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The U.S. real estate collapse continues

Financial analyst Al Martin gave a stark and timely presentation of the continuing economic collapse on his August 28, 2010 monthly appearance on Erskine Overnight.

First segment

  • Existing home sales have fallen to levels not seen since the Korean war.
  • Unsold inventories of existing homes, 12 1/2 months, is the highest on record, not even reached during the depths of the Great Depression in 1933.
  • 44 of the last 48 months have been negative for mutual funds.
  • $500 billion annual drawdown of common stock mutual funds.
  • He said gold is the ultimate hedge. (In contrast, in November 2009, he effectively told gold shills to take a chill pill).
  • He said gold has always risen in a deflationary environment.

Second segment

  • In 2005, 26% of U.S. debt was financed internally — now 33%.
  • $500,000 house in Stockton, California in 2005, has defaulted three times since then. It dropped to $400,000 in Q1 2007, $300,000 in Q2 2008, $200,000 in Q3 2009, now being sold by the bank for $185,000.
  • He said historically, a bottom in the U.S. real estate market comes as the percentage of cash buyers increases. Now, 33% of all housing units sold are paid in full with cash. When it reaches 50%, he says the market will have reached a bottom.
  • 25 to 30 year-old first time homebuyers have fallen 70% since 2005.

Third segment

  • Defense Secretary Robert Gates announced 150,000 U.S. troops to be redeployed to the U.S. by 2014.
  • He said there is record global inventory for oil and copper: a 2 million ton net surplus for copper at the end of the year, and copper is at least a dollar per pound overvalued, and oil is overvalued by at least $20 a barrel.
  • They figured the world economy would perpetually grow by at least 2.2% per year, but 1% is now the new target.

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