Posted on August 28, 2008 @ 10:53 pm - Written by BawldGuy
I often make economists the butt of jokes. I remember one time a line by Johnny Carson. “If all the economists were laid on the ground head to toe, it’d be an excellent idea.” He didn’t think much of them that night. They want us to drink their own special recipes of Kool Aid, but don’t like it when folks notice they’ve predicted 13 of the last 4 recessions. That, uh, includes the recession of 2008 — yet another in a long line of recessions that never were. Yet since the last quarter of 2007, ya couldn’t swing a dead cat (pun intended — ya gotta read the linked post) in ‘Cable TV World’ without seeing a talkin’ head warning us of the recession around the corner. There were a couple who even had the cajones to say out loud and in public that we were already in one.
Makes ya wonder just how stooped some of them think we all are, doesn’t it?
The current and persistent real estate market correction has been the topic of debate since its birth some three years ago. I’ve seen this movie a few times before. I know the ending. Each time another sequel comes to theaters, the debates are similar. Most center around how harsh the correction will be, and when it might run outa steam. To that end, I ask you today,if you would do me the favor of reading a post published here almost exactly eight months ago.
It talked about real estate investing in 2008, and also included my thoughts on the possible life span of this correction.
I reread that post today. My thinking hasn’t changed. In fact, I’m more convinced than I was in January about what the last reel of this sequel holds for us. Plainly put, it’s my contention this time next year we may look back to the late summer, early fall months of August/September/October of 2008 as the time when the market began in earnest to execute it’s painstakingly slow U-Turn. Recoveries are like like emerging from recessions in that it’s only in hindsight that we pinpoint their beginnings.
I won’t go into detail tonight about on what hook(s) I’m hangin’ my ‘end of correction’ hat. Suffice to say the well known disclosure applies. My opinion, along with my heavily armed Starbucks card will get us coffee and cookies most days.
That said, what I thought was gonna happen has been playing out, more or less, since January. There are several trends which, when isolated may not mean much, but when seemingly choreographed with each other, can become powerful forces. Again, I’ve seen this movie, lived it actually a few times already. It’s my opinion the last reel is already playing on the screen.
We’ll see. Again, thanks for reading the January post. I’d love to hear your thoughts.
As I said back then, be nice, be respectful, and let it fly. Have a good one.
Posted on August 17, 2008 @ 11:10 pm - Written by BawldGuy
Of course I have no empirical evidence of this contention. However, dealin’ with real estate investors for over three decades, I’ve been able to observe certain personality traits repeat themselves. One of these is the so called ‘maverick’ gene. You know, when I was in high school, you either loved the Beatles or the Stones. The ones who didn’t care what others thought, went for the second tier, so called ‘cuz they weren’t the Beatles or the Stones.
I liked the Beatles, but could take or leave most of their stuff. Same with the Stones. ‘Course, they both recorded songs that I still love today. Still, high school buds never tired of laughing at my musical taste — which they said was mostly in my mouth. Not so. I just had what Grandma always said was an eclectic taste in music.
Fast forward to the present, more or less. Unlike the Kingsmen who were almost the poster band for one hit wonders (Louie Louie), These guys have been around for years. Anyway, I like these guys. They do what they think is best and right, and let the chips fall, regardless of what others think. Read the rest of this entry »
Posted on August 15, 2008 @ 11:41 pm - Written by BawldGuy
At a family dinner tonight we had three generations at the table. We were at one of our favorite places, and were enjoying several appetizers. Grandma came up in the conversation as we were talkin’ about the Great Depression. The usual stories were told, but then my daughter asked me to tell her favorite Grandma story.
Here’s some perspective against which you can evaluate our current economic challenges.
In the early parts of the last century, the 1920’s, though history books tell us everyone was in the high cotton, bad times had begun for many areas of the country. We usually hear about the Roaring 20’s with the wild parties, and regular folks makin’ it big time in the stock market.
That’s true as far as it goes. Those in ‘fly over’ country were already gettin’ a preview of what was just around the corner. Grandma was the oldest of eight kids. Think it was like The Waltons? Think again. The story is short, and for Grandma ends up being about, of all things, shoes. But for me? It was always about perspective. Read the rest of this entry »
Posted on July 27, 2008 @ 8:35 pm - Written by BawldGuy
In my experience, the beginning of the end of relatively bad economic down times, comes when the handful of folks with real power decide it’s time. You think dancers are choreographed? When the real power makes their moves, Fred Astaire is impressed.
The last several weeks, especially during this month, the small group of clean-up hitters have all grabbed their bats. (He said, making use of world class skill at mixed metaphors.) Bernanke bails out one of the biggest Wall Streets houses. Before that he was indirectly increasing liquidity of not only domestic banks but hose across the pond. He then allows banks not on the cool list access to ‘the window’ at the Fed. His latest? Allowing Fannie and Freddie to also belly up to the Fed for dead presidents as they see fit.
Those are serious moves by anyone’s definition.
Next comes the White House. The president blithely strolls up to the podium and announces how he’d be pleased as punch if we turned drilling for oil into a national sport. Geez, I dunno. Ya think that had anything to do with the almost immediate downward pressure on oil prices?
Wanting his own face time was Treasury Secretary Paulson. Henry throws the gauntlet down to the rest of the world — seems the dollar should be strong. Now there’s an idea to ponder. Why didn’t we think of that? A strong dollar tends to solve a plethora of economic ills. This isn’t news, of course, but true nonetheless.
To review, here’s what’s happened, and just as importantly, not happened in the most recent past.
Bear Stearns failure avoided. Liquidity for banking systems not allowed to become huge factor. Secondary market for real estate credit/financing aided. Oil problem finally shown in public to be what it’s been all along — supply and demand. Go figure. The dollar begins to get real support, at least on the talkin’ side. And for bonus points boys and girls, durable goods swats Chicken Little in the butt. The market had already discounted widely accepted expectations of a .2% dip. Instead, they came in at a solid, and surprising full 2% increase.
And no, I’m not gonna argue the finer points with all the MBA’s who think it’s their mission in life to explain how everyone else in the room just doesn’t get it. The fact is, the big boys are now in the first stages of flexing their muscles, and I’m not gonna quibble — except to say it’s about time, guys.
OK, enough of that stuff on a Sunday. let’s listen to some tuneage. Between Bernanke, Bush, and Paulson, seems they’ve choreographed their dance well.
And now, apropos of absolutely nothing, except maybe as homage to The Boss, our Sunday night video. See ya tomorrow.
Posted on July 19, 2008 @ 12:01 am - Written by BawldGuy
This is yet another recession predicted for nearly a year that hasn’t materialized. MSM (mainstream media) is desperate to create the perception if they can’t report the reality. This time they’ve even gone as far as using the ‘D’ word, depression. ‘Course they’ve backed of that bit of unintentional comedy, as in the six months or so since they first used it, they can’t even coax a recession to appear.
Does this mean there won’t be one? Hardly. But I’d ask you to consider a couple facts.
1. Recessions can be pinpointed as to their beginning and end only through the rearview mirror. Time passes and we’re able to look at the numbers which indicate a recession has begun — or in the case of the last seven years or so — hasn’t begun.
2. Recessions are like pregnancy, at least in concept. You are either in a recession or you are not. Ever met a woman who was kinda sorta pregnant? Me neither.
But enough. The point is simple: The reality of a recession’s existence isn’t open to debate. It has a finite, and long accepted definition which ain’t rocket science, regardless of what MSM would have readers believe. Simply put: Two consecutive quarters of negative GDP growth. When that happens a recession exists. If it ever happens this year or next, you’ll know. The headlines in the MSM will probably be in four inch tall, bolded fonts. Read the rest of this entry »
