Your House : A Pile of Gold

Value of your house in Gold

If we track US home value in gold, not in term of dollar, from the 2005 peak to date, then a very stark picture begins to emerge.

2005 Average gold price $450 Median San Diego home price $500,000 or 1,111 oz of gold

2009 Average gold price $900 Median San Diego home price $325,000 or 361 oz of gold.

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Total loss in value in terms of gold around 70%

Why do we use gold as currency for home price ?

In many non-mortgage countries ( China ), houses are priced in terms of gold.

Drug Prevention Week at Del Norte High School

Red Cross Club at Del Norte High School

August Unemployment Data

States with high unemployment rates

California .......................... 12.2 ( highest in 30 years )
District of Columbia ................ 11.1
Kentucky ............................ 11.1
Nevada .............................. 13.2
North Carolina ...................... 10.8
Ohio ................................ 10.8
Oregon .............................. 12.2
Rhode Island ........................ 12.8
South Carolina ..................... 11.5
Tennessee .......................... 10.8

California Counties :

Imperial ___________ 28%

Riverside___________ 15%

San Bernadino _______ 14%

Santa Clara _________ 12%

Orange ____________ 9.6%

San Diego _________ 10.4

Being Bad 4 Good ! ! !

Being Bad For Good

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* Health Care Expansion Health care stocks

* Cash for Clunkers Auto industry stocks

* Federal bailouts Financial stocks

* Financial consolidation Financial stocks

American recession and global impact

Global unemployment :

Retail Business

Positives :

* Clothing - firming up up 2.3% three of the past four months.
• Electronics — rising 1.1% but that followed a 1.0% decline in July.
• Food/beverage stores had their best sales month, up 0.5%, since January.
• Drug stores also had their best month since March — up 0.4% last month and up in three of the past four months.
• Sports/music/book stores - a huge 2.3% run-up last month.
• Department stores - posted a 1.6% Month to Month surge

Negatives :

• Restaurants — up 0.3% and this followed two months of decline.
• Furniture stores - 0.2% sales loss — sales have been down now for six months running.
• Building materials - a huge 1.2% decline, the third large falloff in a row.

Consumer hunkering down further

As part of the de-leveraging process, household saving rate must increase; However, every ONE percent increase of saving consequently translates to roughly FIVE percent decline in consumer spendings.

1% Saving ----------> 5% retail sale decline -----------> Store closings

So far, the government is willing to pump enormous amount of liquidity and credits to bail out the bursting of real estate and financial bubbles. The end result will be a ballooning federal budget deficit. We are not curing those bubbles, we are transferring private debts to public liability for all citizens to shoulder.

On the other hand, what choices do we have that would avoid more pains and hard ship ?

Are we willing to risk the prospects of a depression to flush out all of financial excesses ?

Old Math :

Appreciation = income

Credit = Wealth

Spending = Growth

New Math :

Asset = Risk

Credit = Liability

Spending = Necessity

Joe Long

Labor Day week-end 2009

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The twin busting of commercial real estate and Regional Banks

The number of bank closures this year continues to grow at an alarmly rate as the fallout of the recession taking heavy toll on local financial institutions. Record banks failure in the first half of 2009. FDIC is rumored to be running short on liquidity/cash to cover so many bailouts.

Many of these regional banks have invested heavily in the commercial real estate market with much higher rates of return ( riskier of course ) during the boom times. Other big players in this CRE market also include insurance companies, private equity, and REITS.

After three years of steep slump beginning with residential mortgage, then now commercial mortgages are the next monsters to crash with many regional banks holding the (empty) bag.

Steady flow of trophy properties in default are being paraded out :

* The St. Regis Monarch Beach hotel, an Orange County luxury resort in Dana Point

* The Four Seasons Hotel in San Francisco.

* The Stanford Court Hotel, also in San Francisco.

* Sunstone Hotel Investors's 366-room Embassy Suites Chicago,

* 284-room Marriott Del Mar in San Diego, or the 299-room Ontario Airport Marriott.

* The 469-room Marriott in downtown L.A.

* The W hotel in San Diego.

At the moment most CRE lenders have been reluctant to realize/recognize these losses on their book yet, praying for some kind of recovery in consumer spendings, and probably more help from Obama administration.

The dearth of CRE activities :

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