KPBS special with Roubini, Shiller link

[CAwireman]

On News hour with Jim Lerner, Roubini, Shiller, etc.

While watching this article on KPBS, I though that Rich and Poway Seller were going to jump out and join the interview. Don't know if you can watch Broadcast from the website, but here's the article: 

Link

Basically, folks saying the things we'd think they'd say, but watching the personalities on the tube who we discuss on this website was quite a thrill!

[powayseller]

Thanks for the link. I’d wondered if it was available. Yardeni was not convincing. He didn’t have any numbers, and relied on his opinions.

[equalizer]

rarely watch tv, but I actually saw the show on my rabbit ears. Yardeni did have good points, such as talk about the employment, which is still strong, but he’s the guy who was screaming about Y2K depression and now hes a permabull?

ED YARDENI: “So what’s the worst-case scenario, that instead of your place being worth $2 million, it’s only going to be worth $1.5 million and you bought it for $800,000? You’re still ahead.”

$40Billion in bonuses on wall st this year, yeah thats Billion, so NYC is totally unique. Salaries, bonuses are nowhere like that elsewhere, outside of the Google area. Yet, Yardeni still acknowledges that 2M can go to 1.5M, which is 25% drop in the strongest market in USA.

ED YARDENI: “I don’t think Americans are stupid. People aren’t just buying things that they can’t afford. Maybe a few are, but for the most part Americans are doing extremely well.”

Dr. Yardeni completed his doctoral dissertation under Professor James Tobin, a Nobel Laureate, at Yale University.
Maybe he only meet smart and rich people. Most people dont how AMRS work, dont know what 535 means, cant fill out 1040ez form. but the good Dr thinks they are budgeting well. OK.
[I once came across a 1040EZ filled out by H&R Block It was maybe 5 lines. waitress 17K income, that its, you could use telephone for that.]

[powayseller]

Yardeni’s points are noted, but they are all fluff points. First, employment lags economic growth by 1-3 quarters. It is a lagging indicator. Second, the quality of jobs is changing from higher paying manufacturing with benefits (pension and health insurance) to lower paying retail without benefits. Third, the phone survey used to measure employment is not the most accurate way to measure employment, since a 20-hr-week daycare worker is counted as employed. Perhaps 20 years ago, she would have had a full-time job for a manufacturer, but now all she can do is part time daycare.

Homes dropping in value are a big deal, especially for the people relying on MEW to sustain their spending, for those who are trying to sell but are underwater, and for those counting on rising home equity to fund their retirement. He forgot to mention ARM resets, and that exotic loans are used nationwide. Even WY had 25% ARMs last year.

Maybe the guy who paid $800K is ahead if the $2 mil house drops to $1.5 mil, but what if the guy paid $2 mil? Then what? What about all the people who bought in the last 2 years who lost all their equity? What about all the ARM resets, and the upcoming short sales?

He’s wrong about Americans. They are not stupid, but they are irresponsible with finances and don’t plan for tomorrow. So we’ll have an entire generation of baby boomers in poverty at retirement. We’ve got people getting ARMs at a time of historically low interest rates. Actually, that is stupid, when you get a 2.9% ARM instead of a 30 year fixed at 4.9%.

Too bad the interview was a conversation instead of a real inverview. Yardeni sure has some explaining to do.

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