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  1. #1
    Clod Hopper's Avatar
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    Financial Big Picture guys.... step in.

    The path we are on has an end. Biden is speeding up the arrival of the train wreck. But there is so much economic meddling that the typical indicators are not responding as they should. Since no one really knows when the crunch happens, I am just seeking opinions. I am weighing out a wide range of possibilities and am curious what you guys are thinking.

    What is your though on when the current merry-go-round ride stops and how bad the downturn will end up. To frame the discussion, lets try to avoid generalities (OMG it will be SOO bad!) Years or months to downturn, guesses as to expectations of life at the bottom. Bonus points: How long to the recovery or what dystopian effect will prevent recovery?
    Proudly un-offended.

  2. #2
    Heard the first radio ad yesterday from a local finance guy (Mike Lester?) what flat stated that he could not predict the future but fully expected a crash by summer - advising his clients to get out of the market and move to safety.

    This guy has a new essay up every day or so, worthwhile reading: https://www.oftwominds.com/blog.html

    And of course the old standby: https://www.zerohedge.com/
    Courage is knowing it might hurt, and doing it anyway.
    Stupidity is the same.
    And thatís why life is hard.

  3. #3
    I see deep instability in the large commercial office space market, these are usually large investor grade mortgages (REITs, Hedge funds, annuities). These are going to cause more than just a ripple.

    We are already seeing some correction in the market this week on the mere idea that interest rate hikes are coming, when they actually do things are going to get really uncomfortable. And no doubt they are coming, they have to if there is a chance to get a handle on inflation, but it's going to grind things to a halt. It was suggested that there will be 4 rate hikes, if you have adjustable rate debt fix it now. The slow down will have an immediate effect, especially in the investment market, but the real effect will be in a few years down the road when people who stretched to purchase in an irrational market are upside down in houses with adjusting rates that they can't afford. I feel like I have heard that story recently somewhere, wish I could remember how it happened last time.

    The bright spot in all this is that wages will come up, ...for those that still have jobs. Fixed incomers will get left behind in an economy that they never planned for.

    Beware the man (figuratively) who steps in with the solution to the crisis, they probably caused it, and are fleecing you to kick the can down the road.
    " A mans rights rest in three boxes; the ballot box, the jury box, and the cartridge box" Fredrick Douglass
    "The nationalist not only does not disapprove of atrocities committed by his own side, but he has a remarkable capacity for not even hearing about them" George Orwell

  4. #4
    Clod Hopper's Avatar
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    Quote Originally Posted by noahfecks View Post
    I see deep instability in the large commercial office space market, these are usually large investor grade mortgages (REITs, Hedge funds, annuities). These are going to cause more than just a ripple.

    We are already seeing some correction in the market this week on the mere idea that interest rate hikes are coming, when they actually do things are going to get really uncomfortable. And no doubt they are coming, they have to if there is a chance to get a handle on inflation, but it's going to grind things to a halt. It was suggested that there will be 4 rate hikes, if you have adjustable rate debt fix it now. The slow down will have an immediate effect, especially in the investment market, but the real effect will be in a few years down the road when people who stretched to purchase in an irrational market are upside down in houses with adjusting rates that they can't afford. I feel like I have heard that story recently somewhere, wish I could remember how it happened last time.
    You list two marker posts that I have lost faith in.

    Historically the commercial office space trends were predictive. But that industry is transitioning as companies move to work-at-home and online business, both accelerated by covid. Commercial/retail starts are way off and I see no clear time that will settle out. So gaging off that is difficult for me.

    Then we have interest rates. A customary tool to moderate markets, it is easy to apply during times of low debt. We are not in low debt times. Any significant jump in rates will greatly affect our debt service, eating more of the tax income and pushing us into a debt spiral, or at least significantly accelerating a spiral we are currently in. I believe the evidence of that is the hesitance of the fed to raise rates when they should, and giving very poor reasons for the lack of action. We are at almost 30 trillion in debt, very small rate moves make a big impact on debt service. Beyond that, we are close to the territory that Europe is in with negative rates to continue finding debt buyers. There is so much downward pressure on interest rates that I dont see the fed making the corrective actions they should. The administration will just continue to cover for the situation with the next "it is just transitory" type statements. So not only do I tend to disbelieve any information the fed's interest rate level might tell me, avoiding proper corrective action leaves our markets/economy very unstable, so when the proverbial straw arrives, the reaction will be rapid and steep.

    I am not trying to shout anyone down. This is just how I see it and I am open to being convinced otherwise. Am I off on any of this?

    Letting inflation run away like it has been is a travesty. Knowingly crushing our (primarily) older generations savings with a seeming lack of care is disgusting and the bump in salaries is no justification. Besides, any bump in salaries is simply in reaction to increased pricing of goods, so those with bumped salaries actually end at a wash in lifestyle while retired take a huge step down.

  5. #5
    Clod Hopper's Avatar
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    Quote Originally Posted by Clod Hopper View Post
    The administration will just continue to cover for the situation with the next "it is just transitory" type statements.
    This is the kind of crap I am talking about:


  6. #6
    First and foremost the Chamber of Commerce is a right leaning group.....
    Let's make sure that is understood.
    2nd immigration DRIVES economic growth...

    Immigration has an impact on a countryís economy. Studies have shown that when people move to the U.S. from other countries, they add to the economic growth of the country. Immigration can help lead to increased innovation, education, economic productivity, and more.


    Just because you think its crap, doesn't make it so.



    https://www.thebalance.com/how-immig...conomy-4125413

    Quote Originally Posted by Clod Hopper View Post
    This is the kind of crap I am talking about:

    ****ing coward.
    Sweater
    Never play chess with a pigeon. The pigeon just knocks all the pieces over. Then craps all over the board. Then struts around like it won.

  7. #7
    tacotoy's Avatar
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    So, a bunch of our client base is investor groups that are picking up MF and Commercial properties, improving and flipping them within a year as stabilized assets. With everything going on, they aren't slowing down their acquisitions, they are picking up at 5x the normal stupid pace.... This aligns with a bit of what Noah said, even at the right level, they will exit the market in a few years and be fat and happy wherever they end up. But someone is always there to buy things that force it to show a loss... otherwise it would never sell.

    It is going to be a ride for sure.... we are in a good place for this adventure, but it still worries me at night. 2008 wasn't fun to be in construction unless you were in the right insulated industry.
    hookers and blow!

  8. #8
    Clod Hopper's Avatar
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    Quote Originally Posted by tacotoy View Post
    So, a bunch of our client base is investor groups that are picking up MF and Commercial properties, improving and flipping them within a year as stabilized assets. With everything going on, they aren't slowing down their acquisitions, they are picking up at 5x the normal stupid pace.... This aligns with a bit of what Noah said, even at the right level, they will exit the market in a few years and be fat and happy wherever they end up. But someone is always there to buy things that force it to show a loss... otherwise it would never sell.
    Valid. But it concerns me that the parties making profit are simply flipping. Essentially betting on not holding the hot potato when the music stops. That is hard for me to swallow as investment indicating longer term stability/improvement. years past, our commercial work was a pretty steady volume of new and remodel work with clients banking on long term returns. Lately it has been mostly internal remodels/re-facia stuff, kinda matches your observation of flipping.

    Quote Originally Posted by tacotoy View Post
    It is going to be a ride for sure.... we are in a good place for this adventure, but it still worries me at night. 2008 wasn't fun to be in construction unless you were in the right insulated industry.
    word. keeping staff employed from 08 to 12 took a few years off my life.

  9. #9
    tacotoy's Avatar
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    Quote Originally Posted by Clod Hopper View Post
    Valid. But it concerns me that the parties making profit are simply flipping. Essentially betting on not holding the hot potato when the music stops. That is hard for me to swallow as investment indicating longer term stability/improvement. years past, our commercial work was a pretty steady volume of new and remodel work with clients banking on long term returns. Lately it has been mostly internal remodels/re-facia stuff, kinda matches your observation of flipping.



    word. keeping staff employed from 08 to 12 took a few years off my life.
    I wouldn't measure any investor pool as a long term standard. But the fact that they have ramped up their acquisitions in the last 35 days, to 5x what they did the 6 months before, does lend to a ramp up of people to capitalize on what is happening/coming. There is definitely going to be quite a few left holding the potato at the end of this.... All I can hope for is that we position well enough to ebb and flow into other parts of the market.

  10. #10
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    Quote Originally Posted by 1BGDOG View Post
    First and foremost the Chamber of Commerce is a right leaning group.....
    Let's make sure that is understood.
    2nd immigration DRIVES economic growth...

    Immigration has an impact on a country’s economy. Studies have shown that when people move to the U.S. from other countries, they add to the economic growth of the country. Immigration can help lead to increased innovation, education, economic productivity, and more.


    Just because you think its crap, doesn't make it so.



    https://www.thebalance.com/how-immig...conomy-4125413


    Legal vs illegal. It makes a difference.
    From the only state in the USA where O'dumbass failed to carry a single county. :hail:

  11. #11
    Clod, my point with the commercial office space was that it is way overbuilt, and now with "remote" worker situation becoming more widely excepted, there will be less demand. A lot/most of this office space doesn't have more than a five year current lease term in place. The businesses that can afford to will carry the leases to completion but wont renew them or exercise options flooding an already overbuilt market. These properties are highly leveraged with loans that barely amortize, betting on value gain through appreciation rather than debt reduction, which has always worked in the past...until it doesn't. Some of the properties can/will be repurposed as high density residential, but the absorption rate won't be anywhere near the attrition rate causing mass default. The investors behind these projects are pension funds and other low risk retirement investments. The nest eggs of those in retirement and close to retirement are going to be devastated, and they will be too big to fail, and the taxpayer will again pass the cost of bad decisions on to the taxpayer.

    You are spot on with the outcome of rising interest rates. The dollar will loose it's credit rating and be replaced by the Chinese digital dollar as the reserve currency of the world. I wonder what the US politicians are getting in return for all their helpful policies?

  12. #12
    Clod Hopper's Avatar
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    Quote Originally Posted by noahfecks View Post
    Clod, my point with the commercial office space was that it is way overbuilt, and now with "remote" worker situation becoming more widely excepted, there will be less demand. A lot/most of this office space doesn't have more than a five year current lease term in place. The businesses that can afford to will carry the leases to completion but wont renew them or exercise options flooding an already overbuilt market. These properties are highly leveraged with loans that barely amortize, betting on value gain through appreciation rather than debt reduction, which has always worked in the past...until it doesn't. Some of the properties can/will be repurposed as high density residential, but the absorption rate won't be anywhere near the attrition rate causing mass default. The investors behind these projects are pension funds and other low risk retirement investments. The nest eggs of those in retirement and close to retirement are going to be devastated, and they will be too big to fail, and the taxpayer will again pass the cost of bad decisions on to the taxpayer.

    You are spot on with the outcome of rising interest rates. The dollar will loose it's credit rating and be replaced by the Chinese digital dollar as the reserve currency of the world. I wonder what the US politicians are getting in return for all their helpful policies?

    Agreed on commercial. Sure doesnt encourage optimism.

  13. #13
    Clod Hopper's Avatar
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    I am starting to wonder who are these economy experts in the Biden team....

    US Doubles Tariffs on Canadian Softwood Lumber and Contractors Expect Higher Prices
    https://www.enr.com/articles/53119-u...-higher-prices

  14. #14
    Clod Hopper's Avatar
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    Lumber headed back up. Forcasters are suggesting it will be worse this spring/summer than last year.



    https://www.nasdaq.com/market-activity/commodities/lbs



    I only bought ahead for a part of my projects. sucks.

  15. #15
    WHY is it headed back up?
    Demand?
    Covid slowing demand, keeping folks out of work and in turn driving up the price because folks build more in the spring/summer cause more daylight?
    Speculation?
    Back to demand.... if folks see that things are turning around... cost go up....



    Quote Originally Posted by Clod Hopper View Post
    Lumber headed back up. Forcasters are suggesting it will be worse this spring/summer than last year.



    https://www.nasdaq.com/market-activity/commodities/lbs



    I only bought ahead for a part of my projects. sucks.

  16. #16
    creepycrawler's Avatar
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    Quote Originally Posted by 1BGDOG View Post
    WHY is it headed back up?
    Demand?
    Covid slowing demand, keeping folks out of work and in turn driving up the price because folks build more in the spring/summer cause more daylight?
    Speculation?
    Back to demand.... if folks see that things are turning around... cost go up....
    Did you read post 13? Maybe doubling tarriffs on wood by biden could have something to do with it.

  17. #17
    creepycrawler

    This message is hidden because creepycrawler is on your ignore list.
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    I can only assume you are responding to me, since it was that fast....
    I don't see what you post.... so I will never see your response LOL
    I don't get it. You and you alone are on my ignore list and yet you feel the need to respond to me.
    WHY?!?!?!
    I don't care what you say...
    Yet what I say NEEDS a response from you?
    WHY?

    You are the Grover Dill of this forum.



    Remove user from ignore list

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    Last edited by 1BGDOG; January 14th, 2022 at 08:42 PM.

  18. #18
    creepycrawler's Avatar
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    Poor lil bitty doggie. He lets people take up so much of his mind then claims he doesnt read what they say even though he has been caught several times replying to exactly what i posted. He is your typical liberal who thinks everyone is dumber than they are and doesnt know that he can turn the ignore function on and off, LOL.

  19. #19
    Captain Radon Steve's Avatar
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    Quote Originally Posted by 1BGDOG View Post
    WHY is it headed back up?
    Demand?
    Covid slowing demand, keeping folks out of work and in turn driving up the price because folks build more in the spring/summer cause more daylight?
    Speculation?
    Back to demand.... if folks see that things are turning around... cost go up....
    Or this could explain at least some of it:

    Quote Originally Posted by Clod Hopper View Post
    I am starting to wonder who are these economy experts in the Biden team....

    US Doubles Tariffs on Canadian Softwood Lumber and Contractors Expect Higher Prices
    Economists say the action will increase prices and constrain supplies

    https://www.enr.com/articles/53119-u...-higher-prices
    Nah, impossible.

  20. #20
    creepycrawler's Avatar
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    He only "has me on ignore" because i kept making him look stupid by proving his statements wrong in the past so now he doesnt have to respond to anything i post because "i cant see it", LOL.

  21. #21
    creepycrawler's Avatar
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    Quote Originally Posted by Steve View Post
    Or this could explain at least some of it:



    Nah, impossible.
    LOL, now he can read it......again.

  22. #22
    creepycrawler's Avatar
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    Ahhh yes, the alternate strategy of ill just go away long enough to act like i didnt read that post so i dont have to agnowledge it, lol.

  23. #23
    creepycrawler's Avatar
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    Maybe the little libtards will start a hunger strike to make things right. They seem fairly deticated, i mean only a couple of them have had to go to the doctor on day 2.


    From Fox News - HUNGER STRIKE DAY 2: Strikers begin to feel health consequences, remain committed
    HUNGER STRIKE DAY 2: Strikers begin to feel health consequences, remain committed

    https://www.foxnews.com/politics/hunger-strike-day-2

  24. #24
    Quote Originally Posted by Steve View Post
    Or this could explain at least some of it:
    Quote Originally Posted by from that article
    However, U.S. lumber producers welcomed the stiffer penalties on what they have alleged for more than a decade was unfair competition due to government subsidies by Canada to its mills and producers.

    "The U.S. Lumber Coalition strongly urges the administration to continue full trade law enforcement," said Jason Brochu, chairman of the U.S. Lumber Coalition and co-president of Pleasant River Lumber Co. "More U.S. lumber being produced in America to meet domestic demand is a direct result of the enforcement. A level playing field is critical for the continued investment and growth of the domestic lumber industry and its hundreds of thousands of workers and thousands of communities across the United States."
    But, Biden is screwing us all blah blah blah.

    - mike

  25. #25
    Real Estate Flippa Rex Ashton's Avatar
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    Quote Originally Posted by sweater View Post
    But, Biden is screwing us all...

    - mike
    Quote-worthy and admitting it is your first step in recovery.

  26. #26
    Captain Radon Steve's Avatar
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    Quote Originally Posted by sweater View Post
    But, Biden is screwing us all blah blah blah.

    - mike
    Did you read what you quoted from the article Mike? Matt asked why lumber prices are going back up. Of course domestic lumber producers want limited competition through financial penalties on imported lumber. That makes for higher prices. It’s pretty simple really.

  27. #27
    Tariffs are a small part of it...

    Nah impossible

    Edit
    When I asked it
    I also offered very valid points.
    Thanks for acknowledging those


    Quote Originally Posted by Steve View Post
    Or this could explain at least some of it:



    Nah, impossible.
    Last edited by 1BGDOG; January 19th, 2022 at 08:29 PM.

  28. #28
    Clod Hopper's Avatar
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    Market correction or the front end of a longer slide? Economic talking heads are dancing pretty fast to convince us it is just a correction that is to be expected, nothing to see here.

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