The Gross Numbers
Stocks lost some more ground, and are in striking distance of recent lows.
Bond interest rates rose as concern about the supply of future bond
offerings hit the market. The Dollar moved sideways today.
Oil went higher on potential oil supply cuts in the Middle East. Gasoline
just went sideways today.
Gold fell $25 today more profit taking. This provides an additional
opportunity to buy gold. It may bounce up again tomorrow, or it may fall
no guesses on my part today. We must wait and see.
The Housing Crisis…..
At the heart of our economic crisis and bank illiquidity is the continuing
housing price decline. Here are some thoughts on this phenomenon.
Let¹s look at the gross numbers:
1. There are about 126 million houses/condos in the US.
2. The average family size in the US today is 3.19 people per family
3. At the current population, there are about 91 million families.
4. Conclusion = we have about 26% too many houses for families to have one
house per family
5. However, some families have second (or more) homes, and the 26%
conclusion doesn¹t take this into affect.
6. However, many people cannot afford a house, so that counterbalances
multiple homes per family.
7. The trend of having families come back together and live in the same
house, called multi-generational families, is increasing with the economic
slowdown, and started about 3 years ago. There was 2 million
multi-generational families in the US, and now there are 6 million. This
trend makes the housing problem worse also.
While this is a gross and inherently inaccurate calculation, the conclusion
is probably right that is there are too many houses in the US.
What solutions exist out there??
1. Increased immigration could fill those houses. Definitely a political
football with the topic of illegal immigration not being dealt with by our
Congressional leadership shame on them. Are they cowards?
2. Planning on which communities we want to grow, and which ones we are
willing to let die. Who¹s brave enough to debate this political football?
3. President Obama has announced a program to help underwater homeowners
stay in their home. While this is a step in the right direction, the
program will not solve the problem by placing a ³floor² under housing
prices.
Some thoughts on our Health Care System in the US….
We clearly have a big problem in the US as our health care system is just
too expensive, and is increasing in cost much faster than inflation. In
fact, as we had a deflation recently, have you noticed any health care costs
going down?? I don¹t.
How about this thought???
In 2007, 40% of adults and 10% of children tried complementary and
alternative medicine (CAM) for their ills. These are things like dietary
supplements, massage, acupuncture, etc. These are things that are typically
not covered by today¹s insurance plans, and are definitely not covered by
Medicare. Medicare is our big future problem in the US budget deficit
fight.
This number of people wouldn¹t by trying something that definitely doesn¹t
work!!!!! Why doesn¹t the government start thinking about CAM and
preventative medical practices, including CAM??? (Naturally, the answer is
that the pharmaceutical companies don¹t want this to happen but that¹s
just a political problem that can be solved by removed the current
politicians.) I would also emphasize that only ³proven² CAM methodology be
included in Medicare so this is something the government could spend
(stimulate) the economy doing.
I assert that this could significantly reduce the overall Medicare costs of
the US.
Here are the last numbers:
Dow Jones 30 Industrial – 6547 (down 79 points)
10 Year Treasury Bond 2.89% (up 0.06%)
Euro – $1.2637
Gold – $918 (down $25)
Oil – $47.07 (up $1.55)
Gasoline – $1.34 (no change)
