Space and Beyond

Listening to the GOP debates and now the back and forth between the candidates can make ones mind numb. Especially since the two main runners are Romney and Newt (yes I feel that Gingrich has made it to the status of a one name superstar). I could go on forever talking about politics and what I feel about each candidate but there was something said today that reconfirms a mindset that I just can't agree with.

Maybe it's a generational thing. Maybe it's my love for sci-fi. Maybe it's my hope that the world can be a better place and one day the people of earth will see that, like it or not, we are ALL from the same planet.

Newt stated that "in his second term as as president there will be a permanent settlement on the moon, and it will be American".

Avoiding the absurdness of the fact that Newt would have a second term as president, I'm more concerned about this American settlement on the moon. Whether or not we actually NEED this settlement is a different debate that time will tell. What disturbs me is that if we get to the advanced state as to be able to have this permanent settlement and could leave our home rock, Earth, is that we'd still be saddled with antiquated ideals that have held our world apart for at least the last 5000+ years.

I am and always will be a true red, white and blue American. But I also see that our world has become much smaller over the past few decades as technology has brought people from all over the world together. It's amazing to me that in seconds I could be online with people from all over the world. I could jump onto my Xbox and be playing Gears of War with someone from NYC or London or even Iran or China.

I truly believe that as the world becomes smaller, old school war will become a thing of the past. I don't ever think we will have a conflict on the scale and scope of World War 2. We knew very little of what Germany was doing in early 1930. The average person couldn't tell you what countries or providences made up the USSR in the 70's and 80's. Compare that to now, we know when there's the slightest unrest in the middle of an African desert. We might not do anything about it but we know. Twitter and Facebook can topple a corupt regime in Egypt at the same time a lonely man in Calabasas downloads what would normally be illegal porn from his office computer... I mean check soccer scores from the EPL (that's right, whew that was close). Anyway, my point being the world is a much smaller place. I could understand hiding under your desk at school due to the threat of a nuclear attack from a nameless / faceless enemy, but would I go to war with Han from Korea that I play video games with online and who sends me bootleg movies?

How does all this fit into an economic blog? Well, because like it or not, we're in an world economy now. On a day to day basis we feel the affects of what happens in Europe and Asia. We've got 24 hour economic news channels. I can trade stocks all over the world from my iPhone at any time of day. If anything is going to bring the world together it's going to be money.

To have a permanent fixture on the moon would take a massive amount of money. It would also be tremendously risky. What any shrewd person would tell you would be to bring in different groups and spread the risk out. I'd hope that we'd also bring in the best and brightest for such an endeavor and that would mean bringing together people from where ever they may be from.

This is the next step of exploration not just to see who can plant a flag first. The moon already has an American flag. Does that mean we own it? I don't think so. Besides, unfortunately and sadly a corporation will probably claim or be given ownership over anything new that is discovered. More than likely it will be a multi national corporation.

To think that a man who is running for president wants the USA to own the moon scares me. What are we going to do with the moon when we can't even fix the problems we have at home? Or maybe he's thinking of a good place to divorce his 3rd wife and leave her on this moon settlement.

We've learn from the past, that to become great we must work together. A massive undertaking, like living on the moon, is going to take a joint venture. As we are becoming one economy and one society, we certainly shouldn't forget our roots and heritage, but we should put aside old xenophobic fears accept that we need to work together. Instead of an American settlement we should have a human settlement. Believe me, when the aliens come to take us over as slaves or steal Earth's natural resources (the ones we haven't polluted) they won't care which part of the rock we're from.

When Politics and Economics collide - MEGA POST

After watching the hysteria of today’s 500+ point drop of the DOW, I can’t just sit back and pretend that you can take politics out of our current economic conversation. Forever I was taught to not include my personal political views in discussions of politics because 1) you don’t want to alienate people from what should be a numbers conversation and 2) you don’t want readers and clients to judge you due to certain political views (I’m in the business to get as many clients, not turn off potential or current clients). But things have gotten so bad that it’s time to put some cards on the table.

Let me first say I’m an Obama supporter. I think he’s a very smart man. I like a million things about him, and his family, in a personal and social way. The biggest issue I have with him, which isn’t very different than issues I have with most Democrats, is that he either has no balls, lost them or sold them out. For his 50th birthday I hope he wished for his political balls to drop like a teenage boy going through puberty.

As for Republicans, I don’t even think that word describes the current party that opposes the Democrats these days. They’re so fractured that I’m confused when I hear various groups trying to describe what the Republican Party stands for in 2011. You’ve got Reagan Republicans, right wing religious Republicans, Tea Baggers, Birth-ers, Constitutional and about 10 other descriptions of what a Republican is / are. I don’t think any of these groups actually know what ‘true” republicans stand for. Take a conservative from 40 years ago and ask them to join one of our two parties now, I think they’d make a B-line for the Democrats.

The problem with the economy is huge. So huge that it’s not limited to what was just perceived as a United States issue or just a political ideals issue. What’s strange is that with each new economic disaster, the path to recovery or the question of what can be done seems to be easier to find. Today was a shock to the system when the DOW and almost all other markets took huge hits. Lots of news has come out that is surprising to many but in reality shouldn’t be as shocking as it is. Italy’s economic troubles, Greece’s issues and other EU countries are reporting such economic troubles that there is great fear that the EURO may be headed for a rollercoaster ride to which many felt that the Euro’s creation and the EU would shelter the whole from some of these problems of the parts. China’s eventual slowdown in growth shouldn’t shock anyone. How long can one country continue to grow and grow and the double digit pace that they’ve been growing (especially for a communist country) and not expect the party to finally be over and real governing has to take place. It’s like in sports, there are no problems for winning teams; but as soon as a team starts loosing, fingers are pointed, backstabbing starts and no one is happy with their contract or playing time. Winning, or in this case making money, hides all problems. What happens when the winning (or growth) slows down? How that is handled is even more important than when times where good. Japan, well lets face it, Japan would rather have had an attach from Mothra or Godzilla than deal with tsunamis and nuclear meltdowns right in the middle of their own economic stagnation.

If you’ve been reading my blog or spoken to me, I’m a huge jobs person. Obviously I’m no genius to say that America needs new, better and higher paying jobs. It’s so easy to say, that I hate to even type it, because it shouldn’t even need to be said. Apparently it does need to be said because no one is doing anything about it. Now this is where we start getting political.

What’s clear to me is that the Republican Party wants nothing to do with any success that Obama can have or might have. They’re doing every thing possible to keep our economy as bad as it is so that the jobs numbers and the real “working class” have a revolt against the president in the 2012 election. “They”; the secret “they” that run each side of the Dems and GOP, “They” on the GOP side know that they have no real contender for the presidency. Part of the reason is that the GOP is so fractured that there is no one person that can stand up and represent all the different factions. Especially when some of the factions are just plain crazy, such as the Glen Beck-ians or the Palin followers. “They” know that in the past no president that has had nearly as bad of an economy has every won re-election but the GOP has such a bottom of the barrel group of candidates that for them to win the economy has to be at or heading to an all time failure.

Don’t get me wrong, Obama isn’t doing anything to help himself. I’ve seen better negotiating skills from my five year old niece this weekend when I tried to pay her to make and deliver drinks to me during our family vacation. When GOP leader Boehner says gleefully that he got “98% of what he wanted” from the recent debt limit negotiations AND is still crying (you decided if I’m speaking literally of figuratively) that the Obama Whitehouse is the root of all our problems; he basically handed the president his ass on a plate. I’d rather think that this president is too smart for bully fights. He’s brought a sniper rifle to a nuke fight. He’s trying to involve all sides, thinking that he can reason with the “enemy” and that he’s actually in a debate / negotiation where both sides want what’s best for the country. In reality, the GOP just wants to blow up the president and the democratic leaders and don’t care how it gets done even if that means killing themselves in the process.

There was no question in my mind that we would raise the debt limit. Why, because Wall Street didn’t have a question about it. If there was any doubt, the months and weeks leading up to August would have seen huge shifts in the market to embrace the fact that were where going to not pay our bills for the first time ever. But there where no such signs and when the smart people came to the kids table and told them to quit all this bitching, the debt limit was going to get raised. (Yes, current drops in the Dow and other indices would lead you to believe this was a surprise, but let’s be real; the Dow is still over 10k and if there was a real scare we’d be at 5k) It’s something that has been done many times in the past and will happen again. Debt is a commodity and every country uses it to one extent or another. Just as debt has become a viable stock option that can be bought sold and traded (but this is going to go on too long anyway, let’s not go there). This was a hostage situation where hostage was itself. There was a gun being pointed at the US economy’s head by the GOP. Sure some out there said, pull the trigger, that’s just what we need to get back on the right foot. But these are just morons. Essentially saying, we’re not going to pay our biggest debts so that we can balance our books for a few years, and then once (and if) we do balance our books we’ll start paying back the debt that we ran up. I don’t think that would set well with our investors. Ask any of the banks (whom we should have let kill themselves in 2009) if they would agree to let mortgages slide for a few years and make no money off interest so that the public could get back on it’s feet and then start paying off the mortgage again. This is simple economics or better yet, street economics. Ask a drug dealer if we can have that ounce of pot, smoke it, in the meantime not pay them but when we get our check in next month, we’ll pay them back. I don’t think that would sit well.

But I’m droning on. The point was there was a fake crisis and the GOP was either ballsy or brilliantly using this fake crisis to 1) keep the money flowing to the rich (themselves and their backers) and / or 2) make the president look bad. At the end of the day, as Boehner almost said, they got both.

I’ve got no problem with socialized medicine. I’ve got no problems with raising taxes on people making over 200 – 250k in income by 3%.

*Let me stop right her to make a point that I talk about every week. There isn’t a person in the world whose Net taxable income is over 200k and aren’t in reality making at least double that. Even a half assed accountant will get someone whose making 300 – 400k look like the person or family is making less than 200k per year. Even if you are someone who gets straight W-2’d and taxes are taken out automatically out of your paycheck, there are thousands of ways for you to get some sort of refund; whether it’s housing interest deductions or small business losses or… you know, I’m not even going to get into it. Just look at the tax code book. It’s about 3 inches thick. There’s a reason for that, it’s because there are 1,000+ ways to not give the government money. And if you ARE one of the few that Makes 200k+ per year and have no deductions or creative accounting and your taxes get raised 3% (like the president proposes) then I’m sorry, find another line of work. We’re just talking about 3% or $6,000 on that 200k. If you’re already paying your 20-25% what’s another 3% so that you can live in the “best country in the world”. I think the real problem is that you don’t see what the initial or extra money gets you. I’ll leave this sidebar and topic for later or another post because the waste of tax dollars could fill up another 10,000 words.*

Back to what got me started, Politics and Economics. The politics have gotten so bad that they’re using our current economic problems to push political agendas. As I said, the GOP was holding a gun to our economic future. What the president fell for was the fact that they couldn’t pull the trigger. They had a hostage that needs to be kept alive. They can’t kill it and then give the dead body back. That would destroy their plans as well.

As always, Obama tried to reason with the GOP. Obama even tried to give the GOP a little threatening of his own, but that’s not him. When he set a deadline, it was more of a suggestion. “24 – 36 hours” and you guys better figure something out. Yeah that really scared them. Never does Obama start on the crazy left and work his way to the middle. (No, I didn't steal this from Bill Maher's latest show. I had this going since last week. Great minds think alike) The GOP starts from the crazy right, Obama starts from the middle and we end up in a generally conservative solution. To which the GOP still say they’re unhappy so Obama has to go even further to the right and basically give in to 98% of what the GOP wants. Frankly I think Obama and the Dems are lucky to get the 2% that’s left over.

I heard an economist listing all the troubles that the world economy is going through. It’s clear that the US isn’t the only country that has problems. But what was a silver lining was that they where speaking about how SOMEONE was going to have to be the leader of the recovery. With so many countries failing and others slowing down, there needs to be and will be a country that leads the world out of this mess.

That was inspirational to me because I feel that this is a golden opportunity for the US to regain its spot in the world economy but also regain its spot as the top world superpower. Someone’s going to figure out how to create new jobs and manufacture something that the world wants, why not let it be the good ole USofA?!?!

In my world things are great. Since the Treasury yields are what determine interest rates, the fact that the yields are so low, they are creating record low interest rates. What can we really learn from these low yield and high bond prices (yields and bond prices move in opposite directions)? It tells us that investors are willing to give us (the American people) money at very low interest rates. This means that the people that are investing in Treasury bonds are willing to take almost nothing as interest because they see that as a safer bet than investing in stocks or even in other markets around the world. Can I just say this was another reason we couldn’t just not pay our bills, we have to preserve our AAA credit rating. Even with an AA rating our treasuries are still a better investment than other stocks which are taking hits. With money coming in at such low rates, why not use that to further push along social and infrastructure projects that can put people back to work which would then create revenues via taxes and make the public buyers of goods instead of hoarders of money. Using the money that’s coming in via the treasuries why not earmark that money to fill up the many potholes in the city of Los Angeles? There is no lack of potholes that need filling and I’m sure we could find people to do this work. In a very short time you could see money being worked back into the system. Back in the day, there were endowments for the arts. This wasn’t just a liberal-hippy cash giveaway but an actual way to get creative people out there making money and creating something. During past recessions, photographers where sent to take pictures and make books. This seems like a waste on the surface but you’re giving an artist a job. Someone who would more than likely be unemployed or unemployable in this recession. They’re creating something that maybe will lead them to go out on their own on the next project because they now have proven their talents. They’ve also used their income to purchase cameras and computers to create these pictures. Then they’ve also spent money on the publishers / printers that produce these books. One job that on the surface seems so silly actually can create so many revenue streams for other business and possibly create a new small business owner down the line. And where did this money come from? Treasuries that only need to pay 3.8% as of 8/4/2011. It’s costing the government 3.8% to fund something that can generate 8% in sales tax alone. I’m sure I’m oversimplifying the process but it can’t bet that much further than what I’m talking about.

Why do we need jobs? So that people will spend money. That’s the goal. Forget that if people are working there are tax dollars to be made, the truth is that if people are working they can spend money on goods that then in turn make companies a profit which will hopefully mean that small business need to hire more people… I don’t know how it can be any clearer to how a strong economy grows. It’s not because the rich get to keep a few percentage points. If companies and individuals with great wealth get to keep what they’ve already made there’s no motivation or incentive for them to higher more people or put out that extra money. They’ll just keep it because the economy is bad and they either wants to cash in on that extra money or keep it incase things get worse. The joke is that if they sit on that extra money, things will get worse. Tax cuts do not work to stimulate the economy on the ground level. If anything they do the opposite.

Now giving the average worker a federal tax holiday or small business tax incentives to newly hired workers, that will get people to hire more and spend more. Imagine a tax cut that’s not on money that a millionaire has already made but for the average person taking home a paycheck, there isn’t a federal tax deduction on that paycheck for a month. Wouldn’t that put money directly into the worker’s hand? In turn, logic would tell you that they will spend that money back into the economy. Again, these seem like simple answers. But because politics are involved, things get complicated in a hurry.

The GOP doesn’t want these problems solved, especially by such “socialist” means because they want to be in office. My question to that is, if you screw up the economy so badly, that when and if you take over, what are you going to do if you do end up with the Whitehouse? We’ll be in a worse position than we are now. The only answers that the Republicans seem to want to push are the same old answers of tax breaks for the “job creators” or rich. At that point, we’ll have officially killed the middle class and have a two tiered caste system (which many people believe we’re in now).

The bottom line is that we need adults. The leadership on all sides is pathetic. I’m not very old, certainly not old enough to say, “In my time I remember”. But I can read. And when I read I find that not to long ago the winning or loosing of power was 2nd to what was best for the people of this country. Now it seems that the possession of power is more important to the politicians than the health, liberty and happiness of our country’s people. It’s now about keeping the job rather than doing it based on what the people voted for.

I used to think that the first 100 days of a presidency was important because that was supposed to set the tone for the new president but now I think it’s the only 100 days that a president has before he has to start worrying about the next election.

If anything (if you’ve made it with me this far); I hope you take away that it’s not one side or another that is hurting us right now. Sure there are social sides and ideas that I like better from one party than the other. That’s not what is important right now. We need LEADERSHIP. We need people to put aside their differences and figure out solutions and be able to enact on these solutions ASAP. We’re going to choke on our own political bullshit. I just hope someone smart comes along and gives us the Heimlich.

Fed meeting and changes

The Fed meet. China drops. The news ain't good. Sometimes I feel like we'd have just the same luck, when it comes to listening to the "experts", as we would letting Paul the octopus prognosticate our economy.

At least with Paul, if he's wrong he'll make some damn fine calamari or tako (my mother's favorite sushi)!!!

I really hate to sound like a broken record. It's not like I look forward to coming up with new and exciting ways to tell you that the economy sucks. Most of you don't need me to tell that to you anyway. It's like the idiotic weather announcements on the radio, I know what the weather is I'm driving in my car or can look out the window. The same can be said about the economy, just look at your bank account or ask a friend how they're doing financially.

The news from China isn't all bad. In fact I think you can take it a few ways. The headline on Marketwatch.com was that China isn't going to see double digit growth for a while. But that's just the headline. As I always preach, you've got to read the article. It seems that China itself maybe the biggest contributing factor to its slowdown. It is not news that China has money. I've spoken with people who live there. Over the past few years, China's biggest issue is how to spread the nations wealth without devaluing their own monetary system. If a government is flushed with money, they can't just hand out checks. As we know, that's just for us broken economies to do :). Ok, not so funny, but take a chill pill; I'm not the one who broke our economy.

As I was saying, what does a Communist government do with all this money? They invest in infrastructure. I've learned of programs where the government is actually building and giving their people new homes. I'm not talking about luxury homes but they're better than the man-made huts that many of the rurally people are still living in. This is just a small example of how the government increases the standard of living of their people without devaluing their currency or allowing the poor rise up in class (for good or bad depending on your political views). Their investment in lower and middle classes also allows them to spend money on stuff that is produced by the rich. In my view this is a type of trickle-up flow of money. But who am I, I'm sure there are a lot more complex things happening. The big news is that China is slowing down some of these investments and "rolled back some of its growth-accommodative polices". These actions are to prevent a bubble and then subsequent burst such as we've experienced. Say what you will about the Chinese, at least their government sees the damage that some of these financial bubbles can create; and while a few people make a lot of money, when it comes time for the bubble to bust many people are hurt.

In the long run it seems that China may be doing the best thing for itself. Only time will tell. Who knows how this will affect our relationship. I don't feel it will hurt us, but it will at some point annoy us because they might tell us no to something. Whether it is when we reach our hands out for money or look for foreign investments which we would expect to be doing better but their rules keep them from exploding. There does seem to be a yin / yang that goes on. The bigger the boom, the bigger the bust. So China is still in play but they seem to be purposely gearing back they're expansion so that they don't go with what we are going through.

That leads us to what the Fed came out and predicted. I look back to different Fed leaders claiming that we're not in big trouble and we should be more concerned with inflation and maybe it's time to raise rates, etc. Meanwhile we had just hit the tip of the iceberg and none of them, even the most radical thinkers were thinking that we'd still be in this hole. Many on the board thought that this depression was going to be a V shaped economy where we see a very hard drop but once all is said and done, we'd have a nice bounce back up. How wrong they are / where. More and more is this recovery looking like it's going to be an L shaped recovery.

Speaking with some of my sources in the foreclosure and shortsale departments, we might only be a quarter of the way through with the homes that will either shortsale or get foreclosed on. Frankly, the heads of these companies don't know what to do. There is such a lack of inventory and most of the homes that are out there are just crap. Either they're way over leveraged or have been sitting so long that people have destroyed them or the homes where crap to begin with and people are now not caught up in the whirling dervish of an exploding market and see them for what they are. Besides, you can't just buy a fixer at a "fair" price, fix it up for thousands of dollars and expect to flip it and make a profit. I'm not saying this is impossible but it's just extremely hard to do.

The other fact that I've noticed is that if anything does come onto the market that's half way decent it's being snatched up like crazy. But not only does it need to be in good condition but priced right as well. You can have a gorgeous house but if you're 50k over value, more than likely you're not going to get what you're hoping to get. people are not going to be putting in that extra money. Especially when financing is such where you're already putting down 20%. People don't want to put down 20% and then the 50k that to property is overpriced. This all leads to 1) crap on the market that just sits and gets worse over time or 2) you need to be in the right place at the right time to snag one of the good home which you might be stuck overpaying for if you really want it. These are tough choices.

Real Estate is such a vital part of our economy. It's one of the last things that we "produce" and sell ourselves. With the Real Estate market not looking good, and other factors as well, the Fed has increased it's projections of unemployment to almost 10%. Here in California, and already in many states, this is not something that's new. We need to get jobs and have jobs created. That's why I'm for stimulus that actually helps hit people. We've seen what the stimulus packages have done for the banks. They've balanced their books and they continue to do business as usual but they're not doing what they where supposed to do with that money, which was help lend to the common person and make loans easier to obtain. I'm not saying that they should go back to stated, 100% neg-am loans; but some of these hoops that the lenders are making even the best clients go through is outrageous. All of this is of the fear that the individual lenders having to buyback loans. Well in my opinion the Fed backing up Fannie and Freddie to buy loans should have taken that fear away and made the lenders more apt to actually LENDING. That didn't happen and now the Fed money has come and gone. I hope that there will be an extension of the Fed buying of Mortgage Backed Securities (MBS).

The Fed is now admitting that this economic downturn will last a while. That's the biggest thing that I got out of the meeting notes. I think we're in uncharted territories and that no one really has a way to get out of this. But like any problem, the first step is to admit there is a problem and deal with it head on.

Time will only tell if the steps that China is making are the right ones or maybe too conservative. Opposite of the Fed. Maybe they should be acting more aggressively instead of a wait and see approach for each half assed idea.

Low rates and a failing economy

Rates are low. Very low. Most people think this is good. As far as someone refinancing or purchasing a house right now, this is good. You're not going to find better rates.

The rates should stay low. Low confidence in the stock market and a lack of jobs is creating a perfect storm for people to shelter their money in treasuries. This pushes the yield down and should mean low rates for a while. Mainly because I don't see where the public or private sector will be creating any new jobs soon. Don't forget we still have a massive Real Estate problem and tons of inventory that the banks have not unleashed or pushed forward on foreclosing. We're far from the end.

The economy is not there. Anyone who tells you that this economy is turning around doesn't know what they're talking about. We're in for a long year. If we can truly put Fed money into "green" research or the creation of "ideas" that will be the best way for us to get out of this mess. Eventually the RE market will correct itself but we've got a long way and many ups and downs before that happens. It's going to take people putting research into new ideas and hopefully there will be a spark that will set off a product that will need specialized employees that can offer good paying jobs. What that spark will be or in what direction of manufacturing, I don't know. But I'm thinking in the way that the Dot.Com boom was in the 90's. Sure there where failures at the end but look what we where left with. iEverything, internet, the digitalization of information and a slew of other products and money earning opportunities.

Back to low rates, yes we have low rates. Now is the time to check into refinancing or if you've been waiting to purchase, start looking. The problem there is that the banks are so tight with the money and guidelines that it's making it near impossible to qualify. Don't be dismayed if you can't get a loan Today. The tightening of guidelines is reactionary to how loose the guidelines where. Eventually you'll see some changes to the positive. It might not seem like it now. It might seem like you hear no a lot more than you hear yes, but in time things will loosen up. Just like the job market, it just takes a spark. It will take a few risk minded investors to roll out a Stated program that makes sense, and if they're successful others will follow. But it takes time for these people to 1) have the balls to create a good program with guidelines that will allow it to succeed, 2) the program must succeed and turn a profit, and 3) both one and two will take time to develop and show success. Even in a perfect scenario, if all these dominoes fall the way they're supposed to, it could take months if not years. I'd guess, from the roll out of a new product to the sale of the loan to the time they can be analyzed and finally confirmed as a success and for other to start copying them; you're looking at a year?

Meanwhile who knows what will happen between now and then. It's scary but for some reason I think there is a light at the end of this pit we're falling in. It's not going to be a fun fall and I might not be able to see the light, but I feel that we know what direction we're going to need to go into. The problem is not everyone, especially the people who actually make the decisions like lawmakers and their advisers and lobbyists, can agree on the same path to take to get to the light. This is where we might find the most difficulty getting to the end. Without a good plan that everyone can latch onto, it could cause us to be lost longer than we need to be or can afford to be.

Happy New Year. What will 2010 bring?

First off, Happy New Year to all. I'm probably the last to wish it to you, and by now, hopefully the last.

Let me say, the worst part of any new year or new decade is putting the wrong year. You all must know the feeling of putting 0_ before everything. Now I've got to deal with putting a 1 then a number and no zero at all. Doesn't anyone feel bad for the zeros of this word? Anyway...

When the tides started to turn people generally felt that we'd be out of this financial mess by 2010. Even I thought things would be getting better. I'm not going to be totally negative. I feel that we're starting to see a little sparkle of light coming over the horizon but it's far off and slow moving.

There are a ton of new rules and forms that, at least for the Bear clients, are useless. I was reading one, and on it the form explains a 30 year fixed loan four different ways. These are supposed to protect borrowers not confuse them more. Whatever the changes are, they're just changes and like I said, Bear clients always know whats going on so I'm not worried just annoyed. But this is all for another time and post.

Rates are swinging like I wrote about earlier. A few weeks of the rates slowly moving up on speculation that Fed money would dry up has done a 180, as predicted, when over the past week the Fed has promised billions to GMAC and I'm guessing (totally guessing) that you'll hear that the Fed will continue to buy MBS.

Also, as everyone (except for people in the commercial business) they're getting hammered. An post on Calculated Risk had a good chart seen below about strip mall vacancies. You don't have to be a millionaire to own a strip mall and many small / family businesses occupy these types of spaces. Even in a bad neighborhood a strip mall is where locals go to get food, laundry, cell phones, local goods, etc. These are the kinds of "real world" figures that I'm always saying that should count more into figuring out the economics that are happening.



We've seen rate come back down of their recent swing up. I believe that we'll have a nice swing down similar to what happened a month or so ago. So anyone who hasn't locked in yet, now is a great time to get ready for when the rates do take their dip.

I hope that we're seeing positive numbers coming up in 2010. It seems that we will. But as anyone can tell you, the bubble we experienced took a long time to grow and pop. It will take a long time to get back to normal. I remember from 03 - 07 each year I'd get someone to come into my office and say, "this is it, its over. Get out of the business now while you still can." Not until the end of 2008, was it that we really started to feel the effects of the recession that loomed. If you tak even half of that example, we've still got another year to go until we start to level out and start to rise. Again, the rise is going to be very slow because of the new rules and regulations. These items would have been good while times where good so things didn't get out of control. But now they seem to just be getting in the way. Again, something for another post.

These last two post haven't been the Bear's greatest. I'll keep working on it. There is just so much that is going on even in this bad economy, I just want to share all the grim reaper news and ideas that I have. It's just that to see a little chance of recovery, true recovery, in a year or so is nice. I sure hope we don't find a way of messing it up.

August info

I find it strange that all of the sudden things don't look as good as the headlines made the economy seem to be for the last few weeks. Headlines like the FOMC sees a leveling out. That sounds good but even if we are leveling out, we're leveling out with unemployment around 10%+ nationally!! How long will we stay at that. Some states are as high as mid 20% for un and under employed.

The worst news and what seems to be buried when it comes out is that we're starting to see the mortgage mess hit A paper / prime borrowers. I read a scary stat that said that by the end of the year 50% of the homeowners, 50%!!!, will be upside down across the country.

The DOW might be up, but these are speculative indicators. It's up because people have thought or have been lead to believe things are getting better. For example; Cash for Clunkers. The program is already out of money and needed more. The government is basically giving down payments for new cars to be bought off of lots that the existing cars where just sitting.

This made auto sales look good. Cars are moving off lots and then the lots need to replenish their inventory. But will the auto makers hire back full timers or just seasonal part timers to pump out what they need to until the Cash for Clunkers run is over. There never seems to be a shortage of people when the government is handing out free money. What happens when that ends. Cars will sit again.

Demand?

I'm reading a lot today about the demand for products was up slightly more than expected. Some people will rally behind the fact that this has to do with the housing market possibly finding a bottom and people are spending more money. These would all be great things if they where true.

I personally see things a little different. It's always curious to me to hear people speculate on the market off of pure numbers and no where do they bring the human element into their calculations.

Let's touch on auto demand. Cash for Clunkers. Auto makers basically shut down production because no one wanted to buy cars. This in turn left a ton of cars on your local lot just sitting. All of the sudden the government comes out with this plan to give people free money for their old cars, which just happens to be enough for a down payment on a new car (when I say new, I mean one that's been sitting because no one else wants or can afford to buy it). Now you see a short term gain and demand for autos. Car lots are starting to need to refill their inventory. So car companies need to crank out some new cars again. Is this a long term solution or a short term fix. Will the people that they hire back be full time or only last a few months until the Cash for Clunkers is over, which that program has run out of money and the senate needs to approve another 2 billion dollars to keep it going.

This shows where you can have profits but in reality they are fake profits. This doesn't seem like a sustainable demand source. So I question the fact that this small spike in sales and demand is really a sign of an improving economy.

ups and downs

The Bear is back. Sorry for the delay.

Let's not waste time, let's get to work. First off, here is a quick link that just repeats everything that I've been saying for the past 2 months.

http://www.marketwatch.com/story/get-ready-to-pounce-on-lower-mortgage-rates

the bottom line is that the Market is crazy. I don't think anyone knows what they're doing and there is no clear answer or direction. It seems that even the people in the Fed that are supposed to be steering the ship are just hanging on to make sure we don't capsize.

I feel that we are in for a drop in the market and for news and REALITY peak its head. I don't know of one person or company that is doing well. I feel for every "good" economic indicator there are even more bad ones that are not talked about as much. For instance today it was said that the number of unemployment claims dropped, the fact is that new claims rose but people currently on unemployment have dropped mainly because their time was up. It's not like thousands of people got jobs last week. Their 12 months or 24 months or whatever the time frame they are under is up. That being said, yes there are less people on unemployment and now more that still don't have jobs and will be getting nothing. This should lead to more problems. Not very "good" after all, is it?

At least we can say, Go Lakers!!! Perfect scene yesterday. Ending the parade at the Coliseum is just like the government did during Greek times. Keep the masses in check by throwing a big party for them to go to. People must be out of work to have 500k+ show up on a Wednesday.

Something smells

I had this great post sitting for a few days but got so busy now it's outdated. Fortunately, I've been busy, unforunately you've missed my words of wisdom. Well here's a quick doozy.

I don't believe all this good economic news. I hope to god I'm wrong but it can't be true. From someone that in the trenches I see nothing but lower values and hard to get loans. I'll address a few issues and feel free to discuss with me more but here we go:

"They" say that home sales have increased. Yes, that's true, but those are of sales of homes in Palmdale and Landcaster that are foreclosures selling for 100k. And a lot of these are being bought by first time investors hoping to cash in, which won't happen and that's a whole other speech.

"Values have increased for the first time in...", bull shit! I'm having appraisal issues everyday about values being too high and appraisal reviews are cutting values all over the place. If you under price a sale soooo low that you get multiple offers and the end value is higher than what you originally offered, then yes "value" went up. But did it really, no because you started so low. Almost every deal I've done or heard about from reps, we're all having value issues. So I'm still seeing a decline.

"We're seeing signs that we'll hit the bottom in 2009". If I fall down a well, eventually I'll hit the bottom. If I'm not dead, I'll have a broken leg / knocked unconsious / AND STILL BE AT THE BOTTOM OF THE WELL!!! Is that anything to cheer about? How do I get out? How fast will it take me to get out if all my tools are gone and I've got morons trying to figure out how to save me?

I know this is a little depressing but it's the truth. I've got inside sources that have said that Countrywide employees have been told that the company made more money in the first quarter of 2009 than 2008. This is impossible. They're either cooking the books, ignoring tremendous loss, or using TARP funds to mask the true loss. How can it be even possible for a bank to say this?

My theory is that they want to make sure that they don't have more people killing themselves and get people to come to work in the morning. Again, hope I'm wrong.