The Housing Mess; Europe Gets Uglier; FED Meeting; The Trillion $ Retirement Problem and More
Many tell me I am unreasonable in my negative outlook on housing for not only the next few years, but at least for a decade. I am willing to admit that certain hot markets like mid to lower Manhattan, or Greenwich, Connecticut do exist as the rare exceptions to an otherwise moribund housing picture. For the very wealthy who don’t need to be concerned with a 20% downpayment things are peachy, for the rest of mainstreet America it is a different story.
The hyperster housing folks have more to work with today, or do they? Housing starts plunged from a revised 744K to 708K. Actual completions fell by a whopping 10%. Permits (promises to build at some future point) soared from 723K to an annualized rate of 780K. Let’s see first if the permits result in higher start numbers in the months ahead. June 30th marks the 3rd anniversary of Cramer’s proclamation that the bottom housing was in. LOL.
Related and Supplemental: construction sector has been losing jobs for 5 months straight.. http://research.stlouisfed.org/fred2/series/USCONS
Anyone start the day off buying 1 year Spanish bills with a record yield of 5.07? Last week’s “Spailout” of €125 billion received an underwhelming response because Spain really needs much, much more.
Realated: ING Says Spain To Need €250 Billion More http://ow.ly/bFMDK. Who has that kind of money? The IMF, the ECB, the EFSF, or the ESM? I’d better stop. It’s too early to belly laugh. Spain should be the synonym for toast – sadly enough. Italy waits in the wings.
The relative good news? Spain’s 10 year yield, after spending some time at over 7%, has scooted back to the 6s.
The European crisis is a “take no prisoners” situation. Even in Germany, typically portrayed as the strongest, dominant and last-man-standing candidate; the all important ZEW economic survey contracted by the largest since 1998.
France’s Insee Business Barometer also weakened leading French banking giant Socgen to suggest there will be euro area economic contraction in both Q2 and Q3.
But not all doom and gloom….
Europe Will Emerge Stronger Than Ever: Mark Mobius http://soc.li/gos7yyB via @CNBC. I can’t disagree if past performance is guaranteed for the future. Even from cultures that went extinct in the annals of history, there was some surviving remnant that would start anew and become bigger and better.
What does Marketwatch know that we don’t? It sent an article out yesterday speculating that Benny and the inkjets (my mild nickname compared to ZeroHedge’s “Chair-Satan”) would conclude the two day meeting tomorrow by announcing an extension of Operation Twist. As a Fed watcher for 20 years (originally forced into it during my Bloomberg days), Twist only extension would be a disappointment – a failure – a non starter for the markets. Goldman Sachs has suggested the Fed could adopt a policy of willy nilly treasury buys to the tune of upwards of $75 billion per month. That sort of policy would not only spark a huge rally in stocks, but would also propel gold to break out of its recent trading range and send it well on its way to $2,000 an ounce.
The Fed’s conundrum is simple. It has been flooring the use of so called “printing” and it just cannot stop “printing” lest the entire Ponzi mechanism seizes up. Adding funny money on top of funny money is a Ponzi and Ponzi’s can only survive through attracting more unsuspecting buyers even if the buyer in the Fed’s case is the Fed itself.
Gold will be a key tell. A slump post Fed announcement means the Fed is stuck in the mud; a rally for gold would indicate the Fed is admitting that it can’t stop the Ponzi and is actually enhancing it.
In a time of deleveraging, the Fed’s policy is a nightmare as its near zero interest rate policy has not flooded households with cheap money.
Another Trillion Dollar Problem in the Making
States face a $757 billion shortfall in funding for public retirement accounts, Pew Center study says: http://apne.ws/KOPR0j -AP
The Cost of Keeping The Masses for Grabbing Their Pitchforks?
$80 bln. That’s annual cost for the foodstamp program under terms of the latest 5 year farm bill that appears to be headed for Congressional passage.
Do Cellphones Cause Cancer?
Related: FCC May Revisit The Issue [Mashable report] http://bit.ly/LSFnyt.
The World Health Organization thinks cellphone radiation is a carcinogen. The FCC has maintained that cellphones do not fry your brain. Let’s pretend the FCC reversed its stance. Would we go back the crank style phones of the 1890’s? I could see that scenario as problematic.
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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