June 3, 200916 yr As a sector of the economy, I think it is. But, I think there will continue to be local conditions that facilitate continued development, but we won't see that creation of cities out of nothing that marked the last decade. My in-laws are building right now outside Richmond, VA - but it makes sense because the nearby Army base is getting a lot of folks from the base being in a winner in the BRAC. I'd imagine northern Cincinnati will actually continue to grow because of the collapse of Dayton as a stand-alone economy. The WPAFB to Cincy corridor would seem to hold a lot of future potential.
June 3, 200916 yr Is it? I see little evidence of that where I live. They keep building and building (single family houses). Not as fast as before, but they are still building at an (un) healthy pace. A new subdivision was started last fall. Is it time for one of my periodic "Warren County monthly housing permit" graphs?
June 4, 200916 yr Is it time for one of my periodic "Warren County monthly housing permit" graphs? LOL !!! :laugh: No, I don't need a graph to tell me that houses are still going up on my street and surrounding ones. And they are selling too. Had friends in Lebanon recently put their house on the market, hoping to sell it so they could move into the subdivision of their desire. Their house sold much quicker than they anticipated. Then they could not find any houses for sell in their target subdivision. They were actively looking for friends to stay with while waiting for a house to come on the market. Fortunately for all of us, one did come on the market and they grabbed it right away. How often is this pattern being played out out across Ohio and the US at this time?
June 4, 200916 yr Author Is it time for one of my periodic "Warren County monthly housing permit" graphs? LOL !!! :laugh: No, I don't need a graph to tell me that houses are still going up on my street and surrounding ones. And they are selling too. Had friends in Lebanon recently put their house on the market, hoping to sell it so they could move into the subdivision of their desire. Their house sold much quicker than they anticipated. Then they could not find any houses for sell in their target subdivision. They were actively looking for friends to stay with while waiting for a house to come on the market. Fortunately for all of us, one did come on the market and they grabbed it right away. How often is this pattern being played out out across Ohio and the US at this time? Something tells me not very often. While building may be happening, I do know that both Butler and Warren are seeing some of the lowest building permit activities in years (and they are some of the main homebuilding regions in the metro).
June 4, 200916 yr Author Here is a nice chart showing outstanding mortgage debt's percentage of GDP since the early 1900s. Makes your realize why the FEDs are desperately trying to stop the housing bust and get it reversed. http://img410.imageshack.us/img410/7414/mortgagedebtpercentofgdh.jpg
June 5, 200916 yr Is it time for one of my periodic "Warren County monthly housing permit" graphs? LOL !!! :laugh: No, I don't need a graph to tell me that houses are still going up on my street and surrounding ones. And they are selling too. Had friends in Lebanon recently put their house on the market, hoping to sell it so they could move into the subdivision of their desire. Their house sold much quicker than they anticipated. Then they could not find any houses for sell in their target subdivision. They were actively looking for friends to stay with while waiting for a house to come on the market. Fortunately for all of us, one did come on the market and they grabbed it right away. How often is this pattern being played out out across Ohio and the US at this time? Something tells me not very often. While building may be happening, I do know that both Butler and Warren are seeing some of the lowest building permit activities in years (and they are some of the main homebuilding regions in the metro). I follow you guys all the time, but I have to pipe in with a question for CincyDad. (IMO: An increase in oil prices can change the chips fast for Butler/Warren Cty.) I have friends in Franklin and Monroe who say they would have a loss of upwards of 50-80 K if they sold right now. (These are houses built within the past 4 yrs.) Do you think they are blowing smoke? Only reason I ask is they keep talking about selling and I am curious to what you think of Monroe and Franklin.
June 5, 200916 yr a question for CincyDad.......in Franklin and Monroe who say they would have a loss of upwards of 50-80 K if they sold right now........are blowing smoke? Well, that's an interesting question..... I'll give you my opinion, but it's just my opinion. Butler/Warren counties really have 2 sets of communities... New and Legacy. The new communities (Mason, Springboro, Westchester, Liberty Township) are where all the people with jobs are moving, buying new homes. The Legacy communities- North (Middletown, Monroe, Franklin) are not attracting people at all, and in fact, have a severe brain drain as people leave after high school. They have been on a downward spiral for 3 decades now. Yes, there are some green sprouts in them, but the pace of decay pretty much outpaces any green that comes up. The Legacy Communities -South (Hamilton, Fairfield) are areas I am simply not knowledgable enough to comment on. So my thoughts here do not necessarily apply to them. I do not see house price appreciation in any of these communities going forward. The new communities have plenty of room to build, so builders will continue to outpace demand, thereby keeping resell values depressed. The old communities just have no prospects at this time for gentrification. Middletown was pinning its hopes on the new hospital, but it looks like that hope was misplaced. (the hospital was taken over by a Dayton group, and I suspect the trend will be for Dayton doctor's to come to MT part-time, thereby replacing MT-based doctors as they retire - plus the hospital is losing money - so I see a gradual exodus out of MT of what physicians remain). The school systems of the Legacy North group are in bad shape. Most people in the Butler/Warren area have children. When you have children, schools are everything. So people with a decent job avoid the Legacy-North cities. Since there is so much construction in the new communities, people will choose to live there, even if the jobs come to Monroe & Franklin. Franklin cannot compete with neighboring Springboro for residency. Monroe/Middletown can't compete with Liberty Township or Lebanon for that matter. Also, keep in mind the cultural differences between the 2 groups of cities. The legacy cities have a very working class mentality, or maybe something below that. They have not seen any new blood in decades, and tend to have a certain "we're good enough, stop saying you are better" mentality. They tend to look at the new cities with suspicions. The new cities, for their part, are composed of outside people moving into the counties. They tend to look down on the Legacy-North inhabitants. The two coexist in the same counties, but they do not intermingle. So are your friends off base when they postulate $50-80k losses on newer build homes in the Legacy_North cities? I tend to think they are on target for those communities. It's not so much about job location, but about competing with neighboring well-to-do towns that have the ability to quickly build lower-cost housing and take away any reason to live in a depressed nearby city. Face it... If Springboro builders start building $180- $200k houses (and they have plenty of land to do so), then why would someone buy a used house in Franklin? Some for Monroe/Middletown and neighboring LibertyTownship and Lebanon. There are always personal reasons for living in a specific place, and in niche housing, but when you look at it from an investment angle, it just does not make since to invest in housing in the Legacy-North communities. There are exceptions, of course, but the trend is very much against a good resale value. All of this is just my opinion.
June 5, 200916 yr ^I'm familiar with the area from work (geographically), but never really researched the dynamics of the entire north or thought about them in those two different ways (new & legacy). Let me know if I am regurgitating something from the previous 27 pages, I will admit I haven't read all of them. :wink: You make some very good points in regards to housing even though I'm still a little leery of those "New" city homes continuing as if nothings happening right now. Sure credit is "somewhat" barely breathing right now! Once these construction projects that got financing prior to this winter start to build out, then will you start to see the full effects in areas that have known nothing but construction and growth for decades? My personal view of the area is that their are alot of OTHER people like my friends in those newer areas too, that took the bait and switch of the housing industry in the early 2000's. These younger people have college educations and jobs yet they are already talking about moving out. These same views and stories come from even more friends who moved west to Indiana at about the same time. The stories are all eerily the same! I think we won't know how these outer rings are going to turn out for a couple years. They may look like they are treading water now, but an unthinkable variable right now "Blight" could very well be in all outer ring neighborhoods very soon. That was one of the original killers of cities and urban counties over the past 50-60 years. (Even your legacy cities can attest to this) The newness of much of todays materials will fade fast when simple maintenance is the last thing on peoples minds.
June 6, 200916 yr Butler County (and to a lesser extent eastern Warren Cty) aren't going to follow the traditional sprawl narrative. The unique aspect of being between two major job centers and have a couple w/in the county means that this is more like Delaware Cty in Philadelphia or some of the fully urbanized counties around NYC. It may not be the core, but it isn't really the periphery. I would say Indiana/Harrison might suffer more but I don't know how much the Honda plant could change things and there is just a different mindset amongst those folks. Exurban KY and Ohio to the east would seem the first areas to shrink back.
June 8, 200916 yr I'm still a little leery of those "New" city homes continuing as if nothings happening right now Oakiehigh, things are slowing down, but they are not stopping. It's kind of hard to get a feel for the amount of building right now due to all the road construction going on. Traffic patterns are completely messed up at the moment, and you can't tell by watching a dump truck roll past your hourse which trucks are building houses and which are building roads. But a drive through subdivisions will reveal a number of homes in each that are under construction. I think a number of other subdivisions that have been platted have had their construction put on hold. As dmerkow pointed out, the sprawl pattern in the Monroe/Franklin area is probably going to be different than in areas east and west of the metro. There are newer job centers in the area. You can live in Monroe and be at work in Westchester in 15 minutes. You can live in Franklin and be at work in Miamisburge in 15 minutes. These have been the 2 job center growth areas of SW Ohio in the past 15 years. They may very well stagnate for the next decade, but there are jobs in these locations that are an easy commute from your friends. The same can not be said for people living 20 miles east or west of the major interstates. I think you are right that a lot of people in the newer cities took the easy financing and will end up being foreclosed on. I heard stats for Mason on the number of people behind on their mortgages 2 years ago that shocked me. And I compeltely agree with you also that deferred maintenance will be an issue for the new cities in the not-to-distant future. Living in an old house, I am constantly doing maintenance. But I enjoy working on the buildings and grounds. Practically none of the office people I've worked with in the past 5 years does any of this. As you can imagine, they buy a new home, do no work beyond simple decorating, and then act surprised when something breaks or leaks. I suspect you know a lot of these type people as well, based on your past posts.
June 8, 200916 yr Practically none of the office people I've worked with in the past 5 years does any of this. As you can imagine, they buy a new home, do no work beyond simple decorating, and then act surprised when something breaks or leaks. I suspect you know a lot of these type people as well, based on your past posts. Your right, I do! I too, live in an older house and enjoy working on my property and I agree that most people I work/friends with moved into these new homes AS their starter homes out of college. Some of them can't even figure their lawnmower out! It will definitely be interesting going forward to see how things shake out. You guys do bring up a very good point about the extreme east & west being at a disadvantage ala jobs, but the number of surplus homes in either direction is actually minor in comparison to the north and south following the interstates. Keep in mind that the #1 reason most of these jobs flocked north were tax abatements. What happens when these expire? How many of these jobs only pay on/at minimum wage? In my endless crusade to figure out what I want to be in life when I grow up, :wink: I have turned down many jobs over the years in the Butler Warren area because I refused to move there. My other option of commuting played as a negative as well due to the pay not being able to offset fuel or traffic time costs. I worked in retail before graduating in Civil Engineering and I was shocked when I began looking in 2006 to find jobs only paying 1 or 2 dollars more than my retail job in the areas we've been discussing. I couldn't even dream of a 180K mortgage on MANY of the jobs I interviewed for then. I imagine it's even worse now. I don't mean to take this too far off course or pit one region against the other, but I'd say I am more skeptical now than I have ever been in where Exburbs in this region are heading. I don't think this had been posted here but forgive me if it was. http://www.cbsnews.com/video/watch/?id=4331378n
June 10, 200916 yr This is an article I read in Business Week yesterday. Article is way too long to post in completion, but the theory behind it is: in a country like the US, where blue collar / industrial jobs are being outsourced, revenue growth comes from new product innovation. Over the last decade, the innovations pioneered in the mid 90's failed to be commercialized at the level expected, resulting in stagant growth. I don't know that you can completely blame this phenomenon for the current recession, as they are implying (they even admit that the theory is difficult to quantify), but it certainly points to a significant problem of our economy: we no longer produce as much as we consume. And if we can't create the same high salaried jobs that we need as a country to maintain our collective lifestyle, the only alternate is that our collective lifestyle has to come down. The Failed Promise of Innovation in the U.S. During the past decade, innovation has stumbled. And that may help explain America's economic woes http://www.businessweek.com/magazine/content/09_24/b4135000953288.htm If the reality of innovation was less than the perception, that helps explain why America's apparent boom was built on borrowing. The information technology revolution is worth cheering about, but it isn't sufficient by itself to sustain strong growth—especially since much of the actual production of tech gear shifted to Asia. With far fewer breakthrough products than expected, Americans had little new to sell to the rest of the world. Exports stagnated, stuck at around 11% of gross domestic product until 2006, while imports soared. That forced the U.S. to borrow trillions of dollars from overseas. The same surges of imports and borrowing also distorted economic statistics so that growth from 1998 to 2007, rather than averaging 2.7% per year, may have been closer to 2.3% per year. While Wall Street's mistakes may have triggered the financial crisis, the innovation shortfall helps explain why the collapse has been so broad. (To see a full explanation of the problems with the economic statistics, go to Growth: Why the Stats Are Misleading.) But here's some optimism to temper the gloom: Many of the technological high hopes of 1998, it turns out, were simply delayed. Scientific progress continued, the technologies have matured, and more innovations are coming to market—everything from the first gout treatment in 40 years to cloud computing, the long-ballyhooed phenomenon "information at your fingertips." The path has been long and winding, but if the rate of commercialization picks up, the current downturn may not be as protracted as expected. Consider another indicator of commercially important innovation: the trade balance in advanced technology products. The Census Bureau tracks imports and exports of goods in 10 high-tech areas, including life sciences, biotech, advanced materials, and aerospace. In 1998 the U.S. had a $30 billion trade surplus in these advanced technology products; by 2007 that had flipped to a $53 billion deficit. Surprisingly, the U.S. was running a trade deficit in life sciences, an area where it is supposed to be a leader. Like I said, it's a long read, but a great one. Really gets to a critical point that hasn't received the same attention with all the attention on the housing bubble / credit boom.
June 16, 200915 yr I don't like to draw close parrallels to the 1930s because so many things are different today, but I agree with the sentiments of the article. I expect a 2nd leg down in the stock market this fall, and have money sitting on the sidelines waiting for it. I expect the low may have already been reached, though, as the next low will probably come close to, but not eclipse 3 months ago. However, I expect this Great Recession to drag on for a looong time. I expect to see some fundamental changes in the lifestyle of Americans, and not for the better, as a result of all this. Yes, it's tricky to navigate through these rough economic times. But life goes on. People need to concentrate on everyday life, and they are. Big ticket spending is in the toilet, but spending on little luxories is still going (think local amusement parks) and spending on basic necessities is steady. That's one of the reasons I think this recession has a bottom built into it...spending on basic necessities and on little luxuries is holding up. Big ticket items are taking the brunt of the collapse. And I'm not sure that big ticket items make up that big a share of the economy these days.
June 16, 200915 yr In the 1930's over half of the country lived on farms. Now something like just 3% of Americans are employed as farmers, despite the country having roughly double the overall population. People complain about the death of the family farm, but I don't think there's much of an argument in the face of those numbers. Somebody bought my grandfather some kind of book, kind of like a baby book, where he was supposed to answer all kinds of questions like his best childhood friend and that kind of stuff. Under "favorite vacation" he wrote something like "we never went on a trip and never heard of anyone who did" and under "favorite store-bought toy" wrote "we didn't have any". He lived in an unfinished attic space with his brother. Things have hardly gotten to that point.
June 16, 200915 yr We'd probably be better looking at how parts of Europe dealt with the Great Depression (esp. GBR) since they were further along the urbanization process than the U.S. was at that point, though certainly no one was as urbanized in 1930 as they are today.
June 17, 200915 yr Author You have to get a little laugh out of the Wall Street Journal's inability to say the word deflation. "U.S. annual inflation slid deeper into negative territory.." This is the largest deflationary data since the 1940's. I still think that when the economy starts to show real growth again, inflation will go through the roof, quickly. Consumer Prices Show Little Evidence of Inflation Threat By BRIAN BLACKSTONE "WASHINGTON -- U.S. annual inflation slid deeper into negative territory in May as consumer prices posted their largest annual decline in almost 60 years. Still, a slight rise from the prior month and an increase in core prices that exclude food and energy support the growing sentiment at the Federal Reserve that deflation risks have waned. However, there's little evidence that inflation is taking hold, either, a concern that has crept into bond markets in recent weeks. The consumer price index rose 0.1% in May from April, the Labor Department said Wednesday, below economist expectations for a 0.3% increase in a Dow Jones Newswires survey. The core CPI, which excludes food and energy prices, also rose 0.1%, in line with expectations. Unrounded, the CPI rose 0.096% last month. The core CPI advanced 0.145% unrounded. Consumer prices fell 1.3% compared to one year ago, the largest 12-month decline since April 1950. That's way below the 2% annual rate of inflation that most Fed officials think is consistent with their dual mandate of price stability and maximum employment." For the rest of the story. http://online.wsj.com/article/SB124524122626523045.html
June 17, 200915 yr Consumer prices fell 1.3% compared to one year ago, Does this mean that retirees SS payments will DROP next year?
June 17, 200915 yr Author Consumer prices fell 1.3% compared to one year ago, Does this mean that retirees SS payments will DROP next year? LOL :-D
June 22, 200915 yr Author Where is business revenue and stock prices headed? I think the insiders have a pretty good understanding were things are going and they are cashing out fast. This type of action should give market participants a good feel for the near future. Last time this happened the market started to collapse two months later. I think we are currently in a calm moment in the eye of the storm. Insiders Exit Shares at the Fastest Pace in Two Years (Update1) By Lynn Thomasson and Michael Tsang June 22 (Bloomberg) -- Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago. Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years. Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects. “If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.” http://www.bloomberg.com/apps/news?pid=20601087&sid=aflROe0Pe0QM
June 22, 200915 yr ^ this could be driven by poor long term prospects, or it could be something else too. Bill Latimer, the director of research at O’Shaughnessy Asset Management, says insider transactions aren’t an accurate barometer of stock performance because executives often reduce their stakes for reasons that have little to do with a company’s prospects. “When you’re dealing with an individual’s buying or selling, you’re clouding the picture with what their specific financial situation may be,” said Latimer, whose Stamford, Connecticut-based firm oversees about $4.5 billion. Something else to consider: even if you believe we're at the bottom, this 'recovery' by all accounts will be long and drawn out. Many executives have taken pay cuts and reductions in other compensation. They may be taking advantage of a mini rally before the summer doldrums kick in to diversify / build up a cash reserve to weather out the remaining storm. Doesn't mean they have no faith in the company, just that, with the current rally, it's economically more palatable to exercise an option / sell some vested shares, etc.
June 22, 200915 yr something of marketing use in this troubled economy? it's a cool chart re who is coming to america? the top 20 countries in 2008 + more info: larger, readable version here: http://awesome.good.is/transparency/web/0905/trans0509whoiscomingtoamerica.html http://www.good.is/post/transparency-who-is-coming-to-america/
June 23, 200915 yr Author How are we getting "refugees and asylees" from the UK and Canada? I actually work with 3 UK citizens in Denver. You also get a lot of UK citizens retiring in the US (Florida, etc...), same with Canadians.
June 25, 200915 yr They could be refugees and asylees that came from other countries through the UK and Canada.
July 6, 200915 yr Author American jobs data are worse than we think By Mohamed El-Erian "What if the US unemployment rate rises above 10 per cent and stays there for an extended period? This is a question that is not being asked enough, even though it entails yet another historical anomaly that will further complicate policy formulation and open it up to greater political interference. The unemployment rate is traditionally characterised as a lagging indicator and, as such, is viewed as having limited predictive power. After all, unemployment is a reflection of decisions taken earlier in the cycle so the rate always lags behind the realities on the ground – or so says conventional wisdom. This conventional wisdom is valid most, but not all of the time. There are rare occasions, such as today, when we should think of the unemployment rate as much more than a lagging indicator; it has the potential to influence future economic behaviours and outlooks. ... http://www.ft.com/cms/s/0/1e06911c-6719-11de-925f-00144feabdc0,dwp_uuid=b8efc2ae-d98d-11dc-bd4d-0000779fd2ac.html
July 6, 200915 yr I think a majority of us here think this is going to be a very long recovery. Right now, I don't see what the next driver of the economy is going to be. There are a lot of niche industries that will contribute to some growth, but probably not enough overall to counter the decline in existing major industries. So unless one of them breaks out in a very big way, I don't see unemployment dropping very quickly at all (unemployment as in the # of people not working real jobs, not necessarily the unemployment number published by the government). Housing was the industry that created jobs after the 2001 recession, but that was both an illusery and delayed at that. It took a long time before the housing bubble began to produce jobs. And as we know, it was an unsustainable bubble anyway. So take the housing bubble out of the equation, and have we really recovered from the 2001 recession, job-wise?
July 6, 200915 yr And this from today's Conference Board numbers.... The Conference Board, a private research organization, said its Employment Trends Index slipped to 88.4 from a downwardly revised 89.1 in May. It was originally reported at 89.9. "Compared with the beginning of the year, the decline in the Employment Trends Index has significantly moderated," said Gad Levanon, senior economist at the Conference Board. "We therefore expect job growth to resume around the end of the year. "However," he added, "over the last month, leading indicators of employment were mostly disappointing, suggesting the Employment Trends Index is still seeking a bottom."
July 6, 200915 yr ^ People can't sell their homes, thus can't move once they're laid off or demoted. Do you see much in the way of people just walking away from their houses in the Toledo area?
July 6, 200915 yr 4. Fewer big box stores and retail establishments relying on mass volume. 5. Less reliance on bloated educational institutions to take care of job training. Schools have got to close due to revenue declines 6. Severe reduction in military spending and conventional military strength. Hasn't history shown that nations tend to permanently increase public employment during economic crises? If so, do you think that we can really cut government employment? Yes, if we rely on private employment to support public employment, then we should cut gov't jobs. But instead, we rely on borrowing to support govt't workers. Short of a constitutional amendment that fixes a ratio of private to public employment numbers, do you really expect gov't to cut employment ever? Particularly in a down-turn?
July 6, 200915 yr *Total* US Debt currently runs aroun 90% of annual GDP - maybe less. Most European nations are much higher. There is still room to borrow, no? Are you thinking we will follow France's radical example of a true ecomic crises (1789) or England's mild example of slow, methodical retreat back to its basic self (shedding its empire over a 50+ year timeframe)?
July 6, 200915 yr I agree with you that this Great Recession will signal a fundamental shift for both the US as a nation, and our citizens. The supremacy of the US has been declining for 30 years (we are still #1, but the gap is closing fast), but will accelerate with this debt increase. And the standard of living of US citizens probably peaked 10+ years ago, but the decline will be very gradual for awhile, before accellerating 20 years from now. As to Europe, yes, they are in worse shape than the US. We've got room to cut, as you outlined above. Most European nations no longer have that luxery.
July 6, 200915 yr Author Man, I wish I had not missed out on this discussion. I think the interesting issue this time around is how interconnected the world is financially. The US is most definitely in decline compared to its past, but I am not sure there is any other nation currently positioned to take over the top dog place (financially or other wise) any time soon without a major war (which history has been show has been fought over and over again during economic decline). I think we are going to see the creation of a international monetary system in the next 5 to 10 years and that will create a 'balance' in world power (US, Europe - maybe, China, Russia) for X amount of time. But its becoming clearer and clearer we will no long 'rule' the world scene. This scenario is based on all the big boys playing nice through all of this.
July 6, 200915 yr People on this thread seem to revel in pessimism. But yeah I see this as akin to the '74 and the early 80s double dip recession as signaling some sort of phase shift in the economy. The full employment unemployment number is a good question. In the 1980s this was seen as 6%-7%, so maybe the "good times" of the 1990s, were unemployment dipped to the 4% range, was the anomaly. I think Dmerkow was sepculating about 8% as the new "full employment unemployment" number.
July 7, 200915 yr Man, I wish I had not missed out on this discussion. I think the interesting issue this time around is how interconnected the world is financially. The US is most definitely in decline compared to its past, but I am not sure there is any other nation currently positioned to take over the top dog place (financially or other wise) any time soon without a major war (which history has been show has been fought over and over again during economic decline). I think we are going to see the creation of a international monetary system in the next 5 to 10 years and that will create a 'balance' in world power (US, Europe - maybe, China, Russia) for X amount of time. But its becoming clearer and clearer we will no long 'rule' the world scene. This scenario is based on all the big boys playing nice through all of this. It seems like Germany, though in a recession as well, is gaining a lot of market share with it's high quality products and that they as a country seem to have a lot of spending power. Many more products have German instructions and have writing on the boxes in German than did ten years ago. You'd think that in the States, products sent here from all over the world would have Spanish and French on them, but it seems like almost as many products have German on them than Spanish (I'm not referring to things like laundry detergent and TVs, but things like hobby products and other specialized items). Not only that, it seems like German firms are having a lot of products made with German engineering, design, tolerances and overall quality produced at competitive prices by the Chinese. Why would people (especially outside the U.S.) buy the poorly designed product from a U.S. firm made in China when a German-engineered product made in China is the same low price?
July 7, 200915 yr Germany has a much more heavily export-based economy than the U.S. Their domestic market is artificially low due to the spending habits of Germans and they are willing and able to trade with folks the U.S. won't - Iran and Cuba for instance.
July 7, 200915 yr Germany currently has the advantage that its neighbors to the east are very low-cost producers, similar to China. A lot of German hobby items I look at are actually made in Czech Republic or other Eastern-European countries. Waterford Crystal was producing the majority of their items in that region as well. I expect a lot of hobby and decorative items will eventually be sold under the name of an Eastern-European company that produces in that region, and not under a Western-European country that contracts manufacturing to that region. There is plenty of old-world craftmanship still in Eastern Europe and at labor costs that are hard to beat. (glass, porcelin, toy trains, etc)
July 7, 200915 yr Author People on this thread seem to revel in pessimism. If I only had a dollar for ever time someone said that on this thread over the last few years I would be living on my own tropical island today. We heard it when it was said that the economy was going into a recession, when it was said housing was going to implode, when it was said that the financial system was going to almost collapse, and when it was said this will be the worst recession since the great depression. I guess it comes down to the concept of what is pessimism vs reality. I think this thread and the other one was about reality. I don't think the world is about to end, but major changes to our way of life, economy, and the balance of the world financial system is definitely changing much more than it did in the 70s or 80s.
July 7, 200915 yr People on this thread seem to revel in pessimism. from today's headlines.... U.S. consumers fall behind on loans at record pace Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt and home equity loans to all-time highs in the first quarter as a record number of cash-strapped consumers fell behind on their bills. Delinquencies on the value of all card debt soared to a record 6.60 percent from 5.52 percent in the fourth quarter as more cardholders relied on plastic to meet day-to-day expenses, the American Bankers Association said. Late payments on home equity loans rose to 3.52 percent from 3.03 percent, and on home equity lines of credit climbed to 1.89 percent from 1.46 percent. ... http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20090707&id=10122557
July 7, 200915 yr Author Here is a timely article talking about changes to our way of life, economy, and the balance of the world financial system. Debt Burden Quickens Power Shift as G-8 Loses Clout (Update2) "July 7 (Bloomberg) -- The world’s most affluent nations will take decades to work off the biggest buildup in debt since World War II. The political costs may be permanent, laid bare at this week’s Group of Eight summit of leading industrial powers. Bank bailouts and recession-fighting measures will explode the debt of the advanced economies to at least 114 percent of gross domestic product in 2014, more than triple the 35 percent of the main emerging economies including China, the International Monetary Fund forecasts. The run-up in debt has hastened a power shift that is sapping the industrial world’s authority to impose its economic doctrine, currency arrangements or greenhouse-gas reduction strategies. Even some G-8 officials acknowledge that the group has lost its grip amid the global recession they spawned. ... http://www.bloomberg.com/apps/news?pid=20601087&sid=azyYcjXIyKQI
July 7, 200915 yr Author Goldman Trading-Code Investment Put at Risk by Theft (Update3) July 6 (Bloomberg) -- Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said. Sergey Aleynikov, an ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, 39, who has dual American and Russian citizenship, is charged in a criminal complaint with stealing the trading software. Teza Technologies LLC, a Chicago-based firm co-founded by a former Citadel Investment Group LLC trader, said it suspended Aleynikov, who started there on July 2. At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft poses a risk to U.S. markets. Aleynikov transferred the code, which is worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated. “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today. “The copy in Germany is still out there, and we at this time do not know who else has access to it.” http://www.bloomberg.com/apps/news?pid=20601103&sid=aoSjBHO2lOJk Interesting Bloomberg article. Makes you wonder a little, if others could use this to manipulate markets in an unfair way, what is keeping GS from using it in an inappropriate way? :? They continue to out perform their financial peers through this deep recession and have a lot of friends at the Treasury (Hank Paulson, etc...) and the Feds. I am sure they are an upstanding company that is only looking to be honest in all their dealings and make a dollar by playing fair in the sandbox.
July 7, 200915 yr ^Good, I hope it hurts them. Goldman is the root of all evil. Bring those bastards down.
July 13, 200915 yr Author I really enjoy coming across these types of post. It really helps put things into prospective and makes you realize just how much lying, miss information and stupidity has been feed to the American public. It also makes you realize the comments that are currently coming out from the same sources (FEDs, Treasury, Govt, NAR, etc...) should be take with a grain of salt. Their track record should speaks volumes to main street. 2004 1. “The ability of lending institutions to manage the risks associated with mortgages that have high loan-to-value ratios seems to have improved markedly over the past decade.” -Alan Greenspan [February 2004] -2005 2. “Home sales are coming down from the mountain peak, but they will level out at a high plateau, a plateau that is higher than previous peaks in the housing cycle.” -David Lereah, Chief Economist, National Association of Realtors [December 2005] -2006 3. “I don’t know, but I think the worst of this may well be over.” -Alan Greenspan, [October 2006] -2007 4. “We have a very strong global economy… and I feel very comfortable with the global economy. -Treasury Secretary Henry Paulson [March, 2007] 5. “The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.” -Ben Bernanke [March 28, 2007] 6. “In today’s environment, it is virtually impossible to violate rules.” -Bernie Madoff [November 2007] -2008 7. “Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009.” -National Association of Realtors [January 2008] 8. “Although recent data suggest that the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession.” -US Congressional Budget Office [January 2008] 9. “I don’t think we’re headed to a recession.” -President George W. Bush [February 2008] 10. “I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.” -Ben Bernanke [February 28, 2008] 11. “No! No! No! Bear Stearns is not in trouble.” -Jim Cramer, CNBC commentator [March 2008] 12. “Later this year, I expect growth will pick up.” -Henry Paulson, just after Treasury had mailed out 130 million economic stimulus cheques [May 2008] 13. “Fannie Mae and Freddie Mac are fundamentally sound. They’re not in danger of going under…. I think they are in good shape going forward.” -Barney Frank, chairman of the House Financial Services Committee [July 2008] 14. “My own belief is if we were going to have some sort of big crash or recession, we probably would have had it by now.” -Canadian Prime Minister Stephen Harper [september 2008] 15. “We’re probably somewhere pretty close to a bottom.” -Fund manager Barton Biggs [september 2008] 16. “The fundamentals of our economy are strong.” -US Senator John McCain [sept 15, 2008] 17. “We remain committed to examining all strategic alternatives to maximize shareholder value.” -Lehman Bros. CEO Dick Fuld, shortly before Lehman went bankrupt [sept 2008] http://thehousingbubbleblog.com/?p=5525#comments
July 13, 200915 yr 16. “The fundamentals of our economy are strong.” -US Senator John McCain [sept 15, 2008] He did himself in with that one. That will go down as one of the funniest quotes in election history. Just because you've been in a recession for 10 months and are witnessing a total collapse of the financial system doesn't necessarily mean that the underlying fundaments aren't strong, no? (lol)
July 14, 200915 yr Author I like the Cramer one. I realize he is a tv entertainer, but their are people that still actually listen to him and make financial dicisions. “No! No! No! Bear Stearns is not in trouble.” -Jim Cramer, CNBC commentator [March 2008]
July 14, 200915 yr ^ Yea, I like the Cramer one too. Apparently he was a very successful Wall Street trader back in '90s, a kind of "Wonder Kid". However, his performance on TV over the past 18 months has not been as successful... he missed the housing bubble, he missed the financial crises, he missed the recession, had an outburst on TV, blamed the Media for the crises (stooping prettly low there), and blamed the Government for not rescuing everyone, including all his friends on Wall Street. On alternating shows he would call for the government to get out of various markets and let market forces do their jobs. All-in-all, I have to wonder if Cramer's hot-shot days were driven by something other than intelligence - something like luck. He has certainly proven over the long run (last 2 decades) to be just as average as the next guy.
July 15, 200915 yr ^ He has the ability to manipulate the market. After stocks are on his show, enough people follow his advice to affect the stock for a couple of weeks. That's how people are able to clone his moves and claim success.
July 15, 200915 yr It is important to distinguish between investors and traders. Most of CNBC is not best used by investors (aiming for a secure long term growth that equals or slightly exceeds inflation), but rather by traders. There are plenty of people that actively engage the financial markets daily and more so and that really is who Cramer is talking to (and most of the rest of the shows). The cable business networks democratized knowledge about finance without actually democratizing the financial system (not that they were supposed to). It is in their interests to pitch to the investor class, but in reality, the trader is the most important audience. Traders are little more than gamblers.
July 16, 200915 yr Author CIT shares slump as investors gird for bankruptcy Troubled lender reportedly in last-ditch scramble for $2 billion "SAN FRANCISCO (MarketWatch) - CIT Group Inc. shares slumped more than 75% Thursday as investors girded for what may be the fourth-largest bankruptcy in U.S. history after the troubled lender failed to get a government bailout." http://www.marketwatch.com/story/cit-shares-slump-as-investors-gird-for-bankruptcy It looks like another big boy is about to bite the dust. I find it interesting to watch who is getting government bailout and who is being allowed to go BK. While I do believe part of the strategy is to slowly let big companies go BK over time(the debt in the system is just to big). I also can't help but wonder, why are most in serious pain, but a few have magically escape? Those 'bandits' just seem to have certain friends in strategic positions at the right time. We may very well end up with one big investment house/bank and a couple of massive banks running the entire show.
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