oftwominds: Housing, Leverage, the Dollar and Purchasing Power

Of Two Minds quoting Harun I. :

"It is not under-education or an inability to think critically which part people from their money, it is their uncontrolled emotions. Faced with purchasing a house which they know is unaffordable or choosing to rent they will not bother to run the comparison as long as it is their dream and 'someone' told them they could. Had grumpy old Mr. Critical Thought been allowed to show up and run a spread sheet or put the numbers into Quicken they (the cold, emotionless reality of the numbers) would have irrefutably deprived them of their 'dream'.

This drama plays out everyday at different levels across the spectrum of human psychology, the food you should not eat because you are morbidly obese, the years-old but never used exercise equipment in the garage, the spouse or partner who is abusive but you can't leave, the dress, shoes, house, boat, car you have to buy but cannot afford, the candidates we vote for because we like the way they part their hair. The inconsistencies, contradictions and convolutions are endless and mind-boggling to the point of madness to the observer."

"10-12 months to three digit oil"

Housing Has not Bottomed if It Were Priced in Gold

If Housing Were Priced in Gold -- Seeking Alpha:

"That is, if gold continues rising and housing continues declining, then it is certainly possible that the median house price could fall to 100 ounces of gold--a mere 20% of its 2005 peak."

Excellent chart. The housing/gold ratio's rate-of-change line is a surprisingly straight-forward downtrend.

BLS Jobs Numbers Contradict BLS Jobs Numbers -- Seeking Alpha

Jeff Nielson in Seeking Alpha dissects a propaganda piece:

"However, I recently begin looking at a different report – reported by the same BLS – that releases the same data, but on a state-by-state basis. I was motivated to do so after reading the unmitigated drivel in a recent article from the Financial Times which was analyzing the U.S. jobs reports. The following statement caught my eye:

Although U.S. joblessness has shown signs of easing nationally in recent months, it continues to accelerate at the state level.

In other words, the oxymoron which the Financial Times (and the rest of the propaganda-machine) is trying to pass-off is that the United States has two, entirely separate economies. There is the “national” economy - where the propaganda-machine assures us “the recession is over”, then there is the separate, state-by-state economy, where the “recession” continues to get worse."

"Too Big For Society"

FT.com / UK - Turner tells bankers to focus on core roles:

"Lord Turner made a robust defence on Tuesday night of his allegations that the “swollen” financial services sector has grown too big for society.

Before an audience of bankers, the head of the City regulator said banks had to focus on essential economic functions if they were to regain society’s trust."

Monetarist Theory as Apologia

SAlbert Kessler, Chairman, Appenzeller Business Press AG - Inflation versus Deflation.pdf:

This is yet another point that Friedman doesn’t seem to deal with. He postulates that a steady-state central bank that feeds just a little money into the economy would prove efficient and productive. What is lost in Friedman’s argument is why he feels the need to justify central banking at all. In the end, the monetarist argument seems more of an apologia for central banking than a considered analysis of what really occurs in an economy that offers up a money monopoly to a handful of individuals.

"Banks are a Pyramid Scheme"

Web of Debt author Ellen Brown on debt money, why money is collapsing and why central banks need adult supervision:

"Brown: Our money is an illusion. Except for coins, which compose only one ten-thousandth of the money supply, all of our money today consists of debt to private banks. Banks always take back more money in principal and interest than they put into the money supply as principal, making the system basically a pyramid scheme. After 300 years, this scheme has spread around the world and has now reached its mathematical limits."

Smoking gun of the Rally?

Funding a Rally Extension -- Seeking Alpha

"As we have seen with the permanent open market operations (POMO), it appears that much of the stock market ramp (at least for the first half of the 2009 rally) was demonstrably accomplished with POMO funds paid to primary dealers that plowed the money into stocks. We have also correlated large increases in bank non-borrowed excess reserves (green in chart below) with stock market ramps. The chart from the previous post is updated here:"

Roubini and Taleb: Government's Socialization of Losses Is Destroying the Real Economy

Washington's Blog:

"Roubini has previously written:

We're essentially continuing a system where profits are privatized and...losses socialized.

Now Nassim Nicholas Taleb is saying the same thing:

After finishing The Black Swan, I realized there was a cancer. The cancer was a huge buildup of risk-taking based on the lack of understanding of reality. The second problem is the hidden risk with new financial products. And the third is the interdependence among financial institutions."