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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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On Wednesday, January 20, 2010, Prince Alwaleed bin Talal was on the Charlie Rose show, and gave some candid assessments, most notably, about the current state of the U.S. First, some background:

CHARLIE ROSE: Prince Alwaleed bin Talal is here. He`s chairman of the Kingdom Holding Company, the Saudi investment firm with billions invested across the globe. “Forbes” ranks him as one of the world`s 25 wealthiest people. “Time” magazine once dubbed him the “Arabian Warren Buffett.”

His firm has major stakes in banks, real estate, hotels, and media companies. His largest investment is in Citigroup, the embattled bank where he is the largest shareholder.

Then, he made the following candid statements about the U.S.:

CHARLIE ROSE: And what do you think of America and our future?

ALWALEED BIN TALAL: I like to summarize, but if you want I can elaborate. America is down, not out.

CHARLIE ROSE: But that`s not good.

ALWALEED BIN TALAL: I know, but you`re down now.

CHARLIE ROSE: Down in what way?

ALWALEED BIN TALAL: There was a book written about the Islamic world “What Went Wrong.” I think right now you could write a book about the United States what went wrong politically, economically, financially, you know, the crisis that you`re in right now. You`re a mess. You are in a mess in the United States. I have to be honest with you, because I love the United States. I admire the United States.

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