Wednesday, March 22, 2006

A New Blog

Here's my new favorite blog. Lots of food for thought.

On who is buying our debt and propping up this housing bubble (the usual answer is China):
Who's snapping up all the hundreds of billions of U.S. Treasury bonds which get auctioned off every quarter, And why are they plunking down such vast sums of real money for such lousy returns?

Let's start by asking, who has hundreds of billions of dollars accumulating every year? China? Nope. Japan? Nope. Europe? Nope. Russia? Nope. The Mideast Oil Exporters? Bingo!

...why are the Mideast oil barons buying American bonds? If the U.S. economy goes into a tailspin, the price of oil will plummet along with it.
On housing appreciation:
Q. What was the median price of an American house in 1996,
and in 2005?
A. The median price of an American house in 1996 was $140,000. In 2005, it was $234,000.

Q. If housing had only risen with inflation (26% total since 1996), what would the median house price have been in 2005?
A. The median house price would be only $176,000.

Q. Inflation has risen a total of 26% since 1996; by what percentage has housing risen?
A. The median house price has risen by 67% since 1996.
On the likelihood of a recession following the current housing bubble:

5 Comments:

Blogger Brian_10x said...

What evidence is there that anyone in the middle east is buying up treasury bonds?
Boise Real Estate

Mar 22, 2006, 3:25:00 PM  
Anonymous rejunkie said...

And there is actually an inverse relationship between oil prices and the US economy -- the record highs in oil prices in 1980 (adjusted for inflation) of $30/barrel preceded the 1981 recession. Ditto Iraq War #1.

High energy prices are a drag on the US economy and divert US $ from finished products (i.e. I can't afford that iPod because I have to pay my PG&E bill).

Where is the evidence for this major middle east bond purchase?

Mar 22, 2006, 7:59:00 PM  
Blogger Bubble-X said...

You'd think the Chinese would diversify. But, then again, if they keep buying our debt, bond yeilds stay low, and mortgage rates dont go up. Hence, people but more houses, get more home loans and then buy more crap from the Chinese.

They could tank us if they decided they didnt like us anymore.. But then who'd buy all thier cheap junk?

Just one of the ways I've been thinking about it.

BubbleTrack.blogspot.com

Mar 22, 2006, 8:02:00 PM  
Blogger Marinite said...

What evidence is there that anyone in the middle east is buying up treasury bonds?

Like I said, "food for thought". So it could be junk food. But it kinda makes some sense. Anyway, if you email the blogger please post his response.

Mar 22, 2006, 9:27:00 PM  
Anonymous Anonymous said...

The quotes are food for thought, but most sites I see list Japan, China as the dominant owners and buyers of US treasury debt. GB, korea and "caribean" make up most of the rest, but the jp and ch are the biggest. Maybe the GB buying is petrodollar recycling, but maybe not.

The main thing that caught my eye....
Q. Inflation has risen a total of 26% since 1996; by what percentage has housing risen?
A. The median house price has risen by 67% since 1996.

NO WAY is real inflation over the past ten years only 10% in terms of consumer prices. That might be the official stat, but it is totally bogus. Food, fuel, entertainment increases vastly overwhelm the decreases in clothing and electronics.

My point - I bet that the real inflation for average american middle and lower class residents is closer to 67% than 25% over the past 10 years. In which case, that would support the argument that there is no national housing bubble. Which we all know there isn't...but there is a local housing bubble.

Mar 23, 2006, 12:38:00 PM  

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