2007-2008: Just a little downturn, won't be bad
2009 - ? : Holy Sh@T!

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Discussion of Housing Bubble, US Dollar, Debt, Trade Deficit, Oil, Gold, Consumer Spending, Central Banks, Inflation, Outsourcing and the Bleak Future of the US economy
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Hurricane Gustav May Reach Cat 5, "Every Bit As Bad As Feared"
Hurricane Gustav is a strong Category 4 storm and has continued to gain strength throughout the afternoon. As of 2 p.m. EDT, Gustav was centered about 155 miles east of the western tip of Cuba, or very near the Isle of Youth, and moving northwest at 14 mph.
According to reports, wind speeds have increased to 150 mph by 5:00 p.m. EDT.
The hurricane is expected to continue strengthening into an even more dangerous hurricane as it slams west Cuba this afternoon.
According to forecasters, the storm is expected to be as bad as everyone feared, the worse case scenario.
Gustav is moving northwest, away from the Cayman Islands, and hurricane warnings for the island nation have been discontinued.
The forecast track continues to indicate that Gustav will make its way into the southeastern Gulf of Mexico tonight and then track northwestward reaching the central Gulf Coast by late Monday.
The outer rainbands of Gustav will begin impacting coastal areas of Louisiana, Mississippi, Alabama and the Florida Panhandle as early as late Sunday with scattered downpours and thunderstorms.
Gustav will slow down as it moves inland, and will likely unleash excessive rainfall and devastating flooding.
The heavy rain and winds from Gustav will test levees breached during Hurricane Katrina. But all that depends on the exact track of the storm.
Reuters: FDIC may borrow money from Treasury
Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.
The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.
The last time the FDIC had borrowed funds from the Treasury was at nearly the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered.Bloomberg: FDIC Adds Office Space in Dallas, Ready for More Bank Failures
Total Borrowings of Depository Institutions (Weekly)
Bloomberg: Gold May Extend Rebound on Demand for Alternative to the Dollar
Gold may rise for a second straight week on speculation the dollar's rally against the euro will stall, boosting the precious metal's appeal as an alternative investment.
Twenty-two of 28 traders, investors and analysts surveyed from Mumbai to Chicago on Aug. 21 and Aug. 22 advised buying gold, which rose 5.2 percent last week to $833.50 an ounce in New York, the first gain in a month.
My thoughts:
In addition to the above, physical demand from India and Middle East countries is expected to rise in the coming months - potentially causing supply/demand issues and driving a sharp rise in prices. For the short-term however, gold will need to get/stay above $850 for a while before the next leg up.
GOLD
Many more Zillow created Charts and Graphs found here
Las Vegas Sun: Vegas home prices at 2003 levels
Owners of more than half of all homes sold in the Las Vegas area in the past five years have negative equity in their homes, according to a new report.
The report from Zillow.com, which tracks real estate values across the country, indicates that home prices in the Las Vegas area have fallen to levels not seen since 2003, and homes sold for a loss in the second quarter of this year made up 69 percent of all home sales.
According to Zillow, the average home in the region -- including single-family homes and condos -- is valued at $205,500, which is down more than 27 percent from a year ago, and down more than 34 percent from the market's peak of $313,275 in the first quarter of 2006.
The report indicates that 99.4 percent of homes lost value in the past year.
Among the report's other findings:
- More than 48 percent of homes sold in the Las Vegas area in the second quarter of 2008 were foreclosures.
- About 70 percent of homeowners who purchased their homes in 2005, 2006 or 2007 have negative equity in their home. For example, about 73 percent of homes purchased in 2006 have negative equity, with homeowners having median equity of minus $52,444.
My Thoughts:
This negative equity situation was caused by excessive speculation and Subprime use - and was exacerbated by the current credit crisis.
The problem however is likely to get much worse: with a massive (>28,000 home) inventory overhang, Alt-A (Exploding ARMs/Liars loans, etc) starting to reset, significantly falling gaming revenue (Las Vegas: Gaming Revenue down > 16%) and an economy reeling from recession (Las Vegas Economic Recession is here) home prices have nowhere to go but down -- much further down.
From a report I read today: Liar Loans Stir More Defaults
~ 40 percent of loans made in California and Nevada in 2005 and 2006 were either interest-only or option ARMs -- "It was pretty evident that the only thing that was supporting these loans was higher home prices"
Closing:
So, will the headline this time next year be: Vegas home prices have fallen to 2000 levels and 60% of those who purchased in the last 8 years are upside down?
Guess only time will tell...
Regards
Randy
There is absolutely no logical or fundamental explanation I can think of for the massive dollar rally of late and the brutal crushing seen in both Gold and Silver prices.
Take today's news as an example:
- Much hotter than expected CPI reading - sharpest increase since 1991
- News that President Musharraf of Pakistan would step down
- No improvements to the Russian/Georgia situation - w/new fears of ethnic cleansing
- Housing situation getting worse - US foreclosure filings surged 55 percent
Each one of the issues above (on it's own) should have been a significant positive for precious metals, but no -- gold fell > $20 in the US market and another $10 thus far in Asian markets (Silver saw it much worse - as a percentage).
Call me a nut job, but this certainly doesn't pass the common sense test and reeks of massive intervention.
Highly respected James Turk felt the same way on his Aug 7th article: Mystery Solved
Same with Ned Schmidt and his Aug 12: Gold Thoughts
Your Thoughts?
The owner/developer, Ian Bruce Eichner defaulted on his $760 million loan with Deutsche Bank, which was paying Perini Construction to continue work -- until yesterday anyway.
Artistic rendering
Deutsche Bank to Foreclose on $3.5 Billion Casino
Aug. 7 (Bloomberg) -- Deutsche Bank AG will foreclose on the $3.5 billion Cosmopolitan Resort & Casino in Las Vegas after developer Ian Bruce Eichner defaulted on a $760 million loan, two people briefed on the situation said.
Germany's biggest bank weighed selling the complex after Eichner's January default, said the people, who asked not to be named because the discussions are private. Deutsche Bank will take over the Cosmopolitan and is talking with companies including MGM Mirage and Hilton Hotels Corp. to help run its 80,000-square-foot casino, the people said.
Sagging commercial real estate prices, weighed down by record subprime defaults, forced banks to hold projects until prices rise or sell at a loss. The Frankfurt-based bank would oversee an 8.5-acre development with two high-rise towers, three wedding chapels, a sandy beach overlooking the Las Vegas Strip and a deck featuring ``European-style bathing.''
``Deutsche Bank wants to be engaged in banking, not running a casino,'' said Matthew Clark, a London-based analyst at Keefe, Bruyette & Woods. ``They've had to decide between selling the Cosmopolitan into a bad market or holding on for better times.''
Las Vegas, the heart of the U.S. gaming industry, is reeling from sluggish economic growth and soaring food and fuel costs. The city's casino revenue slid 16 percent in May, the fifth straight monthly decline, according to the Nevada Gaming Commission.
Closing:
This was probably a very smart move on Deutsche Bank's part. Will CityCenter be next?
Randy