December 15, 2009

For those of you keeping score at home, we're in "Relief" now. After being in Despondency in February.


Once again, this one single chart told us everything we ever needed to know.

If only it had been so obvious at the time.

It is what it is. Trillions in government cheese got us there.

Deal with it.

And yes, Optimism is around the corner in 2010...

(no, still not back. just checkin' in)

59 comments:

ContraryRiches said...

I'll throw in that the roller coaster diagram is no longer on a long plot line, rather these hills and valleys are coming back quicker and quicker....

mark said...

I'm glad you came back if only for a post or two but I don't believe we're anywhere near relief. I think we still have further down to go.

Anonymous said...

Already to relief!
YEAH!

edd browne said...

The distilled wisdom seems to indicate
that this recovery will not be normal.
We don't have the productive capacity
this time that generates exports or limits imports.

Even the Fed says several years.
The phony GNP growth is gone, and we don't
make things as much or as well as in previous
decades.

Intensive training on demand at work and at home
is part of the solution. We killed the golden goose.
.

Anonymous said...

I'm sorry, but the crisis is far from over. There are at least three more bubbles still on the horizon. Student loans, commercial real estate and pension promises.

Budvar said...

Keith, let me get this straight, Obama has been in the job 12 mths and he's gonna save us all right? Is this why the wealthy are sticking their money into short term treasuries and paying for the privilege? If I was a suspicious type, I'd be wondering why they don't want their money tied up in a bank right now, what with FDIC metaphorically been spun around with it's pockets turned inside out (That's a local phrase for cleaned out broke). With treasuries they're guaranteed their money back, a bankrupt bank and a broke FDIC they're not. A lot can happen over that 10 day holiday period. Relief Keith? And you call Palin dumb!!

Anonymous said...

glad you're checkin' in, keith!!! i'm doin' the happy dance here in my college computer lab. better get back to work though... hit you up later amigo!

Anonymous said...

You're high.

Maybe on a fraudulent, "kick the can" basis.

All that debt is still owed, with exactly zero honest proposals how it will be paid.

The stated approach assumes clearly-impossible future levels of GDP, which leaves us with precisely one outcome to deal with it: inflation.

On the "reality-based" scale, we still oscillate somewhere between denial and desperation.

A few years from now, when all the resets, failed loan workouts, and held back foreclosure inventory no longer able to be held hits the fan...

Well. We will certainly see some impressive panic at that point.

Amtex said...

Very true. I see the middle and upper middle class folks showing signs of arrogance again. Frugality lasted about 6 months. I used the last bubble to position my family well. Now it looks like we will get another few years to prepare as best we can for the epic collapse in lifestyle that is coming.

Anonymous said...

BUT BUT the TV says everything is fine .....

borkafatty aka the pig said...

Keith,

Is that you holding the rolled up $20 for the sock puppet getting your party on?

While we may well be in "relief" as far as the stock market is concerned, that world has firmly decoupled from reality. All that gummit cheese did was postpone capitulation for a little longer by moving us back up the curve to "fear" from "panic". NOBODY believes in this fake recovery back home. This aint over by a long shot.

Ohio Loan Officer said...

Sorry to disagree Keith.
I think we are still at DENIAL.
I have a feeling 2010 is going to be the meatgrinder.

OBama just asked the Big Bankers to loose up the money. While back at home, FHA & Fannie are gearing up for major tightening changes starting Jan.1. We are currently at a point where 50% of Americans that apply for a mortgage are being denied. These new regulations are going to exaccerbate that. The value of real estate is directly porportional to the number of potential buyers able to finance to buy it.
And then comes April 30th, 2010--- the $8,000 buyer's credit runs out.

OBama's bailouts and tax credits have been fingers in the dike. But he's running out of fingers.

LOL --- The banks are paying back the TARP funds! Take it from a bank insider, the banks are in no better shape than a year ago. But bonus season is coming and they don't want Uncle Sam messing that up. Q1 2010 they'll be looking for TARP funds again.

We got a long way to go my friend.

Anonymous said...

Banks are embracing for the next wave. ALT - A is just around the corner.

ASU professor admits we will see more foreclosure in 2010.

Hell , my bucket of Pop Corn is half full !

Ways to go. Hold on !

Angry Leprechaun said...

If this is not denial then.......?

casey said...

The banks are paying back tarp by issueing more common stock to suckers like you.Must be nice to raise money by doing absolutely nothing.The economy is a fraud and hoax.
I just reliefed myself by laughing so hard at cocaine kudlow and the jokes on cnbc.Cramer is a total baffoon.

RipeDurian said...

Yes yes yes!

Like the relief I just got from taking TUMS because my stomach cancer was making me uncomfortable...

AHHH RELIEF!

Dr. Huxtable said...

Amazing.

Unbelievable that this chart called it all the way through and we were fortunate to be aware of it and use as a guide.

I just wish that I had gone all in on Bank of America at $2.50/share and held!

Charles said...

I call excitement with Euophoria by Early Summer 2010...

Problem is we'll be at Panic by early 2011...

The chart remains the same but the Cycle has been DRASTICALLY shortened. We're hitting the second peak of our W recession.

Janus said...

Sure, the general mood is definitively in the "relief" stage. Nevertheless I think Keith was more correct when he told us that we where here:
http://1.bp.blogspot.com/_wFWqWIH-WFU/Sqqoc4JBiGI/AAAAAAAALLE/KPVZtaePu60/s1600-h/volatility.jpg

Anonymous said...

.




NO 'F' ing way,

There is still so much denial out there it's crazy!

A lot of fear and some panic.



.

TARPTALFHAMP said...

Keith, you were right about commodities in June '08, and you called the market bottom last March. This new optimism call of yours might be worth considering if Obama and Bernanke had any good options. They don't, and your luck as a sage is going to take a hit in 2010.

edd browne said...

First, round up the libertarian
"economists" who did not timely
repent or flee.

Greenspan first.
.

Bukko_in_Australia said...

Oh yeah -- and the sine wave just STOPS there. And the energy you feel from a sugar high, the caffeine buzz you get from a double espresso, the brain-jangle your sock puppet gets from two lines of coke, that never wears off. Debts don't have to be repaid. Money is infinite. You can make as much of it as you like and it never loses value. Gravity does not apply to America. I can step off this cliff and
a
h
h
h
h
h
!
!

DPW said...

Keith,

Your head is a bubble.

Keeferpanic.com

Keep posting, and I'll keep checking in.

This might help you wake up and smell the java:

http://www.prisonplanet.com/ventura’s-‘conspiracy-theory’-show-probes-911-mysteries.html

Anonymous said...

Bernanke is Person of the Year! Forget Despondency, Were back at Fear!

Anonymous said...

Keith, I would like to request you remove the link to the dirty website. The idiot who runs the site is a douchebag. Kindly replace it with the link to hotchickswithdouchebags.com. I feel that website is more in line with the values of HP and S&A. Remain true to yourself and fight the douchebags Keith, Fight on my man. Thanks, KCL

Guberville Smack said...

I nominate Ben Bernanke as TIME magazine 2009 person of the year. With great heroism and out-of-the box thinking, he printed 100 Zillion Trillion Dollars and saved the world!
An American Hero.

keith said...

Does anyone think we'll ever see "excitement" and "thrill" again in our lifetimes?

I can't picture it, nor can hardly anyone else. But if history is a guide, it'll come sooner than we think. Especially with the punch bowl spiked like never before.

And then after thrill, kaboom. It all falls in again.

bubble after bubble after bubble after bubble. Is that any way to run an economy? I guess TIME magazine thinks so.

Invest wisely. You know the game plan.

Anonymous said...

Denial.

edd browne said...

"think we'll ever see 'excitement'
and 'thrill' again"
- - - - - - - - - - - - - - - - -
I hope not; but purpose is more rewarding.
When has purpose been more crucial than now ?

Not military since '75, but I can think as if a
civil 'warrior', knowing that there are many others
of like mind. Been 'wounded' for it, but it helps
me keep on keepin on.

Failure is acceptable if the mission is right.
There is no shortage of corruption, blunders,
neglect, crime, and innocent suffering;
much of it off the public radar.
.

Devestment said...

I disagree about where we are on the chart. I feel that there is no recovery for the current administration. When I think back to the 1991 real estate bubble I remember that there was no recovery for all of Bush Sr. and things did not level off and stabilize till Clinton.

I regularly consult with a close friend who works for a large financial asset management company.

He says…

His company is bracing for the worst.

The largest wave of foreclosures hits the end of 2010 and into 2011.

Banks are holding foreclosures and allowing defaulted borrowers to live in repossessed homes to keep too many of them from hitting the market all at once. There is a huge backlog already.

Employment hasn’t recovered. When it does under the current administration it will be with low paying jobs because the supply of applicants is so large.

We will probably see some stability in the next administration. You will know things are better when people stop talking about how bad things are.

Economic cycles are not static in all asset classes. Bubbles and recessions happen in different assets independently of each other. Today gold is high as real estate falls. Tomorrow interest rates may climb as gold slumps.

A few things are sure. Many destroyed their credit in the real estate bubble. Many are unemployed. Housing related spending and employment is shattered. Inflation has been very high and the cost of living is difficult to manage for many.

As someone said in the early days of HP, “The best investment you can make is in your own education.”

Randy said...

Keefer said:
“Does anyone think we'll ever see "excitement" and "thrill" again in our lifetimes?”

Yes we will!

We are still not at bottom.

But we will be within 5 or so years, most likely sooner.

You were right when you understood that the internet has changed everything, knowledge and information available to all at the touch of a button will bear enormous fruit, the next time up will be roaring like it never has in the past.

But lets take a look at things from a distance.
Looking down from 10,000 feet here is what I see.

1)Emerging market growth is fake, the same culture that kept them poor for all of their history is still firmly in place, the growth we are seeing there now (including China) has a lot to do with a TREND (very much like the housing mania) prospectors under the guise of investing are fooled by “the grass is greener on the other side of the fence”. So we have tons of money from all sources; pension funds, goberment money, day traders, on and on pumping money in that direction. (The real source of growth, and NOT ‘a new local middle class’) – no fundamentals – It will crash.
2)See #1 and replace Emerging markets with the word Gold
3)At the very top of this insanity are the ones prospecting into Arab countries, it defies logic that a few lucky very rich oil sheiks can build a sustainable economy, or anything else sustainable.
Yet paper money keeps on flowing to all the above

This candle is flickering its final flame and sucking the final paper money from the dumb edumecated MBA types.

We should reach bottom in the next couple of years or so.

As Keefer said, “Cash will be king” IMO the greenback will provide great opportunities during the down times.

Then: the next time up – remember that ‘knowledge is power’ what the Internet has created can never be reversed.

It is then when we should begin planning for high inflation.


*Disclosure I was in the hyperinflation camp for over a year put lots of money into TIPS, but I now understand better.. sold all my TIPS and am back in cash.
What’s immediately ahead of us is deflation…
It is possible that helicopter Ben and company aren’t that dumb after all, I just don’t think they’ll be able to inflate us out of this one.

My new understating is that the Fed is not capable of increasing the “effective” money supply.

That’s right! I was a big Ron Paul supporter but he was wrong and so was I..

I am no more torn on inflation vs. deflation

The answer is = deflation

I can further explain if you ask..

It hath been foretold..

Mark in San Diego said...

Me thinks the "recovery" is just the sugar-high from bailouts, and banks "paying back" TARP for year end bonus checks - Citi anyone???

The illusion of prosperity may be kept alive for the 20% top dogs, but for the 80%, life will just keep going downhill

Prisoner No. 6 said...

Very perspicacious. Already we're seeing the consumers with their pent-up demand starting to act out with their spending. LA Times reports that real-estate prices are on the rebound - mainly because of bargain-shoppers.

As the frustrated money on the sidelines, hiding out in their gold, starts to see others walking away with deals, you're going to see an avalanche of people back into the market. And yes, this means another bubble. With all that entails.

At some point, you have to wonder if the Congress is ever going to have the stones to re-impose the controls put in after the 1929 crash, that kept us out of these kinds of crazy cycles until Ronnie Reagan's bunch started carping about "red tape" and removed them all. And yeah, I know Barney Frank and all that - there's enough blame to go around.

But when one party's only contribution to the debate is "Filibuster!" then what is really to be accomplished here?

Angry Leprechuan said...

Ron Paul and Barny Frank will be on Larry King tonight to debate monetary policy.

Andrew from Russia said...


Does anyone think we'll ever see "excitement" and "thrill" again in our lifetimes?


I hope not. We've had enough of both to remain busy picking up the wreckage for a few more years/decades.
I was surprised to learn that Dubai actually had/has THREE "palm island" projects, each subsequent one larger than the former and started in a haste while ink was still dry on the previous developments. This is eerily similar to the Soviet experience of "dolgostroy" ("long construction") - mega-projects that would never be completed. Makes me pessimistic. Regulators can fix post-bubble hangovers but they cannot fix WASTE.

Anonymous said...

Keith,

Thanks for the fresh perspective. I definitely regret not listening to your advice re: MOABO in Dec 2008(even though you were a few months early, overall a great call).

The game is rigged, that is why using rational investing theory doesn't always work. Sometimes you just have to get in on the momentum fuelled by bad public policy and hopefully get out before the next crash.

Not sure I have the stomach to do anything but I appreciate your point of view.

stupidly said...

I got news for you

D-E-A-D C-A-T B-O-U-N-C-E

The communist are going to destroy the world.

Anonymous said...

Kind of depends where you are at.

http://www.dailyjobcuts.com/

Dr. Huxtable said...

Seriously? I mean really...seriously??? Who's payrol' is TIME magazine on?

Is Britney Spears Mother of the Year?

http://news.yahoo.com/nphotos/Federal-Reserve-Chairman-Ben-Bernanke/photo//091216/480/6e0e5291b6924d9eb2e24d2bfe4cc213//s:/ap/20091216/ap_on_go_co/us_bernanke_senate

Dr. Huxtable said...

I am OUTRAGED at this TIME Magazine 'man of the year'. How can a media outlet show such extreme favoritism and be so disingenuous? They give Bernake this credential for 'keeping the economy from getting worse than it could have been'.

If their cover had any foresight it would shame Bernake for having sold away our future, for having avoided a necessary and healthy correction to this bubble economy. Instead Bernake has rewarded the guilty, punished responsible savers, and sold away our future. TIME Magazine is a joke.

Dr. Huxtable said...

Bernake-'Man of the Year'.

Seriously, this is the cherry on top. It is like raping someone, not even being tried for it and knowing you will not be, and then shooting that person the bird and stealing their lunch. WTF!?

How can a nation of so many be so ignorant? The curtain has come down, the scam is in perfect view, but still the sheep see nothing and nominate their slaughterer 'Man of the Year'.

It is surreal to see this in motion, to know what has been done and gotten away with, to know the direction this leads, and that it only gets bigger and worse from here because all who could stand up and demand what is right and just lack any critical thinking or awareness to do so.

euonymous said...

Keith,

I checked-in in good faith, and with good intentions.

IMHO, you're messing with the medium.

If you thought about that for a couple minutes, you'd realize that that's important.

TXG said...

Keith, if we are in Relief, then when were we ever in Capitulation, Despondency, and Depression. Perhaps in isolated pockets like Detroit, but most people have only experienced Panic to this point. Furthermore, unemployment remains high, more housing resets are coming, and the population is nearing rebellion over the spending in Washington aimed at putting a bandaid on the problem.

A skeptic would argue that your post is a feeble attempt to defend your blind support of the idiot you voted for.

Anonymous said...

Uh huh. And how does a collapsing dollar and out of control debt for governments, businesses, and individuals play into your bullish views?

Mike Hunt said...

Son of a bitch. I just had a dream early this morning that Soot and Ashes had a bunch of new posts since you signing off, I log on and voila- it's true!

Glad to see you back, even if only temporary Keith.

Your insights and cutting analysis is sorely missed.

-Mike

Anonymous said...

It always seems like you are always 2 or 3 dots further ahaead on this chart than what I observe in my area (Philly burbs). I would say we are still in denial in this area. Housing prices have come down a little bit and people are negotiating more, but housing is still way way overpriced. Rents are way overpriced as well. Maybe the upcoming bank holiday will finally usher in reality.

Honica Jewinski said...

If you're using the chart to gauge the health of the stock market, then yeah, I'd pretty much agree with ya. Somewhere around hope I'd say. We'll see how long that lasts though. I suspect it won't be very damn long.

If however, you are using that chart to gauge the overall health of the economy, then, well, all I can say is LMMFAO!!!!!!!!!!!!!

You've GOT to be freakin KIDDING ME! Unemplyment EVERYWHERE. Forclosures EVERYWHERE. Eviction notices EVERYWHERE.

THings are slowly but surely getting worse here bud. Go ahead and take a poll if you must.

JAWS said...

Seems so in Las Vegas real estate.
People have cash. They're coming from all over the place.
They don't even want a deal anymore; they just want a nice place where they can entertain. Lots of it here.

I think CA is still due for a soaking though.

patrat said...

I just drove East from California to Arizona on I-10. Many of the cars heading our way had huge tarp-covered bundles tied onto the top of them or in open trailers behind them. From what I could see, it didn't look like Christmas visit stuff, or camping stuff, or vacation stuff - it looked like clothing and personal possessions all piled together. I've never seen that before.

All I could think of were those old pictures from the 30's of families looking for work I guess, with all their wordly possessions tied on to their cars.

There were quite a few U-haul trailers too, like mine.

Am I imagining things? I've never traveled that route at Christmastime, til now.

By the way, I was helping to move relatives who are losing their house. He's out of work, she has health problems, couldn't pay bills, went through savings, retirement money, loans from relatives and friends ... . It happened pretty quickly actually.

Anonymous said...

In Phoenix, I'd say people are still in denial. Mall and shopping center parking lots filled up with the mindless morons still using their credit cards, houses 60% off peak with probably another 20% drop in 2010. This valley of the smog is chock full of ignorant dumbasses. Can't wait to leave this hellhole!

wallstreetvet said...

Keith we miss you!! I'm tired of all my banker colleagues lost on their market views and the public still hocked up in debt.

SoYouThinkYouCanInvest said...

It's great to see you posting again Keith, even if it doesn't become a daily thing.

There are two types of cycles: short term cycles and long term aka secular cycles. Keith is exactly right where we are in the short term cycle. In the long term cycle we are definitely in the denial phase.

Honica Jewinski said...

JAWS said...
"Seems so in Las Vegas real estate.
People have cash. They're coming from all over the place.
They don't even want a deal anymore; they just want a nice place where they can entertain. Lots of it here."

-----------------------------------

Hmm, that's really intersting JAWS. Say, do the people coming in happen to have hooked noses?

Anonymous said...

Welcome back Keith, even though you are just checking in.

So you are saying that we have already passed the "Point of Maximum Financial Opportunity" and we are headed for euphoria in short order.

I guess I don't know how that could be.

We still have 2 more waves of foreclosures coming in 2010 and 2011.

We have a federal reserve leading all the commercial banks with balance sheets full of toxic waste.

We have 1 out of 4 homeowners upside-down.

We have the US gov't in debt over $12 trillion and climbing.

We have unemployment at 10% and probably going higher.

We have commercial real estate going bust.

We have pension plans going bust.

We have home prices still declining.

We have bankruptcies going higher.

We have big states like California and New York going broke to the tune of billions.

We have an auto indudstry in collapse.

I guess I could go on but what's the point?

So I guess I will just sit back and wait for the euphoria to take hold.

Keith you are the best so I just ask for 1 favor.

Will you let us know when we are in euphoria? I can't wait for euphoria!!!!

Thanks Keith and welcome back!

I look forward to more posts.

Anonymous said...

SoYouThinkYouCanInvest said

"...There are two types of cycles: short term cycles and long term aka secular cycles. Keith is exactly right where we are in the short term cycle. In the long term cycle we are definitely in the denial phase."


Ah so; that is the best explanation I have seen for what is going on.

Thank you for that.

Anonymous said...

I don't know Keith, I think we're at despondency here in the NYC metro area. Or at least, I am, harhar (can't stand the holdays!!).

When is this stock market gonna crash, doyathink? I have everything in bonds, cash, and certain commodities since July waiting for this crash I keep hearing about from one KD, but it doesn't come. wuwt?

msnj

Anonymous said...

Kieth, you are still crazy as ever - we are still in denial my friend.

As an aside, my landlord failed to pay our mortgage and now I am getting kicked out - finally, after all these years of reading HP, etc. DC Metro ends up being no different than any other bubble city and that the gov't jobs can't do anything to stop it.

Saul said...

Haha! You live!

Well, well, well. My take is that there is a bit of a variation in the population - some are still back in Anxiety, most are in Denial and a paranoid few are in Fear.

This year will see more people in Fear and Desperation when the double dip bites. Those people in the know are already there, moving into Panic.