Saturday, September 29, 2007

Little comfort in commercial construction figures

Construction spending beats predictions

Total spending on construction grew 0.2 percent as commercial projects offset home building losses.

September 28 2007: 10:36 AM EDT

WASHINGTON (AP) -- Construction spending posted a bigger-than-expected 0.2 percent gain in August as strength in non-residential construction offset a continued plunge in home building.

The Commerce Department said Friday that the August increase pushed total construction spending to a seasonally adjusted annual rate of $1.166 trillion.

The gain reflected a 2.3 percent rise in spending on office buildings, shopping centers and other non-residential projects. That was the biggest increase in this category in six months.

Spending on home building fell by 1.5 percent, the 18th straight drop in this area, with more weakness expected in coming months as builders scramble to cut back production in the face of slumping sales and a record number of unsold homes.

Analysts had been forecasting that the weakness in home building would be enough to pull down overall activity by about 0.2 percent. According to revised estimates, construction spending fell by 0.5 percent in July and 0.1 percent in June. Top of page

I’ve talked about this before. Commercial construction lags residential. This lag can be up to two years as commercial projects, especial if they are larger buildings, take more time to complete and usually start well after residential projects get underway.

As new neighborhoods spring up, commercial interests begin to move in based on the quantity of housing, projected population density and their prospects for making a profit.

First come the homes, then the dry cleaners, Pizza Huts, Car Dealerships, office buildings, etc...

It follows as no surprise then that commercial construction still has a pulse, but touting it as good news is simply whistling past the graveyard. Once these commercial projects got funded and broke ground the probability of investors walking away from them diminished.

Half completed they most likely will go the distance to completion but to what end? Sparsely populated neighborhoods, little local traffic and few prospects of business interests moving in to rent the available space.

Compound this further by the fact that once the project ends, there go the jobs they supported and all the subcontractors and suppliers associated with their building.

Increased commercial building numbers good news? No…
It just points out how much time we have left before those jobs dry up.

Wednesday, September 26, 2007

Privatizing Profits, Socializing Risk

Stop for a minute, and take a look around. You might notice some things about our great country that don’t look quite right. One being the proposed socialization of corporate risk in the form of bailouts for bankers thinly veiled as a bailout for mortgage holders at risk.

If you haven’t noticed, the federal bailout of mortgage holders won’t really help them, it will only keep them chained down to a life of mortgage serfdom. It in turn helps the big money boyz who were involved in making those bad loans to keep their profits, foisting the bill for their grand mistake onto tax payers.

If the bail out goes through the average American will have to bend over twice and hold still while wealthy bankers engage in multiple counts of unauthorized rear entrie: First for the mortgage, then for the taxes.

The average home ownrer didn’t invent mortgage tranches, C.D.O.s or derivatives nor did he profit from their schemes, but he will get the bill for their failure. Bankers and brokerage firms will be rewarded for their wanton greed and careless business practices by these very bailouts.

Many people think the banks will come and take their house if they default on their loans. Here’s the truth: Bankers don’t want your house. It’s a depreciating asset with a diminishing pool of buyers. They want you to stay in it guaranteeing an income stream. It will be far better to re-price the loan and send the bill for the paper loss to Uncle Sam who will forward it to you and me in the form of taxes or print more money devaluing each dollar we have stuffed in our mattresses. (I call that a back-door tax as it screws the average American saver.)

Will John Q. Public put up with paying taxes to help retain the profits of bankers? Wealthy business men who profited when he got into the mess that left him a debt slave, or is our government asking too much?

Privatizing profit for the rich but socializing the debt if it goes wrong is not just wrong, it’s dangerous. Mr. Average American will at some point look around and notice that he is no longer guaranteed privacy, The Patriot Act took that away along with a raft of other freedoms. He will start to wonder why he got the bill for someone else’s reckless behavior, while those ‘someones’ skated with the profits and did so with the blessing of his government. He will begin to see an America that is increasingly for the rich and the connected. A country that no longer represents him, and he will begin to simmer.

The implications are not pleasant. As the average family is inevitably forced to deal with their new standard of living there is sure to emerge deep resentment. High oil prices coupled with rising grain prices hold the promise of increasing economic pressure on the average American family. A crumbling dollar, and a weakening economy promise more of the same. Something will have to give…

Disenfranchising the Average citizen in this way will come at a price that we’ll all pay.
How long will it be before our government accomplishes what terrorist could not?

Say NO! to bailouts.


Tuesday, September 25, 2007

Housing Market sentiment drops in Norway

40% think home prices will fall The days of rapidly rising housing prices may be over, at least for now.

Four out of 10 Norwegians questioned think housing prices will fall during the next year. That compares to just one in 20 who believed the same a year ago.

The startling turnaround in housing price outlook is revealed in a survey conducted by research firm Sentio for Fokus Bank.

Norwegian Broadcasting (NRK) reported Monday that the survey also indicates that there are more Norwegians who believe their homes will be worth less a year from now, than there are those who believe their homes will increase in value.

Frank Jullum, chief economist at Fokus Bank, called the survey "very bad news" for homeowners hoping to sell.

"Both sellers and buyers expect that prices will come down," Jullum said. "That means we'll probably go through a period where prices either remain stable, or fall."

Housing prices have skyrocketed in Norway during the past several years, and the country's economy remains strong. The prices, though, especially those for small flats, have risen too high, Jullum believes.

He didn't rule out a price decline of as much as 10 to 20 percent.

I live in Norway and I can tell you, house prices here are HIGH. About on par with San Francisco housing prices when their market was still hot. Wages are generally higher here than in the U.S., but not enough to justify those kind of prices.

Easy money was not an American phenomenon, creative lending went world wide and spawned similar housing bubbles in many other countries.

It's true, a year ago everybody here was sure the party would never end and Norwegians were liberating equity from their homes at similar rates to Americans, buying cars, boats, RVs and vacations.

This in a country where cars and boats, or any other form of transport for that matter costs nearly three times what it does in the US. Everybody has to have a luxury SUV don’t ya know…

The party is over, but many here will refuse to see, and hold on for the price their neighbor sold for last year. It's already happening. Stock is increasing, sales are slowing but prices are still somewhat sticky. It's a pattern that started to play out last year in the US and you can see a clear pattern of it repeating here.

Will Norwegians learn a lesson from the US housing market? Probably not. They would never compare themselves to Americans. That would be beneath them.

Friday, September 21, 2007

Maui real estate: Bleak...

I was last on Maui in February of 2007, (See More thoughts on Hawaii housing). I saw a sea of for sale signs then and it was not hard to see where things were going from there. In fact a monkey could have worked it out, but sometimes the obvious eludes us. While on Maui I attended a party of old friends, most with real estate investments on the island. After the lubricating effects that a couple of glasses of wine had on me, I opened my mouth and spilled the beans about what I saw coming in the real estate market and what looked like a prelude to decline. I was met with stunned silence, then I was faced with turned backs. I was an instant pariah… Just add wine…
That is how I remained among my real estate invested friends for the rest of my stay. I can’t say that I blame then though. I can’t say that I didn’t know better.

Da’Nile’, - it’s a warm river, a nice place to slip into when you’ve found you’ve made a wrong turn and you know you’re screwed. I’ve been guilty of that indulgence once or twice myself and I won’t hold it against my friends. If anything, I wish I could have saved them some grief, the inevitable loss that looms over their largest investment and security; their homes.


The following is a copy of an e-mail-newsletter from ‘Haiku Properties’ on Maui, brought to my attention by good friend and long time Maui local, Eva Bluminstein.

Thanks for the heads up Eva!

I lived on Maui for close to ten years and never have I experienced forthrightness from a real estate agent on the island like what follows.
A big tip of the hat to Peter Slate for telling it like it is.

From: "Peter Slate"
Date: Wed, Sep 12, 2007 Sep 12, 2007 - 11:04AM

Subject: Maui Real Estate Overview

Aloha,This newsletter serves a very objective perspective on Maui's real estate market. As most realtors will quickly tell you what you want to hear, we decided to forego the "sugar coating", and tell it "how it is". The newsletter will cover two parts: Maui in general, and our specialty: Upcountry

Sales figures for Maui as a whole from the end of July 07 through the end of August 07 show a 5 % decrease in Single Family Residence (SFR) sales, 8 % increase in Condo sales and a 17 % decrease in land sales. Sales figures for Maui from August 06 compared to August 07 shows a 19 % decrease in SFR, 55 % increase in Condo and 50 % decrease in land sales.

Digging a little deeper, I researched the number of SFR properties and vacant land parcels that are in escrow against those actively listed in the Upcountry area. The Upcountry area includes: Makawao, Olinda, Pukalani, Kula and Keokea. I found there are 162 SFR listings, 21 (13%) of which are in escrow. Similarly there are 62 parcels of vacant land listed, and only 4 (6%) in escrow! Over the last year 177 SFR and 17 vacant land parcels have sold Upcountry. This would indicate, with no new listings, it would take a little under a year to sell all the SFR listed, and 3.6 years to sell the vacant land currently available on the Upcountry market. Another aspect to consider: the average days on market before a SFR sells is 172 days, and 264 days for vacant land. In our opinion, a red hot market shows 45-50% of listings in escrow, a medium market
30% in escrow, and a cool market 20% in escrow * 15 % and below *. Down right bleak. You'll want to remember, not all escrows are successful.

With my curiosity piqued, I decided to enter into the most volatile section of Maui's real estate: the Kihei Condo market. I broke it down into Maalea, Kihei and Wailea. I found:Of the 45 listed condos in Maalea, there are 0 in escrow. In the last year 20 sold. This indicates that with no new listings, it would take 2.25 years to sell off the inventory. Kihei has 376 active listings, 49 (13%) of which are escrow. There were 457 condo sales in the last year. Wailea has 152 active listing, 16 (11%) of which are escrow. There were 215 Wailea condo sales in the last year. Judging by these percentages, we have no other choice than to rate the Kihei / Wailea condo market as bleak.

Expanding further, there are currently 812 active SFR listings, 1332 active Condo listings and 484 active vacant land listings on Maui.

A couple reasons. With so many Banks and financial institutions going bankrupt (149 lenders in one year) over sketchy mortgage debt, the remaining banks and lenders have made it significantly more difficult for borrowers to get
financed, especially in the non- conforming, jumbo range, where most Hawaii loans are placed. Another reason, investors looking to the stock market for better returns.

Our Conclusion:With the explosion of wealth worldwide, and the growing number of people who have a net worth of $ 5 million or more, we know there are very capable buyers, who are in a position to purchase real estate at any time. Given that Maui remains one of the worlds most desirable resort destinations, and that the population is ever increasing ** Maui is not the problem! We conclude investors need only overcome their psychological hurdle before returning in force. With investor confidence restored, we believe Maui real estate will experience a strong rebound. There are currently two Upcountry properties that we feel are exceptional buys.

If you have any questions or comments regarding this newsletter please contact us directly at (808) 276 4017 or at the office (808) 878 6800. If you know of anyone who is thinking of buying or selling real estate on Maui, please refer them directly to the telephone numbers above.

Thanks you for reading our Newsletter.

Regards,John Papazian R (B)

Peter Slate R(S)
Haiku Properties

Vern's Note: The increase in condo sales is most likely the product of steep price declines in that sector. Also before you go buying real estate, I have a bridge for sale.

Tuesday, September 18, 2007

A Cold Dose of Reality

While at Blogger's Bubble we do not always agree with the viewpoints of other bloggers and their articles that are showcased here, we believe these voices have a right to be heard. Some even have something to say like Jim Kunstler, a man with a talent for not mincing words for soft palates. Here is a dose of reality worth reading.

By Jim Kunstler at Clusterfuck Nation
the author of "The Long Emergency"

Shocked, shocked!
"But the really funny part of all this is that the media columnists are acting as though the American public got hoodwinked by Al. Which raises the question: just what the fuck was the public thinking when they bought half-million dollar houses on salaries under 60-K, taking out no-money-down, interest-optional balloon mortgages and other tricked-up contracts? The answer is: they walked into these arrangements with their eyes open because they thought they could get something for nothing. They thought the trend of steeply rising house prices would continue indefinitely and enable them to wiggle free of any hazard by flipping their houses to an endless supply of greater fools who would be there waiting to turn the very same trick. And the smoothies downstream in the mortgage and banking rackets were no less guided by avarice when they cooked up their formulas for bundling half-baked mortgages into tranches of tradeable securities. Easy Al may have failed to notice what was going on here, but then so did everybody else from The Wall Street Journal to the Securities and Exchange Commission.

This, of course, represents an insidious psychology. It could
only happen in a culture that has come off the rails mentally, so to speak, as ours has in the sense that nobody has any sense of consequence, neither the leaders nor those who affect to follow the leaders. The leading religion in America is not evangelical Christianity, it is the worship of unearned riches,
and its golden rule is the belief that is is possible to get something for nothing. Its holy shrines are Las Vegas and Wall Street. (And, by the way, has anybody heard the evangelical Christians complain about Las Vegas? They complain about a lot of things, but are themselves among the greatest believers in unearned riches -- given their preference for prayer over earnest effort in the service of solving life's problems.)

No, the American public, including the cheerleaders in the media, have only themselves to blame for the bitter harvest now underway in the asset and credit markets. And thus it would be salutary thing for Baby Jeezus, or the forces of nature, or whatever powers guide the universe, to now kick the shit out of them, so to speak, financially, because that is exactly what the American public is full of, from top to bottom, from George W. Bush at his lonely desk on Pennsylvania Avenue to the pitiful, bankrupt householders of Orange County and Boca Raton."
The complete article at: Clusterfuck Nation

Saturday, September 15, 2007

When The Music Stops

Financial markets and real estate are connected by way of derivatives that involve perhaps $470 trillion in leverage globally. That's trillion...

The analogy of musical chairs fits both well. When the music stops, where will you be? No telling.
Many however will be looking at their hands wondering where the money went...
The money that never was. Artificially created money on paper and in the digital universe. In reality none of us can really know if our investments are solid or as insubstantial as smoke in a mirror. It may only be at the end of a panic that we find out for sure. That is the paradox of the modern derivatives market, the monster that ate the future.

Why do speculative markets always end in panic selling? Think of speculative market investors as players in a game of musical chairs. The chairs represent the safe positions where a nimble investor winds up with cash proceeds from the sale of their securities at a high price when there are still many buyers, before the music stops. The alternative position, standing, is the position occupied by everyone else after the music stops. These players are stuck holding their securities for lack of a buyer as values drop 20%, 30%, 40%, 60%, 80%... In a selling panic, there are few if any buyers.

When the game is on, the players circle the row of chairs while an orchestra comprised of financial services company employees -- brokers, press agents, market analysts, and others involved in marketing and selling equities-based financial products to investors such as investment trusts in the 1920s and mutual funds now [hedge funds in 2007] -- play in concert with popular press reporters and editors, financial planners and other groupies who play off the same sheet music. Those who don't play off the same sheet music are labeled "contrarian" and are sent off to remote web sites where they can play their odd sounding music in obscurity.

A speculative stock market is unlike musical chairs in one critical respect.An investor takes money out of his pocket to buy stock. He thinks he still has that much net worth, but all he has is equity paper instead. If the price of the stock goes up he thinks he has more net worth. He can even use the stock as collateral to borrow more money to buy more stock.

Meanwhile the original money he spent to buy the stock goes to the guy he bought the stock from. The stock seller might put the money in the bank where someone else will borrow it or he in turn might buy the same stock himself, helping to drive the price up some more. Now the guy that he bought the stock from has the money that he got from the first guy he sold the stock to. And so on.

Add up the money that everyone thinks they've got and it's far more than what is really circulating. But as long as the boom continues everything is fine and the apparent "wealth" grows.Some people after making a gain "hedge" their position. Some get involved with derivatives in other ways, producing even more apparent wealth along with apparent security.

What happens if a significant number of people all want to make a withdrawal?

That's when all the apparent wealth disappears.

It's a chain reaction. Collateral is gone so margin calls get generated. More withdrawals. More chain reaction.

Read the complete article at: itulip

Tuesday, September 11, 2007

Realtors: Home price slump through '08

Home prices are likely to end 2008 below last year's peaks as slump is now seen as worse than previously forecast.
NEW YORK ( -- Home values and housing sales will take an even bigger hit than previously forecast and will not recover to their earlier levels throughout all of 2008, at least, according to the latest economic outlook from the National Association of Realtors released Tuesday.

While the trade group sees gains in prices in 2008 from the current weak levels, it projects that the median existing home price will be $224,600 in the fourth quarter of next year. That would still put the price slightly below the record price reading of $225,000 in the third quarter of last year.

The trade group now says it expects a 3.7 percent decline in existing home prices in the third quarter of 2007 compared to a year earlier, which is worse than the previous forecast of a 2.2 percent decline. And the fourth quarter should see prices down 1.3 percent from a year ago, rather than the 1 percent drop that was previously forecast.

The group has continually been revising price estimates lower as problems in the mortgage markets made it more difficult for potential buyers to find financing and helped feed the glut of homes for sale on the market. As recently as the March economic forecast, it had still been looking for an annual
gain of 1.2 percent in existing home prices.

"There's been an unusual hit to home sales, starting in March when subprime (mortgage) problems emerged, and more recently when problems spread to jumbo loans, with many potential buyers on the sidelines," said a statement from Lawrence Yun, the group's senior economist.

The weakness in prices is being fed by the slowdown in sales, which has resulted in a glut of homes on the market. And that slump in sales is now expected to be worse than the group's earlier estimates.

The group is now forecasting an 8.6 percentage drop in the pace of existing home sales this year, which is not only worse than its previous estimate of a 6.8 percent decline, but also would top the 8.5 percent drop seen in 2006. While the group believes existing home sales should rebound 5.8 percent in 2008, that would still leave the volume of sales more than 11 percent below the record sales of 7.1 million seen in 2005.

New home sales volume is expected to drop even more sharply, posting a 23.8 percent drop this year, and another 7.4 percent drop in 2008. Housing starts are expected to post similar declines each year.

You gotta love these guys at the NAR. Since they keep changing their stories, they are beginning to look like a group of five year olds telling us “a giant stepped on it” when they broke moms vase. The N.A.R. are either completely inept or they are becoming practiced in the art of fiction.

Maybe they think that the old M.O. still works, where they deliver their overly optimistic projections to much media fanfare, then revise the numbers closer to the truth a little later knowing the media won’t pay much attention to the revission.

That’s so 90s.

Come on guys, wake up and smell the coffee. Now we have this thing called the internet and guys like me on it that will call bullshit.

Watch for more downward revisions as we reach quarter 4 of this year.
N.A.R., what a bunch of monkey butts…

Monday, September 10, 2007

Fear and Greed

I read one article after another, most giving rational reasons why a stock, commodity or other investment play will be the smart call. The experts are armed with charts and logic and they make fine arguments, but what most leave out are a couple of basic facts of life that we didn’t have to contend with in decades past.

First: the accessibility to the stock market for the average American (Joe Public). With the creation of ETFs (Exchange Traded Funds) and through etrade, Scott Trade and Ameritrade you can invest in almost anything, even areas that were previously inaccessible to the average investor. This brings many more investors in around the margins and the power of herd-think can not be discounted. A good scare can send a lot of money out of the market which in this environment could cascade to a broader panic.

Second: the internet. The average family has access to information on an unprecedented scale at a time when John Q. Public increasingly mistrusts the mainstream media. There is a lot of information out there supporting the migration to investment markets. Not all of it’s good though and as many suspect, enough wrong information about the mood of the markets can have a direct effect on market volatility.

A lot has been said recently about gold and its’ recent rise in value.
Many seem to be seeking it as a safe haven, possibly even some central banks, but the arguments as to why abound.

Here is mine:
As a hedge gold can not be looked at in light of historical movements. Sure, central banks can manipulate gold by buying it or dumping it, but is it not clear to everyone by now (9/10/07) that those big-boys have lost control of the bus? Government reporting agencies, investment banks, Bernake, and other central bankers are looking a little frightened to me these days.

Panic will most likely drive the rise in gold as the true depth of derivatives poisoning wrecks economies and their individual currencies. Can you count up to $470 Trillion? Neither can I…

Some want to assign rational reasons why gold will or will not rise in value. The tech boom of the 90s was not rational. The housing boom that followed was not rational. Those were motivated by common greed. I say fear is a more potent force and if panic sets in, gold which is more easily purchased as an investment by the common man may be perceived as the only safe haven. Couple this with the existence of the internet and the unprecedented ability of Joe average to access unfiltered information and you can see why the central bankers and government reporting agencies are looking scared.

The call for a temporary rise in gold value is a given. Knowing when to get out will be key. Just look for a calm reference by mainstream media (Time, News Week) to get in on the ‘Gold Rush’.
Then sell.
It’s the best gage of an end to a bubble.

Thursday, September 6, 2007

Todays links

Is a Perfect Storm About to Hit the Housing Market?

Gold Price Rises as Easy Money Destroys Economy in US, Venezuela

Drop in Pending Home Sales Index that measures contracts being signed for existing home sales drops to lowest level since 9/11 attack.

Tuesday, September 4, 2007

Yen Carry Trade Meltdown Could Cause Yen to Soar

A lot of people wonder where in the world to put money given that all asset classes are bound to fall in value very soon.
Here is one idea...

This from Eric Fry at The Daily Reckoning

Is the stock market scaring you? Buy yen.

If the connection between falling stocks markets and a rising yen confuses you, don’t be dismayed. You have a lot of company. But the connection is not as confusing or sophisticated as it might seem. The “yen carry trade,” as it is known, only seems complicated. But it’s actually so simple, it’s moronic.

“Speculators borrow yen at preposterously low interest rates,” explains Bill Bonner. “They trade the money for other currencies - notably those of English-speaking countries - in order to place the money in higher-yielding investments. They then pocket the difference and think they are geniuses. The game works beautifully. Nothing goes wrong. That is, until something goes wrong.”

Two weeks ago, as global stock and bonds were tumbling, the “EXIT” door became jam-packed…and the yen’s price soared. If assets prices worldwide continue to tumble, the yen carry trade will continue to unwind. And if the carry trade unwinds, the yen will soar. Buying yen, therefore, offers a back-door hedge against falling stock and bond prices. One simple way to buy yen is to purchase the CurrencyShares Japanese Yen ETF (NYSE: FXY).

For several years, the yen carry trade has nurtured and facilitated risk-taking throughout the world’s financial markets. It has provided a seductive source of low-cost liquidity that has emboldened speculators to borrow yen at dirt-cheap rates of interest and invest the proceeds in higher-yielding investments. As long as the “higher-yielding investments” obliged with high-yields, the process worked beautifully. And it had been working very beautifully… until about four weeks ago.

But now that stocks and bonds become very volatile - or simply falling - many yen carry trades are producing losses. As the losses mount, the pain is increasing. As the pain increases, the speculators begin to sell their “high-yield” assets and repay their borrowed yen.

Obviously, the process of repaying yen requires buying yen first, then giving them to the lender. That’s why the yen appreciates during times of market distress.

For example, in mid-July the yen fell to a record low against the dollar on the very same day that the Dow reached its all-time high above 14,000.

But as stocks tumbled from their all-time highs, the yen’s value rocketed higher. The more stocks fell, the more the yen rose; the more the yen rose, the more stocks fell. After a while, cause became indistinguishable from effect.

The yen’s recent spike might be signalling that rampant risk-taking is winding down.

“People are taking risk off the table,” one currency trader told Bloomberg News, “In this environment, the yen carry trade is suffering and is going to continue to suffer.” The “suffering” of the carry trade does not move us to tears.

“The big carry trade beast has started to roar,” says Albert Edwards, an investment strategist with Dresdner Kleinwort, “A complete meltdown of the Yen carry trade now beckons.

“So far,” Edwards continues, “the ‘Great Unwind’ has not seen a major reversal of Yen-funded trades. Much else has happened, but this is the elephant that has been waiting to trample its way through the global financial village and squash the villagers already dying of thirst from a liquidity drought.”

Avoid the stampede; buy some yen.

Eric Fryfor The Daily Reckoning Australia

Sunday, September 2, 2007

Back to School Special

Another cogent articulation from Jim Kunstler.
I recommend reading this one. Jim’s observations are very sharp and he skips the sugar coating, which suits me fine. I think he hits the nail on the head when he predicts the shit is about to hit the fan, changing the face of Americana in ways we are not prepared to deal with.

Reality is biting hard. As with the little marmot caught in the Gray Wolf's jaws of death, the body simply surrenders and God's grace of physical shock softens the translation from free-willed joyful creature to dead meat. That is where we are at here in the final days of August, 2007. Digestion follows. The Big Fund Boyz and all their minions will end up as mere worm
castings in the aforementioned global compost heaps.

Terrible shocks are going to rip through the socioeconomic fabric of the USA as we turn the corner past these late summer doldrums. The fiasco of bad debt won't be contained. The choices for those who find themselves financially underwater in the fall of 07 will be 1.) liquidation, 2.) bankruptcy, or 3.)
destroy whatever remains of confidence in the US dollar in order to erase debt by hyperinflation. People holding power don't like the first two, which translate into Depression (let's make it capital "D.") When a nation turns into a fire sale from sea to shining sea, and bankrupt citizens don't even have enough cash-on-hand to buy things desperately cheap -- well, that's a Depression. Everybody from Fed officials to news editors have favored the softer term "recession" the past half century because it implies a mere pause in the inexorable march of progress toward economic nirvana. That's not what we're heading into.

There will be so many assets up for sale across the USA in the months and years ahead that the very sun in the heavens will take on a K-Mart blue-light-special glow. Houses with miles of granite countertops, Maybach automobiles, cabin cruisers that burn thirty gallons of diesel an hour, and much much more. There will be so much slightly used (or barely "pre-owned") stuff for sale that manufacturing another unit of anything (or importing it) will seem like a sick joke. Alas, there may be very few buyers, at least here among the current natives of North America. And so you get "new pricing," and a deadly downward spiral.

The rest of the article: Back To School - Clusterfuck Nation
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