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This Week’s News 5-17 – 5-21

May 17, 2004

This week we’re going to try something a little different – we’re going to let you, dear readers, source the news, and see what happens. Typically, either Rich or myself will be in charge of sourcing daily news stories on the unfolding Second Great Depression. This website gets between 2,500 – 3,000 visitors on the average weekday, so there is obviously an incredible amount of interest in the subject matter.

Until we recently added this blog section, communication had been rather one-sided, from us to you. With the addition of the blog, communication has become very interactive. Depending on the subject matter, we have received hundreds of comments and very interesting interactive discussions.

As an experiment, (and also so that both Rich and I can take a little break from sourcing the news) this week we’ll let you be the editor. If you visit the site regularly, you know what kind of news we’re looking for. See something interesting that you think others would like to know about? Go ahead and post it in the comments section below. Just copy and paste the link from your browser, and write a short headline. If you feel inspired, a brief summary, or short editorial comments are also welcome.

Depression2.tv began as an experiment, and we continue forging ahead with the experimental nature that the world wide web has opened up. Here are some headlines to start the morning:

India Market Crashes Overnight

Oil Futures Rise on Bombings in Iraq and Turkey

Mitsubishi to Cut 9000

Posted by manystrom at May 17, 2004 06:50 PM
Comments

India wasn't the only market to crash overnight. Okay, maybe the markets didn't crash, but Europe and Asia are all in the red, and this has been sustained for some time. It's a slow motion crash. Beware the bear!

http://finance.yahoo.com/m2?u

And this: Market Stall may not be temporary.

http://www.jsonline.com/bym/invest/may04/229555.asp

Happy Reading. Michael


Posted by: Michael Nystrom at May 17, 2004 06:57 PM

Over the weekend I received a PROXY SOLICITED BY THE TRUSTEES for a mutual fund thatI can only exit if I become deceased, disabled or quit my job.

The proxy number one item to be voted on is, and I quote
"To amend the Trust Instrument to allow the board of Trustees, if permitted by applicable law, to authorize fund mergers without shareholder approval."

The 'CRASH' is supposed to see most mutual funds merge or just disappear. It looks like Fidelity agrees, and is preparing to do just that!


wel

Posted by: William Laub, Sr at May 17, 2004 08:49 PM

Middle East societies need to develop safeguards against media manipulation, says DTMFZ Chief:
http://www.ameinfo.com/news/Detailed/39740.html

UK - More Troops for Iraq:
http://www.gulfnews.com/Articles/World2.asp?ArticleID=121190

Posted by: Dave at May 17, 2004 09:47 PM

In general this is a good idea...here is what I think is the biggest financial story of the day.

http://biz.yahoo.com/rc/040517/financial_fanniemae_2.html

However, I think one of the reasons you get 2,500 – 3,000 people visiting this site is because of the insightful links that you put on the front page. Its a condensed list of stories that show the true picture of what's going on. I support having a thread like this one where people can put their own links but I think you may lose subscribers if you rely solely on this. You guys are great editors. You pick and chose links that cut to the heart of the matter. If you rely solely on all of us posting links you'll lose your editorial control and thus lose your product's main attraction. Just my 2 cents.

Posted by: Michael at May 17, 2004 11:43 PM

I like the idea of having readers able to post their links daily on this thread - I think we'll all get something out of that. But I do support Michael (above) in his request for links on the home page. The issue right now is access and time for this week, Michael Nystrom and I are both on the move and can't get to the site each morning (for me) or evening (for Michael) to do the links. This is a very temporary situation for me and I will resume the links after this trip.

Anyway, here's a story that you are all familiar with - - rising Oil prices once again. The world is off to a very rocky start this week; bomb blasts and market crashes - the energy level on this little blue and green ball is rising rapidly at this point - hold on for the ride!


Oil sets another record
http://money.cnn.com/2004/05/17/markets/oil.reut/index.htm

Cheers Rich

Posted by: Rich at May 18, 2004 01:10 AM

Have a look at the OECD recent charts
http://www.oecd.org/dataoecd/45/49/20428215.pdf
this link is in french but you can easily find the equivalent in english.

The OECD has a very clear statistic showing how spending is related to the housing wealth of the households...
If you turn this around : the countries that have been pinpointed has efficient : US GB netherlands and australia are the countries with the highest housing prices biggest household debt problems in which consumers have spent because they believed they were rich ...

If a fall in housing prices was to come ... They would be the biggest victims of the downturn.

Posted by: Dubreuil at May 18, 2004 02:00 AM

Indian Stock Market Crash - Bloodbath on Dalal Street

http://in.rediff.com/money/bsecrash.htm

More detailed information on the stock market crash in India.

Posted by: Greg Boop at May 18, 2004 06:25 AM

Three unrelated links - or are they?
---

I recently took action to protect the vote in Ohio, where electronic voting machines are set to be in place in 31 counties without any paper trail verification. The '04 election is going to be close & could come down to just a handful of votes in Ohio.

http://actforvictory.org/act.php/home/petitions/diebold_ohio

Beijing OFFICIALLY threatens Taipei with destruction:
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=38520

Latest from Big Fisherman:
http://www.obsceneprophets.com/Articles/OPW20040515.aspx


Posted by: Samuel at May 18, 2004 10:41 AM

Oil, Gas Surges - Near $42/bbl!
http://news.yahoo.com/news?tmpl=story&cid=509&u=/ap/20040518/ap_on_bi_ge/opec_17&printer=1

Global Crash Week?
http://urbansurvival.com/week.htm

Posted by: Jen at May 18, 2004 09:28 PM

India, China, Stock Stars of 2003, Lead Emerging-Market Retreat
May 18 (Bloomberg) -- India and China, where accelerating economic growth last year attracted investors such as Warren Buffett and Mark Mobius, rank among this year's biggest stock-market losers.

Posted by: normxxx at May 18, 2004 10:54 PM

I am a daily reader - the main attraction being your choice of news stories and links. If I were to post a link, it would most likely have been previously gathered by a related site. Seems there's only a very small meadow in the massive forest of disinformation which is our American news media.

On that note, I wonder what other readers of the genre feel about the use of such terms as "depression" and "crash". While I tend to agree with the direction of the future (as put forth in RR Prechter's books or Dieff.com) I consider these predictions against the outcomes of similar predictions made in the 60's & 70's (think Soylent Green).

For me, the term "depression" brings to mind images of Atlas Shrugged - of ubermensch capitalists forced to lay off half their workforce. The word has an underlying political and social meaning which may no longer apply. Think about it; at the moment, we might have achieved 25% unemployement levels, yet nothing's changed - no panic in streets, no overt hardships, no wave of short selling. Maybe the personal technology and productivity gains which mask the 25% rate HAVE changed the rules. On that note, if the rules have changed, maybe a 1% prime rate CAN be maintained indefinitely, or maybe accelerating credit growth and huge government deficits really DON'T matter.

With your previous Q&A commentary in mind, assume world markets are centrally controlled - that the 8 or so banks which account for the lion's share of derivatives trading are slowly milking the investment public through market manipulation. Bull and bear alike will suffer. Incredibly, the only way to stay ahead of the game is to act like a perfect idiot and constantly bet against what's considered "good sense" by both sides of the camp. Strange? If there really is manipulation going on - neither side will win, nor will either side lose. The only winners will be those who act "perfectly irrationally" (whatever that means).

With this in mind, terms such as "depression" and "crash" might only be setting up readers of this genre for the same fleecing the bulls have been taking since the S&P peak of 2000.

As for a suggested article, I liked yesterday's financialsense.com market wrap-up

http://www.financialsense.com/Market/daily/monday.htm

(note: link good for this week only) concerning a possible US$ squeeze - case in point - if and when the bears make a killing in US markets, they'll do so only in devalued dollars...

Posted by: steve mann at May 19, 2004 08:12 AM

China's fixed asset investment up 42.8 pct in first four months
http://news3.xinhuanet.com/english/2004-05/18/content_1477110.htm

The Green-span continues...
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/05/19/cngreen19.xml&menuId=242&sSheet=/money/2004/05/19/ixcity.html

U.S. Debt Eating the Markets:
http://www.thestreet.com/_tscrmb/markets/detox/10160722.html


Posted by: News Hound at May 19, 2004 09:48 AM

As we all knew, as everyone knew, Haliburton is a crook:

http://www.msnbc.msn.com/id/5003751/

Posted by: Hal at May 19, 2004 04:58 PM

The pog went nowhere yesterday, May 18, yet the gold stocks went up. Perhaps the meaning is that the manipulators are covering their stock shorts and the attack is over for awhile.

May the light in the land of plenty shine on the truth some day.

Posted by: Brooker at May 19, 2004 09:40 PM

Alan Greenspan Is No William McChesney Martin:
http://www.forbes.com/execpicks/2003/04/23/cx_da_0423topnews.html

Demonstraters Taunt Haliburton:
http://www.chron.com/cs/CDA/ssistory.mpl/business/2580977

Oil Prices Heading Back Up:
http://www.forbes.com/personalfinance/funds/newswire/2004/05/20/rtr1378282.html

China and the U.S. - The Great Unravelling Begins?
http://www.prudentbear.com/internationalperspective.asp

Nader Praises Kerry
http://news.myway.com/politics/article/id/376958|politics|05-19-2004::17:52|reuters.html

Today's Debt: $7,183,392,668,476.95
http://www.publicdebt.treas.gov/opd/opdpenny.htm

Posted by: News Hound at May 20, 2004 04:09 PM

Prefer the regular format of this site. Still full marks for having a go at change .... but now I just breeze in and out of the site instead on lingering.

Posted by: John at May 20, 2004 06:38 PM

We can preach about household debt until we are blue in the face, but until the media and our leaders discuss this problem the majority of Americans will not listen. Household debt is out of control and is being encouraged by our leaders who would rather be popular with the voters, than discuss true problems we are facing. The link below is an honest report of the issue. Thank you for giving America a dose of reality.

Posted by: Patrick at May 20, 2004 08:01 PM

I like both. First, have the newest comments at the top, not the bottom. second, I very much like your editorial selections. Third, I'd like a page for "amateur" insights where folks can vote on the quality of what's written and those authors get "karma" and higher billing. Fifth, I'd like an opportunity to mention our website (www.methuselahfoundation.org) the ultimate conservative website lifewise.

Posted by: dave at May 20, 2004 09:16 PM

For the U.S. economy, much depends on the housing market, and in particular, the refinance sector of that market.

http://www.washingtonpost.com/ac2/wp-dyn/A8651-2004May7?language=printer

Looks like the outfits that deal in CMBS are not going to look the other way anymore as brokers, banks, and appraisers play them for fools. Is this the pin that pops the bubble in places like San Diego, Las Vegas, and DC?

Posted by: tjc at May 20, 2004 11:54 PM

Hey you guys, what is wrong with you? Turn off the tube, get off the 'net and live your life. You all have been wasting your time, waiting for this so called "depression" to hit, and in fact you bring it on yourselves. You are the weak, the lame, the deadbeats of the world, sniffing out negativity wherever you can. You will see whatever you choose to focus on. How has this viewpoint improved your life?

Posted by: DOG at May 21, 2004 11:14 AM

"The greatest scandal in the history of America is presently being perpetrated by the privately owned Federal Reserve Bank; it makes the Enron, WorldCom, and Tyco scandals look infantile by comparison." - Aaron Russo, Libertarian Candidate for President of the United States

Finally, someone who is actually talking some sense!

http://www.russoforpresident.com/

Posted by: Robert at May 21, 2004 11:48 AM

Hey Dog, I'm not negative in beliving what I believe. I just sold my house and made a killing on it. I'll just wait for morons like yourself who have your head buried so far in the sand to keep running up debts and buying over priced houses. In two years when all my debt is paid and the housing market has tanked. I'll come in and buy your house that you defaulted on(because you lost your job and were so far in debt), for 75% of the price you paid for it. I'm feeling pretty up beat to be honest.

Posted by: FeelingWierd at May 21, 2004 09:17 PM

Well guys !!! I finally found some interesting stuff...
I mean by that some keynesian site about why deflation has to happen... Austrian school of economics seems so far out of reach with reality for my own mind ...

welll see for yourself.

A comment on job creation
http://www.cepr.net/Bytes/jobs_byte_2004_05_07.htm

and in parallel the one on price
http://www.cepr.net/Bytes/prices_byte_2004_05_14.htm

this sums up my point here... Inflation is no threat because, it is only an inflation based on raw material costs.
Inflation in good prices is sustainable only if wages keep it moving up, if there is labor power. ANd there is none around.

you can also see a good debate about why there is a bubble in the housing market
http://www.cepr.net/columns/housing_bubble/no_housing_bubble.htm

discussions ...
http://www.inthesetimes.com/comments.php?id=185_100_1_0

Any of you ever looked at Larouche's comments ? He must be one of the rare US communists ... Lol.
Anyway, if keynesians, austrians, communists alike fear the krach and have alternative explanations ...
That means it will happen. Interpretation as to why, how it might have been prevented, how to cure it ... remaining different.

Have a pleasant day.

Posted by: Dubreuil at May 21, 2004 09:51 PM

onelast
http://www.cepr.net/columns/weisbrot/housing_bubble.htm

Posted by: df at May 21, 2004 09:53 PM

Good investors I have known try to wade thru the bull crap to find the truth. Dogs who buy the illusion instead of the reality get skinned alive.

Dog, if you want the spin, the lies, stay with CNBC, & the Republican Pravda. Keep smiling and don't seek out alternative news sources.

Posted by: Jesse Livermore at May 21, 2004 10:00 PM

Hey FeelingWierd,

IMHO, I think you'll be able to buy DOG's house for like 25% of what he payed for it. I'm glad you sold your house. I think you did it just in the nick of time too.

Posted by: Michael at May 21, 2004 10:44 PM

Thanks Michael, Trust me, i've been sweating it out for the past 8 months wondering if I waited to long. 4 months in a row of declining mortgage applications and new housing starts. West and East coast markets at stand still or declining. I think the wheels are coming off this baby fast now. Just hope it doesn't take us all down with it. Just keep posting and we'll get through this together.

Posted by: Feelingwierd at May 21, 2004 11:18 PM

All bubbles pop, the house bubble will be no different. The size and destructive power of our current credit bubble is historic,and We will be reading case studies for decades to come.

Please see a great information source. the Wall Street journal real estate disscussion board.

http://208.185.149.126/WebX?14@67.dh1AauKJd0R.8@.ee8c067!skip=0

Posted by: HouseRat at May 22, 2004 12:33 AM

The Orange County Register signaled a RE top over the past few days. Eight feature articles on RE and RE supported jobs. Also Repoted was in Orange County 14% of all jobs are tied to real estate some
how. When the market does burst it will be REALLY BAD!!!!

Real Estate Job Bubble?

Interest rate-sensitive businesses such as construction, finance and real estate have been responsible for most of the jobs created in California in recent years. Should we be nervous when rates rise? Here's a look at recent job creation in five Southern California regions.

Orange

Net jobs created in past 12 months: 9,600
Total jobs created in past 12 months in rate-sensitive sectors: 14,600

San Diego

Net jobs created in past 12 months: 13,700
Total jobs created in past 12 months in rate-sensitive sectors: 16,600

Riverside-San Bernardino

Net jobs created in past 12 months: 16,300
Total jobs created in past 12 months in rate-sensitive sectors: 7,200

Los Angeles

Net jobs created in past 12 months: -6,000
Total jobs created in past 12 months in rate-sensitive sectors: 4,400

Ventura

Net jobs created in past 12 months: 200
Total jobs created in past 12 months in rate-sensitive sectors: 1,300

Source: EDD

Posted by: houserattt at May 22, 2004 12:52 AM

Hey folks.

Get ready for business as usual. I'll be restarting the daily links off the home page, starting with some weekend postings I will get up Saturday. Then next week we'll be back to normal - although we intend to keep this thread refreshed with your postings of other daily stories you all see fit to post at will and then discuss.

Thanks for participating in this little experiment, it is important for us to keep trying new things and see what works for readers.

Cheers Rich

Posted by: Rich at May 22, 2004 03:25 AM

My dear friends,

I am sorry that my comments offended any of you. It was just a bark, not a bite. There are two ways of teaching, one is though negativity, the other through positivity and love. This was the point that I was trying to make. Using the negative route obviously doesn't work, as negativity breeds negativity. See above for evidence. Therefore, I shall try the positive route:

If a dog was the teacher you would learn stuff like this:

When loved ones come home, always run to greet them.
Never pass up the opportunity to go for a joyride.
Allow the experience of fresh air and the wind in your face to be pure ecstasy.
When it's in your best interest, practice obedience.
Let others know when they've invaded your territory.
Take naps.
Stretch before rising.
Run, romp, and play daily.
Thrive on attention and let people touch you.
Avoid biting when a simple growl will do.
On warm days, stop to lie on your back on the grass.
On hot days, drink lots of water and lie under a shady tree.
When you're happy, dance around and wag your entire body.
No matter how often you're scolded, don't buy into the guilt thing and pout...run right back and make friends.
Delight in the simple joy of a long walk.
Eat with gusto and enthusiasm. Stop when you have had enough.
Be loyal. Never pretend to be something you're not.
If what you want lies buried, dig and dig and dig until you find it.
When someone is having a bad day, be silent, sit close by and nuzzle them gently.

--Dog is to man as man is to God (Dog is God spelled backwards)

Peace everyone, and be happy. When you are floating above the aftermath of the secod great depression, how will you treat those who did not / are not listening now? Will it be the way you treated DOG, with derision and contempt? Or will it be with love, kindness and patience?

Your answer is the key to the future of humanity.

Love is the answer, not money, not gold.

Posted by: DOG at May 22, 2004 01:05 PM

S'up Dog?

I guess the issue for many of us in the contrarian economic space is that there are so many lap dogs out there right now. Most of the people are so bought-in to the current economic paradigm and they can't see the wood for the trees (they resemble sheep more than dogs in many respects).

We the people have been blind-folded since birth on the issue of our monetary system (perhaps the single most important man-made system on the planet). Collectively we're absolutely naive and ignorant about fiat currency, usury, fractional reserve banking and who controls our global monetary system - - hardly a recipe for governance by "We the People."

So, Dog, it's hardly surprising that you elicit a negative response from a tiny minority of core believers in a return to fundamentals - like sound money, constitutionalism, truth and true representation, etc.

We cannot be Polly-Anna, someone has to seek the truth and expose it. Just keeping/stating a "positive attitude" ALL OF THE TIME doesn't resolve anything. I appreciate your perspective and I do think we are all trying to help each other - which is VERY positive. But to remain vocally positive about many depressing negative issues (like the amount of manipulation we all have to deal with when attempting to get to the root of many critical issues) is incredibly difficult. We do our best.

Love and spirituality is the answer, but sometimes tough love is the answer too.


As for your comment above about how you were treated; well.....you did start your original message with "What's wrong with you...you've all been wasting your time...etc." I think you elicited a negative response through your own negative approach to the posters on the board. And I really don't think you got any worse than you gave!

I love the different perspectives on this site and the honesty and integrity of the readership. Everyone is entitled to their view, and so far I've rarely ever seen a post that I thought was entirely abusive. So lets keep the dialogue flowing and not poke people in the eye to begin with.

Cheers Rrrrrrich

Posted by: Rich at May 23, 2004 01:37 AM

A great article on the economic realities of where the U S is, and how we play in the international money market. Scary reality.

http://www.safehaven.com/article-1568.htm

Posted by: Ms Incognito at May 23, 2004 10:44 AM

DOG...our response was to this post below.

"Hey you guys, what is wrong with you? Turn off the tube, get off the 'net and live your life. You all have been wasting your time, waiting for this so called "depression" to hit, and in fact you bring it on yourselves. You are the weak, the lame, the deadbeats of the world, sniffing out negativity wherever you can. You will see whatever you choose to focus on. How has this viewpoint improved your life?"

I for one have been trying to wrap my mind around this depression concept for the last 2 years. It has totally changed my life. I have not been 'wasting my time' by thinking about how to deal with this.

Almost everyone in my family is as blind folded as Rich says above and it saddens me everyday. I want to help them desperatly can't until after events start affecting them personally. I have been chided by some in my family by giving "doom and gloom" warnings. Now I just have to wait until people are on the same page as me.

What kills me is that there are people in my family with much more money than I do. Their money could still be made safe but I fear them losing much of it and soon. Sure I'll be able to keep my very small cache of money guarded for a little while but how long before I'm eating through it to buy food for loved ones who have run out? Medical insurance for loved ones who can't afford it?

Some close to me have gone out and bought new houses and cars today. Their debt loads are enormous. Much larger than their savings. I could not alter their habits by warnings. I was reluctant to even warn anyone at all...who wants to be told how to spend their money?

So DOG forgive me if I'm not perfectly sound of mind. My family is at risk and I care about them. It's like that 90 year old gentleman who lived on Mt. St. Helens before the eruption. The geologists warned everyone to evacuate. That guy just didn't believe that it could happen. He paid for that upbeat and rosy prediction.

What kills me even more is that people now think I'm a pessimist. I AM NOT A PESSIMIST! I am a realist. There is a reality out there that people just choose to ignore. At the bottom ... if I survive...I'll be saying things are about to get better...and no one will believe me then either. Why because everyone will be overly pessimistic at the bottom.

So how has this viewpoint improved my life you ask? It has improved my life by making me take stock in what is really important in life. I spend more time doing fun things for myself now. I play with my new born daughter. I come home from work earlier than before. I am appreciating life before the disaster. We are living in the last golden days before the fall. Having come to the realization I can't help anyone until events start to happen I have just turned inward and looked for spirituality.

So yes DOG I was offended by your remarks and took a swipe at you. I'm sorry. I have spent an enormous amount of effort trying to deal with the emotions of this event before it happens so I can help people when things get tough. I think I've mostly succeeded. I have found peace of mind about a lot of things but I'm still very anxious about what comes next. In all fairness you attacked first. I liked your second post better than your first. If we all keep it positive and try to help each other then we'll succeed. It is important not to fall into the psychological trap of negativity that is and will continue to feed on itself until the bottom.

Posted by: Michael at May 23, 2004 10:45 PM

when is this thing going to fall ive been waiting since I was 27 now I am 35

Posted by: at May 24, 2004 06:48 AM

Dog;

I think you have touched a nerve with allot of us, with your first comment. Beliveing as many of us do about out future, puts us in a very very small minority. And as such many take us as conspiracy kooks or overly depressed. Me and I believe most on this site are somewhat depressed. How can you not look out accross this country and see what is happening and not be depressed. But, like a recovering alchoholic there are stages. I for one am leaving my depressed stage and am entering a stage of realization and action. I sold my house and will rent with my wife and two children for the next couple of years. This is a big sacrifice but we will be debt free and have money in the bank. I am hoping to talk my wife into moving out of the city and into the country,where we can be more self sufficent. This will be stage 3, self dependence. To stop looking at the system to provide for your well being and happiness.

I am truly not depressed anymore. I, like one of the posters above are truly blessed that our eyes have been opened. 10 years from now someone may read this post a mock me because what I thought was going to happen still had not happened. So be it, if I am wrong, the things that I am doing are still right. Living debt free, living life for now and planning well for the future, being there for my children, instead of working two jobs to help maintain my debt load and house, these are good and possitive things(run on sentence I know). Looking to God to provide for me if things turn bad, that's the only way I can see a future. If things go the way we all think they are going to go, it's going to be bad beyond reckoning. If you think through the consequenses of a world wide depression added on to our complete and utter dependence on oil. If there were a catastrophic drop in oil supplies coupled with an economic depression, there would be no place to hide from it. So, instead of going into a hole with a gun, I choose to live my life possitively. I will love my children and wife, and provide the best I can for them. I will look to God to provide for the unknowable future. But, I truly believe that God only helps those that help themselves, so my belief is not a cop out. We must try to better ourselves and do the best we can to convince others of the dangers that our way of life support. If they laugh at you keep your head up and know that you are right, regardless if the money elites are able to pull another fast one and reinflate this economy for another 10 years. Who cares, knowing how we are being manipulated and controlled is the important lesson to be learned. Learning how to take controll of your life and money is the important lesson. Thanks for listening to my ramble.

Posted by: FeelingWierd at May 24, 2004 10:27 PM

I got this addy off the Prudent Bear page, where I am a poster. I will line out what I see. First of all, California housing has to be a bomb ready to go off. We got out of this last recession only because home equity was available to leverage private debt and not much else. It takes something in the tank to support an inflation of debt and we don't have what we need in the tank to soak up the cost of what has been expended and deflation is coming. The money elites won't give away what they have unless they get something back. We are going to be out of collateral the next time and the next time is around the corner.

I am looking at a market and an economy like we saw in Japan for the 1990's. If you look at the charts on that market, you will see it tried to rebound a few years after falling in the first 30 months or so of the 1990's. It peaked in 1996 and started falling from there. Unlike 2000, we now have a stock market bubble and a housing bubble and any move to stop inflation is going to collapse the housing market, depriving the next downturn and any upturn that follows of leveragable collateral and likely threatening the credit creating capacity of the banking system that has piled so heavily into mortgages this time around. Greenie has his back against the wall.

This time around we don't have the great strength we had as a country we had in the 1970's. At that time, credit was really expandable and we had been freed from gold and silver to limit credit. This time around, people are up to their neck in hock and they are out of the collateral that allowed the game to go on. We had our emerging markets in the 1970's and they fell on hard times after the trend ran out. China and the other emerging markets aren't exactly in fantastic financial shape. In fact, the situation in China, which is carrying the world economy right now and creating temporary shortages in commodities, isn't exactly rosy. Its infrastructure is not sufficient to carry what is going on there and going forward will be even more insufficient and could possibly collapse.

The only way to keep the credit structure intact is to continually deficit spend in greater amounts. I doubt this will be politically sustainable, but once we are in a position where the government is the only group that can create credit, we are frozen like Japan. Do we blow up the banks and start over, kicking the political power out of power? It will be easier said than done for the regulators to close operations like C and JPM.

Posted by: mannfm11 at May 26, 2004 08:54 AM

IMO:

Lessons in Life & don't move to EXPENSIVE MINNESOTA:

I purchased real estate in California in my early 20's believing those real estate agents(salesman). They basically told me, "Real estate NEVER falls it ALWAYS keeps on going up!"

Well, the early 1990s arrived in Orange County and suddenly the townhouse I got was not worth what I paid for it. So I suffered for ten years paying and maintaining for expensive housing when I could've been renting for less.

When the opportunity came to sell, I finally sold last year as the price almost doubled. I thought it would be better to get most of it out (the paper wealth) as I could get rather than all of it, just in case of the bubble bursting (then I would get little or nothing).

So here I am in Minnesota, and I'm hearing the same comments I heard in O.C., California years ago. "Our real estate has never crashed" Duh, if you read the history books, in the 1930's there was a big property crash in Minnesota. Also, in the high interest rate environment of the late 1970's, Real Estate in Minnesota also suffered. BUT NO ONE here wants to talk about it!

Another good Minnesota saying is, "Our economy is recession proof". Well, then how come out of most US states, Minnesota is one of the smaller runts when it comes to job growth?

To add to the difficulty of accurately reporting on what really goes on with the Minnesota economy. When the unemployment almost touched 5% last year, NO ONE wanted to talk about it. Now that it has "supposedly" fallen to 4.1% due to temporary jobs, its the talk of the town! Temp jobs are it around here...lol.

Suffice to say, its not easy living with this crap. These people are living in Oz / fantasy land, one that is very, very cold in Winter and very, very humid during Summer. More sheep like than independent thinkers really. Yet the Real Estate prices are astronomical.

Townhome prices on a billboard advertised prices in the $400,000+ range! Apartment like two bedrooms are in the $200,000+ range. There are also EXTRA expenses associated with living in this cold weather, which people don't think about before moving here (myself included).

If the prices are that high here, why not move to a metropolitan area (Seattle), where the prices are just as high or slightly higher and have the Ocean, Mountains, and amenities close by. Its boring here really...to me it does't feel metropolitan at all.

Of course Minnesotans will tout their 10,000 lakes...well, they're more like PONDS. AND you can't enjoy them for a good part of the year because they're frozen (5 months of Winter)and during Summer, they're brown & green and a breeding ground for biting insects.

I guess the only thing i can do is stay out of debt and plan prudently for the future. I have seen Real Estate crash before. It won't be that much different here. Minnesota Real Estate has increased by around 300% and that is not sustainable (low job growth, expensive business environment, expensive Real Estate - above average prices compared to national average, etc.)

BUT, I don't plan to stay around here and live with Sheep who live in a fantasy. I like to live in reality, not fantasy. I don't care, people here can keep on thinking, "Happy, happy, joy, joy, fun, fun" but the crash is just around the corner. Fortunately for me, I don't follow the herd.


Posted by: Jon at May 27, 2004 11:44 PM

English Bob: "Well I... I thought you had fallen off your horse -- drunk, of course -- and that you had broken your bloody neck"

Little Bill: "Heard that one myself. Turns out that I wasn't dead... it was just that I was in Nebraska!"

--"Unforgiven"

----------------------------------------------

Substitute Minnesota for Nebraska and you pretty much get the picture.

What the hell did you move there for anyway?

Posted by: Skippy at May 28, 2004 06:06 AM

Jon & Skippy,
Thanks for the reality check. We were thinking about pulling up our roots in So Ca (Ventura County-just N of L A )and heading to Colorado. MN or NE didn't cross our minds, but thanks for making us think twice. We also thought NC, since we have this desire to find Mayberry, but perhaps we'll just watch The Andy Griffith Show, and let our fantasy live on...

Posted by: fantasy is broken at May 28, 2004 06:30 AM

Dog
The search for information is not negativity but a search for truth. Sometimes the two can be confused. From outsiders looking in yes, I see how it can be perceived as negativity. However, many here do not go with "the crowd" or "the herd".
If a depression happens, it will not be about money or gold it will be about survival. It is nice to say love one and other right now, but when many loose their "stuff" they can get very upset. Will they want to love the banker that takes their home? Will they want to love the repo man as they take back their car. What will this person do?
Roy

Posted by: roy at May 29, 2004 12:56 AM

No, no, no! Please, no more So CA refugees in Colorado. Our life boat is full. Move somewhere else. I hear Witchita is infinitely better than any city in Colorado...

Seriously, all you escapees have caused a terrible housing bubble here as you bid up home prices to ridiculous levels. What's even worse, you then demand our local governments offer the same basket of freebies and perqs you had in tax-crazy California! Oh and thanks so much for the drug problems you brought with you. Seems that starting a meth lab is considered entrepreneurship among the lower class these days.

The next person I meet who tells me they're from California might get shot -- I mean it.

Posted by: tjc at May 29, 2004 08:53 PM

May,
Gosh, thanks for the non-invitation to Colorado. Its sad to hear when Californians leave the Republic, they take their sicknesses with them. Apparently its not a micro element, but its ingrained. I wanted to escape the brain dead, morally bankrupt, cash rich a-holes, but now you tell, there is no escape. Thanks for the warning. My husband is from Kansas, and he'll pass moving back. I was raised in Ca (from age 5) but still have my head on straight. You sound like someone I would love to know. You have both feet on the ground. Sorry to hear the nincompoops are causing a housing bubble. You see, all this delicious sunshine, bakes people's brain. Fortunately, I am not a sun worshiper.

Posted by: fantasy is broken at May 31, 2004 12:54 AM

above message is for tjc, sorry for the error.

Posted by: fantasy is broken at May 31, 2004 12:58 AM

TJC from Colorado and Jon in Minnesota,

It seems the colder the climate, the crankier the resident. Hey TJC, grab 'yer gun! I'm from (Northern) California! Don't worry, I don't have any intention whatsoever to move to Colorado.
I currently rent after selling my condo here for over three times what I paid for it in 1996! The "surreal" estate market is absolutely beyond belief in the San Francisco Bay Area. The cost of living here is astronomical, gasoline is among the highest priced in the nation, and local school closures and bankrupted cities (i.e.- Richmond) portend what lies ahead for all of us. People are moving to Colorado, Minnesota and other states - many times not because they want to, but because they are economically forced out.
As for myself, I have made sacrifices to stay right here. I now rent after owning. That was humbling and discomforting... at first. That didn't last long! I took the proceeds, paid off all debt and had a sizable amount to invest in precious metals!
To TJC in Colorado, I just want to tell you that your anger is justified, but directed at the wrong target. Your anger should be focused toward the Federal Reserve who make it as easy as possible to let anyone, regardless of risk obtain a mortgage and further EZ credit, which in turn drives the prices of homes (and everything else!) ever higher.
You want to talk about economic hardship, try making ends meet here without a leg up! It's expensive sure, and I am having to make sacrifices to live here, but for me it's worth it. It's beautiful, vibrant and the people on the whole around here are some of the nicest you'll find anywhere.
And as far as your commenting on California somehow being responsible for the increase in drugs and violence in Colorado, I'm sorry dude, this is a growing problem all over. And, as the economic situation becomes a lot bleaker more and more people are going to turn to drugs, alcohol and crime.

Posted by: RMC at May 31, 2004 01:30 PM

RMC-No Ca & TJC-Colorado
First RMC, being from So Ca, I can relate to the real estate price comment being "surreal". We sold or 4,000 sq ft home, and are renting too. Northern and Southern Ca are two different realities, but one thing is for sure, California's future is over. The illegals were the turning point, along with our very liberal state assembly. As for blame of the exodus out of Ca, I could not agree wtih you more. Truly, we are being lied too, and putting Greenspan back in as Chairman was amazing. You see things clearly, my fellow stateman.
TJC-I think Californians, who moved to Colorado flushed with housing windfall profits, don't understand that "something wicked, this way comes" (to quote Ray Bradbury) and they better start being a little more conservative on housing offers. I read an editorial today on SafeHaven that scared the hebie-jebies out of me. The only question I have is when does the Great Depression II start?

Posted by: Fantasy is broken at May 31, 2004 11:10 PM

TJC, you think you have problems. Motor on over to Paonia Colorado. Every nudnick trust funder from Denver and places east along with a host of empty headed marxist hippies from Northern California have moved in and are trying to engineer a take over of the entire political structure.

Folks in Iraq are bitter because white guys from North America are trying to tell the people in the seat of civilization they don't have any. How about the sons of pioneers who settled the Western Slope who daily learn they are stupid, ignorant, spritually wrong, and money grubbing consumerists because they work for a living?

The housing market on the western slope is dependent on Californians to keep prices up. When the California market collapses ours will as well. Some reports claim housing prices in Japan declined by as much as 90 per cent during the past twelve years. When the housing market in California topples we could be looking at wholesale foreclosures from the Pacific to the Front Range. Consider the possibilities as millions of disposessed Californians start roaming the Interstate looking for food and shelter.

You and others will be forced to cry out for suspension of the Constitution and enforcement of Marshal Law and travel restrictions just to protect our families.

I'm headed north. Montana I'm coming home!

Posted by: paoniaboy at June 1, 2004 12:48 AM

That's what scares me. Martial Law CANNOT be enforced on a country with a right to bear arms for it's citizens... UNLESS those citizens willingly volunteer for it.

But it's like Fantasia. You get those magic brooms started and you'll never be able to stop them. Ugh. This country gives me the willies. Oil prices are skyrocketing and every day I see more and more Excursions and H2 Hummers. Every day the television puts out dumber and dumber shows. It's like a coordinated attack to retard Americans to the point, and past the point, of total interest of anything. Starve everyone's souls and micromanage everyone's lives to the point of mass consumerism -- "buying all the products that they're selling you, believing all the lies they they're telling you. They say jump and you say "how high?"". -RATM

Montana? Hell... ALASKA! Deep, deep interior Alaska. Places so remote you can only get there with a helicopter.

"He who makes himself a beast removes the pain of being a man"

--Dr. Johnson

Posted by: Grizzly Adams at June 2, 2004 01:05 AM

I won't mention where I live. Too many Californians seeking refuge and ruining it. The Grapes of Wrath in reverse.

It's the economy, stupid. It's the war, stupid. It's the high prices, stupid.

You want to pay less for gas? Stop driving. Want the price of gas to be less? Stop driving.

Doesn't matter how much money you make, it is what is left that matters. Want more money? Stop spending.

Posted by: Ron at June 2, 2004 01:23 AM

Western Montana is no different. High priced houses being built, people working for sub-par wages and are slaves to the system. Montana's postal abbreviation is MT. That it is.

Posted by: Ron at June 2, 2004 01:29 AM

Ron,
Although I agree, we vote with our wallets, we can't stop driving, although most of us have cut back casual driving. Other than Iraq, Greenspan's asset inflation, debt driven consumption is a disaster in the wings. And because of Greenspan and this administration's policies, (I voted for Bush) the middle class is melting away. From outsourcing, to not raising the interest rate, to open borders, our govt has failed us. The list is long, and the solution is overthrowing the govt. In our family's eyes, America is over.

Posted by: Fantasy at June 2, 2004 08:23 PM

A cross sampling of America via the Yahoo board-Economic Article

I spent a few moments sampling a Yahoo message board, and from So Ca to Florida, and many states between, the folks on the board, are in despair, watching jobs melt away with no replacements, inflation eating away their money, and a feeling that things are actually getting worse. The right wing neo-cons (I use to be one-now a moderate) on the radio, are blaming this psychological doom and gloom on the left wing media. Gee, I assume its their personal finances hitting them in the face. BTW, Greenie says inflation is moderate, so it must be. LOL hahahahahahah

Posted by: Fantasy is broken at June 3, 2004 08:51 AM

Inflation:

2. A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.

http://dictionary.reference.com/search?q=inflation

The price of gold closed at 390 USD today. In circa 1970 the price of gold was fixed at 35 USD. The minimum wage was 1.60 USD per hour. Proportionally, the minimum wage should be at 16 USD per hour today. That is the minimum wage. In 1970, when I was in my 'natural prime', I was earning about 3.27 USD per hour; which would be 32.70 USD per hour for my earning power to be the same as in 1970. Who wants to pay those wages? The price of gasoline was at 19.9 cents per gallon. The oil companies are getting theirs, that's for sure.

We've been duped, hoodwinked, had the sheep pulled over our eyes. Along with it all, a stupid war that ain't worth fighting.

Somebody owes me some money.

Posted by: Ron at June 3, 2004 12:43 PM

Will someone give me their take on this essay, and tell me how this relates to the relationship between housing costs and salary deflation?


http://www.safehaven.com/article-1607.htm

Posted by: Fantasy at June 3, 2004 12:51 PM

Nano Technology and the Internet are just a segment of the U S workforce (and India for now, will be the hub),so the gentleman who was quoted in this Safe Haven article, is one of those Free Trade dreamers. We can't just have those kind of jobs, or service jobs,we need to make things and sell them. Give away your manufacturing sector, you've given away your economic base IMHO. Any feedback?

Posted by: Fantasy at June 3, 2004 11:30 PM

I have come across the following bits of information in the past few months, and would like to know if anyone can point me to substantial information substantiating any of them or current status updates or debunkings:

1) Two comets and a debris field are headed towards earth, and the two comets are likely to collide near the earth, sending one of them possibly into the earth, or if they don't collide, they may have toxic ammonia or phosphorus tails that will scorch the earth, and suffocate life.

2) The dormant volcano in Yellowstone park is nearing the point of eruption, and the ash fallout area could be from the Great Lakes, to Alaska, to the Baja peninsula to New Orleans

3) The magnetic poles of planet earth are in the process of switching, and the new north pole is to be near Hawii, the south pole off the south west coast of Africa. It was posited that since the poles of the sun flip every 11 years, and it only takes months for it to happen that it could happen in some short number of months on earth, and that the last time the sun's poles flipped, it somehow got two north poles.

4)The Gulf Stream sinks off the coast of Iceland, but the fresh meltwater from the Arctic Ocean is riding on top of where the Gulf Stream sinks, and it is sinking forty percent more slowly than before. Ice core samples from the Greenland Ice Cap have shown that ice ages have returned (presumably because of the Gulf Stream taking a southernly short cut) within a period of 8 to 12 years.

Reads too much.
wel

Posted by: WILLIAM LAUB at June 4, 2004 11:10 AM

I have heard similar rumors. The US Navy has set to sea.

http://www.urbansurvival.com/week.htm


Posted by: Ron at June 4, 2004 12:36 PM

I have been following this meteor story for a day or so. This is either going to be a first class duping on all of us or within a week we will all know that it was true. I don't scare too easy, but recent events make this ring truer than it normaly would.
Several Wierd things going on right now that should make the hair stand up on the back of your neck.

1) Fed Reserve is pumping money into the economy at break neck speed. Not since the days after 9/11 has there been so much activity. This by itself should make you perk your head up and wonder.

2) 7 or 8 Carrier groups out to sea at the same time. Although not a truly unique even, most certainly something that doesn't happen very often(usually times of War). And you take into account the Chinese manuevers off of taiwan and half of thier fleet out to sea, and Britain sending large portions of their fleet out with ours. Rumors that lots of other fleets are putting out.

3) I'm not an astronomer but I am usually interested in space stuff. I have never seen a news reation quite like the one linked off of drudge report. Early yesterday reports of a very bright meteor flying over Washington state(they have video that it happened).It was widely reported early in the day. But... about 3 hours later there were links all over the web about the fact that it was a hoax. Now if you hadn't read the first accounts or had and then read the 2nd News headlines, you would think that the whole thing was a hoax. That wasn't the case, someone had created a hoax that it had hit the ground, but the meteor diffinitly was there. The wierd part is not the meteor but the press reaction to it. Something this inconsequential being all over the newswires. Almost like they were going out of their way to debunk it. Take this with the recent meteor over NJ and New Mexico and you get ???? Maybe nothing, maybe not. Don't know, but I'll tell you, from now till next tuesday or Wednesday I will be watching the skies allot closer. I will probably just look like a complete and utter fool, which is why I am not talking about it to anyone in RL. Just sharing it with some of you.


Posted by: FeelingWierd at June 4, 2004 10:55 PM

Two comets and a debris field are headed towards earth...

The dormant volcano in Yellowstone park is nearing the point of eruption...

The magnetic poles of planet earth are in the process of switching...

------------------------------------------------------------------------------

Comets: It's has widely been my thinking that if there ever was a real serious comet that would threaten life on Earth we would never hear about it until the very end, my freind. Got to give the President and his staff enough time to reach the bunker 10 miles below the surface without all that pesky rioting.

Volcanos: It has also been a topic of much discussion between my brother and I that the caldera in YNP is one of THE most dangerous geographic areas in all the U.S. It's just waiting to collapse and take 300 square miles down with it. A volcano would certainly release the right amount of energy for this event to take place.

Magnetic Poles: Did you catch the special on NOVA about this? Magnetic disturbances on Mars are blamed for that planet losing it's ability to reroute magnetic fallout from the Sun, leading to it's current dead state.


It's going to be a lovely party isn't it??

Posted by: KilGore at June 4, 2004 11:31 PM

When you buy stock from your brokerage, the trade is settled through the NSCC (owned by the DTCC which is owned by the large brokerages, exchanges and federal reserve). If the seller is a short, they borrow the stock from the NSCC's "stock borrow" program.

The NSCC found it was profitable to lend out stock that didn't exist (after all, it is just a blip in the computer).

The end result is that more than one person might own the same shares. This creates problems if you want your certificate or are owed a dividend of a share in a private subsidiary.

The SEC has admitted that in some cases, the open failures to deliver are greater than all the issued stock of some companies.

According to their financials (note 10) from 2002, they had a $1.5 trillion of stock owing to them from members who may or may not deliver. The DTCC's assets are only $4 billion (+ 12 billion held in trust).

http://www.dtcc.com/AboutUs/2002annual/financials.html

This could explain why the banks don't mind derivative exposure. They can flood the market with unlimited "counterfeit" instruments from the borrow program.

The SEC just changed the rules so that companies can't do certificate based trading (which would force the shorts to cover).

The game is rigged so the big guys can't lose.

http://www.investigatethesec.com/MediaLinks.html


Posted by: steve at June 5, 2004 06:34 AM
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