A short break

Things went off without a hitch yesterday at the Hard Assets Investment Conference. A link to the paper that was the subject of my talk now appears directly to the right -->>

I'll be without internet access for most of the rest of the week so little if anything will appear here until my return to California - it's time for a short break.

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Please, make it stop

Either make it stop or somebody please tell me how I can change my Thunderbird mail settings so I never have to look at this stuff again.Locusts, I tell you.

It's as if a zombified subprime mortgage industry is descending like locusts onto the last part of the housing market that still has equity in it.

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Borrowing boomers

The Associated Press reports that baby boomers are increasingly relying on new debt to make ends meet.

Based on the personal saving rate being close to zero for years now and, up until a short time ago, money flowing freely from home equity extraction, it's a good bet that things are not all that different now than a few years ago - it's just a different kind of debt these days:

The economic downturn is hitting roughly one in 10 middle-aged and older Americans especially hard, compelling them to borrow money for everyday living expenses and to seek help from family, friends or charities, according to a survey released Tuesday by the AARP.

In the telephone survey of 1,002 adults 45 and older, nearly four in 10 said they had helped a child pay bills or expenses. Among retirees, one-third said they'd helped their children pay bills. Eight percent said they'd helped a parent pay bills or expenses. The survey's margin of sampling error was plus or minus 3 percentage points.

One-third of survey participants said they stopped putting money into their 401(k) or retirement account and 14 percent said they had cut back on their medications.

"We have patients coming in fewer times," said registered nurse Tucky Franz of Salisbury, Md. "They'll cut back because of the copay."

The majority of baby boomers said they were finding it more difficult to pay for essentials and utilities, and six in 10 said they had cut back on eating out and entertainment.

That statistic on stopping contributions to 401k plans is pretty shocking - that's the kind of thing that it not easily undone once things return to "normal" (whatever that is).

The good news is that Wal-Mart sales are picking up - it seems that what money is being spent is being spent with a little less abandon.

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An interesting afternoon

OK, truth be told, I haven't exactly been devouring the news over the last few days trying to keep abreast of financial market developments in order to write some witty or insightful commentary in what is usually an unsuccessful attempt at producing something that might be mildly entertaining.

Things will get slower here at the blog by midweek as I'll be completely disconnected from the internet for at least a day or two - maybe that's a good thing.

For some reason, after New York, I agreed to go to Atlantic City for a couple days and finding an internet connection is likely to be at the bottom of the list of things to do there.

After sitting through a number of presentations this morning, all of which were modestly informative (James Dines was his usual self) I trotted two blocks east of here to sit down with Barry Ritholtz for an hour or so.

After resolving all the world's financial problems, we set out to cure world hunger and eliminate all disease but, alas, we were unable to find any workable solutions for either.

We agreed to meet again at some unspecified time in the future to try again.

All the new work being done at The Big Picture and at Fusion IQ looks pretty neat and I think the two of us could have sat and talked for the rest of the afternoon, but we both had other things to attend to.

Upon returning to the hotel, I had the pleasure of meeting Al Korelin who will host the panel I'll be on tomorrow at 8:30 AM - "Causes and Consequences of the Credit Crisis".

It seemed like a good idea to get the whole "... and the name of your blog is what?" thing out of the way beforehand and we ended up having a pleasant chat along with Jay Taylor and Ben Johnson (see the Hard Assets Investment Conference speakers page for more on all of these folks.)

It was a pretty interesting afternoon meeting lots of great people.

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Is "walking away" a myth?

This LA Times report asks if underwater homeowners "walking away" from their homes (a.k.a "jingle mail") is a myth?

In response to questions from The Times, Bank of America spokesman Terry Francisco said the bank had seen indications that some homeowners were taking pains to keep their credit card accounts current at the expense of their mortgage balances, often by raiding their home equity lines to pay their cards, a reversal of traditional customary customer priorities.

But he said the bank did not have "firm figures" on how many homeowners were unnecessarily defaulting on their mortgages.

"We are working hard with our analytics to get at how much that is happening," Francisco said. Others suggest that it may be impossible to find out.

"How would you know what someone's true ability to pay would be?" asked Todd Sinai, an associate professor of real estate at the Wharton School of the University of Pennsylvania. "I'm not sure you could even come up with a definition."

At Fannie Mae, the government-chartered company that owns or guarantees billions of dollars in home mortgages, Senior Vice President Marianne Sullivan conceded that there was growing "folklore" about residential walkaways but said that the phenomenon was more likely connected to investors than people who live in their homes, or "owner-occupants."

"The vast majority of borrowers we find have been acting in good faith," she said. "If they get behind, they are interested in working with their lender."

This sounds a lot like the 2005-era talk of "Is there a housing bubble?" They interviewed the folks at YouWalkAway.com at the end of the article.

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Start spreadin' the news ...

Man, they sure use their car horns a lot around here. I bet half the people in California don't even know what their horn sounds like or where to push on the steering wheel if they wanted to find out.

Here in New York City, honking your horn seems to come as easily as exhaling.

The shot you see below is from my room - I'll venture outside shortly and announce my arrival to this fair city.
After taking a bus from Pennsylvania where I'm visiting relatives, I made the cardinal mistake when exiting the Port Authority Bus Terminal - I made eye contact with someone. I just had to look away and keep walking hoping they wouldn't follow - they didn't.

For those of you just tuning in, I'll be speaking on Tuesday morning here at the New York Hard Assets Conference at the Marriot Marquis Hotel in Times Square. I'll be on a panel at 8:30 AM - "Causes and Consequences of the Current Credit Crisis" and then at 10:30 AM I'll be making a presentation "Buy the Stocks? Or, Buy the Commodities?"

I'll probably post the paper here in PDF format sometime later this week.

Next month I'll be going to Long Beach to participate in another panel at the Hyatt Regency - more on that later.

ooo

This week's cartoon from The Economist:

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Oil and gold contest update #1

Despite what you might hear on CNBC right about now regarding plunging U.S. stocks, it was a good week for hard assets - oil was up almost 9 percent and gold rose more than 3 percent. Here's the anxiously awaited first update to the fourth semi-annual "Guess the price of oil and gold" contest.
With the June WTI crude oil futures contract closing at $126.19 per barrel (WOW!) and the spot gold bid price ending up at $884 per ounce, this puts CG snuggled up closest to the little yellow marker above, followed by the R. Smith, timothy, and AS#2.

For a list of all 111 guesses and other titillating information about this contest, see the post from two weeks ago: Oil and gold guesses - the fun begins.

This chart will be updated about every two weeks until mid-June and then weekly updates will commence. The winner receives a free one-year subscription to the investment website Iacono Research where, after a difficult few weeks, the model portfolio did a lot better than the U.S. stock market and is back into positive territory for the year.

To learn more about investing in natural resources using commonly traded ETFs, stocks, and mutual funds, see this description at Iacono Research. Or, sign up for a free trial.

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