New home sales were reported slightly better than forecast. YAY!!! Cried the Cheerleaders.
Existing home sales fell 2.6 % to their worst levels in a decade, despite an average price decline of 6.1% (Note to Federal Data Collection Folks - nobody really believes your numbers). Booo! Booo! Cried the Cheerleaders. Pay no attention to that man behind the curtain!
Builder's can cut deals to move houses. Free swimming pools, free kitchen granite tops, great financing,.. Existing home buyers usually need to sell the home for more than the mortgage. Those who bought, or refinanced, after 2002 have been having great difficulty clearing that hurdle.
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Friday's should get really interesting for the financial markets over the next year or 2. That is the day that the FDIC will do its seizing and liquidating. You see, the last thing the FDIC wants to do is panic depositors. They will do their dirty work after the news services have depopulated late in friday afternoons. That gives depositors a couple of days to cool their heels before freaking out about the bank that holds their money.
True to form, the FDIC took over 2 more insolvent banks yesterday. Within 18 months, the U.S. will most likely need to nationalize the banking system. The only reason I said "most likely" instead of "definitely" is that the U.S. COULD get "lucky" and experience a round of price and wage hyper-inflation, making mortgages easier to pay for those still employed. I just don't think that the most likely outcome. My G-d, now I sound like one of these no account Wall Street economists... "on the other hand". Never mind, Oil supplies will not be there in sufficient quantities necessary to save economic growth and hence home prices and hence the banks. How can you have wage inflation if more than half the folks working are in the Real Estate, Finance, and Insurance fields, areas that will need a great deal many LESS workers in the very near future?
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These guys have financed MILLIONS of SUV's and pickup trucks for people that don't really need them, making assumptions about the end of lease values for these vehicles that have no correlation to the present realities. Whoever owns this debt is DEAD. SUNK. GLUG.
And you know how I feel about the automakers to begin with.
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We have had our noses pushed up against the glass for so long following the energy, mortgage, and banking train wreck, that we have let the wolf into the door. Over the next decade the big story will be grain and food inventories and supplies.
More on this soon.
Mentatt (at) yahoo (dot) com
4 comments:
I was thinking about grain prices the other day. If you are holding a ton of dollars that are deprecating like mad; things like wheat, with an indefinite shelf life, probably look pretty good. It will always have value and unlike gold its ownership would be hard to ban.
(From the bureaucrat):
Ahh, be aware of this harder-than-it-looks "indefinite shelf life" thing. I figured it would be a good idea to stockpile some food, and after going thru what very little there was on the net on the subject, I think there is only three things that have indefinite shelf life: white sugar, white rice, and honey (assuming the honey has very little water in it). This stockpiling thing is harder than it looks! I have some freeze-dried food cans (good untill 2033), but beyond that, the only things I could further stockpile were paper goods, shower curtains (made from oil) and some precious metals.
How much stockpiling are we talking about? There is only so much room in one's house.
Hard grains such as wheat, corn, etc. can last 15-20 years at 70F. Soft grains like barley or oats, beans and white rice (yep) will last 8-10 years, flour and canned goods last 1-2 years. Note that every 10F drop in temperature doubles the storage life, every 10F climb halves it. Sugar, honey and salt can last indefinitely. When you stockpile, you have to note down the date put away, then use the older items while replacing them.
Nice catch, Tweell, I'd planned to mention salt as keeping forever.
That said, grain and rice both have a definitive shelf life, even with modern technology (freeze drying, nitrogen packing, etc), and always have (historically speaking), which is why both these products were historically used as and accepted as market currency, to pay taxes, and were horded by the lords and rulers of the day against "lean times" (Egypt and Rome come to mind for grain, ancient China and feudal Japan for rice)
The natural loss rate of this 'currency' (due to rats, rot, spoilage, etc) helped maintain the steady-state solar-dependent economies of the day, in the same way that a gold standard did for later currencies. But I digress.
Tweell's data is correct for the stored foods he mentions.
On the flip side, it's already too late for many products, for example Oregon Freeze Dry, the maker of Mountain House canned dehydrated freeze dried foods and one of the largest canneries in North America, is already sold out through 2010, and food prices are already soaring on more commonly available fair from the local grocery/chinamart.
Got food?
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