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Hearing The Margins’ Call

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Many web pundits have made the claim that George W. Bush is clueless. A good illustration of the contention resides across the Pacific Ocean in Japan, where 49.5 percent of Japanese voters believe that Prime Minister Shinzo Abe should resign in light of a heavy defeat. The Bush administration opposes the will of the Japanese voters (as it does that of the American voters) over "concerns" that the electoral trouncing of Abe's Liberal Democratic Party would derail efforts aimed at securing the extension of "emergency anti-terrorist legislation" deemed vital to Bush – er, American security concerns.

But what was it that the Japanese voter did want in their rejection of Abe? Most Japanese voters held stronger views concerning domestic economic issues than did Abe, who was much more interested in scrapping Japan's "quaint" Constitution and negating it's legal inhibitions prohibiting the waging of aggressive war.

So how does this tie in to Owwer Leedur? Patience!

Bloomberg columnist William Pesek holds that of all those who lost in Sunday's electoral upheaval of the traditional Japanese ruling clique, the big losers were the investors.

Meanwhile, on Wall Street, the big losers were… the investors. In following the disastrous economic policies of the Bush regime, Wall Streeters suffered through "the worst month for US equities in three years, according to MSNBC. California real estate leads the nation in foreclosures and is dragging down the entire national real estate scene with it. Institutional investors have become so bearish that they have effectively collapsed American Home Mortgage Investment Corp. with unredeemable margin calls after the value of American's loan and security portfolios were severely debased due to their large numbers of un- and under-performing mortgage loans. Countrywide Financial Corp. and Novastar Financial Inc. also lead the plunge, with Impac Mortgage Holdings not far behind.

For those who are history-challenged, margin calls by skittish investors brought on Black Friday – the Crash of 1929 – resulting in the Great Depression. The entire home loan industry is now facing that elephant, aggravated by the serious decline in the numbers of good paying construction jobs lost through other employers worshiping at the the neo-confidence altar of globalization, leaving their former employees behind as the American Dream for them fades into oblivion. Our government isn't helping things any.

The problems of the home mortgage lenders isn't restricted to the unsold-home-land borders. IKB Deutsche Industriebank, a bank based in Düsseldorf, Germany, are reassigning their investments in American mortgage securities to another German bank. Worse, Australia – which has 1000 Army troops supported by 600 Air force and Navy personnel in Iraq and another 1000 in Afghanistan – has a restive public which wants their government to heed their wishes to bring their troops home, a movement which could gain more participation as the news that the American economic collapse is affecting their own currency.

This loss of confidence in George W. Bush and his nattering nabobs of neo-confidence doesn't restrict itself to the financial realm, but that is a topic for another post.

Suffice it for now to state that George's ill-considered boast – "you are with us or against us" – will not be realized in the intended 1942 manner. The vintage to be realized comes from the Grapes of Wrath sown years before when the Republican Party abandoned the American people in their mad quest for world dominance.

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About pessimist

  • Yep, with the NASDA up 24% from a year ago, the DOW up 19% from a year ago, and the broader indexes up between 16 and 19% from a year ago it sure sounds like disaster is looming. Damn I hate it when I can invest money and double its value in four years. That’s just awful.

    The real estate makret deserves the problems its having, though it’s only a matter of overall home sales volume dropping to where they’re equal in volume to 2003. Maybe someone ought to point out to the real estate industry that population only grows at a rate of 1% a year and people only move on average once every 5 years, so we don’t actually need to build a new home for every baby born every year.

    Of course, I guess it would spoil all the doom and gloom to mention that despite the leveling out of sales volume, homes are now selling for 25% more than they were 3 years ago.


  • Ruvy in Jerusalem


    Do you know how roller-coasters work? They go up, they level off AND THEN THEY GO FLYING DOWN!!

    That’s what makes them such a fun ride. Until you discover that the bar holding you in is busted AND you can’t get off the ride. That is what riding the economy can be like, and that is what the author of this article described to you.

    In your comment you described the roller-coaster as reaching a summit – leveling off; you know what happens once it reaches the summit and levels off, don’t you.

    Go ahead, pop another Prozac…

    But before you do, please fix the title of my essay that you were kind enough to publish yesterday about Waiting for War in the Shards OF Illusions…

    All the best,
    The religious lunatic from the mountains of Samaria…

  • Ruvy in Jerusalem

    Oh, yea, Dave, that’s “Waiting for War in the Shards OF Shattered Illusions”…..

  • Nancy

    Ruvy, Dave doesn’t live in the real world where finance is concerned. He lives in the pixiedust world of BushCo economics. Don’t even bother debating him on it.

  • #4:

    In the real world, my conservative and relatively safe investments provide a very slight cushion against inflation.

    Perhaps Dave could tip us all off to his magical investments which are doubling his money every four years.

  • Clavos

    I’ve been buying all last week and this.

    Great opportunities out there!

    Realist (and everyone else) DOES realize that for there to be a “sell off,” someone has to be BUYING, right?

  • #6:
    And there has to be a REASON they’re selling.

    If it’s just profit-taking, then you’re right about the potential opportunities. If you’re counting on Dave’s 24% a year, well…

  • Clavos

    It’s not just profit taking; in fact it’s almost panic, at least as far as the financials are concerned. But there are still plenty of pickin’s out there.

    And I’m quite content with my net 56% over the last four years.

  • Lee, my investments are relatively conservative too, but they are doubling my money every 6 years on average. Doubling every 4 years is just an extension of the growth for the entire market for the past year – the year where things have been so terrible according to Realist. So terrible that it has beaten the average performance of the last 40 years by 30%.

    The drop we had last week was almost exactly equal to the drop we had in March – both in this same exceptionally profitable year long period. It’s called an ADJUSTMENT, and it was about 4% in both cases. 27% growth minus two 4% adjustments is still 19% growth.

    To give you an idea of the difference between a 4% adjustment and what happened in 1929 which Realist so ridiculously compares it to, The one-week drop in 1929 was 40% as compared to last week’s just under 4%. That’s 10x as much of a drop. So I’ll take Realist seriously when the market drops 5000 points in a couple of days.


  • Oh, and I fixed your title ages ago, Ruvy. Hours before you made the two comments above, in fact.


  • #8:
    …”my net 56%…”

    An average of 14% a year, which is, indeed, satisfactory. (And buying carefully under those “almost panic” conditions has often been a sound long-term strategy.)

    But, in no way, is so much more likely in the next four years as Dave’s rosy statistics suggest.

  • Lee, I didn’t mean to suggest that we’re going to see 20% returns in the next 4 years, but something consistent with the long-term average for the last decade or so isn’t unreasonable. Over the course of the decade overall market growth has averaged about 8%, which is perfectly reasonable, and if you stick with decently managed funds and a few good individual stocks you ought to be able to increase that to at least 10%.


  • The stock/bond bump of he last year is a new home for withdrawn realestate money. And next year?

  • Nancy

    It would seem to me those getting hammered are the banking/lending interests who were so greedy to make money hand over fist they loaned it out to those wholely & utterly unsuitable for credit; now as usual they’re crying for bailout from the taxpayers.

    Tough titties. Let them take the losses like they took the profits: from their own pockets. I’m tired of bailing out irresponsible greedy capitalist pigs.

  • Nancy

    As far as this being a time to buy-Buy-BUY, Clavvie is dead-on: I sure wish I had a million – or half a million, or a quarter of a million. Hell, I’d even settle for a few thousand! There are indeed good pickin’s out there, for those with the means to pick. Alas, I fear it means that the rich will just get richer, because usually nobody else has the capital – or friends in high places with capital – to buy these windfalls.

  • moonraven

    Chris is all over my posts today like white on rice–guess he’s feeling anxious because I will not be posting for several weeks after tomorrow, as will be in the States checking out the size of folks’ balls–among other things.

  • The stock/bond bump of he last year is a new home for withdrawn realestate money. And next year?

    Next year the money goes back into real estate. The whole system is cyclical.


  • Boeke

    So, looking back 3 years, who was right? Realist or the others?

  • You really need to ask, Boeke? Go check out my comments here from three years ago (comments #2 & #3).