Central Perk: 26 feb. 2011

sâmbătă, 26 februarie 2011

Mish's Global Economic Trend Analysis

Real Estate Emails from Arizona and Florida: Should I Buy? Is this a Scam?

Posted: 26 Feb 2011 05:12 PM PST

In response to Interactive Map of Case Shiller Home Price Drop from Peak; Reflections on Flying Monkeys I received questions from readers regarding real estate in Arizona and Florida.

Phoenix Email

Reader Ron is from the Midwest and asks about Phoenix...

"I am very interested in the Phoenix housing data, however given the commentary below I cannot tell either context or time frame. Is Phoenix improving or declining? I cannot tell from your article. Can you elaborate in terms and time frame that would explain?"

Hello Ron

Phoenix may easily be close to the bottom given that massive drop.

However, I would not expect significant appreciation for years even IF Phoenix is at the bottom. That holds true for any bottoming area. I think parts of Florida have probably bottomed as well, but prices could easily stagnate for a decade.

In general, the last bubble is not reblown for decades. Look at the Nasdaq or better yet, the Nikkei.

If you are thinking of moving to and living in Phoenix, I believe the worst of the decline is over. However, if you are thinking about the rental market, you need to be very careful if you do not know what you are doing.

Please see Phoenix Property Scam Targets Australian and New Zealand Buyers for details. I strongly suggest not attempting to manage property from a distance.

Florida Email

Stuck-In-Florida writes ....

I own three residential home properties in Orlando that I bought in 2006, and obviously over held them and they are now all worth half the price. I have had many problems with leasing them out due to many people moving in making the place a mess and leaving due to personal financial problems!

I cannot figure out what to do with the homes now because the options are to lose half my investment or ruin my credit. I do not like either option.

Recently I have been contacted by a gentleman that lives in the area and he found 3 year lease to own (option to buy) tenants for two of my homes, I read over the contract and they are very attractive, 3 years contracted tenant, and an option price at the end of three years at the price of the peak in 2007 or double the price of the home now.

Is this a scam for me as the owner or is this a scam for the tenant, or both ways? Let me know if you know anything about this?

Stuck-in-Florida

Hello Stuck...

I cannot answer your question directly but I may be able to help.

For starters, I am suspicious of "offers to help". Moreover, I do not know Florida law or any specific Florida pitfalls, nor can I (or would I even if I could, attempt to sort out a legal contract for anyone).

Secondly please note what I said to the potential Phoenix buyer above. Even IF this is the bottom, do not expect rapid appreciation, perhaps any appreciation. In real (inflation adjusted returns), I expect real estate to be a poor investment for as long as a decade.

Do you really want to be a landlord?

Even if you do, my advice is simple and easy to understand: Before you sign anything or do anything please consult with an attorney for your state.

You may wish to consider walking away, or you may want to go ahead if an attorney reviews what you have in mind. Again, I am very suspicious of "offers to help". Perhaps that offer is not a scam, perhaps it is.

I do not have legal contacts for many states. In fact, I happen to have a contact for precisely one state. That state just happens to be Florida.

Please read Before Walking Away Consult An Attorney for information about walking away and the name of a Florida attorney specializing in real estate problems.

Tell him Mish sent you. I get nothing out of this. I am just trying to help. Good luck to you.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

189 German Academics Support EU Sovereign Default Plan

Posted: 26 Feb 2011 10:37 AM PST

Unlike the Keynesian and Monetarist academic clowns that rule US academia German academics push for EU sovereign default plan

Almost 200 German economics professors have signed a declaration rejecting current proposals to resolve the eurozone debt crisis, instead calling for a way for distressed countries to declare bankruptcy.

More than 200 professors were invited to sign the document, and 189 did so, including prominent figures such as Manfred Neumann of the University of Bonn and Justus Haucap of the University of Duesseldorf, both in western Germany.

Instead of the collective support mechanism set up last year that could be made permanent in a modified form from 2013, the economists argued it would be better to let countries restructure their debts.

"Restructuring allows the countries concerned to reduce their debt and start over," said the economists.

The solution being mulled at present and likely to be approved by European leaders next month would amount to "a permanent guarantee" of some countries' debt, with "very serious consequences," they added.

The signatories also doubted the effectiveness of measures to reinforce the competitiveness of weaker eurozone countries and control members' public finances owing to the European Union's "limited firepower."

The document was published as lawmakers from Chancellor Angela Merkel's ruling coalition sent her a clear message ahead of negotiations on a permanent EU rescue plan to take place in Brussels.

The German deputies said the future European Stability Mechanism should not be allowed to buy eurozone government debt, as the European Commission and European Central Bank would like.

Those 189 academics simply want the ECB to admit that the debt owed by Greece, Ireland, Spain, Portugal, cannot possibly be paid back. What cannot be paid back, won't, and pretending that it will just makes problems worse. It is refreshing to see a large group of academics on the right side of an economic issue.

Axel Weber, once heir apparent to ECB presidency to replace Jean-Claude Trichet, resigned as president of the German central bank over the issue of the ECB buying sovereign debt. He did not want the ECB to buy debt, most of the rest of the ECB did.

Academics in Germany are disregarded even though they make economic sense. Keynesian and Monetarist academics in the US make no sense but are revered.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

The Year 2000 As Imagined In 1910

Posted: 26 Feb 2011 04:47 PM PST

The National Library of France (BnF) has an amazing collection of prints from 1910 which depict life in the year 2000. They are credited to Villemard.

Back in 1910, Villemard started predicting the future on paper. With each brush stroke, an elegant picture of the future came to life. It is amazing how accurate these paintings are. Sure, we don't have personal wings or flying machines (individual ones that is) just yet, and the cars are a bit different as well. However, the overall look of 2000 pretty much made perfect sense.

The accuracy of these images is not in the way they are drawn but in the toys, gadgets and gizmos that are depicted therein. I wish someone today would do the same thing and predict the future in a hundred years from now. That would give our children a chance to see how lame we were, and how off we were in predicting their future. I can't stop looking at these masterpieces. They are just… oddly beautiful in so many ways.

25 Hilarious Anti-Abortion Billboards

Posted: 26 Feb 2011 03:58 PM PST

When the anti-abortion television commercials were broadcast first in the spring of 1992, one editorial writer warned that a new era for national political advertising had begun. Since that time, pro-life candidates for federal elective offices have broadcast political commercials that contain pictures of abortion or late-term aborted fetuses.

While many people may think that the controversy surrounding abortion has been only a recent moral issue, abortion has always been a hot topic among even ancient societies. Abortion can be traced to as far back as the ancient Romans and Greeks who were actually great proponents of it; some of the most famous philosophers of the day actually wrote about it positively.

Here is a selection of interesting, sometimes ridiculous billboards and signs.

Funny Demotivational Posters - Part 18

Posted: 18 Feb 2011 06:42 PM PST

Funny Gender Reversal

Posted: 18 Feb 2011 06:14 PM PST

If the aliens finally decide to hit the gender reversal switch on their mothership one of these days, it's going to be a scary scene in Hollywood. Sure Angelina Jolie and Minka Kelly will still find a way to be hot, but the rest of them will be completely screwed.

Funny photoshop photos where stars are glued face male to the female body.

Mario Bros: 45 Causes Of Death

Posted: 18 Feb 2011 05:58 PM PST

Every character from a video game has more then one way to die. Today we'll see Mario's 45 ways to pass away.

Why is it always the good one that have to die?

Wave Rock at Hyden, Australia

Posted: 18 Feb 2011 05:52 PM PST

This interesting natural rock is called Wave Rock and located to the east of the town of Hyden in Western Australia. It got its name from the fact that it is shaped like a tall breaking ocean wave. The rock formation is composed of granite and the total outcrop covers several hectares. The rock is about 15 meters high and approximately 110 meters long.