Real estate bubble
Average home prices in the greater Seattle area increased again over the past year. In King County, the median house price in September rose 9.4 percent to $299,610. Just like the bulge on Mount St. Helens, this bubble has got to let off some steam or otherwise erupt someday. Volcanos don't hold back their fury forever.
Goodby Mr. & Mrs. Middle Class, it's been nice to know ya.
--Croakmore
Re: Real estate bubble
Yep. Scary stuff.Originally Posted by Croakmore
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
No, my parents were dumb-ass Republicans. Isn't that obvious?
And, no, I'll bypass that self-imposed Socrates-hemlock business, thank you very much. Is this the kind of premature death you'll be seeking to impose upon your own entire generation? Perhaps you'll be the Presider over the next Grand Inquisition? "Ok," you'll say, "you're too old. Exterminate, now!" 8)
:?
Our authors said that the Great Devaluation could hit practically overnight, or in a series of spaced out steps. With the benefit of approximately eight years since this was written, and your own unique viewpoints, which course seems most likely to you?
A Dollar Panic knocking things down fast.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
It can be argued that the first leg of the Devaluation has already hit. One leg hit in the March of 2000 with the stock market crash and the end of the tech bubble. Another leg, linked to 9/11 hit in late 2001, while another leg hit during the summer of 2002 with corporate scandals. Since then, things have stabilized. There has been no real growth. The devaluation is not over yet, though. I'm thinking that the next one will be a severe one, perhaps followed by a mild shock. The next one should combine with the emerging psychology of elder Boomers, making it a large one. There should be a few mild aftershocks.
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er
What if the emerging "last-act urgency" mentality of midlife-going-on-elderhood Boomers combines with the emerging "risk-aversion" menality of young-adult-going-on-midlife Xers?!?!? . . . and what's more all of that combines with the emerging community-oriented spirit of first wave Millennials?!?
- First wave Boomers entering early 60's +
First wave Xers entering mid 40's +
First Wave Millies entering early 20's =
High and Growing Potential DOOZINESS !!!
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
Corporate Tax Bill Clears Major Hurdle
Corporate Tax Bill Clears Major Hurdle
By MARTIN CRUTSINGER, AP Economics Writer
http://story.news.yahoo.com/news?tmp...orporate_taxes
At first glance I think "Corporate welfare", am I wrong? There MUST be better ways to recharge American business.
Born 8.22.78
Re: Corporate Tax Bill Clears Major Hurdle
To be honest, I think a catastrophe is unavoidable now. So any actions taken to "recharge American business" at this point is just going through the motions. This is very likely to have been true if Gore were President right now too, though I think Bush's tax cuts made it unnecessarily worse in the long run.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
That's my vote, too. I expect China's loosening of the tie of the yuan to the dollar will contribute, if it isn't the catalyst itself.A Dollar Panic knocking things down fast.
Paul Krugman predicted a liquidity crisis within five years. That was two years ago. Stand by.
Marx: Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.
Lennon: You either get tired fighting for peace, or you die.
Paul Krugman comes across to me as a little tweaked out, like he needs a drug fix or something. A tad shrill. But he may very well be right, eh?That's my vote, too. I expect China's loosening of the tie of the yuan to the dollar will contribute, if it isn't the catalyst itself.A Dollar Panic knocking things down fast.
Paul Krugman predicted a liquidity crisis within five years. That was two years ago. Stand by.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
Will a "great devaluation" be gladly self-inflicted?
- A Time to Come Home
Some Parents Quit Working to Be Around More -- When Their Kids Are Teens, Not Toddlers. That May Be Good Timing, Experts Say
By Lynn Crawford Cook
Special to The Washington Post
Tuesday, October 12, 2004; Page HE01
When Pat Kloehn, 49, a Silver Spring mother of two, quit a job she enjoyed at CNN to stay at home with her children, the lifestyle change had a certain familiarity. It was the second time Kloehn had stepped off the career path to become an at-home mom.
Kloehn, whose children are 13 and 17, says, "The first time, I did it because I felt I wasn't having any quality time with my daughter. I didn't spend enough time with her to even know her likes and dislikes. I wanted to have another child, but I wanted to be the one to raise them, not a virtual stranger."
Gladly!
--Croak
Gladly? Hmm, is Betty Friedan still around? If not, I do believe she just rolled over, to the left of course, in her grave upon hearing a "radical" liberal say that. :wink:Gladly!
--Croak
Betty Friedan is still alive and kicking. She was born in 1921, so she is 83.Gladly? Hmm, is Betty Friedan still around? If not, I do believe she just rolled over, to the left of course, in her grave upon hearing a "radical" liberal say that. :wink:Gladly!
--Croak
I want people to know that peace is possible even in this stupid day and age. Prem Rawat, June 8, 2008
In a way, I kinda think that much of the "risk aversion" mentality has already emerged. I would say that it arrived in the March of 2000 with the stock market crash and the end of the tech sector. Not that I don't think that we will see more shocks related to it, but I think it is there. The fact that the stock market has gone nowhere in the past two or so years is indicative of the risk aversion mindset, especially since the worst days are supposed to be behind us.What if the emerging "last-act urgency" mentality of midlife-going-on-elderhood Boomers combines with the emerging "risk-aversion" menality of young-adult-going-on-midlife Xers?!?!? . . . and what's more all of that combines with the emerging community-oriented spirit of first wave Millennials?!?
As for the Boomers, I wouldn't call it a "last act urgency" mindset that will contribute to a financial reckoning. The "last act urgency" is what will create the political crisis. Perhaps, a better word for this is "reality". What happens when "reality" sets upon Boomers? It's been setting in slowly. However, we have not had a real flashpoint related to Boomers, although one could say that it already started with Xers. Boomers don't WANT to realize that they are in a world of feces because they know full well what the consequences will be. Eventually, the financial situation will get to a point in which Boomers will collectively think, "I can't do this anymore," for whatever reason, but mainly thinking of their children. Many are perhaps waking up, but the question is, when will it become a critical mass to cause a major tsunami? Even if the regeneracy is already in full swing because of political issues, the flash point could still wait.
As for the Millies, I don't see how they could have a real stake in all of this. They will merely be the ones who experience the effects of a financial crash.
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er
Welcome to Green Lobster!
I couldn't have said it better myself:
http://www.lewrockwell.com/north/north310.html
WPBFNews.com
A Federal Inflation Conspiracy?
Influential Bond Guru Bill Gross Says The Government Is Intentionally Understating The CPI -- And What A Howl That Has Raised
Subscribe to BusinessWeek
Pimco bond-fund manager Bill Gross has done it again. With his October investment outlook, titled "Haute Con Job," Gross has taken on the government's statisticians and Fed Chairman Alan Greenspan. He accuses them of purposefully underestimating inflation to make the economy look stronger than it is and keep Uncle Sam's costs artificially low.
In the two weeks since Gross's thesis appeared, critics have roared, government statisticians have laughed out loud, academics have expressed disbelief, and portfolio managers have scratched their heads. But everyone has read it. "It has been the talk of the market over the past couple of weeks," says Mike Englund, chief economist at research firm Action Economics and a frequent contributor to BusinessWeek Online.
Gross struck a nerve because he offers an explanation for what seems to be a growing point of confusion among the general public: Why are personal expenses rising so quickly when the government's consumer price index is rising at just 2% to 3% a year? The typical American household budget has seen major price hikes this year for health care, food, energy, and college tuition, points out Peter Cohan, a management consultant and author in Marlborough, Mass. "There is just no way the CPI is reflecting the actual increase in costs that the typical American family faces," he says. "It doesn't pass the smell test."
"RUNNING AMOK." Case in point: One restaurateur in Pennsylvania e-mailed BusinessWeek Online in response to a recent story citing tepid inflation statistics: "Being one who considers himself 'in the trenches,' what the heck is everyone (government, business publications) talking about inflation being kept in check? Talk to the folks down here to get the real deal. Inflation has been running amok for a year and a half."
According to Gross, the government is "fudging on inflation" by adjusting many of the prices that go into its calculation for improvements in quality (for example, a standard-issue corporate laptop computer has declined in price in the past five years, but it also has a lot more memory and capability overall). Gross also says the feds are adjusting for the fact that if the price of beef goes up, people eat more chicken. Therefore, it doesn't matter so much if a steak costs more. Economists call this phenomenon "substitution bias."
Due to these adjustments, Gross figures inflation is really about a percentage point higher and gross domestic product about a percentage point lower than official statistics. Such an error would have huge ramifications for government payouts due for Social Security or TIPS (inflation-protected bonds). It would also affect bond prices and interest rates. He calls the lower levels of official inflation "a con job foisted on an unwitting public by government officials."
OR IS IT OVERSTATED? For most economists and portfolio managers, however, Gross's arguments are pure heresy. David Kotok of Cumberland Advisors called the fund manager "unduly and extremely harsh," in an Oct. 1 e-mail to clients and leaped to the defense of government economists who "are highly skilled professionals who take their work very seriously" and "do not engage in governmental conspiratorial activities of the type Gross suggests."
Action Economics' Englund says academics have been studying this question for over a decade and have sophisticated research to back up the need for adjustments. "It is irrefutable that some adjustments have to be made for quality," he says, even if their size is open to healthy debate. Ironically, he says, much of the discussion before Gross's missive was that inflation is overstated and that the adjustments don't go far enough.
Right or wrong, Gross's argument has portfolio managers thinking, which could ultimately affect the market, even if the government doesn't change its methodology. Bob Sitko, lead portfolio manager for USAA Investment Management's private-account business, says one of his analysts brought the piece to his attention. "It's a tricky issue, and I don't feel equipped to adjudicate the issue [Gross is] raising," he says, but he believes Gross and others who have voiced this concern may generate some response from the Fed.
WRATH, RIDICULE, AND CREDIT. And Sitko says the debate has spurred him to do some deeper thinking about the way productivity increases in Corporate America have contributed to low inflation. He worries now that business reluctance to spend on new technology could suppress productivity growth and lead to more inflation in the future than would otherwise occur.
While Gross has raised wrath and even ridicule, he deserves credit for addressing head-on a central economic paradox that many ordinary folks are wondering about. The truth about the inflation number is probably somewhere between his claims and those of his critics, but based on the reaction Gross is getting, he's clearly asking the right question.
Bob Gross: Haute Con Job.... Pimco Investment Outlook
http://www.pimco.com/LeftNav/Late+Br...O_Oct_2004.htm
"To announce that there must be no criticism of the president, or that we are to stand by the president right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public." -- Theodore Roosevelt
Economist Says Mood Wave About to Crash
Here is another doomsday article about the economy.
Economist Says Mood Wave About to Crash
By alex roslin
Publish Date: 21-Oct-2004
When a young Karl Marx predicted in the 1840s that capitalism was going to self-destruct, he didn't say when. Most of his followers gave up hope a long time ago.
But now the holdouts can take heart. An influential U.S. stock analyst who studies long-term economic cycles says the world is in the beginning phase of a financial collapse that will make the Great Depression look like a hiccup.
"I think we're already in it. We're rolling over into a deflation very much like it were 1928 to 1930, but it's going to last longer," says Robert Prechter, author of Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression.
On the phone from his office in Gainesville, Georgia, Prechter says that, like the 1930s Depression, the coming meltdown will cause political turmoil around the world, including an eruption of wars, secessionist struggles, and extremist movements. He believes the downturn will see a fascist or libertarian president elected in the U.S., and he also has bad news for those who thought Quebec separatism was dead.
"Secession and conquest are common political results of bear markets. Quebec is on a long-term track toward secession," Prechter says.
"It's the beginning of a very long period of conflict, unfortunately. We're only at the beginning of the downtrend of mood here, so you don't see it quite strongly in the economy yet or even in the world political scene. But you can tell there's been a change."
Prechter is not a raving antibusiness doomsayer. Politically, he is a smallgovernment libertarian. He started his Wall Street career as an analyst at Merrill Lynch. He rose to prominence in the late 1970s when, in the middle of a decade of economic stagnation, he announced that the stock market was poised to explode. Prechter was ridiculed for his optimism, but it turned out he was right; the markets entered an unprecedented boom. In 1989, the Financial News Network (now CNBC) named him the "financial guru of the decade", and he became president of the U.S. National Market Technicians Association in 1990.
Prechter says market booms and busts are based on long-term trends that are reflected in everything from skirt lengths to rock lyrics. His research on these "mood waves" has led to some uncanny market calls for his clients at Elliott Wave International, his market-advisory service. In 1984, he won a major U.S. stock-trading championship, setting a record with a 444-percent rate of return in four months.
In an updated version of Conquer the Crash released last fall, Prechter wrote that a series of huge waves had just crested and was starting to tumble down in a kind of "perfect storm" for the economy.
Prechter believes that 2000 was an important year. The world saw the dot .com stock crash, but something even more ominous also happened. It was the end of a so-called supercycle, a wave of economic expansion that had started in 1932 during the low point of the Depression. Prechter believes that five of these supercycle waves form a "grand supercycle". When one of these babies ends, run for cover.
The last grand supercycle hit bottom in 1720. That was the miserable year that saw history's worst-ever stock conflagrations--England's South Sea Bubble and France's Mississippi Scheme. The two crashes saw spectacular speculative manias based on the promise of riches from the New World come apart amid revelations of fraud and illusory profits. Both countries were left virtually bankrupt and entered downswings that lasted 60 years.
The hard times set the stage for the American and French revolutions of the 1770s and 1780s, depressions in the 1790s, the Napoleonic wars of the early 1800s, the end of the feudal order, the rise of industrial capitalism, and the ascension of the United States as a new world power.
Out of this mess, a new grand supercycle emerged that saw 200 years of dramatic economic expansion. Prechter divides this cycle into five periods: three supercycles of economic growth interrupted by two downward waves of depressions, 1835 to 1842 and 1929 to 1932.
This grand supercycle also ended in 2000, Prechter says. That means we are poised for a collapse worse than anything since 1720. The 9/11 attacks and the U.S. invasion of Iraq are just a whiff of the turmoil still to come, he says.
"You can see we're already involved in wars. This is the early part of the trend. Just multiply it out a few more times and that's what it'll be at the bottom," Prechter says.
"As the mood deteriorates, you get a waxing of both fear and anger, and those things generally require expression in some way or another."
Prechter readily acknowledges that his views are way outside the Wall Street consensus and that he has made mistakes in some of his previous predictions. (Most famously, he wrote in 1995 that the end of the grand supercycle would happen that year; he now says he was only off in his timing.)
What makes Prechter's forecasts troublesome is that Wall Street is starting to agree that the economy is in for some ugly times, even if no one will go as far as he does. The financial press is full of articles that say the glory days of the 1980s and 1990s are over and that this decade will be a throwback to the economic doldrums of the 1966-1982 era.
"I don't think anything like a smashup is around the corner, but we're in a troubled economic time," says Doug Henwood, a progressive economist who edits the Left Business Observer monthly newsletter.
"So much stimulus has been thrown at the economy, and it should be doing a lot better than it is. The potential for disruption is large. We could really have a serious problem."
On the phone from his office in Manhattan, Henwood says he has followed Prechter for years and is dubious about his talk of mood waves and supercycles. "It sounds like astrology," he says, laughing.
Henwood also disagrees with Prechter's view that an economic bust-up is inevitable. "Someone like Prechter is coming from a very right-wing political position. They don't think governments can manage crises, sort of like the orthodox Marxist point of view," he says.
But Henwood also acknowledges that he often finds himself turning to Prechter's analyses to understand the economy, especially after the 2000 crash. "Prechter may be onto something," he says.
"You could say the U.S. is topping out. Its day in the sun is over, and maybe China is going to be the wave of the future. There is some sense that the era of American domination might be ending."
On the other hand, Henwood doesn't believe the coming downturn will be as bad as 1929. Rather, he thinks North America will see something like the long, wrenching deflation that Japan has struggled with since 1990. (Deflation is a nasty state of affairs in which prices go down and no one wants to buy anything because they think it'll be cheaper tomorrow.)
Japan has spent the past 15 years trying in vain to restart its deflationary economy after an 80-percent crash in the Nikkei 225 stock index and a collapse in housing prices.
One of the biggest problems facing the U.S. and Canada, says Henwood, is record personal debt, brought on by historically low interest rates and two decades of stagnant wages. In 2002, the average Canadian's debt was 98 percent of his or her disposable income, compared to 56 percent in 1984.
A sign of the dangers came last February when Alan Greenspan, chairman of the U.S. Federal Reserve Board, issued a chilling statement. He warned that two huge U.S. government?sponsored mortgage institutions, Fannie Mae and Freddie Mac, had accumulated so much debt--US$1.75 trillion--that they were vulnerable to an economic downturn. The failure of the two companies could spark a financial crisis, he said.
"People contracted debt on the assumption that the low interest rates are going to stay that way," Henwood says. "When the rates go up, they don't realize how much they are going to pay."
The low rates have led to a housing bubble that could burst if rates go up too much, Henwood says.
Henwood's warnings are echoed by a growing number of analysts in the financial press who predict a painful downturn in 2005 and 2006. Their concerns are based on yet another kind of wave that is expected to crest after the U.S. presidential election in November, the so-called presidential cycle.
This four-year cycle is so named because of how the economy typically expands in the third and fourth years of a presidential term and contracts in the first and second years. The cycle exists because U.S. administrations usually juice up the economy prior to elections, only to slam on the brakes afterward with interest-rate hikes and spending cuts.
It's no coincidence that some of America's biggest market downturns started the year after an election--1929, 1937, 1973, 1981. This time around, things could be worse than normal because the explosion of personal debt has left the economy essentially teetering on the edge of a precipice.
"I totally agree with Robert," says Ian Gordon, vice-president of Vancouver brokerage firm Canaccord Capital and author of the Long Wave Analyst newsletter. "We're repeating the depression of the 1930s, and in some ways it's going to be more difficult because of the record debt," Gordon says on the phone from his office.
"He [Prechter] is predicting that we're going back to the 500 years of the dark age. I don't want to think about that. What I predict is the destruction of the middle class. Essentially, their retirement plans are going to be worthless."
Not all experts are as pessimistic. Marc Lee, an economist in the B.C. office of the Canadian Centre for Policy Alternatives, cautions that it's impossible to predict the economy's future. "It's kind of like guessing at the weather," he says on the phone from his Vancouver office. "You can't know, and anyone who pretends they do know has drunk the Kool-Aid."
But Lee still calls Prechter's scenario "plausible" because of the debt time bomb. "A major ramp-up in interest rates would hurt a lot of people. If we saw a one-, two-, or five-percent rise in interest rates, then all of a sudden people wouldn't be able to make their payments and would lose their homes. That certainly is the doomsday scenario nobody is talking about," he says.
Jim Stanford, an economist with the Canadian Auto Workers Union, disagrees with Prechter's forecast. He says that although the stock markets are unlikely to do well this decade, this won't necessarily hurt ordinary Canadians because most stocks are owned by the rich and the wider economy is reviving nicely.
"I tend to agree the stock market is certainly in for stagnation and possibly worse than that. [But] what happens on Bay Street doesn't necessarily affect Main Street," Stanford says from his Toronto office.
"I don't think it's a crisis of capitalism. The people who manage capitalism have, for the most part, figured out how to do it. If capitalism ends, it will be because people have had enough of it, not because it collapses of its own accord."
Back in Gainesville, Prechter says that governments are powerless to stop the coming crash and no one will be immune, even those who don't own any stocks. "When the market falls a long way, you always get an economic contraction," he says.
He advises clients to keep their assets in cash, government bonds (preferably Swiss) and gold, pay off debt as fast as possible, and avoid risky investments. When the economy hits rock bottom, it'll be a great time to snap up real estate and stocks at bargain prices.
"Protect your resources, and if you're smart enough make money from it," Prechter says. "I'm trying to tell people, 'Get safe.' Everyone else who claims to be an optimist is just telling people, 'Throw your money at risk. Buy more stocks at this ridiculous price. Buy more land on margin.' I think that's risky action.
"All I'm telling people is, 'Take a vacation. Keep your money safe.' That's not a doom-and-gloom message. I think that's a message to keep people happy and hopeful."
"The urge to dream, and the will to enable it is fundamental to being human and have coincided with what it is to be American." -- Neil deGrasse Tyson
intp '82er
I don't see leveraging yourself silly to buy a house with an interest only adjustable loan at a wildly speculation-driven price expecting continuing annual 70% returns on the original equity as "risk aversion". "Settling down", maybe. "Risk aversion"? No. Right now there are zillions of hopeful Xers doing the above.In a way, I kinda think that much of the "risk aversion" mentality has already emerged. I would say that it arrived in the March of 2000 with the stock market crash and the end of the tech sector. Not that I don't think that we will see more shocks related to it, but I think it is there. The fact that the stock market has gone nowhere in the past two or so years is indicative of the risk aversion mindset, especially since the worst days are supposed to be behind us.What if the emerging "last-act urgency" mentality of midlife-going-on-elderhood Boomers combines with the emerging "risk-aversion" menality of young-adult-going-on-midlife Xers?!?!? . . . and what's more all of that combines with the emerging community-oriented spirit of first wave Millennials?!?
My feeling is that when Xers (esp. Spicoli wavers) realize that real estate is now just another Nasdaq style speculative frenzy, their donning of true risk aversion will make things really, really, ugly.
I tend to agree.
A major difference in our POV's is that I don't see us as 4T yet. Where you're waiting for a regeneracy, I'm waiting for a trigger. I like the "reality" concept you use. The Boomer-side War Baby cuspers are already hitting and passing 60. The Aquarian wave overall is staring 60 in the face. The elder phase is on their minds. I see it big time in my '44 parents and beyond. Their collective behavior in midlife has ill prepared them for their last act on the stage of life. And as you said, this reality is creeping in on them, not just plain ol' mortality, as if that weren't bad enough.
It's not the stake I was concentrating on. It was the dynamic. And I think Millies will play an integral role in the dynamic that sets the 4T on it's way. The Cabbage Patch wave is either entering or standing on the threshold of young adulthood. Their communitarian tendencies are going to be felt and ripple through society.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
Re: Economist Says Mood Wave About to Crash
Sounds a bit like Mike Alexander!
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.
