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[Leslie <cayadopi AT yahoo.com>]

<<<<...timing is not equal among investments.  One thing about gold, 
currencies, tresuries; they are liquid.  Real estate , on the other hand is 
il-liquid. >>>>

True.   
 
Except one my r/e broker buds in CA... he specializes in estate sales.  One 
thing he has observed is that r/e is illiquid only when priced wrong for 
market conditions.  Once price is lowered enough, there will be a buyer.  
Although the credit disaster makes it more difficult and of course closings 
take time.  They are illiquid if you aren't willing to sell at a lower price 
than asking.
 
I think I read in some of the hyperinflation stuff that r/e prices do rise.  
I wonder about that this time, somthing doesn't seem right about that this 
time.  (The trick with the r/e bubble was knowing that by Feb 2007 
specifically, the credit bubble "cat" would be out of the proverbial bag - 
the first hint to the public that there was "a problem, Houston".)
 
<<<Practically everyone saw the bubble in real-estate , and some of us knew 
the
end time was near. >>>>
 
I disagree.  You wouldn't believe how many people I talked to about the 
bubble from 2004 thru 2006.  Not only were they clueless, but they told me I 
was dead wrong, Mrs. Doomsday, that real estate always goes up, ya de ya de.  
One guy had the cojones to tell me that as long as he didn't sell his 
property was worth his purchase price, something I'm still laughing about.  
When I was selling in 2005-2006 you wouldn't believe the crap the realtors 
that came to the open house told me (well you probably would) - I confronted 
them with their b.s. - the most shocking thing, was that most of them didn't 
seem to know it was b.s.  LOL.  Then they would con people into thinking they 
had only X amount of time  to buy another property or they'd get hit with cap 
gains tax.  The crap was unreal... of course back then I could actually 
remember the tax rules on that and spouted the data off since it was fresh in 
mind.
 
One home health caregiver lady I talked to (a $12/hr type) had been convinced 
in early 2006 that she qualified for a S/F homes costing nearly $300k.  She 
lived in a small place with her mom and MIL, hub dead, and she is sole wage 
earner.   She was so excited about buying a new home so she could have more 
room and not have to share 1 bathroom.  She only had 2 years left to pay off 
her small condo.  I sat her down and put the math in front of her - then told 
her not to believe me, but to take what I wrote down to the lender that 
qualified her and ask if what I wrote down was true.  She wept the next week 
while she profousely thanked me and told her I saved her life.
 
Ditto with a very well to do friend, self-made Palm Beach type.  She called 
me, again this was 2006 and prices were already sliding for those who pay 
attention.  She was trying to get me to go with her to a condo buying party.  
Short end of it, I told her the side she hadn't heard.  I learned later she 
didn't make any condo flipper investments.  She thanked me earlier this year.
 
Just a couple examples - as I talked to so many people - next to none 
understood it was a bubble.
 
If you can afford the "carry" on the r/e, I think it is still one area people 
recommend if you think hyper-inflation and depression on the horizon.  That's 
one advantage in gold.
 
Real estate "carry" is a lot bigger than most people think.  Mortgage 
interest, rising real estate tax, insurance, and in some cases repairs.  At 
least some of the carry can be off-set by renting - at least until rent 
controls are imposed.
 
 
<<<<....gold is not looked at as an investment, but rather as a store of 
wealth....>>>
 
It only stores excess wealth as long as prices are steady or rising.  Prices 
meaning the exchange rate back into a currency, or,, if it takes the same or 
less grams to purchase some things in the future.    Really what it is is an 
insurance policy taken out against the government debasing the purchasing 
power of the currency.
 
For example.  We know in history that during depressions, gold priced in 
currency falls.  So let's say you bought gold today at $881.  And history 
repeats, and a depression unfolds.  If we look back to the early 30s, you 
will see that gold actually fell in price (in terms of being able to purchase 
fiat currency).   If history repeats here, and we have a depression, gold 
could continue down for a while.  If so, it will take more grams to purchase 
supplies than at the time you purchased gold - i.e. it didn't store any 
wealth during that time period - it lost wealth.  You have to wait for gold 
prices rising before it is a store of "money wealth".   
 
(Geez - we really should have two different terms here to identify wealth to 
avoid future discussions about what is the proper definition of wealth....  
the wealth being discussed here is not the kind of wealth that sustains one's 
life....i.e. cropland, seeds, etc., but the wealth of excess production being 
held in a form other than life sustaining items which should be the first 
priority...)
 
Kitco has a crappy historical chart that shows gold prices from 1883-1998.  
You can barely see the drop in gold price during the depression - but I don't 
know where else to get a better historical chart, but I have seen it in books 
and the drop was dramatic - but gold did lead the way out as far as price 
moving up.
 
http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx (hopefully this 
chart link works - if not, go to kitco.com hit charts on the left, then 
historical charts until you find the box to click off the 1883-1998 range)
 
Of course it is interesting to see the price response of gold.  It was 
$20/ounce until the Federal Reserve was created.  It dropped during the 
depression, moved up in response to the new deal / gold confiscation era - 
then zoomed up when Nixon took us off the gold standard, and has nearly 
tripled again since that ending price area on that chart.... 
 
So far an 4,405% move up from the 1800s value of $20/ounce, since the 
devaluation of the currency game started with the creation of the Federal 
Reserve.   
 
Guess that means, that if you were worth $1 Million in 1900, you would have 
to be worth $44 Million + in order to purchase the same amount of "things" as 
in 1900..... being a millionaire today is "worthless" compared to being a 
millionaire in 1900.....
 
 
 
Note that those who bought the peak in 1982 had to wait some 25 years to get 
back to break-even, and many probably sold at a loss while waiting.... at 
least those that didn't understand what kind of insurance they were taking 
out, or those who found themselves forced to raise cash at an inopportune 
time.
 
 
 
http://www.lewrockwell.com/paul/paul445.html 
 
It's too bad few understood that this guy knew what he was talking about.  
From that link he writes:
 
".. buying gold per se should not be touted as a good investment."  
 
"Both gold and dollars are considered money, and holding money does not 
qualify as an investment."  
 
"...by holding paper money one loses purchasing power. The purchasing power 
of commodity money, i.e. gold, however, goes up if the government devalues 
the circulating fiat currency."
 
"Holding gold is protection or insurance against government’s proclivity to 
debase its currency. The purchasing power of gold goes up not because it’s a 
so-called good investment; it goes up in value only because the paper 
currency goes down in value."
 
"...the incentive and wisdom of holding emergency funds in the form of gold 
becomes attractive when the official currency is being devalued."
 
"The lack of earned interest on gold is not a problem once people realize the 
purchasing power of their currency is declining faster than the interest 
rates they might earn. The purchasing power of gold can rise even faster than 
increases in the cost of living."
 
"...most who buy gold do so to protect against a depreciating currency rather 
than as an investment in the classical sense. Americans understand this less 
than citizens of other countries;..."
 
And he goes on to explain that most people in this country do not realize 
that $1.00 pre- Federal Reserve (1913) is now only worth .04 cents  What is 
scary is that that is just the beginning of a serious devaluation of the 
currency!   He also explains that while there is a strong 
(inverse)correlation between gold and the amount of money in circulation 
"it's not instantaneous or perfectly predictable".   He goes on to state, 
"...many new dollars have been created over the past 15 years that have not 
yet been fully discounted, guarantees the further depreciation of the dollar 
in terms of gold. "
 
Anyway, he says a lot more.......... but he explains things well.  The kind 
of article that anyone who is considering buying gold should read - whether 
as a temporary insurance policy against inflation and/or hyperinflation, or 
collapse of the USD, or any other reason. 
 
(I found this today, looking to see what the US Constitution said the value 
of a dollar is supposed to be $1 is supposed to = 1/20th of 1 ounce of gold.)
 
 
<<<<<<<<<<,...........property taxes could take away that which no-one now is 
even considering.  Things might be different this time, why does one man need 
more than five acres (or 3 acres or whatever), maximum?  Maybe a federal 
property tax on 'excess' acreage is what people will think we need to pay off 
our debts.  Since the vast majority of people live on less than an acre , the 
vast majority of people would not have a problem voting for people who would 
enact such a tax.>>>>>>>>>
 
SHHHHHHHH, don't even repeat that... LOL !!   Actually, some of this is 
already happening, albeit with a twist.  In FL there are homestead exemption 
laws.  In the event of a judgment, they can't take your one homesteaded 
property away - so you would homestead the largest piece of land/most 
expensive property.  I don't know the outcome, but they were trying to change 
that law to protecting a maximum of 1(?) acre.  (Definitely not more than 
five acres.)  
 
I hadn't thought of that before, but I think you are on to something here... 
It is just a matter of time before the tax man follows suit............
 
The Icelandic guy isn't the only one who doesn't trust US $.  Neither does my 
family in Norway - and these are just "old timers" who have no background in 
economics - just common sense.  
 
 
<<<<<<<<<I haven't even considered doing what he did. The only difference I 
see between the dollar and the Krona is that one is backed by the world's 
largest arsenal of weapons and the other isn't.>>>>>>>
 
Dr. Paul writes: "The special nature of the dollar as the reserve currency of 
the world has
allowed this game to last longer than it would have otherwise."  What makes 
the USD the reserve currency of the world?  The fact that countries have to 
change into dollars to purchase oil.  Nothing more, nothing less.  That fact 
is changing.  Do not ignore the importance of the change of the 
"Petro-Dollar" changing to the "Petro-Euro" (and other currencies) with 
respect to the world's reserve currency status.  Or Putin's plan behind this 
move.
 
Politics isn't my game.... so for those of you who follow that, if the US 
feels backed into a corner --- feels threatened that the US Dollar will no 
longer be required in order to purchase oil ---- who are they going to point 
the nukes at to force the rest of the world to return to dollars?
 
Personally I think the US made a lot of enemies around the whole world this 
time, with the exporting of toxic waste ponzi scheme - a lot of enemies.  And 
then you have Putin playing his own version of chess - a financial war game, 
also backed by nukes and an alliance with the Chinese.  Scary stuff.
 
:-)
 
 

--- On Wed, 12/31/08, bobf <bobford79 AT yahoo.com> wrote:


 



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Scary stuff, indeed, Leslie. 

 As for the lew rockwell comments, some of that is what I have been trying to 
say in my not so litaery-advantaged way.

None of us know what will happen , and even if we guess correctly, how long 
it will take to happen.  The markets can stay irrational, up or down, a lot 
longer than a man can remain solvent.  A man has to make his choices and 
realize that he is, in the end, responsible for his own future.

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


--- On Wed, 12/31/08, Leslie <cayadopi AT yahoo.com> wrote:


>  
> Personally I think the US made a lot of enemies around the
> whole world this time, with the exporting of toxic waste
> ponzi scheme - a lot of enemies.  And then you have Putin
> playing his own version of chess - a financial war game,
> also backed by nukes and an alliance with the Chinese. 


> Scary stuff.
>  
> :-)
>