Friday, April 30, 2010

How An Economy Grows

Fantastic book released this week from economist Peter Schiff titled "How An Economy Grows, And Why It Crashes."

The book is told in story form with pictures about three men that wash up on a deserted island and begin to build an economy.

It uses simple illustrations to explain some of the more complex terms in today's modern financial world.

It also begins with a great discussion on why students today are taught Keynesian economists instead of Austrian economics, and how this fundamental misunderstanding of economics is what has put us in the dire position we face today.

It also clearly shows that what we are doing today will only make the problem much worse and the ultimate financial crisis far greater.

Tuesday, April 27, 2010

Home Prices Falling

We just received the Case/Shiller monthly home price index and the numbers are horrifying.  The following chart shows the month over month price rise/fall over the past 7 months:


As you can see home prices peaked in September of last year and have been falling month over month since.  The following chart shows the rise and fall in line form:


This is price information as of February when the home buyer tax credit was in full force, and the government was 100% of the mortgage market.

We can only cringe when we think about what would happen if the home buyer tax credit were to end (ends this weekend) or if some of the 8 million plus in bank owned shadow inventory foreclosures were to come on the market. (banks announced this week this was coming)

Click here for a spreadsheet showing your individual city.

The double dip is here.  Brace yourself.




Monday, April 26, 2010

Video

Peter Schiff, who back in 2005 and 2006 tried to explain to CNBC the problem with a short term subprime housing loan, now tries to explain the danger with our short term government debt.

A good video to come back to in a few years.....