jeffturley

The Charles Dickens’ Christmas Carol is a powerful metaphor for our current economic quagmire. I believe Japan is our own Jacob Marley. Nineteen years ago Japan went through a similar financial quagmire, so we must learn from Japan’s ghost of Christmas Past. Here are 5 Significant Perspectives from Resolve Lending, Inc. 5SPRL in attempt to understand our Present Christmas Ghost.

1. Ghost of Christmas Past: Japan’s Baby boom generation happened ten years prior to our US baby boom (80 million). Since that time we have been on parallel economic paths of booms and busts; yet we trail their cycle by 10-15 years. To understand where we go from here – study Japan. Look no further than the Home Price Index and its parallel on my website. Note the dates. http://www.scribd.com/doc/13970982/Richard-Koo-Presentation (look at slide#9)

2. Ghost of Christmas Present: Clinton once said to President Bush, “It’s the economy stupid.” I now want to scream at everyone, “It’s the borrower stupid.” In both the corporate world and the private sector we virtually have no borrowers. We cannot have inflation (hyper-inflation) if we don’t have borrowers – even if the rates are at “0”. Everyone is too busy paying off debt. http://www.scribd.com/doc/22347450/Credit-Watch-Nov2009

3. Ghost of Christmas Yet to Come: Japan went through 8 financial prime ministers during George W. Bush’s 8 years in office. We will do the same. Sign of Christmas future of the U.S?

4. Ghost of Christmas Future: Here is my question (which I do not have the answer) but do not hear anyone asking, “What is the current Ghost in Real Estate inventory?”

· The Shadow runs deep – currently a 24 month inventory – that is a given.

· How many Bank Owned Homes?

· Permitted Homes Ready to be built. How many “ready to be built homes – subdivision ready homes that are un-built.”

· Inheritance Homes: This is one other set of inventory you never hear about...rental homes, 2^nd homes, and inheritance homes will soon be coming on the market.

5. Ghost of Christmas Present: Every economic philosophic system is built upon the premise that companies and individuals would “always” be looking forward and maximizing profits. We are currently suffering from the ghost of “Christmas Past”. Both corporations and individuals are paying off debt - not demanding loans, therefore neither Keynesians (government spends until corporations and individuals start spending) or Reganomics “trickle down” (current tax breaks turn into debt elimination, not buying new TV’s) have an answer.

The irony to our economic quagmire is when both corporate and private sectors act like Scrooge - we are in deep trouble. Right now, and rightfully so, everyone is hording because of Ghost of Christmas Past. Until we all get a clear confident picture of the Ghost of Christmas Future we will be in this story for a long time.

Have a Merry Christmas and a Happy 2010!

Jeff Turley

jeff@resolvelending.com