Click on the title to link. This is an interesting article about the potential money lost if you wait for the market to "bottom" before buying. The money lost here would be in the form of a higher down payment because of an increased home price. The bottom line (no pun intended) is don't get greedy. The market is so down that now is the time to buy a house. And with rates as low as they are, it is the perfect storm (as we have said before).
If you need a Realtor then you need to call us first. Do not use somebody unless they are referred by someone you trust.
Showing posts with label Crystal Ball. Show all posts
Showing posts with label Crystal Ball. Show all posts
Wednesday, March 9, 2011
Friday, January 21, 2011
Prepare for Inflation Fight
Click on the title to link. Another article talking about the growing inflation problem. Jubak is a good writter. Check it out.
Friday, November 19, 2010
The Wild Ride of 2011
Click on the title to link. This is a very interesting article by Jim Jubak. He has quickly changed his tune about 2011, aligning more with our thoughts that it is not looking good for the near future. Check it out.
Monday, November 8, 2010
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.
Monday, August 23, 2010
Another Market Crash?
Click on the title to link. This is an easy to read article on some signs that indicate the possibility of another market crash. Our two cents...it's definetely coming.
Thursday, August 5, 2010
Is There A Housing Shortgage Looming?
Click on the title to link. This is an interesting article about how there may actually be a housing shortage in the "nearer" future for some markets. What's interesting is they put New Mexico in that category because they say we are one of the more stable and "recovered" markets. Although we do not fully agree or see that (see yesterday's posts), New Mexico is a very desirable state for folks to live in and we could foresee a future shortgage due to the fact that new construction is so very low right now. But we are not close to that being the case, in our opinion. Still an interesting article, however, that is not far fetched.
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Labels:
Crystal Ball,
Economy,
Home Buying,
Home Sells,
home value,
Housing,
Real Estate,
Recession
Labels:
Crystal Ball,
Economy,
Home Buying,
Home Sells,
home value,
Housing,
Real Estate,
Recession
Tuesday, August 3, 2010
Signs of Life?
The front page of the Albuquerque Journal's Business Outlook yesterday read, "Signs of Life". It was regarding the recent report by Moody's ranking Albuquerque among the top 10 healthiest commercial markets in the nation.
The opening sentence reads, "The tide may have turned for the local commercial real estate market." Well you will have to excuse us if, once again, we seem to be dousing this fire with "reality water". Is the commercial market better in Albuquerque? It probably is. However, the signficant moves in our market have come from industrial, limited-service hotel and full-service hotel. We would not exactly say those are indications that "the tide may have turned." But why not? Because the article also says, "The office market is where commercial real estate in Albuquerque clearly reveals substantialdistress from the economic recession." This is, in our humble opinion, are far bigger indicator of what is really going on with the commercial market here.
They all work together, don't get us wrong. But when you have such a huge portion of the commercial market as office space that is going to have a more substantial effect than some of the other areas. It's good news that those other areas are increasing. But it is equally bad news that the office market is struggling so greatly. As the article also says, "...market health is a relative commodity in commerical real estate..." It just seems a bit irresponsible to say "the tide may have turned" when clearly many, many people are still nose deep in it. We know several people who would not only say the market has not turned, but it is worse. As the article said itself, market health is a relative commodity.
The opening sentence reads, "The tide may have turned for the local commercial real estate market." Well you will have to excuse us if, once again, we seem to be dousing this fire with "reality water". Is the commercial market better in Albuquerque? It probably is. However, the signficant moves in our market have come from industrial, limited-service hotel and full-service hotel. We would not exactly say those are indications that "the tide may have turned." But why not? Because the article also says, "The office market is where commercial real estate in Albuquerque clearly reveals substantialdistress from the economic recession." This is, in our humble opinion, are far bigger indicator of what is really going on with the commercial market here.
They all work together, don't get us wrong. But when you have such a huge portion of the commercial market as office space that is going to have a more substantial effect than some of the other areas. It's good news that those other areas are increasing. But it is equally bad news that the office market is struggling so greatly. As the article also says, "...market health is a relative commodity in commerical real estate..." It just seems a bit irresponsible to say "the tide may have turned" when clearly many, many people are still nose deep in it. We know several people who would not only say the market has not turned, but it is worse. As the article said itself, market health is a relative commodity.
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.
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.
Tuesday, February 9, 2010
Growth Won't Hack It
This is a good article by Jim Jubak shedding some more light on the vastness of our financial issue. Click on the title to link.
Friday, October 23, 2009
Is Housing Doomed?
Click on the title to link to this article. We have said many times before...unless the housing market is stable then we cannot claim we are out of this recession. This article is a great summary as to why we are not even close to a housing recovery and, thus, why we will not be out of this recession anytime soon (despite what the "experts" say).
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Labels:
Crystal Ball,
Economy,
Foreclosure,
Home Buying,
Home Sells,
Mortgage,
Real Estate,
Recession,
Short Sale
Labels:
Crystal Ball,
Economy,
Foreclosure,
Home Buying,
Home Sells,
Mortgage,
Real Estate,
Recession,
Short Sale
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 2, 2009
Unemployment Continues to Rise
Visit msnbc.com for Breaking News, World News, and News about the Economy
Friday, September 25, 2009
Tax Credit Deadline Looms
Click on the title to link. We don't have a whole lot to say that we have not alreay said. If this does not get extended you should know two things:
1. You need to find a house no later than mid Oct. If you find one later you may be OK, but we would not risk it. Underwriting times are going to extend longer due to an increased rush at the end.
2. If this is not extended the housing market will drop like a lead balloon.
Hang on, here we go...
1. You need to find a house no later than mid Oct. If you find one later you may be OK, but we would not risk it. Underwriting times are going to extend longer due to an increased rush at the end.
2. If this is not extended the housing market will drop like a lead balloon.
Hang on, here we go...
Thursday, September 24, 2009
Another Housing Slump?
Click on the title to link. This is one of the reasons we believe that if the Feds do not extend the First Time Buyer tax credit the market will fall off a cliff. It will not be a gradual decline. It will be steep and fast. Again, we are not big on the government poking their big nose in, but they got one out of however many right; and it is an important one at this point.
Tuesday, September 22, 2009
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