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   Strategies & Market TrendsMish's Global Economic Trend Analysis

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To: mishedlo who wrote (26283)3/24/2005 7:06:37 PM
From: RealMuLan
   of 116555
Yeah, I can't wait to see these speculators to get burned<g>

I read that in Beijing, some people already start to lose money in flipping apartment<G>

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To: Earlie who wrote (26284)3/24/2005 10:47:52 PM
From: mishedlo
   of 116555
Thanks earlie, much appreciated.
BTW - Pass out this address and that of my Blog too.


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To: russwinter who wrote (26236)3/24/2005 10:54:30 PM
From: mishedlo
   of 116555
"South Florida," he said, "is working off of a totally new economic model than any of us have ever experienced in the past." LMAO

"I just don't think we have what it takes to prick the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. "I don't think prices are going to fall, and I don't think they're even going to be flat."
Trading Places: Real Estate Instead of Dot-Coms

Published: March 25, 2005

Real estate-crazed Americans have started behaving in ways that eerily recall the stock market obsession of the late 1990's.

In Naples, Fla., some houses have been bought twice in a single day, an early-21st-century version of day trading. Buying stocks on margin has morphed into buying homes with no money down. The over-the-top parties of Internet start-ups have been replaced by flashy gatherings where developers pitch condos to eager buyers.

Five years ago, the cable channel CNBC sometimes seemed like a backdrop to daily American life. Its cheery analysis of the stock market played in offices, in barbershops, even in some bars. Today, "Dude Room," "Toolbelt Diva" and other home-improvement shows are the addictive fare that CNBC's exuberant stock shows once were.

"It just seems like everyone is doing it," Laurie Romano, a 26-year-old self-described real estate investor, said with a giggle as she explained why she was attending an open house this month for the Nexus, a 56-unit building going up in Brooklyn's chic Dumbo neighborhood. She and her fiancé, a dentist, had already put down a deposit on a Manhattan condo earlier in the week and had come to look at another at the Nexus.

Nobody can know whether the housing boom of the last decade will end as the dot-com frenzy did. But the parallels are raising alarms among many economists, even those who acknowledge that there are important differences between homes and stocks that significantly reduce the chances of another meltdown. For one thing, houses are not just paper wealth: you can live in them.

Still, perhaps the most troubling similarity, some analysts say, is the claim that the rules have somehow changed. In an echo of the blasé attitude that "new economy" investors took toward unprofitable companies, the growing ranks of real estate investors are buying houses they never expect to be able to rent at a profit. Instead, they think the prices of houses will just keep rising.

Indeed, the government reported yesterday that sales of new homes jumped sharply in February, in the biggest monthly increase in four years. A strong economy and an improving job market contributed to the gain. But many buyers were also trying to beat rising mortgage rates, which could eventually cool the market.

Adding to the parallels between stocks and housing, some of the doomsayers from the 1990's have returned with new warnings.

"We're going through something very similar in real estate that we did with stocks," said Robert J. Shiller - a professor of economics at Yale, whose prescient book on stocks, "Irrational Exuberance" (Princeton University Press, 2000), appeared just a few months before technology stocks began their slide. "It's driven by the same forces: that investments can't go bad; that it has the potential to make you rich; that you'll regret it if you don't do it; that it looks expensive but is really not."

A new edition of Mr. Shiller's book will be published next month. The cover promises an "analysis of the worldwide real estate bubble and its aftermath."

Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.

"South Florida," he said, "is working off of a totally new economic model than any of us have ever experienced in the past."

The can't-miss aura of real estate has also helped nudge many families to invest more of their personal wealth in real estate by buying more expensive homes and taking on riskier mortgages - much as ordinary workers used their 401(k) plans to bet on company stocks.

There are certainly serious reasons to believe that house prices will not suffer the fate of technology stocks. Not only are houses more tangible, but people do not sell their homes as quickly as stocks, making a panic much less likely. Because of tax advantages, few owners are likely to sell and rent something else simply because local house prices start to decline.

As high as they might seem now on the coasts, home prices nationally have not quite doubled over the last decade; during the 1990's, the Standard & Poor's 500-stock index more than quadrupled.

"I just don't think we have what it takes to prick the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. "I don't think prices are going to fall, and I don't think they're even going to be flat."

Such confidence about real estate has created a 1990's-like stampede of new investors. The night before the Nexus party, Patrick Cullert, 31, and Jennifer Mathews, 29, who are engaged, camped out to ensure they would be near the head of the line for one of 16 condos to be sold at the party. It was today's version of pestering a broker for shares in a hot public offering.

And many former stock market enthusiasts are now turning to housing. Douglas Paul, a 46-year-old former analyst, left AT&T in 2002 to buy and sell stocks on his own. But he soon decided that real estate could be another way to make quick profits. Mr. Paul owns two condominium units around Fort Lauderdale and one in Miami Beach, all bought during the last year, in addition to the one where he lives. He plans to sell one of the Fort Lauderdale condos in June for what he believes will be double his investment.

"It really is a very hot real estate market, and I don't know how long it's going to continue," he said. "But in the short term, why not profit from it?"

Mr. Paul's path is an increasingly common one. The National Association of Realtors estimates that nearly one-quarter of home purchases last year were made by people who thought of the house as an investment rather than a place to live. Seminars promising to teach amateurs the tricks of real estate speculation have proliferated.

Even at Harvard Business School, where students have traditionally gravitated to careers in investment banking and corporate marketing, real estate is suddenly hot. About 25 graduates have taken real estate jobs in each of the last two years, up from only six in 2001.

It is not quite the gold rush of 2000, when about 200 Harvard M.B.A. graduates flocked to technology companies. But even if they are not working in real estate, some of those graduates are now investing in it.

Andrew Farquharson, a member of the class of 1999, said he recently teamed up with a high school friend to buy a home in the Central Valley of California "out of pure speculation." He knows of other classmates who have made similar investments.

"I look at this as a short-term investment," said Mr. Farquharson, 36, who works for a venture capital firm, "and plan to unload it as soon as things look dangerous."

In addition to the flood of investors, the parallels between real estate and stocks extend into mainstream culture.

Real estate bulletin boards and blogs like and Real Estate Pimp have taken the place of financial chat rooms like Tokyo Joe's. ABC has a breakout hit in "Extreme Makeover: Home Edition," and Home and Garden Television, a once-obscure cable channel, now draws an average of 827,000 viewers in prime time.

The seemingly inevitable how-to guide inspired by Donald Trump - "Trump Strategies for Real Estate" (John Wiley & Sons) by George Ross, one of Mr. Trump's assistants on his hit show "The Apprentice" - is a strong seller, already hitting No. 177 on's list in March, less than a month after its release.

At the Nexus party in Brooklyn, Steve Nguyen, Ms. Romano's fiancé, said he was heeding Mr. Trump's advice. "He says buy, buy, buy," Dr. Nguyen said.

The same message is being trumpeted by David A. Lereah, chief economist of the Realtors association, who argues in his new book, "Are You Missing the Real Estate Boom?" (Currency), that real estate investors will "experience substantial and satisfying wealth gains" into the next decade.

The question that looms over these books is whether they will suffer the fate of another optimistic talisman, "Dow 36,000" (Times Books), which was a best seller in late 1999. Its authors, James K. Glassman and Kevin A. Hassett, argued that stock prices, despite five years of roaring gains, "could double, triple or even quadruple tomorrow and still not be too high."

The Dow Jones industrial average hovered around 11,000 when "Dow 36,000" was published. It dropped below 8,000 in 2002 and closed at 10,442.87 yesterday.

Another lingering echo of the stock market boom is the role of the Federal Reserve, the nation's central bank. In the 1990's, the Fed kept interest rates relatively low because it saw little risk of rising inflation despite a booming economy, helping feed a fever for stocks. Alan Greenspan, the Fed chairman, famously asked aloud in 1996 whether "irrational exuberance" was driving the stock market, but then backed off from second-guessing investors.

After the market plunged and the economy weakened, the Fed pushed interest rates down to 50-year lows, helping to fuel the housing boom. This month, Mr. Greenspan made some comments about housing that offered a faint echo of his 1996 musings.

"Analysts have conjectured that the extended period of low interest rates is spawning a bubble in housing prices in the United States that will, at some point, implode," Mr. Greenspan said in a speech in New York, adding that real estate speculation had shown a "marked increase." Nevertheless, he said he did not expect a "destabilizing" drop in prices, in part because home prices across the country have never fallen significantly.

But by one measure, houses in at least a few metropolitan areas are as expensive as telecommunications stocks were in 1999, relative to their underlying value.

The average house in San Jose, Calif., costs 35 times what it would cost to rent for a year, according to, a research company. In New York and West Palm Beach, this ratio - a rough equivalent of the price-earnings ratio for stocks - is almost 25.

In March 2000, the price-earnings ratio of the Standard & Poor's 500 - the combined price of the stocks, divided by their profits per share - peaked around 32, and it was briefly even higher for telecommunications stocks. The S.& P.'s P.E. ratio has since fallen to around 20.

Still, no matter how expensive real estate might be, it continues to provide many owners a return worth boasting about.

Holly Peterson, who is writing a novel about the idiosyncrasies of New York's rich, said that at dinner parties in Manhattan, she frequently hears complaints about high home prices, followed by claims of quick profits. "They always hit you with their last jab: 'Of course my money's doubled three times over since I got married,' " she said.

Five years ago, she said, friends at parties were crowing about "making millions of dollars on paper with $25,000 and $50,000 investments." But "most of those people," she added, "got wiped out."

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To: mishedlo who wrote (26279)3/24/2005 11:43:40 PM
From: benwood
   of 116555
Murray Rothbard at had this reply last week:

Murray says that business will have to absorb the tax because they already charge the maximum they can, and so how could they charge more and get consumers to pay -- if there was a way, wouldn't they already do it? There are big implications if the consumers vanish.

However, Murray misses the point I think that people price shop. A consumer will pay that $1000 now because the guy down the street charges $1025. However, if the 14% tax is applied, then they guy down the street is *still* $25 higher, and so the scam, I mean system, works if everybody raises prices. Of course, some will absorb the price but ultimately they will either be force to pass it on or go out of business. Passing it on, however, could sink sales regardless of competition and so lead to business failures anyway.

Like Murray says, all the attention is on HOW they get our money, the so-called "fairness" of taxation, but little attention is paid to the quantity they take.

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To: benwood who wrote (26288)3/25/2005 12:16:56 AM
From: Elroy Jetson
   of 116555
When there is no ability to pass on costs tax on business comes out of business profits.

Those businesses who can afford to shut their doors when they are not able to achieve an acceptable rate of return are few.

Most businesses will continue to operate even the prices they are able to charge cover only their marginal costs and their sales fail to cover their overhead.

Ultimately prices rise to an acceptable level in an industry only after enough businesses have failed to match the reduced consumer demand.

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From: RealMuLan3/25/2005 1:01:22 AM
   of 116555
Guo Shuqing takes helm of Construction Bank 2005-03-25 12:30:45


BEIJING, March 25 (Xinhuanet) -- The China Construction Bank Corporation (CCB) announced here Friday that Guo Shuqing has been elected chairman of the board of directors of the bank.

The CCB interim share-holders' conference and the meeting of the board of directors that opened here this morning held that Guo Shuqing has leadership experiences in both the former State Planning Commission and the State Commission for Restructuring the Economy, and worked as vice governor of Guizhou Province, vice governor of the People's Bank of China and director of the State Administration of Foreign Exchange. A man of strategic vision, strong sense of reform and innovation, and chairman of the bank, Guo will play an important role in promoting CCB's reform and development and the process of internationalization.

The announcement says the CCB is at a critical time of reform and development, it will resolutely seize the opportunity to promote the bank's share-holding restructure process and other undertakings in an all-round way in line with the state's unified deployment.

Guo Shuqing said he will certainly not let down the expectations of the state, shareholders, clients and staff of the bank. He will work closely with the whole bank and make efforts tocontinuously push forward the bank's reform and development, and build the CCB into a modern commercial bank with international competitive edge. Enditem

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To: Elroy Jetson who wrote (26289)3/25/2005 1:01:57 AM
From: mishedlo
   of 116555
Layoffs Du Jour

Associated Press
Alcoa to Cut 2,000 Jobs; Sell Elkem Stake
Tuesday March 22, 8:29 am ET
Alcoa to Cut 2,000 Jobs Over the Next 12 Months; Sell Stake in Norway's Elkem ASA
PITTSBURGH (AP) -- Alcoa Inc. will cut 2,000 jobs over the next 12 months as the aluminum company streamlines its operations as part of its new global business structure, the company announced Tuesday.

200....Kansas City Schools
Posted on Wed, Mar. 23, 2005
School budget cuts proposed
By DEANN SMITH The Kansas City Star
Kansas City school Superintendent Bernard Taylor is proposing eliminating up to a tenth of the district's teacher, librarian and counselor positions and laying off some vice principals and administrators.

62...Oswego City schools
Wednesday March 23 2005
10:20 am
Meeting held to discuss school budget situation
Updated: 3/23/2005 6:22 AM
By: Nick Cowdrey, News 10 Now Web Staff
28.3 teacher positions, 33.5 staff positions, and the elimination of several student clubs and athletic programs.

2000....Pioneer Corp.
Pioneer to Cut Workforce by 5.1 Percent, Ito Says (Update2)
March 23 (Bloomberg) -- Pioneer Corp., which forecasts its first annual loss in nine years, said it will try to recover profitability by cutting jobs and closing factories.
The company will eliminate 2,000 jobs, reducing its workforce by 5.1 percent to 37,000, Pioneer President Kaneo Ito said at a news conference today in Tokyo. He didn't give a time frame for the job cuts. The company also plans to shut about 10 production facilities, mainly overseas, leaving it with 30 factories worldwide, he said.

200....East Side Union High School District
SAN JOSE, Calif. San Jose high school students are letting it be known they don't want to see their teachers lose their jobs to layoffs.
About 900 students at six high schools walked out of class yesterday protesting planned teacher cutbacks in the East Side Union High School District.
The walkouts came after layoff warnings were sent to nearly 800 teachers during the last week. School officials say the warnings are a formality, and less than 200 teachers will be let go.

54....Cerro Metal Products
Manufacturing Plant Makes Another Round Of Layoffs
WJAC 6 Johnstown - Mar 23 3:56 AM
Centre County -- More layoffs are headed to one of Centre County's largest manufacturing plants. Cerro Metal Products handed pink slips to 24 employees in a second wave of layoffs. Thirty workers were laid off from the Bellefonte plant in December.

2 dozen layoffs expected at Florence plant
WIS-TV Columbia - 30 minutes ago
(Florence-AP) March 23, 2005 - A Florence company says it is laying off two dozen workers. DuPont says two dozen workers at its Teijin Films plant in Florence will be laid off at the end of the month.

55....Berkeley Premium Nutraceuticals
Berkeley lays off workers
Cincinnati Enquirer - Mar 22 2:41 AM
Berkeley Premium Nutraceuticals, the Forest Park company raided by eight law enforcement agencies last week as part of a yearlong mail fraud investigation, said Monday it has laid off 55 workers.

40...United Elastic
# Stuart Manufacturing Plant Cuts 40 Jobs O
WXII via Yahoo! News - Mar 22 10:37 AM
A textile manufacturing plant in downtown Stuart, Va., has cut a total of 40 jobs in the last week, according to company officials.

125...Omnova Solutions
Omnova Solutions Posts Wider 1Q Loss
Tuesday March 22, 10:43 am ET
Omnova Solutions Posts Wider First-Quarter Loss on Restructuring and Severance Charges
FAIRLAWN, Ohio (AP) -- Omnova Solutions Inc., a maker of chemicals, decorative surfaces and building products, on Tuesday reported a wider first-quarter loss, hurt by restructuring and severance charges after the company decided to exit a wallcovering distribution business, as well as a labor strike.

36....Lear Corporation
Lear Corporation announces job cuts O
WOOD TV 8 - 1 hour, 2 minutes ago
(Walker, March 24, 2005, 7:38 a.m.) The City of Walker received a warning letter yesterday from the Lear Corporation stating the company's plans to cut 36 jobs from its Alpine Avenue plant on May 6.

27....Cattaraugus County
Budget cuts of $2 million include elimination of 27 jobs
The Buffalo News - 47 minutes ago
LITTLE VALLEY - The Cattaraugus County Legislature took some painful steps Wednesday to cut about $2 million to balance the lopsided 2005 budget in the first quarter of the year.

530...Bosch Corporation
Bosch layoffs begin
Posted: 03/23/2005 03:12 pm
Michigan - The first round in a series of massive job cuts has begun at Bosch Corporation in Lincoln Township, Michigan.
The layoffs will eventually total 530 workers. Forty-two people lost their jobs last week.

Georgia-Pacific offers buyouts to 100 workers
Georgia-Pacific Corp. is offering voluntary severance packages to eliminate up to 100 jobs at its Broadway mill.
The company will accept however many take the buyout package, up to 100, said Mary Jo Malach, company spokeswoman.

undisclosed....Socorro Observatory
Radio telescope near Socorro faces budget problems
Email to a Friend Printer Friendly Version

SOCORRO, N.M. A tight federal budget is forcing the National Radio Astronomy Observatory to trim its staff.
The N-R-A-O runs the Very Large Array radio telescope west of Socorro
N-R-A-O director Fred Lo says the observatory is encouraging early retirements.

Delta CEO: More Cost Cuts Are Needed
AP via Yahoo! News - Mar 23 2:14 PM
Delta Air Lines Inc. will have to cut more costs to deal with increases in fuel prices because raising ticket fares alone will not do the job, the struggling carrier's chief executive said Wednesday.

25....Xcyte Theraphies
Xcyte Cuts Staff By 24%, Focuses Efforts On Leukemia, HIV
IWon - Money - Mar 23 2:49 PM
SEATTLE (Dow Jones)--Xcyte Therapies Inc. (XCYT) cut its work force by 24% to 81 and trimmed its clinical development efforts to focus on two diseases: chronic lymphocytic leukemia and HIV.

35, Alcan Packaging Inc.
Thursday, March 24, 2005
From staff reports
Two major companies in the area have plans to lay off about 50 workers.
Alcan Packaging Inc. is laying off at least 35 people at its plant in Lehigh Valley Industrial Park VI in Bethlehem Township, Pa., according to a company filing with the state Department of Labor and Industry. The layoffs are effective March 31.

90, Lexington Home Brands
Thursday, March 24, 2005
Plants to get more layoffs
Company in Lexington to cut 90 furniture jobs
By Richard Craver
The erosion of Davidson County's furniture-manufacturing base accelerated yesterday when Lexington Home Brands confirmed that it would eliminate up to 90 jobs at two plants by mid-May

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To: mishedlo who wrote (26291)3/25/2005 1:08:41 AM
From: Elroy Jetson
   of 116555
I guess all those lay-offs are pretty bullish!

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To: Elroy Jetson who wrote (26292)3/25/2005 1:42:40 AM
From: mishedlo
   of 116555
Those are announced.
Wait till they happen.
There are about 50K telecom and banking jobs alone going to go up in smoke in the second half.

Now what happens if housing stalls on top of that?


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To: mishedlo who wrote (26293)3/25/2005 1:45:41 AM
From: Elroy Jetson
   of 116555
What happens then? My dream come true - reality will visit America and we get our long postponed correction, only amplified by the delay.

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