[Rhodes22-list] Economics
Bill Effros
bill at effros.com
Sun Mar 25 17:42:47 EDT 2007
1. Real Estate is not a commodity.
2. It can and has gone up forever.
Bill Effros
Brad Haslett wrote:
> Wally,
>
> You can't legislate away the business cycle. It is foolish to think that
> any commodity can go up forever, real estate included. Too bad for those
> people who overextended themselves, including the bankers. Let them all
> fall on their face and be done with it! I've been telling everyone the
> economy was good for the last few years because it has been good for the
> last few years. Not once did I ever say it would go on forever. Our debt
> as a percentage of GNP is well manageable, including the cost of the war,
> but we can't keep spending on entitlement programs, especially social
> security with the coming baby boom retirements, and expect things to stay
> healthy. Look at where the money goes! Our defense spending as a per cent
> of GNP ain't Jack Shit compared to entitlements. Do the math at on that
> before you go ballistic. I don't wear rose colored glasses, I wear a green
> eyeshade (must be that accounting undergrad thing). Anyone who thinks we
> can compete in the global market with our population growing more and more
> dependent on the federal government is hiding behind the roses or just
> doesn't understand basic macro-economics. The new economic front is India
> and China. They are already looking over their shoulder at Vietnam. This
> is a small globe and any prudent investor hedges his/her bets by putting
> some money in the places that are kicking our ass. I don't drink Kool-Aid
> when it comes to economics, I'm a realist and a history buff. You should
> worry about government spending - every 'nanny' government in the last
> century has either failed or changed drastically (think Soviet Union and
> China in that order). EuroIslamia is next. We're probably on the leading
> edge of a correction (recession). That's time to go shopping for bargains -
> things are about to go on sale.
>
> Wally, it would be damned difficult for me to do my career over again. The
> government, in their efforts to save everyone from themselves has almost
> killed general aviation. You can't hang around the airport fence as a
> teenager and beg for a job. This development in my industry is pervasive
> through out our economy. We're getting our asses kicked in growth rates as
> a result. Combine the heavy hand of the federal government with
> over-regulating everything and the propensity to over tax and we're the
> also-ran in the global marketplace. I know you don't like the war but what
> would we do with the money we saved? Give it back to the taxpayers. Hell
> no! We'd find more 'victims' to spend it on.
>
> Brad
>
>
>
> On 3/25/07, TN Rhodey <tnrhodey at hotmail.com> wrote:
>
>> Brad,
>>
>> Maybe the FEDEX financials have you seeing things differently..... but
>> based
>> on the dozens if not hundreds of links you post I would say you drink a
>> lot
>> of cool aid. You have been trying to tell all for years now how great the
>> economy is (was?) and we shouldn't worry about the cost of the war or the
>> growing debt....it is not a problem.....yeah..yeah...yeah.
>>
>> I must admit I am in total agreement about not having sympathy for people
>> who over extend due to keeping up with the Jone's. I also agree the
>> President is given to much credit or blame for the economy. Please note
>> that
>> I made zero reference to Bush in the discussion of housing bust.
>>
>> I can handle my own spending just fine but it is the government spending
>> that worries me more.
>>
>> Wally
>>
>>
>>
>>> From: "Brad Haslett" <flybrad at gmail.com>
>>> Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
>>> To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
>>> Subject: Re: [Rhodes22-list] Economics
>>> Date: Sat, 24 Mar 2007 07:53:53 -0600
>>>
>>> Wally,
>>>
>>> Glad I was busy and on the road for this thread. When it comes to
>>> economics, I don't drink anyone's Kool-Aid but look at the facts and make
>>> my
>>> own judgements. Just as the Clinton year,s boom was based on the hype of
>>> the dot-coms (and unstainable), much of the Bush 43 boom was based on
>>> Detroit gas-guzzlers and cheap money (thus the real estate nonsense).
>>> Neither could last forever. All Presidents take credit for good times
>>>
>> and
>>
>>> get blamed for bad ones when in fact, Presidents don't have that much
>>> influence on the market. This is a good thing! Bush did some smart
>>>
>> things
>>
>>> after 9/11, like cut taxes to spur the economy, and some really dumb
>>>
>> ones,
>>
>>> like bail out airlines that should have been allowed to go
>>>
>> under. Frankly,
>>
>>> I have little sympathy for people getting burned for overbuying what they
>>> could afford in real estate just I have little sympathy for shareholders
>>> who
>>> got burned on Enron or WorldCom. The market is what the market is and
>>> Presidents and the Congress usually muck-up necessary corrections when
>>>
>> they
>>
>>> meddle in the marketplace. We've had a record number or quarters of good
>>> economic performance and only a fool would think that will last forever.
>>> The big question is wether the correction will entail a hard landing or a
>>> soft landing?
>>>
>>> Brad
>>>
>>> On 3/23/07, TN Rhodey <tnrhodey at hotmail.com> wrote:
>>>
>>>> Ed, Reread my post.... no one blamed Bush....are you really that
>>>>
>> dense?
>>
>>> I
>>>
>>>> said our economy was a house of cards.....no blame was even suggested.
>>>>
>> A
>>
>>>> little defensive? I did say Brad was discounting the potential problem
>>>> looming because he was drinking Bush's cool aid. Again Bush did not
>>>>
>>> cause
>>>
>>>> this. The lending crisis is not a government issue although it may be
>>>>
>>> the
>>>
>>>> government (us!) paying for this. Also Bush had no influence on
>>>>
>> lending
>>
>>>> guidelines or the problem. This is not a liberal or conservative
>>>>
>> issue.
>>
>>>> Wally
>>>>
>>>>
>>>>
>>>>> From: Tootle <ekroposki at charter.net>
>>>>> Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
>>>>> To: rhodes22-list at rhodes22.org
>>>>> Subject: [Rhodes22-list] Economics
>>>>> Date: Fri, 23 Mar 2007 06:07:51 -0700 (PDT)
>>>>>
>>>>>
>>>>> Wally:
>>>>>
>>>>> What you have said is particularly true where house values are
>>>>> overvalued in anticipation of increasing in value. I suspect a big
>>>>>
>>> time
>>>
>>>>> shake out coming. However, you blame Bush. Come on now, where were
>>>>>
>>> the
>>>
>>>>> Democratic critics a couple of years past.
>>>>>
>>>>> Bush's stated intent was to allow anybody who really wanted a
>>>>>
>>>> house
>>>>
>>>>> to
>>>>> be able to get one. His ecomomics have helped that goal. Now it is
>>>>>
>> up
>>
>>>> to
>>>>
>>>>> them to keep them.
>>>>>
>>>>> Not all will. However, I suspect many will. The current
>>>>>
>>> default
>>>
>>>>> rate in the sub prime market is quoted as 23%. Truth is it will go
>>>>>
>> up
>>
>>> in
>>>
>>>> a
>>>>
>>>>> recession. Remember some of the creative sub par financiing was pure
>>>>> speculation.
>>>>>
>>>>> There will be some creative ways to help prevent defaults,
>>>>>
>> but
>>
>>>> that
>>>>
>>>>> does not answer your premise, why was the situation permitted. It is
>>>>>
>> a
>>
>>>>> general governance issue and legislators of both parties did not want
>>>>>
>>> to
>>>
>>>>> say
>>>>> or do anything.
>>>>>
>>>>> What is more interesting to look at is the declining value of
>>>>>
>>> the
>>>
>>>>> dollar. They say inflation is under control. However, what you get
>>>>>
>>> for
>>>
>>>>> the
>>>>> dollar is less. So the value of some of those homes under duress is
>>>>>
>>> not
>>>
>>>>> the
>>>>> same value in dollars as a few years ago. Hum. Another way to hide
>>>>>
>>>> facts.
>>>>
>>>>> This is not a Bush issue, but the way the politicians and
>>>>>
>> press
>>
>>>>> hide
>>>>> the truth. If it were a liberal democrat in office, they would be
>>>>>
>>>> looking
>>>>
>>>>> elsewere, and so would you.
>>>>>
>>>>> Ed K
>>>>> Greenville, SC, USA
>>>>>
>>>>>
>>>>>
>>>>> TN Rhodey wrote:
>>>>>
>>>>>> Brad, You have been to be busy being a cheer leader for Bush to
>>>>>>
>>> notice
>>>
>>>>> our
>>>>>
>>>>>> economy is unbalanced. I told you several months ago that the
>>>>>>
>>> mortgage
>>>
>>>>> and
>>>>>
>>>>>> home industry was "a house of cards and heading for huge
>>>>>>
>>> correction".
>>>
>>>>> You
>>>>>
>>>>>> responded and said your home values are fine in Memphis .....
>>>>>>
>>>>>> The largest sub-prime lenders are in trouble and in the last 90
>>>>>>
>> days
>>
>>>>> some
>>>>>
>>>>>> 30
>>>>>> mortgage banks have closed or pulled out of sub-prime lending. The
>>>>>>
>>>> other
>>>>
>>>>>> shoe will drop when all the folks with low Interest Only payments,
>>>>>>
>>>>> balloon
>>>>>
>>>>>> 2
>>>>>> nds, or ARMs have to refinance and find they can not because they
>>>>>>
>>> owe
>>>
>>>>> more
>>>>>
>>>>>> than the home is worth. They will be stuck with a rising payment
>>>>>>
>>> they
>>>
>>>>> can
>>>>>
>>>>>> no
>>>>>> longer make. The common trend in home buying has been 100%
>>>>>>
>>> financing.
>>>
>>>> In
>>>>
>>>>>> the
>>>>>> old days you needed to have 20% or so. Being upside down equity
>>>>>>
>> wise
>>
>>>> in
>>>>
>>>>> a
>>>>>
>>>>>> car is bad...evenworse when you are upside down in equity in you
>>>>>>
>>>> rhome.
>>>>
>>>>>> Many
>>>>>> folks are upside down in equity in their home and 2 car payments.
>>>>>>
>>> Like
>>>
>>>> i
>>>>
>>>>>> said we are building anice house of cards.
>>>>>>
>>>>>> Do a google search for "sub prime lending woes".
>>>>>>
>>>>>> The leaders of companies like New Century maybe looking at jail
>>>>>>
>>> time.
>>>
>>>>> This
>>>>>
>>>>>> is tied into our overall economy in more ways than most
>>>>>>
>> understand.
>>
>>>>>> Wally
>>>>>>
>>>>>>
>>>>>>
>>>>>>> From: "Brad Haslett" <flybrad at gmail.com>
>>>>>>> Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
>>>>>>> To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
>>>>>>> Subject: [Rhodes22-list] Economics
>>>>>>> Date: Thu, 22 Mar 2007 08:48:18 -0500
>>>>>>>
>>>>>>> Hunker down boys and girls and protect your investments - the sky
>>>>>>>
>>>> isn't
>>>>
>>>>>>> falling but we're going to have a low ceiling for awhile. Follow
>>>>>>>
>>> any
>>>
>>>>>>> benchmark you want but this is one of the best predictors out
>>>>>>>
>> there.
>>
>>>> The
>>>>
>>>>>>> understatement is "automotive and housing", that is a huge chunk
>>>>>>>
>> of
>>
>>>> the
>>>>
>>>>>>> economy and both are going through major corrections. Don't
>>>>>>>
>> believe
>>
>>>> that
>>>>
>>>>>>> last sentence, it's boilerplate "the world would be safe if it
>>>>>>>
>>> wasn't
>>>
>>>>> for
>>>>>
>>>>>>> those damn pilots" bullshit. Brad
>>>>>>>
>>>>>>> --------------------------------
>>>>>>>
>>>>>>> Slowing Economy Takes a Toll On FedEx's Quarterly Results
>>>>>>> ------------------------------
>>>>>>>
>>>>>>> FedEx Corp. reported Wednesday that its earnings dropped 1.9% in
>>>>>>>
>> the
>>
>>>>> fiscal
>>>>>
>>>>>>> third quarter, stung by the slowing economy, lower fuel surcharges
>>>>>>>
>>> and
>>>
>>>>>>> severe winter weather.
>>>>>>>
>>>>>>> The package-delivery company, which is seen as a bellwether for
>>>>>>>
>> the
>>
>>>>> overall
>>>>>
>>>>>>> economy, also lowered its outlook for fiscal fourth-quarter
>>>>>>>
>>> earnings,
>>>
>>>>>>> tightening both ends of the forecast range by a nickel share.
>>>>>>>
>> FedEx
>>
>>>> also
>>>>
>>>>>>> said that, while its long-term goal remains 10% to 15% annual
>>>>>>>
>> growth
>>
>>>> in
>>>>
>>>>>>> earnings per share, growth during the coming fiscal year may fall
>>>>>>>
>>>> short
>>>>
>>>>>>> because of the sluggish economy and investments that FedEx expects
>>>>>>>
>>> to
>>>
>>>>> make
>>>>>
>>>>>>> in its business.
>>>>>>>
>>>>>>> "The U.S. economy grew at a lower rate than we expected in the
>>>>>>>
>> third
>>
>>>>>>> quarter, and we saw continued adjustments in the automotive and
>>>>>>>
>>>> housing
>>>>
>>>>>>> markets," FedEx Chairman, President and Chief Executive Fred Smith
>>>>>>>
>>>> said
>>>>
>>>>> in
>>>>>
>>>>>>> the press release. "I believe, however, this represents a healthy
>>>>>>> transition
>>>>>>> for the economy as it phases into a more sustainable growth rate.
>>>>>>>
>>>>>>> "FedEx is in excellent position to take full advantage of global
>>>>>>> economic-growth trends and deliver overall outstanding financial
>>>>>>>
>>>> results
>>>>
>>>>> in
>>>>>
>>>>>>> the long run," Mr. Smith said.
>>>>>>>
>>>>>>> The Memphis, Tenn., company earned $420 million, or $1.35 a share,
>>>>>>>
>>> in
>>>
>>>>> the
>>>>>
>>>>>>> quarter ended Feb. 28, compared with $428 million, or $1.38 a
>>>>>>>
>> share,
>>
>>> a
>>>
>>>>> year
>>>>>
>>>>>>> earlier. Revenue rose 7% to $8.59 billion.
>>>>>>>
>>>>>>> The results, which marked the first profit decline for the
>>>>>>>
>> delivery
>>
>>>>> giant
>>>>>
>>>>>>> in
>>>>>>> more than three years, were at the high end of the $1.20 to $1.35
>>>>>>>
>> a
>>
>>>>> share
>>>>>
>>>>>>> forecast range the company set in December, when it reported
>>>>>>>
>>>>> second-quarter
>>>>>
>>>>>>> results. Earnings topped analysts' forecasts, while revenue missed
>>>>>>> expectations. Analysts polled by Thomson Financial expected, on
>>>>>>>
>>>> average,
>>>>
>>>>>>> earnings of $410.1 million, or $1.33 a share, on revenue of $8.7
>>>>>>>
>>>>> billion.
>>>>>
>>>>>>> FedEx previously said the typical surge in holiday-related freight
>>>>>>>
>>>>> volumes
>>>>>
>>>>>>> was "a bit delayed," the latest sign that a slowdown starting in
>>>>>>>
>> the
>>
>>>>> summer
>>>>>
>>>>>>> and fall at many railroads and trucking companies may be spreading
>>>>>>>
>>> to
>>>
>>>>>>> package carriers that handle many shipments on the last leg of
>>>>>>>
>> their
>>
>>>>>>> journey.
>>>>>>>
>>>>>>> FedEx's average daily package volume in its express and ground
>>>>>>>
>>>>> businesses
>>>>>
>>>>>>> rose 4% in the latest quarter, compared with the year-earlier
>>>>>>>
>>> period,
>>>
>>>>>>> helped
>>>>>>> by growth in international express.
>>>>>>>
>>>>>>> Revenue in the express business rose 3% to $5.52 billion, and
>>>>>>>
>>> revenue
>>>
>>>> in
>>>>
>>>>>>> the
>>>>>>> ground business increased 12% to $1.52 billion. FedEx's freight
>>>>>>>
>>>> revenue
>>>>
>>>>>>> rose
>>>>>>> 30% to $1.1 billion. The Kinko's retail-shipping and office-supply
>>>>>>> business,
>>>>>>> however, continued struggling, with revenue declining 3% to $485
>>>>>>>
>>>>> million.
>>>>>
>>>>>>> FedEx expects to earn between $1.93 and $2.08 a share during the
>>>>>>>
>>>> current
>>>>
>>>>>>> quarter. Its prior guidance had been $1.98 to $2.13 a share.
>>>>>>>
>>> Analysts
>>>
>>>>>>> polled
>>>>>>> by Thomson Financial expect, on average, for the company to earn
>>>>>>>
>>> $2.03
>>>
>>>> a
>>>>
>>>>>>> share during the quarter.
>>>>>>>
>>>>>>> Excluding second-quarter costs associated with the new pilot labor
>>>>>>>
>>>>> contract
>>>>>
>>>>>>> at the FedEx Express segment, the company expects to earn between
>>>>>>>
>>>> $6.70
>>>>
>>>>> and
>>>>>
>>>>>>> $6.85 a share for the year. Its prior guidance had been $6.60 to
>>>>>>>
>>> $6.90
>>>
>>>> a
>>>>
>>>>>>> share.
>>>>>>>
>>>>>>> *Wall Street Journal*
>>>>>>>
>>>>>>> *3/21/2007*
>>>>>>> __________________________________________________
>>>>>>> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
>>>>>>>
>>>>>> _________________________________________________________________
>>>>>> 5.5%* 30 year fixed mortgage rate. Good credit refinance. Up to 5
>>>>>>
>>> free
>>>
>>>>>> quotes - *Terms
>>>>>>
>>>>>>
>> https://www2.nextag.com/goto.jsp?product=100000035&url=%2fst.jsp&tm=y&search=mortgage_text_links_88_h2a5d&s=4056&p=5117&disc=y&vers=910
>>
>>>>>> __________________________________________________
>>>>>> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
>>>>>>
>>>>>>
>>>>>>
>>>>> --
>>>>> View this message in context:
>>>>> http://www.nabble.com/Economics-tf3447654.html#a9634414
>>>>> Sent from the Rhodes 22 mailing list archive at Nabble.com.
>>>>>
>>>>> __________________________________________________
>>>>> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
>>>>>
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