He doesn’t write much but when he does he puts a good

wrap around what’s going on.

I went to the store to get a few things and KNOW that

prices have gone up. I ask the cashier if she had noticed

that prices had increased alot lately. She says that it’s

because of gas prices. I didn’t have the time to give her

a discertation on the real cause (monetary inflation) but

it proved Keynes own quote about inflation.

AuricLenin was surely right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. – John Maynard Keynes

Lenin was surely right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. – John Maynard Keynes

How to Survive the New Gold Rush

Investors Race Into the Hot Commodity, Even as Advisers
Warn That Gains May Have Peaked; Beware the Tax Hit

By ELEANOR LAISE
January 29, 2008; Page D1

Gold has been riding its reputation as a safe haven to new highs. But it also carries substantial risks for investors.

With fears of a U.S. recession prompting investors to abandon stocks, the Dow Jones Industrial Average is down 6.6% so far this year. Gold, meanwhile, has been hitting new records. The precious metal has gained 11% this year, to $927.10 an ounce, and has soared 46% since the end of 2006. As the dollar weakens and the economy and markets appear increasingly unstable, some market watchers believe the metal is now headed to $1,000 an ounce.

online.wsj.com/article/SB120156082315723535.html?mod=hpp_us_personal_finance

Thanks for that link Auric. That is a great synopsis of Keynesian economics. I have bookmarked it cause I want to read it again. Would encourage all to read it.

Best
Dusty

jessel.100megsfree3.com/gold.png

Good article.

As the renowned Mises warned us decades ago, “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

www.youtube.com/watch?v=n7WJeqxuOfQ

www.321gold.com/editorials/hultberg/hultberg012808.html

I recall that. What a farce. Here in Calgary, Alberta, we just witnessed a meteoric rise in housing prices over the last few years. Seems everything peaked this past Fall, just as I sold my condo. Seeing my assessment increase 50% over the previous year was just too tempting.  Sales and prices seem to be softening lately. Hope I am as lucky catching the top of this gold bull, too.

Best. MadMike

Remember back a few years when Bush on a number of accasions in speaches touted the fact that US home ownership was at an all time high? Well……..of course they were with the lending practices the banks were persuing. Some borrowers were even able to get over 100% of the home value, pocketing the rest as free money.

The roosters always do come home to roost……..
Dusty

www.321gold.com/editorials/russell/russell013008.html

Home ownership in record plunge

Fourth quarter saw biggest one-year drop in since tracking began in 1965 - as mortgage problems and rising foreclosures take their toll.

By Chris Isidore, CNNMoney.com senior writer

January 29 2008: 1:40 PM EST

NEW YORK (CNNMoney.com) — The housing and mortgage meltdown caused the biggest one-year drop in the rate of homeownership on record, according to government figures released Tuesday.

The decline, while expected, is yet another indication of the housing market’s sudden and dramatic turn.

The Census Bureau report showed that home owners accounted for 67.8% of occupied homes in the fourth quarter, down 1.1 points from a year earlier. It’s the largest year-over-year drop recorded in the report.

“It’s an incredible story,” said Dean Baker, co-director of the Center for Economic and Policy Research. “We’re back to where we were in 2002, which is before the subprime nuttiness and run-up in prices. And it’s not clear how much farther we’re going to fall.”

The ownership rate was well below the 68.2% ownership rate in the third quarter of 2007. Homeownership rates, which have been tracked since 1965, hit a record high of 69.2% in the second and fourth quarters of 2004.

Foreclosures leap 75 percent

A record 2.18 million homes sat vacant and available for sale in the fourth quarter, according to the report, up from 2.07 million in the third quarter and the 2.1 million a year earlier. The fourth-quarter reading on vacant homes for sale matched the previous record set in the first three months of 2007.

The report shows that 2.8% of homes not in the rental market now sit vacant, matching the record high, also from last year’s first quarter. That’s nearly twice the rate of vacant homes that were on the market during the first quarter or 2001, just as the economy was heading into its last recession.

“For some perspective sake, this measure never topped 1.9% until the housing bubble started deflating,” said Mike Larson, a real estate analyst with Weiss Research.

Dream turns into nightmare: The report shows that the ability of home ownership is slipping away for many Americans who had taken the plunge and bought homes during the housing boom of 2003 to 2005. The accelerating decline in ownership rates is a stark contrast to the relatively steady rise over the previous 20 years.

“The vast majority of those switching from ownership to renting are foreclosures or those forced to sell because they can’t make the payment,” said Baker. “What’s really striking is we should have seen a rise of ownership because of the demographics, with all the baby boomers entering their peak home ownership years. Instead, we’re seeing it fall quite a bit.”

But the subprime mortgage crisis of 2007, which cut off financing to many who had previously been able to use riskier loans to buy a house, and the rising foreclosure rates are just the latest blow to home ownership.

The real estate boom that preceded the mortgage meltdown had produced its own problem, as rising prices reduced affordability for many homeowners and locked out many who wanted to buy a home. Now the reports of falling prices are scaring many potential buyers even in markets where homes are becoming more affordable.

Home price drop: Biggest ever

The glut of vacant homes and the falling rates of ownership are signs of the evaporation of demand for home sales, which in turn has hammered housing values, particularly in neighborhoods with multiple homes sitting empty.

Flood of bad news: The report comes the same day that RealtyTrac, an online seller of foreclosure properties, reported that total foreclosure filings grew 75% in 2007 and S&P Case/Shiller, which tracks home values in the nation’s largest markets, posted the biggest price decline on record for its November reading.

The downturn has also hit home builders particularly hard. Hollywood, Fla.-based home builder Tousa (TOUS) filed for bankruptcy protection Tuesday.

And builders have been stuck with a record inventory of 195,000 completed homes at the end of December, according to a separate Census Bureau report Monday. That report also indicated that new home sales posted the biggest annual drop on record last year.

Lennar (LEN, Fortune 500), the nation’s largest builder by revenue, reported a company record $1.25 billion fourth-quarter loss on Thursday, as it was hit by lower prices, weak volume and hefty charges to write down land values. At the end of its most recent quarter, Lennar agreed to dump 11,000 properties to the real estate arm of Morgan Stanley (MS, Fortune 500) for only 40 percent of their previously estimated value.

Other top builders, including KB Home (KBH, Fortune 500) Centex (CTX, Fortune 500), D.R. Horton (DHI, Fortune 500) Pulte Homes (PHM, Fortune 500) and Hovnanian Enterprises (HOV, Fortune 500), are all expected to post losses through much of 2008.

The sharp decline in home building, coupled with the reduced ability of many American consumers to tap into home equity lines of credit to support their spending has significantly increased the risk that the broader U.S. economy will topple over into a recession this year, if it hasn’t done so already. 

Thanks for the update and the great news!  We will look forward to his return!

Hello everyone.

Just wanted to let those who have been wishing us well know that Sinbad came through his surgery just fine today.
He was out of the recovery room by 4pm and they had him up walking in the hallway by 5pm.
Though he knows you can hold down the fort without him for a few days…….He hopes to be back home and posting to the tent by this weekend.

Thank you all for your prayers and he sends his best to you.

Truly,

Dani

The troubled lender posted a $422 million loss and revealed that a third of its subprime loans are delinquent.

By Roddy Boyd, writer

NEW YORK (Fortune) — Countrywide on Tuesday reported a loss of $422 million in the fourth quarter and revealed that an astounding one-third of its investment portfolio’s sub-prime mortgage loans are delinquent.

The loss threw cold water on Countrywide chief operating officer Steve Sambol’s confident assurances to investors in October that, “We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008.” Seen in this light, Countrywide’s fourth-quarter loss, compared to a $621 million profit a year ago, is what the numerous class action attorneys circling Countrywide (CFC, Fortune 500) will surely call “an unfavorable fact.” Countywide finished 2007 with a loss of $704 million.

The numbers didn’t appear to faze Bank of America CEO Ken Lewis’s determination to acquire Countrywide, however. In a conference Tuesday, Bloomberg quoted him as telling investors. “Everything is a ‘go’ to complete this transaction.” Just over two weeks ago, BoA (BAC, Fortune 500) agreed to buy Calabasas, Calif.-based Countrywide in a $4 billion deal. If and when the deal goes through, the combined company will control just over 25 percent of the U.S. real estate loan origination market.

The market took the highly scripted BoA support as crucial and sent Countrywide stock up 20 cents to $6.15.

At the fulcrum of the mortgage credit crisis, Countrywide’s earnings are seen as a bellwether for the once vibrant - and now largely collapsed - United States mortgage industry. The primary culprit remains a combination of old-fashioned credit deterioration plus an alarming new development: Borrowers simply are walking away from their homes as their equity value falls ever further below their loan amount.

With respect to credit problems, Countrywide is unmistakably going from bad to worse.

The home lending giant reserved $924 million for credit-related losses in the fourth quarter - over a dozen times more than what it set aside in the fourth quarter of last year. To be fair, the $924 million figure is a bit of an improvement from the third quarter’s $937 million reserve.

Countrywide’s eye-popping 33% delinquency rate on its sub-prime mortgage book also represents a decline from the third quarter, where “only” 29.6% of sub-prime paper was delinquent.

The figures obscure a central fact, however: Countrywide’s portfolio of sub-prime loans consist of those that were not previously written down, or could not be sold or securitized. In other words, this portfolio is likely to get much, much worse.

Perhaps as worrisome was the credit deterioration on the conventional loan portfolios, where delinquency rates spiked to 5.76% percent from 4.41%. Along similar lines, Countrywide also said it shifted $7 billion of “prime non-agency” loans to the portfolio - out of the held-for-sale inventory - because it appears that there were no buyers likely to be found for this paper.

Adding to those woes is the emergence of a disturbing trend for mortgage lenders as some borrowers choose to simply walk away from their homes.

As home values drop to levels far below the mortgage amount, it simply becomes more economically advantageous for certain borrowers to hand over their keys. In a foreclosure, a mortgage lender often winds up booking losses that approach or even outstrip its loan amount when it sells the property into a distressed market.