LeeWhee Posted July 25, 2005 Report Share Posted July 25, 2005 A note on RE I've mentioned a couple of times how we had a mini RE bubblette in Peru that peaked and popped in 1997 (of course, the degree of speculation and leverage doesn't come close to the one in the US), but the point is relevant, nonetheless. The thing is that now we are entering our fifth year of the strongest economic expansion in more than half a century, yet home prices remain stagnant. At least they're not falling anymore, but no way they are going up, at least not yet. Still waaay too much supply being absorbed from 1997. I just bought my first apartment earlier this year, and I paid roughly $620 per square meter in a prime location. That same apartment would have cost me at least $1000 per square meter 8 years ago (Don't laugh at the prices, I know they are ridiculously low compared to US standards... I laugh every day when I remember renting a 200 sq ft foxhole on a sixth floor walkup in NY for $2000 a month). Plus, I'm using a single digit mortgage rate vs a double digit mortage rate back in 97. My point is that even after the US RE bubble pops and after a future economic downturn ends and the US is on its way to recovery, the supply of housing will depress prices far longer than most can imagine. Here's a view of my apartment, courtesy of Google Earth... <{POST_SNAPBACK}> Are those clay tennis courts near your place? I might have to come down and check them out... Link to comment Share on other sites More sharing options...
LeeWhee Posted July 25, 2005 Report Share Posted July 25, 2005 What about this one, shorty??? False breakout? Or is it going to 1000? <{POST_SNAPBACK}> Solid resistance at infinity... Link to comment Share on other sites More sharing options...
cwd Posted July 25, 2005 Report Share Posted July 25, 2005 like any non-productive pyramid scheme scam, there must be bagholders at the end of the game -- in this game anyone left holding a house will be a bagholder make hay while the sun shines, and get out Whether it is a hyperinflationary collapse, or a deflationary collapse, real interest rates will vault into the stratosphere, and asset prices will collapse relative to the rate of inflation. If there is hyperinflation, say three years of 50% inflation, where does that leave someone with an ARM that's locked for five years? My guess is that it leaves them with a house that's worth about half of what they paid for it (in real terms) of which they will own about 90% of the equity - which isn't a bad trade for 5% down. Where does that scenario leave someone who sold their house and parked their money in short-term t-bills? Well, of course about six months into hyperinflation, they'd want to move the t-bill money into gold or some other fixed asset as interest rates probably won't keep up with inflation at first. Suppose they do that just as deflation kicks in? I'm not posting this because I have the vaguest clue as to what will happen. I'm just saying that regardless of what happens, when it's over I'll be living in my house (which is in the Bay Area). My paper assets may be in tatters, but if they are I'll be able to pay off the mortgage with restaurant tip money. My personal feeling is that something has to be done to bankrupt the Babyboom generation because Society can't afford to let them retire. So, I'm figuring on hyperinflation followed by a deep recession lasting about five years followed by a World War III to kick start the economy. But I'm an optimist. And besides, I think I'd look good in one of those Home Depot orange aprons. <{POST_SNAPBACK}> One thing for sure is that after every RE transaction the property tax basis resets usually at a higher base. Local governments love it. If higher prices cause higher taxes, one can always get a HEL. Eventually HELOCs are drawn down and we will find out who really owns property in this country. The school board. Link to comment Share on other sites More sharing options...
Sudaca Posted July 25, 2005 Report Share Posted July 25, 2005 A note on RE I've mentioned a couple of times how we had a mini RE bubblette in Peru that peaked and popped in 1997 (of course, the degree of speculation and leverage doesn't come close to the one in the US), but the point is relevant, nonetheless.? The thing is that now we are entering our fifth year of the strongest economic expansion in more than half a century, yet home prices remain stagnant.? At least they're not falling anymore, but no way they are going up, at least not yet.? Still waaay too much supply being absorbed from 1997.? I just bought my first apartment earlier this year, and I paid roughly $620 per square meter in a prime location.? That same apartment would have cost me at least $1000 per square meter 8 years ago (Don't laugh at the prices, I know they are ridiculously low compared to US standards... I laugh every day when I remember renting a 200 sq ft foxhole on a sixth floor walkup in NY for $2000 a month).? Plus, I'm using a single digit mortgage rate vs a double digit mortage rate back in 97. My point is that even after the US RE bubble pops and after a future economic downturn ends and the US is on its way to recovery, the supply of housing will depress prices far longer than most can imagine. Here's a view of my apartment, courtesy of Google Earth... <{POST_SNAPBACK}> Are those clay tennis courts near your place? I might have to come down and check them out... <{POST_SNAPBACK}> Yep, tennis courts, golf course, ocean view But, Google Earth is nicer than Real Earth, as half of the time it's clouded up and hazy. But in summer, the sun sets down in the ocean on the other side of the golf course, which is pretty nice, and the view from the 22nd floor is cool. Link to comment Share on other sites More sharing options...
capitall Posted July 25, 2005 Report Share Posted July 25, 2005 Greenspan is full of shit. The Fed isn't raising rates and he knows it. The market is raising rates. The Fed isn't even tagging along for the ride. It is being dragged, kicking and screaming. The Fed is doing all it can to slow the rate of rise in money market rates by periodically flooding the system with liquidity. From April to July the Fed grew its asset base at an annualized rate in excess of 17%. That's as fast as at any time during the 2003-2004 "easy money" period. It is galling to see Greenspan continually get away with the garbage, the absolute nonsense that he spews, and that a whole lot of intelligent people actually believe. The guy is the consummate bullshit artist, possibly the greatest ever. But it's absolute total bullshit. Anything Greenspan says, you can be absolutely certain that it is the opposite of truth. <{POST_SNAPBACK}> hey, it takes time for BS economics to feed through to the real economy, and even then it takes time to be reported, and even then its easy to cover up the consequnces with bogus reporting. by the time the true effects of fed policy are digested and vomited, greenpan will be free of blame, and "joe 6 pack" will be begging and pleading that he return! .... <{POST_SNAPBACK}> Greenie is just doing his job-- to levitate the economy through rose-colored Words and helicopter money. Perhaps he is dumb enough to believe that this can be done indefinitely. It can't, but then as folks say, no one rings a bell at the top. So it is hard to get the timing right of precisely when when the economy will hit the fan. Link to comment Share on other sites More sharing options...
cwd Posted July 25, 2005 Report Share Posted July 25, 2005 Suds- I doubt anyone here has any idea what a $625/ square meter translates to in terms of real measurements. That meter stuff is used just by backward countries. Here in the US we use the modern English system. You know-- square foots--- price per square foots. ? You guys really need to get with the program. But as near as I can figger you bought your apartment for around $62.50 per square foot, right? <{POST_SNAPBACK}> Yep, you're right... measuring area in square meters is like measuring your weight in English Stones (not the Rolling kind ) I weigh 11.5 Stones... 73 kilos..... <{POST_SNAPBACK}> Doc, that is what I came up with,and that is not way out of line with property in this town. Link to comment Share on other sites More sharing options...
cwd Posted July 25, 2005 Report Share Posted July 25, 2005 It is galling to see Greenspan continually get away with the garbage, the absolute nonsense that he spews, and that a whole lot of intelligent people actually believe. The guy is the consummate bullshit artist, possibly the greatest ever. But it's absolute total bullshit. Anything Greenspan says, you can be absolutely certain that it is the opposite of truth. <{POST_SNAPBACK}> Well I'm not sure how many intelligent people believe him. Rather that it is hard to publicly say that the Emperor has no clothes. Or people perceive that his words and actions are in their self-interest, like the politicians who do not fall into the category of intelligent life anyway. But I don't think he is a pathological liar. He is just clueless. Being a pathological liar would imply that understands what the actual truth is, and I simply don't believe that he does. <{POST_SNAPBACK}> The intelligent wanna believe espcially as long as their assets continue to inflate. Link to comment Share on other sites More sharing options...
cwd Posted July 25, 2005 Report Share Posted July 25, 2005 It is galling to see Greenspan continually get away with the garbage, the absolute nonsense that he spews, and that a whole lot of intelligent people actually believe. The guy is the consummate bullshit artist, possibly the greatest ever. But it's absolute total bullshit. Anything Greenspan says, you can be absolutely certain that it is the opposite of truth. <{POST_SNAPBACK}> Well I'm not sure how many intelligent people believe him. Rather that it is hard to publicly say that the Emperor has no clothes. Or people perceive that his words and actions are in their self-interest, like the politicians who do not fall into the category of intelligent life anyway. But I don't think he is a pathological liar. He is just clueless. Being a pathological liar would imply that understands what the actual truth is, and I simply don't believe that he does. <{POST_SNAPBACK}> Well stated. Link to comment Share on other sites More sharing options...
On The Beach Posted July 25, 2005 Report Share Posted July 25, 2005 took a drive into town on Friday with my father in law,counted 42 empty shops with lease signs in the window....even he was surprised by the sheer volume of suddenly empty shops....this was in one 2 mile stretch. 2 small shops have just had closing down sales in my small local shopping centre where I live...why didn't they sell? This is whats happens....when sales are strong why sell?Then sales are weak for a month or 2,then 3 months,then 4 months,then 6 months and before you know it your sales figures are terrible...who wants to buy such a lousy business? So all you can do is close down and rue the fact that you didn't selll earlier. As Lance Lewis used to say"markets go up until they dont" The orbs continues on its merry way but things are not as rosy as that in OZ...plenty of evidence to the contrary,only a matter of time until the whole shooting match collapses under its own weight... <{POST_SNAPBACK}> BB: Let us know when the RE starts to really dip. Spent 18 months in Queensland moslty in little towns in Outback but also Townsville (including 3 in Townsville GH)...mostly extraordinarly fond memories. My wife loves Byron Bay -- although NSW...but crazy prices exceed much of Florida. LL 7/20: 'I was struck by the near universal bullishness on Heehaw today. Believe it or not, I was bored enough today (in other words, I was really bored) to watch a bit of Heehaw. Near the end of the day, they were supposed to have a bull vs. bear debate, which apparently had been a recurring segment for the past month or so, but today, there were no bears to be found? So, Heehaw was forced to have a bull vs. bull debate over how high we were going. Folks, when there are no bears around, you?ve hit an important turning point. Throw in the fact that long-time bear Michael Metz turned bullish earlier this week, plus the extremely low put/call ratios, plus the absolute collapse the volatility measures, plus the off the charts bullishness that we are seeing in many of the surveys, and it all adds up to signal that we may be at a significant turning point. Throw in the fact that most indices have merely bounced while a select few have made new highs, and you have all the sort of divergences that are present at important tops. I?ve said this before, but the more I look at the current environment, the more it reminds me of 1998. Back then you saw a similar push to a new high in mid July, and you also saw all of these important divergences, as only a few indices made new highs. Back then, it was the Dow, SPX, and NASDAQ that made new highs, while the TRAN, small caps, midcaps, cyclicals, and others all put in failing rallies. What followed was a violent market collapse?. As we get into earnings season, many companies (especially multinationals) will be reminding investors that earnings growth is slowing dramatically and that the rally in the dollar is making that slowdown in earnings growth even worse for anyone who sells abroad. So, we should expect some lowered guidance in many sectors, including a big chunk of technology. Personally, I plan on buying a large stack of October-December puts early next week...' Link to comment Share on other sites More sharing options...
wndysrf Posted July 25, 2005 Author Report Share Posted July 25, 2005 took a drive into town on Friday with my father in law,counted 42 empty shops with lease signs in the window....even he was surprised by the sheer volume of suddenly empty shops....this was in one 2 mile stretch. 2 small shops have just had closing down sales in my small local shopping centre where I live...why didn't they sell? This is whats happens....when sales are strong why sell?Then sales are weak for a month or 2,then 3 months,then 4 months,then 6 months and before you know it your sales figures are terrible...who wants to buy such a lousy business? So all you can do is close down and rue the fact that you didn't selll earlier. As Lance Lewis used to say"markets go up until they dont" The orbs continues on its merry way but things are not as rosy as that in OZ...plenty of evidence to the contrary,only a matter of time until the whole shooting match collapses under its own weight... <{POST_SNAPBACK}> BB: Let us know when the RE starts to really dip. Spent 18 months in Queensland moslty in little towns in Outback but also Townsville (including 3 in Townsville GH)...mostly extraordinarly fond memories. My wife loves Byron Bay -- although NSW...but crazy prices exceed much of Florida. LL 7/20: So, we should expect some lowered guidance in many sectors, including a big chunk of technology. Personally, I plan on buying a large stack of October-December puts early next week...' <{POST_SNAPBACK}> Good luck, Lance. This time last year, you did the exact same thing. And the markets rallied huge into the Dec. 31 highs. Also, QCOM, BRCM, and EBAY are getting ramped up on huge volume with their Yearnings results. YHOO is the only one that really got hurt. Lots of key stocks are going up on high volume, the tape continues to be pretty strong. Where it tops out, I don't know......... But I'd be waiting until this thing shows sign of exhaustion before buying "stacks of puts".......... Link to comment Share on other sites More sharing options...
Guest Posted July 25, 2005 Report Share Posted July 25, 2005 Sep Dow Friday close 10666 Sep Beans evening session last 666.00 Link to comment Share on other sites More sharing options...
Roger7485 Posted July 25, 2005 Report Share Posted July 25, 2005 Thought you might like this sudaca.. http://biz.yahoo.com/prnews/050725/sfm051.html?.v=16 Microsoft just launched its own "Google earth" type service. Edit: Guess it isnt really breaking news, its been planned for awhile. I think they just launched it though And another thing Sudaca, the link on the google earth page is broken so I can download it yet, I'm anxious to get it fired up. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.