Another item of intrigue from my road trip: in the middle of the desert there were billboards advertising a reward for information regarding telephone-line thieves.

No, people aren’t stealing phone service; they’re stealing the actual phone line - thousands of feet of copper worth thousands of dollars these days.

In stark contrast to the tame, government reported inflation numbers, copper prices are up 500% in the past 5 years or so. Dr. Copper, for one, is calling bulls%!# and spawning an entire new class of inflation vigilantes.

The powers that be telling us that there is no inflation ought to ask the loved ones of the people buried at Cooke Walden Capital Gardens why their eternal rest ain’t so peaceful lately.
LIV

Another item of intrigue from my road trip: in the middle of the desert there were billboards advertising a reward for information regarding telephone-line thieves.

No, people aren’t stealing phone service; they’re stealing the actual phone line - thousands of feet of copper worth thousands of dollars these days.

In stark contrast to the tame, government reported inflation numbers, copper prices are up 500% in the past 5 years or so. Dr. Copper, for one, is calling bulls%!# and spawning an entire new class of inflation vigilantes.

The powers that be telling us that there is no inflation ought to ask the loved ones of the people buried at Cooke Walden Capital Gardens why their eternal rest ain’t so peaceful lately.
LIV

I am consistently amazed by the power of the human brain, mainly as it relates to psychology. The brain is powerful enough to cause people to hallucinate, to create an unreal reality, and, even more impressive to me, to completely blind people to the reality right before their eyes.

I just returned from a 10-day road trip across the southwest. Nearly everyone I talked to acknowledged the weakness in real estate with one caveat: the high-end is insulated from the problems plaguing the low-end.

I picked up a real estate rag in San Clemente while I was camping down there. On a single page there were half-a-dozen, bank-approved short sales. The process of people upgrading to larger, more expensive homes is dead. The banks are the only ones moving up the real estate food chain right now (and not by choice – they’d much prefer their loans to perform).

Everyone and their mom should also know by now that the market for jumbo loans is completely non-existant. For mortgages over the conforming limit of $417k there are no buyers. Only those paying cash can afford to purchase multi-million-dollar properties right now. You simply can’t remove demand (buyers who need financing) without a severe impact on the market (high-end real estate).

To believe that the worst foreclosure epidemic that perhaps the country has ever seen combined with a frozen mortgage market will leave high-end real estate untouched is the height of lunacy. Maybe not lunacy. Maybe – just maybe – it’s an extension of the denial that led people to believe there was no real estate bubble in the first place.

Still, the power of the sustained disbelief is truly amazing.
LIV

I am consistently amazed by the power of the human brain, mainly as it relates to psychology. The brain is powerful enough to cause people to hallucinate, to create an unreal reality, and, even more impressive to me, to completely blind people to the reality right before their eyes.

I just returned from a 10-day road trip across the southwest. Nearly everyone I talked to acknowledged the weakness in real estate with one caveat: the high-end is insulated from the problems plaguing the low-end.

I picked up a real estate rag in San Clemente while I was camping down there. On a single page there were half-a-dozen, bank-approved short sales. The process of people upgrading to larger, more expensive homes is dead. The banks are the only ones moving up the real estate food chain right now (and not by choice – they’d much prefer their loans to perform).

Everyone and their mom should also know by now that the market for jumbo loans is completely non-existant. For mortgages over the conforming limit of $417k there are no buyers. Only those paying cash can afford to purchase multi-million-dollar properties right now. You simply can’t remove demand (buyers who need financing) without a severe impact on the market (high-end real estate).

To believe that the worst foreclosure epidemic that perhaps the country has ever seen combined with a frozen mortgage market will leave high-end real estate untouched is the height of lunacy. Maybe not lunacy. Maybe – just maybe – it’s an extension of the denial that led people to believe there was no real estate bubble in the first place.

Still, the power of the sustained disbelief is truly amazing.
LIV

(Click chart for a larger view)
LIV

(Click chart for a larger view)
LIV

The other day, I was on the road listening to Satellite radio when back-to-back real estate ads came on touting their “can’t lose” approaches to flipping real estate. At the time, I was following a new Land Rover with a license plate that read, “BEND RE.”

Later that night I was flipping channels and came across Flip This House on A&E. A couple of channels later I ran past Flip That House on TLC. I had to go back and forth between the two to make sure they were actually two different shows. (According to the Washington Post, at the peak there were roughly 20 of these shows on the air.)

Saturday morning I wake to find in the Real Estate Advertising Section of the Bulletin one of the homes for sale on Mirror Pond has quietly lowered their ask price a cool million. Must be tough to compete with the other 182 million-dollar-plus homes for sale out there…

…Just a few anecdotes from the largest financial bubble the world has ever seen.
LIV

The other day, I was on the road listening to Satellite radio when back-to-back real estate ads came on touting their “can’t lose” approaches to flipping real estate. At the time, I was following a new Land Rover with a license plate that read, “BEND RE.”

Later that night I was flipping channels and came across Flip This House on A&E. A couple of channels later I ran past Flip That House on TLC. I had to go back and forth between the two to make sure they were actually two different shows. (According to the Washington Post, at the peak there were roughly 20 of these shows on the air.)

Saturday morning I wake to find in the Real Estate Advertising Section of the Bulletin one of the homes for sale on Mirror Pond has quietly lowered their ask price a cool million. Must be tough to compete with the other 182 million-dollar-plus homes for sale out there…

…Just a few anecdotes from the largest financial bubble the world has ever seen.
LIV