Archive for Uncategorized
Buy A House AFTER the Tax Credit Expires
Posted by: | Comments10.31.09
no this is not a trick or treat type of joke – I’m serious! If you’re in the market for real estate, wait until after the tax credit ends. Why? I will give you a few moments to think it through……………………………………………..
OK enough time? You got the reason? Here’s why…
According to Bloomberg, car sales dropped 23% after Cash for Clunkers expired. Cash for Clunkers and the $8,000 tax credit for new home buyers are both what my old business school professor would call “gimmicks.”
CFC was a much higher percentage of a car price than the home buyer credit is of a home price, so this should exacerbate the issue. In a nutshell, some people will frantically rush around to get a house before the credit expires – this will cause some people who might have waited a little longer, to buy sooner. This frenzy (highlighted on some TV news shows and which Congressmen even say it works only because it creates a ‘sense of urgency‘), will cause home prices to rise a bit along with the increased demand.
But what do you think will happen the day after the credit expires? yeah you got my drift – there will likely be a demand vacuum and I would hypothesize that you could get more than $8,000 off of an asking price AFTER the credit ends, when fewer buyers are around – especially if it’s offseason. It looks like they might expand the credit until June 2010 – just as the Spring home buying season ends – therefore, next summer might be a good target time to start making offers, unless we have the usually awful and slow winter (when I bought my home).
If you don’t want to be broke, don’t make broke people decisions – buy when others don’t. BE A CONTRARIAN! I hear so many sheep (people) say they will buy in the Spring – how dumb is that? How DUMB is that? I’ll give you an example. A few years back, a nice house listed in Medford, MA for $540,000. It did not sell as the market was growing weaker – all through the summer, fall, and winter it did not sell as the seller lowered the asking price all the way to $460,000! The seller took the listing off the market in February the following year, then relisted in late March and sold it for $540,000. Some fool could’ve had the house $80,000 cheaper but perhaps this buyer didn’t “go out looking” until Spring – a costly mistake.
Go against the grain – if you can find a great deal with the credit, great – but I would guess you’d find an even better deal after the credit expires. By the way, to be an ultimate contrarian, you may want to avoid real estate altogether. We may need another 15% to the downside to factor in future rate increases and further unemployment. Just a thought…
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Chris Grande
US Mint’s Lincoln Coin & Chronicles Set is Beautiful
Posted by: | Comments10.30.09
I just received in the mail my order for the US Mint’s Lincoln Coin & Chronicles set. I must say, it is absolutely beautifully done. The Set contains a silver dollar of Lincoln (first time I think he has been on a silver dollar? not sure – perhaps a coin afficionado can help out?). It also contains the 4 pennies minted this year chronicling Lincoln’s life.
The case is beautiful too – bound, classic look with the Gettysburg Address written 0n the inside – the last 45 words are also engraved on the back of the coin!
For those of you that love history and/or collect coins, this is a beauty. Apparently though, it sold out the next day:(. If you can find a dealer with a copy, buy it – it was $55 – and definitely worth it. Here is a link to the product of which they only made 50,000:
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Chris Grande
Bigger Government = Bigger Corruption
Posted by: | Comments7.31.09
Let’s get right to the action shall we? In an amusing but sad commentary about the recent string of new Jersey corruption arrests, the Wall Street Journal stated that new Jersey created 55,800 government jobs between 2000 and 2007, versus only 6,800 private sector jobs.
This mirrors what Marc Faber mentioned and I discussed last week that the government sector nationwide created over 2.4M jobs where the private sector lost over 5.5M jobs in the last decade – as I mentioned, the undynamic, lethargic gov’t sector is not where you want your jobs being created for growth. Government jobs drain tax dollars and don’t usually spur economic growth and higher tax revenue.
What the Wall Street Journal pointed out as an additional problem with bigger government is bigger corruption. With many layers of government, it is easier to hide illicit acts. And government leaders have power over certain things – permitting, zoning, taxes, environmental approvals, etc – that those in the private sector don’t have. If I had a choice, I would prefer corporate corruption because they have less of a chance of controlling the general public with influence over government processes (ideally). Government corruption is VERY dangerous.
under our current plans, I can see Obama trying to solve the unemployment problem by having government hire another 10m people. With new programs and such, there will be new opportunities for corruption by leaders running inefficient programs. How many of you think the Department of Homeland Security is efficient? ‘Nuff Said…
Chris Grande
P.S. FYI: the governor of New jersey is John Corzine, formerly of Government Sachs (I mean Goldman Sachs), another corrupt organization that got too many handouts during the Fall 2008 porkfest.
Maryland’s Progressive Taxers Get the Slap They Deserve
Posted by: | Comments7.17.09
In the “interesting but EXPECTED” twist department:
Maryland attempted last year to hit high earners with a surtax in order to balance their budget. According to a Wall Street Journal Article, The governor said that these people were “willing and able to pay their fair share.” (Love the fair share language, it’s so subjectively based to the perspective of the person speaking).
Apparently some weren’t so willing. Tax filers in that bracket (above $1M income) dropped from 3,000 to 2,000 last year. Read the article:
Perhaps the economy had an affect but I’m sure more than a few picked up and left for Florida. This is a taste for the US if all of these clowns in Congress start surtaxing Americans. We will see productive Americans leaving the US to set up shop elsewhere (Singapore, New Zealand, Eastern Europe, Hong Kong?). And overall tax revenues will decline further.
The lack of basic economic knowledge among Americans is the only reason ridiculous arguments such as raising taxes on productive people gets any merit. if people knew, or even if more people knew what went into growing and running a normal business (no ipo money types), they would understand that it makes sense to stimulate and attractive creative, enterprising people with low cost of capital and low taxes on the fruits of their labor – then they will be more willing to come here and create jobs.
For an interesting analysis of incentives, including immigration law follies, see my articles on A123 systems and its immigrant founder HERE.
Chris Grande
Monday Thoughts – Printing Press
Posted by: | Comments5.11.09
Observing the market this morning, I can see the strength of the Nasdaq index which is simply amazing. Europe had a weak showing in their markets and the US markets opened down – but it wasn’t more than 90 minutes that the “party index” (Nasdaq) went positive.
The Nasdaq tends to be the more pollyanna of the various market indices often showing strength even after other indices show weakness. The difference lies in the fact that the Nasdaq is full of tech stocks which I have discussed in the past as being permanently overhyped. In past Read More→
Finally, News of a Smart Banker
Posted by: | Comments4.9.09
Yes folks, it seems almost impossible, but here is an article about an actual SMART banker:
It was a pleasure to see how this fellow has acted and how he’s taking advantage of the other fools in his field to profit handsomely. As Jim Rogers always says, if you want to clean this system up, you need the incompetent” people to “fail” and have their assets taken over by the “competent people.”
The solution is so damn Read More→
Rogers, Faber, Fleckenstein, Schiff Weekly Recap
Posted by: | CommentsHey everyone – here are some educational links from a few of the economic pros that I listen to. You’ve seen them featured before on my site so you know they have good stuff to say.
Hope it helps you protect your money…
Chris Grande
Ron Paul Comments on the “Stimulus” Bill
Posted by: | CommentsAbout the only things getting stimulated are congressional spending impulses. Here’s Ron Paul with some common sense:
In this second video, Congressman Paul tells how, instead of the 5 days promised by President Obama Read More→
Just Enough Time to Convert to a Roth?
Posted by: | CommentsWith the economic turmoil, Obama’s plan to raise taxes is being put on the back burner as he focuses his team on “fixing” this economy (we’re going from the weird to the bizarre here). Read the story here:
For those of you who read me often, you know what I’m thinking – possibly enough of a reprieve to get past the 2010 elimination of the income cap for Roth IRA conversions. As I have stated before, with all these bailouts and pumping of cash in the economy, the taxpayer will have a nasty bill in the future. Those of you under 50 are particularly in trouble. And if you haven’t started a Roth yet (for those who qualify) you should seriously consider it. Talk with a tax advisor about this.
Chris Grande
Want Inflation Training Now? Shop at Whole Foods
Posted by: | CommentsWith all that is going on in the world, you may be wondering what higher inflation would mean to your weekly budget. There have been plenty of headlines about the higher cost of food, gas, oil, and most other things a family would require to live their everyday life. And certainly you have had personal experience at the gas pump and grocery store with higher prices.
But you are certainly wondering, what if we had explosive inflation? Many reputable economists have hinted at the outside possibility of this. Extreme inflation is called “hyperinflation” and the most often cited occurrence of this was Weimar Republic era of Germany (the period before WWII). Perhaps you have seen pictures of people with wheelbarrows full of worthless currency going to the store to buy bread. Nonetheless, if you want to experience a little taste of high inflation right now, then get some inflation training by shopping regularly at Whole Foods.
Whole Foods offers us a glimpse into the future of higher food costs. Why? Lets look at their website where they discuss their focus on locally-grown produce. Since they are buying locally grown, they are often paying for food that reflects the higher cost of organic fertilizers and more importantly, reflect AMERICAN WAGE LEVELS. This is the future of prices – as Jim Grant outlined in his latest Interest Rate Observer (subscription required), when we run out of cheap labor sources.
As the world requires more food (the Chinese want to eat more meat for example, and it requires much more corn to provide a calorie of beef than a calorie of straight corn), and we run out of people to grow it with cheap labor, food grows increasingly expensive. We can see this happening now. Look at this 2 year chart of corn. This is the result of worldwide increases in demand for livestock and food in general (and with an extra kicker from the ethanol boondoggle, I mean ethanol program).
As more and more third world countries develop, their laborers will demand higher and higher wages and eventually, food will no longer be cheap. Perhaps you may want to be prepared for this. However, since you can’t start your own farm (well most of you can’t), you might as well prepare to pay higher prices. For example, looking at two super markets in my hometown (Medford, MA), we can see that a sirloin special at Stop & Shop, a popular local grocer costs $6.99/lb but it costs $7.99 at Whole Foods (note these 2 circulars may expire by the time you read this – but also note that the $1 difference is 14%!).
Another example: I enjoy eating berries and from personal experience, the cost of the organic raspberries, blueberries, and blackberries at my local Whole Foods tends to be 50-100% higher than the non-organic berries at regular grocers.
So is the country ready for this inflation training? Apparently not – from the recent news about people fleeing from Whole Foods and choosing to go to Walmart instead, we can discern that people are looking to save money on their weekly expenses. This BusinessWeek article (which even mentions a woman ditching Costco and Bj’s for Walmart) especially hits the issue. is the US ready for higher inflation on gas and food? Can we just smile and pretend this will all go away? If the stampede of shoppers running from Whole Foods and other high end purveyors to Walmart is any indication , we are not ready for this inflation and pretending it will go away will not work.
Take action now to eliminate and/or lower your fixed costs. Read my other post HERE for further discussion on the topic of lowering costs. I may sound like a loony bunker digger, but understand, this problem is real and the only way to fight it, is to take action ourselves – no one is going to bail you out. Good luck out there…
Editor’s note: report on “hyperinflation” from Shadowstats.com here
Chris Grande
5.15.08
Articles discussing the price of food:
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They’re Moving South
Posted by: | CommentsA quick note – check out this short article on a survey of renters:
It seems that most renters plan to move next year and mostly because of job changes or to find cheaper rent. Notice also that the article lists the 10 best cities for renters, according to Forbes. It looks like northern cities may be in trouble…
Chris Grande
Global Infrastructure – Money That Needs to Be Spent
Posted by: | CommentsOne of the most exciting trends in economics is the development of emerging economies. With this development, we are seeing a huge build out of electrical infrastructure, water pipes, roads, sewers, and other enormous projects. The most visible of this is in
Many people know about or have at least heard about some of the major projects in China – for example, the Three Gorges Dam which will produce much needed electricity for China’s growth – but perhaps most people are unfamiliar with the development in Brazil, Vietnam, Africa, Russia, and other interesting places.
For a very interesting rundown on developments, read this conference call transcript from the CEO and Director of Research at US Global Advisors, an investment management firm:
Source: www.seekingalpha.com
And for more background, check out the Wikipedia page for the Three Gorges Dam:
http://en.wikipedia.org/wiki/Three_Gorges_Dam
According to this, the dam will provide 22,500 Megawatts of electricity, enough to power 18.5M US homes – making this the largest capacity of any hydro-electric project in the world, according to Wikipedia.
According to the executives of US Advisors on that conference call, the
Therefore, if you like to research economic investment trends, try the global infrastructure theme- you might find it quite interesting and appreciate how it is driving much of what goes on in global trade today.
Chris Grande
Unemployment?
Posted by: | CommentsA quick blurb that I will probably expand upon later – Yahoo Finance has an article posted today talking about boomers skipping retirement to ‘chase their dreams.’ Basically, starting the business they always wanted to after they retire.
It bothers me that we never talk about entrepreneurs and start ups when we discuss the jobs report – it is my opinion that as more and more Americans graduate from college, there will be less interest in factory work – I don’t know about you, but NONE of my college educated friends ever mentioned that turning screws at a GM factory was their dream job – So the fact that we focus on how many ’screw turner’ jobs we create each month (the all important manufacturing hiring data) and completely ignore how many new businesses start, or how many people file a schedule C (self employed income) or file for incorporation for the first time, really bothers me. Just a thought – by the way, if you have a business idea, start it!
Chris