One-bored-reader, I've written about a number of subjects, but mostly housing this year.
The reasons I've focused on housing in '05 are: 1) I think this is the transition year for the housing market (from boom to slow down), 2) I think housing has been a key factor in GDP growth, employment, retail and the trade deficit. As housing slows, some of these trends will reverse - and that is very interesting!
This coming week will be especially interesting for housing - new and existing home sales will be reported, and OFHEO home price index for Q3.
Dear one bored reader, considering that housing has been the king pin of the US economy over the last few years, I think that CR's focus has been totally correct.
My question to you-is where the hell are you? Housing is beginiing to fall off a deep cliff- that is important-GM really is not.
I don't even like to think what will happen to automotive in general & GM in particular if housing really craters... the negative wealth effect will knock a hole in automotive sales that will take a half decade to heal.
That will be the 'other' shoe once this whole thing unwinds.
Could be that the blog's interest is held by the posters as much as the primary focus on housing initiated by CR.
And so the plight of GM, Delphi, etc may be a competing interest or a complementary one and we (maybe only me) would not be horribly peeved if say, One bored reader wanted to derail/digress/adjoin the discussion. Might be interesting/enlightening to consider the decline of auto sales/profits/earnings with the rise in real estate profits/prices/ share of discretionary income.
But this is not my lead --take us away One bored reader.
One-bored-reader,
I have been reading Steve Roach, the one note global unbalance guy at morgan stanley for some time. All this brings to mind the statement by an economist that "Things that can't go on forever, can go on longer than you can stay solvent".
Just remember when the bears captulate, the crash can't be far away.
Enjoy.
Good one: the real imbalanced imbalance is the unbalanced. I'm glad you mention SR, dilbert because I believe he has single handedly turned more bears off than anyone I can think of.
He just simply wears them down week after week, year after year. You have to have been such a patient bear to have not abdicated and run to the hills with the bulls.
One bored reader--I agree with you. Yes, housing is very important. Yes, the housing market will have a big impact of the economy. And yes, I am losing interest in the blog because of the narrow range of posts.
Perhaps the problem is my expectations. If the intention of the blog is to focus primarily on housing, then I retract my comments. The blog is very detailed and informative on that topic.
Yes, sometimes it does seem like 'real estate, real estate, real estate and eggs'... But I don't like real estate!!!!
I mean we could all discuss corn futures & hog bellies... that is 'economics' too. It just doesn't matter.
In 1999 dot.com was the big story... drove the whole world economy. And through it all they traded hog bellies... no one noticed because it didn't matter. A non-story...
Right now the story is the incredible growth in residential RE asset prices & the debt associated with it... and not just here... literally worldwide. There will be a fallout... mild or severe, sooner or later... big question.
Maybe next year we can all settle down again and talk about GM, social security or hog bellies. Until then it is RE, RE and more RE. Yum.
Keith, I am amazed that so many people read my blog. I started it for myself and a few friends - its grown from there.
I've written about the budget and trade deficit (extensively). I've written about energy, employment and retail. But mostly I've written about housing. And this week, with so much new data being released, housing will once again be the main topic. As I stated earlier, I think housing is the key to the future of the US economy.
As far as this blog, I am just having fun. Its all free, and I don't take any advertising - so its not exactly a money making endeavor! I write about what interests me, and I try to answer questions in the comments or emails.
Personally I'm a little bored with housing too. But I do think it is important for the economy.
The plot schtickens: housing is leveraging/financing other sectors of the economy providing a vehicle that allows us to live beyond our means to the tune of several billion dollars a day. It should be the center piece of our discussion.
i'll never understand why someone takes the time to complain and call themselves bored when this is a website you chose to come to. if you dont like it then go look somewhere else. none of us here use this blog as our sole source of discussion.
i for one appreciate the housing focus this blog has w/o being either off the charts bearish and angry like housingbubble2 and w/o any rah rah from the bulls.
dc you are just too biased against the Boreds --you have vested interests. Easy for you to shoot down the Boreds [Why is this sounding like a hockey game?]. But there are other players (not necessarily offside) who enrich this discussion no matter how whiny or whizzy.
Now if you excuse me I see someone has just passed me the puck...
deficits...do tie into housing and CR has linked to Hamilton's entry upthread (see you there in a jiffy)
job losses and outsourcing...I think it was PIMCO that had this amazing graph of manufacturing losses plotted against real estate related gains in the last decade, illustrating the domestic imbalance in terms of job shifts; the outsourcing that we tolerated in the 90s as manufacturing went to the orient, reflected our confidence that blue collar work was 2nd class work esp now that we had IT. This tune no longer plays because IT has also gone to the orient and we are left with housing which appears to be winding down. Some outsourcing doesn't get the attention it deserves: the illegal aliens (ok insourcing then). It looks like a huge wave of these part time immigrants will need to be 'naturalized' if boomers are to continue with their life style.
GM, the world's largest automaker, gained 28 cents to $23.14. Delphi Corp., the biggest U.S. auto-parts maker, said it will delay the deadline for canceling union contracts and accelerate restructuring talks with GM, its former parent. GM has also agreed to forgo 2006 price reductions on Delphi parts, Delphi said. Delphi rose 1 cent to 39 cents. Bloomberg
That doesn't look like much of a story... but if you know anything about automotive, out-sourcing & off-shoring that part in BOLD is HUGE.
In almost every contract to produce parts for the automotive world... the customers insist on 'price down contracts'... typically 5% per year. So if Delphi agrees to a contract to sell an assembly to GM... it might get $100 this year, $95 next year... then $90.25, $85.74, $81.45, $77.38... until the platform is changed or a new contract is agreed upon (not likely).
Delphi in turn then beats up its suppliers to do the same (sign price down contracts)... if they want to play with the big boys they have to take a few risks.
In my opinion this 'business model' is as big a reason why Delphi and others are in trouble as is the 'legacy cost' you read about in the media. If GM gave up this years 'price downs'... that means they really were worried they had jeopardized their supply chain (as in Delphi can't ship parts due to strike & other disruptions).
This was an emergency decision no doubt - short term put-out-fire type decision. The next thing to watch is will GM butress Delphi for the long haul or quietly, internally, decide they dodged a bullet and accelerate the movement of their component supply chain to China instead. Understand that 70-80% of the valued added in automobiles is in the components & not the domestic final assembly plants. My guess is the latter.
Thought I'd show you all a little of the sausage being made... Don't want you bored, bored-reader...
Dryfly,
What's the general feeling in industrial heartland about the possibility of GM going bankrupt? Do you know UAW people? Are they worried? I assume that the animosity between GM and UAW is strong?
My conversations with some grocery workers who went on strike last year showed an deep animosity against their employers coupled with an astounding ignorance of the dynamics of the grocery industry. I wonder if the auto industry is in the same boat. If so, then it makes the prospect of GM surviving so much smaller.
calmo - LOL... ya it was a sad day on the web when I discovered the html tools... Now if I could only learn to use a spell checker... but would that really help? Nope, doesn't fix grammer... at least not my cheap shots... there isn't a penalty long enough or a box cold enough to stop me from committing those fouls.
::::::
As per Keith's question... I don't know many UAW workers anymore & the ones I did all worked for Cat & Deere (off-highway vehicles)... so can't help you there.
But I do know from family in Michigan that 'yes' folks are pissed off and 'yes' everyone expects GM to file... if they can.
You see there is a big difference between GM & Delphi... Delphi used to be part of GM and was spun off (to avoid the legacy cost as much as anything)... And if I'm not mistaken GM still owns a lot of Delphi. So some of Delphi's BK move was to force GM to pick up some of the legacy or go without parts. GM is far more widely held... and can't just willy nilly file... they would have to prove it and I think they have too much cash on hand to do that now... tho that could change.
There is more to this than we see... and I'm sure a lot more than I know.
Another interesting tidbit... the suppliers to Delphi... I know LOTSA then (not bold this time so as to keep calmo in his chair)... I am going to ask around to see if they expect to get a reprieve from the 'price downs' as well... my bet is 'no soap'.
I'll be in 'Delphi Country' the rest of this week... Chicago area & Indiana... Tue & Wed for sure anyway. I'll have my ears open.
Many lenders have turned to mortgage products designed to lower monthly loans payments and to help borrowers qualify more readily for larger loan amounts, while others require little in the way of documentation during the approval process. These loans do make it easier for some people to get mortgages, but they also can raise the possibility that some borrowers may end up in default.
CR,
Just wondering, is this blog only concentrating on Housing stats ? and not much about other macro economic aspects ?
Also, we have been talking about the "housing slowdown" over the past 10 months or so and nothing drastic has happened as yet.
I find more drastic changes are happ with Delphi, GM, ford than this boring topic of housing.
You are sure gonna lose leaders if u chose to sit on a falling house
One-bored-reader, I've written about a number of subjects, but mostly housing this year.
The reasons I've focused on housing in '05 are: 1) I think this is the transition year for the housing market (from boom to slow down), 2) I think housing has been a key factor in GDP growth, employment, retail and the trade deficit. As housing slows, some of these trends will reverse - and that is very interesting!
This coming week will be especially interesting for housing - new and existing home sales will be reported, and OFHEO home price index for Q3.
Yeah, I get excited by all this stuff!
Best Wishes.
Dear one bored reader, considering that housing has been the king pin of the US economy over the last few years, I think that CR's focus has been totally correct.
My question to you-is where the hell are you? Housing is beginiing to fall off a deep cliff- that is important-GM really is not.
Ya sure housing doesn't matter.
I don't even like to think what will happen to automotive in general & GM in particular if housing really craters... the negative wealth effect will knock a hole in automotive sales that will take a half decade to heal.
That will be the 'other' shoe once this whole thing unwinds.
Could be that the blog's interest is held by the posters as much as the primary focus on housing initiated by CR.
And so the plight of GM, Delphi, etc may be a competing interest or a complementary one and we (maybe only me) would not be horribly peeved if say, One bored reader wanted to derail/digress/adjoin the discussion. Might be interesting/enlightening to consider the decline of auto sales/profits/earnings with the rise in real estate profits/prices/ share of discretionary income.
But this is not my lead --take us away One bored reader.
One-bored-reader,
I have been reading Steve Roach, the one note global unbalance guy at morgan stanley for some time. All this brings to mind the statement by an economist that "Things that can't go on forever, can go on longer than you can stay solvent".
Just remember when the bears captulate, the crash can't be far away.
Enjoy.
Good one: the real imbalanced imbalance is the unbalanced. I'm glad you mention SR, dilbert because I believe he has single handedly turned more bears off than anyone I can think of.
He just simply wears them down week after week, year after year. You have to have been such a patient bear to have not abdicated and run to the hills with the bulls.
CR, I come here because you have the best info on the housing market, in the most understandable way. I'm not bored at all.
One bored reader--I agree with you. Yes, housing is very important. Yes, the housing market will have a big impact of the economy. And yes, I am losing interest in the blog because of the narrow range of posts.
Perhaps the problem is my expectations. If the intention of the blog is to focus primarily on housing, then I retract my comments. The blog is very detailed and informative on that topic.
Yes, sometimes it does seem like 'real estate, real estate, real estate and eggs'... But I don't like real estate!!!!
I mean we could all discuss corn futures & hog bellies... that is 'economics' too. It just doesn't matter.
In 1999 dot.com was the big story... drove the whole world economy. And through it all they traded hog bellies... no one noticed because it didn't matter. A non-story...
Right now the story is the incredible growth in residential RE asset prices & the debt associated with it... and not just here... literally worldwide. There will be a fallout... mild or severe, sooner or later... big question.
Maybe next year we can all settle down again and talk about GM, social security or hog bellies. Until then it is RE, RE and more RE. Yum.
Keith, I am amazed that so many people read my blog. I started it for myself and a few friends - its grown from there.
I've written about the budget and trade deficit (extensively). I've written about energy, employment and retail. But mostly I've written about housing. And this week, with so much new data being released, housing will once again be the main topic. As I stated earlier, I think housing is the key to the future of the US economy.
As far as this blog, I am just having fun. Its all free, and I don't take any advertising - so its not exactly a money making endeavor! I write about what interests me, and I try to answer questions in the comments or emails.
Personally I'm a little bored with housing too. But I do think it is important for the economy.
Best Wishes.
Its not that RE is not exciting, but we came to this movie for gratuitous violence and sex.
Instead we get plot and character developement and story background.
The plot schtickens: housing is leveraging/financing other sectors of the economy providing a vehicle that allows us to live beyond our means to the tune of several billion dollars a day. It should be the center piece of our discussion.
CR,
I agree housing is important... but variety adds spice. ... doesn't it ?
Anyway, your blog is one of the best econ blogs around.
Calmo,
"housing.. should be the center piece of our discussion."
Fantastic.
No wonder, nothing gets done in america regarding
i'll never understand why someone takes the time to complain and call themselves bored when this is a website you chose to come to. if you dont like it then go look somewhere else. none of us here use this blog as our sole source of discussion.
i for one appreciate the housing focus this blog has w/o being either off the charts bearish and angry like housingbubble2 and w/o any rah rah from the bulls.
thanks CR!
dc you are just too biased against the Boreds --you have vested interests. Easy for you to shoot down the Boreds [Why is this sounding like a hockey game?]. But there are other players (not necessarily offside) who enrich this discussion no matter how whiny or whizzy.
Now if you excuse me I see someone has just passed me the puck...
For one-bored...
GM, the world's largest automaker, gained 28 cents to $23.14. Delphi Corp., the biggest U.S. auto-parts maker, said it will delay the deadline for canceling union contracts and accelerate restructuring talks with GM, its former parent. GM has also agreed to forgo 2006 price reductions on Delphi parts, Delphi said. Delphi rose 1 cent to 39 cents. Bloomberg
That doesn't look like much of a story... but if you know anything about automotive, out-sourcing & off-shoring that part in BOLD is HUGE.
In almost every contract to produce parts for the automotive world... the customers insist on 'price down contracts'... typically 5% per year. So if Delphi agrees to a contract to sell an assembly to GM... it might get $100 this year, $95 next year... then $90.25, $85.74, $81.45, $77.38... until the platform is changed or a new contract is agreed upon (not likely).
Delphi in turn then beats up its suppliers to do the same (sign price down contracts)... if they want to play with the big boys they have to take a few risks.
In my opinion this 'business model' is as big a reason why Delphi and others are in trouble as is the 'legacy cost' you read about in the media. If GM gave up this years 'price downs'... that means they really were worried they had jeopardized their supply chain (as in Delphi can't ship parts due to strike & other disruptions).
This was an emergency decision no doubt - short term put-out-fire type decision. The next thing to watch is will GM butress Delphi for the long haul or quietly, internally, decide they dodged a bullet and accelerate the movement of their component supply chain to China instead. Understand that 70-80% of the valued added in automobiles is in the components & not the domestic final assembly plants. My guess is the latter.
Thought I'd show you all a little of the sausage being made... Don't want you bored, bored-reader...
Dryfly,
What's the general feeling in industrial heartland about the possibility of GM going bankrupt? Do you know UAW people? Are they worried? I assume that the animosity between GM and UAW is strong?
My conversations with some grocery workers who went on strike last year showed an deep animosity against their employers coupled with an astounding ignorance of the dynamics of the grocery industry. I wonder if the auto industry is in the same boat. If so, then it makes the prospect of GM surviving so much smaller.
Ok, dryfly that's 2min for boarding. High sticking. Something.
I need to tell you that I'm still reeling from this bit:
that part in bold is HUGE.
--not merely bold as some were led to believe. Not strong either but
HUGE
Slink's in trouble now..I've found the tool kit.
calmo - LOL... ya it was a sad day on the web when I discovered the html tools... Now if I could only learn to use a spell checker... but would that really help? Nope, doesn't fix grammer... at least not my cheap shots... there isn't a penalty long enough or a box cold enough to stop me from committing those fouls.
::::::
As per Keith's question... I don't know many UAW workers anymore & the ones I did all worked for Cat & Deere (off-highway vehicles)... so can't help you there.
But I do know from family in Michigan that 'yes' folks are pissed off and 'yes' everyone expects GM to file... if they can.
You see there is a big difference between GM & Delphi... Delphi used to be part of GM and was spun off (to avoid the legacy cost as much as anything)... And if I'm not mistaken GM still owns a lot of Delphi. So some of Delphi's BK move was to force GM to pick up some of the legacy or go without parts. GM is far more widely held... and can't just willy nilly file... they would have to prove it and I think they have too much cash on hand to do that now... tho that could change.
There is more to this than we see... and I'm sure a lot more than I know.
Another interesting tidbit... the suppliers to Delphi... I know LOTSA then (not bold this time so as to keep calmo in his chair)... I am going to ask around to see if they expect to get a reprieve from the 'price downs' as well... my bet is 'no soap'.
I'll be in 'Delphi Country' the rest of this week... Chicago area & Indiana... Tue & Wed for sure anyway. I'll have my ears open.
Full report later.
You are a resource dryfly. And fun too. --thanks for all your valuable (yes not the other ones) posts. lol
Many lenders have turned to mortgage products designed to lower monthly loans payments and to help borrowers qualify more readily for larger loan amounts, while others require little in the way of documentation during the approval process. These loans do make it easier for some people to get mortgages, but they also can raise the possibility that some borrowers may end up in default.