If I had money in the market that needed to come out, and I was convinced P/E was too high, or saw any other reason for an imminent correction, I'd be watching the chart for signs of a reversal, like a double top (hmmm), perhaps a recent Doji (hmmm), and I'd sell at the second top (hmm).

If I had any money in the market, it would have already sold half at a 25% price rise, half the rest at the next 25% gain, half the remainder at the next 25% gain, etc., automatically, because anyone who invests in today's market without limits or stop-loss orders is a buckethead, unless you understand the precise limitations of structured market orders and find reason to trade naked in isolated cases. If I was able to watch close, and feeling bold, I might override those limit sells, stay in for awhile longer to max gains, then get out all at once, but I'd know WHY I was staying in and WHY I was getting out when I did get out.

Unless I smell opportunity to shoot the moon, any realized gains will take place in sheltered accounts, and any gains in tax exposed accounts will remain unrealized, except to the full extent of my current stash of cap losses, until well after Obutthead is a distant memory in Wash DC. I have no desire or intention of funding his opulent re-distributions.

Once out, I might place a third of the assets one foot out the door, ultra-liquid cash, wire transfer cocked and locked, set to execute from either end, broker, researched safe parking lot  or metals exchange, on my authenticated verbal order. Another third in "diversified cash", ForEx, paper metals, MMs, highly liquid securities with a proven history of negative correlation with the USD, name your poison. Last third ready to invest in carefully selected growth securities and diversification hedges on advantageous entry points, perhaps even limit buy orders on record.

That is assuming, of course, that assets equal to one third of the amount above were already well outside the system,  split evenly between metals and currency, secreted in gopher holes well distanced from any name or alias I'd ever used in the past, and further assuming I had at least enough beans and bullets to enjoy a year's vacation inside Casa del Jeffers, zombies neatly stacked in a ring on the perimeter as conditions of supply and dispatch permit.

If I found market conditions that 100% mandated a sell order Friday, two days in advance, I would at first be wary of improbable crystal balls, second, check six for insider trading exposure, third, short the living fuck out of that security, on the fattest margin I could con a broker out of, fourth, scoop up my massive profits in cash, bhat, kiwis and, I think, Oz dollars ought to do for starters, fifth, buy Buffet and Soros' putz level operations just to put them in their well deserved peasant places, once and for all, and sixth, retire to my armed and armored yacht on the South Pacific with a deck full of hula girls and iced cases of Patrone.

YMMV.

Yeah, well, it wasn't long ago that people were saying very similar things about the way Glenn Beck delivered his warnings, too...

I'm a big fan of Jeffers' long-form posts. But I believe he is a tad off base with this one.

Like I said, I just wanted to piggy back on your post. Certainly I was not correcting anything - when I post stuff like this it's because I'm trying to offer real-world evidence that the crap the naysayers continue to spew is, well, crap.

To expound a tad further on what I said: I am (and the people I am talking about who are close to losing their jobs) are also big free-market believers. Total capitalists. We all believe that when there are no jobs in the field you work in, you must re-train to a job that is in demand...

The problem being, right now there are no jobs in demand because nobody is hiring. Doesn't matter what job you re-train for when there are no jobs to go to.

Thus forcing you to look for government work or subsistence.





 

Listen to your gut.  



But if one can hold steady and weather a shitstorm while everyone around him is going under... then he is comparatively wealthy, and can have cash in hand to grab up opportunities.  And there will be plenty of them.  




You ever been hungry?   Hungry and cold?  And depending on the strength of your back to eek out another day of manual labor to survive?

Neither have I, not by a long shot.

But my grandparents were.  And my parents were born into it.  Born into the epicenter of the Dustbowl Depression.

There exists in this world every bit of potential for infinitely worse.

And there is no shrugging off and "Oh well" to address that kind of horror.

Yes, invest by all means.  But invest in what will cover your ass, instead of "getting rich".

It's hunker and bunker time.

Here's what I would probably do (ie, just philosophising, not investment advice)

Get my eyes on the general specifics of some tangible thing I want next in life, be it house, vehicle, or firearms.

When gold eventually (months out) gets up around roughly $1,250.00 oz, consider selling some and putting it into that tangible.

BUT if we were to suddenly get into some world craziness where gold might suddenly spike like that within days or weeks, not months... I would hold on tight and not sell.  

There exists a train of thought in this country that things can never be "that bad".  We are only two generations removed from a real SHTF occurrence.  Things have been pretty good here in this country and over that time, we have become complacent.  That complacency has now morphed in denial. I listened to the stories of my grandparents say that dinner time involved going out into the front yard to pull dandelions out of the ground for supper to cook the rabbit that you snared over night.  



 

There are some main differences:

We have tons and tons of "things" which we can use up and wear out.  Some of them require batteries, though.  And maintenance.

We have the technology –– which exists more in the form of knowledge than in manufacturing machinery –– to produce wonderful things.  The Chinese have the physical capacity to make them, though.

Back in GD1, people fully expected to work and work hard to support themselves.  Not any more.

One point in favor, one ambiguous, and one against us today.

However, an over reliance in technology may also be an Achilles heal.





 

3. What is the "Last National Bank Run" and how does it potentially apply to where we stand today?



This one last fall?

“A: They are right to this extent . . . we did that about September 15th . . . here’s the facts that we don’t talk about . . . at Thursday 11:00 AM, the Federal Reserve noticed a tremendous drawdown in money market accounts by $550 billion in an hour or two. Treasury opened its window to help and pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.”


Or were you talking about the run on Continental Illinois after the loans were shown to be bad they had purchased from Penn Square.  I think the run was in the billions even in the early 80's(if I remember correctly).

It took me all fucking morning,since I read this at 0300, to remember the name of the banks involved.

BTW,I am surprised with the advent of electronic money and teh interwebs that more banks haven't had runs. It is really easy to move money around. Heck,I figured Northern Rock,with the pictures of people standing in line,would have at least excited people here...

Chris

ETA...It looks like after checking,depositors withdrew almost 10B in less than a month from Continental. This was pre-interwebs,May of 84.
The FDIC deemed it "Too big to fail" and propped it up. In the end they made bondholders complete and wiped out the common. They also mde ALL depositors whole from what I can find. 4.5B in costs. In 1984. Fuck me.

Gee. Where could we possibly have heard the phrase "Too big to fail" before?
 

ETA #2...Linky for Zerohedge article on the MM run...Also WSJ article.

Zerohedge MM article

WSJ Reserve Primary Fund breaks the buck.

On another thread I predicted that in order to keep the debt laden economy afloat a new paradigm would emerge wherein the availability of credit equals wealth and the ruse that our debt will or even can ever be serviced will be abandoned.

I honestly believe that this will become reality in the not so far future because there is no alternative, there is so much debt, both public and private, that it can never be serviced and it will lead to a lower standard of living for most Americans.

Beside reading the article; you really should click the link and watch the video.

As absurd as Ken Fisher's argument is; he is the vanguard of the new paradigm and can say what elected officals can't.

You'll see more and more of this crap, eventually from official channels and respected economists since the outcome is simply unavoidable.




http://finance.yahoo.com/tech-ticker/article/334648/Too-Much-Debt––Please.––We-Need-MORE-Debt-Says-Ken-Fisher?tickers=tlt,tbt,spy,dia,^gspc,udn,uup&sec=topStories&pos=8&asset=&ccode=

Too Much Debt? Please. We Need MORE Debt, Says Ken Fisher

Posted Sep 17, 2009 09:00am EDT by Henry Blodget in Investing, Newsmakers, Recession


The conventional wisdom is that Americans are struggling to crawl out from under a mountain of debt that will restrain growth and weigh down the economy for decades.

As this chart shows, the US debt-to-GDP ratio recently soared to an all time high of 370%, meaning that for every $1 of output we produce, we have borrowed $3.70.  This compares to a long-term debt-to-GDP average of about 150%.

Last time we went on a massive debt binge, in the 1920s, our debt-to-GDP ratio hit a relatively mild 250%, and we spent the better part of two decades (and the Great Depression) working it off.  Many economists think the same thing will happen this time around.

But they're wrong, says Ken Fisher, CEO of Fisher Investments ($35 billion under management), in a wildly contrarian view.

The U.S. has too little debt, not too much, Fisher says.  The U.S.'s return on assets is high and interest rates are low, so our borrowing capacity is much higher than our current debt levels.

Also, Fisher says, you have to look at the U.S. in the context of the world, because the U.S. is only 25% of world GDP.  The world is way under-leveraged, so one country's particular debt-to-GDP ratio doesn't matter.

To say Fisher's view is unusual is an understatement: I, for one, haven't heard it since before the crash, when everyone from Fed Chairmen to fund managers to Wall Street economists were seeing no evil and projecting blue skies into the hereafter.  Fisher was making the same argument then, too, by the way––before the housing sector crashed and triggered a foreclosure crisis among millions of Americans whose debt burden had become way more than they could manage.

This is not to say that, in a perfect world, in which every borrower knew his or her exact debt capacity and never exceeded it, in which no borrower ever made a stupid investment (think those who lent money to banks) or used debt to fund consumption (think using houses as ATMs), we could not safely boost total debt far beyond today's levels.  It is also not to say that the U.S. debt-to-GDP ratio won't keep charging upwards to 500%+ of GDP and stay there forever.

It is to say that Fisher's view is startling and provocative.  I, for one, know a lot of folks who would love to borrow a lot more, and it would be nice to think that doing so was smart, not irresponsible (so 2007!).  So I'll definitely explore this theory further.

Karl relies on facts and he's very precise (I knew him when he was in Chicago and interacted with him fairly regularly in the 90s and into 2000 about network and security issues...) so when he says 20-30 years he's providing a technically accurate projection just basing that on the numbers.



However given the fact that he's proven that the current  path leads to destruction over a given period of time, would seem to me indicate that this, along with other factors like politics, international affairs, internal destruction within the US (such as we see now with the unemployment and credit woes) along with the below:



Patriot Act, the John Warner defense authorization changes, the nationalization of GM and Chrysler, the direct White House control of our banking system, the proof that Dow has been rigged, etc. His continued involvement in Afghanistan and Iraq (he has alienated many of his leftist allies on this issue), Socialized Healthcare, Cap and Trade, etc..



IMHO everthing else that is going on adds possibilities that Karl's time line will be greatly compressed and since I am no economics expert but it seems to me what  he projects is merely a conservative estimate  but that along with all the other factors above  converging  into a critical period in our country's immediate future.  I.E. if alot of the above combine together to just blow the hell out of our country. I'm sure I missed quite a few other factors too.



Karl isn't very tin foil compared to a lot of people here and often refuses to consider other factors which will greatly accelerate his projection if they actually occur. WHat Karl shows us is just another way we're in deep trouble, and a combination of what he sees, what we see, and what no one will probably foresee will probably all combine in some form or another into what we see as "what's coming..."



All of the above is conjecture, if you don't agree with some of it, maybe there are valid points to be gleaned... or not.

I am already looking beyond the 'winter' into the 'spring' of this political and economic insanity.

The whole Obama/ socialism/ ACORN/ kumbaya paradigm is OLD.  Like something rotten in the back of the refrigerator.  That shit already failed in the Soviet Union.  It fails, because it just stupid, and always fails.

It is so predictable we can almost treat it like history already.  Just hunker down and endure while it goes through it idiotic spasms.

Obeyme and his Rahm-it-through house and senate will be proverbially 'nutted' in 2010.  Obeyme will be cast out 2 years later.

What comes in the proverbial 'spring' ?

Those of us who have endured and even gained financial ground during the bad times will have many opportunities.

What will they be?

See?  I am not all doom-n-gloom.

psyops4fun/OdT '12!





eta: quote

Update from an earlier post: I received both documents promised by the ads, both fall within the original claim of what they were supposed to be, both were delivered to my spam box, and the Bernanke report has an overt agenda, though perhaps not an unreasonable one. I am tight for time right now, cannot give either the time it deserves in review, but I do wish to note I have yet to receive any significant increase in financial type spam.

Wanted to make sure this gets read by anyone who may have read the earlier post.



Mac, if you think it is time or past time to liquidate all investment and bank accounts, that a meltdown which FDIC cannot cover, or drastic monetary dislocation of any type is imminent, I will agree that we are in disagreement on the subject.

If you think it is time to make preparations to liquidate all system accounts to cash or other repository of value, on short notice, with minimal effort and in rapid order, while at the same time you are preparing to re-enter the investment markets, or have already begun to do so, not knowing which way things are going to go and therefore preparing for both extremes, we are on the exact same page.

Let OdT have it.  Me, I don't want to have to wear make up all day.

I want to buy me a crane and a bulldozer.  I would feel happy and content with my own crane and bulldozer.

I could make things!  And build things!

Better Bunkers for All!

Just a country girl here.

Dagny Taggart?

I had to google the reference.

Purposefully, I have never read the book, although many fine people recommend it.

My reckoning is that while so many people are being conciously or unconciously influenced by a work of fiction, and are make decisions based on that author's thought patterns, I want to be influenced only by historical and real life input.

If great minds think alike, so be it, but I am relying only on history and my ancestors' survival tactics –– avoiding influence by works of fiction.

People are uncertain of what will happen in the financial system and in the real economy, e.g. they are uncertain if they'll still have a job in another month, if their money will be worth anything by next year, if their stock portfolio will recover or if it will instead evaporate in an instant.  Gold seems to be a way to save money outside the banking system and at the same time hedge against inflation.  On that rationale gold is not an investment in itself.  The strength of strength is that it's a financial instrument that is no simultaneously the liability of someone else as are Federal Reserve notes ("US dollars"), bonds, stocks, etc.  However, it doesn't pay dividends or provide any leverage (if the gold price rises, a gold mining stock, for example, can gain much more than the actual increase in the gold price––that's leverage).
The conventional view in economics is that weak consumer confidence holds people back from spending (instead they save which temporarily reduces overall economic activity) and discourages people from borrowing money (and spending it on purchases like cars or on other forms of consumption like vacations, etc.).  It is assumed that some level of healthy consumer borrowing will contribute to economic growth eventually resulting in higher wages and a higher standard of living.  A similar rationale is applied to public debt.
On a national level it is believed that borrowing money and spending it intelligently to stimulate economic activity and fuel economic growth will result in a level of debt that will ultimately be less significant than the larger GDP.  Obviously, this doesn't work for individual consumers since consumer debt levels can increase much faster than wages or asset vales so consumers can quickly max out and go bankrupt.  Encouraging individuals to load up on debt during times of uncertainty, as much as it might stimulate economic activity, is questionable since it can also result in credit card defaults, foreclosures, as well as in less spending elsewhere in the economy as more and more income is tapped to service debt.  Conventional advice for consumers today includes "sell your gold now": Gold investors warned to liquidate after 'buying frenzy.
On a national level increasing the public debt intelligently can work as long as GDP increase at a rate where the higher the debt level is sustainable.  What we see in practice, however, is that GDP consistently does not keep pace with increases in public debt and that eventually (perhaps very soon) the debt level will be unsustainable.  In other words, the theory does not actually work in practice for various reasons including government waste, fraud and abuse.  Fundamentally, the idea of borrowing and spending one's way to prosperity is flawed because the investment of public funds by the government for the purpose of economic development, e.g., in research and development, can never be as efficient as the free market or in itself be a commercial success.  Regarding public debt Karl Denninger's charts from yesterday are of course fascinating.






Getting back to gold, as debt levels continue to skyrocket the financial stability of the federal government, i.e., the willingness of foreign governments to buy US debt, has become questionable.  An eventual sovereign default potentially resulting in a crash of the US dollar is not impossible.  At the same time, quantitative easing directly dilutes the value of the US dollar raising the risk of inflation.  To make matters worse, wasteful spending by the federal government and new socialist programs that are not merely ambitious monumentally expensive but in fact grandiose in the psychiatric sense (i.e., a delusion) are hastening the arrival of the day when there will be no buyers for US Treasury bonds.






What is certain is things that can't go on don't.  All bubbles eventually burst.  The accelerating bubble in US public debt and government spending is no different, which is why you ain't seen bad yet, but it's comin'.





 

You've never read Atlas Shrugged?  True, it is fiction, but there is much philosophical truth to the book, at it is based on her observations of the Bolshevik revolution.  If you still don't want to read AS, pick up some of Rand's non-fiction stuff.  



 

[/Lurker mode]

QFT!

I have felt for a while we're living AS in real time. Wierd.

Back under my rock...

[Lurker Mode]

Believe me you, I don't know half the stuff you do about this. I read the Denninger article (and just did it again) and really didn't find that he was saying to get out of the market and stuff gold into your mattress... With that particular Market Ticker, he simply was saying that if we don't fix this, by allowing these financial institutions fail, the debt will do nothing but mount...

I fully acknowledge that I am not a fiancial whiz, so I easily could have missed something in the Ticker... But that's what I gleaned from it.

And FWIW I am in agreement with you. I don't have a ton in the way of investments, but I am prepared (and have told my wife) there could be a time when we take a sizeable chunk of money out of the bank and put it into hard goods... As it is I am seriously thinking about taking some cash out in large (for me) increments and spreading them out into various banks or credit unions so if one of them goes TU, I haven't lost everything...

Dozer's a lot more limited use tool than many realize. Mostly for finish grade. You can cut with it, you can move earth with it, you can knock down trees with it, but all these tasks are very slow and inefficient with a bulldozer. Much better tool is a front loader/backhoe combination. You can knock over trees, dig, rough grade, finish grade, and load a dump truck with a hoe. Only real advantage a dozer has over a hoe is that the dozer's tracks tend to float on loose fill where a hoe's tires are more likely to dig in and leave ruts. You can always back and grade to avoid ruts. There are tracked hoes, but fewer in the hoe/loader combination, and you give up wider area mobility with tracks over wheels.

Might as well figure on a dump truck while you're at it. It'll pull a low boy with either the crane or hoe onboard (though the crane may be mobile), get your equipment to a shop for bigger repairs than you can manage at home, and it wlil transport fill, around your site, away from your site, or to your site, saving much money over having gravel or sand delivered, more than half in the latter case.

Is there a school for the noobs to catch up on all this?  I have some serious questions about my family's future and I don't know who to turn to.  Looking to possibly buy a house, go back to school, have kids, etc.  Any help?

ETA: I guess what I'm trying to ask is should I talk to a "professional?"  Real Estate agent, investment banker, etc.  They seem like the bad guys and I don't want to be asking the visiting team which goal I should be shooting for.

You should feed through all of the information and form your own opinions.  Real Estate agents sell realestate.  They know the hoops to jump through and the laws of property transfer.  They are not economists.  Chances are, the investment banker is nowindirectly an employee of the state so his opinions are probably worth a grain of salt...........  



 

Well I meant so far as looking to buy a house right now.  Who can I talk to about how much money we make vs. how much we spend vs. how much debt we can take on mortgage wise, tax brackets, trying to keep the money we have, etc.

If you talk to a RE agent, they'll tell you NOW is the time to buy.

However, if you do research, you'll find that NOW is NOT the time to buy (my personal theory...based on Case Shiller Index and other data)



If you talk to a Investment Advisor, they'll tell you NOW is the time to invest.

However, if you do research, you'll find that nobody really fuckin knows.



For the average joe investor (like me, who knows exactly Jack and Shit about stocks, etc) I haven't got a clue what to do.

All I know is I stopped putting money into my 401k.

3:1

House price: total net income



If you stay at or below that ratio, you should be fine with at least 10% down.

Henceforth, I will take the extra time to snip long quotes, but if you post links to long articles, it's always possible you'll get a lengthy discussion in return. Some subjects reduce to snappy sound bites, some don't.

Denninger has been a fixture in this thread and in both the previous ones.

He has an extremely negative viewpoint as to where all this leads. Althiugh I fully agree with his assessments' potential for havoc, I do not at all agree with either his certainty that chaos is inevitable, or his timing.

We have been diving into debt for decades now. Regulatory issues and monetary issues have been accumulating for similar periods. Deficit spending has been a fixture here for two hundred years, as has quantitative easing, off and on.

While it is certainly possible that any or all of these factors could spark a herd instinct to produce widespread bank runs tomorrow, or that any similar factors could produce flight from the dollar tomorrow, hyer inflation, a defaltionary spiral, etc., the fundamental fact is that these precise same factors have been pervasive all throguh this crash, the dot com crash, and the post 9/11 crash, and they have not produced catastrophe.

These factors are in significant effect, right now, today, and the markets are headed up, just like they headed up after the dot com crash, and just like they headed up after the 9/11 crash. I do not know of any professionals I deal with on a day to day basis who will risk their reputations on a certainty that this event will prove to be the final one, or the fatal one, or even that it will spiral further downward from here.

I like Denninger. I like Denninger more today than I did yesterday because I took some time to examine his credibility and found that, despite early impressions, he does not include scam or spam advertising on his website. The Bernanke Secret Debt report is a thinly disguised attempt to move the bell curve center away from fiat money and towardss gold, either for personal investment or as a currency peg. I happen to agree with all these sentiments, and I recognize the theory and logic behind them.

To a certain extent.

I also like reading Bernanke. he answers to a substandard politician who is lodsing political capital at the very moment he is attempting to passs revolutionary legislation. I fully expect Bernanke to drag roses out of the bear market's butt at every opportunity, just as I expect Denninger to ignore, or urinate on any and every green shoot now visible.

In addition to the market rising, the second order derivatives of unemployment, real estate prices, and financial write downs are all positive. Still on a negative slope, but the degree of those slopes are becoming less steep by the day.

There is EVERY possibility that we will see a temporary respite from long term negative policy fundamentals, just as we have seen numerous such temporary respites from the exact same negative pressures in the past. The ultimate crash assumes that we continue on the same course forever, not a given but a strong porbability within the confines of this administration, and further, that at some point the negatives will accrue until no alternative besides a crash can set things right, but there is no guarantee that crash comes today or any other day.

Let me illustrate.

A GREAT many people were spouting propaganda similar to Denninger's "The End is Dead Ahead" after the 9/11 crash, and yet the end did not occur, instead we had a massive bubble that lasted nearly seven years. If anyone who lost moneyon the 9/11 crash had listened ONLY to the naysayers, and avoid the markets ever since, they would have locked in those losses forever, and they would have completely missed the opportunity to recoup those losses, forever.

What if the current rally lasts ten years before The Final Crash?

What if it lasts 18 months?

I can make the case that dumping everything today, acting on Denninger's apparant certainty, to liquidate all intangible assets for currency or metals, might just be the WORST financial strategy ever employed, especially for those who have suffered significant losses over the past 12 months.

At the very same time, I can make the case that The Final Crash might indeed begin tomorrow morning, and if that proves to be true, total liquidation today would be perhaps the smartest, most lucrative move any investor could make.

Because both extremes are possible from where we now sit, it is my considered opinion, backed up with sigificant skin in THIS game, that I recommend people prepare EQUALLY for BOTH extremes.

Read Denninger, sure, but approach his assessments as the negative limit of mathematical possibility. if you want to prep for the worst thing that can possibly happen, Denninger is a great place to begin.

But if anyone who refuses to read Denninger is an ostrich, with their heads buried in the sand, ass directed towards a locomotive closing the distance at light speed, then those who refuse to read Bernanke, recongnizing his assessments as the positive limit of the mathematically possible, are also ostriches, heads buried in the sand, utterly ignorant of the golden opportunity to position themselves beneficially for the Final Crash which very easily may be years off, two decades off, by Dennnger's own admission.

In my opinion, a rational being is not fulfilling his responsibility to himself and his family, nor to his nation or his race, unless his eyes are fully open to both the potential downside, and fully open to the postntial upside, has made the best prparations he can for either, and has implemented those contingency plans, in BOTH directions, to the absolute limit, JUST SHORT of pull the trigger committment.

Poised to act, cocked and locked to the Nth degree short of committment, dennnger becomes merely the endpoint on the broad spectrum of future possibility, which is precisely where I believe he belongs.

Data to confirm or modify my viewpoint is coming in by the minute, it is a dynamic situation, and I approach each new data point without, hopefully, preconceived notions, notions either supporting a bleak view or an optimistic view. Data is what it is, and the better we find it's rightful place in the spectrum of possibility, the better our individual theories will predict the future.

In the last seven days, a three month hiatus in a six month trend of dollar stability has dissolved into a slightly longer than usual period of backing anfd filling.it could have gone the other way, the dollar could have risen against other currencies or metals, from a flat trend either possibility is equally likely. The dollar did not rise, instead it is losing value, and with this new information, that flat trend can be seen to be backing and filling in the larger 6 month trend. In short, my recommendations to hold dollars from as little as one week ago, have changed to meet the new data now available. but that does not mean I am dumping the dollar.

If there is a spectum of possibility, then the rational investor will act on that data with a spectrum of response, it is not a black and white situation. With the dollar losing value on a six month trend, now, I will move a corresponding fraction of assets away from dollar based holdings, to meet the trend and maintain spending power, perhaps even increase spending power, take gains from the move. Most likely however, since the purpose of my currency holdings is to preserve liquidity, to take advantage of future trading opportunities, or to get out totally and quick, I will avoid looking for gains, and just look to meet the decline in dollar values.

If I paid as much attention to Denninger's certainty and dismal predictions and this series of discussion threads seems to have to date,  I would have long ago exited the dollar entirely, and would have either missed entirely the opportunity to take advantage of a recent dollar bubble, or else gotten a very bloody nose.

That's the range I'm looking at currently, but the 10% down is the killer.  That's why I would like to talk to someone.  I don't know the first thing about buying a house and neither does anyone I know.  My parents aren't answering any of my questions about buying a home even though they've done it twice.  I'm not from the town I'm currently living in so I know nothing about neighborhoods, school zones, or taxes.  Does the 3:1 ratio include insurance that we would need for the house?

I've read and read and read about First Time Buyer programs from the gov't and all the info from the .tx.gov sites but I still have questions.  I don't know the rate of a mortgage loan, I don't know what escrow means, and I've heard all kinds of speculation on whether or not people can still buy flood insurance in Houston which is where I'm at.  Who answers questions like that without taking advantage of the situation?

ETA: Just saw your earlier post.  Going to go check out Case Shiller index.

Making your payment no more than 25% of your monthly paycheck (after taxes) is your primary concern.  20% down is highly recommended, as is taking out a 15 year fixed rate mortgage instead of a 30.

Right now is a real good time to preserve options.

In my perfect financial world, I am standing up in a foxhole, surrounded by a wide, deep moat, with well constructed bridges leading in EVERY direction, looking out with binoculars, 360 degree scans on short intervals. Every bridge is wired to blow, and all the trigger switches are safed against accidental detonation. No bridge is blown yet, and I will wait until the horde is just on the other side before I do drop one, again, preserving ptions till the last second.

If there was a house in my future, and there is, technically just re-titling paperwork, but transfer of ownership all the same, I would be doing my homework, watching prices, touring available properties, getting printouts from real estate agents, all without any committment whatsoever. There is an $8000 credit that expires, if memory serves, close of business 2009,  and were I looking to purchase property, I would NOT let that rush me in this market. With RE prices still heading down, I think I can save enough in 2010, should that one sweet deal appear, to offset, most, all, or even additional money than the $8000 credit. If I'm wrong, I'll still be close enough not to lose sleep over it, and I'll not lose sleep over a major financial committment during very uncertan times either.

Doing your homework means becoming knowlegable about the guaranteed trade-offs that accompany any transaction as large as a home. What works for you will not work for your best friend, most likely. There are a bucketload of books  available on the subject. I recommend buying at least two, and comparing what each says versus the other. If you spend even ten minutes in a bookstore, you can walk out with enough knowlege to save ten thousand dollars, time the three times you pay for the advance of that ten grand over the life of your mortgage, plus protection from time bombs, for less than $50. If you start at a discount used book store, you can get two decent texts for half that.

We know the RE prices are headed down, but we also know that we aren't looking for center of the bell curve bottom, we are looking for ONE good deal on ONE house. At the same time, we recognize some economic risk in time where employment, tax revenues, lending and real estate markets are so volatile, so by looking but avoiding the committment of buying we are also preserving liquidity, and preserving assets for emergency allocation should the need arise.

Build all the bridges you can, short of committing assets, then keep as many open, for as long as possible, as you can.

I am currently looking for houses on the market.  I agree that 25% of income for 15 years would be ideal, but frankly I don't make enough money.  Maybe that should be indication right there that I shouldn't be looking for a house but how can we build wealth if we're paying rent at 33% of our income for 60 years?

Save your money like a tightwad for a while and make a bigger down payment.  That will lower your monthly payment to more reasonable levels.  Alternatively, buy a smaller house on less property.  Or do both.   I hate to say it, but if you can't afford the house, then you can't afford the house.  There's nothing special about houses that makes them immune to normal financial advice.

Edit: Something else to keep in mind.  Houses cost more than just your monthly payment.  There's also the regular maintenance, repairs, and additional furnishings that creep up everywhere.  That's why 25% is recommended as the maximum monthly payment.  You don't want 50% of you paycheck going to support your house every month.

That's the next thing I wanted to get at.  I don't even know if we can afford a house (pretty sure we can), but I don't even know how to use those mortgage calculators effectively since I don't know what the lending rate would be for a loan and don't know the tax situation.  The banks I've talked to won't give you a base rate to start with because you have to apply to find out.  I feel like I'm banging my head against the wall.

Right now we only pay $600/mo all bills paid for rent, and looking to move because our lease is running out fast.  We won't be able to save much after we move from what I've calculated (gas, rent, car note, food, bills, etc.) and that is really what's going to hurt us.  I don't want to jump out there and buy the first house I find, but at the same time I feel like I am missing a HUGE opportunity to get my family off in a good direction if I pass this up.  House prices will go back up, right?  I understand they're projected to keep falling into 2010 but will the market bounce back?  It seems like a pretty small risk, but again I don't have a clue.  I know I'm doing this all wrong but I'm out of ideas.  I need people I can talk to that won't end up ruining us financially.

Don't try to time the housing market.  What's more more important is buying a house you can actually afford.  You won't be doing your family any favors if you find a good deal but are still struggling financially because half your money goes to feeding the house every month.  If you aren't going to be saving much money, why are you moving?  Are you unable to renew your lease?

Thanks for the perspective.  My sis-in-law inheritted the front-end backhoe, plus assorted trucks, tractors, trailers, etc.  She also inheritted the hefty payments on her equipment, and the guys on payroll to operate them.

I am just looking to pick up some decent used equipment to buy outright then lease into the operation, kind of mutually beneficial.

Sorry to digress into industry-specific discussion.

But a couple of points we can all ponder:

1)  There will be opportunities aplenty for those in position to lay down cash for equipment.  I expect prices to go down before they go up though.

2)  We live in a topsy-turvy world when a couple of women are doing this.  That was the throw of the dice, and neither of us wished it to shake out that way.  Nonetheless we are up and operating, and we are proud of employing several skilled and hardworking men whom we respect very much.

A whole helluva lot that is wrong with this country is that for the first time ever, we have more women working outside of the home than men.

That is just fubar any way you slice it.

Brilliant analogy.

I cannot think of a single damned thing to add.

Just wanted to highlight the wisdom here.



Actually a whole lot of us here are in better position for the future than we fear we might be.

We really, really are.

We –– the participants in this thread –– are going to be okay.

I can see it over the horizon.  YES!

The run on The Last National Bank is a fictional account. I believed it would pop up in a search apparantly it dd not, so I'll save you the time.

A larger than normal percentage of the fictional bank's customers, through nothing more  than random chance, all found themselves in the bank's lobby at one time, on a wide variety of banking errands.

As they stood in line, they each began to wonder why all the other were there, what the others knew that they did not.

By the time the crowd in the bank lobby should have dissipated, the specualtion had turned to fear, and the fear had turned into a run on the bank.

The parable illustrates the herd instinct of human beings, especially where issues involving uncertainty or survival are at stake. It can happen just that way, and it most certainly has happened just that way in the past.

Iceland's entire economy collapsed, all the way down to zero, all three (out of three total) of Iceland's banks collapsed in a very short period of time, within this last year, real world catastrophe, no fiction, no parable.

There was trouble, yes. There was mismanagement, BUT....Iceland had the trigger COVERED. The immediate cause was FIXED.

A bank foresaw trouble meeting future obligations, and began working with the government to deal with that problem before any default became necessary. There was not a perfect solution possible, but the local depositors were assured their assets return, and the bank's obligations outside Iceland were to be met in the full extent defined by legal treaty, the treaties creating and binding the European Union, to be specific.

England was not happy with the agreement they signed. They probably signed the treaties thinking such an extreme condition would never occur, but England did sign the treaty.

Instead of losing the 80% of their deposits at the troubled bank that England agreed to lose in the worst case scenario, England simply seized all English assets of a completely different, normally healthy, Icelandic bank, bankrupting that innocent and unconnected bank instantly.

End of Iceland, all Icelandic banks, all Icelandic bank deposits,  and ultimately Iceland's government too.

Well after the Great Crash of 1929, well after the markets had stabilized and recouped a good percentage of their Great Crash losses, England, specifically the Bank of England, largely a central bank, went off the gold standard. This was THE trigger for the massive wave of US bank closures, and Roosevelt's decision to declare a US banking holiday, which REALLY wrecked the US economy, for nearly a decade afterward.

Can logic place the entire or even biggest fraction of the blame on England for both of these economic events?

Not really.

Any person over the age of five has seen a row of dominoes fall. They may or may not have recognized the fundamental physical conditions that allow a fall, or that trigger a fall, but those rules are simple and they are ironclad.

Dominoes cannot fall unless they are in an unstable position. Simple equations from Physics determine potential energy states. More potential energy, less stability. The dominoes can be completely stable within their normal frame of reference, or they can be less stable, right up to, but not including kinetically unstable, at that point they are falling, or simpler put, they are stabilizing. These are the only permissible states, stable, less stable, or stabilizing.

However, there is no fundamental law of physics that REQUIRES unstable dominoes to topple. The more unstable they are, the more likely one will trigger progressive collapse, but they can also stand there in an unstable state for a long, long, long time.

These are the points I wished Sherrick to see and understand for himself.

Earth's economic dominoes are currently in an unstable state. Perfect economic stability is probably an impossible dream, but our dominoes are currently well shy of perfectly stable, not even close.

Earth's economic dominoes have been trending, over several decades now, from a more stable state to a less stable state (with a major jump in instability in 1973 when Nixon took the world's predominate reserve currency off the gold peg).

A domino style collapse is more likely now than it was 30 years ago, because the dominoes are in less stable states than they were 30 years ago.

There are currently no dominoes in catastrophic motion at this time, that I am aware of. Some aer leaning, some are wobbling, but none are in the process of progressive failure, there is currently no string of falling dominoes, no runs on banks, no runs on currencies, in fact, the opposite has been true for about 6 months.

Economic domino stability has been holding steady, or else increasing, since "bottom" in April of 2009.

Unemployment be damned, not only have there been no runs on banks, and no runs on currencies, in real fact, the chances of such runs are less likely now than they were 6 months ago. Unemployment tends to destabilize the dominos. Other factors tend to stabilize them. the net increae or decrease in stability can be approximated by market aggregates, or aggregate prices, or even other trends. The major aggregate indicators have seen a slight increase towards stability over the last six months.

THE critical factor here is the herd instinct. The widespread unease lurking in the minds of the masses, and the very human tendancy to jump first on stimulus, then ascertain exactly what the stimulus actually was later on.

The herd instinct can create panic when there is no real reason to panic.

The herd instinct can avoid panic when there is very real reason to panic.

The dominoes got most unstable at bottom, in March of 2009. Since then, on average, they have slowed or stopped wobbling, for about three months, then held at that level of instability for about three more months. Some wobbled more, some wobbled less, some wobbled less because external forces have been applied to them, forces which may not be sustainable over the long term, but then mathematically, they don't necessarily have to be, once a severe wobble has quieted or been quieted, it may not start up again on it's own.

The period of quiet, stable, stability ended last week. The dollar is on the move. The dollar is moving down against gold, and down against major currencies, slowly right now, but moving it most certainly is. I am watching it VERY closely. Maybe it will settle down again, maybe it won't. Maybe it will settle down for ten or twenty years. Maybe it will move around a bit for a long time, but not move drastically for a year, or ten or 100.

It is very possible that the dollar has resumed a long term trend lower against gold and against other currencies, a trend evidenced long before the great crashes of 2008 and 2009. That might even be a sign of return to normalcy. But the laws apply in specific ways and when the dominoes are unstable, and when one of them begins to wobble even a little,  the possibility of domino style progressive collapse  trends up, not down.

The dollar gained value on gold today, and lost just a tiny fuzz to the Euro. Tomorrow is a new day, and just about anything is possible.

The guy who's ready for one outcome...might get lucky. The guy who is ready for may outcomes has better odds. The guy who is ready for all statistically possible outcomes, needs no luck at all, success is, by definition, guaranteed. Perfect is never possible, but that's no reason not to reach for it.

The current lease is complicated but easiest thing to say is we need to have another place to live before the 1st of the year, and that's pushing it.  Currently at the rate we're saving now, we will be able to move out, pay deposits on utilities and rental place, plus 1 month rent on top of having a cushion of a month of expenses by the end of October.  Another reason I wanted to get suggestions on who I could talk with about this is because I don't want to disclose tons of my financial info in a public forum.

Let's see here....

$550k house.  
ARM
$1,000 mortgage payment
She's a Special Ed teacher.

What the fuck did they think would happen?  

Unless her ole man is the King of all Londinium and wears a shiny hat, they were doomed from the start by their stupidity and deserve to lose the house that they can't fucking pay for.

I see very few physiological or sociological reasons why women can't run black rifles, or work big iron. Plenty of history says no, but I attribute that to Victorian ignorance.

Key is whether it happens because you enjoy it, or  because survival demands it and you hate it.

The entire point of hydraulics and mechanical advantage is to expand the range of human capability. The Second Law of Thermodynamics requires the input of energy to achieve and maintain order, i.e. stability. That's right at the core of the meaning of life.

For what it's worth, a woman's inherent attractiveness, in my opinion, varies directly with personal power. I'll trade a couple broken nails, in return for the ability to move  mountains, any day of the week. I'm more than certain many guys here feel exactly the same way.

Your husband is a lucky guy, and you are probably lucky to have one who lets you be who you are without trying to force you into historically popular, but logically unsupportable, stereotype niches.

Lofty sentiments aside, there ain't NOTHING like lining up your bucket, hoe, and riggers, reving up the rpm's, popping the clutch, and using all three plus forward gear to shake off the muck and climb  out of the mudhole that's trying to swallow your quarter million dollar tool. Elemental victory, lipstick immaterial.

From bid to move in, 6 months is easily average. You need to secure residence, and avoid, if possible, rushing into a major purchase under time pressure. You have skills? Camping out in a fixer-upper, even a bare interior shell, is one way to jump into a house you couldn't otherwise afford.
Even so, you probably do not have time to find a great deal, run thru a mountain of paperwork, close, and move in by COB 2009, especially with great hunks of official-type worktime closed off due to holiday stretches.

Look for something temporary, month to month, or even week to week, as a backup contingency if nothing else, and then find your house from a position of strength. Shouldn't be too tough, it's a buyer's (or renter's) market right now.

I do the same thing you did with Denninger's article, toss it toward the wall, see what sticks and see what gets tossed back in your face. With skin in the game, this ain't no game, and losing on error hurts real pain.

In this case, one post of your's coincided with three threads worth of thoughts on Denninger, and Denninger's place in the larger scheme of events. Guys here are gun guys, and they're my kind of people. Whatever help i can give, and just as much what I get back, just makes all of us stronger.

Reply to all, part, or none. Building a complicated case in logic, step by step, figuring out puzzles, goes to one level of credibility in thought form, but much higher if it stands the test of visible print in an...aggressive...environment.

There has been much ado about KD's extropolated graphs.

Nobody in his right mind could reasonably foresee those ski slope lines going like that for 20 freaking years, all smoothly, mathematically scary.

I don't think the graphs and the article were meant to be taken as any sort of forecast.

Rather they serve to illustrate why we can't keep doing what we are doing.  Nothing more, nothing less.

Think of all the things that can happen in 20 years.  Economic trends consistently following any given set of mathematical data is just not likely

Wars and inventions.  Diseases and discoveries.  Variables of all sorts intrude.

First hyperinflation, now it's deflation. Wow, I'm confused.

So now people in Viet Nam will be living in American-made, pre-fabricated, Daniel Boone-style log cabins.

OOOOOOOOOOOkay.