Tuesday, January 24, 2012

Outlook: 2012 Q1 update

New year, new projections, and a bit of a review of the previous year.  I will dive right into it.

Employment:  Previous call on this one was not so bad, it has continued to flatten out, although the headline number stands at 8.5%, but the drop in that number has not been because of new jobs, but due to people not being considered as looking for a job (because they have given up).  Dashed green line is the old prediction, and I suspect now I am about 8 months early on the start of the drop in this, so I have revised the prediction (new red line).  I am on track here, and still solidly believe that unemployment will become an even bigger issue going forward.

As you can see with my previous track record, guessing the inflation percentage is pretty poor, but to my defense, it is a wild number that could be entirely made up.  Without going back and tracking down the dates, I suspect the first leg up from mid 2009 to the beginning of 2010 was the impact of QE1, and the second leg up from 2011 to now was the impact of QE2.  Will there be a QE3?  Some say yes, some no, either way I cannot see it mattering much.  If it is enacted, it will be small and I am depicting this as a slowing of the deflation in the 2nd half of this year.  Why no QE3?  The bond holders and rating agencies are about to put an end to the spend spend spend mantra.  Recall that the rating agencies put the USA on watch in July, and the review should come in January, so with the recent bill to allow the tax cut to continue for 2 months into 2012, and the unemployment payments to also continue, look for bond buyers to say enough is enough.

I cannot be too upset with the Dow Jones, the peak was higher and longer than I predicted, but it now really does appear a peak is in and the "look out below" phase should now start in earnest.  For those of you counting, that would put the most recent peak as May 2nd, 2011 at 12,876 which remains below the all time peak of 14,280 on October 11, 2007.  I seriously do not think we will see these numbers again any time soon.  I am very concerned on this, if it does happen, it will be fast and furious.  Please beware.  Most of the people I read these days are at best neutral, and many are leaning towards the scenario I have depicted below.  Even if you are optimistic, a correction of the leg up from 2009 is due. 

As for gold, I have consistently been wrong on this.  I can recall when it was $400 and when it got to $600 I did not believe it.  Now at $1600/ounce it just seems insane to me.  Look at the curve of the price climb, if I were to continue the same arc I would get a circle.  Again, with the Dow I think the top is in, and as an added bonus, banks have become very protective of their cash, and it is very unlikely they will continue pumping money into gold and silver.  Why?  Losses in the stock market will force investors to convert gold to cash to cover positions, and that will drive the price down faster than the stock market.  I would not touch this at all until it is below $600, likely lower.

The super committee has failed, and so the debt continues to rise.  Look for congress to eliminate the automatic cuts, but it will not matter much.  I am expecting another credit agency to downgrade the US debt in Jan or shortly thereafter. The curious thing in my mind is that the debt level did not return to where it should have.  I know they hid some of the debt in funny places to forestall the "decision date" but would have figured that they would have undid that.  The limit will soon be $16.4 trillion without any fuss which should carry the US to the end of 2012.  Again, for every dollar the government spends, it borrows $0.33 of that dollar.  For 2012, there is no budget, else they would have to put on paper that they are spending like mad. 

2012 is the year Europe sees at least 2 countries default (yes, not just Greece).  Why 2?  Because you have to understand, they have all lent money to each other, so when Greece goes everyone takes a hit to their finances.  I will guess that the 2nd country will be Hungry or Italy.  Could be both, but unlikely.  Interesting how Greece, Ireland, and Portugal have been dropped from the Federal Reserve report.  Last I checked, Greece was paying 400% for a 1 year bond (ie people expected default within 3 months).  In the news you will start to learn about a CDS, which is the acronym for Credit Default Swap.  In short, to cover bets on bonds, some banks bought these CDS's as insurance in case of a sovereign default.  When the default does occur, a lot of money will change hands... a lot!!! Nearly all of the European countries have been downgraded recently, including France which will only continue.  Nothing good will come from Europe this entire year.

Consumer credit has bounced since the downturn, much more than I would have thought, and continues to rise as confidence builds.  This will not last forever, as people and businesses become weary of a downturn (ie read Recession) and will shed debt.  For 2012 I suspect things will flatten with the turn down starting at the end of the year. 

The beauty of statistics is that they are numbers on a piece of paper (or computer screen) and with an eraser or the delete button you can wipe them out.  This is what the National Association of Realtors has done.  Lucky for me it has not impacted prices, but sales for the last 5 years or so have been revised down.  Apparently they overestimated the numbers by about 10% which is quite remarkable to me, since it is someones job to gather this stuff.  Anyway, I was a little low in my call, but not all that far off.  I cannot say this was a good call, but nor can I say it was bad.  Look for the upward trend to continue until the summer as the last of the last hurrah's and then things should start moving again... down.  I honestly have little clue who is buying at this point, you either have to be very optimistic, or perhaps not aware of the extent of the trouble ahead.

And there you have it.  Keep your money safe, be wary of your 401k, have some cash stashed away for safe keeping if you can.  When Europe implodes, it will not take long before it explodes and takes out surrounding regions like China and the USA.  The die are cast, just have to wait to see the final numbers now.  Lets hope I am totally wrong and everything turns out wonderful this year... but I am not counting on it.  Good luck to all!


Tuesday, November 22, 2011

Outlook: 2011 Q4 update

Sorry for the delay, a move can distract your focus a bit.  So data is as of today.  The next update in Jan will be the yearly one where I update the predictions once again.

You can forget about the US defaulting, that mini-crisis came and went with no big fan fare.  But things are rapidly deteriorating.  Greece has technically defaulted, and the people are protesting in the streets with massive strikes by public unions that do not want their money cut.  Italy is not in as bad shape, but the protests there have turned violent.  And now we are seeing Occupy Wall Street (OWS) starting in New York, and then spreading to multiple major cities in the US, and now London.  These peaceful protests will turn violent, but maybe not until spring (I am assuming they will tail off as the weather gets cold). Things are breaking down, and signs are definitely there that a serious crisis is very possible in the next couple of months.  Look for jaw dropping drops in the stock market now.

The employment has flattened as forecast, and I am also sensing the plunge is about to begin, with Lowe's and Gap closing stores and laying off thousands very soon, and you have to wonder how many others are considering the same. State and local governments are also shedding employees, but the Federal government has yet to really begin its trimming.

Inflation continues to climb, and at 3.5% that is pretty high, but again, I am not reading a bunch into it.  Certainly not the hyper inflation that a large group of folks were determined we were headed for 6 months ago.  I still fear QE3, but given the problems around the world and within the US, one has to figure the Federal reserve has to be reconsidering if that is a good idea or not. 

The Dow is breaking down, note over the last 6 months that the peaks are getting lower, and the lows are also getting lower.  Now look back to 2008 and note what a similar pattern ended up with.  If you follow Elliot Wave, you would hear targets in the 4,000 range.  It should absolutely go below the previous low of 6700, so if you are still long, you have to ask yourself why.  Get out!!!

I am not updating the Gold chart, it takes forever and I just do not have time.  It has peaked, but is still very elevated.  I will update it later.

The super committee has failed, and so the debt continues to rise.  Look for congress to eliminate the automatic cuts, but it will not matter much.  I am expecting another credit agency to downgrade the US debt in Jan or shortly thereafter. 

Europe is bankrupt.  If you have money in a Greek bank, get it out and put it under the mattress!!!  Seriously, do it now.  There are a ton of people doing it right now and the banks are running out of cash.  Wait and you may not have any money.  Europe is so bad, that the Federal reserve has broken my previous chart into 2 charts, as the Greek yields are so high that you cannot see Italy and Spain, along with France which are all breaking down.  Look back to when Greece crossed the 500 point spread in early 2010.  Now look where Italy is now.  And the beauty of this entire thing is, Italy has a bunch of Greek debt, so when Greece refuses to pay Italy will be in serious trouble, and her debt is held by Spain, whose debt is held by England, whose debt is held by France, whose debt is... you see how this ends.

Not much to see the revolving continues up, but for how long? I am thinking time for a change in direction, but may be early once again.

The housing market slowly breaking down or just holding it own, depends on how you want to spin it.  But, if governments fall, so will house prices. 

Get your money out of the stock market, consider getting it out of the 401K, and double check your bank, insurance company, and anything else you depend on.  I will post about my close call with MF Global which I almost had signed up for an account with, never considering that they would go belly up with no notice.  But more on that later.  Take charge of your money, else it will slip away.


Wednesday, August 3, 2011

What should I do?

Once again I am getting this question, and from multiple people.  What should I do with my money at this point?  First off, lets take a look around and see where we are headed now that the debt ceiling debate is finally over, for now.

United States:  The way lawmakers dealt with the $1.5 Trillion budget deficit was to trim next to nothing from it.  So once again we will spend $3.5 Trillion and collect $2.0 Trillion.  The tea party "right" will soon become more infuriated (due to their base realizing nothing changed) and will become more extreme, going further to the right in the coming months.  But in the end, and not to sound fatalistic, but it was the right call not to cut anything.  We might as well try to squeeze out one, possibly two more years of blissful ignorance.  I have said this in the past, but once again, there is no one in government that will willingly take the economy and ruin their own career.  So will will prop it up, patch it, borrow, and spend until no one will loan us anything any longer.  Just the way it is.  Initial reports have the AAA credit rating being downgraded in Jan of 2012.

Europe:  An economic disaster is in progress.  Portugal, Ireland, and Greece have all failed.  Italy and Spain (along with Belgium) are now in the spot light, and not fairing very good at all. 
Note the spreads for Italy and Spain.  Everyone else that touched this line has had a not so good fate.  And even better, it does not matter which one goes up, either will collapse Europe.  Italy is supposed to have a bond auction Thursday, and the European Central Bank has already figured out that it will fail, so they are planning to step in to buy the bonds, this is a bad bad sign. 

So what to do?  First convince yourself I am correct, and that is not at all certain.  Then ask yourself, will the US default/inflate its debt away, or will it be able to grow itself out of this mess.  If you think that I am right, there are still questions.  But here is my take.

If you have Euros physically, dump them.  I have no experience with a currency that goes defunct, but I have no plans to find out first hand either.  I see no upside to holding Euro's, and with the best case being a break even scenario, why would one hold them.

That is the easy part, moving forward from a US focus, things trudge along for another 6 months.  The market has no upside potential in my opinion, and lots of downside risk.  Lots!  You have to ask if you have stocks, will they continue up?  I think no.  Therefore dump them.  Should you go short, only if you are well versed in what you are doing.  I am short currently and looking to go more short.

Ok, you say I dumped my stocks, now what.  401k?  Still a tough question.  It is pretty clear that taxes will rise, but not until next year.  I suspect in about 12-18 months the government will
start looking towards the 401k's as a source of funding.  That scares me, there is a lot of money there, and the US needs a lot more.  It appears to be about $2.4 Trillion in all 401k's, although I cannot seem to find an official total.  The more I read about 401k's, the harder it is to get the money out of there.  Apparently some plans do not even allow you to withdraw at all.  The first step I can suggest is stop contributing!  Even if you are a bit worried, why would you lock your money up in the government coffers?  Put the money in your bank account.  Yes, you will lose 20-30% for income taxes now (versus 20-30% of income taxes later, presuming they do not rise to say 40%).  As for withdrawing/closing your 401k, look into it.  Try this site, but googling for it on your own is just fine.

Now, what to invest in?  With my funds that are not short, I have the rest of my money invested in the USD.  Yes, you can say I am long the US Dollar if that will make you feel smarter at parties.  Otherwise, if you are fine with not sounding sophisticated, "cash" works just fine.  I will start to say this, you should have 2 types of cash, bank account cash (short term CD's, plain savings, short term treasuries, short term money markets, etc and the second type, physical cash

If you have metals, keep them.  No need to play that game.  I strongly suspect the price of gold and silver will tumble, and would not be buying here, but if I am wrong... you will have some at least.  So, below I will set up a ROUGH chart on what I think you should have and when.  If it is not obvious, I do not know your actual situation and therefore cannot tell you what you really should do.

Things are getting fun now!  The June 2013 thing is a total guess, but I just added it to paint a picture. 


Tuesday, July 19, 2011

Outlook: 2011 Q3 update

We are in a holding pattern, Greece is about to default soon, and so much focus is being paid to that situation, only now are folks starting to notice the unrest in Italy.  Protests and banks in trouble.  However, we are also coming up to an Aug 2nd deadline for the US to possibly default also.  The odds are incredibly unlikely that the US will actually default, and it will not be a serious default regardless, however as much as I have underestimated the impact of government bailout packages and incentives in the past and their influence on the economy, rest assured many will underestimate the impact of the austerity that is coming to the USA.  We have to cut out about $1.3 Trillion, or roughly 30% of the current budget to spend what we take in.  Or, raise taxes by that amount.  Either way, lots and lots of government jobs are going to be eliminated.  Really, lots and lots!!!

Unemployment, the headline number shocked everyone this past month, but as my new graph shows, the actual employment is flat, and going slightly down.  Not all that much.  This is definitely a jobless recovery, and I am not sure how you can use the word "recovery" given this type of data.  I still think late this year the percentage resumes its drop as shown.  Mainly because the government that hired everyone will need to let them all go very soon.

Inflation continues to climb, and at 3.5% that is pretty high, but again, I am not reading a bunch into it.  Certainly not the hyper inflation that a large group of folks were determined we were headed for 6 months ago.  I still fear QE3, but given the problems around the world and within the US, one has to figure the Federal reserve has to be reconsidering if that is a good idea or not. 

Hard to say about the Dow, the upside of the market seems to be changing, or at least pausing.  Right as we sit, the latest high is lower than the previous, and that could be bad news, but again we could shoot up some more.  I am on high alert, as the 50 day moving average and the 200 day moving average are just below where we sit, and I know a bunch of longer term traders honor the 200 day MA, so a break of that, although still early, would be not good. 

Gold keeps chugging skyward, and still no amount of inflation could justify this.  Well, yes, hyper inflation could, but yet again we do not see that on the previous chart.  So I will stick to my guns and say gold is in for a great fall, but when?

And so like the space shuttle when it sits in a holding pattern on the launch pad, so does the debt ceiling.  Rest assured, once they agree, and they will, it will jump right back on track.  They have only stalled right now.  I have read a fair bit about this debate, and even if we "default" on Aug 2nd, it will not be the end of the world.  Everyone is just assuming we will pay a bit late, and given that it does not look to be a problem, and I do not think it will be either.  They will come to an agreement, as no one wants to be the one that could possibly be blamed for what "might" happen.

This data from the chart below is old, June 22nd in fact.  Italy and Spain are now climbing, Greece is considering a default, and Portugal and Ireland have been downgraded to junk status.  The really scary thing is that there are initial discussions on Japan, England, and the US and their debt loads.  This all comes crashing down, and it is very interesting to see the countries get knocked off one by one at this early stage, but it will soon be by the tens if not more. 

Not much to see the revolving continues up, but for how long? I am thinking time for a change in direction, but may be early once again.

And on this one I have to laugh a little, as last quarter I was concerned that the bottom had fallen out and I had overestimated home prices, and now it would appear I have underestimated home prices.  Overall I have to say it looks on track, and should continue down for the next four years, but for now we will take it one quarter at a time.  There is no hope at this point, and the only proposal I have seen recently to save the housing market is to retire part of the principal on underwater mortgages,  but that idea will require someone take a loss (the banks, shareholders, or the government) and it is unlikely anyone will step up for that.

At this point I suspect I am a bit too pessimistic, namely with regards to the market, and gold still.  Gold is just incredible, for no reason what so ever it has gone parabolic and remarkably continues its rise.  Note now, the fall will be horrific, and there will be no sympathy for those in that market.  Europe looks like it is on the precipice of Armageddon, as Greece will default in a matter of days to weeks, and look for dominoes to fall in Ireland and Portugal very soon after.  Overall things are ok, but still that quiet nervousness persists.  Be careful! 

The email for updates issue is SOLVED!  At the top of the page you can now enter your email, it will send a confirmation, and then you will get a mail automatically whenever I post.  And no, I cannot see the email addresses. 


Sunday, May 22, 2011

Trouble overseas

I am growing more and more concerned about the overseas picture.  It has gotten to a boiling point in Egypt, Syria, Libya, Yemen, Bahrain, Tunisia, Oman, and now it appears to be hitting European countries, namely Spain and Italy. 

It is only a matter of time before the investment community freaks out and prices begin their plunge.  Look very soon for the stock and bond markets to realize that things are not at all good.  One thing I believe that sparks protests is unemployment, and so I would like to orientate everyone as to where we stand given the various countries in despair. 

 and for comparison
Data is all from Google.  Nearly all countries except Germany and Italy are sitting at 20 year highs for unemployment.  This is a breeding ground for protest and civil unrest.  If you recall all of the unrest in Los Angeles, just type that into your search engine, and you will find that was in 1992.  This does not mean there will be unrest, but it certainly helps having a lot of people sitting around doing nothing. 

And below are the current credit ratings, one by a popular agency, and another, more realistic in my estimation. 

Credit ratings
Country         Weiss               S&P(Aug 2010)    S&P(current)            S&P outlook
China                 A                    A+                          AA-                            Stable
Egypt                 C-                   BBB-                      BB                              Stable
Germany            C+                  AAA                     AAA                             Stable
Greece               E                     BB+                        B                                Negative
Iceland               D+                  BBB                      BBB-                           Negative
Ireland               D-                   AA                        BBB+                           Negative
Italy                   C-                   A+                          A+                              Stable
Japan                 C                    AA                         AA-                             Negative
Portugal             D+                  A-                         BBB-                            Negative
Spain                 D+                  AA                         AA                              Negative
United Kingdom C-                  AAA                     AAA                             Negative
United States      C                   AAA                     AAA                             Stable

Funny that China is at the top on one list, and in the middle of the other.  I believe the Weiss ratings, not to mention that they are a lot easier to understand.  Just to fill in the blanks, BB and below are considered speculative investments by S&P.  Seems pretty funny to me, I am not sure if that includes Greece or not, but either way, Greece is on the verge of being speculative.  So to the web, and what I did not consider, the data I sighted above is a bit dated, as Greece is at B now as per the Denver Post.

There is a lot of chatter that a top for the market is either in, or will be in the next 3 weeks.  Either way, it is serious time to use extreme caution.  Look for a prolonged period of stock prices falling, very soon!

Sunday, May 15, 2011

What is the American Middle class?

As we begin to fight over budgets, taxes, labor unions, pensions, and all other fun matters, it is probably a good time to post a few articles on the makeup of the USA, and more specifically the financial break down.  Who has the money, and how much?  Ask yourself this, am I in the middle class?  I suspect most reading this will answer yes, as it is a comfortable middle ground that we all like to hold on to, we are average, common folk  Well the best way to start off is for you to take a look at the breakdown below.  If you fall into the highlighted yellow row, you are middle class, or at least by my definition. This is income by household.

% of Population Lower bound Upper bound
0% - 20%  $0   $20,712
20% - 40%  $20,712  $39,000 
40% - 60%  $39,000   $62,750 
60% - 80%  $62,750   $100,250
80% - 95%  $100,250   $180,000 
95% - 100%  $180,000+ 
Source from 2009:  http://www.census.gov/hhes/www/cpstables/032009/hhinc/new05_000.htm

I suspect that as many of you own computers and surf the web, it is likely that a few are middle class, but the overwhelming majority are Upper class.  Yeap, I am probably shattering your little world of conformity, but you are not what you think.  But to make you feel better, academics have different definitions, one considers Upper middle as 85%-99%, and then Lower middle as 55-85%, and Working class 25-55%.  Below that is divided between Working poor, and Underclass.  That should make you feel better, middle class is between 55%-99% of the income range.  That just seems wrong to me.  There are other definitions you can see here.

And so average?  Again the Census Bureau reports it was $49,777 for 2009.

Number of people in the US covered by health insurance?  253.6 of 308.7 million, or a surprising 82%, of which 15.4% of total is covered under Medicaid, with an additional 14.7% covered by other government insurance.  Those numbers blew me away!!!  82% of the population is already covered by health insurance.  Makes sense now that I think about it.

And who pays how much in taxes?
% of Population based on income      % of Federal income
0-50%                                                     3.6%
51-99%                                                 62.7%
99-100%                                               33.7%

That troubles me greatly, half the population essentially pays nothing for the land, defense, services, roads, and all of the national services and protections.  This not mean they do not pay state and local taxes.

And how much is in your 401k?

Age of householder
Value, all
Value, all
Under 35 years old
35 to 44
45 to 54
55 to 64
65 or older
All households

Given the spread between Average and median, you have to believe that the median values are more likely the common values, and the average is swayed by the really really rich, which given the other numbers in this post is not hard to believe.  This data comes from here.

And we should consider debt, and a better analysis and breakdown from 2 years ago by USA today...Total Personal debt: $121,953 per household which breaks down to $89,514 in mortgage, $22,231 in consumer (credit cards, auto loans, etc), and $10,208 in Other.

But there is more, on the government side I typically report only the national debt (the $14 Trillion owed) but there is more.  Some of this is fear mongering, so do not go whacky on these numbers as it is hard to tell the truth from the bending of the truth.

Total government debt per household is $546,668
which breaks down to $284,288 in Medicare, $160,126 in Social Security***, $54,537 in national debt, $29,694 in military retirement, $15,851 in civil servant retirement, and $2,172 in other.  I will note, the social security is a bit of fear mongering, as social security is not really owed, it is a guess of how much needs to be in the account to pay out in the future, but we can always pay out less if it comes to that.  Of course I suspect that it will not be a pleasant discussion.

And on to wealth, or how much money you actually have, here is a fascinating graph showing what actually is, what people think it is, and what they think it should be from the University of California at Santa Cruz

Note please that Estimated bottom 40% have 10% of the wealth, but in fact not even the 40-60% bracket (average) actually has that much! 

I hope this was helpful, as it should put into perspective things in the future. 

Once again if you wish, email me and will add you to an email list that will be pinged when I post.  Best I can do for now.  Email is patrick14384 (at) gmail.com (sorry the cryptic, but lots of robots rummaging around the web).

Sunday, April 17, 2011

Outlook: 2011 Q2 update

Everyone but everyone is now on board with the economic recovery.  Well, I should not say everyone, as I am not.  But I am disagreeing with the Federal Reserve, US government, economists, and a whole slew of others.  On my side... the US taxpayer.  Yeap, the poor person that has to get up, put gas in the tank at $3.79/gallon, go to work and pay taxes and the heating bill, and then get groceries on the way home.  Well let us see what the charts say.

Unemployment, the headline number continues to fall, but as my new graph shows, the actual unemployment is also improving, but look at the size of the improvement.  Not all that much.  This is definitely a jobless recovery, and I am not sure how you can use the word "recovery" given this type of data.

Inflation climbed this quarter, but only a percentage point and a half, and given the volatility of the number, I am not reading much into it.  Most of it can be attributed to rising oil prices.  QE2 which is the latest "easing" by the federal reserve is ending in June, and unless there is a QE3, we should see the true picture, and even with QE3, the picture will just take more time to emerge.

So far so good on the stock market, but a turn is now way overdue, or at least in my estimation.  I am afraid of another 200 points up are left, but I am still feeling good so far (all of 3 months into this).  The amazing thing (and this assumes we turn soon) will be all of the money pumped into the monetary system, and we are still 1600 points beneath the all time high on the Dow. 

And for gold, it is just unreal.  Parabolic rise at this point is the only way to describe it.  Given the inflation numbers, there is just no justification for this at all.  When it crashes, and it will, it will be spectacular.  The only question is when now, and guessing the top with no skin in the game is the safest method, as it could continue like oil did a few years ago. 

I still feel good about the debt issue, come this fall the debt should slow in its rise, but don't look for a miracle.  Big election will be 12 months away at that point, and so all parties will be courting voters, and there are lots of them that want/need handouts.  Only thing that will stop this is bond traders, and that will not happen any time soon. 
Right on time, on Nov 16 I wrote that Portugal would be asking for a bailout in 3-6 months,and now 5 months in they have finally caved in, and are asking for a bailout.  So now the focus turns to Spain.  But before we dive into that, note that every country that made it to the 400pt spread from the German bond rate has then failed, and that seems to be the magic number.  Spain is 200pts below that, and that is comfortable for now.  The wrench in the system however is that the ECB has started to RAISE interest rates.  Those that are close to default cannot afford higher interest rates.  Almost seems like suicide.  I will however modify my projection for Spain failing, as I have to keep in mind they cannot ask for a bailout.  So from here, 9-12 months.  It will be very interesting to follow this. It now appears that Greece WILL default, and I think that happens in 2012.  This will be very bad, as it is the other countries within the EU that are holding the debt, so if they are keeping their heads above water, and Greece comes back and says they cannot pay, what are the odds they will help anyone else?  Very slim.  This is not at all a good thing, and it seems to be marching to a very predictable beat. 

The interesting thing with this is that revolving credit continues to drop (credit cards), but non-revolving (auto loans etc, but not home loans) is back on the increase.  It is very very interesting, my read is that people only now believe that things are getting better (since Jan).  The nay sayers would say that now is the time for things to fall apart.  Either way, deflation is still occurring.

Now I am starting to wonder about my call on this, and I may have been too optimistic.  I project about a 8-9% decline this year, and well things are off to a rocky start.  There is no support for prices any longer, and I cannot see a white knight anywhere on the horizon.  Time will tell, but things are not looking good for the housing market.Mortgage rates are up, loans are down, and buyers are staying in their apartments. 

We are still on track for this year.  Things are holding together, but the foundation definitely has gaping holes, and water is starting to makes its way into the holes.  3 more months of ok should be in store, but once again, and as I said at the beginning of the year, the 2nd half of this year could be pretty rough.  Europe is the #1 problem right now, but the US congress is also gearing up to start imposing austerity measures and this will certainly slow the US economy and send it into depression.  But look for the bond market to really dictate the measures, as one blogger reported, you could take all of the cuts proposed by the President, and Rep Ryan, combine them and still not balance the budget (not even close).  We need to cut $1 Trillion from the budget, each year!  I love the news reports, this plan or that plan will cut $4 Trillion over 20 years.  Do the math and it is nowhere close to what is needed. 

One issue I have noticed is that since these posts come so infrequently, not everyone reads them in a timely manner.  I have looked for a widget to build a email list, but ads and silly stuff come with it, sooo... if you wish, email me and I will build an email list that will be pinged when I post.  Best I can do for now.  Email is patrick14384 (at) gmail.com (sorry the cryptic, but lots of robots rummaging around the web).