The BEST Way To Get Rich In America: Steal From The Taxpayers

                                              
If you want to get rich, don't bother inventing something to advance humanity, move to DC and go to work for a lobbying firm or Government contractor.

This is an interesting exposè of the 25 richest neighborhoods in America.  While many of the 'hoods that make the list are associated with America's former industrial wealth, three of the top five are bedroom communities of Washington, DC.

I have to say, this is outright embarrassing and tragic for this country:  Richesest 'Hoods in America

Having spent several months living in Georgetown in 2004, I can vividly recall that everywhere you went went within a 10-15 mile ring around Capitol Hill, the only thing you could "smell" was taxpayer largesse.  What a sad statement about this country...

R.I.P. Harold Ramis

Harold Ramis passed today.  Included in his epic body of a work as a writer, director, producer and actor is "Animal House," which in my view is the funniest movie ever made ("Trading Places" may share that spot for me).

"Animal House" ignited the re-birth and proliferation of frat house participation and culture on college campuses across the country, which had started to die out during the "counter-culture/social revolution" movement that swept the nation starting in the mid-1960's.

The 1970's are an important period of time for me not only because that was the period of my teen years, but also because - upon reflecting back - it was probably the last window of opportunity for the citizens and progressive politicians (Gary Hart and Tim Wirth, for instance) to save our system.

After the revelations of Watergate, there was a chance to burn the system down and rebuild it from the ground up and make the adjustments to the legal structure required to prevent the build-up of the systemic rot and decay which had accumulated over the previous 200 years.

But instead, Nixon was pardoned and the elites seized and began to implement the extreme power and control that accompanied the possession of the world's reserve currency in pure fiat form.  This enabled the business and political elites to hasten the erosion of The Bill of Rights and obliterate the check and balance system of power separation that was fundamental to our democracy. 

Notwithstanding the appalling failures of every post-Nixon President leading up to the present, currently we are stuck with a man who promised hope and change - to do his best to restore Rule of Law.   Instead, we have a President who has dedicated his first six years to advancing the despotic powers that have accumulated into the Executive Branch of Government and has shepherded our county further down the path of systemic destruction and totalitarianism.

"Animal House" is symbolic of both the rebellious spirit that had proliferated American culture during the 1970's but also of this country's transition into a system of pathological social order and behavioral control.

Gone forever is the "question authority" spirit upon which this country was founded.

R.I.P. Harold Ramis and R.I.P.  USA:

The Gold/Silver Ratio: Gold And Silver Are Going Higher

The price of gold and silver will both hit new highs in 2014. The price of gold goes north of $2,000, and silver will quickly go over $50. When it does, it will get a little crazy.  – Eric Sprott, Sprott Investment Management - SilverDoctors.com

A reader the other day was inquiring about the gold/silver ratio (GSR). The GSR is an interesting metric that converts the price of gold and silver into the number of ounces of silver it would take to buy one ounce of gold.  Over the entire course of history, that I know of, the GSR has been as low as 8, which was the fixed ratio used by the Roman Empire for exchanging gold and silver.

Interestingly – at least to me – if you look at the GSR over the last 350 years, it held steady at around 15 until the middle/late 1800′s.  At that point in time it rose steadily as the gold standard was slowly eroded by United States.  President Lincoln was actually the first President to disconnect gold and silver as  the Constitutionally mandated currency when he allowed someone to use Government-issued bonds to settle a debt obligation (the action was later upheld by the Supreme Court under President Grant).

At any rate, to cut to the chase, since the Federal Reserve was founded, the GSR has ranged from 15 to 100.   The low-end of the range usually correlates with bull market tops in gold/silver and vice versa with the high-end.

Currently the GSR is 60 and I believe the recent movement in the GSR is signalling the possibility of a big move ahead for gold and an even bigger move for silver.  I have compiled my analysis in this article published by Seeking Alpha today:   The Gold/Silver Ratio: Forecasting A Big Move Higher For Silver

I don’t know if the next big move higher that I believe is coming will be the final stage of the precious metals bull market, but I do think that based on the extraordinary supply/demand fundamentals for gold that the next move will be big for gold and spectacular for silver.

As I Suggested Would Happen - More Homes For Sale Now

Inventory rose year-over-year in 22 of the nation's 35 largest metro areas covered by Zillow, with the largest inventory gains coming in some of the areas that were hit hardest by the housing recession, including Las Vegas (up 42.8 percent), Phoenix (up 30.5 percent) and Sacramento (up 26 percent). These metros also experienced significant cooling in the pace of home value appreciation in January, as buyers had more homes to choose from and were less apt to engage in the kinds of bidding wars that helped drive prices up so quickly last year.

More Inventory Slows Home Value Growth

I have been suggesting that we would start to see a lot more homes for sale starting in January, as home buyers who are theoretically now even or "above water" on their mortgage after paying too much before the bubble popped look to sell and move on, with less debt.

I can say anecdotally that I'm seeing "for sale" signs pop up like weeds every day now, as I drive pretty much the same routes throughout central and south-central Denver regularly.  I'm also seeing more "coming soon" signs.   Back in 2007/8 when I noticed these, I assumed the was house not for sale yet.  It is, however, for sale but it is not officially listed.  The "coming soon" sign means the broker has an exclusive, albeit usually short term, selling agreement - a "hip pocket listing," as it's called.  The house is for sale but it's not listed in the MLS system and therefore does not show up in the National Association of Realtors "inventory" metric.  The latter of which actually lags the market by 2-3 months anyway.  

Let's say in any given market that maybe 5-10% of all homes sport the "coming soon" brand.  That means that at any given time the actual inventory of homes for sale is 5-10% higher than is being officially reported or being represented by your most helpful home salesman.   Just one more source of fraudulent data that has infected our entire system.

I suspect that anxious buyer demand for homes was "pulled forward" into 2013.  The anxiety stemming from the "low inventory" narrative, from the new FHA mortgage rules this year which make getting an FHA mortgage (20% of all mortgages) more restrictive/lower size limits and from fear of higher interest rates.   In other words, this rising inventory will be met by significantly reduced demand from both "organic" buyers and investment buyers.  As I pointed out in my articles over the last three months, we saw evidence of a decline in both buyer cohorts in the last quarter of 2013.

Look out below...

Housing: From The Trenches In Arizona

"I live in ground zero of the real estate bubble in Arizona and my wife is a real estate agent. She works with a flipper and none of their properties are moving, not even getting offers. With winter snowbirds here this is the strongest time of the year for real estate and nothing is moving. Her investors have been dumping their prices and are starting to panic. "Just get rid of it" is becoming the mantra. The MLS listings have been increasing every month for three months and sales are declining. I think its about to shit the bed again."  - from a comment posted on today's earlier post.

Housing Is In Big Trouble

              

A lie told often enough becomes truth  - Vladmir Lenin 

When you look at the quote - and the source of that quote - it's amazing how similar the political, banking and media machinery in this country has assimilated the characteristics of the old Russia that we were taught to despise in the 1970's U.S. educational system.  I guess time is a flat circle.  Everything ever done in this world will be done again, over and over. 

The big lie being told to the public right now is that the housing market is in a miraculous recovery,  that inventories are extremely tight and that now is the best time to "invest" in a new home.   Of course, if that were true, why are homebuilder insiders unloading their company shares in epic quantities?

January home sales in Southern California were their slowest in three years:  LINK   The "bad weather" lies do not work there because SoCal was warmer than normal in January.  How about the truth:  the housing market is back in its bear market trend.

The narrative that has been carefully spun around the housing fairy tale is full of lies.  Sure, the way the National Association of Realtors reports inventory makes it appear as if listings are low right now. Look around your area and make note of the number of "coming soon" signs you see.  They're all over Denver.  A couple homes in my immediate area have been "coming soon" since before Christmas.  Did you know that a "coming soon" home is actually on the market but not officially listed in the MLS.  That "coming soon" home is thus not counted in the NAR's inventory.  But it's for sale.

And the big banks have been withholding a large portion of homes they have foreclosed on over the past 4 years.  They can do this because the Fed's QE has injected $2.5 trillion in cash onto their balance sheets.  The homes will soon hit the market, as foreclosures are spiking up again.  If you scan through enough homebuilder 10-Q's, you'll see that homebuilder inventories have seriously ballooned over the last year. inventory is significantly higher than propaganda is reporting.  And if you read my series of articles on the housing market over the past 3-4 months, you'll see the real data showing sales falling at an accelerating rate month the month and that prices are quickly dropping.

We saw even more evidence that the housing market is starting to fall apart today.  Housing starts - which in and of itself is a dubious indicator of housing market vitality - once again spiked lower and was well below the expectations of Wall Street's "brain trust" aka snake oil salesmen.  And the weekly index of mortgage purchase application took another big tumble this week, falling to 19 year lows and down 17% year over year.  Mortgages, by the way, are the life blood of home sales. If applications to purchase homes are plummeting, so is true demand.

As I outline in this article published this morning, the housing market is in big trouble:  Look out below!

If you are thinking about buying a home because you think the time is right, wait for 6 months.  Not only will you have a huge selection of choices but prices will be significantly lower.  If you want to sell your house because you understand the nature of the big lie being told, get it listed now and price it to move.

The SH*T Is Starting To Hit The Fan

First, a little humor for the day.  The Hong Kong Gold Exchange is going to build a 1500 tonne vault in China:  LINK   The rumor in my office is that Janet Yellen has decided that because of all of the bad weather in New York this year, she is going to use that vault to move Germnay's 1500 tonnes into a more weather-friendly environment...

Homebuilder sentiment collapses the most on record in one month, mortgage applications drop to a 19yr low (reported last Wed).

Then there's this string of reports:

- the TIC report shows China reduced its U.S. Treasury holdings in December by the 2nd largest
  amount ever
- Student loans hit a record $1.08 trillion in December, delinquencies on this debt hit all time high
- social unrest in Venezuela, violence and deployment of military in Ukraine, bank runs in Thailand
- well-paid bankers, especially JPM bankers, dropping dead with no explanation

Reminds me of the "coup de gras" systemic collapse chapter in "Atlas Shrugged."  It's going to get ugly this year...