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"One should either write ruthlessly what one believes to be the truth, or else shut up."

Arthur Koestler 

Monday
Sep222014

World War III Kickstarter

Friday
Sep192014

Will Housing Decline?

Joshua Pollard, the former head of Goldman Sach's housing research department during the 2008 real estate crash, thinks that homes are headed for a decline:

3 Stages of the home price decline

Unless the calculus of history is a poor guide, there is a 60% chance that home values decline materially, in fact, the correction is already underway. This probability rises when new negative shocks emerges. The home price decline will be defined by 3 Stages:

Stage I: Hot to Cool: Active since Summer 2013*, Price growth is slides across the country as flippers lose money outright in the red-hot investor markets (NYC, San Francisco and Las Vegas); New home absorption rates - sales per community - are declin; investors slow their home purchases; total home sales decline year over year; developers lose pricing power, press outlets shift from positive to mixed about the health of the housing market.

Stage II: Demand to Supply: Small shocks convert demand pools into supply ripples. A first wave of investors begin trimming prices to get ahead of future declines; discounts increase to incentivize purchasers as purchasers increase their delays for better deals; developers reduce land budgets as cancellations tick up; major financial press outlets take a more negative tone toward housing lowering confidence overall.

Stage III: Deflation & Response: Falling home prices create a negative deflationary feedback loop that foreshadows a once-in-a-lifetime policy response. Deflationary economics take full hold; leveraged bets on real estate unwind in quarterly ripples due to the public reporting cycle & asset manager redemption schedules; willingness to lend shrinks; the broader consumer finally understands it is a bad time to buy a home, a shrinking housing market negatively impacts jobs causing recession; the estimated effects of never-before-seen public policy reactions determine when and where prices eventually trough. 

Note that Pollard is trying to start some new sort of project. 

While I did not perceive it in the summer of 2013, I do see the beginning of a decline now. Prices have once again reached the silly levels of 2008. I noticed a house in San Diego, a simple three bedroom house in an older area. It sold for $400,000. As someone raised in San Diego, I am in the common situation of being unable to afford to buy any of the houses I grew up in. Here is the Zillow estimate for the cheapest one of them: La Jolla Home

$1.2 million for a simple 3 bedroom house. 

As Herb Stein famously said, if a situation can't continue, it won't continue. 

Thursday
Sep182014

Can You Reduce Your Debt?

Can you reduce your debt? I have been trying for years and have finally got my debt considerably reduced. I am not where I want to be—yet. 

Why is this important?

The economy is currently not that bad, but the effects of good economic results are quite spotty. There is still a large overhang of future problems building slowly. Interest rates will go up, and that means prices of investments and residential property must go down. On a purely subjective basis it seems that we have a few years of sideways movement in economy activity. But even though I think a crisis is coming, I feel that the US will "weather the storm" better than most countries.  

While I am not a fan of economic collapse blog, I agree with this point strongly: 

The U.S. National Debt Has Grown By More Than A Trillion Dollars In The Last 12 Months 

The idea that the Obama administration has the budget deficit under control is a complete and total lie.  According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollarsfor the first 11 months of fiscal year 2014.  But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated.  If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny.  On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32.  As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37.  That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months.  We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation. 

Debt is not going down. The statistics you read are not reliable. Another crisis is coming. 

Do not be like the typical person that has zero savings, or even worse, the savings they do have are less than their credit card balances.  If you have credit card debt, make it your highest priority to pay it off. There is nothing you or I can do about the overall economic situation, but on a personal level we can get ready.

Are you ready? 

Thursday
Sep112014

False Flags

Here is Wikipedia's definition of a false flag:

False flag (or black flag) describes covert military or paramilitary operations designed to deceive in such a way that the operations appear as though they are being carried out by entities, groups or nations other than those who actually planned and executed them. Operations carried out during peace-time by civilian organizations, as well as covert government agencies, may by extension be called false flag operations if they seek to hide the real organization behind an operation. Geraint Hughes uses the term to refer to those acts carried out by "military or security force personnel, which are then blamed on terrorists."

Here is a list of various false flags from the Washington Blog that are admitted to have occured. (Note that at least one seems not admitted but possible.) The list is well worth your time. 

Trust no government official. 

Wednesday
Sep102014

Breaking News:Russia Invades Ukraine