Archives: 2008 March

You might be wondering just how bad can the US housing crisis get? The short answer is that it will probably be much worse than you now think.

The National Association of Homebuilders, as you might suspect, keeps a close eye on the nation’s economic trends. Home building is an important part of the US economy, accounting directly and indirectly for about 10% of all economic activity. The following is from one of the NAHB’s recent reports.

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The Economy Skates Close to Recession

GDP revisions for the fourth quarter of 2007 left the overall economic growth rate at a meager 0.6%, but the estimated contraction in residential fixed investment deepened to a 25.2% annual rate and RFI subtracted a whopping 1.25 percentage points from the GDP growth rate.

The housing contraction weighed on GDP growth from other directions as well, including the reeling housing finance system and components of retail sales closely related to housing market activity.

Available data, including housing starts and building permits for January and February, point toward another sharp contraction in RFI and another very weak GDP growth rate in the first quarter of this year, a pattern that skates dangerously close to recessionary conditions.

We now view a mild recession as a nearly even bet, but we also believe that aggressive actions by the Fed and the recently enacted economic stimulus package virtually guarantee stronger growth by the second half of the year.

To see more go to NAHB
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Note that the NAHB forecasters still take the common view that things will pick up in the second half of the year. Most economists, government leaders, and the average consumer is, in my opinion, still in denial as to how deep and prolonged this downturn will be.

For one thing the Bush administration is still in the Whitehouse. Why would anyone think that the same administration that has made such a mess in Iraq, could not deal with the reconstruction of New Orleans, is loaded from top to bottom with incompetent political hacks, and that never has been able to deal with reality, can deal with the worse downturn since the great depression.

For another , just as the bubble economy overshot the mark on the upside, the downturn will probably overshoot the mark to the downside. If history is any guide at all it only makes sense that one of the biggest bubbles ever created, the housing bubble, will take a long time to correct.

What most Realtors will not tell you, because most of them have a poor understanding of history, is that real estate can go down as well as up, and that the down cycles can last for a very long time. Japan is a good recent example. Real estate prices peaked there is 1989 and have fallen in many areas by up to 70%. While there has been some improvement over the past few years most real estate is still over 50% below 1989 prices.

A new breakthrough secret is all you now need in order to get your Google AdWords pay-per-clicks FREE!

A gentleman from New York discovered what he calls an “oversight” on the part of 99.9% of all marketers that allows him to get otherwise paid-for advertising at Google as well as all other search engines that allow sponsored ads.

And no, nothing about his “secret” is illegal – nor does it require that you know someone on the “inside” at Google, Yahoo, MSN, Overture and others.

Instead, the New Yorker boasts proudly “…this is something that I caught onto just before 2000 when there was so much search engine craze running around, and started doing small just to test things at first … but which I later expanded on after getting the hang of it.”

This same fellow went on to start and operate sixteen separate online companies selling everything from pet food, DVDs, children’s toys & games, books, software, and sold not only his own manufactured products but became an affiliate for other web businesses – all the while applying his mastermind secret.

Over the course of nearly eight years the New Englander confesses “I’ve actually gotten over $87 million in advertising that using my secret I never had to pay for … and the largest share of which was more recently in Google pay-per-clicks as well as other forms of pad advertising at search engines … all of which I got for free …”

So powerful is his secret that he’s able to monopolize any niche online, and can always secure the top premium spots just above the usual organic results featured at most search engines.

He still has to set up an account with the search engines – but after applying his secret he is removed from having to pay for all the costs otherwise involved.
Again, nothing about his secret is either illegal or robs from the search engines.

One spokesperson from one of the most popular search engines said chuckling after being made privy to this amazing secret “Wow! Ha! This is really unique … and in my expert opinion it would only serve to enhance and bring more business to us at [name of search engine withheld for legal & confidentiality reasons] and not cause us to lose business in the slightest. Amazing!”

The northerner revealed that in this nearly eight years’ period of time since applying his secret he’s done well over $300 million in sales revenue with a most diverse line of products, and most recently in the last two years netted nearly $166 million after really “buckling down and pressing my secret to its fullest potential.”

Now to everyone else’s fortune, the city slicker is releasing his secret for getting an unlimited amount of pay-per-click ads to the general public. But he’s not promising any of us for how long.

A bit of an eccentric, the gentleman says “We’ll see just how long I can make it available before it saturates things.”

While the Bear Stearns story is still unfolding it is obvious that the Federal Reserve Bank and Chairman Ben Bernanke have thrown caution to the wind and are now dancing with the Bear.

They are also dancing with a hot, really enraged, A group of shareholders who are claiming rape and who are wondering, with good reason, how they could have been practically wiped out in record time. From a high of over $170 a share only last year the generous price set by the Fed and JP Morgan for Bear Stearns was all of $2.00 a share.

Last week’s “buy out” of Bear Stearns really highlights the severity of the the possibility of a complete monetary system collapse. And not just by the investments banks, brokerage firms, and commercial banks but by the US Federal Reserve.

In order to induce JP Morgan to “buy” the Bear the Federal Reserve offered $30 billion dollars of taxpayer money to protect Morgan from nasty Bear portfolio surprises. No doubt here will be some in there as at $2.00 a share the Bear subprime “assets” must be toxic waste of the worse sort.

The Federal Reserve then did something totally unprecedented. The Fed, under Ben Bernanke’s throw the money from helicopters direction, made the same overnight lending facilities available to the brokerage firms as are available to the banks.

And the collateral for these loans? Why of course it is the impossible to evaluate toxic waste subprime paper that can’t be sold or even evaluated anyplace else. In effect the Fed has become the dumping ground for all of the contaminated near worthless paper that no one else will touch.

====== As Stated by the Taipan Publishing Group ====

As a result of all this, the Federal Reserve has picked up a new nickname — the Yucca Mountain of subprime.

For those unfamiliar, Yucca Mountain is a proposed dumping site for America’s nuclear waste. Most states are in favor except Nevada, where Yucca Mountain forlornly sits. Las Vegas is particularly less than thrilled at the prospect of a toxic tomb just 90 miles away.

Thanks to political opposition and technical problems, Yucca Mountain isn’t expected to open for business until the year 2021 (if even then). But the Federal Reserve version, as we have seen with Bear Stearns, is open for business right now. Subprime gunk has proven too toxic for Wall Street to handle, and there is just nowhere else to put the stuff.

As Wall Street’s books grow ever more radioactive in the minds of investors, the Fed will have no choice other than to continue its stealth nationalization program. The only way it can do that is by printing more dollars throwing good money after bad until the madness finally stops.

======= To Read the Full Taipan Publishing Group story =======