gdp's Comments

Paul Kedrosky: Infectious Greed : California’s Millionaire Clearinghouse Problem

Sat, 20 Jun 2009 14:21:10 +0000

I've read articles quoting a buyer imperiously stating this time down is just like the 1989 downturn. He bought because current prices are as low as they will get due to the "inevitable" rebound, which will quickly make up for negative cash flow. Near what turned out to be the "bottom" in 1997 -98, the Netscape IPO ushered in the dot-com bubble which wiped wiped out everyone's 1989-era housing mistakes. Maybe there will be another "boom" to bail out the housing bubble (which itself bailed out the dot-com bubble), but I'm renting and waiting. I predict the knife-catchers will run out of ammo (or at least their ability to withstand negative cash flow) & there will be much better housing values in the coming ~12 months. By way of encouragement, you may note California's latest foreclosure moratorium will have no teeth. Most lenders will be exempt. Any who won't be exempt will rush to foreclose ASAP.

Paul Kedrosky: Infectious Greed : California’s Millionaire Clearinghouse Problem

Sat, 20 Jun 2009 00:26:37 +0000

"Anyone have some detail regarding the statistics? " It is really quite self-explanatory. Knife-catchers are gobbling up lower-priced houses, convinced they are buying at the bottom & the "inevitable" rebound will quickly make up for negative cash flow. (Yes, most are STILL paying prices which do not leave them with positive cash flow.) They pay "cash" but then take out a mortgage once they find a tenant, so don't believe that nonsense about "strong hands." Even punch-drunk knife-catchers can't engineer the finances to do this for places selling much over $500K, so that inventory piles up. Once the next round of foreclosures arrives (figure July -August, which is also after the end of spring selling season), the knife-catchers will begin to "discover" they over-paid. About the same time, so-called "mid"-priced ($750K) and high-end home ($1M+) owners will begin to admit --at least to themselves-- how far they are, and for how long they will be, underwater. (A 1989 median California buyers was underwater until 1997 -98.) Then, things will finally start to get "interesting."

THE PRAGMATIC CAPITALIST : WANT TO EARN $5MM A YEAR DOING NOTHING?

Fri, 10 Apr 2009 02:26:54 +0000

1. Just like houses on the way up, it "worth" what somebody will pay --10 of the sellers might get $90. The other 90 will get some unknown value below $90. 2. In the real world, you might reasonably pay 49 cents on the dollar & make a profit over time. If I'm doing the math right, in Tim Geithner's world, you can pay 99 cents but you only have to kick in ~7 cents of your own money. (Assuming you have at least $100B to buy a seat at the table, Timmy kick ins another ~7 cents & then loans you 85 cents.) 3. economy minus economy not all screwed up = Y, aka "the output gap"

THE PRAGMATIC CAPITALIST : WHY YOU CAN'T BE SHORT OIL

Mon, 6 Apr 2009 05:12:47 +0000

FWIW, I hear the IMF plans for $50B of its contribution to the G20 $1T bail-out fund will come from selling off some of its gold. So the "fear" in this fear trade is maybe that the "global TARP" will work?

THE PRAGMATIC CAPITALIST : WHY YOU CAN'T BE SHORT OIL

Sun, 5 Apr 2009 16:16:06 +0000

If your oil/fear premise is correct, why did gold do down hard late last week? (FWIW, I assumed it was the usual Friday shenanigans plus, maybe, a sign the overall market was ready to roll over since gold has lately, more-or-less, gone up & down with market...)

THE PRAGMATIC CAPITALIST : INVESTORS PILING BACK INTO STOCKS

Sun, 5 Apr 2009 05:22:34 +0000

Pardon my ignorance but was, "Or smart money going back to work?" a serious suggestion? ( I think you are being facetious?) Except for a quick directional flip, do pros really "invest" with ETFs? Rather than differentiate among the names & buy the stronger ones? (Or at least avoid the weaker ones?) You know, like a professional investor would might to do?

THE PRAGMATIC CAPITALIST : NEW HOME SALES INCREASE

Wed, 25 Mar 2009 17:20:54 +0000

January sales are the lowest for any month on the calendar (at least dating back to 2003 when we started tracking it). Touting an increase in February sales vs. January is not "news." We've been reporting this phenomenon for years as "spring selling season," which runs from February through June. ( http://www.viewfromsiliconvalley.com/id481.html). If this February tout holds up as "news," then you should expect another one every month through June --maybe that's a trading strategy? ("News" would be if any of those reports shows a month-to-month decline.) Then in July, m-o-m volume will start to crash, which shouldn't be "news" either.

Paul Kedrosky: Infectious Greed : Has the Econoblogosphere Decoupled?

Wed, 25 Mar 2009 04:07:52 +0000

"Does the recent bullish uptick indicate things are getting better? " --What bullish uptick? --The market rallies up a couple percent above "the bottom" claimed in October? And again in November? --February house sales exceeded January? (Like they do EVERY year!) --We aren't getting millions more layoffs in the MIDDLE of Q1 like we did at the END of Q4? Anything else I missed? I'll change when the facts do. "Hype" and "spin" do not count as facts anymore in 2009, than they did in 2004 -2008. Until then, we'll keep publishing...

THE PRAGMATIC CAPITALIST : TOM TUCCI: WE'RE MIRRORING JAPAN

Sat, 21 Mar 2009 17:11:28 +0000

I think there's a bug or typo in your html?

THE PRAGMATIC CAPITALIST : A FEW WORDS ON TUI SELL SIGNAL

Thu, 19 Mar 2009 22:25:40 +0000

"I am quite confident saying that at some point in the following quarter we will see the 800 level on the S&P more than once, i.e., the majority of this rally is likely already over with and if we move much higher there is a strong possibility that we will revisit 800. " ---Since we saw 800 yesterday (Wed., Mar 18), I'm a bit confused by this comment on Mar.19. Can you please clarify?

THE PRAGMATIC CAPITALIST : ASSAULTING OUR OWN CURRENCY

Thu, 19 Mar 2009 18:20:10 +0000

A series of excellent points which I hope prove to be true. We come at it from a slightly different angle, showing house prices, government employment, etc. are all economically unsustainable Unless, of course, we are all taxed and inflated into oblivion. (www.viewfromsiliconvalley.com)

Paul Kedrosky: Infectious Greed : New Phrase Need: Pork Barrel

Tue, 3 Feb 2009 22:06:11 +0000

how about something evoking Proxmire's "Golden Fleece Awards." Maybe: political fleece toxic fleece golden pork Or go back a bit further: Hooverville payment

Paul Kedrosky: Infectious Greed : Peter Schiff vs. Peak Oil in 2008

Fri, 2 Jan 2009 05:41:09 +0000

If Peter Schiff was so "right," why is his portfolio so far underwater? I guess being "wrong" but still having (OK, most of) your money is the "bad" choice?

Paul Kedrosky: Infectious Greed : Which Tech Companies Don’t Survive 2009?

Tue, 30 Dec 2008 05:17:30 +0000

I think we'll see changes in droves: 1) companies unable to service debt: Freescale, NXP, Micron, AMD, maybe even SanDIsk 2) spin-offs who dodged the bullet last time: Agilent, Avago, Conexant, Mindspeed, Lucent, Spansion, Legerity /Zarlink, ... 3) companies finally unable to raise more operating cash: Force10, Extreme Networks, 4) companies whose niche has shrunk too small: National Semi, Lattice 5) take-your-pick of several debt-heavy fabs: UMC, Chartered, SMIC, Dongbu (govt bail-outs notwithstanding) Another development will be discrediting the patent strategy so many tech companies initiated. This will turn out to be mostly wasted effort as the market refuses, or is unable, to pay historic (aka modeled) valuations...

Paul Kedrosky: Infectious Greed : Keeper of a Barron's Story Summary

Sun, 21 Dec 2008 16:33:16 +0000

Classic spin. Combine two or three un-disprovable "facts" then print the desired conclusion. How these guys have any credibility at this point is amazing... Maybe someday these folks will be required to put their money where their mouth goes. Then let's see where their predictions fall.