Sunday, October 10, 2010


So, it's been an interesting week.

Let’s take a moment to consider a few things.

Given the U.S. government’s $13 trillion accumulated debt, its continuing $1 trillion annual deficits, its failure to deal with a rapidly approaching explosion of entitlement spending, increased healthcare costs, State and city obligations to retirees which are in many cases too sizable for many localities, the near-total state of political gridlock, and now a looming massive funding issue of unknown proportions with this foreclosure crisis, and what do you have?

I suspect the full range and scope of what is going on still has not been realized. We are entering the second act of the 2008 crisis and I sincerely believe it will eclipse anything we have seen yet because of the shear size of this OTC derivative disaster.

The reaction from the US Federal Reserve is not hard to predict. Last Monday (before the fervor of the Foreclosure Crisis) we saw this commentary from New York Fed President William Dudley:

"Fed action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long... The outlook for US job growth and inflation is unacceptable. We have tools that can provide additional stimulus at costs that do not appear to be prohibitive."

When you have the New York Fed President openly stating that subdued inflation is unacceptable, it doesn't take a PhD in economics to decipher what is coming.

What we are waiting for now is a tipping point, an incident that will trigger a flood of actions. The stage is set for panic and when it is triggered, I suspect you will see Gold move a couple of hundred dollars in a manner of days and Silver move $5- $10 in the same time frame.

Olympic Village

Meanwhile on the real estate front, the Olympic Village story is another unfolding disaster.

If it interests you, this link will take you to a media briefing on the Olympic Village by City Manager Penny Ballem on September 30, 2010.

As noted in the comments section of VCI, there are some interesting facts in this report.

Number of market units put up for sale: 737
Number of presales: 264
Number of presales closed: 223
Number of presales that have not closed: 264-223 = 41
Number of post-Olympic sales closed: 36
Number of units with closed sales: 259
Number of units remaining unsold: 454
Number of units with pending sales: 737-259-454 = 24

Breakdown of the 259 closed sales by price:
under $1 million: 202 (78%)
$1 to 2 million: 54 (21%)
over $2 million: 3 (1%)

Breakdown of the 454 unsold units by price:
(Prices as of May 15, 2010)
under $1 million: 48%
$1 to 2 million: 24%
over $2 million: 28%



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  1. As Jim Sinclair says, "QE to infinity". This would mean serious cost push inflation, which is already happening or hyper-inflation as people bail out of US Treasuries.
    Alternatively, if the Fed avoids QE, we could experience a severe depression, as interest rates increase and economic activity plummets.
    Either way, we are stuck between a rock and a hard place.

  2. All of us are experiencing history in the making where in 20 years the mindset of a generation will be changed. I truly hope that this does not get ugly as in marching in the streets but baby boomers who believed their retirement savings was in equity of the home are in for a wake-up call.

    thanks again for all the work you have done, just fell upon your blog and look at it every day. keep up the great work.