Tuesday, January 29, 2008

This just in.... (HA!)

"The Federal Reserve may push interest rates below the pace of inflation this year to avert the first simultaneous decline in U.S. household wealth and income since 1974..."

May push rates below rate of inflation? This journalist certainly has a knack for the understatement. Assets bubbles are going to come, for sure... but they won't be were the Fed wants them. Say hello to $200 Oil, $25 Nat Gas, $10 Gallon of Milk, $8 per dozen eggs, $35 Silver, and $2000 Gold. Say goodbye to the value of your savings if you continue to hold them in dollars or fixed incomes securities denominated in U.S. dollars.

"BP's Global Refining Margins Sink Almost Four-Fold on High Oil"

"Folks, the lack of new refineries is soooooo 2006" - Dr. Saif Lalani. Production of conventional crude oil is in decline, not ifs, ands, or buts. We now have TOO MUCH refining capacity, and whenever an industry experiences overcapacity, their margins get killed.

Call me old fashioned... but for me to pay 30, 40, 50 times earnings for a stock, there has got to be some damned sure earnings growth in evidence, and it has to last YEARS. Otherwise, these stocks are going down like a rock in a pond.

WTF???!!! There are several signs of where the bottom is. Rents are 3 to 3.5 % of the purchase price of homes in most bubble markets. When rents get to 5 to 5.5% of median purchase price the market will see the bottom - so either rents go up by 80% or prices come down another 40%, give or take. Any questions you jerks at the Sun Sentinel (South Florida's POS rag). Here is another sign of a bottom: When median income can pay for a mortgage that is 80% of the purchase price of a home. Are these metrics really that hard to understand? Now take the next leap. Inflation will help those housing metrics, deflation will kill them. Hope for inflation. Be ready for anything, but my bet is on monetary inflation.

Folks, most things lend themselves to just a LITTLE BIT of old fashioned homework.

Check back here for a no BS assessment of the incomprehensible HS we are spoon fed from the Main Stream Media.

Yours for a better world,

Mentatt (at) yahoo (d0t) com

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