Boom2Bust.com

Holiday Schedule

Due to the Labor Day holiday, there will be no new material posted on Monday. Posts will resume on Tuesday.

Have a wonderful weekend!

Christopher E. Hill
Editor

Labor Day Weekend Music Videos

Just some YouTube music videos to remind you why we celebrate Labor Day…

Devo, “Corporate Anthem” (1979)
YouTube Video Link

Grace Jones “Corporate Cannibal” (2008)
YouTube Video Link

And my favorite…

The Skids, “Working For The Yankee Dollar” (1979)
YouTube Video Link

Scottish punk rockers, Teutonic tramps, what more could you ask for?

Related Post

From our sister blog Investorazzi.com earlier today:

“Jim Rogers Lets Loose On CNBC”

(On Senators Obama and McCain)

Neither one of these guys understand what’s going on. They don’t understand currency markets, economies, they don’t understand the world. You know, both of them will cause us more problems than they’re going to solve. If you happen to be friends with whoever wins, sure, you’re going to have a better time in the next four years. But the rest of us, the 300 million Americans, are all going to be worse off in the next four years. In fact, the world will be worse off.

Jim Cramer Expects Housing To Bottom By Third Quarter Of 2009

For CNBC’s Jim Cramer, things are looking up these days.

First, stocks reached a bottom (or so he claims)…

Back on July 29, 2008, I noted that CNBC television personality, former hedge fund manager, and best-selling author Jim Cramer declared that the bear market in stocks was officially over. Cramer said that stocks would not revisit their lows of July 15, when the Dow Jones Industrial Average ended the day at 10,962.54, and the S&P 500 at 1,214.91.

Soon, it will be housing’s turn (or so he claims)…

From the CNBC website this past Tuesday:

The economy will never recover if housing doesn’t find its footing first. But when will that happen? Cramer said he expects a bottom by the third quarter of 2009.

There is, of course, the usual Mad Money rigor behind this prediction. Cramer pointed first to the stock charts of Pulte Homes, Toll Brothers, DR Horton, KB Homes, Lennar, Centex and MDC. All of them show a peak exactly one year before housing did in July 2006. Well, guess what? Now these charts are showing that housing stocks bottomed last month. So if the logic worked for housing’s peak, why not for it’s bottom?

On top of this, Cramer added his thesis that stocks usually tell the story of their respective industries for six months out. So in a sense, investors can use stocks to see six months into the future. Part of the reason Cramer’s saying a year this time, though, is because the market is so horrible he’s allowing for setbacks. He doesn’t want to be premature, especially considering the aforementioned stock charts seem to indicate a year is a better timeline.

Who knows? He might be successful at calling the bottom of the housing slump, since his timeframe is extended out quite a while. Recent calls for a floor have proved to be premature. MarketWatch’s Greg Robb wrote Tuesday:

Economists who are calling the housing bottom are like a baseball team that’s close to clinching a playoff berth but keeps losing, and its clubhouse staff has to keep loading and unloading Champagne across the country.

Every month, these economists say the bottom is close, but really some poor souls are putting the Champagne back on the truck for the next month.

Sources:

“Cramer Calls the Housing Bottom”
Tom Brennan
CNBC, August 26, 2008

“Housing hasn’t bottomed yet”
Greg Robb
MarketWatch, August 26, 2008

Survey: U.S. Job Market As Bad As 2001 Recession

AP business writer Ellen Simon talked about the U.S. job market in today’s Chicago Tribune. According to one survey, it’s just as bad as it was seven years ago during the last recession. Simon wrote:

American workers’ confidence in the job market is as low as it was during the 2001 recession, according to a survey released Thursday.

When asked whether this is a bad time to find a quality job, 65 percent said it was, matching the level of the 2001 recession, according to the survey by Rutgers University’s John J. Heldrich Center for Workforce Development.

With unemployment at 5.7 percent, the highest level since 2004, and weekly unemployment claims hitting a six-year high earlier this month, workers are worried about everything from their weekly hours to their total pay…

And whether or not they’ll be trading in that nice suit for a Chuck E. Cheese costume before long…

Source:

“Survey: American workers’ confidence in job market as low as during 2001 recession”
Ellen Simon
Chicago Tribune, August 28, 2008

—

With your FREE My Monster Account, you can: Set up job search agents and have your dream job emailed to you!

The United States Of Complacency

Optimism. One of our greatest strengths as Americans, yet also our Achilles’ Heel. It never ceases to amaze me how many times we let optimism give way to complacency in this country.

After the tame Atlantic hurricane seasons of 2006 and 2007, a number of disturbing reports emerged about how an increasing number of Americans living in hurricane-prone areas were letting down their guard. From a Mason-Dixon poll conducted in May 2008:

On the heels of two mild storm seasons, Americans in Gulf and Atlantic coastal states are still complacent and unprepared for hurricanes according to a new Mason-Dixon poll released today.

The poll shows some residents of hurricane-vulnerable states say they will not evacuate and prefer to weather storms at home. Many residents lack disaster plans, and many are still misinformed about how to protect themselves and their families during a storm. The poll shows even many of the residents who live within 30 miles of the coast fail to take proper precautions…

Among the poll results emergency management officials find most alarming are these:

• 54% don’t feel vulnerable to a hurricane or related tornado or flooding,
• 56% have no family disaster plan,
• 67% have no hurricane survival kit,
• 85% have taken no steps to make their homes stronger since the last hurricane season,
• 13% said they might not or would not evacuate even if ordered to do so, leaving thousands of residents at grave risk in the path of any given storm.

Optimists, or hurricane-fodder?

Some Americans have gone so far as to accuse hurricane forecasters of creating hysteria with their storm predictions. Ken Kaye of the South Florida Sun-Sentinel wrote about an experience that Steve Weagle, chief meteorologist of WPTV Channel 5 in West Palm Beach, had back in 2004. Kaye wrote:

As Frances was approaching in September 2004, Weagle of WPTV said he received an exasperated e-mail.

“Once again you are scaring the hell out of people,” a viewer wrote him. “You guys should be called on this.”

And when last year’s tumultuous hurricane season failed to transpire, one individual even threatened to sue forecasters. From the Orlando CBS affiliate, Local 6, back on November 29, 2007:

Central Florida’s most famous hotel owner, Harris Rosen, lashed out at hurricane expert Dr. William Gray for his gloomy storm predictions saying they have damaged state tourism.

Rosen said he believes Florida lost billions of dollars in business because of Gray’s outlook and even threatened a lawsuit.

“Look, doctor, you’ve made these forecasts and you were wrong once,” Rosen said. “You made the forecast and you were wrong twice. Are you going to continue to make these forecasts?”

Perhaps forecasters paid attention to such legal threats. Or maybe they themselves suffered from a bout of complacency. With Tropical Storm Fay still gestating, I watched while a young meteorologist on a nationally-televised weather channel comment that the tropical disturbance, which would eventually become Fay, didn’t appear to pose a threat to the United States. “Famous last words,” I remarked. I also added, “This will probably be a blog post.” Take that, Nostradamus.

The preliminary reports from Fay, which set a record with four landfalls in Florida:

• 11 Florida deaths
• Tens of millions of dollars in damage
• 15 Florida counties receiving FEMA disaster aid
• More than 17,000 claims filed with Florida’s top five insurance companies, including 13,955 homeowners claims, 2,127 automobile claims, and 1,063 claims for the National Flood Insurance Program.

“No threat”

And now there’s Tropical Storm Gustav, which the latest hurricane forecast models show as increasing to hurricane strength before it makes landfall in Louisiana, and possibly around New Orleans.

But no need to worry, said city emergency preparedness director Jerry Sneed. According to Reuters’ Kathy Finn last night:

Sneed said he was confident that floodgates and pumping stations that failed during the 2005 storms would bear up.

“The citizens should not be worried about the flooding again,” he said.

However, Randall Mikkelsen of Reuters UK portrayed a different scenario. According to Mikkelsen today:

Poor areas of New Orleans hardest hit by Hurricane Katrina remain vulnerable to flooding because flood control improvements have not been completed, a U.S. official said on Thursday as Tropical Storm Gustav threatened a possible new strike on the city… the improvements are years from being complete and several neighborhoods remain vulnerable, said program director Bill Irwin of the U.S. Army Corps of Engineers.

“There are those high-level risk areas — such as the Lower 9th Ward, Gentilly, St. Bernard, New Orleans East and the West Bank — still,” Irwin said. “There are gaps in the system.”

Cross your fingers.

It appears the overly-optimistic view that “it can’t possibly happen to me” runs rampant throughout American society. Last year, a Red Cross survey found that 93 percent of Americans aren’t prepared for a major calamity such as a natural disaster, pandemic, or a terrorist attack.

93 percent. Pathetic. Guess we’ll just have to keep on suffering the consequences of inaction.

Returning to the incident involving the e-mail to meteorologist Steve Weagle as Hurricane Frances was approaching, Ken Kaye of the South Florida Sun-Sentinel wrote:

After the Category 2 hurricane did widespread damage in Palm Beach County, Weagle said the man sent him this apology:

“I’ll never doubt you again. It was the worst night of my life.”

“The dog and I were stuck in the closet for hours.”

Sources:

“Mason-Dixon Poll Finds Residents of Coastal States Complacent After Below-Normal Hurricane Seasons of 2006 and 2007”
Press Release
National Hurricane Survival Initiative, May 29, 2008

“TV meteorologists walk a tightrope during hurricane season”
Ken Kaye
South Florida Sun-Sentinel, August 6, 2008

“Hotel Mogul Threatens Lawsuit Over Hurricane Expert’s Gloomy Forecasts”
Local6.com, November 29, 2007

“New Orleans considers evacuation as Gustav looms”
Kathy Finn
Reuters, August 27, 2008

“UPDATE 2-N. Orleans poor areas still vulnerable to flooding”
Randall Mikkelsen
Reuters UK, August 28, 2008

Why I Love Redheads

I love redheads. Just one, mind you— whom I happen to be dating. However, I’ve recently warmed up to a certain red-headed anchor who rose to fame with CNBC but now plies her trade over at the FOX Business Network. Liz Claman wrote a great piece back on August 21 about the recent housing bailout and the likely taxpayer “rescue” of mortgage giants Fannie Mae and Freddie Mac. She bluntly stated on her “Liz-Vision” blog:

Am I the only one completely frustrated right now? All this talk about the ‘inevitable’ government bailout of Fannie Mae and Freddie Mac is making this red-head crazy. The bailout is so far unfounded but the smart money says it’ll likely come to pass. You can’t let these mortgage behemoths fail because they’re pretty much the only ones writing mortgages out there during this time of fear.

Okay fine, I get it, make us all feel guilty for not rushing to put a pillow under Fannie and Freddie’s ‘fermischt’ fannies. But they, along with many people who will be bailed out by the housing bill will be getting the biggest financial ‘do-over’ in a generation. Lenders who signed off on mortgages they had no business granting, homeowners who signed on the dotted line of totally inappropriate mortgage loans they could never keep up with, and companies that allowed it all to happen are getting cozy, comfy pillows thrown under them instead of forcing them to suffer for their sins.

Save for a tiny percentage of people who were victims of predatory lenders, most of these people happily pulled up a chair to the roulette table, gladly took the free drinks and began gambling away. Shouldn’t they have to swallow the bitter medicine now of having made a bad bet?

The author of The Best Investment Advice I Ever Received: Priceless Wisdom from Warren Buffett, Jim Cramer, Suze Orman, Steve Forbes, and Dozens of Other Top Financial Experts, asks another question:

Why then will we, along with the millions of honest, hard-working American homeowners who haven’t defaulted on their mortgages, have to pay out of our pockets to help those who blew it? Believe me, I have no problem helping out those of lesser means, those who perhaps got the short end of the societal stick, folks who try but need the extra help from the rest of us Americans. That’s what makes our country great… we are a society that takes care of each other. I’m grateful for that. But this?

I want to scream…

Reminds me of a line I once heard in a movie…

And her with her freckles and her temper. Oh that red head of hers is no lie!

-Michaeleen Oge Flynn, “The Quiet Man” (1952)

Source:

“Stop Using My Money To Bail Out Gamblers”
Liz Claman
FOX Business, August 21, 2008

Brief Glimpse At America’s Future?

Anyone else out there think this is where we’re heading?

Warning: Video contains profanity… and might lead to sudden onset of depression.

Intro to “Idiocracy” (2006)
YouTube Video Link

R.I.P. Trevor…

Tropical Storm Gustav: Anyone Worried?

4,000 active oil and gas platforms in northern Gulf of Mexico
Source: National Oceanic and Atmospheric Administration

Tropical Storm Gustav
5-Day Track Forecast Cone (as of Tuesday night)
Source: National Weather Service

Jitters, anyone?

Poll Shows Eroding Confidence In U.S. Economy

Earlier today, CNN Money’s Aaron Smith talked about CNN poll results which showed three-quarters of respondents believe the U.S. economy is in bad shape. Smith wrote:

Americans’ opinions on the health of the economy have worsened significantly over the last year, according to the results of a CNN poll released Monday.

Seventy-five percent of participants in a national CNN/Opinion Research Corp. poll believe the U.S. economy is in bad shape, compared to just 43% of respondents who shared that view a year ago.

In a poll conducted Aug. 23-24, 43% of those surveyed rated the current economic conditions as “very poor,” while 32% rated it as “somewhat poor.” Only 21% rated the economy as “somewhat good” and a mere 4% said it was “very good.”

The findings are based on 497 interviews and have a margin of error of plus or minus 4.5 percentage points.

Around this time last year, Americans had a significantly less dire view of the economy. A poll taken Aug. 6-8, 2007 found that 17% rated economic conditions as “very poor,” while 26% rated it “somewhat poor.” Furthermore, 45% rated the economy as “somewhat good,” while 11% said it was “very good.”

David Wyss, chief economist for Standard & Poor’s, told CNN Money that the U.S. economy will get worse before it gets better, particularly when it comes to jobs. Smith noted that so far this year, the economy has lost 463,000 jobs (source: U.S. Department of Labor). From the piece:

“I don’t even think we’ve seen the worse of it,” said Wyss, who doesn’t see any evidence of an imminent upturn. “I think we’ll lose another half million [jobs], and possibly another million.”

Source:

“U.S. view of economy is getting worse – poll”
Aaron Smith
CNN Money, August 25, 2008

Farmers’ Almanac Predicts Cold Winter

Worried about high heating bills this coming winter? Maybe you should be. From The New York Times this Sunday:

People worried about the high cost of keeping warm this winter will draw little comfort from the Farmers’ Almanac, which predicts below-average temperatures for most of the U.S.

“Numb’s the word,” says the 192-year-old publication, which claims an accuracy rate of 80 to 85 percent for its forecasts that are prepared two years in advance.

The almanac’s 2009 edition, which goes on sale Tuesday, says at least two-thirds of the country can expect colder-than-average temperatures this winter, with only the Far West and Southeast in line for near-normal readings.

“This is going to be catastrophic for millions of people,” said almanac editor Peter Geiger.

Carsicles

The Almanac broke their forecast down by region. From the article:

The almanac predicts above-normal snowfall for the Great Lakes and Midwest, especially during January and February, and above-normal precipitation for the Southwest in December and for the Southeast in January and February. The Northeast and Mid-Atlantic regions will likely have an unusually wet or snowy February, the almanac said.

In contrast, the usually wet Pacific Northwest could be a bit drier than normal in February.

Source:

“Winter weather? Almanac says ‘Numb’s the word!’”
Associated Press, August 24, 2008

Homeowners Try Using Gimmicks To Unload Properties

Some people will do just about anything to get rid of their homes these days— including turning to gimmicks. J.W. Elphinstone of the Associated Press wrote in yesterday’s Chicago Tribune:

It seems home sellers can’t give their homes away these days.

Two home-essay contests, one in Colorado and one in Oregon, both failed to attract enough literary enthusiasm and have left the sponsors in a lurch.

The deadline has just passed for J.J. Rodgers and her husband Wes Ludlow to give away their second home in Red Feather Lakes, Colo. The couple started the contest in January after their two-story home sat on the block for three straight summers.

From across the country, people mailed in essays and the $100 entry fee. Rodgers said she was “astounded and touched” by the stories strangers were willing to share.

The couple extended the May 25 deadline, but still fell about 700 entries short of the 2,000 needed to make the contest work financially…

Likewise, Ray Sinclair and his wife, Sharon, canceled their essay contest for their home in Yachats, Ore., after extending the deadline from the end of May.

They are also returning the $200 entry fees to contestants.

“The abrupt lack of entries and severely diminished Web site activity since the end of June have triggered this decision,” Ray Sinclair wrote on his blog.

For Sale: Home & Bride

Elphinstone talked about some of the other creative ideas homeowners have been running with:

Deven Trabosh, a 42-year-old single mother, offered her South Florida home and a shot at marrying her on the Internet. In Wisconsin, Bob Fanning, 69, will make the buyer of his home the beneficiary of a 10-year, $500,000 life insurance policy.

And Ricki and Bob Husick gained international interest after advertising that the buyer of their two-story colonial in Wexford, Pa., would receive the full purchase price back after the couple dies.

The Husicks, who had list their home for $399,999, sold the property for $377,000 in early June, according to county records.

Source:

“Why you want my house in 100 words or less”
J.W. Elphinstone
Chicago Tribune, August 24, 2008

World’s Richest Nation? Not The United States

U-S-A! We’re number one! Not really, according to PARADE magazine’s IntelligenceReport. From the August 17 issue:

Despite what the Presidential candidates are saying, America is not the world’s richest nation. If you run the numbers, Switzerland has a higher median household income ($62,000, compared with our $48,000). And, at $44,000, our per capita GDP (the amount of national income generated per citizen) has fallen to third: The tiny nation of Luxembourg leads the way, with $78,000; Norway is second, with $52,000. Last year, the number of millionaires in China, Russia, and India grew faster than in the U.S.

Income inequality also is greater in the U.S. than in other developed nations, and some economists believe that makes us more vulnerable to hitting the skids than the rest of the world. “Low-wealth children are unlikely to become high-wealth adults, while high-wealth children are very likely to become high-wealth adults,” says Dalton Conley of the Center for American Progress, a Washington think tank. “That should sound alarms for policymakers.”

Source: HeavyWhimsy.com

Source:

“The World’s Richest Nation?”
PARADE (IntelligenceReport), August 17, 2008

Quote For The Week

A home is to live in. For most people, seeing real estate as an investment that will surely appreciate is risky business. For one thing, while prices are already down in many parts of the country, they might go lower. So the cheap house you buy now could still sink in value. And while we’ve become accustomed to 6 or 7 percent returns on real estate, historically prices have just kept pace with or barely exceeded inflation. It’s probably wise to buy a home you want to live in rather than an investment with four walls.

-Jim Guest, President of Consumers Union, the independent non-profit publisher of Consumer Reports, in the September 2008 issue of the monthly publication.