Archive for May, 2008
America Motoring to Disaster
America has been motoring towards disaster ever since its economy was structured around the automobile and cheap energy supplies. Now that energy is no longer cheap disaster is imminent. Like the airlines, the American business and lifestyle model is broken with oil above $125 a barrel and probably headed higher, perhaps much higher, as peak oil all too soon kicks in with a vengeance.
Gasoline prices at $4.00 a gallon have started to force Americans to cut back on their driving. Even middle class families are having a tough time making ends meet with rising gas prices, rising food prices, double digit increases in the cost of health care, stagnant incomes, and falling house prices occurring all at the same time. So some effort at energy conservation is finally underway.
28May2008 | taipan | 0 comments | Continued
Mortgage Housing Economic Crisis to Get Worse
Those investors who think that the worse of the mortgage, housing, and economic crisis are already behind us should consider the following report.
According to a new report from the Office of Federal Housing Enterprise Oversight the prices of homes sold in the first quarter of 2008 posted a record decline.
Home prices fell 3.1% from the first quarter of 2007, the largest decline in the purchase-only index, which excludes refinancings, since the federal agency began keeping records 17 years ago.
First-quarter prices dropped 1.7% from the fourth quarter, the largest quarterly dip ever.
“It’s not going to be the largest decline on record for long,” said Peter Schiff, president and chief global strategist at Euro Pacific Capital.”Prices are going to keep falling until we get to the equilibrium, which is much, much lower. This is only the beginning.”
22May2008 | taipan | 0 comments | Continued
A Flock of Black Financial Swans Overhead
Black Swan events are disastrous events that are supposed to be so rare that one doesn’t really have to worry about them. The probability of a black swan event occurring is just too remote.
Or is it?
I can’t help but think that a flock of black swans is still circling above the world’s financial markets. One or more of the unwelcome critters will likely swoop down to engulf the markets in yet another crisis later this year. 2008, the year from hell, seems to have created exactly the type of environment that naturally attracts black swans. The mispricing of risk is a tasty morsel that I expect black swans love.
17May2008 | taipan | 1 comment | Continued
April 2008 US Foreclosures Set Record Level
U.S. home foreclosure filings set a new record level high in April, 2008, rising about 65% over the previous year and placing municipalities at risk by cutting into the value of taxed property. The U.S. Foreclosure Market Report was released on May 14,2008 by the RealtyTrac, an online marketplace that tracks foreclosed properties.
There are still many optimists about who seem to think that the worse of the financial crisis is over. Current data suggests otherwise and that foreclosures will continue to increase over the next year to 18 months. It is hard to see the US economy doing well with massive numbers of foreclosures dragging down the value of the entire US housing market.
14May2008 | taipan | 0 comments | Continued
America’s Dependence Upon Cheap Energy
America and the American Empire were build on the back of cheap energy. Now that energy is not at all cheap the empire is running on gas fumes. The growth model has been broken, even if most Americas don’t realize it yet. But they soon will as crude oil prices move even higher.
Just think about how American developed as a nation. The concept of manifest destiny meant that we pushed ever westward, until America controlled all of the vast territory from the Atlantic to the Pacific, from sea to shining sea and beyond as we added Alaska, Hawaii, Puerto Rico, and Guam.
12May2008 | taipan | 0 comments | Continued
US Federal Reserve Bank Loves Bubbles
The United States Federal Reserve Bank just can’t help itself. It has an apparent love for bubbles, bubbles, bubbles. As soon as one bubble shows signs of deflating the Fed gets busy and creates another.
First it was the Dot.Com bubble that was created by the then Chairman of the Fed, the one and only maestro bureaucrat, Alan “Bubbles” Greenspan of irrational exuberance fame. What a spin master. It was Mr. Greenspan who created the bubble after the Asian currency crisis of 1997 and 1998. World financial markets were flooded with liquidity as Alan and the Fed panicked and turned on the cheap credit money making machines to flank speed, damn the consequences.
6May2008 | taipan | 0 comments | Continued
Hello Eugene,
Thanks for taking the time to read the post and for your comment.
Sadly, most Americans are still in a ...
Quite right,too.
When confronted by such experts I immediately ask why, if they're so clever, they're working ...
A very interesting and informative post, Taipan, even if depressing.
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