Market meltdown...?!

Short form. Building contracted for by some nasty types in Japan. There was an existing building on one part of the lot. The "addition" was built beside and over and actually attached to the original building. Since the nastys never paid the contractors the title was never transferred. Some of the required permits were never applied for as well. 30 years later there are multiple title claims, liens and other encumbrances.

As Max noted, the clip was way out in left field. I just found it amusing in light of the exchanges that you and I had on title management earlier in this thread. As close to the ultimate nightmare scenario as I could imagine.

Interesting........sounds like a "script" for a Sunday movie !!
Has all the right ingredients
Lawyers, guns & money.

"Splish, splash, -Dollar takes a bath"

Why watch TV with these high-action 'thrillers' keep coming at us on-line?...

Here, let me say it one more time:* Cash in your GLD and SLV and buy the real thing.* Holding ETFs is the same thing as playing musical chairs, with only a fraction of the necessary chairs available for those circling the room. Had you switched over just a couple of weeks ago, Friday's decline notwithstanding, already you would have recovered the commission incurred in making the conversion. I still have not entirely followed my own advice, in case that somehow reassures you. Call it lethargy or an attempt to bottom fish or whatever. Regardless, it is foolish. See? I readily admit to it.
*
Don't dare even mention stocks or bonds to me. Holding equities today is beyond foolish and can best be described as downright stupid.
*
My name is Edgar J. Steele. Please visit my web site, www.ConspiracyPenPal.com, for other messages just like this one.

Wanna be an ex-pat? ...Anybody?

Really, I don't mean to say too much. Overall, I still believe there is hope for those who are wise enough to have an off-shore 'plan A' course of action. Get in now, for this next few weeks promises to pan-out for those counting on Energy futures and Oil. The news is bad, but what the heck, we are only interested in self-preservation. Chapman's summary on last week's 'dead cat bounce':

"..These problems reflect a systemic syndrome that has purposely been visited upon our economy and financial system. This all didn’t happen by accident. The elitists know what they are doing. Free trade and globalization didn’t just happen to us. It was planned as a gateway to world government years ago and it has been used as an instrument of power many times in the past. The problems of our vehicle industry just didn’t happen, they were planned just as the S&L fiasco was planned and our current subprime problems were planned. Our Congress hasn’t acted and won’t act because they do as they are told. They are either paid off or compromised. They march in locked goose step with the lying Treasury and our privately owned Fed. Our financial system passed the point of no return five years ago. There is no way back, our entire financial system is coming down."

Now for the bad news: "Operation Bite":

General Ivashov Calls For Emergency Session Of
UN Security Council To Ward Off Looming US Aggression*
By Webster G. Tarpley
3-25-7


WASHINGTON DC --*The long awaited US military attack on Iran is now on track for the first week of April, specifically for 4 AM on April 6, the Good Friday opening of Easter weekend, writes the well-known Russian journalist Andrei Uglanov in the Moscow weekly "Argumenty Nedeli." Uglanov cites Russian military experts close to the Russian General Staff for his account.

The attack is slated to last for twelve hours, according to Uglanov, lasting from 4 AM until 4 PM local time. Friday is a holiday in Iran. In the course of the attack, code named Operation Bite, about 20 targets are marked for bombing; the list includes uranium enrichment facilities, research centers, and laboratories... http://rense.com/general75/bite.htm
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Of course I'm not a financial planner, so I normally don't provide a legal waiver, but my instinct says 'run' when the dollar hits 81. Real Gold is a value at $648., and I would buy all you can up to $691. -and hold. Canadian and Mexican energy issues will further erode their currency values. I would look to outback Australia and New Zeland, if you are looking for peace and quiet.

(Ps. Buy the ugliest primer-gray boat, and bury the gold under some lead in the bilge.)

"Three Bears, No Goldilocks- Financial Armageddon"

Surely we all wish this thread would die permanently. And, I promise, after this I'll go back to full-time propeller talk.

Just keep this in mind: Speed is of the essence! If you saw the world from my perspective you would already be reading this from some forgotten port on the other side of the world. This month, 'Yacht Sales' -should- double. Next month, 'Prices' -should- follow suit. Spare diesel 'fuel tanks' may be indefinitely 'back-ordered' as well. If in doubt, check your guy-lines.

With this promise, I'll be directing my future comments toward personal preparations, and defensible foreign territories. Hopefully, others will follow this lead, although I realize that most folks who can afford a $40.+M toy probably believe the are above the din of inequity. Still, "the meek shall inherit," and I can only pray that the innocents will quietly acquiesce that, mostly, we Americans really aren't to blame...
__________________________________________________
The title of the book "Financial Armageddon" is not a metaphor. Panzner is talking about the destruction of the financial system as we know it, first by deflation, then by hyperinflation. In addition to managing your investments, he emphasizes the importance of staying aware, alert, and focused on the changing circumstances so that you can act accordingly as the situation shifts. In such a breakdown, your critical thinking skills and ability to react quickly and independently to a world in which nothing is as it seems will be among your best assets. As such, Panzner recommends a number of resources and websites (including http://bullnotbull.com) to help guide you through the transition. Panzner also runs his own blog/website at http://FinancialArmageddon.com

"Unable to cope with the harsh new economic environment, growing numbers of Americans will end up on the streets - confused, homeless and hungry. With that, begging will increase to previously unseen levels. So too will a range of other social ills, especially when those who have lost hope seek solace in drugs or alcohol…Even once-model citizens will have little choice but to break the law to take care of themselves and their families."
_______________________________________________________

With threats of Bush attacking Iran in a week, I'm truly afraid that the fix is in. No, I cannot fault those who don't have the resources to see all of the bad things that are happening, let alone know how to read between the lines. According to my friend Barry Chamish, (and now verified many times over,) ordinary Israeli citizens currently face the greatest danger. One false move, and it's 'Bye-bye Gaza.' -Death by proxy, and a mortal wound to all.

As of this writing, the ECB is well up over $200B in its efforts to prop up certain French and German banks to allay any fears of a possible meltdown.
A slowdown in financial credit growth, according to the folks over at Barron's, could have some ugly repercussions and unpleasant implications for the economy as a whole.

A global bank run would not be helpful to the boat business.

Airship,

I have merged your new thread with an existing thread of the same topic. Let's all try to make a concerted effort to use existing threads. Not only does this automatically notify other posters in the existing thread, resulting in greater participation, but it produces more relevant returns when searching YF.

Thanks!

Cultural differences abound. My nephew lives in Kunming SW China. He's been there for about 8-9 years after graduating in Mandarin at Leeds university. He tells us that there are hundreds of new flats and apartments being built at an enormous rate. These are snapped up by Chinese investors almost off the drawing board. However, these dwelling are NOT for living in. They are mothballed in the hope that they will increase in value. Apparently, the Chinese believe a second hand home is less valuable, so all are left empty.

How long will this go on? Who knows, but eventually there will be a realisation that investment in thousands of empty flats is like the story of the Emperor's new clothes. Already, according to TIME, China has dozens of shopping malls that are empty of customers because the shoppers earn only a tenth of Westerners incomes and cannot afford the Western brand names.

First Pericles

Great post Airship!

airship, I sympathize with your viewpoints.
From all outward appearances, it seems like the "little guy" is taking it in the neck.

But, not so fast.
I am a diligent reader of FT, WSJ, and Barron's, mostly because I find finance and economics fascinating.
Fascinating in that economists are like weatherman/weatherwomen: they don't always get it right. With spectacular results, eh? BTW, train wrecks are morbid, but I can't help but watch.

This is my take on things:

One wag in a recent WSJ piece mentioned that a future doctoral thesis might be able to explain the whys and hows and the still-unraveling ramifications of this sub-prime mess.
The so-called 'Greenspan put' (options-speak for buying your way out of a problem) has been blamed for allowing the "Moral Hazard" (If the Fed moves in to fix the problem, won't that reward future riskier behavior?), i.e., the bailouts of Long Term Capital Management in 1998 and the drastic lowering of the Fed Funds rate following the dot-com implosion in 2000 which, in turn, only led to the overheating of the housing market due to low borrowing interest rates.
Low rates enticed many and greed led lenders to entice many more to buy housing requiring little or no documentation of income or credit history (or downpayments, for that matter). Historically low interest rates were expected to stay low forever?
People really thought that?
Folks also said that they feared if they didn't act NOW, they would never, ever, ever be able to afford a house.

BTW, the relaxed standards of Moody's and the S&P mortgage bond ratings in recent years was also a huge contributor to our current morass. They massaged BBb- tranches ("slices" of huge Mortgage Backed Obligation bond offerings) to magically transform ( I still, to this day, cannot figure out how "they" did this) to AAA+ and, then, through the derivative process, managed to spread all that seemingly-solid paper literally around the world. Amazing.

Add to all that the increased use of quantitative programs in the major hedge funds--as opposed to good 'ol fashioned actively managed funds--up became down and left became right, nothing made sense anymore until, well, the shares hit the fan, so to speak. No one expected computer trading programs to sell off high-valued blue chips and rush to buy crummy issues.
Who knew?
But, that's just what highly-leveraged positions and margin calls led to.

If the pros couldn't forsee what was coming, how could the little guy?

airship, you gave me credit for the "best understatement of the year (to date)" earlier in the thread. Thanks for the notoriety.

I will lay another Irrefutable Truism on you and our readers. Bear with me, here.
While I am slow to connect the dots, I have observed over the years that physical assets purchases requiring the borrowing of money, whether they be cars, or boats, or houses-- all share a common trait:

An Asset Purchase, With Little Or No Equity Toward The Mortgage (a/k/a a sizeable down payment) May Result In the Loss Of Said Asset To The Mortgager When Markets Decline.

Equity.
Equity.
Equity.

Zero percent down!! You can afford it!! Buy NOW!!

Maybe now, but maybe not later on.

I saw half-million dollar boats repo'ed in 1981 (and since) and secretaries whose Pontiac Fieros became "upside-down" to the point where the car was worth less than what they owed. They had no cushion.

So, Benny and the Feds are utilizing old-school methods as a fix by relaxing the Discount Rate to help the markets and financial institutions to recover.
They have left the Fed Funds Lending Rate alone (which would help everybody else's woes) so as to not aggravate inflationary pressures---which would exacerbate everybody else's woes.

If nothing else comes of this mess, there will be--or ought to be--a whole lotta folks who understand how equity works.
And how, just like the Dow, markets decline as well as rise.

Peace.

Interesting note, airship, regarding the Japanese intra-generational mortgage extension: that would have been very humane considering those buyers in the Eighties suffered an eye-popping 80% drop in housing values in relatively short order.

Now, on a positive, more nautical note, since even my eyes are starting to glaze over, I was curious as to how all the above is affecting yacht loans and so I called on a couple of my marine financial lender friends*.
Turns out that since boat loans have-- and have had-- the lowest default rate of any mortgage class, virtually nothing has changed over the past months, the reason for which is that, typically, one's income documentation and a 20% downpayment are required prior to one's loan approval.

Equity, baby, equity.


* None of whom are known as 'Jimmy's Bait Palace and Quickie Boat Loan Co.'

Not to much optimism from the 'powers to be'. We are waiting for the eventual spill over up here, as we've had double digit annual increases since 2003.
Although we don't have 'sub-prime' type lending up here, 95-100% financing is quit common, especially in our speculative western market.
*Just to keep this tread nautical: There are approximately 12,375 Marinas in the US with about 875,000 slips.
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Bernanke's Pledge Fails to Dispel Pessimism at Jackson Retreat

By John Fraher and Scott Lanman

Sept. 3 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke's pledge to stop the credit-market rout from wrecking the economy failed to quell concern at the Fed's Wyoming summer retreat that the U.S. is heading for recession.

``I came to Jackson Hole thinking there would be no recession, but I'm leaving thinking we could well have one,'' said Susan Wachter, a professor at the University of Pennsylvania's Wharton School, who co-wrote the first academic paper presented at the conference.

This year's theme -- Bernanke said organizers had ``outdone themselves'' with a relevant topic -- was housing and monetary policy, eliciting forecasts of sliding home prices and criticism the Fed should have done more. Martin Feldstein of Harvard University warned of a ``very serious downturn'' and called on policy makers to cut interest rates by 1 percentage point.

The normally academic tone of the Kansas City Fed's symposium was replaced this year by concern that the sudden increase in the cost of credit to people and companies will hurt spending and investment. Consumer confidence dropped by the most in two years in August, the Conference Board reported on Aug. 28.

``There are no optimists in the crowd here,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York and a former head of domestic research at the New York Fed. ``There's a pretty strong consensus that this has gotten a lot more serious.''

As officials and professors debated lessons from the housing slump, New York Fed President Timothy Geithner and Governor Randall Kroszner were spotted on their mobile phones. Geithner is the central bank's liaison to Wall Street, while Kroszner heads the Fed board's banking supervision committee.

`Very Serious'

``The economy could suffer a very serious downturn,'' Feldstein, president of the National Bureau of Economic Research in Cambridge, Massachusetts, told the conference. The NBER dates American economic cycles. The last recession was from March to November 2001.

Bernanke, dressed in a dark grey suit that stood out from the typical dress of polo shirts, jeans and khakis at the Grand Tetons gathering, said in the opening speech that the Fed will ``act as needed'' to protect the expansion.

That didn't assuage critics such as Edward Leamer, the head of an economic forecasting group at the University of California at Los Angeles. He wrote in one of the conference papers that the Fed merited an `F' for failing to prevent the housing bubble and then not reducing rates as it burst.

`Lesser of Two Evils'

Feldstein called for ``a major reduction now in the federal funds rate, possibly by as much as'' 1 percentage point from the current level of 5.25 percent. While that may push up inflation, it's the ``lesser of two evils,'' he said in a Sept. 1 speech.

Fed policy makers next meet on Sept. 18. While central banks pumped $350 billion in emergency funds into money markets last month, signs of stress continue.

Commercial paper, a short-term financing tool, declined by $244.1 billion, or 11 percent, in the three weeks to Aug. 29, the most in at least seven years, Fed data show. Three-month Treasury bill yields had their biggest drop since 2001 in August as investors sought safety in government debt.

Delinquencies on subprime mortgages, the origin of the turmoil, are likely to climb further as variable-rate loans reset higher, Bernanke said.

Even so, ``global financial losses have far exceeded even the most pessimistic projections of credit losses on those loans,'' he said. That's because of difficulties in setting prices for complex securities and concerns that housing will hold back economic growth, the Fed chief said.

`Gloomy as I'

``I rather expected that I would come out and find that people weren't quite as gloomy as I was, and I didn't find that,'' said former Fed Governor Lyle Gramley, now a senior economic adviser at Stanford Group Co. in Washington. ``So it confirmed my own concerns about the economy.''

Attendees nevertheless sounded confident that the global economy, which has relied on the U.S. to drive growth for much of the past decade, is strong enough to cope with the slowdown.

In China, where the economy expanded at the fastest pace in more than 12 years in the second quarter, manufacturing unexpectedly quickened in August. While business confidence in Germany, Europe's largest economy, fell last month, it was still better than most economists had forecast.

``The world economy is still very robust and growth is much more evenly spread than it was a few years ago,'' Otmar Issing, former chief economist at the European Central Bank, said in an interview.

That was little comfort to most at the conference as they debated the impact of the housing recession on consumer spending, in between hikes along trails near Yellowstone Park.

Yale University professor Robert Shiller said house prices in some U.S. cities may fall by as much as half, while Leamer predicted declines in some areas of 30 percent to 40 percent. Feldstein saw the chance of a ``substantial decline'' in spending because consumers won't be able to borrow as much against the value of their homes.

This graph gives one a good insight into a ‘speculative’ marketplace.
The investors keep purchasing pre-sales (product not built yet) with no intention of moving in but only to flip at profit, hopefully prior to completion to avoid closing costs.
During a prolonged hot market, the new product inventory eventually vastly outnumbers demand, this type of speculation comes to an end with someone holding the product or debt.
Take a 7-10 year brake and repeat the above process.

*nautical piece: In 2005 the US recreational marine industry had $37 Billion in sales and services.