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2-27: Dow Drops 416 on Global Market Plunge
2-26: Greenspan warns of U.S. recession
2-25: Dismissed HSBC executives had received $40m in bonuses
2-22: Stocks are headed for a fall
2-21: Iowa Attorney General Targets Sub-Prime Lenders
2-20: Fed's Inflation Analysis Ranks With Zimbabwe's
2-19: Fed chief warned on inflation target
2-16: Diving for Pearls in a Sewer
Etc... Daily News from June 2006 to present and February 2006 - June 2006
We don't purport to know when the market is going to correct a few days hence... no one can know that. But the coincidence of a single warning story and a correction soon after is notable for readers who believe that intuition can have better predictive value than analysis.
Interesting also to note that while digging through past iTulip news stories we found another recent instance of Greenspan talking about the markets:
Greenspan: Global economy faces asset price fall
April 12, 2006 (Reuters)
Former Federal Reserve Chairman Alan Greenspan warned on Wednesday a global glut in liquidity would result in a fall in asset prices.
He said asset prices will begin to fall, but did not predict when that would happen.
"I am reasonbly certain that what we are looking at today is an abnormal situation," he said.
We all remember what happened a month later.April 12, 2006 (Reuters)
Former Federal Reserve Chairman Alan Greenspan warned on Wednesday a global glut in liquidity would result in a fall in asset prices.
He said asset prices will begin to fall, but did not predict when that would happen.
"I am reasonbly certain that what we are looking at today is an abnormal situation," he said.
Stocks Plunge as Commodities Spike Inflation Fears
May 14, 2006 (Reuters)
The stock market took its worst dive since January as prices of copper, nickel, zinc and platinum hit all-time record highs, renewing fears of inflation and higher interest rates.
IMF acts to avoid markets meltdown
May 15, 2006 (Guardian Observer)
The International Monetary Fund is in behind-the-scenes talks with the US, China and other major powers to arrange a series of top-level meetings about tackling imbalances in the global economy, as the dollar sell-off reverberates through financial markets.
'We are in meltdown mode,' said David Brown, chief European economist at Bear Stearns. 'It's all being whipped up into a bit of a selling frenzy. The dollar has a massive portfolio of negatives against it: it's the long-term problems of the trade deficit, and the government's budget deficit.'
Bloom warned that 'phase two' of a sell-off would cause turmoil in the equity markets, as on Friday, when both the Dow Jones and FTSE saw sharp losses. 'I'm expecting an increase in volatility and uncertainty across the board,' he said.
Dollar jitters shake world stocks
May 15, 2006 (Times Online)
Fears about inflation and the outlook for the dollar sent world markets tumbling for a second day as panicked investors pulled cash out risky investments.
Don't know about you, but next time Greenspan gets bearish on the markets or U.S. economy, we're buying and holding a Rydex negative index fund until the markets correct.May 14, 2006 (Reuters)
The stock market took its worst dive since January as prices of copper, nickel, zinc and platinum hit all-time record highs, renewing fears of inflation and higher interest rates.
IMF acts to avoid markets meltdown
May 15, 2006 (Guardian Observer)
The International Monetary Fund is in behind-the-scenes talks with the US, China and other major powers to arrange a series of top-level meetings about tackling imbalances in the global economy, as the dollar sell-off reverberates through financial markets.
'We are in meltdown mode,' said David Brown, chief European economist at Bear Stearns. 'It's all being whipped up into a bit of a selling frenzy. The dollar has a massive portfolio of negatives against it: it's the long-term problems of the trade deficit, and the government's budget deficit.'
Bloom warned that 'phase two' of a sell-off would cause turmoil in the equity markets, as on Friday, when both the Dow Jones and FTSE saw sharp losses. 'I'm expecting an increase in volatility and uncertainty across the board,' he said.
Dollar jitters shake world stocks
May 15, 2006 (Times Online)
Fears about inflation and the outlook for the dollar sent world markets tumbling for a second day as panicked investors pulled cash out risky investments.
The National Association of Realtors (NAR)–not to be confused with the IACR (International Association of Critical Realists)–announced that "existing-home sales in January rose 3 percent from December 2006, by the biggest amount in two years. Also, that the median price of an existing single-family home fell from a year earlier, to $210,600, the sixth straight monthly decline from year-earlier levels.
Does anyone really care what the NAS says? When I debated Mike Shedlock (aka Mish) recently on the topic of eventual, hypothetical post-debt deflation outcomes–the infamous inflation vs deflation question–one of his site's listeners commented to the effect that I must be out to lunch because I didn't know the main shill for the NAR David Lereah by name.
As Warren Buffett famously said, "Never ask a barber if you need a haircut." It's a waste of brain matter to commit to memory the name of any "expert" on the payroll. It is sufficient to determine whose payroll an expert is on, so that you can assign an appropriate bias level to the expert's opinion of the asset in question–stocks, bonds, commodites, real estate, bullish, bearish... whatever. In the case of Lereah, I discount his opinion 100%, and don't even listen to him for the entertainment value.
Bulls sell stocks and bonds, using compelling theory, such as explained in the bible of stock market investing Random Walk Down Wall Street, which holds that you can't make money timing the market.
The bond markets work the same way, except when they don't (PDF). Theory actually works for a while within a central banking managed market, but in the way physics works in an experiment. Guys like Jim Finkel at Dynamic Credit model and measure credit spreads on various tranches of CDOs, given a range of default probabilities, the way physicists model and measure the rate of sublimation of ice in an experiment, given a range of reasonably expected temperature and humidity levels, based on historical data, for, say, Nova Scotia, where the scientist thinks he is conducting his work. (Sublimation is the change from solid to gas without passing the liquid state, such as when the ice shrinks from your driveway even though the outside temperature has not gotten above freezing.) The experiment goes as expected for years, until one day it suddenly goes wrong. The temperature spikes to twice the level predicted in the model. That's when the scientist who thought he was working in Nova Scotia discovers he's actually been working inside a giant refrigerator... and global central banks just pulled the plug.
One topic that I don't see getting a lot of coverage over on the housing bubble blogs is the impact of expiring building permits. The plummeting number of permits issued is no doubt feeding the Fed's worries about a recession, as permits and recession are strongly correlated. New building permits are a measure of new demand; the number permits expiring indicates the extent of decline in demand that is already counted, but may be fiction. Now all the data are circumstantial.
Builders cancel, put plans on hold
February 22, 2007
Some developers hope to wait out the real estate market's downturn
In 2004 Kevin Ward bought a deteriorating hive of apartments near the Venice airport and converted them into 20 affordable condominiums, his first play in Florida real estate. Five sold in one day. In less than a year he flipped the entire building.
Ward doubled-down, pitching two more projects far more ambitious than the first, with some 3,000-square-foot units carrying $1.5 million price tags.
Today, both are at a standstill.
"We'll probably be back this time next year with a new project," said Ward, 49. "We think the world will be a little bit better then."
We don't. Come June 2007, it'll be two years down, eight to go. February 22, 2007
Some developers hope to wait out the real estate market's downturn
In 2004 Kevin Ward bought a deteriorating hive of apartments near the Venice airport and converted them into 20 affordable condominiums, his first play in Florida real estate. Five sold in one day. In less than a year he flipped the entire building.
Ward doubled-down, pitching two more projects far more ambitious than the first, with some 3,000-square-foot units carrying $1.5 million price tags.
Today, both are at a standstill.
"We'll probably be back this time next year with a new project," said Ward, 49. "We think the world will be a little bit better then."
Kevin Ward above is only demonstrating the natural human tendency to assign the quality of intelligence to good luck. If he'd had the further good luck to have been reading iTulip, maybe he would not have "doubled down" and used the proceeds from the sale of 20 affordable condos to purchase a white elephant. Kevin, if you are reading this, take comfort in the fact that as unwitting occupants of a bubble economy, we have all made such misjudgments at times. And if you are feeling down, remember, there is always someone with even worse judgment to point to and laugh at. To wit...
Lonely man brought donkey to hotel room, court told
A man who was found dressed in latex and handcuffs brought a donkey to his room in a Galway city centre hotel, because he was advised “to get out and meet people,” the local court heard last week.
Thomas Aloysius McCarney with an address in south Galway was charged with cruelty to animals, lewd and obscene behaviour, and with being a danger to himself when he appeared before the court on Friday. He was also charged with damage to a mini-bar in the room, but this charge was later dropped when the defendant said that it was the donkey who caused that damage.
Solicitor for the accused Ms Sharon Fitzhenry said that her client had been through a difficult time lately and that his wife had left him and that his life had become increasingly lonely.
“Mr McCarney has been attending counselling at which he was told that he would be advised to get out and meet people and do interesting things. It was this advice that saw him book into the city centre hotel with a donkey,” she said. She added that Mr McCarney also suffered from a fixation with the Shrek movies and could constantly be heard at work talking to himself saying things like “Isn’t that right, Donkey?”
Supt John McBrearty told the court that Mr McCarney who had signed in as “Mr Shrek” had told hotel staff that the donkey was a family pet and that this was believed by the hotel receptionist who the supt said was “young and hadn’t great English.”
Receptionist Irina Legova said that Mr McCarney had told her that the donkey was a breed of “super rabbit” which he was bringing to a pet fair in the city. The court was told that the donkey went berserk in the middle of the night and ran amok in the hotel corridor, forcing hotel staff to call the gardai.
McCarney was found in the room wearing a latex suit and handcuffs, the key to which the donkey is believed to have swallowed. He was removed to Mill St station after which it is said he was the subject of much mirth among the lads next door in The Galway Arms.
He was fined €2,000 for bringing the donkey to the room under the Unlawful Accommodation of Donkeys Act 1837. Other charges were dropped due to lack of evidence.
A man who was found dressed in latex and handcuffs brought a donkey to his room in a Galway city centre hotel, because he was advised “to get out and meet people,” the local court heard last week.
Thomas Aloysius McCarney with an address in south Galway was charged with cruelty to animals, lewd and obscene behaviour, and with being a danger to himself when he appeared before the court on Friday. He was also charged with damage to a mini-bar in the room, but this charge was later dropped when the defendant said that it was the donkey who caused that damage.
Solicitor for the accused Ms Sharon Fitzhenry said that her client had been through a difficult time lately and that his wife had left him and that his life had become increasingly lonely.
“Mr McCarney has been attending counselling at which he was told that he would be advised to get out and meet people and do interesting things. It was this advice that saw him book into the city centre hotel with a donkey,” she said. She added that Mr McCarney also suffered from a fixation with the Shrek movies and could constantly be heard at work talking to himself saying things like “Isn’t that right, Donkey?”
Supt John McBrearty told the court that Mr McCarney who had signed in as “Mr Shrek” had told hotel staff that the donkey was a family pet and that this was believed by the hotel receptionist who the supt said was “young and hadn’t great English.”
Receptionist Irina Legova said that Mr McCarney had told her that the donkey was a breed of “super rabbit” which he was bringing to a pet fair in the city. The court was told that the donkey went berserk in the middle of the night and ran amok in the hotel corridor, forcing hotel staff to call the gardai.
McCarney was found in the room wearing a latex suit and handcuffs, the key to which the donkey is believed to have swallowed. He was removed to Mill St station after which it is said he was the subject of much mirth among the lads next door in The Galway Arms.
He was fined €2,000 for bringing the donkey to the room under the Unlawful Accommodation of Donkeys Act 1837. Other charges were dropped due to lack of evidence.
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