Saturday, October 06, 2007

Article in works

Ok,

I know its lame to put in a placeholder, but I've noticed an abnormal trend this year in the inventory. Normally, there is a National inventory peak on September 21st with a 2.5 day sigma (standard deviation). With inventory climbing again, it looks like we could have a six sigma event pretty soon!

The fact that inventory peaked at the end of september (about 3.5 signma) is too easily explained away by the "hickup" in the mortgage market. However, if we get to the point where a market inventory peaks during October, we have a six Sigma event. There is a reason "Six Sigma" was selected as the name of corporate quality campaigns; a six Sigma event is so out of the norm it only happens if the process is broken.

By broken process, it implies that none of the normal fixes will save the real estate market. We're beyond another Fed 50 point drop. We're beyond freezing option ARMs at the teaser rates. Let's face it, if home construction suddenly stops, we go into recession just from those job losses.

Sadly, about the only thing that can be done now is an emergency infrastructure program. Now I'm biased, I truly believe that "Transportation is the cornerstone upon which a city builds wealth." Its past time to expand the interstate system. Its past time for certain cities to get a proper commuter rail network. Why do none of our major airports have a good bus terminal like the ones at Haneda (Tokyo) or Frankfurt? I'm all for building dedicated bus lanes to said bus terminal (elevated?). And of course, build more runways. ;) (I'm an aviation nut.)

Something should be done to absorb all of the unemployed construction workers. Hopefully with efficient production. No point in wasting money just employing people. I'm most concerned the maximizing the infrastructure.

Edit circa 6:40pm: I'm noticing the "Bulls" are starting to get really nasty. Could it be that the pigs are squeeling due to be spanked by the "Invisible hand" of the free market? Kudos to Adam Smith for writing such an awesome book. (I have a 3rd edition from a used book store.)

Nasty "bulls" are invading most of the bubble blogs. Their #1 concern seems to be our dissemination of accurate information counter to their agenda. The last time I saw this was around when New Century failed. Thus, I speculate that the current "counter-information" campaign is due to economic stress in the REIC. In other words, we are but a short time away from some economic event. But what is it? REIC layoffs? A Realtor branch closure? Countrywide selling out to BoA? When? I'll go on the record and say within October.

But then again, I'm already on the record predicting a stock market correction in October. Note: I have no shorts or puts, but I'm dang bearish.

Got popcorn?
Neil

6 comments:

oc bear said...

I'm OK with mass transit to the airport, but lets build better cities first.

An observer from another planet would wonder why with the ability of people to see, speak, and act virtually all over the world they still make a daily migration to and from some remote location in 2 ton vehicles. What fascinates us about Venice, Italy is its absence of traffic. We should be building new cities that eliminate traffic. I love cars, but I'd rather take a long drive than a short commutes.

wannabuy said...

We should be building new cities that eliminate traffic.

How I wish. You mean urban planning where the street level is parking and shopping? The level up is gyms and the 2nd floor for certain shopping (e.g., the new Target store design.)

Above that you build condos and then you build a "flat" of concrete upon which you build townhomes or "detached condos." :)

Oh yea... But then again, I sit and chat with one of my cousins on proper urban planning.

Next lets talk overhead, off grade bike paths to and from work. :)

There is a heck of a lot we could do.

Got popcorn?
Neil

tj & the bear said...

Man, you're looking to provoke Robert with all that nurb-speak! ;-)

IMHO the next great project will be in developing and deploying alternative energy systems. That'll employ everybody, guaranteed. [Now *I'm* provoking Robert.]

Tell you what, I've got puts all over this market and fixing to add more. This is the shorting opportunity of a lifetime, so why miss it? I'm definitely "putting" my money where my mouth is.

p.s.: Still waiting for your HBB get-together recap.

wannabuy said...

TJ,

I do need to do a proper recap. Funny, I want to do a better job on that than other articles. ;)

Got popcorn?
Neil

Peahippo said...

Neil, due to recent developments (including all the government interference in the housing market in the last 4 months), I'm going to have to officially declare the False Peak. Once I saw Benjy lower the prime rate, and then heard one of those banks go back to stated-income loans, I knew that I was seeing a critical indicator of the False Recovery (False RE-covering? ... he hee!).

While we're within the radius of the False Peak, home prices can rise again ... OR, some builders will see inventory clear faster, which will (in true Hypercapitalist fashion) prompt them to go on a building binge again.

The Great American Housing Bubble is going to take at least 5 years to wind down. With government interference, that will extend by a clean 18 months, which we can call 2 years. Since the bubble peaked in 2005 to 2007 across the nation, that means prices must fall (after stagnating for 2 years, tops) until 2012 to 2014. We're only at the False Peak, of a long series of stairsteps downward. We have a LONG way to go!

Hence ... it's far too early to ever expect our Hypercapitalist government to admit we have a severe economic problem. Since it won't be making any such admissions for at least 2 years from now, there's not going to be work programs. Consumers are still borrowing in order to keep up their unsustainable standards of living! If the American people are still in such deep denial, then why does anyone believe that the government lives in reality? Government announcements can't be believed until 2009.

Don said...

Sadly, about the only thing that can be done now is an emergency infrastructure program.

Not gonna happen with this president.