders were still seeing price increases in these and other materials, however. The cost of steel reinforcing bar, commonly referred to as rebar, was up 28 percent. The price of lightweight steel for framing was up 27 percent, and the price of steel beams has jumped by 22 percent. But for wood products, which account for the lion's share of a typical new home's cost, "the worst is over," Carliner said. Indeed, though builders who responded to the survey continued to gripe about escalating costs -- builders always need something to complain about, the NAHB economist said -- the majority reported that obtaining the framing lumber, trusses, OSB and plywood they need is not as big a problem as it was just three months earlier. Published: January 19, 2005 realtytimes.com

To: CalculatedRisk who wrote (21751)	1/19/2005 1:52:28 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Sickened By Fraud, A Real Estate Appraiser Turns In His Pencil by Blanche Evans It may be a sign that the housing party is coming to an end. Rampant fraud has at least one appraiser turning in his pencil, and he's on a rant. Texas appraiser Bob Burnitt says "Durn it!" He's sick of fraud. "I have only practiced real estate appraisal in the state of Texas, but in my 53 years of being on this planet, without a shadow of a doubt, real estate appraisal is the most corrupt 'profession' I have ever seen," says a disgusted Burnitt. "It is my belief at this point it is no different in any other state." Unfortunately, it does seem to be human nature for people to want to take the easy way out in many occupations and trades - just look at how our country rewards politicians who lie, and looks the other way from the criminal actions of business leaders. The Justice Department moves slowly to prosecute white collar criminals, mainly because the miscreants can hire lawyers capable of bankrupting the nation with delays, hearings and appeals. Just ask the SEC where it would start if it were going to investigate every CEO who covers the inflation of earnings. The stock market would have to close for years. The mortgage lending/real estate appraisal business is the absolute bottom, says Burnitt. "I have lost every single 'good' client I have ever had for the same 'reason,' laments Burnitt. "Sooner or later, I do an appraisal that doesn’t 'make value' and that is it, I’m fired. Time and time again. During the so-called "re-fi boom" loan officers absolutely demanded that I either lie or inflate an appraisal for them. When I tell them I can’t do that, it is unethical and illegal, they just hang up the phone and call my competition." Being fired several times a week for simply following the rules is something he can’t take anymore. "It never stops," Burnitt says, "Well, actually it has slowed down a lot, because I have finally gotten on enough black lists that my phone just doesn’t ring anymore. So I have decided to make it easy on myself and simply decline all further assignments. I have dropped my membership to the Board of Realtors, and, of course, the MLS." The Realtors are as much to blame as anyone else for this awful situation, he says. They want appraisals to meet asking prices, too. Burnitt didn't throw in the towel before trying to do something about the situation, but he says his congressman and state representative looked the other way. They claim there is no money to pursue the problem, he says. "I have met face-to-face with my Congressman (Joe Barton) and supplied him with plenty of documentation that loan fraud and inflated, fraudulent appraisal practices are rampant, and his was reply was, 'Oh, that’s just human nature, I can’t do anything about it." Well so is any other kind of theft, but we at least try to enforce the law when it comes to that. It seems to be OK with Congressman Barton to steal with a pencil. "My State Representative, Jim Pitts, is equally aware of this situation. Same reaction, "can’t do anything about it". My State Senator, Jane Nelson, has also been advised of this situation as well. Believe you me, I have kept files of my correspondence with these people," says Burnitt. "I only hope I am still around to make sure they can’t claim ignorance the next time we have a real estate lending crash. And we will have one, it is inevitable. It is not a matter of if, it is just when." Burnitt plans on beating the I-told-you-so drum loudly. "It is misleading to appraisers, and really, much worse than that, misleading to taxpayers and stockholders in Fannie Mae and other lending institutions for there to be a Texas Appraiser Licensing and Certification Board, and a Texas Real Estate Commission to be in place that is allowing these crooked practices to flourish," says Burnitt. "The Texas Association of Realtors deserve plenty of blame as well. Lets not forget the Texas Savings and Loan Department, they are the ones that license the Mortgage Brokers and Loan Officers. All of these agencies and associations are aware of the situation and are simply looking the other way. Our elected officials are looking the other way as well." "The other night, I watched a television documentary on one of the major networks regarding the dangerously ballooning unsecured credit card situation. It was pretty much the same old thing, but one part of the story got my attention, and confirmed what I believe is the powers-that-be's "real and true policy’ regarding banking and the economy in general. What got my attention in this story was, the State of California’s Attorney Generals Office went after some of the lending institutions for their unfair, dishonest, and illegal practices regarding the credit card business. The OCC, the Office of the Comptroller of the Currency came after the California Attorney Generals office and made them back off! "Once more it has been confirmed to me that as long as the economy "train" is on the track, nobody’s going to do nuttin', honey," says a disgusted Burnitt. "That is just the way it is, and it is the way it is going to be." realtytimes.com

To: CalculatedRisk who wrote (21751)	1/19/2005 2:09:13 PM
From: mishedlo	Respond to of 116555

"House of Cards: Refinancing the American Dream" To meet the fast-rising expenses of health care, education, gas and insurance - and, yes, often just to afford the next cool gadget - households have relied increasingly on credit card spending. When credit card debt becomes too big, households rush to refinance their homes at seemingly attractive, low mortgage rates. In the process, they borrow extra money to pay off their credit card debts. Now saddled with a larger mortgage, households start anew to build up fresh debt on their higher-rate credit cards. At some point, debt becomes overwhelming. The game ends badly. "At some point, when your income does not keep up with your expenses, it is called bankruptcy," says Javier Silva, a senior researcher at the Demos think tank in New York. millions of U.S. households are falling into a vicious cycle of tapping their credit cards and then refinancing their mortgages to extract needed cash from the equity in their homes. What's driving this cycle? Households are using debt to bridge the financial gap between their incomes and expenses. It's a seductive game. The appreciation of homes in most metro areas - certainly here in the Tampa Bay area - has been skyrocketing, adding equity for homeowners at a dizzying pace. And leveraging that new-found wealth is encouraged by a daily barrage of credit card and low-rate home refinancing solicitations, by Federal Reserve Chairman Alan Greenspan's "no worries" remarks in speeches and even by the deficit-prone Bush administration's go-spend-your-tax-cuts appeals. Sound precarious? Sure does to me, especially at the start of a new year in which the Fed seems gung-ho to continue raising interest rates. Those are the same rates that will increase the cost of credit card debt and bump up adjustable-rate mortgages in short order. More here: sptimes.com

To: CalculatedRisk who wrote (21751)	1/19/2005 2:13:51 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Housing bubble burst could hurt first-time buyers By GREG IP Wall Street Journal Millions of Americans became stockholders in the late 1990s, just in time to experience the biggest bear market in a generation. Does the same fate await millions of first-time homeowners? One issue on which Republicans and Democrats agree is that more people should own their own home. It is part of President Bush's "ownership society" initiative. Homeownership has risen to a record 69 percent of all households, from 67.5 percent when Bush took office in 2001, despite persistent unemployment. Low interest rates get most of the credit, but Bush would like to nudge it along. His American Dream Downpayment Initiative, signed into law in 2003, offers as much as $200 million a year to subsidize first-time home buyers' down payments, especially for low-income and minority families. He has instructed his tax-reform panel to preserve tax breaks for homeowners. At the same time, he has tried to curtail rent subsidies. But are these policies wise? Housing prices, adjusted for inflation, are up 36 percent since 1995, the steepest boom in at least 50 years, according to Dean Baker, co-director of the Center for Economic and Policy Research in Washington. "This is a particularly bad time to be promoting homeownership among young people," Baker told a media briefing last week. The housing boom's demise has been wrongly predicted many times already. Still, there are straws in the wind. Housing starts and new-home sales both fell sharply in November and mortgage applications to buy homes dropped in early January. Prices in two of the world's most buoyant housing markets, Australia's and Britain's, have stopped rising. The International Monetary Fund has found that housing booms and busts are synchronized around the world, so those countries' experience may foreshadow the U.S.'s. The overall economy should easily bear a flattening or modest decline in house prices. Gramlich noted that as long as prices remain near today's levels, most homeowners will still have a lot of equity against which they can borrow to finance other types of spending. And in theory, rising wages, business investment and exports should pick up the slack as housing-related spending tapers off. Yet for many new homeowners, especially those on lower incomes, an end to annual double-digit house-price gains could spell real financial hardship. Baker says such families seldom benefit from the tax deductibility of mortgage interest, either because they don't owe income taxes or they don't itemize their deductions. And they move more often, typically in less than four years, so transaction costs like commissions and mortgage fees, generally 10 percent of the purchase price, bite more deeply. Baker calculates that even if prices rise at the overall inflation rate for the next four years, someone who bought a $130,000 house with 5 percent down and sold it in four years will spend 25 percent more than if he had rented. If housing prices decline, many families would be unable to sell their home for enough to pay off the outstanding mortgage, making it harder to move to another job. Even if homeownership turns out to have minimal private benefits, advocates say it generates social benefits, like less crime or more civic involvement. But a review of academic studies co-written by housing economist Donald Haurin of Ohio State University finds little empirical evidence that homeownership produces these "neighborhood effects." poconorecord.com

To: CalculatedRisk who wrote (21751)	1/19/2005 2:29:25 PM
From: mishedlo	Read Replies (4) \| Respond to of 116555

Bernanke-US immigration rules threat to productivity NEW YORK, Jan 19 (Reuters) - Tightened U.S. immigration policies since the Sept. 11, 2001, terror attacks threaten America's ability to keep boosting productivity, Federal Reserve Governor Ben Bernanke said On Wednesday. [Quite frankly this is assinine. It's going on four years since 2001 and productivity has never stopped soaring (primarily thru job exporation I maigt add) - mish] A relatively open immigration policy earlier had paid big dividends for the United States, Bernanke said in response to questions after addressing the Council on Foreign Relations. "I think a very important part of the productivity gains in the past decade were associated with our open immigration policy," Bernanke said. "If we don't allow, if we don't make provision for bright people, whether they be graduate students or professional people to come...that's a loss to our society and a loss to our potential productivity." [Gag me with a spoon. Immigration, primarily illegal has doen nothing but lower wages. Mish] On the question of U.S. economic prospects, Bernanke identified what he said were two major "risk factors" in the form of high oil prices and soft foreign demand for U.S.-made goods. But he said that if oil prices stabilize, even at current relatively high levels, they should not be a drag on national output. "As long as they don't continue to rise at something like the pace of 2004, that too ought to be a net plus to aggregate demand growth in the U.S.," Bernanke said. He acknowledged that big U.S. trade deficits, which he said represented a drain on aggregate U.S. demand because they stem from swelling imports, were a problem. "For our growth (this year) to be what we hope it will be, that is, above trend, maybe 3-1/2 percent or even better, we need for the trade balance to be no worse of a drag than it has been recently," Bernanke said. Stronger growth abroad would help because U.S. trade partners might be less reliant on exporting to the United States if their own consumers spent more. "I think there's a reasonable expectation of a decent performance in Europe and in Japan and continued strength in China," Bernanke said. [I think this is a more than reasonable proof he is nuts. Mish] "Our hope is that the trade balance will not worsen and become even more of a drag in 2005 than it was in 2004 and if that's the case, the prospects for reasonable (U.S.) growth are pretty good," he added. In response to a question, Bernanke said it seemed as if the U.S. economy may have grown less vigorously in the fourth quarter than Fed policymakers had been anticipating, though he did not estimate the pace of growth in gross domestic product. [WTF? Trying to get expecations lowered a bit are we? That's a good way to let the cat out of the bag. Mish] GDP expanded at a healthy 4 percent annual rate in the third quarter this year. Fourth-quarter GDP figures will be published by the government on Jan. 28. reuters.com

To: CalculatedRisk who wrote (21751)	1/19/2005 2:36:59 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

ConocoPhillips seeks permit for LNG terminal Wednesday, January 19, 2005 6:05:38 PM afxpress.com DALLAS (AFX) -- ConocoPhillips is seeking U.S. Coast Guard approval to build a liquefied natural gas terminal in the Gulf of Mexico as part of its effort to meet global gas demand, the company said Wednesday. The proposed terminal would be located 56 miles south of Louisiana's coast with a throughput capacity of 1.5 billion cubic feet a day, said the Houston-based integrated oil company Construction could begin late next year and would take about four years to complete. The first delivery of LNG to the offshore terminal could take place in 2010, ConocoPhillips said. The company is also developing or has proposed other terminals in Freeport, Texas, and off the Alabama coast. Shares of ConocoPhillips were last at $90.20, up 8 cents In December, U.S. regulators gave Cheniere Energy the go-ahead to build the Sabine Pass LNG terminal. The offshore Louisiana facility will have capacity to receive 2.6 billion cubic feet of fuel a day. Liquefied natural gas, formed when natural gas is cooled to 260 degrees below zero Fahrenheit, shrinks to occupy 600 times less space than its gas form, making it easier to transport in tankers. The LNG is returned to its natural state at the terminals and pumped into U.S. pipelines. The United States imported a record 507 billion cubic feet of LNG in 2003, and imports for the first 10 months of 2004 rose by roughly 30 percent to 547.2 billion cubic feet, according to Energy Department data. forexstreet.com

To: CalculatedRisk who wrote (21751)	8/16/2008 7:38:51 PM
From: carranza2	Read Replies (1) \| Respond to of 116555

Bernanke is Houdini? I'd say Roubini is Houdini....got it spot on the money three years ago. Why a stronger dollar is not a good thing: prospect.org A Higher Dollar Raises Fears of Sharper Downturn This is what the headlines of the news articles noting the recent rise in the dollar should have said. Instead, we were told things like "Dollar's Rise Could Dampen Inflation," and "Dollar Rallies Against Euro, Pound on Concerns of Global Slowdown." The over-valuation of the dollar has been of the economy's most serious problems for the last decade. The high dollar led to an unsustainable trade deficit that peaked at almost 6 percent of GDP in 2006. By definition, a trade deficit means that domestic savings is less than domestic investment. This means that (barring an investment boom, which we have not seen) there must be either a large government deficit, low private savings, or a combination of the two. None of these situations are desirable or sustainable, at least over the long-term. While the trade deficit has consistently been far larger than the budget deficit over the last decade, it has received far less attention from the media. The only plausible way to bring the size of the deficit down to a manageable level is by reducing the value of the dollar. A lower dollar is especially important in the wake of the collapse of the housing bubble. Without the improvement in the trade balance, the economy would have been shrinking over the last three quarters. Without a continued improvement in the trade balance, spurred by a falling dollar, there is little hope that the U.S. economy will escape a prolonged downturn. The media should be giving more attention to the recent rise in the dollar and pointing out the danger it poses to the economy. It should also be discussing the dollar in the context of the presidential campaign, since the next president's policy on the value of the dollar is likely to have more impact on the near-term health of the economy than anything else he does in office.