U.S. Property Crisis: The Lessons of the Automotive Industry
By J. Christoph Amberger
Taipan Group's Dynamic Market Alert
-- U.S. Property Crisis: The Lessons of the Automotive Industry
-- Clowns & Harlots: The Real ER
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U.S. Property Crisis: The Lessons of the Automotive Industry
by J. Christoph Amberger
Fed policy makers acknowledged recently that the housing recession will, in all likelihood, hold U.S. economic growth back for longer than they had originally thought. Building permits in April fell to the lowest since June 1997.
And yet, there have been plenty of reports in recent weeks that pointed to reviving demand for homes. The Mortgage Bankers Association's index of applications for mortgages to purchase homes rose an average 5% in May from the prior month -- and was up 6% year over year. New home sales soared 16% in April, the most in 14 years.
But homebuilders and developers still are sitting on large supplies of unsold homes. Inventories in April equaled 6.5 months' worth of sales. (But even that's down from the record high of 8.1 months' worth posted in March.)
Thirty-year mortgage rose to an average 6.74% at the end of last week.
Now, for anyone who has ever bought a house in the last quarter century, even a 7% mortgage rate does not sound all that bad -- especially considering that there is no law on the books that would force a pinched homebuilder or a lender feeling the competition breathe down his neck to charge market rates.
In fact, builders have started advertising fixed rates of 5.5% and less -- simply to get rid of unsold stock.
I believe this is just the beginning. Give it another six months, and homebuilders may be forced to adopt the loan policies of your trusted neighborhood car dealership... with no cash down, zero interest for the first year or longer, or cash back offers to attract willing buyers.
This would not just clear out inventories, albeit at lower margins, but also contribute to the reversal of a strong inflationary factor in the U.S. economy.
Clowns & Harlots: The Real ER
by Christopher Corbett
The grim end last week of Edith Isabel Rodriguez, who died ignored on the floor of a Los Angeles emergency room, generated a lot of concern. But anyone who lives in a large city knows that the last place you go for help is an ER.
On TV dramas, the competent and compassionate doctors and nurses in emergency rooms are never too busy to comfort the sick and troubled. But if you live in a big city you know this is fantasy. There is no place more dangerous or scarier than an ER.
In Baltimore, we have legendary ER horror stories. Attendants at one hospital -- now blessedly closed -- actually let a guy die on the sidewalk in front of the hospital because it was “not their job” to walk a few yards to fetch him into the ER. That was no more shocking than what happened in Los Angeles last week.
The last time I was in an ER, my wife had felt a little faint and dizzy. Next thing she knew she was in an ambulance and taken to the nearest Baltimore hospital. Nearest and best do not always equate in Baltimore.
Baltimore is home to Johns Hopkins, often said to be the best medical school and best hospital in the world. But the reality is that most of the time you do not get taken to Hopkins but to a third- or fourth-string hospital where, to put in bluntly, ALL HOPE ABANDON, YE WHO ENTER HERE.
My wife was in a waiting area when I got to the ER, fully expecting to be taken home. Sitting on a gurney next to her was a scantily clad fat man who was grinning and singing to himself. His hair was braided in a long queue of the sort worn by Chinese coolies in the 19th century. He was wearing only the briefest of hospital smocks.
Not a pretty sight.
My wife’s office had called. She’d felt a little faint. Dizzy, perspiring heavily, some tingling in the extremities. Hell, I feel like that most of the time. I thought it was the coffee. But they hauled her down to the ER. Big mistake.
In the waiting area, there were revelers who had come to the ER after domestic affray, pugilistics, marital discord, altercations with sharpened cutlery and other misadventures of the sort familiar to Baltimore, which calls itself “Charm City.”
There were several tired police officers, too. Two patients had been handcuffed to chairs. Two other patients were having some sort of psychotic episode -- or drug withdrawal, perhaps? One man was barking. And Jerry Spring was blaring from the TV into a waiting room that looked like an open casting call for his freak show of American life. It was mid-afternoon on a weekday and this was a scene right out of a Hieronymus Bosch painting.
Outside, the temperature was a withering 97, with about 90% humidity. Inside, where the air conditioning was hopelessly inadequate, the hospital was a kind of vast Turkish bath.
Naturally, because this was a hospital, home of “hospital food” (a close relative of “airline food”), there was plenty to eat. Once it became clear that my wife would stay overnight, a friendly aide brought her a giant slab of lasagna and what I think were vegetables. They had been humanely destroyed via a process related to carpet cleaning; steamed to death, all nutritive value removed. Her other choice had been fried chicken!
I knew my wife was going to live, because even before the lasagna arrived she deeply regretted having allowed two eager and well-intentioned EMTs to haul her down here. That’s the first sign that you are going to be OK. If you get to an ER and you immediately think, “Holy smokes! Why did I come here?” -- you’re better. For many, the mere sight of the ER has restorative powers. It’s like being transported to a holy shrine like Lourdes.
In truth, unless you have been extracted from a flaming car by the jaws-of-life or are in full cardiac arrest, you should never go to an ER. No one I know has a good ER story. No one ever says they enjoyed going there. In most cases, you will have either stopped bleeding, or bled to death, before a doctor sees you. I now understand why the makers of the popular TV show ER (and all the other doctor shows) have to wildly distort and embellish. No one would watch real ER stories, the same sorry soul waiting for hours in a chair. Is he still waiting? (That would be the first seven episodes of the show.) It would be hard to build sympathetic characters out of the sullen robots who process in the insurance information. (“I’m on my break.”)
On ER they do everything from open heart surgery to organ transplants. And there’s no waiting! I’ve never been in a city ER where I actually saw any procedure performed. In fact, you do not want to have a procedure performed in an ER. Many of the doctors there are residents and interns, still on their learner’s permits -- literally, “practicing medicine.”
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In 2006, China imported 3.78 million tons of nickel.
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