Mish's Global Economic Trend Analysis |
- Housing Denial in Australia Feeds Off Same Myths We Heard in the US
- I have a simple proposal: Balance the budget by 2022 come hell or high water
- 25,000 out of 70,000 Illinois State Employees are on Workers' Comp
- Bullish Sentiment Stampede
Housing Denial in Australia Feeds Off Same Myths We Heard in the US Posted: 13 Apr 2011 07:16 PM PDT It is amusing to watch Australian analyst after analyst cite the same silly myths regarding housing that we saw in the united states. First consider a sampling of the nonsense we heard in the US.
Florida was ground zero in the US bubble bursting and for the next two years we heard things like.
For varying reasons every city thought "it's different here". Yet the bubble bust spread from city to city and eventually engulfed the entire country. Similar denial runs deep in Australia. Please consider Australia Housing Cracks Emerge Across Queensland Coast Apartment prices in the luxury beachside Australian town of Noosa Heads have tumbled by a fifth since 2008 as cracks emerge in a housing market that's so far escaped the rout seen in the U.S., U.K. and Ireland.Look at those last two paragraphs. I believe that is the typical attitude. It is the same nonsense we saw in the United States. To be fair, the article did mention that Gerard Minack, a market strategist at Morgan Stanley, believes Australian home prices are as much as 40 percent overvalued. However, that opinion is in the minority. Five Facts
In the US, countless sellers walked the market down, hoping to get prices they could have gotten "last month" as Realtors in every city gave reasons why "It Can't Happen Here" Well it could and did. It turns out there was not a shortage of housing in Phoenix, San Diego, or Las Vegas. It only appeared there was a shortage because inept Fed policies fueled bubble mentality. Moreover, prices eventually crashed in places where there were limited properties for sale. Home prices simply will not forever stay monstrously elevated over wage growth and the cost to rent even if there is a shortage. Yet, the same denial is happening in Australia in spite of the fact the US provides a clear model of what happens to prices once the pool of greater fools runs out. For more on the Australian housing bubble and the pool of greater fools, please see Australian Home Sales Sink, Luxury Units Sell for Half Cost; New Home Loans at 10-Year Low; Australia Retailers in Deep Trouble; Party Officially Over Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
I have a simple proposal: Balance the budget by 2022 come hell or high water Posted: 13 Apr 2011 11:21 AM PDT In what amounts to baby steps, Obama Said to Seek $150 Billion Defense Cuts Beyond Gates's Plan President Barack Obama, as part of his plan to reduce the nation's long-term debt, will propose cutting $400 billion from the Pentagon's budget through the 2023 fiscal year, extending cuts beyond those sought by Defense Secretary Robert Gates, a person familiar with the plan said.What is the Goal? Proposals are flying, but do we have a goal? If so what is it? Right now Democrats, Republicans, and the president are playing tiddly-winks for political points. Before we can talk about cuts, there must be a goal in mind. I have a simple proposal: Balance the budget by 2022 come hell or high water. In regards to military spending, cutting 400 billion over 12 years is barely a start. I think we should cut $200 billion a year minimum over 12 years, a total savings of $2.4 trillion dollars. Look at it this way: If we take all of the cuts the Ryan has proposed and all of the cuts the administration has proposed, we are still not there. However, if we add them together, then kill the department of energy and the department of education, and cut still more from the defense budget, we might have a solid chance at balancing the budget in 10-12 years. In other words we need more defense cuts + some of Rand Paul's ideas + some of Paul Ryan's ideas + some of Obama's ideas. We will not get anywhere without a goal. So the first thing we should do is set one. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
25,000 out of 70,000 Illinois State Employees are on Workers' Comp Posted: 13 Apr 2011 08:05 AM PDT The cost of doing business in Illinois is staggering. Such is the nature of a bottom-feeding government and union-driven model that adds inefficiencies everywhere you look and also in places you don't. For example, over 35% of Illinois state employees are on workers' comp. That statistic would be bad enough in isolation, but Illinois also has the highest costs in the nation, by far. Please consider Workers' comp reform is too important to state business climate not to address, soon If you need a local example to illustrate in real dollar terms just what it means to have the second highest workers' comp costs in America - behind only Alaska, by the governor's own admission - look no further than Morton-based CORE Construction Group Ltd., which operates nine companies in five states.Illinois vs. the Second Worst State
I am seldom surprised by graft in Illinois where public union handouts, inefficiencies, bribery, coercion, and corruption are second to none, but 35% of state employees on workers' comp, including 25% of arbitrators who do nothing but decide injury claims has to take the cake for workers comp insanity. Worst-in-the-Nation "bragging rights" are at stake. I challenge California, New York, and New Jersey to top that. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 13 Apr 2011 12:45 AM PDT I have mentioned several times recently that bullish sentiment is extreme. If anything, "extreme" seems like an understatement as noted in Bullish Sentiment: Turning into a Stampede? The latest Elliott Wave Theorist reports that a "bullish consensus" has also crystallized among a wide range of investors and financial professionals:Sentiment Not a Timing Indicator Sentiment is never a timing indicator because things always go further in both directions than people think. Regardless, I am sticking with my assessment this is not a good time to be long the market. In case you missed them, I gave my rationale in a couple of recent articles.
Please note that "not a good time to be long" is not the same as a "good time to be short". It may or may not be a good time to short. However, the longer the "Bullish Sentiment Stampede" lasts, the better the odds. Finally, if you missed the rally and are thinking of getting in now, I have a one word suggestion: "Don't". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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