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Did the futures just jump 35% or something?

CA is going down....

The state added just under 15,000 positions in 2007 and January saw another shrink in employers' payrolls. Training programs and other initiatives will be pursued, officials say.

State's job losses fan recession fear - Los Angeles Times

I think it has a lot to do with being in a position where you are able to either do nothing and hope for the best or act and potentially derail the economy. It takes a lot of faith and conviction to put yourself in the latter position.

“How a Bubble Stayed Under the Radar”

My Dad always told me, when making an important decision look at all the possible outcomes and if you can handle the worst-case scenario go for it.

Greed seems to outweigh common sense more often than not.

Its about f.... time SOMEBODY with creds has called these creeps on the carpet.

The lack of regulation will cost many many people.... retirement plans, municipalities, etc. way beyond the dummy who lied on their loan app.

Sean Hannity thinks John Hagee is sane.

I can understand suggesting ordinary people letting themselves be swayed by "herd mentality" but I can neither believe or accept such behavior from "serious students of the markets" such as Alan Greenspan.

Every professional I know of first applies the basic rules of analysis for their profession to any problem they face before looking for novel solutions. In medicine, it's called looking for horses before looking for zebras. In natural resources, we look for water stress before exotic new bug species.

Dr. Greenspan should have learned in high school if not first year college that people on average can only afford to spend about one third of their income on housing. If he did not see a problem coming with home prices way above 6X income, he was either suborned into silence or bribed. At a guess, he is hoping for a proactive pardon before January 20, 2009.

Shiller article, last sentence-

"And it is now possible that a downward cascade will develop — in which rational individuals become excessively pessimistic as they see others bidding down home prices to abnormally low levels."

I get a kick out of the TV commercials from WF and others about reverse mortgages. “My house is now paying me”. I have always thought that people counting on SS and their houses for their retirement are only fooling themselves. I don’t believe SS or Medicaid/ Medicare will be there for me (46) or my wife (44). We live a very comfortable lifestyle, but still live beneath our means. We have enough saved to live for a couple of years without going into our 401K. It still doesn’t seem to be enough to give me peace of mind. The future is very scary with the Government going wild on spending and the younger generation (most of them) having no clue as to how they will pay for their retirements. I don’t believe this is going to have a happy ending. Americans need to live within their means and save more. Not likely to happen. Sad.

Ah, yes, the Mighty Wurlitzer.

John Stark- "The problem, Dr. Shiller, is that there are few, if any, perfectly rational people."

I agree, with modification. Take out "perfectly."

I sure as hell wouldn’t count on anyone but you.

We're all from New Orleans now.

Shiller almost makes it sound as though everybody bought into this bubble.

As many of you have pointed out repeatedly, not everybody did; not everybody borrowed (or lent) to the max to go long on housing. But we all get to enjoy the recession brought on by those who did.

As a small-town newspaper reporter, I'm proud to say I wrote about housing bubbles a couple of years ago, altho I did include the obligatory "on the other hand" quotes from the local experts who said no bubble was happening here. (Most of them are still saying that, BTW)

I'm not proud (in fact, I am ashamed) to admit that I didn't really understand what was going on until it was too late: this was a bubble based on speculative lending, not buying or borrowing. The speculative lending enabled the borrowing and the buying. Buyers and borrowers don't answer directly to the fed or the comptroller of the currency or the SEC or the office of thrift supervision etc. etc. etc., but the lenders sure do. The cops on the beat were deaf, dumb and blind, and so, to some extent, was I.

If they had really cared about the welfare of the American people, they would have taken steps to cool the fever down. This is shelter we're talking about after all. Shelter, communities and neighborhoods.

Instead, they fed the fever and even cheered it on.

Say amen, somebody.

I'm in with Topher and wonder if we had the same father. Mine also pushed looking out for yourself since no one else, especially the gub'mint, isn't looking out for you. Now I find myself saying the same thing to my kids...not to mention that they will also have to work smart as well as hard.

Will SS be there for me? No, and being a cancer survivor, I have doubts sometimes about whether I would be allowed the medical care that some think should be rationed in the future. "Gee, you got your additional years of life, now just go ahead and enjoy the little time you have left while we take care of someone else..."

When people talk about rationing healthcare, this is ultimately the kind of decisions that are going to be made.

I want to take my finances into my own hands and keep my future away from the public sector.

i can offer an explanation for "the inaction of the policy makers..." of which CR and Shiller speak;

we live in a society that is about immediate gratification... and now damn it.

instant credit.

buy now pay later.

don't save.

dont deprive yourself for the sake of the future.

no long term investments nor plans. first impressions.

what have you done for me lately.

instant on.

instant off.

instant breakfast.

instant karma.

fast food,

fast cars.

fast women.

and faster men.

have you ever watched an old black and white movie and counted how long the camera stays put on one scene where people are talking or pans the horizon slowly or focuses on the the expression of the actor...sometimes lasting 30 second or a minute or more.

now watch tv or current hot releases from hollywood. no point of view, frame, or cut lasts longer than 5 seconds.

we have all become subprime ADHD.

that's why...no patiences.

idoc -

Shiller also said that stocks were in a bubble, and according to his calculations they still are. I'm assuming that this is the set of circumstances that causes them to revert to the mean. It's not going to be pretty.

"we live in a society that is about immediate gratification... and now damn it. "

no. i don't think that was it. my FIL invested in LA CRE beginning back in the 60's-70's and its done nothing but go up and is now paying handsome rental incomes. there is something fundamentally sensible about investing in RE being its a tangible asset and this mentality has been present for generations. i suppose one could argue that was around when we went off the gold std and his returns were a reflectin of inflation.

but the instant gratification mindset only really got going in RE the last few years.

Commodity wasteland

u got 2 problems with that argument. BB and Peak Oil.

Good summary by CEPR.

404 - CEPR

Nice video by Dean Baker.

The Housing Bubble | MediaCow

Topher, tj: You guys are going to be just fine in retirement. One, because you're working on it now and two, because you're willing to accept responsibility for what happens to you. You guys probably have more net worth than either Troy or I, and we're going to be okay. Hell, I don't think everything is going to be sweetness and light, but why should it be? It's always going to be rough for the mass of people because we make it that way, just can't stand prosperity. Hate to be a positive thinker but I believe attitude is critical.

tj,

Damn! I didn't realize that the USD-JPY rate had sunk so low...is it updated 24-7 on Bloomberg?

dryfly - I think you're rushing to judgement. We'll need to check those charts once U.S. demand for all things manufactured in EEV land has suffered for six months. My base case is a nasty correction in PM's and commodities once the depth of the recession hits home here. Followed by soaring prices (in dollars only, I should add).

dryfly:

Explanation of the differences between zinc and aluminum ("aluminium" to our British friends): the latter takes mucho energy to make, so is more of a proxy for high energy prices. The former, not so much, so is more able to deflate.

malabar

not entirely true on McHugh. last 6 mo he's been advocating this crazy hyperinflation view of stocks going to the moon. he's changed his tune since the beginning of the yr on this though. i find him interesting tho not least b/c he publishes daily. he can be alarmist also. i use him mainly to identify turning pts that he's decent on warning about.

what about the men in Congress, Administration, FED and so on ? What is THEIR value added if they can't see what the citizen doesn't see and act appropriately ?

Politics doesn't work that way, because (at the risk of channeling JJ) we are stupid and only want to be told what we want to hear ("The American Way of Life is Non-Negotiable" -- Darth Cheney).

Not just Americans, but Homo Sapiens Sapiens.

Smaller populations, like Norway (4.5M), Singapore (4.5M), Finland (5.2M), Hong Kong (7M), Denmark (5.5M), have a chance at establishing functioning meritocratic systems run by enlightened potentates of Compassion and Vision, but a Democracy -- like any form of government, including minarchy -- gets the politicians/leaders the citizenry collectively deserves.

The central, fatal flaw in our current economic system IMV is that land values -- rents -- are simply too high. Most every productive member of society is required to put in 20-30+ hrs per week to just keep a roof overhead. Add in another 5 or 10 to pay for government services, and there's not much left for living let alone education and civic duties.

Retailers have had to do some hard research into the nature of trends - how they are structured, and how markets are captured or driven - in order to recognize which of their products will sell, or even how to shape products to dominate markets.

I think some of their conclusions speak as directly as possible to the herd instinct Schiller is attempting to describe.

They break trends into a timeline peopled by trendsetters, early adopters, a mainstream moment and, lagging far behind, the latecomers or losers. At the precise moment your Aunt Maude from Cleveland has had her brow pierced, you may safely assume piercing the brow is a dead trend.

I think one of the things they're saying is that Aunt Maude is out shopping for a new house this Spring, or has recently purchased one.

It also goes some ways towards showing how, say, PMs can go hockey-stick. Maude will call the peak or, more likely, chase them down the backslope.

>12th percentile writes:
if i retire on SKF and SRS am i still a patriot?

Absolutely not. First, you have to add EEV to the mix to show you have courage and global vision. Then, you have to hold these double shorts almost all the way to the bottom

rich:
are you holding your proshare short ETFs? or are you jumping in and out.

I can't decide (of course I'm not going to emulate you, just trying to get your thinking on this)

I'm doing mainly TWM and SDS (fun account) and they seem to go up/down in a sawtooth pattern. I've been considering jumping out near the low average of the sawtooth, and then rebuying if there is a bump... (not going long in between)

it just seems to me that this market has been more of a sideways market as opposed to a big drop... or are you thinking it's going to drop big "3rd wave" if you will...

trying to see your work, not the answer if that makes sense!

TIA.

I disagree with CR on the financial ignorance of average Americans. We are suckers for a slick sales job. The legalese in a contract is mind-numbing. Can any of you explain all the reasons your credit card company can raise your interest rates? There's a reason they call it "fine print."

That said, the policy makers and regulators seem to have been asleep too. Or maybe they saw it all and just didn't give a damn. Caveat emptor you know.

The conservative opposition to regulation is sometimes useful, but in this case it was wreckless. It's part of the conservative world-view to assume that if people make mistakes, they deserve what they get. There is no need for a social safety net, just throw them to the lions.

Sunday morning sermon over.

I have followed with fascination such programs as "House Hunters," "National Open House," "Property Virgins," "Hidden Potential,"

KathyP. I agree.
That said, I've been more interested in the SHIFT of RE programming.

It went from shows like
"House Hunters" (perennial fave show about buying a house) amd "Trading Spaces" (show about how to spruce up home TO LIVE IN for a few hundred $$$)
to
"How much is my house worth" (house now seen as asset)
to
"Flip This House" and "Flip That House"
to
"Sell this House" and "Buy me!" (shows about distressed homeowners trying to get out of their house, unsuccessfully)

the latter two categories are especially enlightening:
early in these show's careers, everybody made tons of cash doing NOTHING on the "flip" shows, and people got "out" of their homes for big profit on the "sell this house" shows.

Now...
The flip shows end with a person HOPING to sell for a profit (in the past, they'd show the closing and how much they made)
and the "sell this house" shows often end with them saying "with these improvements, we're sure they'll get an offer anytime now!"

SDS:
I really like your overall post, but I find it odd how you summarized.

Here's how I interpreted your points:

1. lending standards fell causing credit bubble and mortgage backed security bubble.
2. people using greater % of income for home purchase

but then you summarize as:
In short, it was the recent rise in wages of many, but not all, American families that contributed to the 'housing bubble'

I would agree w/ your points, but not your summary.

based on your first two points, I would have stated it more like "It was the increased allocation (in % terms) of total income towards housing combined with overabundance of unwarranted credit that caused this housing bubble"

Especially since I haven't heard of much income growth during the bubble years.

stated this way there are 2 ways to "save" the bubble:
1. increase real incomes
2. supply more credit.

almost all players are trying #2 in various new "plans", but they are finding out what "pushing on a string" means.

burnside, what's the story on Alcatraz?

"Alcatraz Terraces - Experience the delightful peacefulness of the ultimate gaited community."

Or is it a fixer-upper?

As far as the rationality of the average person goes, I think it's a mistake to look for a single average, better to divide people into two first: the proverbial ants and grasshoppers.

The ants put as much as they can into their 401k, maybe they refinanced when rates bottomed in 2003, but instead of taking money out, they moved to a 15 year fixed with a payment about the same as their original mortgage. They buy as much car as they actually need and drive it for 7-10 years, etc. They carry no debt on their credit card.

The grasshopper refinanced 2-3 times over the last six years, plus has a HELOC, they have two recent model SUVs in the drivewayand don't even meet their employers match on their 401k. They carry $14,000 in credit card debt.

You average everyone together and they look only slightly overextended, just $7,000 in credit card debt, a good chunk of home equity, etc.

But if you look at the two groups separately, the grasshoppers are absurdly over-extended and the ants are in very good shape.

The relative size of the two groups might not be that important. Say the grasshoppers are 50% of the population, then that means half of families are way overiextended. But what if they are just 33%? Well, that means they must be carrying an average of $21,000 on their credit cards, owe even more on their cars, etc., and a third of families are way way way over-extended.

I actually have a similar strategy to Rich. I trade short-term in some retirement accounts and longer term in brokerage accounts. I have some TWM, SRS and SCC in brokerage accounts I figure I can get the long-term capital gains on. I think TWM is best for this because I agree with Rich it is going to take a huge hit, but I think it will be over many months. Even if the Russell hit 550 tomorrow, I think I might keep it for the 12 months because I think odds are it will still be lower next January. I also have JAN 09 put spreads on the Russell. I bought some of my SRS last April, so I will definitely hold that for the year.

But I've resigned myself to taking a fair amount of short-term gains this year in the brokerage accounts. That sucks doubly for me because Massachusetts taxes S/T gains at 12%, everything else at 5%. Ouch.

bob/rich...

thanks for your input.
unfortunately I'm young and only have $20k in my traditional IRA since I just started earning money 5 years ago (I'm not eligible for Roth).

My traditional IRA holds my CEF, which I have to have there because otherwise it's taxed as a collectible (ARRGH!)

thus my SDS and TWM are in taxable accounts.

I don't want to hold just for a tax break if I'll lose money that way, but at the same time the future of stocks does look grim...

thanks for your insight... I probably owe rich a beer for turning me on to TWM in the first place!

rich

thats basically what i've been doing also except my core positions are larger % wise. you have to keep a good size chunk core position b/c the big reversals downward are so quick and violent that you'll miss out on huge gains like the last 2d. i also have major positions in banks and HB's.

So who's to blame? (For the housing bubble.)

Allow me to share a couple of things I know for sure. (I'm a recovering banker.)

1. You can't force someone to borrow money.
2. Lenders (and borrowers) will repeat the same (borrowing and lending) mistakes once they get beyond the lessons of the past.
3. Regulation can not change human nature because human ingenuity will find a way around the regulation.
4. The "madness of crowds" is accelerated by modern communication technology.

So who's to blame? I believe we all are.

The better question is, "How do we avoid making the same mistake again?"

-- Hiding Out

(this is a very rambling response to SDS... sorry, not very concise... and a little scatterbrained, but hope it makes sense)

Since 2002, there has been a significant rise in the incomes of many professionals in America (i.e., doctors, IT professionals, etc); after the dot-com bust, they were looking for a place to invest their extra income, and real estate seemed like a good place to park their money. My argument, of course, only applies to the homes that are of high-value today (over 500,000), but I'm wondering how much of the bubble was created or supported by one portion of the population that saw a significant increase in their wages?

This is possible. I will tell you of my theory that blends with yours, but is slightly different. I agree that incomes rose in certain demographics POST 2002, however I feel the seed of the bubble was well in effect before then. (the mania in San Diego started in earnest I'd say in 2002)

In my worldview (not scientifically derived, but from my own life) this is what happened

1. start of this was mid 90s with the ability to take 250k/500k capital gains on housing tax free. (it set up the idea of "house as investment" and even "short term investment" since you only need to be there for 2 years... why not make it 15 years?)
2. then we had first part of CREDIT BUBBLE which showed up in stocks. made a lot of people rich on paper.
3. then 2001 two things happened:
   -people lost a LOT of paper wealth
   -people were shocked into fear by 9/11

(this is where I differ from your theory... a lot of Tech/IT people were really hurting, as were doctors... I know because I'm a doc and wifey's a tech person, doctor and tech incomes fell substantially from 2000-2003 or so... we maintained overall income by seeing more patients)

1. people were 'afraid' of stocks so they funneled their remaining wealth into RE. also, RE offered "security" from the evil outside world, so people wanted their home to be their "sanctuary" (thus, I feel the first impetus into RE wasn't due to increased wealth, rather an attempt at wealth preservation. this started IMO in 2001, BEFORE incomes rose)
2. fed cut interest rates AND allowed loose lending. interest rates were so low that traditional savers wer FORCED out of their savings. they weren't going to go to stocks ("risky") so they went to RE ("safe"). this not only allowed RE values to go up but it encouraged it. (this IMO is the reason the Fed should go to hell... it forced grandma out of her savings accounts and Treasuries and into RE, either that or see her life savings eroded by sub-inflation returns)
3. this helped us emerge from recession. NOW incomes started rising.
4. people had improved balance sheets due to emerging from recession AND improved housing wealth, so they felt more wealthy (this re-merges with your theory of people having more income)
5. people took this new found wealth and plowed more and more into RE, shunning stocks. (this seems clear to me if you look at the participation % of people in RE from 2000-current, and compare that to the ratio of institutional vs retail investors since 2000... the retail investors never really returned to the equities markets)

now we have self-reinforcing cycle
increased RE valuations leads to increased RE "wealth" which leads to more disposible income (through the lax lending industry/MEWs) which is plowed into RE which leads back to increased RE valuations.

but it started from FEAR (of 911 and stocks) and flight to perceived safety (RE)... and also from being "forced" out of below-inflation yielding savings accounts.

anyway, hope that helps, I know it was rambling.

That said, I agree 100% with your ideas of credit bubble, lax lending, etc...

I just teaked your income theory a bit... but your theory may be more accurate... as I said my theory is simply my interpretation of how it all went down... (simplified)

Malabar,

If there is a single technical indicator you should believe in, its the Hindenburg Omen.

From Safehaven - Safe Haven | The Past Performance of the Hindenburg Omen Stock Market Crash Signals 1985 - 2005

If we define a crash as a 15% decline, of the 22 (now 23) confirmed Hindenburg Omen signals, six (27.2 percent ) were followed by financial system threatening, life-as-we-know-it threatening stock market crashes. Three (now 4) more were followed by stock market selling panics (10% to 14.9% declines). Three more (13.6 percent) resulted in sharp declines (8% to 9.9% drops). Five (22.7 percent) were followed by meaningful declines (5% to 7.9%), three (13.6 percent) saw mild declines (2.0%to 4.9%), and two were failures, with subsequent declines of 2.0% or less. Put another way, there is a greater than 25 percent probability that a stock market crash - the big one - will occur after we get a confirmed (more than one in a cluster) Hindenburg Omen. There is a 41 percent probability that at least a panic or crash sell-off will occur. There is a 54.5 percent probability that a sharp decline greater than 8.0 % will occur, and there is a 77.2 percent probability that a stock market decline of at least 5 percent will occur. Only one out of roughly 7.5 times will this signal fail.

And note, the 1 time out of 7 1/2 where the system was a "failure", you still probably made money being short.

As I get older, I get less impressed with intelligence and more impressed with judgment. Sometimes being smart just means you can create brilliant justifications for idiotic decisions. It's hard not to see that dynamic at work here.

Tom

How a Bubble Stayed Under the Radar

Also note that these same people who missed the bubble are now denying even the possibility of a recession even though we're probably already in one.

SDS, I'm not so much arguing with you as tossing the ball back and forth over the net.

To me the housing debacle appears to be a combination of mutually reinforcing factors, of which the "professionals pumping up the market" is probably one the smallest sectors. With the rare exception, this hasn't been characterized as millionaires sitting on lemons.

[a very low-brow synopsis]

The dotcom bubble blew up when J6P climbed on to join Aunt Millie.

It was a relatively contained mess in that the losses among J6Pers were more or less disposable income.

The staggering out of that mess was eventually described as "The Jobless Recovery." Thems with jobs is lucky to hold on to them, much less aggregate real wealth through raises.

The bankers needed another cow to bleed lifeless. Conveniently, Greenspan starts pumping Adjustable Rate Mortgages. (I was still watching TV in those days and the first time I heard that, I thought he was misspeaking. The second time I popped an aneurism.)

In no time flat every lender in the country is throwing money at anyone willing to catch it. Heck. Just stand still for a moment and the loan will fall in your lap.

Bombarded with this constant barrage, J6P eventually gets the drift and joins the free-money-RE-never-goes-down free for all, and buys a flipper. The free-money lure is further abetted by bundles of 0% CC offers dropping through the mail slot every day.

The early birds do actually make a tidy profit. Several co-workers, the more intrepid, made out quite well. These, unfortunately, serve as "good" examples for others to join the fray while pickins' is good.

As with any enterprise, supply catches up with demand. Builders can't build any faster. Anyone not resting under a headstone has a second "home." Now the game becomes "pass the loaded gun."

Complicating the non-compis-financialis pollution is the financial industry's insatiable proclivity for selling, reselling, reselling, reselling, and reselling anything that comes within its grasp. The eventual "worth" of all this RE, subprime and otherwise, based on fractional reserve principles, soon morphs into sums too staggering to rationally comprehend.

Based on the free-lunch model, disaster wasn't just a possibility (if even imagined - which it wasn't; "RE only goes up,") or a probability - the reckless ravings of a few downer economists and bloggers; but only a matter of time, a certainty based on the didn't-you-learn ANYTHING-from-the-dotcom-disaster model.

CCs are maxed out. HELOCS are tapped out. RE doesn't just go up. Whoops.

Houses made of cards built on sand
slide into the sea, eventually.

Sorry Jimi.

What the article seems to miss is that there are agents that are directly and indirectly selling the bubbles!

The root of bubbles seem to have a widespread notion that there is some new factor at work.

With the .com bubble, it was rising productivity, massive demand for bandwidth, and the notion that everyone would buy even their dog food over the internet. With housing, it was 2nd and 3rd home demand and the notion that a tangible asset would always increase in value. I've often wondered if the housing bubble was exacerbated by the .com bubble burst. When folks saw their .com investments disappear they sought refuge in an asset that couldn't.

Yearning to Learn,

Just so I'm not giving the wrong impression, the majority of our assets are in much safer investments, cash/CDs, treasuries/bonds, preferred shares, some foreign currencies/gold/ag commodities (not futures).

I'm going to put a little into municipal bonds tomorrow.

If I were you, I would make a limit of 10-15% of your IRA to put into options or the negative ETFs like TWM.

There have been times over the last few years when I've over-extended into the risky stuff. How do you know when you're over-extended? When the market going against you for a couple months keeps you from sleeping.

Gawains Ghost,

It's to read highly informative posts like yours -- by insiders who have true knowledge -- that I frequent this blog.

More, more!

you know the difference between the mgex wheat and kcbt wheat contract? i think that's where thisguy got burnt.
askin | 03.02.08 - 8:38 am | #

According to the exchange, it's the gradient value of the wheat, to be determined solely by the exchange. The MGE wheat has a higher protein value than CBOT soft or KC hard and that makes it of higher quality/ desirability in the making of some food products. The guy got burned shorting size into the teeth of a huge bull move. Had it gone the other way, nobody would have been any the wiser.

Rich- And if Obama doesn't clinch, are the merkets going to be fine?

Re: MF Guy

What's the difference? It was just a rouge trader. (I guess that means red wheat in French)

Yearning to Learn:

I want to thank you again for taking the time to add to my thoughts and to clarify my misgivings. You stated that after 9/11:

"a lot of Tech/IT people were really hurting, as were doctors... I know because I'm a doc and wifey's a tech person, doctor and tech incomes fell substantially from 2000-2003 or so... we maintained overall income by seeing more patients"

I was not aware of this. But I think you agree with me that eventually incomes did begin to rise for some. Others commenting to my post have suggested that income inflation may not have been as significant as my theory suggests. They may be right. However, I would still appreciate economists (including Shriller) paying more attention to the contribution that income inflation may have played, at one study that systematically disproves the kind of theory that I was suggesting. I think we would benefit from this recent fiasco if we really understood what went wrong without simply assuming that it was a 'RE bubble' without distinguishing its nature from other bubbles (tech stocks, for instance).

Finally, YTL, I completely agree with your modifications to my theory, and thank you for pointing out so clearly the role played by the self-reinforcing cycle of increased RE valuations leading to increased RE "wealth" leading to more disposible income through lax lending leading money back into RE leading to increased RE valuations, and so on. An important point indeed!

Bob_in_MA:

thanks for the clarification.

Don't worry, I'm not overextended on my Proshare shorts. I'm VERY conservative overall in my investments lately.

The problem for me is that I had no income until 1999, and very little from 1999-2001. I started making more in 2002, and I used all of it from then until 2003 to pay off debt and build up an emergency fund (school loans, housing downpayment etc)
(my only debt now: my house, but I have enough cash in bank to pay loan in full)

From 2003-2007 I finally started making "real" money, but it left me unable to contribute to a Roth.

So each year I max my 401k (since 1999) and that's currently all in Treasury Money Market because everything else is crap in there.

And each year since 2004 I did a traditional IRA, but it can only be $4k per year so there's only a little over $15k in there (haven't contributed for '08 yet). that's all CEF (due to tax consequences of CEF)

Due to this, the lions share of my net worth is in taxable accounts.

95% of taxable account stuff is in Treasuries and Savings Accounts and CDs

And 5% is "fun"-that's where I'm gambling with the Proshares funds. I'm FULLY prepared to lose it all... but thus far I've done pretty well...

Just wanted to let you know that I've enjoyed your and Rich's and others advice, but I promise you're not giving me rope with which to hand myself!

Not quite completely off thread, but I like to bake bread, and I find that 2 archaic grains are far tastier and tho whole grains produce just as fine a bread as worthless white flour. To wit: spelt, and even more so, kamut. Only place to buy kamut is at the health food store; I've seen some spelt at the grocery store. I doubt there is any futures mkt in those.

Buckwheat is good in some uses, and to be even more exotic, there is also teff and amaranth. All of them are healthier than the wheat you are referring to.

I'd really like to see kamut promoted, since it is so tasty and supposedly better for digestion too.

Rich,

Obama's econ adviser is from the Chicago school of economics and his understanding of markets is plenty good, especially compared to a financial illiterate like McCain.

Sorry about the last post. Something went badly wrong.

sportsfan writes:
I just watched a lengthy video where the speaker did an excellent job of describing the unprecedented nature of the California housing bubble of 2003-2005.

The presentation was made in February 2006, but the video went up on youtube only 3 weeks ago. The entertaining speaker was Christopher Thornberg, senior economist at UCLA's Anderson School of Management.

I realize it's long, but I would highly recommend this to anyone seriously interested in the subject. Also, he has lots of graphs and charts and at times sounds like what CR must have been saying then (when I wasn't reading this blog):

YouTube -  ? v=BiqEacwADlE
sportsfan | 03.02.08 - 3:11 pm | #

I posted this on the next (more recent) blog entry, but it really should have been here.

The bubble was clearly visible.

I second stoic's recommendation of Galbraith's 1929 book. I would call attention to the "Something Should be Done?" chapter. I interpret this as saying those who knew a speculative bubble was going on did not want to be blamed for collapsing it.

Can any one supply an exact reference for the "A and B information cascade" paper mentioned in the TrimTabs article? Can it be downloaded?