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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: tonto who wrote (13275)	8/14/2007 4:55:49 PM
From: Ann Corrigan	Respond to of 224729

Globalization gone crazy-why should Americans take advice from the Financial Times of London to buy houses & stocks?: >>Pick stocks, buy houses, don't worry By James Altucher, thefinancialtimes.com Published: August 14 2007 Here's what I like about the so-called housing bust. Every house is for sale. It doesn't take a brain surgeon to realise this is a voyeur's dream. First off, before this creeps out, know this: I'm now in the market to buy a house. I've been renting for the past couple of years and now is the time to buy. There's not only blood in the streets; there's full-scale haemorrhaging. I'll get to specific numbers in a second but this is the exact time you should be considering buying. There's no rush, however. You have a good year before the next stampede begins, but begin it will. So I'm taking my time checking out houses as they come up for sale. When you go into a house that's on the market you learn a lot about the people who live there. You see the pictures on the wall, the degrees from select schools, the envelopes from the IRS on the kitchen table. You know their taste in cars, in computers, what sorts of books and videos they like. But one thing I've begun to question when I walk through these houses is: Am I a man? It seems like in every house, in the basement or some shed out back, there are tools. Lots of tools. It seems that every guy has a saw in his house. What are they all doing with saws? Was I supposed to get one somewhere? Did I miss out on the free saws at the men's room? But seriously, let me belt it out: US household assets are $54,000bn. Liquid net worth (cash, mutual funds, bonds etc) is $27,500bn. Household debt is $13,000bn. In other words, the US household balance sheet is looking great: $54,000bn in assets ($27,500bn liquid) to cover $13,000bn in debt. Heck, we're under-leveraged as a country right now and should probably take on more debt. And, by the way, liquid net worth has gone up year-over-year about $700bn. So much for the myth that the savings rate is negative. If the savings rate was negative then net worth would be going down. Hence the "net". But what about the subprime mess? Isn't that going to bring the net worth of the US to $0 or even negative? Right now the entire subprime market is about $800bn and let's give full credit to the traders and media and say 50 per cent of that is at risk. So $400bn. Will $400bn worth of homes go into foreclosure? Of course not. Defaults are good for nobody. Things will and are getting restructured. OK, but this is not just a subprime issue, right? What about the so-called Alt-A loans that are right above subprime? Isn't that the same as subprime but with just a different mask? Not at all. Alt-A borrowers are prime borrowers with higher loan-to-value (ie they borrowed on 90 per cent of their home instead of 60 per cent). But these people have jobs (unemployment is low and incomes are going up) and nobody is complaining yet about an extra $200 a month tacked on to their adjustable rate mortgages in the past 60 days. Standard & Poor's, bless their souls, have come out and said that the amount at risk in the $400bn Alt-A market is $914m. That's million. And yes, not only is a billion not worth what it used to be, but a trillion ain't that hot any more either. The entire mortgage market in the US is about $11,000bn. But isn't housing in a crash? Didn't I say it in the first paragraph of this article? Well, yes. Housing prices are down 1 per cent year-over-year, after almost doubling in the past five. So, please, before you jump out the window and hit the quant traders on the sidewalk, note that this "crisis" in the stock market has little to do with housing. It has to do with the "holy grail". The holy grail for hedge funds is to return 1 per cent a month with no volatility. If you can do that you can raise infinite money. So they all did it for several years. Here's how. They borrowed at libor +75 basis points and bought subprime paper yielding libor +200. At first, subprime was libor +500 but so many people got into this trade that by 2006 the spread between the US government and people who have never borrowed a nickel in their lives and had no jobs was only 125 basis points. So how do you make 1 per cent a month? You lever up 10 to one. And if subprime goes down 10 per cent (it's down more than 50 per cent now on the ABX), you get wiped out. The holy grail trade is over. Be a man. Pick stocks, buy houses, try not to worry. The Financial Times Limited 2007<<

To: tonto who wrote (13275)	8/15/2007 11:46:59 AM
From: Ann Corrigan	Read Replies (1) \| Respond to of 224729

Rove says Democrats making Vietnam mistakes >Rove makes a fiery exit-believes history eventually will vindicate Bush. By: Mike Allen Aug 14, 2007 07:48 PM EST WACO, Texas — A day after announcing he will leave government Aug. 31, Karl Rove said Tuesday that Democrats are headed toward repeating Vietnam-era mistakes that gave Republicans the upper hand on national defense for 30 years. “The Democrats have a problem with national security,” the White House senior adviser said. “Too many Democratic leaders are opposing policies that will lead to America’s success in the Middle East.” In an hour-long one-on-one interview near the Crawford White House, Rove said congressional efforts to oppose President Bush’s “surge” strategy have clear echoes of Democrats in the early 1970s who cut off support for U.S. military involvement in Vietnam, a war that was even more unpopular than Iraq. In Rove’s view, the nation wound up with its prestige diminished and its adversaries emboldened. “The Democrats have suffered since,” he said. “To the degree that the current circumstance has caused people to say, ‘Wait a minute. Are we seeing a rerun? And I don’t like how it ends,’ they could face the same problem.” When asked about the House Democratic leadership, Rove said: “This last election was a very close election, and I think they misread the results. They think they’ve got some mandate to raise taxes and blow up the budget. It’s just unbelievably out of touch with reality.” Rove was at his most animated when discussing the president’s threat to veto spending bills if their totals exceed his requests. Republicans have predicted the dispute could lead to a partial government shutdown this fall. “If there’s a decision to shut down the government, it’s going to be coming from Capitol Hill, not from us,” Rove said. “There are tools to make the government run when you can’t reach an agreement about a budget … My hope is that Congress decides to put the best interests of the country ahead of whatever political ambitions or schemes they’ve got.” Holding forth at Ninfa’s, a Mexican restaurant, Rove was unswerving and even a tad mischievous as he previewed the case he will make with conservatives and scholars in his new role as burnisher-in-chief of a beleaguered president’s legacy. Rove acknowledged that a positive view is probably years away — and said Bush knows it. “I’ll rant and rave about the latest editorial abuse from The New York Times and its gross inaccuracies, and the president will say to me, ‘Don’t worry about it: History will get it right, and we’ll both be dead,’” Rove said. “I hope for a long life, but history will judge him kindly. I look at what he has done. In a time of war, he has utterly transformed the foreign policy of the United States. We take the economy today for granted because it’s so darned good. This is a guy who has overseen big changes.” At a briefing for reporters near Bush’s ranch in Crawford, White House deputy press secretary Dana Perino said Chief of Staff Josh Bolten does not plan to go outside the White House to replace Rove, but said it is possible two or three people may succeed him. “If you think about all of the things that Karl Rove was responsible for, he had, I think, maybe 60 people who reported to him directly,” Perino said. “So that's a lot for one person to handle.” Rove said he remains optimistic about his party’s future no matter who fills his shoes. He said he disagreed with a news article in Tuesday’s Wall Street Journal that said his resignation “all but certainly signals the end of whatever hopes [Bush] had of winning major political victories in a Democratic Congress in his remaining 17 months in office.”<