CNBC All of the increase in housing starts was in multi family, single family starts actually dropped again and July's numbers were revised down. Gee, do you think builders are starting to expect that more people will be moving into multi family from single family???
Click on the title above or the link below to review the entire CNBC article.
http://www.cnbc.com/id/39287685
Wednesday, October 13, 2010
Saturday, September 18, 2010
Now in Harrisburg PA and coming soon to your town . . .
I read the article below earlier this morning and thought of my friend, Kirk Nace. He has not only warned us of this for the past several years, he actually resides near Harrisburg. Take a few minutes and read over this then try to rationalize how we are on anything other than a path to hell . . .
A serious warning about muni bonds
"To disrupt our services because we can't make a bond payment would just be unconscionable. And as a leader I couldn't do it."
So explained Linda Thompson, the mayor of Harrisburg, Pennsylvania. She was explaining the city's refusal to repay part ($3.29 million) of the $288 million it owes for an incinerator it bought. The total obligation for the incinerator comes to roughly $6,000 per citizen of the city. It is a debt that can't be repaid and should have never been lent.
Unless you happen to live in Harrisburg, you probably didn't see this item in your local paper. And you probably wonder why we'd bother writing about it. After all, why should the impending bankruptcy of a small Pennsylvania city matter to you?
It should matter to you because it represents the next leg of the debt crisis – the failure of municipal finance. We were also struck by the logic of the mayor... who clearly views paying the city's debts as optional.
She knew the state of Pennsylvania would be forced to bail out her city. (If the state didn't intervene, it would be impossible for any other city in Pennsylvania to issue bonds.) And even if the state refused, the bonds are insured by Ambac, which means, in the eyes of the mayor, it's likely that no one will get hurt by her decision.
And sure enough, Pennsylvania stepped in last weekend. On Sunday, Pennsylvania Governor Ed Rendell announced a $4.3 million bailout for Harrisburg, saying missing the bond payment was "not an option." Rendell continued... "Harrisburg's financial future is still very cloudy, and difficult decisions still need to be made to return this city to financial stability. Allowing a missed bond payment, however, would not be a good decision."
That's how a $288 million loss can become irrelevant to an elected local official. Like a subprime borrower living in a house without paying his mortgage, the mayor of Harrisburg thinks paying for its debts is someone else's problem. She's bringing Obamanomics to city finance.
We have this warning to offer: When our elected officials no longer care about repaying hundreds of millions of dollars, the entire system of municipal finance is going to collapse. And the damage that's going to occur will be material to our entire country.
The system that exists today was created in the 1970s. The entire system is predicated on the lie that states won't allow losses to muni-bond holders. That's the only reason muni-bonds are insurable: The insurance companies know there will never be a claim. They have no reserves to cover the risk of municipal losses because there have almost never been any. Over the last 40 years, the default rate on investment-grade municipal debt was 0.03%, according to the credit-ratings service Moody's.
You can think of this system as similar to the subprime-credit bubble. No banker in his right mind would loan money to a person with no credit and no job who was buying a house in a slum. But once you took the credit risk away from that banker, he was happy to lend billions on deals like that because the risk became someone else's problem. Billions in bad debts piled up. Suddenly, it was the banker's problem again because he'd destroyed the entire system.
The same thing is about to happen in the muni-bond market: Nobody has paid any attention to credit quality because everyone believed the states won't allow cities to go bust. As a result, a truly stupendous amount of money has been lent to cities – cities that have no hope of ever repaying the debts. Specifically, municipal debt now totals $2.8 trillion – roughly 22% of our country's GDP. That's an all-time high. The amount of debt owed by cities has doubled since 2000. And the debts are now too big for individual states to guarantee.
Harrisburg is small potatoes. Mass transit systems are a much, much bigger problem. Almost every local politician in America has promised a subway, a train, or a bus to take his constituents to work for next to nothing – but running these systems is incredibly expensive. In Boston, the mass transit authority is now $8.5 billion in debt and has been paying $500 million per year in interest. Does that sound sustainable?
What about all of the stadiums and arenas built over the last 20 years? Politicians love to build these things as part of citywide "revitalization" efforts. But paying for them? That's somebody else's problem. Take the Meadowlands – the football stadium built nearly 40 years ago. It was torn down last year, but it has never been paid for.
The New Jersey Sports and Exposition Authority (aka the State of New Jersey) borrowed $302 million to build it and never repaid the debt. Today, it owes more than $800 million and spends $100 million per year on interest for a stadium that no longer exists. California has 380 different local redevelopment agencies, which collectively owe $29 billion.
This money will never be repaid.
When I warn people about muni-bonds I always get the same reply: "Governments don't go broke." Oh yes, they do. States face a cumulative budget gap of $140 billion in the next year – they don't have the money to guarantee these debts. Meanwhile last year, more than 187 tax-exempt issuers defaulted on $6.4 billion of securities – the most since 1992. These numbers are going to get bigger – a lot bigger.
You see, all of this credit was only made available because lenders believed (foolishly) that there was no risk in lending to cities and states... just like they handed out all those subprime loans, believing they would never default because "home prices never decline." But after a few city bankruptcies, that thinking is going to change – forever.
With less (or no) additional credit available, how will cities and states be able to refinance at a reasonable price? Just like when the subprime credit markets shut down, the whole system collapsed because no one could refinance. The same thing is going to happen with the cities and the states.
There's a very good chance that once the dominoes start falling, there won't be any way to stop them without a massive federal bailout.
Local governments are no doubt grateful for the billions of dollars that have poured into muni bonds over the past 18 months. But if some of those dollars are yours, you should know you're not getting adequately paid for the enormous risk you're taking.
A much safer – and more profitable – strategy is to avoid the usual income investments, like muni bonds, and look for high-yield opportunities your broker will never tell you about. We've put together a website detailing our favorites right now. Contact us to learn more.
Regards,
Porter Stansberry
A serious warning about muni bonds
"To disrupt our services because we can't make a bond payment would just be unconscionable. And as a leader I couldn't do it."
So explained Linda Thompson, the mayor of Harrisburg, Pennsylvania. She was explaining the city's refusal to repay part ($3.29 million) of the $288 million it owes for an incinerator it bought. The total obligation for the incinerator comes to roughly $6,000 per citizen of the city. It is a debt that can't be repaid and should have never been lent.
Unless you happen to live in Harrisburg, you probably didn't see this item in your local paper. And you probably wonder why we'd bother writing about it. After all, why should the impending bankruptcy of a small Pennsylvania city matter to you?
It should matter to you because it represents the next leg of the debt crisis – the failure of municipal finance. We were also struck by the logic of the mayor... who clearly views paying the city's debts as optional.
She knew the state of Pennsylvania would be forced to bail out her city. (If the state didn't intervene, it would be impossible for any other city in Pennsylvania to issue bonds.) And even if the state refused, the bonds are insured by Ambac, which means, in the eyes of the mayor, it's likely that no one will get hurt by her decision.
And sure enough, Pennsylvania stepped in last weekend. On Sunday, Pennsylvania Governor Ed Rendell announced a $4.3 million bailout for Harrisburg, saying missing the bond payment was "not an option." Rendell continued... "Harrisburg's financial future is still very cloudy, and difficult decisions still need to be made to return this city to financial stability. Allowing a missed bond payment, however, would not be a good decision."
That's how a $288 million loss can become irrelevant to an elected local official. Like a subprime borrower living in a house without paying his mortgage, the mayor of Harrisburg thinks paying for its debts is someone else's problem. She's bringing Obamanomics to city finance.
We have this warning to offer: When our elected officials no longer care about repaying hundreds of millions of dollars, the entire system of municipal finance is going to collapse. And the damage that's going to occur will be material to our entire country.
The system that exists today was created in the 1970s. The entire system is predicated on the lie that states won't allow losses to muni-bond holders. That's the only reason muni-bonds are insurable: The insurance companies know there will never be a claim. They have no reserves to cover the risk of municipal losses because there have almost never been any. Over the last 40 years, the default rate on investment-grade municipal debt was 0.03%, according to the credit-ratings service Moody's.
You can think of this system as similar to the subprime-credit bubble. No banker in his right mind would loan money to a person with no credit and no job who was buying a house in a slum. But once you took the credit risk away from that banker, he was happy to lend billions on deals like that because the risk became someone else's problem. Billions in bad debts piled up. Suddenly, it was the banker's problem again because he'd destroyed the entire system.
The same thing is about to happen in the muni-bond market: Nobody has paid any attention to credit quality because everyone believed the states won't allow cities to go bust. As a result, a truly stupendous amount of money has been lent to cities – cities that have no hope of ever repaying the debts. Specifically, municipal debt now totals $2.8 trillion – roughly 22% of our country's GDP. That's an all-time high. The amount of debt owed by cities has doubled since 2000. And the debts are now too big for individual states to guarantee.
Harrisburg is small potatoes. Mass transit systems are a much, much bigger problem. Almost every local politician in America has promised a subway, a train, or a bus to take his constituents to work for next to nothing – but running these systems is incredibly expensive. In Boston, the mass transit authority is now $8.5 billion in debt and has been paying $500 million per year in interest. Does that sound sustainable?
What about all of the stadiums and arenas built over the last 20 years? Politicians love to build these things as part of citywide "revitalization" efforts. But paying for them? That's somebody else's problem. Take the Meadowlands – the football stadium built nearly 40 years ago. It was torn down last year, but it has never been paid for.
The New Jersey Sports and Exposition Authority (aka the State of New Jersey) borrowed $302 million to build it and never repaid the debt. Today, it owes more than $800 million and spends $100 million per year on interest for a stadium that no longer exists. California has 380 different local redevelopment agencies, which collectively owe $29 billion.
This money will never be repaid.
When I warn people about muni-bonds I always get the same reply: "Governments don't go broke." Oh yes, they do. States face a cumulative budget gap of $140 billion in the next year – they don't have the money to guarantee these debts. Meanwhile last year, more than 187 tax-exempt issuers defaulted on $6.4 billion of securities – the most since 1992. These numbers are going to get bigger – a lot bigger.
You see, all of this credit was only made available because lenders believed (foolishly) that there was no risk in lending to cities and states... just like they handed out all those subprime loans, believing they would never default because "home prices never decline." But after a few city bankruptcies, that thinking is going to change – forever.
With less (or no) additional credit available, how will cities and states be able to refinance at a reasonable price? Just like when the subprime credit markets shut down, the whole system collapsed because no one could refinance. The same thing is going to happen with the cities and the states.
There's a very good chance that once the dominoes start falling, there won't be any way to stop them without a massive federal bailout.
Local governments are no doubt grateful for the billions of dollars that have poured into muni bonds over the past 18 months. But if some of those dollars are yours, you should know you're not getting adequately paid for the enormous risk you're taking.
A much safer – and more profitable – strategy is to avoid the usual income investments, like muni bonds, and look for high-yield opportunities your broker will never tell you about. We've put together a website detailing our favorites right now. Contact us to learn more.
Regards,
Porter Stansberry
Saturday, September 4, 2010
How "Flippers" are impacting the real estate market . . .
I've been giving a lot of thought lately to "Flippers," you know the people buying up short sales and REO's and then reselling them.
If there was a higher bidder out there for these properties, why do the flipper end up with the properties? Is it possible that they are in fact the highest ready, willing and ABLE buyer? Key word here is able as there are fewer and fewer ABLE buyers today, what with the credit tightening, unemployment, etc.
When they buy a property it is counted as a closed sale. When they turn around and resell the property it is counted as ANOTHER closed sale. Where would today's housing numbers be if all of these deals were taken out of the count? So we have some properties selling multiple times and most properties not selling at all - perhaps those sellers should learn more about my buddy Kirk Nace's 6 Week Listing Strategy (http://www.6WeekListingStrategy.com )
IF short sale flippers went away, foreclosures would skyrocket even higher. What impact would that have on prices, on government (read this as tax payers getting screwed even more) bailouts, etc?
When flippers purchase REO's rehab and then resell them, someone is doing the rehab. Doesn't that help keep some people working?
When a short sale doesn't sell it usually becomes a foreclosure. This hurts the homeowner, it hurts the neighborhood, it hurts the lender, the mortgage insurer, the noteholder and countless others, yet we look at those who have created a business around buying distressed properties and reselling them as vultures or parasites. Imagine a world where nothing existed to clean up dead animals - they just pile up and rot, pretty nice image huh? it's a shame we don't have smellavision for you! Yes these flippers may be cleaning up the dead, and yes it's a valuable service.
It's always bothered me that these flippers get such a bad wrap, now that I've thought about it, I am simply shaking my head and realizing that they are serving several valuable functions and yet are unappreciated.
If there was a higher bidder out there for these properties, why do the flipper end up with the properties? Is it possible that they are in fact the highest ready, willing and ABLE buyer? Key word here is able as there are fewer and fewer ABLE buyers today, what with the credit tightening, unemployment, etc.
When they buy a property it is counted as a closed sale. When they turn around and resell the property it is counted as ANOTHER closed sale. Where would today's housing numbers be if all of these deals were taken out of the count? So we have some properties selling multiple times and most properties not selling at all - perhaps those sellers should learn more about my buddy Kirk Nace's 6 Week Listing Strategy (http://www.6WeekListingStrategy.com )
IF short sale flippers went away, foreclosures would skyrocket even higher. What impact would that have on prices, on government (read this as tax payers getting screwed even more) bailouts, etc?
When flippers purchase REO's rehab and then resell them, someone is doing the rehab. Doesn't that help keep some people working?
When a short sale doesn't sell it usually becomes a foreclosure. This hurts the homeowner, it hurts the neighborhood, it hurts the lender, the mortgage insurer, the noteholder and countless others, yet we look at those who have created a business around buying distressed properties and reselling them as vultures or parasites. Imagine a world where nothing existed to clean up dead animals - they just pile up and rot, pretty nice image huh? it's a shame we don't have smellavision for you! Yes these flippers may be cleaning up the dead, and yes it's a valuable service.
It's always bothered me that these flippers get such a bad wrap, now that I've thought about it, I am simply shaking my head and realizing that they are serving several valuable functions and yet are unappreciated.
Thursday, September 2, 2010
Much more to think about . . . you do think right?
www.cnbc.com/id/38959363
It’s NOT the economy stupid, it’s the mess in DC – couldn’t pass on this title!
http://www.csmonitor.com/Business/The-Daily-Reckoning/2010/0828/The-path-to-depression
Could the path we are following really be this simple to understand yet hard to accept?
http://www.csmonitor.com/Business/The-Daily-Reckoning/2010/0827/Too-much-mortgage-debt-Here-have-another-loan
Housing, jobs, consumer spending all point to further slow down, so why are politicians and Realtors trying to tell us things are improving?
http://www.latimes.com/business/la-fi-petruno-20100828,0,6008427.column?page=2
let housing prices correct naturally, STOP the government subsidies which are only causing more pain for a longer duration and spreading it among all tax payers.
http://www.reuters.com/article/idUSN2619995720100826
delinquencies continue to grow READ THIS AS FUTURE FORECLOSURES, FUTURE SUPPLY AND FUTURE DOWNWARD PRESSURE ON REAL ESTATE PRICES CONTINUE TO GROW!
http://www.businessweek.com/news/2010-08-25/sales-of-u-s-new-homes-dropped-to-record-low-in-july.html
existing home sales drop to record low, and there are liars and idiots claiming it’s a surprise
It’s NOT the economy stupid, it’s the mess in DC – couldn’t pass on this title!
http://www.csmonitor.com/Business/The-Daily-Reckoning/2010/0828/The-path-to-depression
Could the path we are following really be this simple to understand yet hard to accept?
http://www.csmonitor.com/Business/The-Daily-Reckoning/2010/0827/Too-much-mortgage-debt-Here-have-another-loan
Housing, jobs, consumer spending all point to further slow down, so why are politicians and Realtors trying to tell us things are improving?
http://www.latimes.com/business/la-fi-petruno-20100828,0,6008427.column?page=2
let housing prices correct naturally, STOP the government subsidies which are only causing more pain for a longer duration and spreading it among all tax payers.
http://www.reuters.com/article/idUSN2619995720100826
delinquencies continue to grow READ THIS AS FUTURE FORECLOSURES, FUTURE SUPPLY AND FUTURE DOWNWARD PRESSURE ON REAL ESTATE PRICES CONTINUE TO GROW!
http://www.businessweek.com/news/2010-08-25/sales-of-u-s-new-homes-dropped-to-record-low-in-july.html
existing home sales drop to record low, and there are liars and idiots claiming it’s a surprise
Wednesday, August 25, 2010
BUSY week for those of us who could say "I told you so!"
Sales of existing homes drop 27.2% in July from previous month - I told you so
Sales of new homes drop 12.1% in July from previous month - I told you so
US Real estate is not a nest egg or viable investment - I told you so
Politicians only make situation worse - I told you so
US Housing market in double dip - I told you so
Riots and revelotion occuring in USA - I told you so, oh wait that one hasn't happened . . . yet
http://www.cnbc.com/id/38820610
Housing in double dip – yeah, we told you it was coming – did you listen? If you want help email Kirk@KirkNace.com share your story and maybe you will be one of the lucky ones shown the best way to optimize your situation!
http://www.cnbc.com/id/38811394
NY Times – Your home is NOT a nest egg. Reality is that in the US real estate values have basically kept even with inflation since 1890!
http://finance.yahoo.com/news/Fidelity-401k-hardship-apf-2389751238.html?x=0&sec=topStories&pos=8&asset=&ccode=
AP if things are getting better why are more people taking money from the retirement plans?
http://www.businessinsider.com/the-15-states-with-the-most-underwater-homes-2010-7study this and come up with a half dozen or so questions you can ask the next time so rocket scientist Realtor, or seller who has been influenced by them, tells you that things are getting better
http://articles.moneycentral.msn.com/news/article.aspx?feed=MY&date=20100819&id=11912826
Quite simply the most well done piece I have seen yet, and I review 100+/day, on what would truly be in US citizens best interest, period – Kudos to David Stockman!!!
http://www.marketwatch.com/story/a-good-idea-for-fixing-housing-2010-08-20?pagenumber=1
Wall Street Journal writer discusses the reality of US housing supply/demand/pricing mix
Sales of new homes drop 12.1% in July from previous month - I told you so
US Real estate is not a nest egg or viable investment - I told you so
Politicians only make situation worse - I told you so
US Housing market in double dip - I told you so
Riots and revelotion occuring in USA - I told you so, oh wait that one hasn't happened . . . yet
http://www.cnbc.com/id/38820610
Housing in double dip – yeah, we told you it was coming – did you listen? If you want help email Kirk@KirkNace.com share your story and maybe you will be one of the lucky ones shown the best way to optimize your situation!
http://www.cnbc.com/id/38811394
NY Times – Your home is NOT a nest egg. Reality is that in the US real estate values have basically kept even with inflation since 1890!
http://finance.yahoo.com/news/Fidelity-401k-hardship-apf-2389751238.html?x=0&sec=topStories&pos=8&asset=&ccode=
AP if things are getting better why are more people taking money from the retirement plans?
http://www.businessinsider.com/the-15-states-with-the-most-underwater-homes-2010-7study this and come up with a half dozen or so questions you can ask the next time so rocket scientist Realtor, or seller who has been influenced by them, tells you that things are getting better
http://articles.moneycentral.msn.com/news/article.aspx?feed=MY&date=20100819&id=11912826
Quite simply the most well done piece I have seen yet, and I review 100+/day, on what would truly be in US citizens best interest, period – Kudos to David Stockman!!!
http://www.marketwatch.com/story/a-good-idea-for-fixing-housing-2010-08-20?pagenumber=1
Wall Street Journal writer discusses the reality of US housing supply/demand/pricing mix
Saturday, August 21, 2010
This Is Why There Are No Jobs in America
By Porter Stansberry
Saturday, August 21, 2010
I'd like to make you a business offer.
Seriously. This is a real offer. In fact, you really can't turn me down, as you'll come to understand in a moment…
Here's the deal. You're going to start a business or expand the one you've got now. It doesn't really matter what you do or what you're going to do. I'll partner with you no matter what business you're in – as long as it's legal.
But I can't give you any capital – you have to come up with that on your own. I won't give you any labor – that's definitely up to you. What I will do, however, is demand you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you're allowed to operate your business. That's my role in the affair: to tell you what to do.
Now in return for my rules, I'm going to take roughly half of whatever you make in the business each year. Half seems fair, doesn't it? I think so. Of course, that's half of your profits.
You're also going to have to pay me about 12% of whatever you decide to pay your employees because you've got to cover my expenses for promulgating all of the rules about who you can employ, when, where, and how. Come on, you're my partner. It's only "fair."
Now… after you've put your hard-earned savings at risk to start this business, and after you've worked hard at it for a few decades (paying me my 50% or a bit more along the way each year), you might decide you'd like to cash out – to finally live the good life.
Whether or not this is "fair" – some people never can afford to retire – is a different argument. As your partner, I'm happy for you to sell whenever you'd like… because our agreement says, if you sell, you have to pay me an additional 20% of whatever the capitalized value of the business is at that time.
I know… I know… you put up all the original capital. You took all the risks. You put in all of the labor. That's all true. But I've done my part, too. I've collected 50% of the profits each year. And I've always come up with more rules for you to follow each year. Therefore, I deserve another, final 20% slice of the business.
Oh… and one more thing…
Even after you've sold the business and paid all of my fees… I'd recommend buying lots of life insurance. You see, even after you've been retired for years, when you die, you'll have to pay me 50% of whatever your estate is worth.
After all, I've got lots of partners and not all of them are as successful as you and your family. We don't think it's "fair" for your kids to have such a big advantage. But if you buy enough life insurance, you can finance this expense for your children.
All in all, if you're a very successful entrepreneur… if you're one of the rare, lucky, and hard-working people who can create a new company, employ lots of people, and satisfy the public… you'll end up paying me more than 75% of your income over your life. Thanks so much.
I'm sure you'll think my offer is reasonable and happily partner with me… but it doesn't really matter how you feel about it because if you ever try to stiff me – or cheat me on any of my fees or rules – I'll break down your door in the middle of the night, threaten you and your family with heavy, automatic weapons, and throw you in jail.
That's how civil society is supposed to work, right? This is Amerika, isn't it?
That's the offer Amerika gives its entrepreneurs. And the idiots in Washington wonder why there are no new jobs…
Regards,
Porter Stansberry
-----------------------------------------------------
Wow, is it any wonder that the sharpest people we know have been helping us see for years that we are headed towards "The Former United States of America?"
Saturday, August 21, 2010
I'd like to make you a business offer.
Seriously. This is a real offer. In fact, you really can't turn me down, as you'll come to understand in a moment…
Here's the deal. You're going to start a business or expand the one you've got now. It doesn't really matter what you do or what you're going to do. I'll partner with you no matter what business you're in – as long as it's legal.
But I can't give you any capital – you have to come up with that on your own. I won't give you any labor – that's definitely up to you. What I will do, however, is demand you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you're allowed to operate your business. That's my role in the affair: to tell you what to do.
Now in return for my rules, I'm going to take roughly half of whatever you make in the business each year. Half seems fair, doesn't it? I think so. Of course, that's half of your profits.
You're also going to have to pay me about 12% of whatever you decide to pay your employees because you've got to cover my expenses for promulgating all of the rules about who you can employ, when, where, and how. Come on, you're my partner. It's only "fair."
Now… after you've put your hard-earned savings at risk to start this business, and after you've worked hard at it for a few decades (paying me my 50% or a bit more along the way each year), you might decide you'd like to cash out – to finally live the good life.
Whether or not this is "fair" – some people never can afford to retire – is a different argument. As your partner, I'm happy for you to sell whenever you'd like… because our agreement says, if you sell, you have to pay me an additional 20% of whatever the capitalized value of the business is at that time.
I know… I know… you put up all the original capital. You took all the risks. You put in all of the labor. That's all true. But I've done my part, too. I've collected 50% of the profits each year. And I've always come up with more rules for you to follow each year. Therefore, I deserve another, final 20% slice of the business.
Oh… and one more thing…
Even after you've sold the business and paid all of my fees… I'd recommend buying lots of life insurance. You see, even after you've been retired for years, when you die, you'll have to pay me 50% of whatever your estate is worth.
After all, I've got lots of partners and not all of them are as successful as you and your family. We don't think it's "fair" for your kids to have such a big advantage. But if you buy enough life insurance, you can finance this expense for your children.
All in all, if you're a very successful entrepreneur… if you're one of the rare, lucky, and hard-working people who can create a new company, employ lots of people, and satisfy the public… you'll end up paying me more than 75% of your income over your life. Thanks so much.
I'm sure you'll think my offer is reasonable and happily partner with me… but it doesn't really matter how you feel about it because if you ever try to stiff me – or cheat me on any of my fees or rules – I'll break down your door in the middle of the night, threaten you and your family with heavy, automatic weapons, and throw you in jail.
That's how civil society is supposed to work, right? This is Amerika, isn't it?
That's the offer Amerika gives its entrepreneurs. And the idiots in Washington wonder why there are no new jobs…
Regards,
Porter Stansberry
-----------------------------------------------------
Wow, is it any wonder that the sharpest people we know have been helping us see for years that we are headed towards "The Former United States of America?"
Friday, August 20, 2010
WSJ: Is a Crash Coming? Ten Reasons to Be Cautious
I have seen this a few times in the last 2 days, my comments are inserted in [CAPS]
Is a Crash Coming? Ten Reasons to Be Cautious • By BRETT ARENDS
Could Wall Street be about to crash again? [YEP]
This week's bone-rattlers may be making you wonder.
I don't make predictions. That's a sucker's game. [I GENERALLY AGREE, EXCEPT WHEN IT'S THINGS LIKE GRAVITY WILL CONTINUE TO WORK AND AS OUR FRIEND "OUCH!" HAS WRITTEN FOREVER, THE LAW OF SUPPLY AND DEMAND CONTINUING TO WORK - THANKS AGAIN KIRK] And I'm certainly not doing so now.
But way too many people are way too complacent this summer. Here are 10 reasons to watch out.
1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you're getting paid well to take risks, they may make sense. But what if you're not? [EARNINGS HAVE BEEN HELD ARTIFICIALLY HIGH AND AS THEY DROP THIS 20X WILL LOOK EVEN WORSE]
2. The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.
3. Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that's reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true. [MONEY MANAGERS AND FINANCIAL PLANNERS ARE BULLISH BECAUSE THEY MAKE MONEY SPEWING NONSENSE, JUST LIKE NAR AND ALL THEIR DROID REALTORS TELLING EVERYONE WE'VE HIT A BOTTOM IN THE HOUSING MARKET - WHAT A BUNCH OF SHI$%^!]
4. Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, it's affecting wages too. The Bureau of Labor Statistics reports that, last quarter, workers earned 0.7% less in real terms per hour than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if people owe way too much money. [THINK JAPAN NO APPROACHING 2 LOST DECADES AND REALIZE THAT IF WE CAN GET AWAY WITH JUST THAT WE WILL BE VERY FORTUNATE!]
5. People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It's the debt, stupid. According to the Federal Reserve, total U.S. debt—even excluding the financial sector—is basically twice what it was 10 years ago: $35 trillion compared to $18 trillion. Households have barely made a dent in their debt burden; it's fallen a mere 3% from last year's all-time peak, leaving it twice the level of a decade ago. [HELL A DECADE AGO WE HAD FAR TOO MUCH DEBT AND WE KNEW, AND DISCUSSED THAT IT WAS UNSUSTAINABLE!!!]
6. The jobs picture is much worse than they're telling you. Forget the "official" unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. That's the lowest since the early 1980s—when many women stayed at home through choice, driving the numbers down. Among men today, it's 66.9%. Back in the '50s, incidentally, that figure was around 85%, though allowances should be made for the higher number of elderly people alive today. And many of those still working right now can only find part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish? [LESS THAN 3 OUT OF 5 US MEN OVER 20 YEARS OF AGE HAVE A FULL TIME JOB? YEP THINGS ARE JUST FINE OUT THERE, THAT NUMBER RIVALS THE 30'S]
7. Housing remains a disaster. Foreclosures rose again last month. Banks took over another 93,000 homes in July, says foreclosure specialist RealtyTrac. That's a rise of 9% from June and just shy of May's record. We're heading for 1 million foreclosures this year, RealtyTrac says. And naturally the ripple effects hurt all those homeowners not in foreclosure, by driving down prices. See deflation (No. 4) above. [ I WON'T TOUCH THIS ONE OTHER THAN TO SAY IF YOU AREN'T FOLLOWING WHAT KIRK NACE HAS BEEN SHARING FOREVER YOU WILL EVENTUALLY KICK YOURSELF, HIS PROJECTIONS, WHILE SOMETIMES A BIT TO CAUTIOUS, HAVE BEEN DEAD ON. HE IS NOW SAYING WE ARE 5+ YEARS AND AT LEAST 25% PRICE WISE FROM A BOTTOM. IF I KNOW HIM, AND I DO, I WOULD BET THAT WE ARE AT LEAST 7 YEARS AND 35+% FROM A BOTTOM, NOT BECAUSE I KNOW MORE BUT BECAUSE I KNOW HE TENDS TO BE TOO CONSERVATIVE IN HIS ANALYSIS.]
8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a "September effect." The market, on average, has done worse in that month than any other. No one really knows why. Some have even blamed the psychological effect of shortening days. But it becomes self-reinforcing: People fear it, so they sell. [LOOKS LIKE WE MAY HAVE STARTED A BIT EARLY THIS YEAR . . . GOTTA LOVE SDS/SRS/SPXU THANKS KIRK!]
9. We're looking at gridlock in Washington. Election season has already begun. And the Democrats are expected to lose seats in both houses in November. (Betting at InTrade, a bookmaker in Dublin, Ireland, gives the GOP a 62% chance of taking control of the House.) As our political dialogue seems to have collapsed beyond all possible hope of repair, let's not hope for any "bipartisan" agreements on anything of substance. Do you think this is a good thing? As Davis Rosenberg at investment firm Gluskin Sheff pointed out this week, gridlock is only a good thing for investors "when nothing needs fixing." Today, he notes, we need strong leadership. Not gonna happen. [DON'T GET ME STARTED - REVOLOUTION/RIOTS/REBUILDING WITH A CLEAN SLATE IS THE MOST REASONABLE OPTION, PERIOD]
10. All sorts of other indicators are flashing amber. The Institute for Supply Management's manufacturing index, while still positive, weakened again in July. So did ISM's new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI's Weekly Leading Index has been flashing warning lights for weeks (though the most recent signals have looked somewhat better). Europe's industrial production in June turned out considerably worse than expected. Even China's steamroller economy is slowing down. Tech bellwether Cisco Systems has signaled caution ahead. Individually, each of these might mean little. Collectively, they make me wonder. In this environment, I might be happy to buy shares if they were cheap. But not so much if they're expensive. See No. 1 above. [BUCKLE UP, IF YOU AREN'T HELPING PEOPLE WHO ARE HURTING YOU ARE MISSING THE CHANCE OF A LIFETIME.]
Is a Crash Coming? Ten Reasons to Be Cautious • By BRETT ARENDS
Could Wall Street be about to crash again? [YEP]
This week's bone-rattlers may be making you wonder.
I don't make predictions. That's a sucker's game. [I GENERALLY AGREE, EXCEPT WHEN IT'S THINGS LIKE GRAVITY WILL CONTINUE TO WORK AND AS OUR FRIEND "OUCH!" HAS WRITTEN FOREVER, THE LAW OF SUPPLY AND DEMAND CONTINUING TO WORK - THANKS AGAIN KIRK] And I'm certainly not doing so now.
But way too many people are way too complacent this summer. Here are 10 reasons to watch out.
1. The market is already expensive. Stocks are about 20 times cyclically-adjusted earnings, according to data compiled by Yale University economics professor Robert Shiller. That's well above average, which, historically, has been about 16. This ratio has been a powerful predictor of long-term returns. Valuation is by far the most important issue for investors. If you're getting paid well to take risks, they may make sense. But what if you're not? [EARNINGS HAVE BEEN HELD ARTIFICIALLY HIGH AND AS THEY DROP THIS 20X WILL LOOK EVEN WORSE]
2. The Fed is getting nervous. This week it warned that the economy had weakened, and it unveiled its latest weapon in the war against deflation: using the proceeds from the sale of mortgages to buy Treasury bonds. That should drive down long-term interest rates. Great news for mortgage borrowers. But hardly something one wants to hear when the Dow Jones Industrial Average is already north of 10000.
3. Too many people are too bullish. Active money managers are expecting the market to go higher, according to the latest survey by the National Association of Active Investment Managers. So are financial advisers, reports the weekly survey by Investors Intelligence. And that's reason to be cautious. The time to buy is when everyone else is gloomy. The reverse may also be true. [MONEY MANAGERS AND FINANCIAL PLANNERS ARE BULLISH BECAUSE THEY MAKE MONEY SPEWING NONSENSE, JUST LIKE NAR AND ALL THEIR DROID REALTORS TELLING EVERYONE WE'VE HIT A BOTTOM IN THE HOUSING MARKET - WHAT A BUNCH OF SHI$%^!]
4. Deflation is already here. Consumer prices have fallen for three months in a row. And, most ominously, it's affecting wages too. The Bureau of Labor Statistics reports that, last quarter, workers earned 0.7% less in real terms per hour than they did a year ago. No wonder the Fed is worried. In deflation, wages, company revenues, and the value of your home and your investments may shrink in dollar terms. But your debts stay the same size. That makes deflation a vicious trap, especially if people owe way too much money. [THINK JAPAN NO APPROACHING 2 LOST DECADES AND REALIZE THAT IF WE CAN GET AWAY WITH JUST THAT WE WILL BE VERY FORTUNATE!]
5. People still owe way too much money. Households, corporations, states, local governments and, of course, Uncle Sam. It's the debt, stupid. According to the Federal Reserve, total U.S. debt—even excluding the financial sector—is basically twice what it was 10 years ago: $35 trillion compared to $18 trillion. Households have barely made a dent in their debt burden; it's fallen a mere 3% from last year's all-time peak, leaving it twice the level of a decade ago. [HELL A DECADE AGO WE HAD FAR TOO MUCH DEBT AND WE KNEW, AND DISCUSSED THAT IT WAS UNSUSTAINABLE!!!]
6. The jobs picture is much worse than they're telling you. Forget the "official" unemployment rate of 9.5%. Alternative measures? Try this: Just 61% of the adult population, age 20 or over, has any kind of job right now. That's the lowest since the early 1980s—when many women stayed at home through choice, driving the numbers down. Among men today, it's 66.9%. Back in the '50s, incidentally, that figure was around 85%, though allowances should be made for the higher number of elderly people alive today. And many of those still working right now can only find part-time work, so just 59% of men age 20 or over currently have a full-time job. This is bullish? [LESS THAN 3 OUT OF 5 US MEN OVER 20 YEARS OF AGE HAVE A FULL TIME JOB? YEP THINGS ARE JUST FINE OUT THERE, THAT NUMBER RIVALS THE 30'S]
7. Housing remains a disaster. Foreclosures rose again last month. Banks took over another 93,000 homes in July, says foreclosure specialist RealtyTrac. That's a rise of 9% from June and just shy of May's record. We're heading for 1 million foreclosures this year, RealtyTrac says. And naturally the ripple effects hurt all those homeowners not in foreclosure, by driving down prices. See deflation (No. 4) above. [ I WON'T TOUCH THIS ONE OTHER THAN TO SAY IF YOU AREN'T FOLLOWING WHAT KIRK NACE HAS BEEN SHARING FOREVER YOU WILL EVENTUALLY KICK YOURSELF, HIS PROJECTIONS, WHILE SOMETIMES A BIT TO CAUTIOUS, HAVE BEEN DEAD ON. HE IS NOW SAYING WE ARE 5+ YEARS AND AT LEAST 25% PRICE WISE FROM A BOTTOM. IF I KNOW HIM, AND I DO, I WOULD BET THAT WE ARE AT LEAST 7 YEARS AND 35+% FROM A BOTTOM, NOT BECAUSE I KNOW MORE BUT BECAUSE I KNOW HE TENDS TO BE TOO CONSERVATIVE IN HIS ANALYSIS.]
8. Labor Day is approaching. Ouch. It always seems to be in September-October when the wheels come off Wall Street. Think 2008. Think 1987. Think 1929. Statistically, there actually is a "September effect." The market, on average, has done worse in that month than any other. No one really knows why. Some have even blamed the psychological effect of shortening days. But it becomes self-reinforcing: People fear it, so they sell. [LOOKS LIKE WE MAY HAVE STARTED A BIT EARLY THIS YEAR . . . GOTTA LOVE SDS/SRS/SPXU THANKS KIRK!]
9. We're looking at gridlock in Washington. Election season has already begun. And the Democrats are expected to lose seats in both houses in November. (Betting at InTrade, a bookmaker in Dublin, Ireland, gives the GOP a 62% chance of taking control of the House.) As our political dialogue seems to have collapsed beyond all possible hope of repair, let's not hope for any "bipartisan" agreements on anything of substance. Do you think this is a good thing? As Davis Rosenberg at investment firm Gluskin Sheff pointed out this week, gridlock is only a good thing for investors "when nothing needs fixing." Today, he notes, we need strong leadership. Not gonna happen. [DON'T GET ME STARTED - REVOLOUTION/RIOTS/REBUILDING WITH A CLEAN SLATE IS THE MOST REASONABLE OPTION, PERIOD]
10. All sorts of other indicators are flashing amber. The Institute for Supply Management's manufacturing index, while still positive, weakened again in July. So did ISM's new-orders indicator. The trade deficit has widened, and second-quarter GDP growth was much lower than first thought. ECRI's Weekly Leading Index has been flashing warning lights for weeks (though the most recent signals have looked somewhat better). Europe's industrial production in June turned out considerably worse than expected. Even China's steamroller economy is slowing down. Tech bellwether Cisco Systems has signaled caution ahead. Individually, each of these might mean little. Collectively, they make me wonder. In this environment, I might be happy to buy shares if they were cheap. But not so much if they're expensive. See No. 1 above. [BUCKLE UP, IF YOU AREN'T HELPING PEOPLE WHO ARE HURTING YOU ARE MISSING THE CHANCE OF A LIFETIME.]
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