Da Bear Report:
 
 
It is almost June which means that is almost not May. Things are happening in the financial and economic world. I would like to share some of those things with you.  
 
But first some quotes on gold:  
 
"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."  
 
Murray N. Rothbard  
 
"Even during the period when Rome lost much of her ancient prestige, an Indian traveler observed that trade all over the world was operated with the aid of Roman gold coins which were accepted and admired everywhere."  
 
Paul Einzig  
 
 
Da Bear on Gold:  
 
Gold didn't exactly roar through 700 but it hasn't dropped below $650 yet either. If gold drops below $650 I would be more bearish. Gold is still below last year's high. So is silver. So is oil for that matter. Maybe gold and silver were telling us last year that housing was peaking and consumers were starting to hurt; maybe gold and silver are still telling us this year that housing is going lower, that consumption is going lower.  
 
Dubya is down in the polls. As usual. He is still in his fifth wave down, and still expected to hit rock bottom next spring. Incidentally, a short term stock bottom may develop then. The first pit stop on the way to Dow3006.  
Detroit, the former Motor City, is still hurting. That's what Joe Black said, and I believe him. Detroit has seen better days. What should we call it now? Dubyastan? That could work.  
 
But then where might Congressstan be? Congress also sucks, deep in red ink, and full of people still with a bubble mentality. And their approval rating is going down as well. Just as I predicted...  
So, in nominal terms Dubya is deflating but in real terms (in terms of Congress) Dubya is standing still--like a deer in headlights.  
 
Al Gore is in the headlines for not wearing underwear. No wait, that was Paris Hilton.  
Al Gore is in the headlines for speaking in sing-songy tones. No wait, that was Paris Hilton.  
Al Gore is in the headlines for going to prison. No wait, that was Paris Hilton.  
Finally, Al Gore is famous for being flat-chested. No wait, that is still Paris Hilton.  
So, as Al Gore and Paris Hilton both might say "THAT'S HOT."  
 
And back to Gore and politics. as i have iterated before (reiterated) Al Gore might run. He might not, but he might. Al Gore might win. He might not, but he might.  
 
And on Gore's favorite topic Global Warming:  
 
ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ  
 
Boy, I needed that nap. But seriously folks Global Warming is no laughing matter, except when it turns out wrong. Then it's hilarious. (cue laugh track emoticon) Laughing  
 
Either March or April was one of the coldest March or Aprils on record. Plus, numerous baseball games were snowed out, as were Capitol Hill hearings on climate change. (cue laugh track emoticon) Laughing  
 
So if I called the Peak of Global Warming right I can coast on that call for a good one thousand years. Even so, June will be here in a few days and that means summer is on its way. I will call summer a Global Cooling B wave. As long as this B wave accords to Elliott Wave rules, high temperatures should go no higher than 1.382 times the old highs which would be approx. 138.2 degrees Fahrenheit.  
 
 
If freedom is outlawed, outlaws will be able to corner the market.  
If shortages are outlawed, would we still have a shortage of outlaws?  
 
 
Dow up big yesterday, up a little today.  
The S&P 500 near record high.  
Stocks aren't a bargain. As pointed out in his last update Prechter says that the dividend yield is lower than it was in 1929--and has been since 1991.  
Gold up some today. now it is at 667 an ounce.  
 
US economy grows at 0.6% in the first quarter. The lowest amount of quarterly growth since 2002. link: http://biz.yahoo.com/ap/070531/economy.html?.v=3  
 
Somebody forgot to bring the BOOM!  
 
 
 
Police State stock. Still Krispy Kreme Doughnuts.  
 
KKD up 18 cents or 2.15%. i am keeping an eye on my Police State stock pick b/c in a police state donuts are legal tender. that could potentially make this company KKB or Krispy Kreme Bank.  
 
damn, its down 20 cents after hours. KKD is even cheaper!  
If i am correct on the police state-donuts-legal tender play KKD should soon start paying great dividends!  
 
Monopolistic Luciferian Central Banking never tasted so sweet!  
 
cncbc.com rating of KKD  
 
3 out of 10 on stock scale.  
 
Analyst recommendation: Moderate Sell  
View analyst ratings  
Financial Highlights  
Sales* 461.20 Mil  
Income* -42.24 Mil  
Sales Growth* -15.10%  
Income Growth* +35.30%  
Net Profit Margin -9.16%  
Debt/Equity Ratio 1.36  
* last 12 months  
 
 
Income growth is up which is good. The rest of the numbers are bad, but we are looking for a contrarian play aren't we?  
 
 
Here are some comments and factoids about housing:  
 
from thehousingbubbleblog.com:  
 
 
Home housing bubble news from Wall Street and Washington. “Declines in home prices in 20 U.S. metropolitan areas accelerated in the 12 months ended in March as the supply of homes exceeded demand, a private survey showed. Home values dropped 1.4 percent from March 2006, after declining 0.8 percent in the year ended February, according to a report today by S&P/Case-Shiller.”  
 
“The report is consistent with last week’s data that showed sellers had to reduce prices to lure buyers into the market for both new and previously-owned properties.”  
 
“Thirteen cities showed a year-over-year decrease in prices for the month, led by a 8.4 percent drop in Detroit home values and a 6 percent drop in San Diego.”  
 
The Associated Press. “U.S. home prices fell 1.4 percent in the first quarter compared to a year ago, the first time since 1991 prices have shown a quarterly decline, according to a housing index released Tuesday by Standard & Poor’s.”  
 
“‘We still don’t see anything that looks like a clear bottom,’ S&P index committee chairman David Blitzer said. ‘We’re still headed down.’”  
 
“Boston, Detroit, San Diego and Washington, D.C. showed the greatest year-over-year declines in prices.”  
 
From Bloomberg. “New home construction in the U.S. may take until 2011 to return to last year’s level, said David Seiders, chief economist for the National Association of Home Builders in Washington.”  
 
“‘We’ve fallen way below trend because we soared way above trend during boom times,’ Seiders said in an interview. ‘The upswing will be relatively slow, unlike earlier cycles.’”  
 
“The inventory of unsold homes is the largest since the Washington-based National Association of Realtors started counting them in 1999 and house prices have suffered the steepest drop since the Great Depression, according to the realtors’ group.”  
 
“Atlanta-based Beazer Homes USA Inc. was offering houses in the first quarter at a development about 44 miles outside Phoenix, Arizona, for $136,990, down 36 percent from the year-earlier price of $215,490, said Samantha Morris, senior consultant in Metrostudy’s Mesa, Arizona, office.”  
 
“Larry Zacks, president of closely held Putnam County Builders Inc. in Mahopac, New York, said he put a 3,150-square-foot house on the market in February for $799,000 and had to reduce the price, first to $749,000, then to $699,000 and then to $659,000.”  
 
“‘We finally sold it for $649,000,’ Zacks said. ‘Things are moving, it’s just a question of finding the right price. In a glutted market, buyers have a huge selection, so they don’t have to be forgiving.’”  
 
“Prime Home Builders in Fort Lauderdale, Florida, is advertising a 23 percent discount on a new four-bedroom townhouse in Naples, Florida. The price was slashed to $344,169 from $449,258 in a development where about half the units have been sold, said Keith Thompson, a marketing consultant with Prime Home Builders.”  
 
“‘It was under contract and the buyer forfeited the deposit, which is pretty common in this market,’ Thompson said. ‘We’re putting it out at a much lower price by rolling the deposit over to the next buyer.’”  
 
From Business Week. “Real estate investors got a swift smack back to reality May 25 with news that existing home sales fell to a four-year low and inventories reached a 15-year high.”  
 
“The time-tested retail strategy of ’slash prices, move inventory’ appeared to be the lesson of the Commerce Dept. data released May 24, with an 11.1% drop in the median sales price for new homes driving new-home sales to an annualized rate of 981,000.”  
 
“The pricing inducements, the largest monthly drop in median sales prices on record, suggest the country’s housing-market woes aren’t over yet. ‘What you’re seeing is the blue-light special,’ Pat McPherron, an economist with Moody’s Economy.com, told the Associated Press on May 24. ‘The only way this market is going to move is by price-cutting.’”  
 
“A Banc of America Securities analyst downgraded home builder NVR Inc. Tuesday, saying home sales and prices in the company’s key markets are sinking.”  
 
“NVR makes more than half of its revenue and nearly three-quarters of its profits in Washington and Baltimore, analyst Daniel Oppenheim said. He expects home sale in those markets to worsen and NVR’s margins to fall.”  
 
“‘Our May survey pointed to a 4th straight month of weak traffic in D.C., after improvement from November to January,’ he said.  
 
National Mortgage News. “We got us an industry catfight! This tiff started early last week at the Mortgage Bankers Association’s National Secondary Market Conference in New York where, according to reporting by National Mortgage News’ Ted Cornwell, trade group officials made a number of veiled public comments blaming the foreclosure crisis on, well, loan brokers.”  
 
“Some mortgage bankers believe that brokers work for incentives (commission, yield spread premiums) and could care less about a loan’s long-term performance.”  
 
“National Association of Mortgage Brokers president Harry Dinham fired off a statement saying, ‘It is truly unfortunate that the president of the Mortgage Bankers Association has attempted to shift blame away from Wall Street, federally chartered banks, state-chartered lenders and underwriters for the subprime situation we find ourselves in today.’”  
 
“NAMB is calling for the creation of a national registry ’so that consumers can be protected by the bad actions of all originators whether they work in a bank, state-chartered lender, credit union or mortgage brokerage.’”  
 
“In 2002, Chinese investors owned about $100 million in U.S agency MBS. Now they own well over $110 billion, a nearly 1,000-fold increase in less than five years.”  
 
From Fitch Ratings. “Home prices were virtually unchanged for 2006 subprime mortgages even as subprime defaults rose to double digit levels, according to Fitch Ratings in a new report.”  
 
“The analysis showed that subprime loans originated in the first quarter-2006 (1Q’06) have experienced only 0.5% of home price inflation (HPI) after 12 months, but that defaults have jumped to 8.3% of outstanding mortgage balances.”  
 
“The low HPI is exacerbating the increased risk associated with these loan attributes said Managing Director Glenn Costello. ‘Some of these borrowers are probably experiencing outright home price declines.’”  
 
 
 
home prices:  
 
In the shadow of the headline Monthly new-home sales hit a 14-year high is the more important subtitle "prices taking record dive".  
 
The beleaguered housing industry is sending mixed signals, with sales of new homes surging in April by the biggest amount in 14 years while prices endured a record plunge. Analysts said the price drop could provide evidence of builders' desperation. They are looking to reduce a glut of unsold homes in the face of the worst slump in sales in more than a decade.  
 
The Commerce Department reported Thursday that sales of new single-family homes jumped by 16.2 percent in April to a seasonally adjusted annual rate of 981,000 units. That was the biggest one-month sales gain since a 16.4 percent surge in April 1993. Even with the increase, however, sales are 10.6 percent below the level of a year ago.  
 
The median price of a new home -- the midway point between the costliest and cheapest -- fell to $229,100, a record 11.1 percent below the March level. The price was 10.9 percent below the level of a year ago, the biggest year-over-year price decline since 1970.  
 
Analysts said the drop in home prices probably reflected efforts by builders to cut prices more aggressively to sell homes. The inventory of unsold new homes fell slightly to 532,000 in April. It still would take six months to deplete this inventory at the April sales rate.  
 
Good News  
 
* The Census Bureau Report shows new home sales are up 16.2% from March  
* The Census Bureau report shows that housing inventory plunged from 6.7 months supply to 5.8 months supply.  
 
The Bad News  
 
* Median new home prices made a record plunge  
* Those prices do not include incentives that are running rampant  
* The new home sales figures will likely be revised lower  
* March sales were revised lower from 858,000 to 844,000  
* New home sales do not include cancellations  
* The margin of error on new home sales is +- 13%  
* Median home prices are now reportedly back to July 2005 prices and there were few if any pricing incentives in summer of 2005  
* Home for sale dropped 540,000 to 532,000 units.  
 
Summary  
 
In spite of a record decline in median sales price and a 14 year high in new home sales, actual inventory of homes dropped a mere 8,000 units from 540,000 to 532,000 units.  
 
 
 
That's bad. But wait... it get's worse! This "that's bad. But wait... it get's worse!" moment is brought to you, as always, by Joe Black.  
 
The Former Motor City's Economic Report  
 
Gasoline now well in excess of $3 a gallon , is beginning to have an effect at least here in Detroit on retail sales of everything from a pair of jeans to automobiles . It's not like things were bad already , now we get this . Wal-Mart just announced that they have clothing backing up everywhere in the supply chain . It seams that no one is buying their recent plunge into the clothing sector . Even their new attempt to enter the higher end clothing lines isn't working .  
 
Housing , according to our resident brokers , is and has been non-existent for 3 or 4 years now . It's not uncommon to talk to some one here who has had their home up for sale for 3 years without even a low-ball offer . This past Sunday an auction was held for 300 inner city homes and prices per home of around $5,000 per house were expected .  
 
Our tool & die shops , while their weren't many left any way , are closing down in droves . It seams were having another one of those surges in out-sourcing again . Furniture stores and really anything to do with housing in general , are closing down one by one . A couple of weeks ago I got a bid from a heating and cooling guy for a new furnace and AC unit . His bid was the lowest at $2,600 , I said I'll give you $2,200 and you can have it in cash if you like . He took the deal without as much as a blink of an eye . It seams he hasn't had an installation in 3 months .  
 
Every day it seams I see more and more "moving signs" out on the curb . Last week I stopped by one of them late on a Saturday afternoon . A woman 50ish and her sister were moving out west and selling everything . Sitting out in the driveway amongst the rubble was one of those little mobility scooters that the elderly and the handicapped get around on . The thing was brand new and I asked what's the story on this thing . One of the sisters began telling me that they had bought it for their father in the summer of 2005 while he was in the hospital recovering from a massive heart attack . The problem is he never quite recovered and died while still in the hospital . They paid $825 for it and tried to take it back but the place they bought it wouldn't take it back . She said you can have it for only $125.00 , I replied I'll give you $100.00 and that's it . To my surprise even though it was a bit reluctantly , she took the $100.00 . I brought it home and took some pictures of it , threw it on EBAY and Craig's List and sold it in 9 days for $400.00 .  
 
The car dealers here are trying to dump their used car inventories by having these big one day sales , where they offer you so much for any car on trade running or not . I get emails from them saying they need to dump 300 cars tomorrow , just come in and make an offer etc etc . The lots are full to the brim and yet the manufacturer wants to dump more inventory on them . Used car prices have all but collapsed , it's a good time to buy a gas guzzler , and if gasoline hits $4 or $5 this summer it will get even better .  
 
There seams to be a realization now even amongst the most optimistic folks , that the party is over for Detroit . Experts are saying that this area will take another 10 years to hit bottom and I believe them .  
 
Over the last dozen or so years when every fool was buying , yours truly was selling . Today while many are selling and leaving the bargains are many . But we have a long way to go before the bottom is met . When the shrewdest investors won't buy , The Reaper ! will then get out the check book and begin buying , preferably when there is blood in the street . The Reaper !  
 
______________________________________________________________  
 
 
 
On the Great Depression and Great Britian (and America).  
from martin armstrong's report on Great Britains stock market from 1926-1932:  
 
in 1926 GB market was at 120.  
in 1928 market went from a small dip around 140 to 160.  
between 1928 and 1929 market corrected some.  
in 1929 the market made a slightly lower high around 160.  
his chart is hard to read, but it looks like the market may have made a secondary high early in 1929.  
after the secondary high the GB market went back down to 140 by the end of the year or so.  
In 1930 to 1931 the stock market went from about 120 steadily down to 80.  
The Great Britain stock market then bottomed just above 60 in 1932.  
 
so GB rose from 120 in 1926 to 160 in 1928/1929 or about 33% in two or three years.  
 
the GB market then fell from 160 to 60 from 1929 to 1932 or 62.5% in 3 years.  
 
which was not as bad as the late twenties/Great Crash Dow, but still pretty bad.  
but it also didnt rise as much its final two years or so.  
looks like a decent comparison to current dow. More on the comparison of 1929 and today below.  
 
Robert McHugh is looking for a top in june or a little later than that. he is also looking for higher gold and silver. He also thinks if the dollar drops below 80 it will be bad. so do i.  
 
McHugh has also compared the latest dramatic runup in the Dow to the dramatic runup in the Dow in 1999-2000. there are a few similarities.  
full link: http://www.financialsense.com/fsu/editorials/mchugh/2007/0526.html  
 
excerpt:  
 
"In 1999, prices staged a dramatic 2,750 point rally over a one-year period, that had folks talking about Dow 35,000, with no end in sight for the glorious bull market. To be bearish was ridiculous. However, the unthinkable happened. In January 2000, a major Bear market started, which lasted through March 2003. Just prior to this historic top on January 14th, 2000, the DJIA rose 2,750 points over a 12 month period, with a significant correction about two thirds the time and price move through this extraordinary rally. Following that correction, the Dow Industrials rose another 1,750 points in a parabolic ascension over three months.  
 
In 2006/2007, since July 2006, we have seen a 2,850 point rally over a ten month period, which has folks talking about Dow 35,000, with no end in sight for this glorious bull market. To be bearish seems ridiculous. About two-thirds the way through this time and price move, a significant correction occurred (late February 2007), which has since been followed by another 1,689 points in a parabolic ascension over three months. The point is, there is historic precedent for a major bear market to start immediately after such a price pattern. Our Demand Power and Supply Pressure indicators will tell us when and if such a bear market decline occurs."  
 
 
from cnbc.com yesterday. Deja vu all over again or a repeat of deja vu all over again?  
 
Asian stocks were mixed in the morning session Thursday, with most markets rallying and South Korea setting yet another record high. But Chinese stocks continued to fall, down as much as 4%.  
 
Wall Street rose, sending the blue-chip Dow and broader S&P 500 index to record closing highs, thanks to minutes from the Federal Reserve's latest meeting that reassured investors about the health of the world's biggest economy.  
 
Chinese stocks swung widely in volatile trade as small speculative stocks plunged further after Wednesday's hike in the share trading tax. The Shanghai Composite Index opened lower, rebounded into positive territory and then dropped sharply again. Selling focused on small-capital stocks favoured by short-term speculators, while many blue chips held steady. Oil refining giant Sinopec, one of the most heavily weighted stocks in the index, climbed.  
 
On Wednesday, the index plunged 6.50% after the government raised the tax in an effort to cool excessive speculation. Analysts believe the tax hike, and other official steps this month including an interest rate hike, may slow a bull run that has taken the index up as much  
as 62% this year. But with Chinese corporate profits still growing strongly and the market  
awash in money from newly created mutual funds, they do not expect an extended bear market.  
 
 
Housing...may not recover until 2011:  
 
 
U.S. Home Construction Bust May Last Until 2011 (Update1)  
 
By Bob Ivry and Brian Louis  
 
May 29 (Bloomberg) -- New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington.  
 
Monthly construction starts would need to jump by 21 percent to reach Seiders's benchmark for full recovery, which is 1.85 million. There were 1.53 million in April, the Commerce Department said. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes.  
 
``We've fallen way below trend because we soared way above trend during boom times,'' Seiders said in an interview. ``The upswing will be relatively slow, unlike earlier cycles.''  
 
The inventory of unsold homes is the largest since the Chicago-based National Association of Realtors started counting them in 1999 and house prices have suffered the steepest drop since the Great Depression, according to the realtors' group. Defaults and foreclosures also may rise as about $650 billion of loans to subprime borrowers, those with poor or limited credit histories, reset at higher interest rates by 2009.  
 
``We're still being hit pretty hard by the subprime-related mortgage market problem,'' Seiders said. ``One of the biggest unknowns right now is how serious the change on the mortgages side will be on home sales.''  
 
Sales of new homes rose 16 percent in April, the highest increase since 1993, the Commerce Department said last week.  
 
`The Champagne'  
 
The biggest gain in new-home sales in 14 years was made possible by homebuilders who cut prices more in April than in any month since 1970. The median new-home price fell 11 percent to $229,100 from $257,600 a year earlier, the reported showed.  
 
Declines in home prices in 20 U.S. metropolitan areas accelerated in the 12 months ended in March as the supply of homes exceeded demand, a private survey showed today. Home values dropped 1.4 percent from March 2006, after declining 0.8 percent in the year ended February, according to a report today by S&P/Case-Shiller.  
 
Sales of previously owned U.S. homes fell in April to the lowest level in almost four years, the National Association of Realtors said last week.  
 
``I'll break out the champagne a year from now after the resetting of the mortgage rates and defaults come in less than what we're fearful about,'' said Susan Wachter, a real estate professor at the Wharton School at the University of Pennsylvania in Philadelphia. ``For now, for the sake of the wider U.S. economy, the homebuilders have to start clearing out their inventory.''  
 
Cutting Prices  
 
Atlanta-based Beazer Homes USA Inc. was offering houses in the first quarter at a development about 44 miles outside Phoenix, Arizona, for $136,990, down 36 percent from the year- earlier price of $215,490, said Samantha Morris, senior consultant in Houston-based Metrostudy's Mesa, Arizona, office.  
 
Builders ``have written off any hope'' of 2007 being a good year, said John Burns, president of John Burns Real Estate Consulting in Irvine, California. ``When you start offering consumers a good deal, you start selling homes.''  
 
Larry Zacks, president of closely held Putnam County Builders Inc. in Mahopac, New York, said he put a 3,150-square- foot house on the market in February for $799,000 and had to reduce the price, first to $749,000, then to $699,000 and then to $659,000.  
 
``We finally sold it for $649,000,'' Zacks said. ``Things are moving, it's just a question of finding the right price. In a glutted market, buyers have a huge selection, so they don't have to be forgiving. If they don't like one thing about it, they can go down the street.''  
 
Price Slashing  
 
Prime Home Builders, a closely held company in Fort Lauderdale, Florida, is advertising a 23 percent discount on a new four-bedroom townhouse with two and half bathrooms in Naples, Florida. The price was slashed to $344,169 from $449,258 in a development where about half the units have been sold, said Keith Thompson, a marketing consultant with Prime Home Builders.  
 
``It was under contract and the buyer forfeited the deposit, which is pretty common in this market,'' Thompson said. ``We're putting it out at a much lower price by rolling the deposit over to the next buyer.''  
 
Horsham, Pennsylvania-based Toll Brothers Inc., the largest U.S. luxury home builder, reported that fiscal second-quarter profit slid 79 percent. Chief Executive Officer Robert Toll said on May 24 he was ``a little more confident'' about the market, adding: ``I would emphasize a little.''  
 
Stocks Fall  
 
Toll Brothers' stock fell 7 percent this year through May 25, compared with the 25 percent slide of Hovnanian Enterprises Inc. of Red Bank, New Jersey. Shares of Pulte Homes Inc. in Bloomfield Hills, Michigan, declined 17 percent, Dallas-based Centex Corp. dropped 14 percent, Miami-based Lennar Corp. fell 13 percent and D.R. Horton Inc., based in Fort Worth, Texas, declined 11 percent.  
 
Subprime loans are given to borrowers with bad or incomplete credit histories. About eight in 10 subprime mortgages made in 2005 and 2006 had adjustable rates, according to Credit Suisse Group, meaning that borrowers will have to pay higher monthly interest rates after a pre-determined period, usually two years.  
 
To contact the reporters on this story: Bob Ivry in New York at bivry@bloomberg.net ; Brian Louis in Chicago at blouis1@bloomberg.net .  
Last Updated: May 29, 2007 11:54 EDT  
 
 
Da Bear comment on Real Estate: They say to buy when there is blood on the streets, but how much blood do you wait for? Do you buy when there is lot's of blood on the streets or not a lot of blood on the streets? How about waiting until FEMA comes in and cleans things up?  
 
...which brings me to my next topic: Police State Real Estate Play of the Month. this month's police state RE is Iraq. Why? Because there is blood on the street. actually lots of it. When there is panic in the street stay on the sidewalk. When there is blood on the street, buy condos in Iraq. No one wants real estate in Iraq, that's what makes this a good contrarian strategy. Plus, troops will never leave there. and they need a place to live. thats why Iraqi Real Estate (IRE) is a good investment.  
 
Yes sir, that BOOM! you hear is Iraqi real estate exploding (in value)!  
 
 
more on politics... (cue segue emoticon)  
 
Arrow  
 
 
 
Da Comments and Observations on Ron Paul:  
 
Ron Paul took on Rudie Julie Annie at the last Republican debate. Dr. Paul took Mr. 9/11's strong point and threw it right back at him. Mr. Groundzero has one issue, and apparantly he hasn't even done his homework on that. Apparently, Dr. Paul not only reads the Constitution for the Articles, he reads the 9/11 Commission Report for the facts and information.  
 
Maybe Mr. 9/11 needs a new issue. Maybe, perhaps he can be Senator Seven Seven Seven and take credit for totally fucking up that too.  
Apparently Dr. Paul was not impressed with Mr. 9/11's so-called strenght. Unlike NORAD on certain unfortunate days, Ron Paul won't stand down. Unlike most candidates that aren't in bed with Fox News and have their mics off, Rudie Julie Annie won't shut up.  
 
Maybe next time Mayor Mayhem will tout his experience as mayor of Pearl Harbor, Hiroshima, Nagasaki, Atlantis, Pompeii, and the consolidated metro area of Soddom and Gommorha. Maybe he won't.  
 
In the last debate Ron Paul finished second to Mitt Romney after leading most of the night. He did well on leadership qualities. On other online polls Dr. Paul did just as well, and even was the leader on some.  
 
Results of AOL Barbeque poll:  
 
With which Republican candidate would you most like to socialize?  
Rudy Giuliani 43%  
Ron Paul 20%  
John McCain 14%  
Mitt Romney 10%  
Tommy Thompson 5%  
Mike Huckabee 3%  
Tom Tancredo 2%  
Sam Brownback 1%  
Duncan Hunter 1%  
Jim Gilmore 1%  
Total Votes: 15,809  
 
So that poll has Dr. Paul behind only Mr. Barbequed Irish New York Firefighters and Cops.  
 
Dr. Paul's support is growing by leaps and bounds online and also in the real world (not to be confused with the mainstream media).  
 
Ron paul will be on Daily Show June 4.  
More Ron Paul items: http://www.dailypaul.com/node/206#comments  
 
 
On Patrick.net I found that somebody HATES America... Evil or Very Mad  
 
Housing woes to continue, expert says  
Economist says downturn could weaken state’s financial future  
Contra Costa Times 05/10/2007  
 
“The malaise in California home building will hound the state for a while longer, a top state government economist told an East Bay gathering Wednesday. Even worse, California is particularly vulnerable to ripple effects because the state depends on housing and home building for a greater share of its economic activity than other regions, said Howard Roth, chief economist with the state’s Department of Finance.”  
 
“‘I see no signs that the housing downturn will abate any time soon,’ he said during an interview after his speech.”  
 
“…Roth warned that the weakness could be even more severe based on the first-quarter home building activity. ‘To keep us out of recession, we need for consumers to continue to spend through the rest of 2007,’ Roth said.”  
 
Have YOU been doing your part for Clownifornia’s economy? How many bidding wars have you “won” lately? How many plasmas, boats, RVs or spousal “enhancements” have you bought with the house ATM this year? None?!? Why do you hate Amerika…?  
 
Do we really need to make renting and saving a criminal offense? Enough already –stop your whining and get out and start spending, dammit!!  
 
Uncle HARM  
 
 
Uncle "Why do you hate Amerika...? HARM HATES America! Evil or Very Mad  
 
 
 
RE crash worse than expected:  
 
 
Bernanke Warned by Real Estate Analysts:  
Housing Collapse Is Much Worse Than You Say  
 
May 22, 2007 (EIRNS)—A real estate investment and analysis firm, John Burns Real Estate Consulting, said on May 21 that it is "going public with our concerns" that the national sales information for both new and existing homes, is misleading and covering up a deep plunge of the housing sector. "The housing market has softened much more than is being reported" by the Fed, and the National Association of Realtors (NAR), says JBREC.  
 
The firm reports that having purchased and compiled actual home sale closing data for 55% of the country, it finds existing-home sales down, not 9% as NAR reports, but: 22% in May 2006-April 2007, compared to May 2005-April 2006; and much more than that on a simple year-to-year comparison of the past couple of months. It found that existing-home sales have fallen every bit as much as the new-home sales of the biggest homebuilders D.R. Horton and Lennar, which are down 37% and 27%. It found that home brokerage transactions by Realogy Corp., the nation's biggest realtor company which owns Century 21, Coldwell Banker, and ERA, fell 18% from 2005 to 2006. And that mortgage applications for home purchase have fallen 18%, even though many buyers now have to fill out several applications in order to get a mortgage.  
 
Taking the states with the worst housing sales/foreclosures crises, JBREC found Florida home sales down 34%, not 28% as NAR reported; Arizona sales down 38%, not 28%; and California's down 37%, not 24% as NAR reports. This strong underreporting of the collapse by NAR, the firm says, only dates from the middle of 2006; it doesn't claim any intentional misrepresentation by NAR.  
 
As for new-home sales, JBREC reports the Census Bureau is continuing not to subtract cancellations from reported sales, giving sales figures which are much rosier than the grim reality, and are reported publicly by the Federal Reserve.  
 
"In summary, we believe that the Fed should know that the housing market correction has been quite steep, and is also not showing signs of bottoming out," concludes JBREC.  
 
Separately, a Wall Street firm reported May 18 that the foreclosure "shock cone" is widening: While total foreclosures, at all stages, are up 60-70% over last year so far, foreclosure notices—the front end of the process, when a mortgage is typically 90 days delinquent—are 127% higher so far than in 2006. It said that foreclosed homes being resold by banks or lenders, are hitting the housing market with an average price drop of 30% nationally.  
 
 
 
Crazy tulips. I found this on the Tulip mania...  
___________________________________________________________  
 
Could a mere tulip bulb be worth $76,000? It is if people are willing to pay for it! It may sound preposterous, but this is exactly what happened in Holland in the 1630’s.  
 
Tulipomania ChartThe seeds of this craze were planted in 1593. A man by the name of Conrad Guestner imported the first tulip bulb into Holland from Constantinople, in present day Turkey. After a few years, tulip bulbs became a status symbol and a novelty for the rich and famous. Eventually, tulip bulbs became a hot ticket item in neighboring Germany, as well. After some time, a few tulip bulbs contracted a non-harmful plant virus called mosaic. The effects of this mosaic virus were tulip petals with beautiful “flames” of color. This unique effect furthermore increased the value of the already rare and highly exclusive tulip bulb.  
 
Initially, only the true connoisseurs bought tulip bulbs, but the rapidly rising price quickly attracted speculators looking to profit. It didn’t take long before the tulip bulbs were traded on local market exchanges, which were not unlike today’s stock exchanges. By 1634, tulip mania had feverishly spread to the Dutch middle class. Pretty soon everybody was dealing in tulip bulbs, looking to make a quick fortune. The majority of the tulip bulb buyers had no intentions of even planting these bulbs! The name of the game was to buy low and sell high, just like in any other market. The whole Dutch nation was caught in a sweeping mania, as people traded in their land, livestock, farms and life savings all to acquire 1 single tulip bulb!  
 
In less than one month, the price of tulip bulbs went up twenty-fold! To put that into perspective, if you had invested $1,000 and came back on month later, your investment would have ballooned to $20,000! Now you can understand the mad rush to buy tulip bulbs at any cost. Tulip bulb mania affected the public psyche to an extreme. One drunk man in a bar started peeling and eating what he thought was an onion, while it was in fact it was the bar owner's tulip bulb on display. This man was jailed for many months!  
 
All common sense and logic was thrown to the wind, and even scoffed at. This is exemplified by how many USEFUL items it cost to buy 1 single tulip bulb:  
 
• four tons of wheat  
• eight tons of rye  
• one bed  
• four oxen  
• eight pigs  
• 12 sheep  
• one suit of clothes  
• two casks of wine  
• four tons of beer  
• two tons of butter  
• 1,000 pounds of cheese  
• one silver drinking cup.  
 
Mind you, these valuable items COMBINED only equaled the value of 1 tulip bulb! The modern day value of these items is over $40,000!  
 
In 1636, tulips were trading hands on the Amsterdam stock exchange as well as on exchanges in Rotterdam, Harlem, Levytown, Horne and many other exchanges in other nearby European countries. These exchanges started to offer option contracts to speculators. These option contracts allowed tulip bulbs to be speculated upon for a fraction of the price of a real tulip bulb. This allowed people of lower means to speculate in the tulip market. Additionally, options allowed for leverage. Due to leverage, option buyers were able to control larger amounts of tulip bulbs, allowing a greater profit. In a previous example, we showed how a $1,000 dollar investment would have yielded $20,000 in one month. As if this weren’t enough, option leverage allowed this same investment of $1,000 to balloon into $100,000! Unfortunately, leverage is a double-edged sword. If the tulip bulb price moved downwards ever so slightly, the option buyer’s investment would be lost and they might even owe money! Talk about risky. But at this point, it was commonly believed that the tulip market was immune to crashing and that it would “always go up”.  
 
After some time, the Dutch government started to develop regulation to help control the tulip craze. It was at this point that a few informed speculators started liquidating their tulips bulbs and contracts. It was these people, or the smart money, that secured large profits that were now in the form of cold hard cash. In addition, more tulip bulbs were added to the supply due to people harvesting new tulip bulbs. Suddenly tulip bulbs weren’t as quite as rare as before. The tulip market began a slight down trend, but shortly after started to plummet much faster than prices went up. Suddenly the market began a widespread panic when everyone started realizing that tulips were not worth the prices people were paying for them. In less than 6 weeks, tulip prices crashed by over 90%. Fortunes were lost. Wealthy became paupers. Bankruptcies were everywhere due to the negative side of option leverage. People that traded in farms and live savings for a tulip bulb were left holding a worthless plant seed. Many defaults occurred, where speculators couldn’t pay off their debts.  
 
The Dutch government avoided intervening, only to advise tulip speculators and owners to form a council to attempt to stabilize prices and mend public confidence. Every one of these plans failed miserably, as tulip prices plummeted even lower than before.  
 
Assembled deputies of Amsterdam nullified all of the contracts purchased at the height of the mania. The supreme judges of Amsterdam declared all tulip speculation to be gambling, and refused to honor these contracts. As a result, payments were not enforced by any of Holland’s courts. This further fueled the market crash.  
 
The financial devastation that followed the tulip bulb crash lasted for decades, crippling Dutch commerce. The price of tulips at the height of the mania was $76,000; 6 weeks later they were valued at less than one dollar! The only people who prospered from the insanity were the smart money who liquidated at the top.  
 
In market manias, the investors are acting irrationally. Excessive greed causes people to feel financially invincible and make decisions that cause financial devastation. This process occurs regardless of if the market is a commodity market or a paper market like stocks. The moral is clear; the only way to survive is to be the smart money.  
____________________________________________________________  
 
My take: manias and bubbles are bad. the tulip mania ended in 1637. another one of those seven's again.  
 
 
The Case-Shiller price index on real estate:  
 
The 10-city Case-Shiller price index fell 1.9% year-on-year through March, while the 20-city index dropped 1.4%. The 10-city index has fallen nine months in a row, while the 20-city index has fallen for eight straight months.  
 
Thirteen of 20 cities in the Case-Shiller index have seen falling prices in the past year, led by Detroit (down 8.4%) and San Diego (down 6%). Home prices rose 10% in Seattle, 7.4% in Charlotte, N.C., and 7% in Portland, Ore. Prices in Phoenix and Las Vegas, Nev., have fallen the furthest from their peak. After growing at a 49.3% pace in September 2005, home prices in Phoenix are now down 3% year-on-year. In Las Vegas, price gains went from 53.2% in September 2004 to negative 1.6% in March 2007.  
 
Among other major cities tracked by the index, home prices are down 4.9% in Boston, down 4.8% in Washington, down 3% in Tampa, Fla., down 2.4% in Cleveland, and down 2.3% in San Francisco. Prices fell 2% in Denver, 1.9% in Minneapolis, 1.4% in Los Angeles and 1.1% in New York. In addition to the price gains in Seattle, Charlotte and Portland, prices rose 2% in Atlanta, 1.6% in Dallas, 1.3% in Chicago and 1% in Miami.  
 
 
So it looks like everywhere is hurting... even Trump (The Donald) is having a hard time selling his luxo-condos in Chicago. He has sold a grand total of 8 since January. He better start selling more...  
 
or call his buddy Larry Silverstein and get him to blow up his Trump Tower Chicago on 7-7-7. Given that stocks also look over-extended and a bottom to top 75 year cycle could occur then, it may not be a bad move by The Donald.  
He could always blame it on terrorists who HATE comb-overs! Evil or Very Mad  
 
 
BREAKING NEWS!!! BREAKING NEWS!!! Terrorist with boxcutter terrorizes box! BREAKING NEWS!!! BREAKING NEWS!!!  
 
 
 
America and the Great Depression continued:  
 
 
In the 1920's Great Britain was in trouble so it lowered its interest rates, creating bubbles elsewhere. Great Britain then raised interest rates and pulled the rug out from under America.  
 
Everyone go screwed... but countries on a gold standard got screwed worse.  
 
i guess we are GB and China is USA but Japan could be GB in this scenario.  
 
but it should be interesting.  
 
the article said that worldwide commodity prices dropped, so i guess that means in GB too. doesnt mention GB stock prices though.  
 
Martin Armstrong wrote a great report a while back about the Roaring Twenties, the Great Crash, and the subsequent Depression. As was the case with Nikoli Kondratieff government identified a great economic observer and threw him in jail.  
 
Mr. Armstrong notes that there "was a tremendous amount of takeovers and mergers between 1927 and 1929." Colgate and Palmolive were on of the big mergers of that era. One might add that there were also lots of takeovers in 1987. I don't know if there were many takeovers in 1637 Tulipmaniaville--but i bet there were. What is it with years ending in '7' and crashes? There was also a big crash in 1907. That probably means that on July 7, 2007 (which would mark the 75th anniversary of the all-time Dow low) we should all be comfortably ensconced in our bunkers.  
 
What preceded the Crash of '29 besides spectacular run-ups in global stock prices? Well, credit and debt exploded. Buying on the installment plan was a big mark of the Roaring Twenties. Same as today. Property bubble that burst a couple of years earlier, Florida land and property in 1926, land and property everywhere until the peak in 2005-2006. Same as today. You also had an emerging superpower and a tired old superpower unwilling to give up; then it was USA that was the emerging super power, England the fallen one. Today USA is the worn out superpower and the People's Empire of China is the emerging superpower.  
 
At the beginning of 1929 the Federal Reserve got on Wall Street regarding the speculative movement. The Fed threatened to reign in credit. China is currently doing the same. Also in early 1929 the Bank of England raised its discount rate from 4.5% to 5.5% in order to get gold from flowing out of England. Today Japan, China, and America are under pressure to tame speculation, support their currencies and get gold flowing the right way (more with USA than with anyone). In his great report Mr. Armstrong then noted that those two factors were a cause of the early February decline. This year all stock market indexes declined in February. It didn't mark the top but it did serve as a wake-up call and an early warning.  
 
The warnings from higher ups did not do much to stop the speculation. Time magazine noted that the speculators believed that the Federal Reserve had an inexhaustible reserve fund for traders to borrow from.  
The stock market had some dips, but real estate and banks started to feel the pain first. Real estate prices continued to soften and in one swift blow 25 banks failed in Florida. The current implodo-meter is showing 76 subprime lenders going BUSTO!  
Stocks stubbornly trudged higher (for a while of course). Are stock market traders at stock market peaks really really dumb??? (Da Question of the Month).  
 
In late August and early September of 1929 the stock market peaked. By the way for long-term investors the market got back to its 1929 high in 1954--25 years later. thats a loooooooong time. A July 7th top which may or may not accompany a mega-false flag nuclear attack could happen and could be what some people in the Apocalypse Industry call "a double whammy." After the highs everyone tried to essentially get out at once over the next few months. and that usually doesn't happen...  
nor does it end well...  
 
There was a sharp retrenchment after the high, followed by a rally that ran out of steam. After that the market fell sharply lower again. After that it churned for several weeks. In September Roger Babson, famed market letter writer analyst of the day, stated that the market was "riding to a fall." The market rallied a bit more, but he is remembered for calling the top.  
 
Martin Armstrong writes that in October "news came out that building permits for 1928 showed a 23.4% decline." I (da bear) wasn't there in October 1929 but I don't think that that was good news. Flashback to today: sales go up only because prices implode, and home builders with half a brain cell (which is probably a smaller minority than one may think) cut back on building. Due to the Bad October News of 1929 the Chinese (yes, those Chinese. well, not actually those Chinese, more like their grandparents or great grandparents) dumped silver and the price of silver went down a lot. BOO! China. BOO! silver. BOO! Bad housing data.  
 
Despite getting kicked in the ass, bulls of the day, the SFs3006 of 1929 or as I like to call them the 19293006ers proclaimed: "Fundamentally everything is sound, nothing has changed." Immediately the Big Kick Ass Machine aka the Crash of 1929 took out all the fun of the fun-damentals.  
Angry speculators got margin calls and subsequently got angry about that too. Cries of "fundamentals" roared nearly as loud of the cries of the Roaring Twenties roaring to a screeching halt.  
 
Enter Yale professor Irving Fisher and his uttering of utterly stupid and utterly errant statement of "Stock prices have reached what looks like a permanently high plateau." Thanks Mr. Fisher you are wrong. Stupid Fisher, that 1929 perma-dumb-bull, or SF19293006 may have not seen a permanently high plateau for stocks, but he did have a quote worthy of the permanently high plateau of all-time stupid statements.  
 
At the end of the October the Dow dropped over 10% percent on two consecutive days. Those are big drops. They even named one of them Black Tuesday. I guess if Obamarama gets elected President next year it will be called the Second Black Tuesday. There was also speculation on Black Tuesday that the Fed was going to raise the discount rate. This pissed people off. This rumor caused some to believe that "the Fed and its board were viewed as the assassins who were terrorizing the financial world." I think the term they were looking for was "slowly boiling a frog."  
 
All stocks got hit hard, rails, cars, and even bank stocks. It was no small panic. All told the Dow Jones Industrial Index had fallen from the 386 high in September to 212 on Tuesday, October 29 (martin armstrong).  
 
Stocks recovered in 1930 in a B wave but what followed was the crash of 1930 to 1932 that took down every market with it. Commodities, including high grade diamonds and low grade copper, crashed, partially recovered, then dropped again. Incidentally, all major stock markets crashed and bottomed in that time frame with the Dow Jones Industrial Average (the stock market that was to overtake British stocks as the major stock market) bottomed in early July 1932.  
From 1928 to 1932 British stocks went from 165 to 60.  
From 1929 to 1932 the Italian stock market went from 90 to 40.  
From the peak between 1928 and 1929 to the low in 1932 the German stock market went from 150 to 50.  
From the 1929 high French stocks went from 500 down to 200.  
From 1929 to 1931 Japanese stocks went from just under 100 to below 50.  
 
 
 
However, the most famous crash was in America, the emerging superpower. It is da bear's observation that China stocks could have the most spectacular fall and bottoming. after the bottom it should be the best buy.  
 
British stock prices were also hit hard but not as much, since the last rise of the bull was rather tepid compared to the parabolic rise of American stocks. The Crash of 1929 offered an inflection point. Quoting from Armstrong's work:  
 
"In London, the markets were nervous indeed. However, a well-known local broker wrote to his clients in his newsletter that shocked the British financial establishment. The broker was Oswald T. Falk, a member of the distinguished London house of Buckmaster & Moore. Falk advised all of his clients to sell their entire holdings of British stocks and buy those of the United States or perhaps even some colonial enterprises in Canada. His statements are still as interesting today as they were shocking to those who read them then.  
He stated:  
 
 
"I believe that the industrial prosperity of England is much more than temporarily depressed, and that we are some way down the road of a  
long decline, at the end of which we shall find our relative industrial position entirely different from what it was in the 19th Century... I would sell the shares of almost all British industrial companies operating at home, particularly the shares of the older industries.  
 
"I believe that the economic, political and climatic advantages of the U.S. and Canada during the next few decades will be so overwhelmingly great that these countries offer the most attractive field for investment. There is room for immense expansion and the desire for it. Wealth is the main objective, the pace will be hot, and the profit high.  
 
"I think it is quite wrong to believe that the currency chaos of the last ten years will now be replaced by a long period of calm stability similar to that of the 19th Century. On the basis of this view, I would invest a large part of any fund in the strongest currency in the world, the American dollar."  
 
 
da bear  
 
There is no new thing under the sun...