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That Guatemalan sink hole that you may have seen earlier in the week that looked so much like a Photoshop job that virtually no one believed it is, apparently, quite real.
A ten-story building would fit inside that hole but only a phone booth and a couple of unlucky passersby ended up falling in. Even with the aerial shot, it still looks kind of fake, to my eye, mostly due to the hole being almost perfectly symmetrical.
One of the most unsettling aspects of the precipitous decline in mortgage purchase applications following the expiration of the homebuyer tax credit just over a month ago, a development noted here the other day, is the fact that mortgage rates are now at or near record lows. The Wall Street Journal real estate blog provides this summary of current rates:
Home-mortgage rates were little changed last week, holding steady for the most part at or near recent lows, including a record for the 15-year fixed-rate loan, Freddie Mac said.
The 30-year fixed-rate mortgage average rose slightly to 4.79% for the week ended Thursday, according to Freddie’s weekly survey.
In the prior week, the average rate was 4.78%, the lowest since December. The year-ago average for the 30-year home loan stood at 5.29%.
…
Rates on 15-year fixed-rate mortgages averaged 4.2%, the lowest level since Freddie Mac began tracking this in 1991, down from 4.21% in the prior week.
It’s as if freakishly low interest rates are no longer the exception, but the rule.
I remember about seven or eight years ago, back when we owned a home in Southern California and refinanced just as 30-year rates were coming down to about the six percent level for the first time since Dwight D. Eisenhower was in the White House. The gal at the loan company said that we’ll never see rates that low again. As it turns out, since the 30-year mortgage first hit six percent in late-2002, they’ve averaged 5.8 percent. Over the last year or so they’ve averaged right around five percent.
The Labor Department reported that nonfarm payrolls rose by 431,000 in May, however, a full 411,000 of these jobs were temporary positions for work on the 2010 U.S. Census.
Aside from the high level of government hiring, there were only modest job gains in manufacturing (+29,000), professional and business services (+22,000), and education and healthcare services (+17,000) while construction payrolls tumbled (-35,000).
The whole idea of having your own currency that you can debase as needed to inflate your debt troubles away seems to have a little less support from the Bank of England today, that is, based on this report in the Telegraph.
No one should fool themselves into believing that Britain can inflate its way out of its public debt mountain, the Bank of England’s deputy governor has warned.
Charles Bean raised the spectre of hyperinflation, saying it is “severely misguided” to hope that a rise in prices would help Britain out of its current predicament.
His comments come amid growing suspicion that politicians around the world may eventually resort to inflation as a means of reducing what they owe in capital markets, and follow the Swedish Riksbank’s decision to change its inflation target.
In an opinion piece for Telegraph.co.uk on Friday, Mr Bean writes: “Some people have suggested that a bit of extra inflation now might actually be a good thing. After all, wouldn’t it help to get the economy going by reducing the real value of public and private debt? This is severely misguided.
“Aside from the dubious morality of redistributing wealth from savers to borrowers, we have seen from past experience that a bit of inflation has a nasty habit of turning into a lot of inflation.”
Obviously, Charlie Bean has been talking to Kansas City Fed President Thomas Hoenig who stands alone at the U.S. central bank calling for rate hikes sooner rather than later to lessen the chances of “a lot of inflation” developing here. These two could start a trend…
The inventory at the popular SPDR Gold Shares ETF (NYSE:GLD) just made another big jump, some 21 tonnes added yesterday after a series of big additions in recent weeks which brings the “tonnes in the trust” to a new record high of 1290 tonnes as shown below.
So far this year, a total of 156 tonnes have been added to the trust with, apparently, no end in sight given what’s going on with paper money around the world. This report in Bloomberg today describes how Australia’s Perth Mint is doing a brisk business with European customers, some of the details – adding staff, running short on blanks, etc. – reminiscent of the late-2008 period when demand for physical gold soared.
Full Disclosure: Long gold coins and GLD at time of writing
TOP STORIES
China’s Property Market Freezes Up – WSJ
Letter to a Seventh Grader – CBO Director’s Blog
Hungary Official Says Economy in Grave Situation – BusinessWeek
States Shrink ‘Unaffordable’ Benefits to Bridge $1 Trillion Gap – Bloomberg
Blame Hitler: Why Europe is responding timidly to its crisis – Slate
White House sends BP a $69 million bill – CNN/Money
Buffett’s PR disaster – Salmon, Reuters
Mercantilism and Inflation – Mises
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MARKETS/INVESTING
Oil price near $75 amid rising demand – AP
Gold bullion dips below $1200 an ounce – Nasdaq
Should Investors Boycott the Stock Market? – aucontrarian
Gold Sales to Europe Jump on Crisis, Perth Mint Says – Bloomberg
Anxious investors flee stock funds – MarketWatch
Higher oil prices on the way – CNN/Money
By Tim Iacono, Since 2005
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