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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (31226)	4/26/2005 12:42:15 PM
From: benwood	Respond to of 110194

"mobocracy" I love it!

To: ild who wrote (31226)	4/26/2005 1:30:56 PM
From: ild	Respond to of 110194

Date: Tue Apr 26 2005 12:37 trotsky (lilbett & Earl Grey@real estate) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved obviously, with prices about 90% above trend, nothing can possibly go wrong. speculative buying ( according to the US realtor's association, which tends to play such thing down ) is estimated to have comprised some 25-35% of all RE transaction over the past year, and in 'hot' condo markets it is estimated to comprise about 70-80% of all transactions. Greenspan's remark that there can't be a bubble because real estate is a relatively illiquid asset class compared to say the stock market has already been invalidated by the fact that day trading in condos has recently begun. speculators of course don't have to move out of a property, since they never moved in in the first place. the fact remains that residential real estate prices are NOT economically justified, since rental yields are the lowest ever, and don't even remotely cover the expenses of real estate bought on credit ( thus speculative buying is based entirely on the greater fool theory ) . the argument that the ATM function of RE means prices can't come down is hampered a bit by the fact that equity ownership is at an all time low - and there's a natural limit to this decline in equity ownership, and i suspect it is well above zero. last year's bubble expansion required $1.2 trillion in additional mortgage credit, itself a new record. in the past 4 years, interest rate derivatives notionals in the banking system increased by a cool 100% , and real estate assets on the banks balance sheets now represent 62% of all bank assets - up from 10% in the 1950's. 70% of all household now pretend to own a home ( a.k.a. 'saturation' ) . now, this bubble is NOT just 5 years old. rather, the past 5 years have seen the bubble's parabolic acceleration stage, just as the stock market bubble went parabolic in the final 5 years. will the RE bubble continue? it might for a few more months...who knows for sure. the first warning shots have been fired though - and if the below chart makes you confident about the bubble's continued durability, you should perhaps talk to the people who bought say JDSU in February of 2000.... click here ... b4-thebell.com PS: the new home sales and housing starts blow-off numbers are late cycle lagging phenomena that will NOT give advance warning of the bubble's end ( does anybody still remember the infamous big "DRAM shortage" of mid to late 1999 that drove the semiconductor stock blow-off stage just before the sector's 80% collapse? ) Date: Tue Apr 26 2005 11:49 trotsky (frustrated, 10:08) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved well, this is imo as hypothetical as such things get. for starters, GDP itself is a number that tells you more or less nothing about what happened in the real world. the calculation is so flawed as to defy belief. in that sense, when someone says "a $10 rise in the PoO cuts 0.5% from GDP growth" it is really meaningless. after all, GDP growth is whatever the statistics minions of the state SAY it is. and yes, gasoline is also part of the retail sales numbers ( which, you may have noticed, are not usually reported with an 'excluding food and energy' qualification as e.g. the CPI - part of the spin process ) , and rising oil revenues are e.g. beneficial for for the local economies of states that have large oil production, such as Texas and Louisiana. in theory, if the market were free and the money supply static, higher oil prices would imply falling prices elsewhere in the economy, or failing that, less sales of other goods ( usually a combination of the two can be expected ) , and to some extent that happens also in the fiat system, depending on how fast the printing press is set to work. the reason why it's not a wash is that a great deal of the energy related spending goes into the pockets of foreign producers - high energy prices contribute to the trade deficit, which in turn lowers the official GDP calculation. Date: Tue Apr 26 2005 11:10 trotsky (bullishonsilver, 10:01) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved lol...a trenchant observation. note though that handholding when walking side by side ALWAYS requires one of the parties to employ the rosette brush. by walking to the right of the dullident Abdullah is presumably sending subtle mixed signals to his subjects ( 'see, we're close buddies, but note that i've used the occasion to make the arguably most powerful illiterate in the world into a residence for my fecal bacteria' ) .