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From: Mike Johnston	1/18/2007 7:37:29 AM
	of 115618

A quote from Poole: But "for those who believe that a GSE crisis is unthinkable in the future I suggest a course in economic history," he concluded. Hawkish words about GSE's, but do they really mean it ? By Isabelle Lindenmayer Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Failure to enact reform of government-sponsored enterprises Freddie Mac (FRE) and Fannie Mae (FNM) would be a potential source of financial crisis, Federal Reserve Bank of St. Louis Federal Reserve Bank President William Poole said Wednesday. "Although there is pending legislation in Congress, a major restructuring of these firms and genuine reform appear to be as distant as ever," Poole said in prepared remarks to the Charter Financial Analysts of St. Louis in Brentwood, Mo. That said, the Fed official said he remains hopeful that Congress will eventually pass meaningful legislation to reform the the congressionally chartered giant mortgage lenders, adding that private-sector financial firms should have an "intense interest" in GSE reform legislation. "I believe that many risk managers simply accept that GSEs are effectively backstopped by the Federal Reserve and the federal government without ever thinking through how such implicit guarantees would actually work in a crisis," Poole warned. "The view seems to be that someone, somehow, would do what is necessary in a crisis," Poole said. Rather, three essential reforms are required to eliminate GSEs' threat to financial stability: a limit on their portfolio growth, an increase in their minimal required capital, and satisfactory bankruptcy legislation, he said. Poole's prepared text didn't address the outlook for the U.S. economy or monetary policy. He will be a voting member of the policy-setting Federal Open Market Committee this year. In his speech, Poole reiterated the case for turning the mortgage giants into private firms. "If they bolster their capital, they can function perfectly well as purely private firms," he said. Citing a study conducted by economists at the Board of Governors, Poole emphasized that privatizing Fannie Mae and Freddie Mac wouldn't raise mortgage rates paid by borrowers. The Fed official also made the case for limiting Fannie Mae and Freddie Mac's role in market segments beyond conforming home mortgages. In order to constrain operations of the GSEs to "areas with a clear public purpose," Poole suggested either an end to the implied federal guarantee behind the two mortgage giants, or placing restrictions on the size of their owned portfolios. "For them to extend their operations into market segments already well served by existing private firms will not enhance the efficiency of mortgage markets or reduce costs to mortgage borrowers," Poole said. In addition, Congress should strengthen the powers of the Office of Federal Housing Enterprise Oversight, the government agency tasked with regulating the two mortgage giants, Poole noted. All that said, Poole did state that he doesn't believe a GSE crisis to be imminent. But "for those who believe that a GSE crisis is unthinkable in the future I suggest a course in economic history," he concluded.

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To: Crimson Ghost who wrote (62224)	1/18/2007 7:38:09 AM
From: Haim R. Branisteanu	of 115618

OT - What is the point of Zionist Neo-con - why the linkage between neo conservatives who by sheer numbers way outnumber the American Jews me included? Your characterization of all neo conservatives as Zionist in your opposition to their ideology and political believes is reflecting your hatred toward Jews. I am respecting your disdain of neo conservatism ideology but do not accept the linkage and hatred of fellow American citizen who happen to be Jews. In general on this tread there is a tendency by certain poster to bundle neo conservatism to Jews at a time that the facts point completely in other directions – as most Jews voted democrats and in general they are much more liberal than mainstream America. Your comments remind me of a story I was told during my recent visit in Eastern Europe where a young woman who may be was 3 years old at the time of the Romanian Revolution in 1989, who complained that Ceausescu did not get a just trial and was executed around Dec 25, or Christmas (Romanians are Orthodox Christians) and put a “black mark /shadow” on Romanian Justice. More she added the man in charge was a JEW ceausescu.org – well, this another fabrication – as there are barely any Jews left in Romania – they were all “sold” by Ceausescu to the western countries. (Romania PM stated this in a recent speech as Romania received money for every Jew that left the country)

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From: Crimson Ghost	1/18/2007 9:27:11 AM
	1 Recommendation of 115618

Real Estate Will Underperform Inflation for Decades January 16, 2007 Dan Forshee is an engineer at the Boeing Company and lives in Mukilteo, Washington The census.gov web site clearly indicates that while general prices throughout the economy tripled between 1915 and 1965, from 30.4 to 94.5, rents (the most reliable indicator in the absence of price data) only doubled, from 49.6 to 94.9! This means that if you had bought in 1915 and sold in 1965, you would have lost 33% in purchasing power. Obviously, actual results varied with about half of actual returns even lower and half higher. Tables E135-E166 of the following link provides the source for this information: www2.census.gov An interesting side note is that over the period of 1915 to 1965, housing costs appreciated in price by an average of only 1.32% per year, or negative 0.8% a year after inflation. The Census data contradict the absurd fantasy often popularized in the media and culture that house prices are a wonderful investment and always provide consistent inflation-beating returns. In fact, in the last century they often underperformed inflation for many decades at a time. There are many legitimate reasons to buy real estate: stability of schools and neighbors, freedom from capricious landlords, certain tax advantages, and mortgage payments that save money every month by being less than the rental of the same unit. If the last 100 years are any indication of the future, expectations of future price appreciation are not a legitimate reason to buy real estate. A large percentage of the current buyers in the real estate boom of the 2000s are buying based on future price appreciation. Unfortunately, this means that the real estate boom of the 2000s is largely based on a myth. As real estate prices return to levels justified by the legitimate reasons, prices will fall in inflation-adjusted terms. Combining the census data for 1914-1970 with data sets from Freddie Mac for the years 1970-2006, the following figure is obtained: The chart indicates that housing prices in the mid-1990s were about 25% below prices in the mid-1920s. The old adage of our grandparents that “housing is a depreciating asset” was true for a very long time. The 1914 peak in inflation-adjusted terms was only exceeded for the first time in 2005. Even if you don’t believe price statistics, evidence can be gathered with the just two eyes for evidence of the real estate fall in the years following the peak in 1914-1933. In free-market capitalist societies, as land prices get higher, buildings get taller. Higher prices of real estate make it profitable to build tall buildings because the higher construction costs are offset by lower land costs. Most major cities in the United States had tall buildings built between 1914 and 1933 during the real estate boom of that time frame. After the tallest building was built, it typically took about 41 years for the real estate prices to return to levels that would justify buildings of similar height. Here is a data set of example cities: Region Name of City Tallest Building Built during previous peak Year in which the record was broken. Number of years to break the previous peak West Seattle 1914 (Smith Tower) 1969* 55 West Los Angeles 1927 1968 41 West San Francisco 1927 1965 38 Midwest Chicago 1930 1965 35 Midwest Minneapolis 1929 1973 44 Midwest Detroit 1928 1977 49 Midwest Cincinnati 1931 Not yet broken 75+ Midwest Cleveland 1930 1991 61 Midwest St. Paul 1930 1986 56 Midwest Columbus 1927 1973 46 Midwest Kansas City 1931 1980 49 East New York 1931 1970 39 East Philadelphia 1932 1974 42 East Boston 1915 1964 49 East Pittsburgh 1932 1970 38 South Dallas 1923 1943 20 South Houston 1929 1962 33 South Tulsa 1918 1966 48 Foreign Toronto 1931 1967 36 Foreign Mexico City 1956 1984 28 * The space needle is taller and was built in 1962. However, it was built as a show piece, not for economic reasons and therefore is not listed. Even if it is listed, it does not appreciably change the results. Summary by Region: West Coast Average: 45 years Midwest Average: 52 years East Coast Average: 42 years South Average: 34 years Foreign Country Average: 32 years Average of the five regions: 41 years The tall building indicator indicates that it takes about 41 years for a peak real estate market to bottom out and then rise to exceed the previous peak. The tall building indicator UNDERSTATES the time to return to a previous peak because of technological improvement in building construction. Over many decades, construction techniques and equipment improve, lowering construction costs and thereby making it more feasible to build a tall building on a lower cost of land. Assuming the tall building indicator is off by between 50% and 200% due to technology improvements, the 41 years indicated is probably closer to 60 to 120 years for a peak real estate market to exceed its prior peak. The Census and Freddie Mac data on the page 1 backs this up. The peak real estate market of 1914 was not exceeded in inflation-adjusted terms until 2005, fully 91 years later, which is in the middle of the expected range.

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To: Haim R. Branisteanu who wrote (62229)	1/18/2007 9:39:43 AM
From: Crimson Ghost	11 Recommendations of 115618

My animus is aimed not at Jews in general but at the most right wing sectors sectors of the "Jewish Establishment" I cannot forget how Dick Cheney was cheered wildly again and again when he threatened Iran at the AIPAC annual meeting not long ago. Most Jews are Democrats but these "creme de la creme" are the chief force pushing to further expand Middle East hostilities. Too Israeli Prime Minister Olmert was quoted not long ago as saying that the Iraq war -- which has virtually destroyed that once relatively prosperous and secular nation -- was good for Israel. I don't think there is another country in the world whose leader would make such an outrageous and bloodthirsty assertion -- with the notable exception of George Bush

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To: mishedlo who wrote (62173)	1/18/2007 10:44:53 AM
From: Don Lloyd	1 Recommendation of 115618

Mish, If Opec wants to convert dollars or Euros to gold nothing is stopping them right now. I wish they would do that. They can even go one further and back their currencies in gold if they want to. But that will not affect the price of oil or gasoline one bit. It will however affect the price of gold by increasing the demand for it over other currencies, with gold in this case functioning as a currency. At any instant in time, the total quantity of any exchange-valued good, whether it be dollars, euros, gold, or whatever, is both fixed and finite. Every unit of every exchange-valued good is owned at every instant in time by one, and only one, person or entity. For the exchange value of any of these goods to go up, there must be a net increase in the demand to hold a given quantity of the good in question. When this occurs, there is an increased stress on the finite supply of the good and its scarcity value must rise to damp this increased demand to hold which cannot otherwise be physically accommodated. OTOH, the use of an exchange-valued good in an actual transaction or exchange puts no additional stress on its finite supply. An exchange merely transfers ownership of the exchange-valued good from the buyer of a good being purchased to the seller. While in more primitive economies people had to physically accumulate an exchange-valued good (money, say) over time for a future purchase, this is largely no longer the case. If the buyer of oil or whatever wants to hold the purchasing medium more than a microsecond before exchanging it, he can, but he doesn't have to. And if he doesn't, he puts no stress on the finite supply of the medium and produces no increase in the demand to hold the medium. Net net, hold what you want as long as you want, and only convert it to a purchasing medium at the last microsecond. Regards, Don

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