By Charles Hugh Smith, OFTWOMINDS
The widespread view of cities as parasitic consumers of rural food production overlooks the tremendous quantity of food which could be grown (or was once grown) in cities.

A common “Survivalist” scenario foresees cities imploding into heavily armed and utterly ruthless warring gangs within a few days of the supermarket shelves being emptied by hoarders. This view overlooks the long history of food production within cities, stretching back thousands of years, and the fact that pre-petroleum “modern” cities such as Paris supported populations in the millions with a mix of urban-grown food and horse-drawn (or human-powered) carts and river barges of food from nearby sources.

I cannot recall the source (my excuse is information overload from the huge array of sources I read) but it seems that about 1/3 of “modern” cities’ food supplies were until rather recently provided by urban gardeners, small-scale egg/fowl production, etc.

For an overview of precisely how large, complex cities functioned in the pre-petroleum age (circa the foundation of modern capitalism, not be confused with the crony-cartel simulacrum we suffer from today), I recommend the three-volume masterwork by Fernand Braudel, Civilization & Capitalism, 15th to 18th Centuries:
The Structures of Everyday Life (Volume 1)
The Wheels of Commerce (Volume 2)
The Perspective of the World (Volume 3)

It is not inevitable that cities are hopelessly unsustainable, it is poor planning, ignorance and incompetence on the part of city agencies and the lackey politicos who are owned by real estate developers and other Protected Fiefdoms.

For a taste (pun intended) of just how productive a network of small urban gardens can be, please consider The Urban Homestead: Your Guide to Self-sufficient Living in the Heart of the City.

There are ample opportunities for creative approaches to growing more food in cities. Here is but one exploration in the pages of Scientific American (check out the November 2009 issue at your local library).

Growing Skyscrapers: The Rise of Vertical Farms Growing crops in city skyscrapers would use less water and fossil fuel than outdoor farming, eliminate agricultural runoff, and provide fresh food.

Granted this is a “high-tech” scenario, but the principles laid out–using gray water, solar arrays on buildings, greenhouses for year-round growing, etc.–are common-sense and potentially applicable to the abundant “crop” of abandoned buildings dotting the American urban landscape.

I can attest to the insane quantity of food that can be grown on a postage-stamp urban garden (our own, a 15′ by 18′ dirt patch around our peach tree) and the stupendous yields which can be gathered from urban orchards (we have two fruit trees, and they supply multiple households).

This is important: now is the time to order your seeds for the coming growing season, and please check out the catelog of this site’s longtime supporter,Everlasting Seeds. Everlasting Seeds has supported oftwominds.com for well over a year, and it has a special offer for veterans of the Armed Forces–an acknowledgement which means a lot to the proprietor of Everlasting Seeds and to me.

I just ordered my seeds from Everlasting Seeds, and I think you’ll enjoy looking at their offerings. If you’re a small urban gardener like myself, then you might consider giving away some seeds to friends, as a way of encouraging them or aiding their own gardening efforts. Every order will be helping a small business doing good work for the betterment of the nation and its residents.

I have been growing vegetables since 1969 (in the red earth of Lanai, Hawaii, in my junior year of high school) and the satisfaction is not describable in the language of a consumerist/media-distorted culture such as the U.S.

Tommie over at one of my favorite blogs, Freedom Guerrilla “gets it”: growing even one tomato plant in a pot is a revelation. Is there any wonder that hardened prison/jail cons find previously unknown satisfaction, purpose and healing in gardening and caring for pets? Animal husbandry and agriculture’s roots run deep in all of us, as do hunting, fishing and collecting food (gathering).

In aggregate, there are significant swatches of open land in cities which are completely underutilized. There are rooftops which are unused which could support growing boxes. So-called “Third World” cities–so often looked down upon by spoiled first-world residents– often have robust and sophisticated urban and/or suburban suppliers of food, especially fowl and fish which can be grown in small-scale environments.

When fish and animals are grown in large-scale industrial operations, it is an environmental catastrophe: the staggering quantities of animal waste are a pollutant, the antibiotics used to suppress the spread of disease in an unhealthy monoculture setting are detrimental to the animals and those who eat them, and so on. Small urban plots supporting a few chickens (or a small suburban pond for fish) are healthier all the way around.

Cities need not be entirely dependent on some distant oil-dependent industrial production of grain and factory-meat. That choice is one based on ignorance of what is possible, ignorance of how cities fed themselves a mere 120 years ago (never mind 500 years ago), and a gross misunderstanding/ incompetence on the part of Fiefdom-Elite dominated city officials and urban residents.

We in the so-called “First World” could learn quite a lot from our own past and from successful, innovative “Third World” cities.

Urban Planning books of interest:

The Geography of Nowhere: The Rise and Decline of America’s Man-Made Landscape(James Howard Kunstler)

Home from Nowhere: Remaking Our Everyday World for the 21st Century (James Howard Kunstler)

The City in Mind: Notes on the Urban Condition (James Howard Kunstler)

A Pattern Language: Towns, Buildings, Construction

Streets for People: A Primer for Americans

The Death and Life of Great American Cities

Global City Blues

The New Transit Town: Best Practices In Transit-Oriented Development

Planet of Slums

The Works: Anatomy of a City

Books on the industrialization of food production in the U.S. and the consequences:

The End of Overeating: Taking Control of the Insatiable American Appetite

The Omnivore’s Dilemma: A Natural History of Four Meals

Food, Inc. (film)

King Corn (film)

Super Size Me (film)

Fast Food Nation (film)

Fast Food Nation (book)

Rats in the Grain: The Dirty Tricks and Trials of Archer Daniels Midland, the Supermarket to the World

The Informant: A True Story

Self-Sufficiency/Gardening, much of which can be applied to urban/suburban zones:

When Technology Fails: A Manual for Self-Reliance, Sustainability, and Surviving the Long Emergency by Matthew Stein

Gardening When It Counts: Growing Food in Hard Times

Storey’s Basic Country Skills: A Practical Guide to Self-Reliance

Just in Case Kathy Harrison

The Urban Homestead: Your Guide to Self-sufficient Living in the Heart of the City

Depletion and Abundance: Life on the New Home Front Sharon Astyk

It’s a Long Road to a Tomato: Tales of an Organic Farmer Who Quit the Big City for the (Not So) Simple Life

Five Acres and Independence: A Handbook for Small Farm Management

Food Security for the Faint of Heart

How to Build Animal Housing: 60 Plans for Coops, Hutches, Barns, Sheds, Pens, Nestboxes, Feeders, Stanchions, and Much More

A Nation of Farmers: Defeating the Food Crisis on American Soil

The Humanure Handbook: A Guide to Composting Human Manure

Rainwater Collection for the Mechanically Challenged

Radical Homemakers: Reclaiming Domesticity from a Consumer Culture

Cook Food: A Manualfesto for Easy, Healthy, Local Eating

If you haven’t visited the forum, here’s a place to start. Click on the link below and then select “new posts.” You’ll get to see what other oftwominds.com readers and contributors are discussing/sharing.

DailyJava.net is now open for aggregating our collective intelligence.

Order Survival+: Structuring Prosperity for Yourself and the Nation and/or Survival+ The Primer from your local bookseller or from amazon.com or in ebook and Kindle formats.A 20% discount is available from the publisher.

Of Two Minds is now available via Kindle: Of Two Minds blog-Kindle

Go to my main site at www.oftwominds.com/blog.html
for the full posts and archives.

More articles from Charles Hugh Smith….

Zero Hedge

With Geoffrey Batt

This weekend the New York Times has published an interesting observation of gender differences when quanitfying the intangible concept of “overconfidence” as it relates to stock trading. While the article throws a relatively minor wrench at the spoke of “efficient markets”, we are following it up with a scientific paper by Wei Xiong and Jialin Yu, discussing the Chinese Warrant Bubble, in which speculative mania gripped the trading of warrants so deep out of the money that they were certifiably worthless, yet trading at an increasing turnover rate, and substantially inflated prices. With numerous unequivocal examples of bubbles in the history of capital markets, starting with Dutch tulip mania (1634-37), progressing through the Mississippi bubble (1719-20) the South Sea bubble (1720), the Internet bubble in the late 1990s, and the housing bubbles of the mid 2000s, it appears that human traders never learn from history as the speculative element overpowers rationality each and every time. The underlying premise: the hope that another greater fool will emerge. And emerge they do, until they don’t, and markets collapse bidless. It is certainly easy to draw a parallel between the Chinese Warrant Bubble, and the trading of AIG, C, FNM, FRE and a whole slew of otherwise worthless companies, which on occasion make up over 30% of of the volume of the US stock market, which in turn drives the momentum that pushes the balance of all stocks. Another parallel: the entire US stock market is now one big “greater fool” trap waiting to spring once the greater fools have their fill of gambling fever.

As the authors point out:

In 2005-08, over a dozen put warrants traded in China went so deep out of the money that they were certain to expire worthless. Nonetheless, each warrant was traded nearly three times each day at substantially inflated prices. This bubble is unique, because the underlying stock prices make the zero warrant fundamentals publicly observable. We find evidence supporting the resale option theory of bubbles: investors overpay for a warrant hoping to resell it at an even higher price to a greater fool. Our study confirms key findings of the experimental bubble literature and provides useful implications for market development.

The explanation: overconfident, under-informed “speculators” i.e., the bulk of traders in US stock markets, who get the bulk of their finance education from CNBC, who do no homework, yet hope the a stock will be flippable in one second at a higher price, just like a hose was flippable 4 years ago to some other stupid schmuck. We all know how that one ended. We all know how this one will end too. Furthermore, in China, where natural curbs on shorting exist, it shifts the bias even further toward one of optimism, as the “threat” of going into a shorted trade, makes one overly confident that the next natural trade is a buy. This merely goes tho who how any form of shorting curbs simply tend to exaggerate an upward bias to the market in the short-term, yet one which without fail compensates by a more substantial drop in the medium- and long-term.

Unable to short sell, it is natural for a smart investor to speculate on selling an overvalued warrant at an even higher price to another buyer in the future. Without knowing his own limitation in warrant trading (or in other words, by being overconfident), a less sophisticated investor could also have a similar speculative motive, i.e., he buys a warrant aiming to resell it at a higher price later. In such an environment, warrant prices are determined by investors’ speculative motives instead of the underlying stock prices. Even when a warrant is deep out of the money, investors still trade it as long as its price fluctuates, which may be viewed as profit opportunities by these investors.

The authors then go to debunk the fallacy of the fast/smart money hypothesis, identifying it for what it is: early momentum driven speculators who successfully feed off of other less sophisticated speculators.

A large volume of behavioral finance studies suggests that various behavioral biases can lead inexperienced individual investors to feedback positively to past returns. Does this feedback effect exist in the warrants market? Examining the feedback effect can help us understand the time-series dynamics of the warrants bubble…The presence of positive responses of both warrant returns and turnover changes to past warrant returns again highlights the importance of incorporating investor heterogeneity in understanding the warrants bubble, consistent with the key insight of our earlier analysis.

Yet even if greater fools are sufficient, they are certainly necessary: where did they come from in such volumes as to make a difference?

What explains the lack of investor learning in the Chinese warrants market? It turns out that there was a steady flow of new investors attracted into the Chinese financial markets by the stock market boom. According to a recent report by the CSRC (2008), the total number of individual brokerage accounts in China had increased from 80 million to 140 million from 2005 to 2007. It is conceivable that many of these new investors had been trading warrants. While we do not have access to account-level data, a recent study by Pan, Shi and Song (2008) analyzes all the accounts involved in trading one warrant issued by the BaoGang Cooperation and find that the flow of new investors had a positive impact on the warrant price. The large inflow of inexperienced investors is common during the booming periods of many developed and emerging financial markets. Since most experimental studies focus on a given set of subjects, they tend to miss the important effects of the endogenous inflow of inexperienced investors on bubbles.

And the key caution the authors derive is one that is all too applicable for the US in its current comparable frenzied bubble state:

The Chinese government introduced warrants with the aspiration that they can provide a tool for the Chinese investors to hedge stock price risk in a market environment with many existing restrictions on trading stocks, such as prohibition on short-selling and margin buying. To facilitate this objective, the Chinese government has enacted several rules (the T+0 rule, no stamp tax and registration fee, and wider daily price change limit) to make trading warrants much more convenient than trading stocks. This effort failed to achieve its intended effect. Instead, it led to a spectacular bubble. This outcome might appear surprising. However, it could be explained by a widely documented psychological bias—illusion of control, i.e., people behave as if their personal involvement can influence the outcome of random events (Langer, 1975 and Presson and Benassi, 1996). This bias implies that investors are likely to confuse the control they have—over trading the warrants quickly and cheaply—with the control they lack—over the return the warrants might realize. The frenzied trading and spectacular bubble occurred in the Chinese warrants market thus caution future governments regarding granting too much trading capacity to (possibly inexperienced) investors at an early stage of market development.

With ever-dropping volumes and a shift away from institutional trading, is it precisely the inexperienced marginal traders: the retail and the Ph.D written algo signal models, that determine the price level of the S&P? If so, watch out below when this brand new bubble pops, as bubbles eventually always tend to do.

Full paper.

More articles from Zero Hedge….

Zero Hedge

A lot has been written and said in the past few weeks about CDS. Almost
all of it has been bad press for the poor boys who write and trade this
stuff for a living. Heads of State, leading academicians and
economists, the MSM and even some of the financial blogs have all been
pounding the table on this issue. The message has been pretty clear. “Something
has to get done, or we are really really going to blow up next time”.

The catalyst for the recent uproar has been Greece and to a lesser
extent the other PIIGS. The perception has been created that somehow the
existence of a CDS market for Greek Government Bonds has caused a
crisis. Nothing could be farther from the truth. We now know that CDS
had very little to do with the yield spike in GGB’s. It was the movement
by the low rent bond traders (AKA global investors) that caused this
hiccup. Greek CDS was the tail that got wagged. Not the other way
around. But the vitriol continued. Wolfgang Munchau wrote on this topic
last week. The following quote summed up his thinking:

“The case for banning CDS is about as
strong for banning bank robberies.”

Some of the arguments against CDS include:

(I) They are unregulated.


(II) They create the opportunity for excessive leverage.


(III) They are used for and encourage speculation.


(IV) They may be written by under capitalized firms. Depending on
the outcome this could create an excessive financial risk for the writer
and thereafter cause a systemic risk. (The AIG story)


(V) They can, by their very existence, precipitate or fuel a
financial crisis.

CDS is functionally an insurance policy one can buy to protect against
default of payments from a borrower. While it is different in a number
of respects from payment default insurance, it really is the same thing.
If you accept that CDS = MI then you have to look at what is happening
in that market. Mortgage CDS is the big casino; Greece and all the
others are just a sideshow by comparison.

First consider the private sector side of this. The mortgage insurance
industry (MI) is represented by an outfit called MICA. The current and
recent members of this group include:

S&P updated its views on the Mi providers in November 2009. Does
this sound like a group that is adequately capitalized? Their comments:

Overview
• The mortgage insurance industry continues to face significant
challenges
during 2009, to the extent that many mortgage insurers have reported
losses exceeding our expectations.
• We believe that the macroeconomic environment may be having an
increasingly negative impact on the prime mortgage insurance books,
suggesting an elongation of the loss cycle beyond our prior
expectations.
• As a result, we are placing the ratings for several mortgage
insurance
companies on CreditWatch with negative implications.

As of February 2010 this group had mortgage insurance in force totaling
$850 billion. Anyone who recognizes these names and understands
these ratings knows that this group is under capitalized. The number of
insolvencies of these firms and their failure to make timely payments
under their insurance obligations has already strained the mortgage
market. This group clearly represents a systemic risk to the system.

As insurance providers these companies are supposed to be regulated. But
they functionally are not. The fact that a number of them continue to
exist and write new policies (AIG) proves that there is no useful
regulation.

MI insurance allows a borrower to acquire a home with no or very little
skin in the game. We have learned that this is bad business and leads to
defaults. The D.C. mortgage agencies have learned this lesson the hard
way. They have been suffering defaults on their book of “enhanced” loans
at multiples of the rate of conventional mortgages.

In the heyday of mortgage silliness the MI companies were insuring up to
105% of the purchase price of a home or condo. This never should have
been allowed to happen. It clearly encouraged speculation and there is
no doubt that excessive leverage was the intended result.

In my opinion the MI industry has all of the negative
characteristics (I-V) that the detractors of CDS point to.

The private sector side of the MI business is a joke. But it is small
beer compared to what the D.C. lenders have been doing and continue to
do. As of the most recent reports, Washington has the following mortgage
CDS outstanding:

These numbers speak for themselves. That 50% of all mortgages
outstanding are guaranteed as to their performance by the central
government is the definition of a systemic problem. No one has any skin
in this house of cards.

The D.C. mortgage players are regulated, but by whom? The FHFA. The FHFA
and its predecessor OFHEO have never regulated the agencies properly.
The proof of that is staring us in the face. The absence of proper
oversight will cost the American taxpayers at least $500 billion dollars
before this mess is over. FHA will have its hand out for a federal
bailout by year end.

None of the mortgage agencies have adequate capital for this type of
underwriting risk. The joke is that they have no capital at all. The
equity necessary to absorb the losses comes from the taxpayer. We are
writing a check to cover that shortfall every quarter. That check
averages $10 billion dollars a month. And every month the agencies write
more CDS contracts. Nothing has changed.

The agencies have already proven that they constitute a systemic risk.
They helped create the mess in we are in today. They encouraged
speculation in the housing market. They have created the excessive
leverage that has caused the economy to shudder. If in the next few
years we find that the recovery does not hold and we slip into a
protracted period of recession it will be the mortgage agencies that
will be the albatross that brings us down.

The D.C. mortgage players clearly have all of the negative
characteristics (I-V) that those opposed to CDS are worried about.

It is all well and good for the press, our political leaders and many
deep thinkers to throw stones at the CDS market; no doubt some of these
stones are well intended and justified. But for me it is misdirected.
How can someone throw these stones while there is a $ 6.5 trillion CDS
market right here in the US and it is sanctioned and encouraged by
everyone one who has a say in the matter?

The reason is simple. Expedience and survival are at stake. If we woke
up on Monday and there were new rules that eliminated the MI and
federally sponsored guaranties on individual mortgages we would be in a
depression by the end of May. Our system would simply freeze up and die
if that would happen.

To a much lesser extent the same is true in the global debit insurance
business or CDS market. If that were taken out of the equation it would
have significant global deflationary impacts. Those that are taking up
the mantle against CDS should address their concerns to where the truly
big numbers lie. They also need to understand that the direction they
are headed will lead us to that horrible sucking noise of deflation that
everyone seems so desperate to avoid.

More articles from Zero Hedge….

Tim Iacono submits:

Renae Merle at the Washington Post throws cold water on the idea that the "nascent" economic recovery (is anyone still calling it that?) will continue much longer in this story about a subject that seems to slip further and further from the top of everyone’s list of concerns – the growing backlog of foreclosures or soon-to-be foreclosures.

Read more…. »

Here is an edited reprint from  August 12, 2006. Back then, what I was suggesting, seemed absurd to a lot of visitors to my blog. Today, it seems to fit in line with last week’s news of  Kansas City’s massive school closings.

Every day you hear some Congressman talking about taxing the rich, and more welfare reform for the poor. If we go back in history to the times of Rome and Greece, every male owed one month of labor to the state. The state did not classify people as poor. You either came up with someone to work for you or you did the month of labor.

Now let’s advance several thousand years. Today in the US, we have the rich, the middle class, and the poor. We know the poor don’t pay much in taxes. The middle class is the real bread winner for the government. Then we have the rich. They don’t really have to pay taxes either. Once you make the money, you can’t be taxed on it a second time. We do have people that make over $100,000 a year working two and three jobs with the wife’s wages added in, and these people are considered the rich that need to be taxed, neat huh?

Another item to consider is real estate taxes. Real Estate is visible wealth and is taxed as such. So if your house value triples in price, your house taxes also jump–California is an exception. Prop 13 limited the increase to a small yearly amount based on purchase price. That’s little consolation if you bought in the last two years. Notice that it is the Want-To-Be-Rich group of home owners that pay a disproportional part of their income in real estate taxes. And hey it’s all tax deductible. But lose your job and have no income, deduct it from what?

Back in the 1920’s local governments had been spending their new found wealth. Then in the 30’s with the collapse of housing, the tax base for local communities collapsed. Schools closed because they couldn’t meet the payroll. Here is a quote from “The Great Depression”  pg. 93 by David Shannon.

People never enjoy paying taxes. With the lower incomes of the depression came widespread demand for retrenchment and lower local taxes. Indeed, many citizens and property owners were quite unable to pay their taxes at all.

Since a large part of the revenues of local government is spent for public education, it was perhaps inevitable that the tax crisis should produce cutbacks in the schools. Many communities decreased their school spending severely. In effect, they passed the burden on to the teachers, the students, or both.

So we have the rich, the middle class, and the poor. The only ones that have lost their way are the middle class. These are the people about to enter a new world, called bankruptcy.

Another compounding factor back in the 1930’s was the legislative stupidity that figured “If you raise taxes and fees, it will bring in more income.” Well, to their surprise it brought in less. Unfortunately, intelligence is not a prerequisite when running for public office.

Read more….

In recent months we have seen many articles talking about the lack of predictability in big bubbles like the current credit crisis.  Some of these authors argue that bubbles are impossible to predict and therefore preparation is futile.  This observation is false simply because history is littered by people that have predicted events including the Great Depression.  And it is nonsense on the surface because if you see your friend having 20 shots of tequila it is very likely that it will not end pretty even though it is fun in the moment.  What makes bubbles seem impossible to predict during the mania is this collective groupthink where the herd dominates most of the conversation drowning out opposing views.  We’ve highlighted many homes during the years here in California and the obvious explanation was a bubble was here and it would burst at a certain point.  Yet there is little reward for being the messenger of bad news and this was the tragedy of any modern day Cassandra.

I’ve noticed a few people in other articles and blogs talk about how great of a deal they got on a California home.  30, 40, or even 50 percent off the peak price.  Yet this discount in itself is meaningless unless we put it into context of the local economy, incomes, and inflation-adjusted home prices for that area.  Yet even today, we see the same psychological trappings of those that bought in 2006 and 2007.  “Well it has to go up because it went up in 2002, 2003, etc” and this was the basis of prices heading higher.  Today, it is more like “I got a home for 30, 40, or even 50 percent off therefore it is a good deal.”  But price alone does not tell you everything.  If a low price was the measure of value, then Detroit would be the ultimate value play but there is a reason homes that once sold for $100,000 which seemed cheap a decade ago are now going for $1,000 or even $500.

Now why bring this up?  We are seeing unique trends in the housing market.  For example, there has been a large amount of sale activity in the Inland Empire:

Source:  DataQuick

The amount of sales in distressed markets is astounding.  From data showing financing on these purchases, we see that many investors are rushing out to buy homes.  But are prices making sense even in these areas where prices are down 50 or even 60 percent?  It is hard to tell because these local economics are feeling the brunt of the recession.  For example the above chart shows some areas in Riverside County part of the Inland Empire.  The sales volume above is intense.  For example, in the Temecula zip code above 38 home sold in December of 2007.  Today that volume is three times that.  The Hemet zip code above is running at double the pace.  So the volume is there.  But take a look at the unemployment rate in the Inland Empire:

Source: BLS

There is a reason for the extraordinarily cheap housing prices when headline unemployment is 14 percent (meaning the underemployment rate is upwards of 25 percent).  As an investor it is hard not to be tempted by low prices.  But going out there to view the market, you see in some cases, home after home either boarded up or completely uncared for.  Many of these communities are dealing with a large surge of Section 8 renters.  Just look at how many rentals are available in these areas and you can see that many investors are getting in over their heads.  They are only focusing on one side of the equation in price.  They are failing to examine the local economy or trends in the area.

MLS

For the first time in three years of tracking the MLS data have I seen a significant jump in inventory for Southern California.  The six counties in Southern California currently have 69,000 homes listed on the MLS.  This is up from the low reached in October of 2009 with 64,000 properties listed.  Part of this has to do with a large number of short sale properties hitting the list but also, the expiration of HAMP offers for many who simply do not qualify.  The housing market has gone from a manic casino to a slow payout slot machine.  But only looking at the MLS data is misleading as we already know.  We recently found out the massive gimmick Lehman Brothers was using to hide toxic assets.  Well the MLS does not tell the entire story.

If we look at distress inventory, we find out that it is true that many Southern California communities have a large amount of distress properties:

Source:  Foreclosure Radar

This is being reflected in the median sale price.  The median sale price in Southern California has gone up since it hit a low in January of 2009 of $250,000 for almost a year.  However, last month it dipped by $17,500.  Part of it has to do with the fact that California has a 12.5 percent unemployment rate.  A lot of the housing volume has come from investors.  Last month 28.9 percent of all Southern California home purchases were all cash.  So either people are looking to flip again or purchase to create rentals.  But the rental market is already saturated:

The California vacancy rate is the highest on record.  So if these investors plan on turning these units into rentals, by supply and demand prices will be pushed lower so hopefully they are factoring this in.  Some are taking solace that there will be no tsunami but in that belief, they assume that there will be no further price corrections.  This is one large fallacy going around today.  Tsunami, trickle, or any other weather comparison prices will correct in many areas simply because they do not reflect the current market.  Did we also mention the massive California budget deficit?

Estimated Balance on Distress Properties

One way to get a sense of how much correcting we have, I dug deeper into the distress data.  Take for example the top 1,000 properties in Los Angeles County that are scheduled for auction or bank owned:

These homes haven’t hit the market.  A handful are on the MLS but not many.  If these homes sell today for the estimated value (unlikely since it is a bit high) we would see an average loss of $195,175.  Now this is only a sample of the 63,000 distress properties in Los Angeles County.  Banks clearly have this data so they rather take on people that have stopped paying their mortgage then realize that $195,175 loss.  But this has a timeframe attached to it.  Just look at a couple of the mortgage balances.  $470,000 would carry a $3,000 to $4,000 total housing payment depending on the interest rate.  The loss on that property is roughly $210,000.  So they can hold off for 4 years ($4,000 x 48 months) but this won’t happen.  The most I’ve seen has been 18 months from when the NOD was filed.  Yet the loss at a certain point will be realized.  And make no mistake, the reason banks are not lending is because of this.  Their internal cash flow is bleeding.  They are simply hoping for a bubble resurgence which obviously is not going to happen.  Why?

California Big Salaries Down

What people don’t want to talk about deals with the reality that many of the high paying jobs were basically cogs of the bubble machine.  Many mortgage brokers, agents, and bankers were getting lucrative income for being sellers of this financial mess, the biggest since the Great Depression:

“(May 2007) Brokers can earn higher commissions – up to 3 percent instead of the typical 1 percent – by having customers buy loans with interest rates that are higher than market rates, with prepayment penalties charged if the loan is paid off before a certain date, and with little or no verification of the borrower’s income, known as “stated income” loans. That’s the difference between a $12,000 and a $4,000 commission on a $400,000 loan.

Leonard said he believes such practices are common, partially because there is no state law requiring the broker to disclose that the borrower is eligible for a lower rate.

Many loans offering the highest commissions have been subprime loans, higher interest rate loans that often are sold to those who have low credit ratings or present other risk factors, such as undocumented earnings. Mortgage industry experts say the majority of defaults in the last two years are tied to these loans.”

With option ARMs outlawed and other toxic junk finding no market in Wall Street, the only game in town is government backed loans that certainly do not carry a $12,000 commission.  So what we have is this:

And many of these people were buying in prime areas like the Westside with inflated bubble salaries that are now gone.  So the pool of qualified buyers is down for mid to upper tier markets.  Going back to the Cassandra effect, the state was satisfied as well because they were collecting large amounts of taxes from these people.  They were getting good money from payroll taxes but also, solid revenues from properties that were now assessed at absurd prices.  There was no incentive for the state to stop the party.  California was an economy that was built by the housing bubble both in employment and housing values.  It is now suffering on both ends of the spectrum.  That is why our unemployment rate is still at the peak while nationwide the unemployment rate seems to have leveled off.  It is also the case why our state government is in an absolute mess.  They counted on the bubble revenues:

So what this means is get ready for higher taxes or more cuts.  Unless we decide to recreate the housing infrastructure to start another bubble but Wall Street is already done with the housing market and is on to better bubbles to chase with taxpayer money.  In other words, California is going to have a stagnant housing market for years to come.

Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis, and information.

a

Read more….

Hearty Doomish greetings go out to Ian M, his friends in and around UBC's comp sci department and nerds everywhere (hi Admin!)  This is your day

Alas at some point along the way Ian's old man severely lost his way and became … an Arts nerd?

There was the time back on June 16, 2004 when the Chronicle-Herald picked up a stale wire story and I awoke to find …

.

"Orlando Bloom Named World's Sexiest Actor"

emblazoned all the way across page E1 of my breakfast newspaper.  I couldn't stop laughing for a week.

That was followed by a year and a half painstakingly constructing a Spenserian sestina to demonstrate the application to D-chiro-inositol of a radical new strategy for cyclitol specification, but for today perhaps it will be just as well if I limit the fun and games to a pair of ghazals inspired by one of the Gray Code examples in Knuth.  They're actually two of the draft sections for a long sequence of celebrations of our neighbourhood catch basins I've been working on titled Empire of Drains.

            Pawns

Be my sword you fat French spade, mucking to the prize.
Glow harder, swifter, smaller, oh spark struck in my father's eyes.

I found the willow wands unasked but they'll look nice
on the mantle, fire crackling, skirts rustling; tinkling of father's ice.

Outside, together, raise the picnic table, praise the cross.
How warm it is to shelter and forgather at my father's house.

Who wants to carry a caldron, mince mushrooms, memorize a curse?
Not I, a diamond scepter let me bear on father's horse.

But maybe it's for me when others judge the case.
If I could spell, would it disturb my father's ease?

Let me bear tankards while the children all carouse.
I see his club, there's no one in this awful house.

Locked fast inside the cockpit; see, this finger knows
I need to scream and dive upon my father's house.

Awake pentacle and float above my cloud. You'll rise
to when you rain like shekels, dancing in my father's eyes.

.

            More Pawns

Despite the love no resting in my mother's arms.
I drained that cup for nation (Mother's) harm.

Burn this stick, I'll show you what I am.
Dentistry accorded with my mother's aims.

Sing out, out! It won't contain, this room.
Dance seven-times-seventy-times around my mother's home.

Ring-scores on glass sparkle in the gloom.
Last night I dreamed of mother, home.

Let them perceive a black sizzling when we come.
And what's for this night's supper mother, ham?

They came for singing, but I'll entertain the dome.
Tap wands, pull bunnies till my mother come.

Break in, the gate, I need to dig that loam.
The brush awaits let burn my mother's umb.

Smart toilet – what coin would operate, what alms?
Brush off this straw, then set me in my mother's arms.

.
John Wise McLeod

Read more….

Maybe Obama can launch HALM, Help For Lawmakers: [Thanks L!]

The state's money problems are so bad that lawmakers are getting eviction notices and calls from collection agencies about their offices back home.

At least five state senators say they've piled up so much unpaid rent, sheepish landlords are asking them when the government plans to make good on its bills.

"He said, ‘Ira, I'm sorry,'" said Sen. Ira goldmoney.com?gmrefcode=bearmarket43″target=”_blank”rel=”external”title=”silver” >Silverstein, D-Chicago, recalling a visit from his landlord delivering an eviction notice. "And what am I going to do? I can't argue with the man."

While none of the lawmakers has actually gotten the boot yet, they are getting a taste of the frustratingly slow pace at which the state pays bills as it careens toward a $13 billion budget hole. It's a pain that's magnified exponentially for school districts, drug rehabilitation counselors and businesses awaiting tax refunds.

It isn't just the rent that's the problem:

"When they can't pay the rent of a Senate office, there's no way they're going to be able to pay the hundreds of millions of dollars in bills that they have back due," Duffy said. "It just shows what a tragic crisis we're in and how far out of hand this is."

Read more….

By Charles Hugh Smith, OFTWOMINDS
The cliche will be wrong–bells will toll at the bottom in housing and stocks.

The Wall Street cliche is “they don’t ring a bell at the bottom,” meaning that there is no definitive signal that a market has truly hit bottom, as opposed to just another leg down in a longer slide.

Guessing that “the bottom is in” sets up another cliche, “catching a falling knife” which describes impatient speculators buying stocks or houses in the conviction that “the bottom is in” only to lose their shirts as the market continues its decline after a brief head-fake of “recovery.”

In the standard ideology of “investing” (code word for rampant speculation), it is “impossible” for bells to toll at the bottom because that would be too easy; the market famously trends in whatever way will cause the most loss and grief for the greatest number of participants/players. If a bell rang at the bottom, then everyone could jump in with low-risk certainty that the “bottom is in.”

But that’s only half the story. Let’s start by considering a number of things which are widely considered “impossible.” How about the notion that 4% of mortgage holders defaulting could trigger a collapse in the housing bubble?

Can 4% of Homeowners Sink the Entire Market? (February 21, 2007)

Oops, the “impossible” happened.

Here are a few other things currently considered “impossible” which seem not just likely but highly probable, if not guaranteed:

1. States will default on their bond, pension and entitlement obligations.

2. Pension funds will go broke.

3. Vast numbers of cities and counties will go bankrupt as the impossibility of raising taxes and meeting their soaring debt and pension obligations becomes obvious to all.

4. Commercial real estate will rival television as a “vast wasteland” of empty office towers, empty malls, empty strip malls, empty retail and empty warehouses.

So what’s the “other half of the story” in why the bells will toll at the bottom in stocks and housing? Simply this: nobody will want to buy stocks or houses even as the bells toll mournfully on, because the foundation beliefs which have propped up those markets for decades will be discredited and repudiated.

Those beliefs are:

1. That housing/real estate is the foundation of long-term wealth

2. That stocks/mutual funds beat other investment asset classes over the long haul.

What seems “impossible” now–that people will repudiate these core beliefs and turn in disgust from “the great opportunities in real estate and stocks”–will not only come to pass but it will mark a long “bottom” characterized by simmering anger at Wall Street and the real estate/lending industries for bankrupting everyone who “believed” that “housing never goes down,” “stocks are the best investment in the long run,” etc.

Right now our politics of experience is dominated by the stock market and housing. Every “news” website has stock market indices prominently displayed in their top-of-the-fold premium space, and every blip in the housing market is relentlessly hyped in blaring headlines–especially if it’s “good news” (foreclosures dipped 1%–the housing recovery is in full swing! Get in now! etc.)

Given that hype about the stock and housing markets is like the water we swim in, it seems “impossible” that a time will come when people either don’t care or the very sight of stocks and housing statistics will trigger disgust and revulsion.

This is what happens when the core belief in the goodness and light of housing and stocks is beaten out of a population by relentless, soul-destroying losses.

Here’s something else that’s currently considered “impossible” which seems highly probable to me, just based on history and human psychology: that stocks will trade at price-earnings ratios of 4 to 6, that dividends will exceed 10% because interest rates exceed 10%, and that houses will routinely sell for 10% or 20% of their bubble highs even in desirable areas. Houses in undesirable areas will have zero value except for scrap, and unfortunately most McMansions have little useable lumber or other materials, being largely constructed of wood chips, defective drywall, plastic piping, fake rock or brick, etc.

Stocks which sold for $40 a share today will trade for $1 or $2. Volume will be light because people will have given up playing the crooked shysters’ Wall Street games. The Dow Jones Industrial Average will trade around 1,000 (down from 10,600 today) and after years and years of shouting and screaming and hype about “the bargain of a lifetime” and “this is bottom, the market willl never go lower than 6,700 ever again in the entire history of humankind,” etc. etc. etc., people will have finally relinquished their core belief in the fairness, goodness and wonderfulness of stocks and housing as surefire pathways to wealth.

To those of you who consider these wild speculations, I recommend researching valuations in the depths of the Great Depression. Skyscrapers sold for the cost of their elevators. Nobody wanted houses or stocks because they were discredited and repudiated as stores of value and pathways to wealth.

At the bottom in stocks and housing, the bells will toll ceaselessly, but they will be ignored. People will only buy a house if it’s cheaper than renting and they have a large sum of disposable cash. The deep-seated notion that housing will appreciate and make the owner wealthy will have been discredited by reality. Nobody will buy for “appreciation” because that belief structure will have been destroyed. Housing will once again be shelter and an imperfect store of value. It will be valued for its “use-value” as shelter and the security of controlling a small parcel of land.

Wall Street will be gutted by one of two actions: people simply opted out, leaving the gangsters, fraudsters, crony “capitalists” and their politico enablers without money to play with/embezzle, or a great political uprising will have overwhelmed the bought-and-paid-for lackeys in Congress and a new political movement will have finally muzzled the ravenous blood-stained jackels of Wall Street, money-center banks and the socialist black holes of Fannie Mae, Freddie Mac, FHA, Ginnie Mae and all the other taxpayer-subsidized moneypits where wealth went to die.

Yes, it’s all “impossible,” just like the housing bubble popping was “impossible.” When you swim in a carefully manufactured politics of experience long enough, the most obscenely blatant hype and embezzlement become normalized. Only when you exit that poisoned water does all become illuminated and the “normal” discredited and repudiated.

There is more on this aspect of the politics of experience in Survival+: Structuring Prosperity for Yourself and the Nation and/or Survival+ The Primer.

Go to my main site at www.oftwominds.com/blog.html
for the full posts and archives.

More articles from Charles Hugh Smith….

Zero Hedge

It’s Déjà Voodoo Economics… All Over Again

By: Eric Sprott & David Franklin

If you’re of a certain age, chances are you remember exactly where you
were when JFK was  assassinated. Similarly, if you’re from Canada or
the United States and have an even remote interest  in hockey, it’s
highly likely that you remember exactly where you were when ‘Sid the
Kid’ scored the  winning overtime goal in the Olympic gold medal game.
These were both “significant events”, albeit  for different reasons. We
wonder, however, if any of you recall where you were on September
18th,  2008? Do you remember that day? We can’t seem to recall it
either, which is strange, because it was  one of the most important
days of the decade. October 7, 2008 is another day that should stick
out  in our memories, but we’re sure you don’t remember that day either
– and we’re in the same boat.  How is it, then, that we can’t recall
where we were or what we were doing on the two days the entire 
financial system almost collapsed?!? It boggles our mind. These dates
should have been emphasized  in every “review of the decade” written at
the end of 2009, but we’ve been hard pressed to find them  mentioned in
any mainstream publication. This is troubling to us, and makes us
wonder if people are  even aware of the incredible events that took
place on those fateful days only eighteen months ago.

The financial industry often prides itself on the hindsight principle.
We may not predict the future  with great accuracy, but when things
fall apart we’re very quick to explain why and how it happened  with
authoritative aplomb. “Hindsight is 20/20″, as they say. But is it
really? Despite our seemingly  thorough analysis of past failures, the
financial industry seems to have an uncanny ability to make  the same
mistakes over and over again. Perhaps this is due to the fact that we
don’t properly review  events passed. Our obsession with predicting
future results impels them away into oblivion. The fact  remains that a
cursory look back on the last decade reveals an apparent cycle of asset
bubbles that  all grew and burst before our eyes, with little effort
made to actually address the underlying causes  that made them
possible. We have written at length about the next asset bubble now
forming in  government debt and currency. Looking back on the last
decade from 2000 to 2009, are there any  lessons that can provide some
guidance for the next decade? And are there any lessons that can  be
gleaned from September 18th and October 7th, 2008, when we almost lost
the entire financial  system? We certainly hope there are.

The seeds of the financial mess we are currently experiencing began in
the mid-to-late nineties.  As we approached year 2000, the widespread
belief developed that new technology would rewrite  economic rules. The
euphoric years between 1995 and 2000 blew the first asset bubble of the
21st  century in the technology-heavy NASDAQ Index. Alan Greenspan
first uttered his now famous  “irrational exuberance” warning in
December 1996 when describing stock valuations at the time.¹
It  wasn’t until mid-1999, however, that the U.S. Federal Reserve
actually increased interest rates in an  attempt to quell the
overheated stock market. The Fed actually raised rates six times
between June  1999 and January 2000 in an attempt to cool an already
overheated economy. The dot-com euphoria  burst on March 10, 2000, when
the NASDAQ peaked at 5,132, representing more than double its  value
from only a year before. We were watching the bubble closely at the
time, and wrote on March  9th 2000, “In the next few months, if not
weeks, we anticipate that the Nasdaq will capitulate to market 
liquidity. Valuations are screaming at us! Excessive speculation is
running rampant! DON’T BE A  PART OF IT!!!” It was a timely
recommendation.

In many ways, the NASDAQ bubble was somewhat conventional in that it
was born out of over- enthusiasm for the prospects of new technology.
The fact that the Federal Reserve actually tried to  cool the bubble
down, however feebly, in the years before its peak, is really what
differentiates it from  the bubbles that followed. The NASDAQ collapse
is well understood now, ‘in hindsight’. This collapse  compelled Alan
Greenspan and the Federal Reserve to embark on the largest rate cuts in
US history  in an effort to soften its impact. The inability to face
the economic pain of the market crash ultimately  set the stage for the
second bubble of the decade, this time in housing. The key point to
emphasize  here is that the Federal Reserve lowered interest rates thirteen
times between January 3, 2001 and  June 25, 2003 in order to cushion
the economy. These rate cuts allowed for increasingly easy access  to
credit on a worldwide scale. It didn’t take long for the second bubble
to develop, and it wasn’t hard  to see the warning signs. Even The
Economist magazine noticed, stating on June 16, 2005, that “the 
worldwide rise in house prices is the biggest bubble in history.”²
Home prices rose at an annualized  rate of more than 11% from 2000 to
the peak on July 31, 2006 -more than doubling in that time  period.³
The financial sector became the US economy’s central economic driver,
generating up to  41% of all corporate profits and making it the
fastest growing sector of the economy.⁴ In July 2005, 
Greenspan described certain real estate markets as “frothy” and
recommended that the Federal  Reserve rein in lending standards.⁵
We wrote in response at the time that “(Alan Greenspan) should  be
careful what he wishes for… it may come true. It’s like throwing stones
in glass houses. It may  all end with the Federal Reserve having to
bail out the financial system, as it did with the savings  and loan
crisis a decade ago.” We now know what transpired in the years to
follow – we’ve all lived  through it, and it ended with the biggest
bailout in financial history.

So what’s the point, you ask? In hindsight, it’s very safe to argue that the Fed probably shouldn’t 
have lowered rates thirteen times between January 3, 2001 and June 25,
2003. It proved to be an  extremely damaging policy. Artificially low
rates created a lending mania of enormous proportions  which dragged
consumers along for a debt-fueled buying orgy. In our January 2008
commentary,  aptly entitled “Welcome to the 2008 Meltdown”, we opined
that “There are meltdowns occurring  everywhere: commercial real
estate… car loans…credit cards. It was all a massive Ponzi scheme 
sustained by overleverage. Because this has been one of the most
egregious bubbles ever, its impact  is likely to linger longer than
anyone expects. This is more than just a market failure. It’s a
systemic  meltdown.” And it was. But the meltdown happened so fast that
it never seemed to burn into our  collective memory. Everyone remembers
that we went into a severe recession in late 2008, but do  they know
the details of what actually transpired? A quick review is needed to
appreciate how close  we really came to a full shutdown.

It was the Lehman Brothers bankruptcy on Sept. 15th that set everything
in motion. Most market  participants will remember that date – Bank of
America bought Merrill Lynch the very same day, so  it was certainly
memorable. What many people fail to appreciate, however, is the mayhem
that took  place during the following days in the US money markets. The
day after Lehman’s collapse, the  Reserve Fund, one of the oldest and
most high profile US money market funds, began to hemorrhage  money as
investors redeemed in panic. Large institutional investors soon began
pulling money out  of other major US money market funds fearing heavy
losses from Lehman Brothers debt. Almost  $173 billion was pulled from
such funds over the next two days, threatening to collapse the entire 
US financial system.⁶
Two weeks later, on Sept. 29th, investors sent the Dow Jones plummeting
778  points, representing the largest single-day loss in the history of
the index. In hindsight, it was somewhat  of a delayed response,
because the real damage had by then been averted by the Treasury’s
blanket  guarantees on all money market funds.

The fact remains that on Thursday, September 18th, the US financial
system almost completely  collapsed. The details of that day remain
frustratingly murky. The imminence of complete disorder  seemed to
scare Congress into action, but we can only piece the story together
through random  anecdotes that have been partially revealed through
subsequent interviews. In what has been dubbed  ‘the Kanjorski meme’,
Congressman Paul Kanjorski recounts a meeting that was held between
Ben  Bernanke, Henry Paulson and certain members of Congress where the
conception of the “Troubled  Asset Relief Program” (TARP) supposedly
took place. To stem the flow of money out of US-based  money market
funds, Paulson had to provide an almost instant guarantee on all money
market funds  held within the US. Kanjorski recounts, “If they had not
done that, their estimation was that by 2pm that  afternoon (September
18th), $5.5 trillion would have been drawn out of the money market
system of  the United States, [which] would have collapsed the entire
economy of the United States, and within  24 hours the world economy
would have collapsed. We talked at that time about what would happen 
if that happened. It would have been the end of our economic system and
our political system as  we know it.”⁷
Further details of these meetings have been provided by Senator James
Inhofe, who  recounted that Paulson had warned of martial law and civil
unrest if the TARP bill failed.⁸ It is interesting  to note
that while Henry Paulson mentions several meetings that took place on
September 19th in his  book, the discussion of ‘imminent financial
collapse’ and ‘martial law’ was noticeably absent.

The official record of the events of September 18th, 2008 comes from a
research report issued by  the Joint Economic Committee. The reports
states, “On Thursday September 18, 2008, institutional  money managers
sought to redeem another $500 billion, but Secretary Paulson intervened
directly  with these managers to dissuade them from demanding
redemptions. Nevertheless, investors still  redeemed another $105
billion. If the federal government were not to act decisively to check
this  incipient panic, the results for the entire U.S. economy would be
disastrous.”⁹
Between the official  record and the statements by members of congress
and the senate, we can piece together an almost  system-wide collapse
that was potentially hours away.

The second fateful date to remember was October 7, 2008, when the UK
almost collapsed. Bank  of England Governor, Mervyn King, describes the
situation: “Two of our major banks which had had  difficulty in
obtaining funding could raise money only for one week then only for one
day, and then on  that Monday and Tuesday it was not possible even for
those two banks really to be confident they could  get to the end of
the day.”¹⁰
This was the justification given for the Bank of England to provide
secret loans of £61.6 billion to The Royal Bank of Scotland and HBOS to
maintain solvency.¹¹ Amazingly,  news of these loans was
never revealed until November 24, 2009, more than one year later.
Recalling  that fateful day, David Soanes, Managing Director of UBS
Bank, and part of the group assembled  to assist with the UK
government’s crisis response, stated, “We only really knew by probably
about  seven o’clock at night (October 7, 2008), that we, that everyone
was going to get through to the next  day.”¹² These
revelations raise new questions about the true scope of bailouts
undertaken by the  major governments at the time. Lord Myners, the UK
Financial Services Secretary, alluded to similar  covert banking
operations conducted by the European Central Bank and the US Federal
Reserve.13  We have no idea what he is referring to, but we would
certainly be interested to learn more.

This type of activity by the leaders of our financial system certainly
helps to explain why those two dates  are not more ingrained in our
collective memory – strong efforts were obviously made to hide their 
severity. The fact that these details were left out of Henry Paulson’s
memoirs strikes us as astounding.  It also seems incredible that the
best we can do to understand those fateful days is to cobble together 
comments made after the fact. It serves to be reminded that the events
of September and October  2008 had previously been considered
unthinkable, and we must never forget that the ‘unthinkable’ can 
happen again. A complete banking collapse would not be pleasant – and
it’s certainly not an experience  we would ever wish upon ourselves,
but it must be remembered that WE ALMOST WENT THERE.

So where does this leave us for the decade ahead? In bad fiscal shape.
It seems as if we’re just  making the same mistakes over again, and on
a far larger scale. We have passed the debt obligations  of the
financial system onto the governments. We have liquefied the system
beyond any rational  explanation, more than doubling the monetary base
since the collapse of Lehman Brothers. Social  Security, which was in
balance in year 2000, is now underfunded by $15 trillion dollars. Total
unfunded  obligations of the US Government are now $104 trillion. If we
add the $6 trillion of outstanding Fannie  Mae and Freddie Mac debt and
the $12 trillion of outstanding national debt, we arrive at a total US 
government debt obligation of $122 trillion. It’s a truly preposterous
amount of money that will never  be paid off in today’s dollars. As we
wrote in our October 2009 article entitled “Dead Government  Walking”,
the US Government is on a trajectory to default on their obligations,
and the same can  realistically be said for the UK and Japan. The
answer put forward by the US, UK and Japanese  governments? Quantitative Easing and 0% interest rates. Have they learned nothing from the past  decade?!

As our readers know, the flagship funds at Sprott have been managed
with the view that we entered a  long-term secular bear market in year
2000. We have never detracted from this view, and it remains in  place
today. We will not be bears forever, because the cycle will eventually
reverse, but a new secular  bull market will not, and cannot, emerge
until the world solves its debt problems. Our overarching  macro view
is strongly influenced by the Kondratieff Cycles. The ‘winter season’
began in the year  2000 and continues to this day. We have watched this
cycle unfold, and have noted the Kondratieff  Theory’s eery ability to
predict the debt defaults and banking collapses that we witnessed over
the  past two years. Our analysis suggests that we are only half way
through this Kondratieff winter, with  another approximate ten years
remaining. They will undoubtedly be an interesting ten years, and it 
should come as no surprise to our readers that gold is considered the
ultimate asset class to own  during the ‘winter cycle’. It has
certainly served us well up to now.

A review of the last decade would not be complete without our
predictions for the next ten years.  Rather than bore you with
prognostications, we would like to leave you with some titles we are 
considering for future editions of Markets at a Glance:

1. The Federal Reserve Board. Remarks by
Chairman Alan Greenspan (December 5, 1996). The Challenge of Central
Banking in a Democratic Society. Retrieved on March 10, 2009 from:
http://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm
2. The Economist. (July 16, 2005) In Come the Waves. Retrieved from:
http://www.economist.com/opinion/displaystory.cfm?story_id=4079027.
3. Bloomberg, S&P/Case –Shiller Composite – 20 Home Price Index Not Seasonally Adjusted
4. Johnson, Simon (May 2009) The Quiet Coup. The Atlantic. Retrieved on
March 10, 2010 from:

http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/

5. Andrews, Edmund (May 21, 2005) Greenspan is Concerned About
‘Froth’ in Housing. The New York Times. Retrieved on March 10, 2010
from:

http://www.nytimes.com/2005/05/21/business/21fed.html?_r=2&oref=slogin

6. Henriques, Diana (September 19, 2008) Treasury to Guarantee
Money Market Funds. The New York Times. Retrieved on March 10, 2010
from: http://www.nytimes.com/2008/09/20/business/20moneys.html?em
7. Kanjorski, Paul (January 28, 2009) Kanjorski: We came so close to
complete financial collapse. Pocono Record. Retrieved on March 10, 2010
from:

http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20090128/NEWS04/901280302

8. CNN iReport (November 20, 2008). Paulson Was Behind Bailout
Martial Law Threat. Retrieved on March 10, 2010 from:
http://www.ireport.com/docs/DOC-150837
9. United States Congress, Joint Economic Committee Research Report
#110-25 (September 2008) Financial Meltdown and Policy Response.
Retrieved on March 10,
2010 from: http://www.house.gov/jec/Research%20Reports/2008/rr110-25.pdf
10. BBC (September 24, 2009) Mervyn King and other key players reveal
true extent of financial crisis one year on . Retrieved on March 10,
2010 from:

http://www.bbc.co.uk/pressoffice/pressreleases/stories/2009/09_september/24/money.shtml

11. Conway, Edmund and Monaghan, Angela (November 24, 2009) Bank of
England tells of secret £62bn loan to save RBS and HBOS. Telegraph.
Retrieved on March 10, 2010 from:

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6646923/Bank-of-England-tells-of-secret62bn-loan-to-save-RBS-and-HBOS.html

12. BBC (September 24, 2009) Mervyn King and other key players
reveal true extent of financial crisis one year on. Retrieved on March
10, 2010 from:

http://www.bbc.co.uk/pressoffice/pressreleases/stories/2009/09_september/24/money.shtml

13. BBC (November 25, 2009) Alistair Darling defends secret loans
to RBS and HBOS. Retrieved on March 10, 2010 from:
http://news.bbc.co.uk/2/hi/business/8378087.stm

More articles from Zero Hedge….