By The Tim on July 28, 2010
Here is your open thread for the mid-week on July 28th, 2010. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Posted in Open Thread | Tagged open_thread
Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.
Townhouse construction starting again at a site that was dormant for at least a year. Bellevue Way.
Anomaly?
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I just posted a link to the recording of last night’s episode of my weekly economics radio show.
http://surkanstance.blogspot.com/2010/07/this-week-on-bear-radio-gold-as.html
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I see that an auction for 5 year treasury notes today broke all expecations for demand, even though the yields were only 1.796%.
This is a flashing red sign of growing deflation. All this demand for T-bills is further evidence that the great wave of credit destruction is growing steam and that investors continue to flee to percieved safety. I wouldn’t at all be surprised to see T-bill drates drop a lot more in the next few years.
http://www.cnbc.com/id/38446055
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By Sniglet @ 3:
Expecting further drops off of cyclical lows is a pretty poor investment strategy, just like expecting further gains off of historical highs – no matter what happened in Japan
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Even if interest rates do rise at least there is some preservation of capital with investments of treasuries vs other asset classes that could potentially see significant drops in valuations (e.g. real-estate, stocks, etc).
Also, I tend to think that when EVERYONE is advocating a particular investment strategy that the opposite tends to be the better choice. These days almost no one is suggesting you buy treasuries. Heck, even Nasim Taleb (the “Black Swan” himself) is saying that everyone should be 100% short treasuries. It is hard to find an article anywhere advocating that investors pile into t-bills.
This leads to an intriguing paradox. If all the investment advice is suggesting that individuals avoid t-bills, who then is buying them?
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By Sniglet @ 5:
corporations have records amount of cash and the savings rate skyrocketed during the recession.
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new study out says the government prevented 8.5 million jobs from being lost.
In Study, 2 Economists Say Intervention Helped Avert a 2nd Depression
http://www.nytimes.com/2010/07/28/business/economy/28bailout.html?src=me&ref=business
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Fun with Glenn Beck and infographics…
http://www.ritholtz.com/blog/wp-content/uploads/2010/07/GoldlineGlennBeck4.jpg
Enjoy.
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RE: pfft @ 7 –
Even the 8 million Jobs Lost is a Joke Pfft
We all know once you take a hamburger flipping job after being replaced with insourced/outsourced labor for half wage rates; you’re still counted as gainfully employed. Use documented U6 BLS unemployment data and that 8 million you reference is just another MSM exageration. That’s the type of data the Great Depression was historically measured too, U6 [includes severely under-employed].
Have you hung out with the younger “Y” generation lately [they tell me there are no jobs]? Have you talked to recently retired people that urgently want back in to the workforce, because of the zombie 1.7% 5 yr locked money federal treasury interest rates, they can possibly get at in 5 years [LOL], after they reverse mortgage their house, so they can get medical attention and eat?
Trying to morph the current uncontrolled population debt in America as a good thing, is like saying a nuclear explosion is good for you….LOL
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Krugman?
“The most confused of any putative authorities are the academic economists, lost in the wilderness of their models and equations and their quaint expectations of the way things ought to go if you can tweak numbers. These are the people who believe with the faith of little children that if you can measure anything you can control it. They will go down in history as the greatest convocation of clowns ever assembled, surpassing all the collected alchemists, priests, and vizeers employed in the 1500 years following the fall of Rome.”
Our economy at large?
“This compressive deflationary collapse is not the kind of cyclical “downturn” that we are familiar with during the two-hundred-year-long adventure with industrial expansion – that is, the kind of cyclical downturn caused by the usual exhalations of markets attempting to adjust the flows of supply and demand. This is a structural implosion of markets that have been functionally destroyed by pervasive fraud and swindling in the absence of real productive activity.”
“We’ve generated too many future claims on wealth that does not exist and has poor prospects of ever being generated.”
http://kunstler.com/blog/2010/07/what-is-it.html
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RE: Scotsman @ 10 –
Scotsman, There’s Some Economists, Like the Democrat Dr. Roubini, I Respect
And I’d include you in that group too :-)
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By Scotsman @ 10:
kunstler is not a credible source for anything.
KUNSTLER THOUGHT Y2K WAS THE END OF THE WORLD
http://peakoildebunked.blogspot.com/2006/05/305-kunstler-thought-y2k-was-end-of.html
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RE: Sniglet @ 5 –
I agree that there is little or no incentive to buy into the stock market or Real Estate. Who would want to buy a mortgage today as an investment? Let’s say the mortgage has a much higher return than 2%, or 4%. Would you buy it, today?
How about a stock based on hard assets, of equipment, factories, the Real Estate it all sits on? Does that seem safe today?
Honestly, is there any where in the world where this seems like good investment strategy?
I think it would be much better to gamble on which economy will come out of this massive debt burden.
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From- A Dozen questions For Michelle Malkin:
9. What’s the one thing you would do as President “just because you could”?
MALKIN: Appoint Chuck Norris as White House press secretary.
Oh yes. Yes!
http://www.humanevents.com/article.php?id=38292
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RE: David Losh @ 13 –
So True
After paying 5% mortgage interest, home owner dues, property taxes and maintenance [etc, etc], buying flat priced or declining priced real estate is as good an investment as a new car….LOL
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RE: RoflCatDown @ 8 – I got a good laugh out of that one. I’d like to see similar flowcharts for Sleep Number Beds and Oreck vacuums.
Regardless of how one feels about any of these entertainers, one should realize that they are in the business of hawking goods, not enlightenment.
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RE: softwarengineer @ 15 –
Really, that wasn’t the point.
Investors have very few options, today, for all of that cash that is squirreled away. Where would you invest? Any of you.
sniglet has made a case for deflation. It’s a new term, and concept for me, but I’ve learned to embrace it. In that case of deflation it leaves few options for investment.
Would you buy currencies, today, or gold, stocks, mortgage backed securities, or the promise of future earnings in a corporation? I wouldn’t. I wouldn’t buy Real Estate today until it did cash flow, with stable, cheap, rent. It costs money to maintain property, and then you have this new group of renters. Good Gawd!!!
Where would you find growth industry with every new idea being beaten to death with the old Republican Guard bad mouthing anything that hasn’t been tried a million times?
We’re stuck. Low interest bonds seem like the way to go.
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By softwarengineer @ 15:
not everyone buys a house strictly on it’s ROI. people buy houses to live in.
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By pfft @ 18:
And once they buy them, some people actually expend money on the house, knowing that it will only ultimately return them a fraction of their investment in the improvements.
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