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Earl: You couldn't be more right on.
I have seen this power fiasco develop for over a year now. I have
seen the pressure cooker build up steam and it is now JUST STARTING to
blow it's top. With a government in California that borderlines on
socialism/enviornmentalism, it has been very difficult for the power
industry to develop. Private commerce has to pay too much in fees and
they are heavily restricted by regulations. On the other hand PGE and
Edison are no angels either and have colluded with the powers that be
to cause a crisis (along with other oil/gas power brokers) in order to
rectify the situation. Grey Davis has his head in the sand.
Attempting to nationlize the power industry is a big step in the wrong
direction. Government will never solve any problems here (or
anywhere).
Industry in California will bear the brunt of the effects. They can't
turn off or conserve power. They have to run thir productions lines.
In a few months the accountants will be screaming to control costs
and more layoffs will be added to the already burgening unemployment
rate left by the many dot coms. Just as there was a big exodus from
California in the late 80's, I think by fall/winter we might be seeing
another wave of the same.
Maybe now might be a good time to invest in Real Estate in southern
Oregon, western Nevada, and Arizona. Not to mention Austin, TX.
Bob Perry
San Jose, CA
--- In realtraders@xxxx, "Earl Adamy" <eadamy@xxxx> wrote:
> I agree with much of what you say, however there was a very well
written
> guest column on the WSJ editorial page a couple of weeks ago,
setting forth
> the case that Californians expect social, environmental, and
economic
> perfection without any trade-offs so it seems natural that costs
there would
> lead the rest of the country. It rang a bell when I read it, however
I felt
> that much of it was applicable to urbanized areas in the rest of the
country
> as well - remember those red and blue election maps? What I do know
(living
> in the Southwest), is that because Californians don't want energy
facilities
> built locally, California is draining off energy supplies (and water
as
> well) from surrounding areas thus driving scarcity and costs for the
rest of
> us. Unfortunately, too many Californians are now leaving their
idealized
> world and moving in with those of us who eschew urbanized America
thereby
> driving up housing costs along with water and energy consumption.
>
> As for the huge annual hikes in my medical insurance premiums, I
think this
> is a national problem which is not going to go away any time soon.
In short,
> the medical system is running on the ideal of perfection in medical
> treatment without accompanying self-responsibility for proper eating
and
> exercise because the later requires self-denial - a "no no" for my
baby
> boomer generation and those generations which have followed.
Further,
> consider that while tobacco has been identified as a major health
risk, no
> one is yet going after the soda companies which seem to have fueled
near
> epidemic numbers of diabetics.
>
> So from a financial point of view, investors have a real conundrum
... short
> term interest bearing instruments could easily go to near zero rates
when
> the credit bubble is gored -or- long term bonds will continue to
tank if the
> bubble persists and inflation rises. Personally, I think historians
will
> recognize Mr. Greenspan for what he has accomplished - trading off
the long
> term economic health of the country for short term "perfection".
>
> Earl
>
> ----- Original Message -----
> From: "Ira Tunik" <irat@xxxx>
> To: <realtraders@xxxx>
> Sent: Sunday, April 22, 2001 10:14 AM
> Subject: Re: [RT] Another Panic Cut Sets Stage for Rate Hikes Next
Year
>
>
> > They say (the talking heads) that they (the Fed) will continue to
lower
> > rates. Greenspan's thesis has been to stop inflation. The Fed
numbers
> say
> > there is no inflation. Here are some numbers that might interest
you on
> the
> > inflation front. Is this in California Only.
> >
> > Gasoline is over $2.00 a gallon in many places. What happened to
the
> outrage
> > when it crossed $1.00 per gallon? Utility bills have doubled and
in some
> > cases tripled and they are projected to double again. Of course
no one
> > cooks, cleans, turns on their lights, heats or air conditions
their homes.
> > People in California don't have stoves, refrigerators, ovens,
dishwashers,
> > micro waves, furnaces, hot water heaters and air conditioners that
use
> > power. The products manufactured and agriculture produced in
California
> will
> > effect everyone in the country sooner or later. Health care
premiums up
> 20%
> > again. Auto prices are higher. Soon the oil price hikes will
effect the
> cost
> > of food, manufactured goods and about everything else we use.
Gee, soy
> bean
> > prices are the low end, that sure impacts my cost of living.
> >
> > Last year was a bear market and boy did it effect the cost of
housing in
> this
> > state. some facts. A record number of California homes sold for
$1
> million
> > or more last year. That is up over 50% from 1999, the previous
record
> high.
> >
> > some highlights
> > Total $1 million + homes sold 11,364
> > Number newly built: 1,343
> > Most expensive: $22 million (10,280 Sq. ft. home in Atherton)
> > Over $10 million: 34
> > $5 to $10 million range: 164
> > Condos: 528
> > Median price per Square Foot: $492 (up 16.2% from last year)
> > Median down payment: $400,000
> > Percent of buyers paying cash: about 24%
> > median size : 2,961 Sq. Ft.
> > Largest: 22,007 Sq. Ft. ( Coronado, $5.5 million)
> > Highest million-dollar-to-overall-sales ratio: Atherton, Rancho
Santa Fe.
> >
> > Even the billionaires are paying more for their new homes.
Housing costs
> in
> > the wine country are up 50% in the last couple of years. I have
no idea
> what
> > is happening in the rest of the country, but I will tell you this,
> California
> > has been the leader of trends for years and if that remains true,
look out
> > ahead the rest of the country. Ira.
> > Me wrote:
> >
> > > Digging a deeper hole? I think so. Lower interets rates aren't
the
> > > solution to all problems (consider Japan). What will happen
when we
> > > find that lower rates don't fix the problems?
> > >
> > > JW
> > >
> > > --------------------------------
> > > http://www.thestreet.com/p/comment/detox/1396002.html
> > >
> > > Another Panic Cut Sets Stage for Rate Hikes Next Year
> > > By Peter Eavis
> > > Senior Columnist
> > > 4/18/01 3:06 PM ET
> > >
> > >
> > > Go ahead, fight the Fed. Wednesday's half-point cut in the
federal
> > > funds target rate makes Alan Greenspan an even easier opponent.
> > >
> > > A cold, hard look at Greenspan's conduct of monetary policy
shows
> > > that the chairman of the Board of Governors of the Federal
Reserve is
> > > far from infallible. In fact, since he took over as Fed chief in
> > > August 1987, Greenspan has spent much of his time cleaning up
messes
> > > that he himself is responsible for.
> > >
> > > The next mess is in the making, and it'll be even bigger after
> > > Monday's rate reduction. If recent history is any guide,
inflation,
> > > already close to its five-year high, will rise to unstomachable
> > > levels within the next 12 months as a result of the Fed's
current
> > > cheap-money policies. Detox's prediction: Greenspan will be
hiking
> > > rates in 2002, if not before. The market, when it gets wind that
> > > tighter money is on the way, will tumble. And investors who
chose not
> > > to see Easy Al as a God will be rewarded -- richly.
> > >
> > > Deep Breaths
> > > Evidence of the next leg up in price inflation can be seen
> > > everywhere. Money supply figures are soaring, which, by
definition,
> > > means banks are churning out new loans. The mortgage market is
on
> > > fire. Consumer debt is growing at a rip-roaring pace, even
though
> > > people's debt burdens are at record levels. Hundreds of stocks
still
> > > trade at absurd bubble-type valuations, underlining how much hot
> > > money still exists.
> > >
> > > For some unfathomable reason, most market mavens think inflation
> > > automatically ceases to become an issue when the economy slows,
as it
> > > has in the U.S. The real lesson is that unwise attempts to boost
> > > flagging economies or collapsing financial markets -- something
the
> > > Fed is guilty of now -- have been a chief cause of inflation
through
> > > the ages.
> > >
> > > Now, the Fed is redoubling efforts to reflate the bubble
sectors.
> > > Take the capital goods industries, particularly the tech sector,
> > > which have been whacked over the past six months. In the release
that
> > > accompanied Wednesday's cut, the Fed showed its deep concern for
> > > capital investment, saying that it "has continued to soften,"
adding
> > > that the "persistent erosion in current and expected
profitability,
> > > in combination with rising uncertainty about the business
outlook,
> > > seems poised to dampen capital spending going forward."
> > >
> > > And the stock market, even though it has been rising recently,
also
> > > has the Fed worried. In the release, the central bank frets
about the
> > > effect that "reductions in equity wealth" will have on
consumption.
> > > Looking at that, it's hard not to conclude that the Fed's
Wednesday
> > > cut is also meant to help the market go back up.
> > >
> > > Hans Tietmeyer, the ex-head of Germany's Bundesbank, the only
major
> > > central bank with a record to be proud of in the postwar period,
was
> > > quoted as saying recently: "The U.S. central bank is dangerously
> > > close to becoming a prisoner of the financial markets." After
> > > Wednesday's Fed move, he'll surely be removing the words
"dangerously
> > > close to."
> > >
> > > Like all superaccommodative central banks, the Fed hates to see
the
> > > economy adjust to get rid of unhealthy areas. The fact is, the
> > > capital goods industry, like the Nasdaq, was in a state of gross
> > > excess. In 2000, private sector investment accounted for 19% of
the
> > > economy, the highest level in the series, which started in 1929.
It
> > > only got to that level through a massive boom in IT sales.
Capital
> > > investment, dominated by tech buying, accounted for 25% of U.S.
> > > growth in the second part of the '90s, according to Dick Berner,
> > > economist with Morgan Stanley. Now, there's a huge glut in tech
gear,
> > > something dramatically underlined by Cisco's (CSCO:Nasdaq - news
-
> > > boards) inventory writedown this week. Clearly, John Chambers'
recent
> > > squeals to the Fed to cut rates to help his business didn't fall
on
> > > deaf ears.
> > >
> > > Past as Prologue
> > > So, what next? Greenspan is repeating past dysfunctional
behavior. In
> > > 1987, he slashed rates to bail out an overheated stock market,
only
> > > to raise them aggressively the following two years as inflation
got
> > > out of control. In 1994, he ratcheted up the cost of money,
> > > contributing to Mexico's currency collapse. The Treasury bailed
out
> > > Mexico -- a move the Fed aided with lower rates -- and the
emerging
> > > markets bubble continued to balloon until the Asian crises of
1997-
> > > 1998.
> > >
> > > In 1998, Greenspan brought down rates rapidly to ensure that
> > > liquidity was pumped back into the financial markets after the
near
> > > collapse of Long Term Capital Management. Money supply soared.
> > > Greenspan primed the pump some more ahead of the Y2K changeover,
and,
> > > almost like clockwork, inflation was moving up quickly by early
2000.
> > > That led to the rate hikes of last year. And it was these that
caused
> > > the collapse in the Nasdaq and capital spending. A bold pattern
> > > emerges: panic-cut-hike-panic-cut-hike-panic-cut-hike. Whatever
> > > medical term one might use to label this type of behavior, it's
> > > clearly no way to run a central bank.
> > >
> > > Where are the excesses now? Well, the stock market is back in
> > > fashion. A no-hoper like Yahoo! (YHOO:Nasdaq - news - boards) is
> > > trading at a cool 500 times expected 2001 earnings, for example.
> > >
> > > Heating Up
> > > But look at what's happening in the consumer and housing debt
> > > markets -- it belies belief. Consumer debt is growing at over
10%.
> > > This is happening at a time when delinquency data show that
consumers
> > > should be cutting back on their debt. In the fourth quarter of
2000,
> > > consumer debt payments as a percentage of disposable income grew
to
> > > 14.3% from 14.1% in the previous quarter -- levels that haven't
been
> > > seen since 1986. Meanwhile, Moody's figures show that an
increasing
> > > number of credit card loans are going bad. In February, the
write-off
> > > rate for credit card loans was 5.8%, while delinquencies were
5.26%.
> > > Both numbers are well above year-earlier periods.
> > >
> > > The OFHEO House Price Index was up 8.13% in the last quarter of
2000,
> > > the highest increase since 1987. Government-sponsored entities
that
> > > buy mortgages like Fannie Mae (FNM:NYSE - news - boards) and
Freddie
> > > Mac (FRE:NYSE - news - boards) are stuffing their balance sheets
with
> > > new loans. Fannie Mae's mortgage portfolio totaled $641 billion
in
> > > March, up 19% from March 2000. Fannie's portfolio grew at a 23%
rate
> > > in the first three months of the year, up from the 16% rate for
all
> > > of 2000. Despite the growth, mortgage delinquencies totaled
4.54% of
> > > loans in the fourth quarter of 2000, the highest level in eight
> > > years, according to the Mortgage Bankers Association. More loans
> > > going bad even as loan totals soar -- this is a classic sign
that the
> > > credit bubble is entering very dangerous territory.
> > >
> > > With all these loans being advanced, is it any wonder that
prices are
> > > still buoyant? Inflation, as measured by the Cleveland Fed's
index,
> > > designed to strip out the "noise" in price data, measured 4.2%
in
> > > February and 4% in March. The last time it was at these levels
was in
> > > January 1996. Price indexes could go even higher when recent
jumps in
> > > gasoline prices are added in. The Fed may know this and might've
> > > wanted to get a rate cut in before the next inflation releases
> > > undercut the case for one.
> > >
> > > However, given the strength of the above indicators -- and the
fact
> > > that other recent economic numbers have shown surprising
strength,
> > > like Tuesday's industrial production rise of 0.4% -- some
independent-
> > > minded commentators are deducing that the reason for the inter-
> > > meeting cut was not to address softness in the economy at all.
Sean
> > > Corrigan, analyst at Capital Insight, of Rochester, England,
wonders
> > > whether the reduction could be to address a systemic problem we
don't
> > > know about yet. Could a bank or a large hedge fund be in trouble
as a
> > > result of a bad bet or extensive exposure to a large bankruptcy,
he
> > > asks? Perhaps Argentina is about to come off its dollar peg and
> > > devalue and the Fed is softening up the market for that.
> > >
> > > But don't cry for Argentina. Shed your tears for Easy Al, and
all
> > > those lemmings who believe in him.
> > >
> > >
---------------------------------------------------------------------
> > >
> > > Know any companies that the market may be misvaluing? Detox
would
> > > like to hear about them. Please send all feedback to
> > > peavis@xxxx
> > >
> > > To unsubscribe from this group, send an email to:
> > > realtraders-unsubscribe@xxxx
> > >
> > >
> > >
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> >
> >
> > To unsubscribe from this group, send an email to:
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> >
> >
> >
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> >
> >
> >
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