Showing posts with label Depression. Show all posts
Showing posts with label Depression. Show all posts
Tuesday, November 9, 2010
Has The Fed Done It, Again?
Click on the title to link. The short answer is, yes. This is an article I found today by Jim Jubak which adds to the foder of what we posted yesterday. The Fed's, in our opinion, have no clue what they are doing and have made a huge mistake in flooding US dollars into the economy (unless, of course, you want to devalue the dollar). This is a huge issue that is coming down the pipe, people. You need to educate yourself on this so you are prepared. We do not mean to sound gloom and doom, but this is a major concern.
Monday, November 8, 2010
Will The Fed Self Destruct?
Click on the title to link. The fact that the Feds are flooding the economy with $600 billion to "revive" the economy will, in our opinion, only kill the economy. Why? Because you cannot devalue the dollar like the Feds are going to do with their plan. Inflation will go through the roof, rates will go up, the cost of goods will go up, people will have to spend more to get less, etc. This is a stupid move by the Feds.
And just to be clear, it does not matter whether you are a Rep or Dem. You better wake up to reality regardless because this is a bad move by the Feds that may show temporary, early signs that are positive. But the storm is coming (unfortunately).
And just to be clear, it does not matter whether you are a Rep or Dem. You better wake up to reality regardless because this is a bad move by the Feds that may show temporary, early signs that are positive. But the storm is coming (unfortunately).
The Jobs Picture Continues to Worsen
By Robert McHugh, Ph.D.
November 6th, 2010
Let’s look at some of the Fundamentals of the economy which eventually leak into the market at some future equilibrium price in the future:
The Bureau of Labor Statistics, a division of the Labor Department, announced Friday, November 5th the results of their employment survey and statistics for the month of October 2010. Using just their numbers, they reported that non-farm payrolls rose 151,000 in October. However, they goosed this figure by 61,000 make believe, guestimated, assumed, non-counted fictitious jobs they presume were created by new businesses they think started up, net of businesses that closed down. That brings the non-farm payroll figure down to 90,000. But, of that 90,000 reported new jobs, 35,000 were in temporary service jobs. So, if we take that figure out, we are down to 55,000 new jobs created in October. However, the U.S. needs to create 150,000 new jobs every month just to accommodate population growth, which means that once again, job creation fell short by 95,000 in October. In other words, the employment picture got worse.
The BLS reported that the unemployment rate, by their convoluted calculations, remained at 9.6 percent, 14.8 million good folks out of work. However, they purposely chose to not count 2.6 million unemployed folks who wanted work, looked for full time work within the past 12 months, but did not look during the most recent 4 weeks for one reason or another. For 1.2 million of those 2.6 million, the reason was they were so discouraged, they figured, “why bother.” The BLS 9.6 percent figure would have risen to 11.28 percent by including those 2.6 million, no arguing the truth there. That is really the number that should be reported. But worse, the BLS does not count the underemployment rate. There were 9.2 million folks who wanted to work full time, but were denied that opportunity involuntarily, by having their full time hours cut back, or by settling for a part-time job while they continue their search for full time work. If we add those good folks to the unemployment ranks, we find that the underemployment rate was 17.2 percent. That means more than one out of every six employable people were either unemployed or stuck in a part-time job when they wanted full time work.
Then there is the immeasurable group of folks who have full-time work, but in a job that is below their skill level, and at a pay rate below what they had in previous full-time work. Add to them those who have full time work on salary (do not qualify for hourly overtime pay), but work more hours now than they did before to cover the responsibilities of fellow workers who got laid off, but also did not get a salary increase. Not sure how many of these good folks are out there, burning out, giving up quality of life just to keep their jobs. Then there are those who have full time work, but have not been given raises because their employers suggested they be happy at their current wage or else they will be replaced by someone else willing to work the same job for less. Call this entire paragraph the “quality of work” work decline, which I do not believe anyone has a handle on. But if you talk with friends and neighbors, empirically there are a ton of folks in this category, a category whose numbers have increased dramatically since the Bear Market started.
All this adds up to an employment picture that is grim, and getting worse. The impact of course is on consumer spending, which accounts for 70 percent of GDP. The only solution out of this mess is a massive income tax rebate and tax cut, placing the QE2 Dollars the Fed is printing, into the hands of households, and not Wall Street where QE2 is going. If households got the money, they would lower their debts, and increase their spending. That increase in spending would boost small business revenues. Small businesses (who are responsible for 70 percent of hiring) would then start hiring to handle the increase in sales. Small businesses would then spend more, boosting sales of large corporations. Large corporations would then add jobs and go to Wall Street for capital. Wall Street’s profits would grow from investment banking operations, rather than the Trading accounts QE2 are designed to goose. At every level, government tax revenues would get a piece of the action. Voila, prosperity for all!
If I were king, this is what I would do. I would cancel QE2, as that will have no positive impact on the economy or employment. I would then do QE3, a one time only event. It would be designed to choke start a dead economy and deteriorating employment picture that will eventually lead to a Great Depression.
I would have the U.S. Treasury issue at least $5.0 trillion of new Treasury note securities, short to intermediate term, up to 5 years in maturity. This term is chosen because this economic “trickle up” plan would reap returns to the Treasury in the form of massive tax revenues by year five without the necessity to raise income tax rates, rather while actually lowering income tax rates, when this debt could be retired. I would then sell these $5.0 trillion of securities in the open market, with the Federal Reserve as buyer of last resort, providing demand if necessary. Even if the Fed buys all of these securities, it is okay because the Treasury will be retiring them within five years anyway from the increase in tax revenues it will accrue from a growing and prospering economy.
Then I would take that $5.0 trillion and rebate 1 to 2 years of income taxes to households (not businesses), with a minimum rebate of $25,000 since many folks were unemployed and do not have income over the past two years. Small businesses would end up getting the rebate because there are many who file subchapter S returns that flow to household tax returns. I would then require that half the rebate be used to pay down debt. This would result in stronger financial balance sheets for households and lending institutions. Banks getting their loans repaid would see their non-performing assets decline, and see their loan portfolios decline. That would improve their capital ratios and their liquidity. In conjunction with improved household financial positions, this would put banks in the mood to be accommodative in lending practices, which would help the economy. This would strengthen the FDIC’s reserve position as fewer banks would fail.
Households would then take the rest of the money, and feel more confident about the future, and likely spend on items they have been holding back on due to necessary austerity. This would boost small business sales, which would result in job creation to accommodate the increase in sales. This would increase small business’ demand for the products and services of large corporations. Large corporations would then turn to Wall Street firms for capital and loans, boosting Wall Street’s profits, not from Trading schemes courtesy of the Fed, but from growth in aggregate demand, the economy. Local, State and Federal government entities would get a piece of the action at each level, increasing their tax revenues, allowing them to retire debt and increase infrastructure spending which would create more jobs.
This results is prosperity for all, a growing pie, growing aggregate demand. With the increase in tax revenues, the Treasury then retires the $5.0 trillion of newly issued debt that kick-started this economic recovery plan. The Fed sells its securities back to the Treasury, and the U.S. Dollar retains its value.
This will not happen, because both political parties seem intent on solving economic problems with a top-down approach, where they give trillions of Dollars printed out of thin air to Wall Street who then take the money and earn increased Trading Account profits with mega-purchases and profit-taking sales of stocks and other financial instruments, like some wealthy drunk at the casinos. A great deal of this money will get destroyed, disintegrate at a coming stock market plunge, and the wealthy Wall Street Trading machine will end up leaving the gambling table broke once again, with all the money from the Fed gone for good, leaving a trail of a devalued Dollar, rising unemployment, falling home prices, failing banks and businesses, bankrupt families – the next Great Depression. That will lead the Central Planner’s to the bright idea where sovereign nations merge into a new Union of Western States, including North America and Europe, in an attempt at one world government they falsely hope will fix the mess they created. Unfortunately this is probably the path we are on.
November 6th, 2010
Let’s look at some of the Fundamentals of the economy which eventually leak into the market at some future equilibrium price in the future:
The Bureau of Labor Statistics, a division of the Labor Department, announced Friday, November 5th the results of their employment survey and statistics for the month of October 2010. Using just their numbers, they reported that non-farm payrolls rose 151,000 in October. However, they goosed this figure by 61,000 make believe, guestimated, assumed, non-counted fictitious jobs they presume were created by new businesses they think started up, net of businesses that closed down. That brings the non-farm payroll figure down to 90,000. But, of that 90,000 reported new jobs, 35,000 were in temporary service jobs. So, if we take that figure out, we are down to 55,000 new jobs created in October. However, the U.S. needs to create 150,000 new jobs every month just to accommodate population growth, which means that once again, job creation fell short by 95,000 in October. In other words, the employment picture got worse.
The BLS reported that the unemployment rate, by their convoluted calculations, remained at 9.6 percent, 14.8 million good folks out of work. However, they purposely chose to not count 2.6 million unemployed folks who wanted work, looked for full time work within the past 12 months, but did not look during the most recent 4 weeks for one reason or another. For 1.2 million of those 2.6 million, the reason was they were so discouraged, they figured, “why bother.” The BLS 9.6 percent figure would have risen to 11.28 percent by including those 2.6 million, no arguing the truth there. That is really the number that should be reported. But worse, the BLS does not count the underemployment rate. There were 9.2 million folks who wanted to work full time, but were denied that opportunity involuntarily, by having their full time hours cut back, or by settling for a part-time job while they continue their search for full time work. If we add those good folks to the unemployment ranks, we find that the underemployment rate was 17.2 percent. That means more than one out of every six employable people were either unemployed or stuck in a part-time job when they wanted full time work.
Then there is the immeasurable group of folks who have full-time work, but in a job that is below their skill level, and at a pay rate below what they had in previous full-time work. Add to them those who have full time work on salary (do not qualify for hourly overtime pay), but work more hours now than they did before to cover the responsibilities of fellow workers who got laid off, but also did not get a salary increase. Not sure how many of these good folks are out there, burning out, giving up quality of life just to keep their jobs. Then there are those who have full time work, but have not been given raises because their employers suggested they be happy at their current wage or else they will be replaced by someone else willing to work the same job for less. Call this entire paragraph the “quality of work” work decline, which I do not believe anyone has a handle on. But if you talk with friends and neighbors, empirically there are a ton of folks in this category, a category whose numbers have increased dramatically since the Bear Market started.
All this adds up to an employment picture that is grim, and getting worse. The impact of course is on consumer spending, which accounts for 70 percent of GDP. The only solution out of this mess is a massive income tax rebate and tax cut, placing the QE2 Dollars the Fed is printing, into the hands of households, and not Wall Street where QE2 is going. If households got the money, they would lower their debts, and increase their spending. That increase in spending would boost small business revenues. Small businesses (who are responsible for 70 percent of hiring) would then start hiring to handle the increase in sales. Small businesses would then spend more, boosting sales of large corporations. Large corporations would then add jobs and go to Wall Street for capital. Wall Street’s profits would grow from investment banking operations, rather than the Trading accounts QE2 are designed to goose. At every level, government tax revenues would get a piece of the action. Voila, prosperity for all!
If I were king, this is what I would do. I would cancel QE2, as that will have no positive impact on the economy or employment. I would then do QE3, a one time only event. It would be designed to choke start a dead economy and deteriorating employment picture that will eventually lead to a Great Depression.
I would have the U.S. Treasury issue at least $5.0 trillion of new Treasury note securities, short to intermediate term, up to 5 years in maturity. This term is chosen because this economic “trickle up” plan would reap returns to the Treasury in the form of massive tax revenues by year five without the necessity to raise income tax rates, rather while actually lowering income tax rates, when this debt could be retired. I would then sell these $5.0 trillion of securities in the open market, with the Federal Reserve as buyer of last resort, providing demand if necessary. Even if the Fed buys all of these securities, it is okay because the Treasury will be retiring them within five years anyway from the increase in tax revenues it will accrue from a growing and prospering economy.
Then I would take that $5.0 trillion and rebate 1 to 2 years of income taxes to households (not businesses), with a minimum rebate of $25,000 since many folks were unemployed and do not have income over the past two years. Small businesses would end up getting the rebate because there are many who file subchapter S returns that flow to household tax returns. I would then require that half the rebate be used to pay down debt. This would result in stronger financial balance sheets for households and lending institutions. Banks getting their loans repaid would see their non-performing assets decline, and see their loan portfolios decline. That would improve their capital ratios and their liquidity. In conjunction with improved household financial positions, this would put banks in the mood to be accommodative in lending practices, which would help the economy. This would strengthen the FDIC’s reserve position as fewer banks would fail.
Households would then take the rest of the money, and feel more confident about the future, and likely spend on items they have been holding back on due to necessary austerity. This would boost small business sales, which would result in job creation to accommodate the increase in sales. This would increase small business’ demand for the products and services of large corporations. Large corporations would then turn to Wall Street firms for capital and loans, boosting Wall Street’s profits, not from Trading schemes courtesy of the Fed, but from growth in aggregate demand, the economy. Local, State and Federal government entities would get a piece of the action at each level, increasing their tax revenues, allowing them to retire debt and increase infrastructure spending which would create more jobs.
This results is prosperity for all, a growing pie, growing aggregate demand. With the increase in tax revenues, the Treasury then retires the $5.0 trillion of newly issued debt that kick-started this economic recovery plan. The Fed sells its securities back to the Treasury, and the U.S. Dollar retains its value.
This will not happen, because both political parties seem intent on solving economic problems with a top-down approach, where they give trillions of Dollars printed out of thin air to Wall Street who then take the money and earn increased Trading Account profits with mega-purchases and profit-taking sales of stocks and other financial instruments, like some wealthy drunk at the casinos. A great deal of this money will get destroyed, disintegrate at a coming stock market plunge, and the wealthy Wall Street Trading machine will end up leaving the gambling table broke once again, with all the money from the Fed gone for good, leaving a trail of a devalued Dollar, rising unemployment, falling home prices, failing banks and businesses, bankrupt families – the next Great Depression. That will lead the Central Planner’s to the bright idea where sovereign nations merge into a new Union of Western States, including North America and Europe, in an attempt at one world government they falsely hope will fix the mess they created. Unfortunately this is probably the path we are on.
Wednesday, October 13, 2010
Recession or Recovery?
Click on the title to link. This is an interesting article as it talks about how this "recovery" sure feels and looks like a recession. Don't kid yourself into believing that we are in "recovery" mode. We are smack-dab in the middle of a recession still. Do you feel recovered? This is one of the first articles we can remember seeing that actually admits to this.
Adding more reason to believe this...the Fed Reserve is desperate to get the economy going. So much so that they are talking about printing 6-7 trillion dollars worth of money to flood the economy with cash in the hopes that it will stimulate people to spend. The problem with that stupid idea? Inflation will sky rocket, rates will go with it, and the value of the dollar will plummet. They are in a mess and don't know what to do.
Adding more reason to believe this...the Fed Reserve is desperate to get the economy going. So much so that they are talking about printing 6-7 trillion dollars worth of money to flood the economy with cash in the hopes that it will stimulate people to spend. The problem with that stupid idea? Inflation will sky rocket, rates will go with it, and the value of the dollar will plummet. They are in a mess and don't know what to do.
Wednesday, August 11, 2010
The Depressed Real Estate Market
Click on the title to link. This is a good article about how the real estate market is not budging despite the fact that rates are at 50 years low. This is not surprising since we saw that the last round of first time buyer incentives really did not do a whole lot to stimulate the market. The fact that rates this low is not moving the market is not a good sign. It shows that people are sitting back and waiting to see what happens, mainly because of our current Administrations fiscal policies (in our opinion). We have been saying that reports of recovery have been grossly overstated; this is a great example of why.
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Labels:
Depression,
Economy,
home buyer,
Home Buying,
Home Sells,
Housing,
Real Estate,
Recession
Labels:
Depression,
Economy,
home buyer,
Home Buying,
Home Sells,
Housing,
Real Estate,
Recession
Friday, July 30, 2010
Higher Inflation
Inflation is going to be going up. It is inevitable because the government has to do something to try and pay for all the garbage legislation they are passing. When you combine higher inflation with higher taxes you get poor people with no jobs. This is a major issue staring us in the face. Here is a quote by Federal Reserve guy, ...
what we're trying to do is encourage output growth and production, and through that channel, get inflation to move higher.Not good at all, but it's comin'.
Thursday, July 29, 2010
Foreclosure Activity Rising
Click on the title to link. Another article that should not surprise those of you reading this blog regularly. Foreclosures are going to continue to get worse for another year, roughly. Albuquerque is still in a slow recovery stage. The market is still down here and will continue to be so until buyers increase. However, folks are not very interested in buying right now because they are in a holding pattern. The vicious cycle continues.
Cities Still Waiting For Recovery
Click on the title to link. Here is the article that ties in with the interactive map we just linked to. We find it funny how so many articles have talked about our "recovery", yet here is an article saying the exact opposite. Again, false positives...
And let us tell you first hand, the purchasing of homes right now is still way down. Are people buying homes? Of course, but not many. And the higher end market (homes over the 400K range, roughly) are sitting for at least a full year, if not longer. We see it getting worse (possibly much worse) before it gets better.
So what's our deal, are just "half empty" folks? Not at all. However, you have to objectively look at what is happening in our country right now and face reality. We don't see much good at this time.
And let us tell you first hand, the purchasing of homes right now is still way down. Are people buying homes? Of course, but not many. And the higher end market (homes over the 400K range, roughly) are sitting for at least a full year, if not longer. We see it getting worse (possibly much worse) before it gets better.
So what's our deal, are just "half empty" folks? Not at all. However, you have to objectively look at what is happening in our country right now and face reality. We don't see much good at this time.
Shrinking Home Prices
Click on the title to link. This is a great interactive map of the country showing you what areas are still in decline (almost all), and what areas are in recovery. The good news...compared to many other areas, Albuquerque and the surrounding area has done fairly well (although it's all relative). The bad news...although this map indicates some areas are in recovery, we still contend they are false positives because we are not coming out of this faltering economy anytime soon. This Administration and Congress are leading us into financial bankruptcy as a country, mark our words. No country, institution, or person can spend like we are; it is not sustainable.
Thursday, July 22, 2010
The Fast Approaching Credit Cliff
Click on the title to link. This is a huge issue that is coming at us like a freight train, yet nobody is talking about it. One of many reasons we believe the worst of this economic crunch is yet to come...
Tuesday, July 6, 2010
Our Country's Greatest Threat...Debt
Click on the title to link. This is a great article on several levels.
1. It explains in simple terms why our country is facing a potential collapse. We absolutely cannot keep up this spending; it will sink us. This article does a good job of explaing that and shows why it is the biggest security threat to our great nation.
2. It furthur goes on to explain how private resource must be part of the solution. What does that mean? Equity in one's home is private resource, and folks need to be ready to utilize that equity when the government comes out saying they cannot afford all their unsustainable public aid policies.
Home Equity Conversion Mortgages (HECM, or Reverse Mortgages) are going to become a tremendous key to accomplishing this "unlocking" of one's equity. It cannot be viewed as a last resort but a necessary component to our coming financial mess. Stand by for more info as we continue to discuss HECMs.
1. It explains in simple terms why our country is facing a potential collapse. We absolutely cannot keep up this spending; it will sink us. This article does a good job of explaing that and shows why it is the biggest security threat to our great nation.
2. It furthur goes on to explain how private resource must be part of the solution. What does that mean? Equity in one's home is private resource, and folks need to be ready to utilize that equity when the government comes out saying they cannot afford all their unsustainable public aid policies.
Home Equity Conversion Mortgages (HECM, or Reverse Mortgages) are going to become a tremendous key to accomplishing this "unlocking" of one's equity. It cannot be viewed as a last resort but a necessary component to our coming financial mess. Stand by for more info as we continue to discuss HECMs.
Friday, July 2, 2010
The Psycho(logy) (of) Pricing Your Home
Click on the title to link. Probably the single biggest thing we hear and see as to why homes are not selling (besides the fact that buyers are buying) is that people are psycho about what they want to sell their home for. We know, we know, you have put blah, blah, blah into the house, and it has to be worth X. Well, that just aint how it works.
This is a good article regarding the psychology behind pricing your home. Read through it and let us know what you think. What questions does it raise in your mind? Remember this, reality is a bitter pill to swallow. You cannot price your home on what you wish it was worth, what you need for it, or what you would like to get out of it (unless of course you want it to sit there for sale). If you want to sell your home then it will get what the market will bare, and what comps dictate it is worth. Right now, it's just may make you psycho.
This is a good article regarding the psychology behind pricing your home. Read through it and let us know what you think. What questions does it raise in your mind? Remember this, reality is a bitter pill to swallow. You cannot price your home on what you wish it was worth, what you need for it, or what you would like to get out of it (unless of course you want it to sit there for sale). If you want to sell your home then it will get what the market will bare, and what comps dictate it is worth. Right now, it's just may make you psycho.
Thursday, July 1, 2010
Deflation Warning
This is not an advisory, but a warning...deflation is on its way. In all seriousness, we cannot predict the future (obviously). However, you should know this is not something new coming from this blog. We are in no way doom and gloom, but we are realists. We just cannot sustain our current spending policy; it is literally impossible. Something has to give, and it is going to give way to deflation, in our humble opinion.
Click on the title to link to a short, easy to read article regarding this. Just be educated and aware because it will certainly effect the real estate market even worse.
Click on the title to link to a short, easy to read article regarding this. Just be educated and aware because it will certainly effect the real estate market even worse.
Monday, March 8, 2010
US Crisis Brewing Abroad
Click on the title to link. This is another interesting article about the crisis abroad with Greece and the UK. It will almost certainly impact the US in a substantial way. Check it out.
Monday, February 22, 2010
Is a US Crisis Coming?
Click on the title to link. This is a real issue for the US right now, and it could have serious consequences. We still contend we are not even close to being out of the woods, despite what the media wants you to believe. Is it better? Yes. Will it get worse? Probably.
Friday, November 13, 2009
The Risks of Walking Away...
Click on the title to link to this video. This is a great video about the "risks" of walking away from your house and letting it go into foreclosure.
Thursday, November 12, 2009
Tuesday, October 20, 2009
Permit Fall Signals Housing Weakness
Click on the title to link. We believe it is premature and irresponsible for anybody to say we are out of this recession at this point. As we have said before, many of the positives out there are directly derived from stimilus efforts. Those are "false positives". And until they get the real estate market stabilized (and it is not even close) then we cannot and should not claim we are out of the woods.
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Labels:
Crystal Ball,
Depression,
Economy,
Home Buying,
Mortgage,
Payments,
Real Estate,
stimulus
Labels:
Crystal Ball,
Depression,
Economy,
Home Buying,
Mortgage,
Payments,
Real Estate,
stimulus
Friday, October 9, 2009
The Ugly Truth
This is an article about our rediculous budget deficit. Sad.
Click on the title to link.
Click on the title to link.
Friday, October 2, 2009
Unemployment Continues to Rise
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