Housing Dominoes Fall

charles hugh smith-Where There Is Ruin III: Housing Dominoes Fall: "As housing rolls over, the dominoes are beginning to fall. The last domino? Global recession.

Surprise of surprises, the business cycle cannot be revoked. (Didn't we learn that in the dot-com era? I guess not.) Rising investor demand (greed) causes prices to rise, stimulating more supply to capitalize on that demand (more greed) which leads to massive oversupply and a calamitous collapse in price. This works for wheat, routers, houses, you name it (and from time to time, even in oil/energy). "

Is World War III Coming to your Neighborhood?

ZAMAN DAILY NEWSPAPER (2006072835102): "Newt Gingrich, former Speaker of the U.S. House of Representatives, calls it the “third world war.” Bill Kristol, editor of the neoconservative Weekly Standard claims it is “our war.”
And the Bush Administration is standing by…and standing by…and doing almost nothing…until what happens? The devastating and immoral attacks by Israel on Lebanon’s people, infrastructure and land seem, somehow, rather disproportionate to the insults and injuries inflicted by Hezbollah’s border crossing two weeks ago. To be sure, the rockets and missiles falling on Haifa and other towns and cities in Northern Israel, and the resulting civilian deaths, are hardly moral or justified. Yet, when was the last time one country destroyed another in order to retrieve two kidnapped soldiers? And didn’t Israel just recently kidnap a good fraction of the Hamas leadership during its foray into Gaza? We need only recall various rescue missions mounted in the past to rescue Israeli captives (e.g., Entebbe) to recognize that Lebanon is the victim of something more than meets the eye. "

The Coming End of the US Foreign Investment Bubble - iTulip.com Forums

The Coming End of the US Foreign Investment Bubble - iTulip.com Forums: "If you go to google and type in 'what will pop the internet bubble' the first link returned is a piece I wrote for bankrate.com February 1999. It explains what will pop the tech stock bubble: Credit Squeeze, Bankruptcy, Fraud, and Weakness in the Real Economy. The article comes up first in a google search more than six years later because no one else at the time was making specific predictions on the causes of the impending collapse of the stock market bubble. Now, more than six years later, I'm going to do it again.

Here I'm going to explain the most likely causes of the collapse of the simultaneous bubbles in real estate, equities, and bonds that are the latest asset bubble products of the most recent cycle of the Bubble Cycle System. They all emanate from a single source, a bubble in foreign net acquisition of US financial assets. If you understand the dynamics of events that are likely to collapse the foreign net acquisition of US financial assets bubble and when, you are on your way to understanding the fate of all of the secondary bubbles that it has spawned and the result: a major inflationary recession."

Pork Rinds

Minyanville: "One thing we Americans will never be accused of is self-restraint. Faced with entreaties to “eat all you can eat”, “shop til you drop” and “SuperSize It”, we are powerless to resist…and we’ve got the bloated balance sheets and physiques to prove it. After stuffing ourselves silly over the last few years, however, it appears some of us have finally had enough. The latest retail roundup reinforces what we suspected all along-- the U.S. economy is starting to get a little soft around the middle. Sure, things at the high-end are still quite firm. But our middle-class gut has definitely started to head south. As the nation’s midsection succumbs to gravity and the lower-income ranks begin to swell, mid-tier retailers and dining establishments are feeling the pinch.

After kicking and banging their household ATMs to deliver any cash still trapped inside it appears the jig is finally up. Combing through the Fed’s Commercial Bank Assets release last Friday (must reading for insomniacs) we made a most shocking discovery. Transaction deposits (aka checking accounts) at banks plunged -$30b in one week and are down -8.4% y/y, their lowest level since the last recession. Gee, might this evaporation in deposit balances foreshadow a slowdown in discretionary spending ahead?"

REAL ESTATE BURST, UPCOMING RECESSION, AND SOARING COMMODITY PRICES

REAL ESTATE BURST, UPCOMING RECESSION, AND SOARING COMMODITY PRICES: "Having lived and worked in San Francisco during the Tech and Dotcom bubble, I had a first hand glimpse into the bubble mentality and the irrational exuberance of your average consumer. From Dotcom companies throwing lavish parties (while reporting negative earnings) to college students investing their school money in the stock market, to the creation of “short- lived paper millionaires,” I easily recognized that this move up in the stock market was not sustainable. In the midst of this bubble, many people would look at their stock options or 401k plans, classify themselves as millionaires, and spend money in the economy that further propelled the rise up in the stock market and further expanded the bubble. The end result was that most of these stock options expired worthless, investors lost millions of dollars in the stock market, and the “paper millionaires” where no longer millionaires.
Throughout history, you will find notable examples of manias, Ponzi schemes, and bubbles that have ended up in disasters with investors cutting back on their spending and scrambling to atone for their financial mistakes. This scenario did not happen after the Dotcom bubble. Instead, investors shrugged off their losses as they saw the value of their homes skyrocket. Consequently, the rise up in real estate prices allowed them to continue spending and temporarily delayed the US economy from heading into a major recession. I believe that 2006 will be the beginning of the burst of the real estate bubble, and that this burst will have immediate and severe consequences on the US economy as a whole."

'City faces meltdown if debt crisis hits'

Telegraph | Money | 'City faces meltdown if debt crisis hits': "In a worse-case scenario, a sharp fall in credit conditions worldwide would have devastating consequences for Britain, the Bank warns.
It could cause a 1.5pc contraction of the UK economy, a 25pc fall in house prices and a 35pc drop in commercial property prices over three years, according to the scenarios mapped out by the Bank. Other major countries would suffer similar effects, it says.

It also indicates that the risks of a serious financial problem in the City have increased during the past six months, and investors would be wrong to assume that, following the market turbulence of past months, the worst is now over"

Flat Earthers Back in Control In Asia?

russwinter's Xanga Site: "It now appears that the Bank of Japan is firmly committed to ensuring that the planet continues to get a solid dose of inflationary atomic fallout. Despite the clear and present danger, such as this hot PPI report, these Wizards just can't help themselves, as they continue to debate whether the earth is flat or round. Although the end of ZIRP is likely at hand, it now seems the flat earthers are prevailing. Flat earthers in China also seem to be in the ascendency, choosing to deal with their out of control train with 'rules'. Just repeat after me, because it's a key concept. The word 'corruption' may as well be substituted for 'rules', when it comes to China. It simply means plutocrats get the bennies, while saps are deprived. Just makes plutocratic looting all the more effective. Andy Xie writes another good piece on China's flawed policy.
Meanwhile the Fed immediately moves to take advantage of the Yen weakness by doing their own version of Adam Smith (not) faux economica. After all many so called 'analysts' use TIPs spreads as inflation indicators, so why not just influence that a little, eh? Perhaps they will get more 'analytical' help when a doctored CPI report is delivered on July 19?"

Oxiana says Prominent Hill set to be Australia's next major copper/gold mine

AFX News Ltd. London : Financial News Products: "SYDNEY (XFN-ASIA) - Oxiana Ltd said its Prominent Hill project in South Australia remains on track to become Australia's next major copper/gold mine with final approvals for its development expected in August.

The company, which mines gold and base metals in Western Australia and Laos, said a bankable feasibility study is expected to be completed by the end of July.

Oxiana said Prominent Hill continues to display competitive fundamentals and attractive metallurgical characteristics.

'Prominent Hill's robust fundamentals ensure that its costs will be competitive after allowing for current trends in capital and operating costs across the industry,' Oxiana said.

It said there is significant upside in and around the long-life orebody as the deposit remains open to the west, east and at depth.

Using a 0.3 pct copper cut-off grade, Oxiana said the total resource is now estimated at 118.7 mln metric tons containing 1.543 mln tons of copper and 1.870 ounces of gold. SYDNEY (XFN-ASIA) - Oxiana Ltd said its Prominent Hill project in South Australia remains on track to become Australia's next major copper/gold mine with final approvals for its development expected in August.

The company, which mines gold and base metals in Western Australia and Laos, said a bankable feasibility study is expected to be completed by the end of July.

Oxiana said Prominent Hill continues to display competitive fundamentals and attractive metallurgical characteristics.

'Prominent Hill's robust fundamentals ensure that its costs will be competitive after allowing for current trends in capital and operating costs across the industry,' Oxiana said.

It said there is significant upside in and around the long-li"

Who's paying for the War on Terror?

Dude, where's the Dharma: "Late last week I came across the first of what is now a collection of articles proclaiming an improvement in the US fiscal deficit. Being a skeptical sort I did a bit of cross checking, using government figures, mind you, and discovered there is both more and less to this tale than meets the eye.

On the 'less' side of the tale I find the 'improvement' in the deficit. The term 'deficit', at least as I understand it, is a flow figure. It refers to a shortfall of income relative to expenditure over the course of a period of time, usually a year. The sum of these deficits is a 'stock' figure, the debt. I bore you with this remedial accounting as preamble to my rather curious discovery. If, as the President, inter alios, avers, the deficit is shrinking, why is the debt still rising at a rapid pace?"

Uranium fever sends warm glow across the sector - Barry Fitzgerald - Opinion

Uranium fever sends warm glow across the sector - Barry Fitzgerald - Opinion: "STAND by for a second bull run in local uranium exploration/development stocks — one driven by a frenzy of merger and acquisition activity.
The second bull run is just starting to take shape and already it has emerged that there is likely to be three key playmakers — Canadian/Australian Mega Uranium, John Borshoff's Paladin and Toro Energy.
They are the ones with the fancy market capitalisations that can make things happen through scrip takeover bids for their smaller brethren."

The Shepherd Investment Strategist -But No Man Has A Right To Be Wrong In His Facts (Bernard Baruch 1870-1965)

The Shepherd Investment Strategist - A Service of JAS MTS Inc: "First of all, as I have pointed out in a number of voice updates, the makeup of the DJIA has been changed since just after the model’s sell signal and during the bear market in stocks that signal predicted. In late 1999, only a week after the sell signal, Chevron, Goodyear Tire, Sears Roebuck and Union Carbide were removed from the index and replaced by Intel, Microsoft, Home Depot, and SBC Communications. Later, in April 2004, International Paper, Eastman Kodak and AT&T were replaced by Verizon, AIG and Pfizer. The effect of these changes has been substantial. Although we cannot precisely measure the complete effect of these changes, due to the fact that some of these previous components were taken over by other companies or taken private, we can easily see the differential between some of them compared to the replacements.
For example, Sears (not the same company that is a holding company for the stores now) fared much worse from high to low in the bear market than did Home Depot. In fact, Home Depot was a big beneficiary of the-borrow- to-remodel boom that went along with low mortgage rates. Goodyear Tire did abominably after the market peaked in January 2000, much worse than any of its replacements. Later on, the old AT&T (not the company combined with SBC, named ‘at&t’) did far worse than any of its replacements, falling dramatically from its highs and never really recovering. The same obviously goes for Eastman Kodak and to a certain extent International Paper.
So, the question must be asked: is the near new high on today’s DJIA representative of an actual new high in the stock market? This is especially important to ask, since the latest changes in the index took place within the timeframe of the sell signal in the model. If you look at the facts"

Oxiana - look back at 2005

Asia Today Online ® - Asia is our Business: "MELBOURNE — The first major load of copper cathode will come out of the processing plant at the Khanong copper mine in Laos at the end of this month, promising a deepening of the country’s infant mineral sector.

The Australian company Oxiana began mining copper — the first copper mined in Laos — at the end of last year. By the end of 2005, the mine is expected to yield some 30,000 tonnes of copper. In full production, it will turn out double that. The mineral will be snapped up by buyers from neighbouring Southeast Asian countries.

Says Owen Hegarty, Founder and Chief Executive of mine operator Oxiana: “They can’t get enough of it. We are already getting faxes and emails every day for our copper. Buyers are virtually standing at the front gate.” Hegarty says the copper will be trucked to China, Malaysia, Thailand and Vietnam."

Copper climbs on strong fundamentals, eyes funds

Creamer Media's Mining Weekly Online, South African Mining News :: News Today: "Copper prices rose in thin trade on Tuesday, supported by a firmer tone in Shanghai futures, as investors focused on strong fundamentals and anticipated an influx of speculative funds into metals.

By 0414 GMT, London Metal Exchange copper for delivery in three months was up $95 or 1,3% at $7 370 a ton. On electronic trading platform Select, the metal had earlier traded between $7 320 and $7 475.

On Monday, copper ended down $45 at $7 275."

Copper up for 4th day, technical outlook improving | Reuters.com

Copper up for 4th day, technical outlook improving | Reuters.com: "SINGAPORE, July 3 (Reuters) - Copper prices jumped for a fourth straight session on Monday, supported by sharp gains in Shanghai futures as investors kept bidding up the market due to strong fundamentals and an improved technical outlook.
By 0436 GMT, London Metal Exchange copper for delivery in three months was up $145 or 2.0 percent at $7,465 a tonne. On electronic trading platform Select, the metal had earlier traded between $7,430 and $7,480.
On Friday, copper ended up $15 at $7,320 after trading as high as $7,600, the highest since June 8. The market had rallied 8 percent on a weekly closing basis in London.
'I think it's reasonably healthy,' said Peter Richardson, chief metals economist at Deutsche Bank, adding that Friday's London close above a key resistance level of around $7,250 was important to maintain the momentum.
With mining companies still struggling with low grades of concentrate and labour disputes in Mexico and elsewhere, supplies are pretty tight, he said, even if the market is moving into the traditionally slow European summer period.
Prices of copper, used in construction and electronics and a barometer for industrial demand, reached a record $8,800 on May 11. Since then, the red metal has fallen 15 percent, but it is still up 70 percent from the end of last year.
LME dealers in Sydney, Tokyo and Shanghai said overall trade volume was thin as the U.S. market is closed.
Copper trading at the COMEX division of the New York Mercantile Exchange is closed on Monday and will remain shut on Tuesday for the U.S. Independence Day holiday"

How to Survive and Thrive in the Resource Market

Kitco Commentaries - Dr. Richard S. Appel: "June 25, 2006 - The junior exploration market is a minefield to most who enter it. This is because few individuals are properly prepared to maneuver in it, and are thus fated to suffer the inevitable consequences. Yet, if properly approached I believe that junior stock speculation can greatly enhance an investor’s wealth.
An investor may wisely or luckily select a company’s stock that is destined for higher prices. Or, he may become entranced by one of the over-zealous promoters who convince him that his company’s future is destined for a meteoric rise. In either instance the investor may enjoy a roller coaster ride that takes his stock to dizzying heights, only to find it returning to or below his starting point when the meteor falls back to earth.
The purpose of this essay is not to deter investors from this market. My hope is to better educate and prepare the reader so that he or she can reap the rich rewards that it offers, while minimizing their losses.
In order to achieve this goal one must understand the true odds for a company’s lasting success, the players in this market, and the application of risk vs. reward when choosing a company. Further, the risk must be spread among a number of companies. In this fashion if one does well it should more than compensate for any losses produced by the others. Finally, and possibly of greatest importance is the absolute need to control one’s emotions, and especially our greed."

Warning From a Real World Economist

Kitco Commentaries - Tom Dyson: "To be a successful economist, you have to use government statistics. Government stats are an economist’s bread and butter. The thing is, according to Williams, you can’t take them at face value. Governments massage their statistics for political reasons. So in order to make accurate predictions, you have to know how the government puts its numbers together.
John Williams has dedicated twenty-five years to this dismal task.
“The longer I’ve looked at the numbers and the statistical series as they’ve evolved over the decades, the more that I’ve started finding things in the numbers that most people do not see.”
What has happened over time is that the methodologies employed to create the widely followed series… such as GDP, the CPI and the employment numbers, all have had biases built into them that result in overstating economic growth and understating inflation.
Real unemployment right now – figured the way that the average person thinks about unemployment, meaning figured the way it was estimated back during the great depression – is running about 12%. Real CPI right now is running about 8% And real GDP probably is in contraction.”
Williams says these adjustments occurred in very tiny steps over the years. As far as he’s aware, the first major adjustment was made during the Kennedy administration when they stripped out discouraged job seekers from the unemployment statistics. Adjustments have showed up in every administration since.
The Consumer Price Index gives a good example. “All in all, if you want to peel back changes that were made in the CPI going back to the Carter years, you’d see that the CPI would now be 3.5% to 4% higher. The difference that it makes is significant: if t"

Copper may spurt on China factor

The Hindu Business Line : Copper may spurt on China factor: "Following less hawkish than expected Fed comments, commodity prices continued to extend their gains further across the board with crude oil, copper and gold moving higher. In addition, market fundamentals are supportive.
It is obvious, Fed hike and comments have soothed concerns over the impact that the inflation/growth trade-off might have on commodity demand, observed an analyst.
Leads surge
Indeed, copper has led the surge higher. Closing near at $7,300 a tonne on Thursday (up 5.8 per cent), the metal shot up to trade above $7,500 on Friday.
Declining warehouse inventories continue to support the market.
The upward movement is not surprising because the medium-term fundamentals for the base metal are supportive.
While technical analysts have been calling the end of the bull market in copper for some time now, demand-supply situation favours an upside to prices.
The demand side looks positive, while supply uncertainties continue to weigh on the market.
Prime Mover
It is no more the US, but China, with its huge appetite, which is the prime mover of the base metals market.
Those closely watching developments in the Chinese economy assert that demand drivers in the country are only getting stronger (infrastructure and construction sector) and that the copper market there is tight.
The Asian giant is world's largest consumer and has contributed to more than 60 per cent of the growth in demand over the past three years.
The decline in China's imports of copper in the first half of this year means a substantial drawdown of inventory there.
Gold's move
The second half could, therefore, witness a huge demand surge for raw material (in a tight supply situation) with its implication"

As American economy goes into multidecade stagflation Indian outsourcing especially Bangalore and Hyderabad economies will collapse

IndiaDaily - As American economy goes into multidecade stagflation Indian outsourcing especially Bangalore and Hyderabad economies will collapse: "But again Indian pudits and oligarch are dead wrong. They do not realize what a great trap they are in. American and European economies are enetring multidecade stagflation that will eventually end in depression. As it unfolds over the next thirty years, Indian outsourcing economies will just collapse. That will destroy Bangalore and Hyderabad as we know today.
Again Indian oligarchs and quick money freedy politicians are wrong. They never understood the coming oil price hike. They never understood the coming gold price hike. They never understand anything till they suffer big time"