October 12, 2011--Little Shortages Here, Firesale Prices There...

OS is in the midst of several deadlines, so he hasn't had time to think, much less write, anything he feels is worth any of his loyal readers.

But, anecdotes here and there are instructive regarding where we seem to be just now.

A routine visit to the mechanic yesterday, oil change and service for Mrs. OS's auto. The mechanic (CamShaftBob) is a small-shop guy, has cared for the fleet for years, old-school. OS drove his pickup truck over for the transport of the second driver home, and was chatting with CamShatBob, who spotted the old truck with its recently installed set of tires and mused--'I hope those tires last you a long time on that truck, the last set ran 60,000 miles, and I can't get any more for you. They stopped making them.'

Late last week, listening in on an NPR program discussing shortages of medicines reported by hospitals, including some chemotherapy treatments.

Earlier this year, chatting with the vet about arthritis treatment for OS's venerable old dog, and was told the pharmaceutical that has worked so well is now out of manufacture. OS bought up the practice's entire inventory on the spot. The vet reported that his staff spends more time each month attempting to keep medicines stocked than ever before.

Don't know if it's a huge pattern, but shortages seem to be appearing here and there, in unexpected places. And some prices are beginning to spike, like milk, bottled water, bread.

On the other hand, merchandise shows up at Marshall's, a secondary retailer of last year's LatestAndGreatest that OS would never expect to see, at prices that are profoundly discounted. Coldwater Creek and Chico's are pushing merch on sale to Mrs. OS at deep-deep-deep discount, free shipping, and not last season's items, either.

It's like the hands reaching across the table of the market are having a hard time locating one another...

Again, not a 'global view', but something seems afoot.

Jeremiah's Economics 101

OS has no particular insights to offer, and stacks of work looming on his desk for the week, all of it on deadline and overdue.

But he got up early for church this morning, made the 8:30 service. Today's readings from the lectionary were striking, and can be found here, courtesy of Vanderbilt Divinity School Library.

The story of Jeremiah, blacklisted and under house arrest as the wheels came off his world in his day, was moving. It was his job to deliver the bad news to the Powers That Be that their day was over, stick-a-fork-in-'er-she's-done, that the whole rotten society was about to be overrun and carried off into captivity. That it was too late to save the situation.

Pretty depressing stuff, much like we hear in our day.

Then, he hears another word from On High: Your cousin is selling his real estate. Buy it. No, it doesn't make sense, but buy it anyway. I still have a future planned for this place, and you should invest in it. Make sure you get clear title, and preserve the deed, (implicitly) for the sake of your descendants.

All the readings for the day point to the same truths--if the future belongs to the Almighty, then it's not up for grabs. Societies and people that embrace selfishness and greed fall apart, get conquered and carried off. Greed is poisonous, but wealth honestly gained and shared is a blessing to all.

Invest.

Create.

Work.

Trust--but don't place your trust in your stuff.

Shape a good future for those yet unborn. There will be a payoff.

It ain't over, even if this chapter closes.

This Keeps Making The Rounds: Worth A Second Mention

Sometime back, OldSouth tripped across this wonderful comedy routine first created for Australian TV.

Obviously, he wasn't alone, and the routine continues to make the rounds.

It's worth a repeat performance:

KERRY O'BRIEN, PRESENTER: Time for John Clarke and Bryan Dawe with a few reflections on Europe's financial woes.

BRYAN DAWE: Your name is Roger yes?

JOHN CLARKE: Roger.

BRYAN DAWE: Ah, that's your name?

JOHN CLARKE: Roger.

BRYAN DAWE: Good. And what do you do Roger?

JOHN CLARKE: I'm a financial consultant.

BRYAN DAWE: Ah, financial consultant, eh?

JOHN CLARKE: Roger, yes.

BRYAN DAWE: Terrific and Roger how is business at the moment?

JOHN CLARKE: Not bad thank you. Been a bit quiet lately.

BRYAN DAWE: How do you mean lately?

JOHN CLARKE: Since the war. Been a bit quiet.

BRYAN DAWE: Fair enough. Okay, Roger your special subject tonight is the economies of the European community. Your time starts now. Best of luck.

JOHN CLARKE: Thank you.

BRYAN DAWE: How much does Greece owe, Roger?

JOHN CLARKE: $367 billion.

BRYAN DAWE: Correct. And who do they owe it to?

JOHN CLARKE: Mostly to the other European economies.

BRYAN DAWE: Correct. How much does Ireland owe?

JOHN CLARKE: $865 billion.

BRYAN DAWE: Correct. Who do they owe it to?

JOHN CLARKE: Other European economies mostly.

BRYAN DAWE: Correct. How much does Spain and Italy owe?

JOHN CLARKE: $1 trillion each.

BRYAN DAWE: Correct. Who to?

JOHN CLARKE: Mainly France, Britain and Germany.

BRYAN DAWE: Correct. And how are Germany, France, Britain going Roger?

JOHN CLARKE: Well they're struggling a bit, aren't they?

BRYAN DAWE: Correct. Why?

JOHN CLARKE: Well ‘cause they've lent all the vast amounts of money to other European economies that can't possibly pay them back.

BRYAN DAWE: Correct so what are they go to go have to do?

JOHN CLARKE: They're going to have to bail them out.

BRYAN DAWE: Correct. Where are they getting the money to do that Roger?

JOHN CLARKE: That is a good question. I don't know the answer to that one. (laughs)

BRYAN DAWE: How much does Portugal owe?

JOHN CLARKE: Hang on a minute, what was the answer to that earlier question?

BRYAN DAWE: Just keep answering the questions Roger.

Where is Portugal going to get the money it owes to Germany if Germany can't get back the money that it lent to Italy?

JOHN CLARKE: Just a minute. What was the answer to the previous que-

The question was: How can broke economies lend money to other broke economies who haven't got any money because they can't pay back the money the broke economy lent to the other broke economy and shouldn't have lent it to them in the first place because the broke economy can't pay back?

BRYAN DAWE: You are wasting valuable time Roger. How much money does Spain owe to Italy?

JOHN CLARKE: $41 billion. But where are they going to get it?

BRYAN DAWE: Correct. What does Italy owe to Spain?

JOHN CLARKE: $27 billion but they haven't got it - they're broke.

BRYAN DAWE: Correct. How can they pay each other if neither of them has any money?

JOHN CLARKE: They're going to get a bailout, aren't they?

BRYAN DAWE: Correct. And where is the money coming from for the bailout?

JOHN CLARKE: That is what I'm asking you!

BRYAN DAWE: Correct. Why are people selling the European currency and buying the US dollar?

JOHN CLARKE: Because the US economy is so much stronger than the European economy.

BRYAN DAWE: Correct. Why is that Roger?

JOHN CLARKE: Because it's owned by China.

BRYAN DAWE: Correct and very well done! And after that round you've lost $1 million.

JOHN CLARKE: I've lost $1 million? I thought you said well done!

BRYAN DAWE: Yes well done - you've only lost $1 million. That's an extraordinary performance Roger.

JOHN CLARKE: I've only lost $1 million.

BRYAN DAWE: Very well done.

JOHN CLARKE: That's quite good is it?

BRYAN DAWE: Oh it's excellent.

JOHN CLARKE: Sell everything immediately. Quickly!

KERRY O'BRIEN: I think it's called laughing as you sink.

Checking In With Jesse and JDA

OS is up to his keister in different pieces of paper that need to go in different directions, and everyone tells him that their piece of paper is the most crucial.


On top of that, one of his students has ended up in the ER, and the frantic mom is making the five-hour drive now.  Send one up for J, if you would.

But, the day isn't complete without five minutes checking in with Jesse and JDA.

Something is seriously awry (actually a lot is seriously awry), and the ability of the Fed to continue to print and pump may be drawing to a close, finally.  OS has stopped buying, and is willing to take his lumps on what he holds, 'cuz rain or shine, those firms will still be with us in five years or so.

This from Jesse:

The average person buys when they should sell, and sells when they should buy. Often they buy or sell when they should do nothing. The Wall Street insiders and their demimonde frequently help them to do this. That is how things are, and now moreseo than before because of the shrinking pools of exploitable non-banking capital and the lack of financial reforms.

And, for grins, this from JDA...

Too, too funny.

Saturday Morning, Small-Town South

The workload is enormous at OldSouth's international corporate HQ (and if you believe he works from a corner office, then he has such investment opportunities for you!  You see, we buy up all these dodgy mortgages, slice them into teeny-tiny pieces, and sell bonds backed up by all those teeny-tiny pieces. And, if anything goes wrong, the taxpayers make you whole, 100 cents on the dollar....well, never mind....).

No really, Saturday morning, we had to get out of the house, and treat ourselves to breakfast at a little family-owned place in town.  Called the daughter in grad school, to see if she wanted to join us, no answer, oh well. Drove into our little town, past the increasingly vacant little office buildings, the vacant car dealership, the 'for sale' and 'for rent' signs.

We walk in the restaurant, and hear the daughter's voice: 'What are my parents doing here?' Great minds think alike, she's escaped to breakfast with her best friend from high-school,  unemployed by the Great Recession. College education, industrious, attractive, bright sense of humor, papering her world with job applications. Usually, not even an acknowledgment of receipt of the application. Unemployment benefits still running, but of course no heath coverage. Living at home again. Some days, she says, she just doesn't want to leave the house.

Any number of thoughts come to mind.  This young lady is now at least a year now from establishing a separate household for herself, even if she finds a good job next week. Marriage, family not on the horizon, and she's now twenty-five. This does not bode well for real-estate over the next five years or so around here.

She's not untypical, except she has the college degree.

OS is concerned that we are witnessing an entire group of young people slowly becoming marooned.

(Hmm...millions upon millions of jobs saved or created.)

The Foreclosure Next Door

OS lives in a small county, and news travels. Which is a good thing.

Some good friends in the neighborhood now face a quandry, here in the Great Recession. OS attempts below to tell their tale. Suggestions welcomed from around the world, and he'll pass them on.

*******

This family has lived in one small house for almost twenty years, and it has been a blessed place to live, work, and raise the kids. When we moved in, it was a wreck, as were we, but that story's for another time.

Over time, very slowly, we've maintained the place, and improved it. Faithfully paid the mortgage to the bank down the road. The end is in sight on the mortgage, and we're paying ahead. 

And we've quietly fought the problem of the house next door. The occupant is not the owner, but an old gent who served as a surrogate uncle to both kids, and his contribution was substantial. He's a real character, an eccentric, and a defacto member of family. Age and macular degeneration are taking their toll upon him.  This is where he lives, and has, for most of the past twenty years. 

The owner is not a bad person, but not particularly competent at life. It fell to the old gent, years ago, to essentially pick up where her absent parents left off when she was orphaned. Some important stuff didn't happen in the process, but he did the best he could.


Over time, the house next door, with which our house shares a long driveway, has become ever shabbier, as has the pasture and the ancient horse that hangs out there.  Were codes to inspect, the house would be condemned, and it is not salvageable. I could tell tales, but again, another time.


Another neighbor mentioned in passing that he thought the house was in foreclosure. I called our local attorney, who knows where all bodies are buried, and in a brief letter received yesterday, he confirmed that indeed, the house is in foreclosure.


So, my call went back to him, to get more details, and the process of thinking through what happens next begins.  


Someday, we will need to sell our house and property.  The  value of this little well-loved house, sitting on nine lovely acres of our beloved Middle Tennessee, has just taken a real hit. And life has just become a bit more complex.

*****

OS will keep you posted on their progress. 

This may be a good way to track this phenomenon, and put a human face on it.

Check back from time to time.  OS will try to label these 'foreclosure next door'.