NationStates Jolt Archive

The Dow Jones industrial average will likely break 12,000 tomorrow or later this week, which will be an all-time high.

How will you greet the news?

With a heartfelt 'meh'.

How will you greet the news?
With cautious indifference.

How will you greet the news?

With blunt indifference.

I blame Bush!!

Even though I don't invest, it's certainly good news. Not quite sure if it's prostitute and cocaine level good, but it's definitely close.

With a heartfelt 'meh'.

.

I blame Bush!!

Um... you're aware that in this case, that's praise, right?

The Dow Jones industrial average will likely break 12,000 tomorrow or later this week, which will be an all-time high.

How will you greet the news?

How great for the rich people who have money to invest to begin with.

And you know what's awesome? The drooling, idiotic liberal sheep (as contrasted to the drooling, idiotic conservative sheep, of which there are plenty as well) still think that America's economy is in the toilet. You have no idea how many people I've had to give the "well, actually" speech to recently.

And you know what's awesome? The drooling, idiotic liberal sheep (as contrasted to the drooling, idiotic conservative sheep, of which there are plenty as well) still think that America's economy is in the toilet. You have no idea how many people I've had to give the "well, actually" speech to recently.
The economy that liberals care about isn't doing well, but then, there's never been a time in human history when it was.

Yeah, but fucking worthless Lucent isn't going anywhere, as usual.

*grumbles on about his major, major gripe with his parents*

Yeah, but fucking worthless Lucent isn't going anywhere, as usual.

*grumbles on about his major, major gripe with his parents*
I have to admit, I laughed at this post, because it so beautifully illustrates the whole problem with the strong economy/weak economy dichotomy. This economy is strong, for some, and weak for others, and the Dow is an especially bad indicator of the health of the economy as a whole.

As for me, since I'm relatively new to the retirement account part of the economy, I'd actually be in better shape if the Dow stayed low, because that means I can buy more shares. I'd want it to be zooming upward in about 30 years, right before I retire. Current retirees are loving the rise in the stock market, because it benefits them.

This is all well and good, but serious problems loom on the horizon.

Will we still have a dow of 12000 when exotic loans come due?

The economy that liberals care about isn't doing well, but then, there's never been a time in human history when it was.

***DING*** WE HAVE A WINNER!

This is all well and good, but serious problems loom on the horizon.

Will we still have a dow of 12000 when exotic loans come due?

I'd bet on it, because investors are either already moving out of real estate or are gone already and are back in the stock market, from what I understand--thus the recent rise.

How great for the rich people who have money to invest to begin with.

I started investing very simply: paying down the mortgage and all debts as quickly as possible.

Heck, even if you start putting $50 a paycheck into an ING bank account you'll be ahead of inflation and have a good start.

I'd bet on it, because investors are either already moving out of real estate or are gone already and are back in the stock market, from what I understand--thus the recent rise.

It isnt just real estate. If people don't have money to spend, that hurts the economy.

Celebrate while you still can, it's going to plummet rather spectacularly in a while.

I reckon I read that the Dow MEANS ABSOLUTELY NOTHING WHATSOEVER...and you should consult the S&P 500 for a more accurate market reading. Check Newsweek of this week or last week or within the past month.

It isnt just real estate. If people don't have money to spend, that hurts the economy.

Yeah, but it doesn't always hit corporate profits as hard. When people are desperate, they'll work harder for less money, and labor is the primary cost of any business. Cut that, and you often raise profits, and that's what the Dow is the best indicator of--corporate profit.

Celebrate while you still can, it's going to plummet rather spectacularly in a while.

May the flying spaghetti monster have mercy upon my soul for thinking much less writing this but I swear to Buddha as I read your post, the voice I heard was that of Eeyore from the Winnie the Pooh cartoons. Sorry.

The Dow Jones industrial average will likely break 12,000 tomorrow or later this week, which will be an all-time high.

How will you greet the news?

Yay! I just made more money! yay! :D

Gee, perhaps I'll have money to pay for college!

Gee, perhaps I'll have money to pay for college!

And like I said before, I'll make even more money! Yay for Bank Interest rates! Yay!

May the flying spaghetti monster have mercy upon my soul for thinking much less writing this but I swear to Buddha as I read your post, the voice I heard was that of Eeyore from the Winnie the Pooh cartoons. Sorry.

I never knew Eeyore liked the Austrian School of Economics... :D

I'd bet on it, because investors are either already moving out of real estate or are gone already and are back in the stock market, from what I understand--thus the recent rise.

That's how the market works. Generally, real estate, commodities, and stocks all move in cyclical patterns; generally, two of the markets are booming while the other is lagging (like how real estate and commodities boomed in 2001-2005 or stocks+real estate from 1995-2000) because of the cycle of investment.

No matter though. A healthy economy produces additional capital to reinvest which leads to more gains and then when the economy slows, the market adjusts accordingly. And people making money is always a good thing (if it's legal, of course). Ideally, the strong stock market and nonresidential construction combined with falling commodities prices will give the economy a life going in to 2007, but who knows? Retail sales and jobless claims were strong, and there have been some major revisions to job growth that explains the rise in job market confidence. Also, the slowing inflation pressures mean real instead of nominal job growth, and that is also a good thing.

Hopefully, this is the start of another strong bull market; my simulated portfolio definitely appreciated the $3,000 I've made over the past week or so, and hopefully it will translate in to even bigger gains.

I reckon I read that the Dow MEANS ABSOLUTELY NOTHING WHATSOEVER...and you should consult the S&P 500 for a more accurate market reading. Check Newsweek of this week or last week or within the past month.

Correct. However, the S&P is making six-year highs and is only 10% off its all-time high...it's moving along with the Dow and Nasdaq. It's a pretty clear sign that stocks are moving up; how long it will last until a pullback is a matter of speculation, but suffice to say the market is doing well right now.

And like I said before, I'll make even more money! Yay for Bank Interest rates! Yay!

What "Bank Interest rate" are you talking about?

What "Bank Interest rate" are you talking about?

My guess is they mean the end of the Federal Reserve's rate hiking campaign; last time they ended a tightening cycle, in 1994, stocks proceeded to have one of their strongest bull markets in history and the indices rose an average of 20-30% per year from 1995-1999.

The Nasdaq exploded, but stock market bubbles tend to have a mind of their own. Still, I wouldn't mind seeing the IXIC rise 80% like it did in 1999 or have Qualcomm soar to $1,000/share again....

I reckon I read that the Dow MEANS ABSOLUTELY NOTHING WHATSOEVER...and you should consult the S&P 500 for a more accurate market reading. Check Newsweek of this week or last week or within the past month.

No stock market is a truly accurate indicator of how the economy is doing. Keep in mind that stocks don't even necessarily represent how a company fares, par example; GM is up 56% YTD.

If you want to know how the economy is doing, look at basic economic indicators, such as: unemployment, core CPI inflation, consumption expenditure, real GDP, New construction (housing), and the central bank's overnight lending rate, to name but a few.

Gather together those as well as many others, enroll in a few stats and economics courses at your local university, compile it all up, make a prediction, and call yourself an economist. Or, just realize that if you read newsweek to tell you which stock-market to look at to find out how the economy is doing, you're better off being silent.


Preferably the latter.

-snip-

Absolutely correct. There's no doubt that the economy and stock market correlate, but sometimes they don't agree on certain things; if the economy is too strong, it's great for individuals but bad for stocks and if it's too weak, it can be bad for stocks and individuals.

That's why the "Goldilocks scenario" of moderate growth is so important; right now, we're pretty much in the sweet spot for the stock market-economy juncture, especially when you consider the falling commodity prices that are helping to dampen inflation.

However, there are some signs that the economy is accelerating again, so we'll have to see how that plays out going in to the next few quarters.

My guess is they mean the end of the Federal Reserve's rate hiking campaign; last time they ended a tightening cycle, in 1994, stocks proceeded to have one of their strongest bull markets in history and the indices rose an average of 20-30% per year from 1995-1999.

The Nasdaq exploded, but stock market bubbles tend to have a mind of their own. Still, I wouldn't mind seeing the IXIC rise 80% like it did in 1999 or have Qualcomm soar to $1,000/share again....

Nah, I don't think he's that deep.

Nah, I don't think he's that deep.

You never know...:confused:

Wow! Just like in the movies! Just in the nick of time before an election!
Holy trade fraud Batman!!!

I'll remember that the Dow Jones means absolutely piss, and I'll also remember that it was around 11,400 about five years ago.

Yeah, but it doesn't always hit corporate profits as hard. When people are desperate, they'll work harder for less money, and labor is the primary cost of any business. Cut that, and you often raise profits, and that's what the Dow is the best indicator of--corporate profit.

If people have to work harder for less money, prices will need to fall for things to be sold.

That is the first step towards a deflationary spiral, which is extremely bad news.

Meh. I don't invest.

I'll just look back to the past three times that the stock market did extremely well and hope I remember where I hid my kruegerrands.

I blame Bush!!

No, no, haven't you been listening? Everything that happened in the last five years has been Clinton's fault. The White House and the RNC says so.

Meh. I don't invest.
Me either, not really. I have a retirement account as a benefit with my job, a 403(b) where the state puts in just over 10% of my yearly income and I match it, but it's not like I'm picking stocks or anything.

Me either, not really. I have a retirement account as a benefit with my job, a 403(b) where the state puts in just over 10% of my yearly income and I match it, but it's not like I'm picking stocks or anything.

You should index your stocks. That way, even if a sector of the economy goes sour (blue chip, housing), you'll still gain money.

You should index your stocks. That way, even if a sector of the economy goes sour (blue chip, housing), you'll still gain money.
ING handles it for me. I'm in a variety of funds, pretty aggressive since I'm just starting out.

Um... you're aware that in this case, that's praise, right?
How would it be praise? :p

You should index your stocks. That way, even if a sector of the economy goes sour (blue chip, housing), you'll still gain money.

Or be like me and be a real speculator...either you make a lot of money, or you crash and burn like the best of them.

Needless to say, don't use this strategy on things like college savings, retirement funds, or anything nondisposable.

And you know what's awesome? The drooling, idiotic liberal sheep (as contrasted to the drooling, idiotic conservative sheep, of which there are plenty as well) still think that America's economy is in the toilet. You have no idea how many people I've had to give the "well, actually" speech to recently.
Maybe those drooling idiotic liberal sheep have a point that you're conveniently ignoring:
Which is the Dow hitting new highs doesn't actually mean much.
Instead let's take a look at how it's been performing over the last 6 years of the Bush presidency.
Guess what? It's gone up 1200 points in 6 years. That's less than 2% average gain year-on-year.
Wow. Awesome economic progress.
Still, can't be as bad as Clinton's handling of the economy can it. I mean he only oversaw the Dow going up 16% average gain year-on-year over his 8 years as president.

So let's hear it for Bush and his masterful handling of the US economy!

So let's hear it for Bush and his masterful handling of the US economy!

To be fair, the markets also crashed and burned in Clinton's last year. Neither President did a single thing to really affect the stock market; after all, the buying binges of the late 1990's had to be paid for by the bear market of 2000-2002. The healthy corporate profits during the Reagan Administration paved the way for the attractive investment climate of the 90's, and Reagan's profits stemmed from Carter's crushing of inflation.

So actually, Carter deserves a fair share of the credit for creating the investment and economic climate we have today. It would've been a lot worse had we not beaten inflation in 1980.

I blame Bush!!

Um... you're aware that in this case, that's praise, right?
Praise for Bush for DJ crawling to 12,000? :p

Then I guess you were ecstatic with Clinton?

http://www.stockmarkettiming.com/djia-linear.gif

Just out of curiosity, and boredom at work, I looked up the historic year-on-year opening/closing for the DOW, copied them over to excel and then worked out the % year-on-year gains AND then (told you I was bored) the average % gains over 4 year intervals, from 1929 to present day (no prizes for guessing why I chose 4 year intervals).
And here's the result:
2005 - 2006: 11.10
2001 - 2004: -0.07
1997 - 2000: 67.30
1993 - 1996: 95.34
1989 - 1992: 52.24
1985 - 1988: 78.99
1981 - 1984: 25.68
1977 - 1980: -4.05
1973 - 1976: -1.78
1969 - 1972: 8.08
1965 - 1968: 7.96
1961 - 1964: 41.93
1957 - 1960: 23.31
1953 - 1956: 71.11
1949 - 1952: 66.77
1945 - 1948: 16.20
1941 - 1944: 16.66
1937 - 1940: -26.55
1933 - 1936: 203.42
1929 - 1932: -80.48

Thus, over the last 78 years only once has the Dow gone up by so little over 2 presidential terms - during the oil shocks of the 1970's. Not shown here, but also of interest is that there's been only three times in that period where the DOW suffered 3 (or more) consecutive years of negative gains:
1929 - 1932
1939 - 1941
2000 - 2002
Great, innit?

And yet we not only have to put up with the right-wing pitbulls spouting on and on about how great the economy's doing under Bush, but also see the appalling absence of basic research skills from the media that can easily disprove their nonsensical tirades.
I mean, I'm not a journalist and it took me 2 minutes to find the info and another 10 to break down into a simple, easy-to-understand form!


(stats taken from http://www.econstats.com/eqty/eqea_mi_2.htm in case you're interested)

I don't invest, I doubt I can invest, I think people rely too much on the stock market and we risk a 1929 situation if something goes wrong.. So I see it as quoted:
With cautious indifference.

Just out of curiosity, and boredom at work, I looked up the historic year-on-year opening/closing for the DOW, copied them over to excel and then worked out the % year-on-year gains AND then (told you I was bored) the average % gains over 4 year intervals, from 1929 to present day (no prizes for guessing why I chose 4 year intervals).
And here's the result:
2005 - 2006: 11.10
2001 - 2004: -0.07
1997 - 2000: 67.30
1993 - 1996: 95.34
1989 - 1992: 52.24
1985 - 1988: 78.99
1981 - 1984: 25.68
1977 - 1980: -4.05
1973 - 1976: -1.78
1969 - 1972: 8.08
1965 - 1968: 7.96
1961 - 1964: 41.93
1957 - 1960: 23.31
1953 - 1956: 71.11
1949 - 1952: 66.77
1945 - 1948: 16.20
1941 - 1944: 16.66
1937 - 1940: -26.55
1933 - 1936: 203.42
1929 - 1932: -80.48

Thus, over the last 78 years only once has the Dow gone up by so little over 2 presidential terms - during the oil shocks of the 1970's. Not shown here, but also of interest is that there's been only three times in that period where the DOW suffered 3 (or more) consecutive years of negative gains:
1929 - 1932
1939 - 1941
2000 - 2002
Great, innit?

And yet we not only have to put up with the right-wing pitbulls spouting on and on about how great the economy's doing under Bush, but also see the appalling absence of basic research skills from the media that can easily disprove their nonsensical tirades.
I mean, I'm not a journalist and it took me 2 minutes to find the info and another 10 to break down into a simple, easy-to-understand form!


(stats taken from http://www.econstats.com/eqty/eqea_mi_2.htm in case you're interested)

Damn fine work, I've not seen that before. Write a letter to the New York Times.

To be fair, the markets also crashed and burned in Clinton's last year. Neither President did a single thing to really affect the stock market; after all, the buying binges of the late 1990's had to be paid for by the bear market of 2000-2002. The healthy corporate profits during the Reagan Administration paved the way for the attractive investment climate of the 90's, and Reagan's profits stemmed from Carter's crushing of inflation.

So actually, Carter deserves a fair share of the credit for creating the investment and economic climate we have today. It would've been a lot worse had we not beaten inflation in 1980.

I believe Carter's greatest success as President was putting Volcker in charge of the Fed. His number two, if it had been implemented fully, would have been the conservation program and CAFE standards for cars.

The Dow Jones industrial average will likely break 12,000 tomorrow or later this week, which will be an all-time high.

How will you greet the news?

with a shrug. i don't know or really care what the dow jones is or what the number means, all i know is that it's always mentioned in the boring numbers bit at the end of the news, but there was a poll so i had to vote.

While I'm at it...

...the Dow just crossed 12,000.

I believe Carter's greatest success as President was putting Volcker in charge of the Fed. His number two, if it had been implemented fully, would have been the conservation program and CAFE standards for cars.

Pretty much. He gets a lot of flak for situations that he had no control over, but what he did to contain their causes never gets mention even though they were very good ideas with lasting positive effects on our economy.

I believe Carter's greatest success as President was putting Volcker in charge of the Fed. His number two, if it had been implemented fully, would have been the conservation program and CAFE standards for cars.

I believe we thoroughly agree on Volcker being Carter's big success. His sound fiscal policies were vital to ending the stagflation that was borne sometime in the Johnson-Nixon era.

Damn fine work, I've not seen that before. Write a letter to the New York Times.
Thank you. Always nice to receive a compliment.

I've just realised - I've not adjusted for inflation. That would make the results even more interesting. I'll see how busy I am tomorrow at work. If I have time I might just do that.

I believe we thoroughly agree on Volcker being Carter's big success. His sound fiscal policies were vital to ending the stagflation that was borne sometime in the Johnson-Nixon era.

Generally, Johnson created the situation with his combination of massive increases in government spending and a too-loose monetary policy that pushed the economy too close to capacity. Nixon made it worse by trying to stop rising inflation with price/wage controls, and that was combined with the Federal Reserve increasing liquidity at the same time that inflation was accelerating.

In other words, Johnson started the mess and everything cascaded from there with the oil shocks just making the situation worse. It wasn't until the controls were lifted and the monetary policy tightened to extremes that the economy was able to get out of stagflation.

Maybe those drooling idiotic liberal sheep have a point that you're conveniently ignoring:
Which is the Dow hitting new highs doesn't actually mean much.
Instead let's take a look at how it's been performing over the last 6 years of the Bush presidency.
Guess what? It's gone up 1200 points in 6 years. That's less than 2% average gain year-on-year.
Wow. Awesome economic progress.
Still, can't be as bad as Clinton's handling of the economy can it. I mean he only oversaw the Dow going up 16% average gain year-on-year over his 8 years as president.

So let's hear it for Bush and his masterful handling of the US economy!

Given inheriting a mini-recession, fighting two wars (albeit one of his own making), an oil shock, the hurricanes on the Gulf Coast, and losing the World Trade Center (and all of its talent), he really didn't do so badly. I'm frankly amazed it's in the black at all, but the tax cuts were a big factor in that.

While I'm at it...

...the Dow just crossed 12,000.
hmmmm...yet the world hasn't ended, nor naked dancing girls appeared in the street throwing money to all.

bit of a let-down, tbh.

so why are we discussing this, exactly?

Given inheriting a mini-recession, fighting two wars (albeit one of his own making), an oil shock, the hurricanes on the Gulf Coast, and losing the World Trade Center (and all of its talent), he really didn't do so badly. I'm frankly amazed it's in the black at all, but the tax cuts were a big factor in that.

You're right--the tax cuts helped get the Dow back up. Didn't do much for the average working person, but they did a lot for the wealthy and corporations.

You're right--the tax cuts helped get the Dow back up. Didn't do much for the average working person, but they did a lot for the wealthy and corporations.

Thanks.
I'm not wealthy, but I did get back more on my taxes. :)

This actually surprised me, since I try to keep myself within the pay $250/returned $250 range.

hmmmm...yet the world hasn't ended, nor naked dancing girls appeared in the street throwing money to all.

bit of a let-down, tbh.

so why are we discussing this, exactly?

What?!? You didn't hire the prostitutes and buy the cocaine? :D

Because I started a thread on it.

Thanks.
I'm not wealthy, but I did get back more on my taxes. :)

This actually surprised me, since I try to keep myself within the pay $250/returned $250 range.

I broke even on the tax front, but lost ground when it came to increases in my share of local and state goods and services.

I broke even on the tax front, but lost ground when it came to increases in my share of local and state goods and services.
Don't remind me about tax. I have a huge bill coming. I'd been expecting it for weeks now, and as it hadn't turned up I rang the Tax dept to find out why.
They told me that as I hadn't earned enough last year I didn't need to pay any tax.
This isn't quite true. I know I earned well over the threshold.
When dealing with the Tax dept, you always know that no matter what, you're the one at fault. Had I not rung them, when they did eventually find out their mistake, I could easily have been penalised. Their logic being that I should have known that I owed tax and contacted them.

Also, I've since found out that I'll have to pay 18 months tax all at once.
We only pay tax once a year over here. First year is fine, but 2nd year's a killer: they charge you for the previous year and 1/2 of the current one.
I didn't know that, and now am having to save like crazy. I was expecting to pay $6000US but now it's going to be closer to $9k.
ouch.





Back on topic.
Yay. Dow Jones up to record highs.
I'd much rather focus on this stat though:
http://newsimg.bbc.co.uk/media/images/42039000/gif/_42039724_family_income_203.gif
Cause this is the one that affects the average US citizen the most.

Back on topic.
Yay. Dow Jones up to record highs.
I'd much rather focus on this stat though:
http://newsimg.bbc.co.uk/media/images/42039000/gif/_42039724_family_income_203.gif
Cause this is the one that affects the average US citizen the most.

Yep, and that's even worse when you factor in increased costs for food and energy, which aren't factored into any inflation numbers. Republican politicians and the press and economists can crow all they want about the "strong economy," but average people aren't buying it because they can't afford to--they're not earning enough.

Yep, and that's even worse when you factor in increased costs for food and energy, which aren't factored into any inflation numbers. Republican politicians and the press and economists can crow all they want about the "strong economy," but average people aren't buying it because they can't afford to--they're not earning enough.

Can't argue with that. Wages have remained pretty much flat.

Can't argue with that. Wages have remained pretty much flat.

And I didn't even get into the higher cost of housing in much of the country. We're about to see a self-correction on that front that's going to hurt a lot of people.

And I didn't even get into the higher cost of housing in much of the country. We're about to see a self-correction on that front that's going to hurt a lot of people.

You mean the coming wave of defaults on ARMs which they couldn't really afford?

Yeah, I'm seeing that too. Hoping to pick up something nice with oceanfront cheap around late 2007.

The Dow Jones industrial average will likely break 12,000 tomorrow or later this week, which will be an all-time high.

How will you greet the news?


I will put an apple on the plate in front of my Bush statue and worship a hundred dollar bill for an hour. Then I will buy a few more shares of ADM.


That night an eight ball some really good herb and a threesome of the best " escorts " my dividends can buy.....and some viagra to kill the coke effect...cant forget that...

You mean the coming wave of defaults on ARMs which they couldn't really afford?

Yeah, I'm seeing that too. Hoping to pick up something nice with oceanfront cheap around late 2007.That's certainly part of it, but there's also just a lot of overpriced inventory sitting out there. I see it in my neighborhood. Condos--condos!--with an asking price of $600K, townhouses at $800K, and that's not even on the beach. This is two miles inland. On the beach it's even crazier. And even when you go west toward the Everglades, the prices are still crazy--it gets down to the $400-500K range maybe. There's lots of vacancies, but no one can afford those asking prices. Hell, few people can afford half that. My g/f and I are both professionals with solid incomes, and we're out of the market completely. We can't even sniff at it unless we want to do a bullshit loan, and we refuse to do that.

While I'm at it...

...the Dow just crossed 12,000.

And I just remembered where I hid my Krugerrands.

That's certainly part of it, but there's also just a lot of overpriced inventory sitting out there. I see it in my neighborhood. Condos--condos!--with an asking price of $600K, townhouses at $800K, and that's not even on the beach. This is two miles inland. On the beach it's even crazier. And even when you go west toward the Everglades, the prices are still crazy--it gets down to the $400-500K range maybe. There's lots of vacancies, but no one can afford those asking prices. Hell, few people can afford half that. My g/f and I are both professionals with solid incomes, and we're out of the market completely. We can't even sniff at it unless we want to do a bullshit loan, and we refuse to do that.

Absolutely true. My neighbor paid 2.5 times for his house last year what I paid in 1999 and the homes are very similar.

That really sucks. IMO, I wouldn't ever buy real estate in Florida... insurance premiums are going higher all the time. It is only a matter of time before companies start retreating from the state.

(I'm thinking of eastern CT or Rhode Island, maybe New Jersey.)

Absolutely true. My neighbor paid 2.5 times for his house last year what I paid in 1999 and the homes are very similar.

That really sucks. IMO, I wouldn't ever buy real estate in Florida... insurance premiums are going higher all the time. It is only a matter of time before companies start retreating from the state.

(I'm thinking of eastern CT or Rhode Island, maybe New Jersey.)

Real estate prices in Rhode Island are sky-high, and I believe the same is true fro New Jersey. Considering that they're the two most densely populated states, it really isn't surprising.

Absolutely true. My neighbor paid 2.5 times for his house last year what I paid in 1999 and the homes are very similar.

That really sucks. IMO, I wouldn't ever buy real estate in Florida... insurance premiums are going higher all the time. It is only a matter of time before companies start retreating from the state.

(I'm thinking of eastern CT or Rhode Island, maybe New Jersey.)
If we can ever get a real change in the state legislature, we might wind up with a workable insurance system. Personally, I think we're heading to the point where we'll need to consider a single payer universal property insurance system for Florida, or even a consortium of the Gulf states.

Real estate prices in Rhode Island are sky-high, and I believe the same is true fro New Jersey. Considering that they're the two most densely populated states, it really isn't surprising.

Yes, but the market is slowing amazingly. Houses are taking twice to three times as long to sell as they were a year or 18 months ago. Right now 70% of all Americans own their own homes -- a new high.

However, lots of people overbought their houses and are "house poor" -- spending more than 25% of their income on their mortgages. Soon, second homes/vacation homes and "starter homes" with ARMs will begin to default in large numbers. It's a cycle.

Yes, but the market is slowing amazingly. Houses are taking twice to three times as long to sell as they were a year or 18 months ago. Right now 70% of all Americans own their own homes -- a new high.

However, lots of people overbought their houses and are "house poor" -- spending more than 25% of their income on their mortgages. Soon, second homes/vacation homes and "starter homes" with ARMs will begin to default in large numbers. It's a cycle.

Around here in Florida, there's a lot of foreign investment in real estate as well, and a lot of unsold inventory still in the construction stages. There are going to be a lot of empty units in the coming year or two.

(I'm thinking of eastern CT or Rhode Island, maybe New Jersey.)Pittsburgh has the cheapest housing, on average, for all U.S. cities with 200,000 people or more.

Pittsburgh has the cheapest housing, on average, for all U.S. cities with 200,000 people or more.

Thanks JB, but someone Pittsburgh just doesn't strike me as where I want to go to "get away from it all"... ;) Don't get me wrong, I'm sure it's a great city, but it's not what I'm looking for in a vacation home.

Interestingly, the housing market is changing to the commercial market; last month, 17,500 residential contractor jobs were cut, but 17,300 new jobs were created in commercial contractor positions. It seems like a lot of contractors are switching industries...very interesting, and troubling at the same time. It's sort of like the dot-com bubble, when investors kept switching companies and investments in order to keep their portfolios growing; indeed, it's almost like the "greater fool" in action.

Now, an important corollary to this is industrial capacity utilization and production growth rates; the capacity number is at its 1999/2000 levels, and production is growing at over 6% year over year, slightly faster than it did in the 1990's. What this means is we are approaching the limits of our industrial capacity, and more will need to be built to meet that demand. This may provide a boost in the intermediate term that will keep the economy going even as housing slows.

Advance GDP for Q3 is coming in next Friday; I think it will be interesting to see how this plays out. Personally, I think GDP will come in stronger than expected at 2.5-3.0% due to the rebound in retail sales and commercial investment during the quarter, improvement in the stock market as a replacement wealth effect, and the fact that housing and consumer spending have not downshifted dramatically despite higher energy prices and slowing home equity. I think Q4 GDP hinges primarily on the direction of energy prices and job growth, so it's up in the air.

I do not think there will be a recession within the next year; possibly in the later part of 2007 or early 2008, but no sooner. Also, there have been some significant revisions to 2006 job growth, so that may also benefit the economy. One huge point that needs to be mentioned is that real wages in 2006 are rising for the first time since 2003, and this means well for consumer spending going in to Christmas and 2007.