[Rhodes22-list] Economics

Sun Mar 25 20:45:24 EDT 2007

Bill,

Yes, in the long run.  When you're leveraged beyond your cash flow you are
not an investor, you're a speculator. Real estate behaves like any
marketable product, it has it's own cycle.  Timing is everything.  Mine has
been excellent, I bought low and gave it to some underserving wife high!
That is another issue beyond the list's ability to solve.

Brad

On 3/25/07, Bill Effros <bill at effros.com> wrote:
>
> 1.  Real Estate is not a commodity.
>
> 2.  It can and has gone up forever.
>
> Bill Effros
>
> Brad Haslett wrote:
> > Wally,
> >
> > You can't legislate away the business cycle.  It is foolish to think
> that
> > any commodity can go up forever, real estate included. Too bad for those
> > people who overextended themselves, including the bankers.  Let them all
> > fall on their face and be done with it!   I've been telling everyone the
> > economy was good for the last few years because it has been good for the
> > last few years.  Not once did I ever say it would go on forever.  Our
> debt
> > as a percentage of GNP is well manageable, including the cost of the
> war,
> > but we can't keep spending on entitlement programs, especially social
> > security with the coming baby boom retirements, and expect things to
> stay
> > healthy. Look at where the money goes!  Our defense spending as a per
> cent
> > of GNP ain't Jack Shit compared to entitlements.  Do the math at  on
> that
> > before you go ballistic.  I don't wear rose colored glasses, I wear a
> green
> > eyeshade (must be that accounting undergrad thing).  Anyone who thinks
> we
> > can compete in the global market with our population growing more and
> more
> > dependent on the federal government is hiding behind the roses or just
> > doesn't understand basic macro-economics. The new economic front is
> India
> > and China.  They are already looking over their shoulder at
> Vietnam.  This
> > is a small globe and any prudent investor hedges his/her bets by putting
> > some money in the places that are kicking our ass. I don't drink
> Kool-Aid
> > when it comes to economics, I'm a realist and a history buff.  You
> should
> > worry about government spending - every 'nanny' government in the last
> > century has either failed or changed drastically (think Soviet Union and
> > China in that order).  EuroIslamia is next.  We're probably on the
> leading
> > edge of a correction (recession).  That's time to go shopping for
> bargains -
> > things are about to go on sale.
> >
> > Wally, it would be damned difficult for me to do my career over
> again.  The
> > government, in their efforts to save everyone from themselves has almost
> > killed general aviation.  You can't hang around the airport fence as a
> > teenager and beg for a job.  This development in my industry is
> pervasive
> > through out our economy.  We're getting our asses kicked in growth rates
> as
> > a result. Combine the heavy hand of the federal government with
> > over-regulating everything and the propensity to over tax and we're the
> > also-ran in the global marketplace. I know you don't like the war but
> what
> > would we do with the money we saved?  Give it back to the
> taxpayers.  Hell
> > no!  We'd find more 'victims' to spend it on.
> >
> > Brad
> >
> >
> >
> > On 3/25/07, TN Rhodey <tnrhodey at hotmail.com> wrote:
> >
> >> Brad,
> >>
> >> Maybe the FEDEX financials have you seeing things differently..... but
> >> based
> >> on the dozens if not hundreds of links you post I would say you drink a
> >> lot
> >> of cool aid. You have been trying to tell all for years now how great
> the
> >> economy is (was?) and we shouldn't worry about the cost of the war or
> the
> >> growing debt....it is not a problem.....yeah..yeah...yeah.
> >>
> >> I must admit I am in total agreement about not having sympathy for
> people
> >> who over extend due to keeping up with the Jone's. I also agree the
> >> President is given to much credit or blame for the economy. Please note
> >> that
> >> I made zero reference to Bush in the discussion of housing bust.
> >>
> >> I can handle my own spending just fine but it is the government
> spending
> >> that worries me more.
> >>
> >> Wally
> >>
> >>
> >>
> >>> From: "Brad Haslett" <flybrad at gmail.com>
> >>> Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
> >>> To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
> >>> Subject: Re: [Rhodes22-list] Economics
> >>> Date: Sat, 24 Mar 2007 07:53:53 -0600
> >>>
> >>> Wally,
> >>>
> >>> Glad I was busy and on the road for this thread.  When it comes to
> >>> economics, I don't drink anyone's Kool-Aid but look at the facts and
> make
> >>> my
> >>> own judgements.  Just as the Clinton year,s boom was based on the hype
> of
> >>> the dot-coms (and unstainable), much of the Bush 43 boom was based on
> >>> Detroit gas-guzzlers and cheap money (thus the real estate nonsense).
> >>> Neither could last forever.  All Presidents take credit for good times
> >>>
> >> and
> >>
> >>> get blamed for bad ones when in fact, Presidents don't have that much
> >>> influence on the market.  This is a good thing!  Bush did some smart
> >>>
> >> things
> >>
> >>> after 9/11, like cut taxes to spur the economy, and some really dumb
> >>>
> >> ones,
> >>
> >>> like bail out airlines that should have been allowed to go
> >>>
> >> under.  Frankly,
> >>
> >>> I have little sympathy for people getting burned for overbuying what
> they
> >>> could afford in real estate just I have little sympathy for
> shareholders
> >>> who
> >>> got burned on Enron or WorldCom.  The market is what the market is and
> >>> Presidents and the Congress usually muck-up necessary corrections when
> >>>
> >> they
> >>
> >>> meddle in the marketplace.  We've had a record number or quarters of
> good
> >>> economic performance and only a fool would think that will last
> forever.
> >>> The big question is wether the correction will entail a hard landing
> or a
> >>> soft landing?
> >>>
> >>> Brad
> >>>
> >>> On 3/23/07, TN Rhodey <tnrhodey at hotmail.com> wrote:
> >>>
> >>>> Ed, Reread my post.... no one blamed Bush....are you really that
> >>>>
> >> dense?
> >>
> >>> I
> >>>
> >>>> said our economy was a house of cards.....no blame was even
> suggested.
> >>>>
> >> A
> >>
> >>>> little defensive? I did say Brad was discounting the potential
> problem
> >>>> looming because he was drinking Bush's cool aid. Again Bush did not
> >>>>
> >>> cause
> >>>
> >>>> this. The lending crisis is not a government issue although it may be
> >>>>
> >>> the
> >>>
> >>>> government (us!) paying for this. Also Bush had no influence on
> >>>>
> >> lending
> >>
> >>>> guidelines or the problem. This is not a liberal or conservative
> >>>>
> >> issue.
> >>
> >>>> Wally
> >>>>
> >>>>
> >>>>
> >>>>> From: Tootle <ekroposki at charter.net>
> >>>>> Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
> >>>>> To: rhodes22-list at rhodes22.org
> >>>>> Subject: [Rhodes22-list] Economics
> >>>>> Date: Fri, 23 Mar 2007 06:07:51 -0700 (PDT)
> >>>>>
> >>>>>
> >>>>> Wally:
> >>>>>
> >>>>>      What you have said is particularly true where house values are
> >>>>> overvalued in anticipation of increasing in value.  I suspect a big
> >>>>>
> >>> time
> >>>
> >>>>> shake out coming.  However, you blame Bush.  Come on now, where were
> >>>>>
> >>> the
> >>>
> >>>>> Democratic critics a couple of years past.
> >>>>>
> >>>>>       Bush's stated intent was to allow anybody who really wanted a
> >>>>>
> >>>> house
> >>>>
> >>>>> to
> >>>>> be able to get one.  His ecomomics have helped that goal.  Now it is
> >>>>>
> >> up
> >>
> >>>> to
> >>>>
> >>>>> them to keep them.
> >>>>>
> >>>>>        Not all will.  However, I suspect many will.  The current
> >>>>>
> >>> default
> >>>
> >>>>> rate in the sub prime market is quoted as 23%.  Truth is it will go
> >>>>>
> >> up
> >>
> >>> in
> >>>
> >>>> a
> >>>>
> >>>>> recession.  Remember some of the creative sub par financiing was
> pure
> >>>>> speculation.
> >>>>>
> >>>>>        There will be some creative ways to help prevent defaults,
> >>>>>
> >> but
> >>
> >>>> that
> >>>>
> >>>>> does not answer your premise, why was the situation permitted.  It
> is
> >>>>>
> >> a
> >>
> >>>>> general governance issue and legislators of both parties did not
> want
> >>>>>
> >>> to
> >>>
> >>>>> say
> >>>>> or do anything.
> >>>>>
> >>>>>        What is more interesting to look at is the declining value of
> >>>>>
> >>> the
> >>>
> >>>>> dollar.  They say inflation is under control.  However, what you get
> >>>>>
> >>> for
> >>>
> >>>>> the
> >>>>> dollar is less.  So the value of some of those homes under duress is
> >>>>>
> >>> not
> >>>
> >>>>> the
> >>>>> same value in dollars as a few years ago.  Hum.  Another way to hide
> >>>>>
> >>>> facts.
> >>>>
> >>>>>        This is not a Bush issue, but the way the politicians and
> >>>>>
> >> press
> >>
> >>>>> hide
> >>>>> the truth.  If it were a liberal democrat in office, they would be
> >>>>>
> >>>> looking
> >>>>
> >>>>> elsewere, and so would you.
> >>>>>
> >>>>> Ed K
> >>>>> Greenville, SC, USA
> >>>>>
> >>>>>
> >>>>>
> >>>>> TN Rhodey wrote:
> >>>>>
> >>>>>> Brad, You have been to be busy being a cheer leader for Bush to
> >>>>>>
> >>> notice
> >>>
> >>>>> our
> >>>>>
> >>>>>> economy is unbalanced. I told you several months ago that the
> >>>>>>
> >>> mortgage
> >>>
> >>>>> and
> >>>>>
> >>>>>> home industry was "a house of cards and heading for huge
> >>>>>>
> >>> correction".
> >>>
> >>>>> You
> >>>>>
> >>>>>> responded and said your home values are fine in Memphis .....
> >>>>>>
> >>>>>> The largest sub-prime lenders are in trouble and in the last 90
> >>>>>>
> >> days
> >>
> >>>>> some
> >>>>>
> >>>>>> 30
> >>>>>> mortgage banks have closed or pulled out of sub-prime lending. The
> >>>>>>
> >>>> other
> >>>>
> >>>>>> shoe will drop when all the folks with low Interest Only payments,
> >>>>>>
> >>>>> balloon
> >>>>>
> >>>>>> 2
> >>>>>> nds, or ARMs have to refinance and find they can not because they
> >>>>>>
> >>> owe
> >>>
> >>>>> more
> >>>>>
> >>>>>> than the home is worth. They will be stuck with a rising payment
> >>>>>>
> >>> they
> >>>
> >>>>> can
> >>>>>
> >>>>>> no
> >>>>>> longer make. The common trend in home buying has been 100%
> >>>>>>
> >>> financing.
> >>>
> >>>> In
> >>>>
> >>>>>> the
> >>>>>> old days you needed to have 20% or so. Being upside down equity
> >>>>>>
> >> wise
> >>
> >>>> in
> >>>>
> >>>>> a
> >>>>>
> >>>>>> car is bad...evenworse when you are upside down in equity in you
> >>>>>>
> >>>> rhome.
> >>>>
> >>>>>> Many
> >>>>>> folks are upside down in equity in their home and 2 car payments.
> >>>>>>
> >>> Like
> >>>
> >>>> i
> >>>>
> >>>>>> said we are building anice house of cards.
> >>>>>>
> >>>>>> Do a google search for "sub prime lending woes".
> >>>>>>
> >>>>>> The leaders of companies like New Century maybe looking at jail
> >>>>>>
> >>> time.
> >>>
> >>>>> This
> >>>>>
> >>>>>> is tied into our overall economy in more ways than most
> >>>>>>
> >> understand.
> >>
> >>>>>> Wally
> >>>>>>
> >>>>>>
> >>>>>>
> >>>>>>> From: "Brad Haslett" <flybrad at gmail.com>
> >>>>>>> Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
> >>>>>>> To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
> >>>>>>> Subject: [Rhodes22-list] Economics
> >>>>>>> Date: Thu, 22 Mar 2007 08:48:18 -0500
> >>>>>>>
> >>>>>>> Hunker down boys and girls and protect your investments - the sky
> >>>>>>>
> >>>> isn't
> >>>>
> >>>>>>> falling but we're going to have a low ceiling for awhile.  Follow
> >>>>>>>
> >>> any
> >>>
> >>>>>>> benchmark you want but this is one of the best predictors out
> >>>>>>>
> >> there.
> >>
> >>>> The
> >>>>
> >>>>>>> understatement is "automotive and housing", that is a huge chunk
> >>>>>>>
> >> of
> >>
> >>>> the
> >>>>
> >>>>>>> economy and both are going through major corrections. Don't
> >>>>>>>
> >> believe
> >>
> >>>> that
> >>>>
> >>>>>>> last sentence, it's boilerplate "the world would be safe if it
> >>>>>>>
> >>> wasn't
> >>>
> >>>>> for
> >>>>>
> >>>>>>> those damn pilots" bullshit.  Brad
> >>>>>>>
> >>>>>>> --------------------------------
> >>>>>>>
> >>>>>>>    Slowing Economy Takes a Toll On FedEx's Quarterly Results
> >>>>>>> ------------------------------
> >>>>>>>
> >>>>>>> FedEx Corp. reported Wednesday that its earnings dropped 1.9% in
> >>>>>>>
> >> the
> >>
> >>>>> fiscal
> >>>>>
> >>>>>>> third quarter, stung by the slowing economy, lower fuel surcharges
> >>>>>>>
> >>> and
> >>>
> >>>>>>> severe winter weather.
> >>>>>>>
> >>>>>>> The package-delivery company, which is seen as a bellwether for
> >>>>>>>
> >> the
> >>
> >>>>> overall
> >>>>>
> >>>>>>> economy, also lowered its outlook for fiscal fourth-quarter
> >>>>>>>
> >>> earnings,
> >>>
> >>>>>>> tightening both ends of the forecast range by a nickel share.
> >>>>>>>
> >> FedEx
> >>
> >>>> also
> >>>>
> >>>>>>> said that, while its long-term goal remains 10% to 15% annual
> >>>>>>>
> >> growth
> >>
> >>>> in
> >>>>
> >>>>>>> earnings per share, growth during the coming fiscal year may fall
> >>>>>>>
> >>>> short
> >>>>
> >>>>>>> because of the sluggish economy and investments that FedEx expects
> >>>>>>>
> >>> to
> >>>
> >>>>> make
> >>>>>
> >>>>>>> in its business.
> >>>>>>>
> >>>>>>> "The U.S. economy grew at a lower rate than we expected in the
> >>>>>>>
> >> third
> >>
> >>>>>>> quarter, and we saw continued adjustments in the automotive and
> >>>>>>>
> >>>> housing
> >>>>
> >>>>>>> markets," FedEx Chairman, President and Chief Executive Fred Smith
> >>>>>>>
> >>>> said
> >>>>
> >>>>> in
> >>>>>
> >>>>>>> the press release. "I believe, however, this represents a healthy
> >>>>>>> transition
> >>>>>>> for the economy as it phases into a more sustainable growth rate.
> >>>>>>>
> >>>>>>> "FedEx is in excellent position to take full advantage of global
> >>>>>>> economic-growth trends and deliver overall outstanding financial
> >>>>>>>
> >>>> results
> >>>>
> >>>>> in
> >>>>>
> >>>>>>> the long run," Mr. Smith said.
> >>>>>>>
> >>>>>>> The Memphis, Tenn., company earned $420 million, or $1.35 a share,
> >>>>>>>
> >>> in
> >>>
> >>>>> the
> >>>>>
> >>>>>>> quarter ended Feb. 28, compared with $428 million, or $1.38 a
> >>>>>>>
> >> share,
> >>
> >>> a
> >>>
> >>>>> year
> >>>>>
> >>>>>>> earlier. Revenue rose 7% to $8.59 billion.
> >>>>>>>
> >>>>>>> The results, which marked the first profit decline for the
> >>>>>>>
> >> delivery
> >>
> >>>>> giant
> >>>>>
> >>>>>>> in
> >>>>>>> more than three years, were at the high end of the $1.20 to $1.35
> >>>>>>>
> >> a
> >>
> >>>>> share
> >>>>>
> >>>>>>> forecast range the company set in December, when it reported
> >>>>>>>
> >>>>> second-quarter
> >>>>>
> >>>>>>> results. Earnings topped analysts' forecasts, while revenue missed
> >>>>>>> expectations. Analysts polled by Thomson Financial expected, on
> >>>>>>>
> >>>> average,
> >>>>
> >>>>>>> earnings of $410.1 million, or $1.33 a share, on revenue of $8.7
> >>>>>>>
> >>>>> billion.
> >>>>>
> >>>>>>> FedEx previously said the typical surge in holiday-related freight
> >>>>>>>
> >>>>> volumes
> >>>>>
> >>>>>>> was "a bit delayed," the latest sign that a slowdown starting in
> >>>>>>>
> >> the
> >>
> >>>>> summer
> >>>>>
> >>>>>>> and fall at many railroads and trucking companies may be spreading
> >>>>>>>
> >>> to
> >>>
> >>>>>>> package carriers that handle many shipments on the last leg of
> >>>>>>>
> >> their
> >>
> >>>>>>> journey.
> >>>>>>>
> >>>>>>> FedEx's average daily package volume in its express and ground
> >>>>>>>
> >>>>> businesses
> >>>>>
> >>>>>>> rose 4% in the latest quarter, compared with the year-earlier
> >>>>>>>
> >>> period,
> >>>
> >>>>>>> helped
> >>>>>>> by growth in international express.
> >>>>>>>
> >>>>>>> Revenue in the express business rose 3% to $5.52 billion, and
> >>>>>>>
> >>> revenue
> >>>
> >>>> in
> >>>>
> >>>>>>> the
> >>>>>>> ground business increased 12% to $1.52 billion. FedEx's freight
> >>>>>>>
> >>>> revenue
> >>>>
> >>>>>>> rose
> >>>>>>> 30% to $1.1 billion. The Kinko's retail-shipping and office-supply
> >>>>>>> business,
> >>>>>>> however, continued struggling, with revenue declining 3% to $485
> >>>>>>>
> >>>>> million.
> >>>>>
> >>>>>>> FedEx expects to earn between $1.93 and $2.08 a share during the
> >>>>>>>
> >>>> current
> >>>>
> >>>>>>> quarter. Its prior guidance had been $1.98 to $2.13 a share.
> >>>>>>>
> >>> Analysts
> >>>
> >>>>>>> polled
> >>>>>>> by Thomson Financial expect, on average, for the company to earn
> >>>>>>>
> >>> $2.03
> >>>
> >>>> a
> >>>>
> >>>>>>> share during the quarter.
> >>>>>>>
> >>>>>>> Excluding second-quarter costs associated with the new pilot labor
> >>>>>>>
> >>>>> contract
> >>>>>
> >>>>>>> at the FedEx Express segment, the company expects to earn between
> >>>>>>>
> >>>> $6.70
> >>>>
> >>>>> and
> >>>>>
> >>>>>>> $6.85 a share for the year. Its prior guidance had been $6.60 to
> >>>>>>>
> >>> $6.90
> >>>
> >>>> a
> >>>>
> >>>>>>> share.
> >>>>>>>
> >>>>>>> *Wall Street Journal*
> >>>>>>>
> >>>>>>> *3/21/2007*
> >>>>>>> __________________________________________________
> >>>>>>> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
> >>>>>>>
> >>>>>> _________________________________________________________________
> >>>>>> 5.5%* 30 year fixed mortgage rate. Good credit refinance. Up to 5
> >>>>>>
> >>> free
> >>>
> >>>>>> quotes - *Terms
> >>>>>>
> >>>>>>
> >>
> https://www2.nextag.com/goto.jsp?product=100000035&url=%2fst.jsp&tm=y&search=mortgage_text_links_88_h2a5d&s=4056&p=5117&disc=y&vers=910
> >>
> >>>>>> __________________________________________________
> >>>>>> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
> >>>>>>
> >>>>>>
> >>>>>>
> >>>>> --
> >>>>> View this message in context:
> >>>>> http://www.nabble.com/Economics-tf3447654.html#a9634414
> >>>>> Sent from the Rhodes 22 mailing list archive at Nabble.com.
> >>>>>
> >>>>> __________________________________________________
> >>>>> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
> >>>>>
> >>>> _________________________________________________________________
> >>>> Live Search Maps � find all the local information you need, right
> when
> >>>>
> >>> you
> >>>
> >>>> need it. http://maps.live.com/?icid=hmtag2&FORM=MGAC01
> >>>>
> >>>>
> >>>> __________________________________________________
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> >>>>
> >>>>
> >>> __________________________________________________
> >>> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
> >>>
> >> _________________________________________________________________
> >> Exercise your brain! Try Flexicon.
> >>
> >>
> http://games.msn.com/en/flexicon/default.htm?icid=flexicon_hmemailtaglinemarch07
> >>
> >>
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> >>
> >>
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