Tails from the Back Seat: Winter "Wonder"land

Can it really be that Karly (age 8) and Jake (age 6) have never seen snow before??

Yes, they are "lucky dogs" until now...and here are their thoughts on the matter.....

         Snow is wet                                   Little white balls

         Snow is cold                                 That can't be caught

         It covers up                                   Mouth wide open

         The smells of old                          But all's for naught

                           --Karly                                               --Jake

Cold, dark days and falling snow....

Eureka Springs, AR - 3/21/13

Where did all the flowers go?

Opelousas, LA - 3/14/13

I guess it's not a lie if you REALLY believe it's true

Many people are aware by now that the FOMC minutes for the December meeting released yesterday contained a statement that suggested more FOMC members were interested in ending the Fed's bond buying program - also known as "QE" - by the end of 2013.  The precious metals were immediately hammered, while there was very little reaction in the bond market and no reaction in the S&P 500 or the housing stocks.

There are two problems with the above.  First, if it were indeed true about the Fed ending QE by the end of 2013, think about what that would mean for interest rates, mortgage rates, the housing sector,the burden of interest payments on our huge national debt, and the economy overall.  If the Fed stopped buying Treasury and mortgage bonds,  interest rates would spike up several hundred basis points, risk of US debt default would skyrocket, government programs would need to be cut by up to 60%, and the US economy would really find out what it means to tumble off the cliff.

Second, who will buy all the new Treasury debt issuance?  The Fed is purchasing approximately 70% of all new Treasury issuance. The Fed, not China or Japan, is the largest holder of our debt.  If the Fed were not buying this paper, who would?  Seriously.  Either future Treasury bond auctions will fail OR it will take significantly higher interest rates to induce new money into Treasuries to make up for the trillions the Fed has been buying.  Of course, the Government could balance its spending and eliminate the need for additional Treasury issuance...I'm investing under the premise that the Government is not going to balance its spending anytime soon (maybe not until a total fiscal/monetary collapse forces the issue).

So it appears the FOMC minutes were either a big lie or a massive smoke screen.  It's not the first time the Fed has suggested that QE would not continue, only to expand it within six to nine months.  

Government deficit spending = de facto QE.  

Needless to say, the Fed has already committed to buying a $trillion+ more in Treasury and mortgage debt in 2013 (and this doesn't even include the $trillion in Government-backed student loans relentlessly marching towards default). Unless the Fed is prepared to shoulder the consequences of ending that program rather than expanding it at the end of 2013, yesterday's plunge in precious metals can be seen seen as a true gift from the markets by anyone who takes advantage of it.

Merry Christmas from Key West!!

Just sharing a bit of our Christmas in Key West with you!  Hope all our friends and family enjoy a holly jolly holiday filled with love, peace, joy, and great cheer!

Pre-holiday Greetings from West Palm Beach

Welcome to Paradise, Boyd's Campground, Key West

Let the holiday festivities begin!

Decorations abound throughout the town!

Creative Christmas at the Docks

Christmas Movie Marathon must carry on...regardless of the weather!

Santa on "island time"....

Karly and Jake too!

Fabulous Fall: Foliage & Football

Without a doubt, the fall grape harvest in Napa Valley is spectacular, with its wine-perfumed air and gilded-leaf vineyards dotting the hillsides.  However, the stunning mosaic foliage of mountain-side forests, crisp nose-tingling air, and electric energy of long-lived football rivalries that accompany the celebration of fall on the East Coast is incomparable!

We have spent the last few weeks following the peak fall foliage season on the East Coast from the Shenandoah Mountains in Virginia, to the Blue Ridge Mountains in North Carolina, to the Cherokee Foothills of the Great Smoky Mountains in South Carolina...and now we are nestled in the heartland of Georgia, Athens to be specific, where the U of Georgia vs. U of Florida football rivalry perfectly exemplifies the energy of East Coast fall traditions.  And of course there is nothing more sweet than a hometown victory, as the [under] Bulldogs beat the Gators!

The weather has been exceptional, sunny but cool days (perfect for hiking!) and crisp nights, allowing the blazing technicolor leaves to grace the trees for maximum enjoyment.  Fortunately, the path of our travels has managed to skirt the ravages of Storm Sandy up the East Coast and we look forward to the hurricane  season soon ending before we head into Florida for the holidays.

Fall truly is a most spectacular time of year, but only photos truly can do justice to its splendor, enjoy!

P.S.  Don't miss the Halloween greeting from Jake!

Shenandoah Mountains, VA

Hiking along Skyline Drive, VA

Virginia, A Swing State??

Virginia is for Puppies!

Blue Ridge Mountain Homestead ready for Fall

The tapestry of a North Carolina country road

Table Rock Mtn, Cherokee Foothills, South Carolina

The view from Table Rock Mtn

Hiking among the Golden Aspens

Cherokee Foothills, South Carolina

A Tapestry of Technicolor

Quintessential East Coast (Cherokee National Scenic Highway)

View from Sassafras Mtn, highest peak in SC

"The Hedge", UGA Stadium, Athens GA

How 'bout them Dawgs??!!

Happy Halloween from Jake!

Original Footage Obtained From Ben Bernanke's Mother

Housing Market: Geronimo!

It's been a while since an economic post, and the data points we keep seeing are too tempting to pass up a comment now. At this point, it doesn't look like the US is in a recovery by any measure. What we are at the end of is a monstrous debt cycle that has been perpetrated over the last 40 years (yes, this is bi-partisan clusterf**k). It started with Nixon flushing Breton Woods down the toilet and closing the gold window. Every year/administration since, we have been consistently devaluing our currency and engaging in an orgy of massive borrowing in the private and public sectors.

This has many implications for all of us. The housing market is one that hits the hardest for most. Take it on fact, not faith, that the housing market is getting ready to go into collapse mode again and that the "tight inventory" argument being put forth by utterly biased frauds like the National Association of Realtors is total BS.

Traveling through the country, I take a great interest in real estate listings. The listings that are in short sale, foreclosure or just hundreds of days on market are growing. As an example, from a New Jersey newspaper: "The long-expected second wave of foreclosures in states where courts delayed their processing appears to have begun in New Jersey and area counties, with filings jumping in the second quarter from a year ago." LINK

Then this morning Bloomberg reported this:  "Foreclosure filings rose in almost 60 percent of large U.S. cities in the first half of 2012, indicating many areas will have more distressed homes on the market later this year, RealtyTrac Inc. reported." LINK

THEN, the National Association of Realtors reported that pending sales for June dropped 1.4% unexpectedly in June.  A .9% increase was forecast by Wall Street's Einsteins. Even more significant - and reinforcing a serial of downwardly revising previously reported data - the NAR downwardly revised the pending homes sales number for May.  Here's a LINK.  The disturbing reality is that this is the seasonal time of year that the housing market is supposed to be at its relative healthiest.  In fact, the NAR data is seasonally adjusted - imagine how ugly the raw data must be.

The NAR's excuse for the drop in pending home sales is "tight inventory."  But we know that's a bunch of BS.  Short-sales are failing to close en masse.  I personally know (and you may too) someone who was sitting in a house with a defaulted mortgage waiting for a short sale to close that failed because the financing fell through.  Furthermore, a lot of the bank-owned inventory was shifted to Fannie Mae and Freddie Mac, who then off-loaded it onto investors in big blocks through a sale-to-rent program initiated by the Obama Administration.  The rental inventory is going to balloon back up, including many apartment buildings that have been started and which have caused the building starts statistic to bounce over the past year.  Rental prices for homes in many parts of the country have softened up from this past winter.  I wonder why?

As the rental inventory expands and drives rents lower, it will also drive home values lower.  This process will be exacerbated by this coming second wave of en masse foreclosures.  I'm not the only one who perceives this insidious negative feedback cycle starting back up. For every area of the markets, I have certain analysts to whom I pay attention, mostly to confirm my own thinking or gain new insight. Mark Hanson is the guy worth paying attention to for housing market analysis. Here is a link to some of his analysis, and it's worth reading. LINK


If you are thinking about buying a house because your realtor is telling you that the market is tight and prices are going higher, don't do it.  If you are thinking about selling your house to capture remaining equity value, get it done as soon as possible.  This fall/winter could be very ugly, and not just for the housing market...

Living it up in the UP

We've been travelling through Michigan's Upper Peninsula for the last month, and it has been everything we were expecting and more. Being filled with National Forests, it's been easy to find secluded spots to camp for free off the grid. We spent 16 days in one spot near Munising, MI.

Sixteen days without any electric, water or sewer hookups is our current best. We should be able to easily push that up to 21 days someday when we find the right spot. Actually, it's hard to call this "camping". We have electricity (solar), satellite TV, a big refridgerator/freezer, bathroom/shower, and our own bed and sofa to come home to every night. This definitely isn't roughing it.

We do cook over an open fire most nights (much better than using the gas range or the convection oven). One night we cobbled together a meal of grass-fed organic sirloins purchased at a local farm we visited, some long grain wild rice hand harvested by native american indian tribes using traditional methods (available only in northern Minnesota and Wisconsin), and some fresh local greens from the Munising Farmers Market. To top it off, we opened a bottle of 2002 Keever Vineyards Cabernet Sauvignon (Yountville,  Napa Valley). Definitely not roughing it.

This campsite in the Hiawatha National Forest was 10 minutes from Lake Superior in one direction and 10 minutes to dozens of inland lakes in the opposite direction. We were five miles from town, but had absolutely zero noise at night. Ours was the only camp fire or light for miles. We could walk the dogs anytime without needing to worry about running into other people or cars. It would have been nice
to be on a lake or stream, but if we were, it probably wouldn't have been as secluded (or as bug-free).

There are too many great photos to post them all. Here are some for now. I would say the hiking, lakes, streams, beaches, and scenery are as good as anything we saw in a month in New Zealand....and this place is a lot less crowded than NZ! If you're thinking of going to New Zealand for the outdoor activities of the South Island, save yourself some money and check out the area around Munising, MI first.

 Typical sunset.

 A small piece of the Pictured Rocks. Those pictures deserve their own post later.

 Just miles and miles of empty white sand beaches. You can drive to some of them or hike in for even wilder scenery.

 Some of the 300 foot cliffs seen from the lake.

Another typical sunset. (they never get boring)