THE ECONTRARIAN

A tad askew from the traditional view

Tuesday, November 15, 2005

STORM WARNING

.........well, I just read that the average home in kokomo, indiana is worth $94,000, which reminded me of an article in last sunday's LA Times reporting that the median value of homes in all of LA County had hit the $500,000 range........And what do you get for $500,000?...Try a cottage of less than 800 square feet in a not so hot area....Actually, some in that price range were as large as 1,200 square feet...I've seen many in my travels throughout LA, and I can tell you these $500,000 houses have two things in common - tinyness and ugliness!!!....It would be totally depressing to live in them.....The market here and in many places is insane....A crash is coming that will dwarf anything seen before....and the only question is - not "if" - but "when".....

.......and by the way, the spread between the 2-year T-note and the 10-year T-bond was only 11 basis points on Thursday and it was lower mainly because the long rates made a big move downward, meaning that while the Fed was busy jacking up the short term rates to prevent inflation, the bond investors (the shrewdest bunch in investorland) were continuing to bet on a recession................and it could be a lollapalooza if coupled with a real estate collapse.......good time to get defensive......Dave McGill

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