iTulip.com

Oil sheen spreading from Gulf platform explosion

aaron — Thu, 02 Sep 2010 19:03:32 GMT

Here we go again:

Quote:

Alan Sayre, Associated Press Writer, On Thursday September 2, 2010, 2:03 pm
NEW ORLEANS, La. (AP) -- The Coast Guard is saying that a mile-long oil sheen is spreading from the site off an offshore petroleum platform that exploded in the Gulf of Mexico off Louisiana.

The site of the explosion is west of where BP's massive spill occurred.

The Coast Guard said no one was killed Thursday in the explosion. The blast was spotted by a commercial helicopter flying over the site.

All 13 people aboard the rig were found floating in the water in survival gear.

Dutch Boy Micha Kat

don — Thu, 02 Sep 2010 18:55:26 GMT

Max talks to journalist Micha Kat about the Bilderberg Group�s lawsuit against him.

EJ's Book: "The Postcatastrophe Economy" available now!!!

LargoWinch — Thu, 02 Sep 2010 17:15:24 GMT

I was lucky enough to get my hands on a copy of the galley and I must say that I really enjoyed it.

EJ has quite a knack for explaining very complex economic and socio-political processes, as per discussed here on iTulip, in a concise and accessible manner.

This is a book I could easily give to one of my friends, with no interest in economic or investing and they would say: "Yoah! Really?". In other words, they would get it.

As for me, I found it was a great complement to my iTulip experience. It is almost a condensed version of iTulip's work, but sometimes certain concepts are approached from a different angle, which is quite welcomed.

Well done EJ.
5 Stars: *****

Oh and BTW, jimmygu3 is the first one to write a review on Amazon, and a nice one at that.

Available now!

Farm Land Investment

dummass — Thu, 02 Sep 2010 14:39:29 GMT

http://www.hardassetsinvestor.com/fe...e-to-stay.html

US Housing Data Cooked?

don — Thu, 02 Sep 2010 14:21:13 GMT

Housing Numbers - Are They Being Cooked?

I have a very disturbing email that came in this evening.

It alleges out-and-out fraudulent reporting of home sales in one of the regional MLS systems.

That is, prices paid that are in fact much lower than the "sold" prices reported in the MLS.

The person in question claims to have seen over 100 of these in his area. I have copies of two, and it appears, from the evidence that I have, that at least for those two the claim is accurate.

One in particular I was able to pull the auction data on. It "sold" under reserve, is listed as sold in the MLS at ~25% higher than the "sold" bid, and the premium is disclosed as 5%. This property also has a 90-day "anti-flip" provision on it, implying that the paper may be held by one of the GSEs. (It's a nice-looking place, incidentally.)

Here's the problem, obviously - Case-Schiller and other "home statistics" numbers related to price paid are all computed off these numbers provided by the local Realty boards (via NAR.) If the data in the MLS is bogus then so is the so-called "median sales price" and so are Case-Schiller's numbers!

These are not small discrepancies either - in both cases the "over-reporting" is by approximately 25%!

Both subject properties sent to me were auctions.

I am going to dig into this - if this can be verified and is happening nationally the claims of recent price stabilization are utter crap, and the first obvious question that arises is "how far back does this go?"

It also raises a key question when it comes to BPOs, not only from a standpoint of bank valuations (e.g. "drive-bys") but additionally if you're buying a house and your agent is showing you comparable sales predicated on faulty MLS data you are going to be induced to RADICALLY overpay.

For the time being I would verify any claimed "sold" prices with the county recorder before believing any alleged "sold" prices you're being fed as comparables.

This might be an anomaly, an "isolated incident", or it may not be what it appears to be, but with a 25% disparity we're not talking small potatoes if this is accurate.

http://market-ticker.org/akcs-www?post=165800

This time is different

sgominator — Thu, 02 Sep 2010 10:49:20 GMT

http://noir.bloomberg.com/apps/news?...DWkBH4tM&pos=3

;_OO

Is this the contrarian indicator that the chinese bubble is finally ready to bust? :o

PS.
by the way, did Bloomberg redesign its web site in white/orange in place of the old black/orange to prop up the social mood of the financial community?
was the black backgroud too much "depressing"?

Germany plans for Peek oil

Mega — Wed, 01 Sep 2010 21:19:00 GMT

http://www.spiegel.de/international/...715138,00.html

Mike

Fiat money will collaspe in 2011 !

Mega — Wed, 01 Sep 2010 20:03:32 GMT

http://www.marketoracle.co.uk/Article22354.html
Mike
BTW:- EJ do you want ti interveiw me for your new book?

Canadian Housing Question

don — Wed, 01 Sep 2010 19:31:04 GMT

Housing bubble at precarious 30-year peak

National Office | News Release
Issue(s): Economy and economic indicators, Housing and homelessness
Projects & Initiatives: Growing Gap
August 31, 2010

OTTAWA � For the first time in 30 years, a synchronized housing bubble has spread to six red-hot real estate markets in Canada, says a report by the Canadian Centre for Policy Alternatives (CCPA).

Canada�s Housing Bubble: An Accident Waiting to Happen examines trends in house prices in Toronto, Vancouver, Calgary, Edmonton, Montreal and Ottawa between 1980 and 2010 and finds price increases in those cities are outside of a historic comfort level.

On average, inflation-adjusted house prices in these cities have historically held stable at between $150,000 and $220,000 in today�s dollars, but current housing prices in all six major markets are now over $300,000, on average.

�The bursting of housing bubbles is a rare event in Canada, but the steep rise in house prices in so many cities displays all the hallmarks of an accident waiting to happen,� says the report�s author David Macdonald, a CCPA research associate.
Historical trends indicate Canada�s hottest six real estate markets are more unstable than a generation ago, especially after steep house price increases between 2002-07. Before 2000, house prices tended to hover within a narrow range of between 3 and 4 times provincial annual median income. Today, house prices are anywhere from 4.7 to 11.3 times the median income.

�As house prices rise outside of their historical range they become much more susceptible to mortgage rate changes,� says Macdonald.

�The hottest six real estate markets could be in for a correction at best or, at worst, a bubble burst. Rate setters at the big banks are in the driver�s seat now as mortgage rates inch up. They need to hit the brakes lightly.�

Canada has only had three housing bubbles burst, twice in Vancouver and once in Toronto. The study simulates the conditions of the two most recent bubbles, as well as the 2006 housing market collapse in the U.S., to assess how bad a correction might be. It predicts homeowners in Edmonton and Montreal could be hardest hit, losing 38% to 34% respectively of their property value in under three years in a worst-case scenario. Vancouverites would be worst hit, in dollar value, losing almost $200,000.

http://www.policyalternatives.ca/new...s-30-year-peak

A look at Canada�s housing market

Who might be in trouble and what can be done?

by David Macdonald, Trish Hennessy
National Office | Commentary and Fact Sheets
Issue(s): Economy and economic indicators, Housing and homelessness
Projects & Initiatives: Growing Gap
August 31, 2010

The Canadian Centre for Policy Alternatives released a study showing that, for the first time in 30 years, six red-hot real estate markets are in a synchronized housing bubble. The Centre�s Trish Hennessy interviewed the study�s author, CCPA Research Associate David Macdonald, to learn more about the problem.

Trish Hennessy (TH): We know the American housing market collapsed in the wake of the subprime mortgage crisis a few years ago but Canada's housing market has been viewed as relatively healthy. Your study on Canada's six hottest real estate markets indicates our housing market might not be as rosy as we think. What's your diagnosis?

David Macdonald (DM): I think Canadians have come to expect that their houses will increase in value by 5% to 10% a year and the truth is, like the U.S., that kind of return on investment simply can't continue indefinitely. Record-low mortgage rates and deregulation of the Canadian housing market means that housing prices are getting far outside of their historical "comfort zone." My concern is that when we get outside of that zone, housing prices become much more volatile and can be affected quite dramatically by changes in mortgage rates.

TH: Canadian housing prices may be out of their comfort zone, but is the problem worse in some cities than others?

DM: Definitely. Edmonton, Montreal and Vancouver are particularly at risk. Sleepy housing markets like Edmonton and Montreal exploded around 2002, with prices rising from about 3 times the provincial median income to 4.5 times in less than a decade. The third threat � Vancouver � did not experience as big a percentage increase (housing prices there were sky high to begin with), but homeowners in that city may be poised to experience a much larger dollar loss if mortgage rates increase.

TH: So, if I own a home in Edmonton, Montreal, or Vancouver how worried should I be?

DM: I'd be pretty worried. The historical perspective suggests housing markets that went up the most have the most to lose. It is really mortgage rates that will define when housing prices start to fall and how quickly. Every housing bubble in Canada since 1980 has been burst when mortgage rates when up by more than 1% above their two-year average. We aren't close to that tipping point right now and we may stay safely below it in the short term � say the next 6 months to a year � but that doesn't mean that the situation is stable in the long run. On the bright side, those who owned a home before 2002-03 will still see a modest appreciation in the value of their home, even following a crash under the worst-case scenario. (Worst-case scenario being a widespread housing market collapse like what happened in the United States post-subprime mortgage fiasco). On the down side, homeowners who bought their house after 2002-03 are more at risk.

TH: Many Canadians have bought a home -- and assumed hefty household debt -- with the notion that home ownership is a form of financial security; that if things go badly in the labour market or whatever, at least you have a house to sell as financial insurance. In fact, a lot of Canadians count on selling their home to ensure a good retirement. Are we right to think this way or is this a potentially dangerous game?

DM: Owning a home certainly can be a useful means of forcing one to save and accumulate for retirement. What is shocking is how quickly Canadians assumed that housing prices would continue to increase at 5% or more a year. Instead of a place to live and raise a family, a house has become the latest investment craze. Just as Nortel was once seen as a sure winner that couldn't fail (and many an investor got a great shock there), the housing market craze is equally vulnerable to downturn. Unfortunately, Canadians are taking on far too much debt to get into the housing market now. I can only hope that smart policies are put in place quickly to let air out of housing bubble slowly -- otherwise, a lot of Canadians could get burned.

TH: What can we do to stave off a major housing bubble burst?

DM: First of all, the government, through CMHC, can slowly curtail the 35-year mortgages that it insures. Prior to 2006, the maximum amortization period was only 25 years and we should return to that level. Second, the banks have a big role to play. When � and if � the Bank of Canada starts to raise interest rates, the big banks need to maintain a slow and measured increase in their mortgage rates, even if it means a hit to their billion dollar profits. If the banks shock a precarious housing market with a large mortgage rate increase, Canadian homeowners will almost certainly shoulder a dramatic drop in average house prices. The pressing need for these changes to Canada�s housing policy should help to drive home the message that a house is where we live � it shouldn't be speculative investment.

http://www.policyalternatives.ca/pub...housing-market

24-page PDF Canada's Housing Bubble @ http://www.policyalternatives.ca/pub...housing-bubble

what does recent LOW gold/silver volatility mean?

grapejelly — Wed, 01 Sep 2010 19:14:30 GMT

Very low volatility in the last few weeks. What does it mean?

Gold hasn't move up or down very much at all.

What do you read into this?

PCR: Death By Globalism

don — Wed, 01 Sep 2010 17:47:30 GMT

Death By Globalism

By PAUL CRAIG ROBERTS

Have economists made themselves irrelevant? If you have any doubts, have a look at the current issue of the magazine, International Economy, a slick publication endorsed by former Federal Reserve chairmen Paul Volcker and Alan Greenspan, by Jean-Claude Trichet, president of the European Central Bank, by former Secretary of State George Shultz, and by the New York Times and Washington Post, both of which declare the magazine to be �ahead of the curve.�

The main feature of the current issue is �The Great Stimulus Debate.� Is the Obama fiscal stimulus helping the economy or hindering it?

Princeton economics professor and New York Times columnist Paul Krugman and Moody�s Analytics chief economist Mark Zandi represent the Keynesian view that government deficit spending is needed to lift the economy out of recession. Zandi declares that thanks to the fiscal stimulus, �The economy has made enormous progress since early 2009,� an opinion shared by the President�s Council of Economic Advisors and the Congressional Budget Office.

The opposite view, associated with Harvard economics professor Robert Barro and with European economists, such as Francesco Giavazzi and Marco Pagano and the European Central Bank, is that government budget surpluses achieved by cutting government spending spur the economy by reducing the ratio of debt to Gross Domestic Product. This is the �let them eat cake school of economics.�

Barro says that fiscal stimulus has no effect, because people anticipate the future tax increases implied by government deficits and increase their personal savings to offset the added government debt. Giavazzi and Pagano reason that since fiscal stimulus does not expand the economy, fiscal austerity consisting of higher taxes and reduced government spending could be the cure for unemployment.

If one overlooks the real world and the need of life for sustenance, one can become engrossed in this debate. However, the minute one looks out the window upon the world, one realizes that cutting Social Security, Medicare, Medicaid, food stamps, and housing subsidies when 15 million Americans have lost jobs, medical coverage, and homes is a certain path to death by starvation, curable diseases, and exposure, and the loss of the productive labor inputs from 15 million people. Although some proponents of this anti-Keynesian policy deny that it results in social upheaval, Gerald Celente�s observation is closer to the mark: �When people have nothing left to lose, they lose it.�

The Krugman Keynesian school is just as deluded. Neither side in �The Great Stimulus Debate� has a clue that the problem for the U.S. is that a large chunk of U.S. GDP and the jobs, incomes, and careers associated with it, have been moved offshore and given to Chinese, Indians, and others with low wage rates. Profits have soared on Wall Street, while job prospects for the middle class have been eliminated.

The offshoring of American jobs resulted from (1) Wall Street pressures for �higher shareholder returns,� that is, for more profits, and from (2) no-think economists, such as the ones engaged in the debate over fiscal stimulus, who mistakenly associated globalism with free trade instead of with its antithesis--the pursuit of lowest factor cost abroad or absolute advantage, the opposite of comparative advantage, which is the basis for free trade theory. Even Krugman, who has some credentials as a trade theorist has fallen for the equation of globalism with free trade.

As economists assume, incorrectly according to the latest trade theory by Ralph Gomory and William Baumol, that free trade is always mutually beneficial, economists have failed to examine the devastatingly harmful effects of offshoring. The more intelligent among them who point it out are dismissed as �protectionists.�

The reason fiscal stimulus cannot rescue the U.S. economy has nothing to do with the difference between Barro and Krugman. It has to do with the fact that a large percentage of high-productivity, high-value-added jobs and the middle class incomes and careers associated with them have been given to foreigners. What used to be U.S. GDP is now Chinese, Indian, and other country GDP.

When the jobs have been shipped overseas, fiscal stimulus does not call workers back to work in order to meet the rising consumer demand. If fiscal stimulus has any effect, it stimulates employment in China and India.

The �let them eat cake school� is equally off the mark. As investment, research, development, etc., have been moved offshore, cutting entitlements simply drives the domestic population deeper in the ground. Americans cannot pay their mortgages, car payments, tuition, utility bills, or for that matter, any bill, based on Chinese and Indian pay scales. Therefore, Americans are priced out of the labor market and become dependencies of the federal budget. �Fiscal consolidation� means writing off large numbers of humans.

During the Great Depression, many wage and salary earners were new members of the labor force arriving from family farms, where many parents and grandparents still supported themselves. When their city jobs disappeared, many could return to the farm.

Today farming is in the hands of agri-business. There are no farms to which the unemployed can return.

The �let them eat cake school� never mentions the one point in its favor. The U.S., with all its huffed up power and importance, depends on the U.S. dollar as reserve currency. It is this role of the dollar that allows America to pay for its imports in its own currency. For a country whose trade is as unbalanced as America�s, this privilege is what keeps the country afloat.

The threats to the dollar�s role are the budget and trade deficits. Both are so large and have accumulated for so long that the prospect of making good on them has evaporated. As I have written for a number of years, the U.S. is so dependent on the dollar as reserve currency that it must have as its main policy goal to preserve that role.

Otherwise, the U.S., an import-dependent country, will be unable to pay for its excess of imports over its exports.

�Fiscal consolidation,� the new term for austerity, could save the dollar. However, unless starvation, homelessness and social upheaval are the goals, the austerity must fall on the military budget. America cannot afford its multi-trillion dollar wars that serve only to enrich those invested in the armaments industries. The U.S. cannot afford the neoconservative dream of world hegemony and a conquered Middle East. (here's where Roberts fumbles the ball a bit- the US is in the ME in order to assure the mandate of the dollar as the world's oil-buying script)

Is anyone surprised that not a single proponent of the �let them eat cake school� mentions cutting military spending? Entitlements, despite the fact that they are paid for by earmarked taxes and have been in surplus since the Reagan administration, are always what economists put on the chopping bloc.

Where do the two schools stand on inflation vs. deflation? We don�t have to worry. Martin Feldstein, one of America�s pre-eminent economist says: �The good news is that investors should worry about neither.� His explanation epitomizes the insouciance of American economists.

Feldstein says that there cannot be inflation because of the high rate of unemployment and the low rate of capacity utilization. Thus, �there is little upward pressure on wages and prices in the United States.� Moreover, �the recent rise in the value of the dollar relative to the euro and British pound helps by reducing import costs.�

As for deflation, no risk there either. The huge deficits prevent deflation, �so the good news is that the possibility of significant inflation or deflation during the next few years is low on the list of economic risks faced by the U.S. economy and by financial investors.�

What we have in front of us is an unaware economics profession. There may be some initial period of deflation as stock and housing prices decline with the economy, which is headed down and not up. The deflation will be short lived, because as the government�s deficit rises with the declining economy, the prospect of financing a $2 trillion annual deficit evaporates once individual investors have completed their flight from the stock market into �safe� government bonds, once the hyped Greek, Spanish, and Irish crises have driven investors out of euros into dollars, and once the banks� excess reserves created by the bailout have been used up in the purchase of Treasuries.

Then what finances the deficit? Don�t look for an answer from either side of The Great Stimulus Debate. They haven�t a clue despite the fact that the answer is obvious.

The Federal Reserve will monetize the federal government deficit. The result will be high inflation, possibly hyper-inflation and high unemployment simultaneously.

The no-think economics establishment has no policy response for economic armageddon, assuming they are even capable of recognizing it.

Economists who have spent their professional lives rationalizing �globalism� as good for America have no idea of the disaster that they have wrought.

Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury.

http://www.counterpunch.org/roberts09012010.html

DC Begins the Bust-up

BuckarooBanzai — Wed, 01 Sep 2010 15:55:35 GMT

From the Daily Bell. http://www.thedailybell.com/1338/DC-...e-Bust-Up.html

Excerpt:

"The American exception has traveled from a republican democracy to a back-room exercise in influence peddling. It has gone from a fairly transparent system to one that lacks even the most elemental checks-and-balances at a fundamental level. No one will ever understand the horse-trading that goes on or loopholes that have been created via these behind-the-scenes regulatory exercises. This hardly can be called legislating anymore. It is a form of pocketbook law."

Obama looking for a cloaking device....

Mega — Wed, 01 Sep 2010 11:14:17 GMT

He wants to "Cloak" QE2 !
http://nbyslog.blogspot.com/2010/09/...ted-to-be.html
Mike

Rob Arnott on Sovereign Debts

oddlots — Wed, 01 Sep 2010 02:32:22 GMT

I thought this was a good interview and analysis from Rob Arnott regarding debt metrics in the world:

The interview was here:

http://kingworldnews.com/kingworldne...ob_Arnott.html

The paper - "Debt be not Proud" - can be found here in the middle right:

http://www.rallc.com/

Takeaway is that there's little if anything to distinguish the "PIIGS" from the G5 in terms of debt metrics. Who coulda node?

Overdose: The Next Financial Crisis (46min.) - Aug. 31, 2010

LargoWinch — Wed, 01 Sep 2010 00:21:54 GMT

Mildly entertaining, a lot of rehash/economic fast food, but a few decent parts such as comments from Freddie Mac ex-chief economist.
-LW

Trailer: 2min.

Full Movie: Runtime: 46min. (Available in HD)

Quote:

In times of crisis people seek strong leaders and simple solutions. But what if their solutions are identical to the mistakes that caused the very crisis? This is the story of the greatest economic crisis of our age, the one that awaits us.