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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (260444)	7/13/2010 2:55:29 PM
From: tejek	Read Replies (2) \| Respond to of 306849

ECRI WLI continues to deteriorate, now at it's lowest reading since the internet bubble collapse. Don't follow it but the lowest point was last summer, not now.....its started to reoover, has taken a dip and I suspect will resume its recovery very shortly....see chart: rubbernet.com.sg The Dry Baltic Index has deteriorated for 13 weeks and continues to move lower. Over capacity in that particular segment of shipping.......see recent news reports from Maersk, one of the largest shippers in the world with 500 vessels: Capacity added in response to strong demand in US/Asia trade maerskline.com Maersk Line addresses the equipment shortage situation maerskline.com M3 money supply is on a sharp downwards trajectory. That's after a huge injection by the central bank.....the least of our worries. Housing sales have fallen off a cliff now that the tax credit expired. Just like car sales did after Cash for Clunkers ended. They recovered.....just as they have recovered in S. CA [see the article I posted to you earlier]. Meredith Whitney thinks we're about to see another major housing price correction. Excuse me but M. Whitney has been mostly wrong thoughout this recovery and definitely does not know housing. A housing recovery is in place and will get stronger as we go forward. I know housing very well. Retail sales are soft. Real unemployment is increasing. Government stimulus from the Recovery Act is ending right about now. None of the root causes of the 2007-8 collapse have been fixed, nor will those root causes be addressed by the FinReg bill making its way through Congress. Europe is on the skids and is implementing severe austerity measures, which will have a huge impact on global GDP and the US, which gets a sizable chunk of our GDP from exports to Europe. China is in a huge real estate bubble and is on the verge of seeing that explode. I read somewhere that 60% of China's GDP is construction related, most of which is coming from government expenditures. Just wait until they ratchet that down. Back here in the US the Census Worker bubble in employment is now reversing and we'll see the effects of that in June and July numbers. Small businesses are surviving off of credit card debt and consumers are deleveraging at a very rapid pace. In short, we are in the midst of a severe contraction. The government has been able to put a nice facade on it with money printing, stimulus, and bailouts, but the free markets are now exerting themselves again and the US gov't is out of bullets. Is it possible that the economy powers ahead despite all of the above and avoids negative GDP growth? Is it possible that the stock market doesn't collapse in the next few months back to March 2009 levels? Yes, but the odds are about 70% that the we see a double dip and the stock market goes down sharply by October. If that doesn't happen, then maybe the economy and stock market can muddle along in a lackluster sideways to slightly up pattern for the next 2-3 years. But I am not betting on that scenario. MM, I don't have the time to go through every nuanced and cassandra statistic you've posted and you are entitled to believe what you want but the recovery is in place. And btw you are behind when it comes to Europe.....the Euro has stabilized and Spain, Portugal and Greece have all done successful bond auctions in the past month with lower yields than expected. And it seems this crisis has made the EU stronger, not weaker, as many expected including M. Whitney. Its true the recovery is not as strong as past recoveries and that's because the recession was extremely severe and there were a lot of wrong economic policies put in place under Bush for 8 long years. But the recovery is here and getting stronger. Book mark this post.