You are most welcome!

#106

Take a look at this link, Jonathan. Its organized enough for me to not have to explain the state the U.S. economy is in and its certainly not at 400% intergovernmental debt to GDP or they’d be bankrupt 5 years ago. As for the rest, expect interest rates to rise as I explained before ’cause we like deficits and real estate bubbles now.

And for Peter Weiner who wrote:

“I will put this as politely as I can;

I don’t know what drugs you are on, but I’d like $200.00 worth!”

There are times Peter, when I wish I’d have $200 bucks worth of the drugs I’ve done in the past cause there have been some good ones, but those times are fleeting at best… the last post you alluded to of mine wasn’t one of those occasions. These days, its DHA, Ginko and Phosphatidyl Serine (I have to be careful as I don’t eat red meats) and I purposely digress, you’ll have to look this stuff up yourself.

And speaking of what this latest stuff does for me…

“There is no economy in the US unless there is credit growth and that has been dependant on ultra lax lending standards predicated on phantom equity from inflated housing and asset prices which were dependant on said easy credit. Credit will remain restricted for a loooooooong time as unemployed people no longer qualify.”

For how long? I said 2 years, Peter. What, are you thinking 2 decades? Do you really believe it will take an eternity for housing valuations to increase, for GDP to turn positive, for market forces to correct and rebound? And while real estate rebounds from an oversold market, you can’t see it for what it is… credit growth?

“Ain’t coming back, nowhow, nowhere soon.”

I said 24 months. (If you want to go precise, I’d say 24 to 29 months and both east and west is covered in that timeframe) I didn’t say tomarrow. And just for the record to all who question my logic. It won’t be manufacturing that drives the U.S. back to an economy of health. Infact, if their economy rebounds, it won’t be normal fundamentals that drive it. Oh, I do believe automakers will have rebound, that I can see and most readers could agree with this as well. Chevy will bounce back and Ford will still be there. Electric cars will begin to fill the highways and the future does hold some innovative change. Financials will strengthen precisely because they will and have tightened their own lending practices.

But one thing that you seem to have totally missed Peter, (as a self confessed drug user would probably do) is that housing valuations are oversold nationally and have nowhere to go but up. And since, Peter, its just as true in the U.S. that close to 80% of the average persons equity is in their own homes… a major pop in real estate valuations creates a major pop in personal equity and that undeniably creates a wealth effect.

This wealth effect is enough on its own to drive any nation out of a rut regardless of a hollowed out manufacturing sector and a large chunk of ruined financials because in case you haven’t picked up on it, a major pop in real estate valuations creates jobs and rescues financials that should otherwise be allowed to fall broken to the rocks below. Look what it did for George Bush. Since 2001, real estate valuaitons rose to the point that 1.4 million new homes were being built every year. Add condo’s to the equation and they were building accomodations to match a 35 year turnover, the profits were that good. Their polices created a commodity/construction/real estate boom/financials boom/bubble and no one was complaining while everything was appreciating in value, but where are they now?

And while virtually all real estate bubbles end badly, the Obama administration doesn’t have to create one the way Bush did to create this “wealth effect” simply due to the glaring fact that they inherited a real estate bottom.

By the way, where have you been? Weren’t you there in the recession and market bottom of 03′, where Bush stoked an already overheated RE market to pop their nation out of a stagnant 01′, 02′ economy? Interest rates dropped in 01′ before that to create the same “wealth effect” and the big difference in 03′ is that his administration had to generate even higher valuations than before so the Bush administration got rid of any other hurdles in their way of creating an all out Real estate bubble and was it madness? Yup. Anything to win another term including war and 911 I guess. It was madness because it didn’t address the root of their ugliest of problems and even someone with a similar past such as yourself should know what that is.

The U.S. simply stopped making stuff.

And until their nation legislates their corporations back home to manufacture instead of outsource it all oveseas and gets protectionist to internalize their economy again and they do fix healthcare and take some of the for profit components out of it, they won’t be the powerhouse they once were. The U.S. has clear ugly systemic problems and until they address them, they will continue to be an empire in decline but folks (and you can include yourself in this, Peter), what is the timeline of a decline of an empire?

6 weeks? 6 months? 6 years? A decade? Two decades? More? How long did it take Rome…. How long does it take to go from world superpower to 3rd or 5th or 10th place… Most of us are guilty of expecting things to happen right away from systemic failures and poorly managed governments. Much of the feedback governments do are years and in some cases decades away in terms of implimenting causal effectual policies…. but real estate valuations… folks, that is something that can be manipulated as quickly as the Bank of Canada dropping rates to zero creating a real estate bubble here.

How long did that take?

And what kind of wealth effect has it created in the face of ugly economic fundamentals in our own back yard?

And what kind of hangover will we face from it in the end… cause all we have to do is look south to see our own future.

Are readers understanding this yet?

The increase was fuelled primarily by higher gasoline prices. Still, economists took this as a sign that consumers are feeling more confident.”

Higher gasoline prices means we are “feeling more confident”

WTF ? I’m not confident, I am pissed off!

Can you believe what the newspapers print these days?

That was one of the most comprehensive and intelligent analyses I have read. Thank you.