The Rude Awakening
Scotland, Edinburgh
Monday, July 2, 2007 ------------------------- - Following the bubbles of yore with an eye to the future,
- The trouble with hydrogen is energy,
- Aussies outstrip the mines of the world, hello Hungary and more…
------------------------- Joel Bowman, reporting from Edinburgh but flying over Europe… Thanks to the marvels of modern technology, we were able to schedule this morning's Rude while still in the comfort of our favorite rainy British city. As you read this, however, we are about forty thousand feet above continental Europe, en route to our new home in Budapest, Hungary. We never cease to be amazed by the new communication technologies that facilitate this kind of time and space compression. How times have changed. The days of handwritten letters are all but gone, it seems. Long ago, someone undertaking the journey we embarked on this morning would have had to set aside a few months. Today the trip we will take will take us about 4 hours…and that's including security checks! The times, they are a changin'. Everywhere we look in this sooty old city of Edinburgh we can see monuments to the march of the days. The café from which we wirelessly connect to the world wide web, for example, bares a plaque near the entrance announcing that this was the café where J.K. Rowlings jotted her famous series of wizard tales, the Harry Potter novels. As we sit and write, tourists draw from far and near to snap a few digital photos of the place. They come in from the rain to upload them to their laptops and, with the click of a mouse, send their holiday slideshows to friends and family all over the world. On the opposite corner of Drummond St., there stands a plaque commemorating a hero from a different era. The quote on the plaque is from a young writer's journal. Bemoaning the rainy days and lamenting the time wasted at his favorite bar, Rutherford's, just down the road, the author wishes he could "write a single book…create a little shipwreck." Robert Louise Stevenson's Treasure Island was published in 1883. Save the few men who mill about in front of Rutherford's, staring at their reflections in the puddles at their feet and smoking cigarettes, nobody seems to notice the plaque. If memory serves us correctly, it was Lewis Carroll that once wrote, "It's a poor sort of memory that only works in reverse." In the first of our Rude reader mail today, we're taken back to a housing bust of the past to help us prepare for the future. This pondering, along with the rest of your
mail, is right below. Enjoy… ----------------------------------- Rude, I lived in Alaska for 25 years and not only had a front row seat for oil production at Prudhoe, but went through a major housing boom and bust in that state. Houses were appreciating at 6-10% or more every month for two years during the hey-day of Prudhoe, and just like a few months ago in the lower 48, no one thought that the party would end. End it did though! Housing plummeted almost 50%, the worst of it happened within about three weeks. 1,000 people were leaving Anchorage and other towns per month. People were declaring bankruptcy left and right and leaving the keys to their homes, condos and townhomes on the countertops and walking out. Bankruptcy and credit laws were changed due to the extreme circumstances so that people's credit would not be ruined for the rest of their lives. The Japanese came over in hordes and bought up real estate for pennies on the dollar. Strip malls were deserted and no one was filling the empty spaces. There were for rent and for sale signs everywhere, with empty homes, store-front businesses and even office buildings. Not only was real estate for sale, so were 'toys' like boats, extra cars, tools, furniture and furs. The big drop in prices happened within the first month, but the prices continued to fall from there as foreclosures escalated. It took a full two years to reach the bottom, and real estate prices just sat there for another five years before they started to creep up. It took 12 years to get back to pre-crash prices. Is the lower 48 housing crash over? Not by a long shot! The lower 48 housing boom has taken five years to build and become crazy. It is not going to unwind in one year. We're in Florida and every tenth house is for sale. In our subdivision (where we rent!) which is brand new, at least 70% of the houses are reduced, empty or for rent…or all three. Businesses are closing, and no one is filling the spaces. The ARM readjustments are just hitting, with more getting ready to hit in the next quarter…and we expect to see more houses being auctioned and even more sitting empty. Builders are still building in our area…so we know the mania is far from over. When hope still springs eternal, then the bottom has not been plumbed. Buy a house now? Not yet. Not when prices could go 25-40% lower! P.R. from north Florida Our resident housing guru, Mike "Mish" Shedlock, has been warning of a second wave in the housing tsunami for a while now. It seems that complacence before the real meltdown could see a few homeowners lose more than just their most valuable investment. Read on here for all the details: Why Your Home Could Be Worth 43% Less by 2011 -------------------------------------- Rude, The following is a response to an email in last week's Mailbag concerning hydrogen-powered cars. Your reader wrote: "Hydrogen can be made from electrolyzing water. Everywhere has a water supply already. Everywhere has an electricity supply already. Bingo - everywhere could be a hydrogen fueling station with the right equipment and there would be NO transportation required." Here is what's wrong with it. 1) Electricity comes primarily from burning fossil fuels. Using this energy to produce hydrogen via electrolysis is a fairly inefficient process. Energy out/Energy in is a lot less than 1. 2) In order to carry enough hydrogen to do some good you would have to compress it to a very high pressure. The energy required is a dead loss since you don't get it back. 3) Fuel cells are not perfect, efficiency is fairly low, leading to more loss. 4) The equipment used is not cheap, either in the fuel station or your car. 5) The overall efficiency would probably be less than that of an internal combustion engine. There is nothing to gain here, if this was economically feasible somebody would be doing it. Keep thinking Rude readers, you may come up with something, and there are a lot of other smart people who are also trying. Don Black --- The Agora Financial Reserve - Final 3 Days --- Find out how you can grab a free subscription to our newest $995 Energy & Scarcity Investor service AND lock in all our best investment ideas…for life. The Agora Financial Reserve is open for three more days. Details Here: The Agora Financial Reserve -------------------------------------------------- Rude, Canadian miners, you say! From your name I guess you must have come from Oz once-upon-a-time, so you would know there's more to mining than Canadian companies. Sure, I have charted the rip-roaring shares on the Vancouver X in the nineties, but I found the pickings were easier to manage close to home. I chart all the Oz miners, and read all their news, and there's so many - must be over 500 - and so many coming up with the goods. I reckon it's these guys that showed the Canadians the way. When the pickings got harder here these companies scoured the world and found so much overlooked by
just about everyone. Sometimes fortunes were just there for the taking. They took advantage of exploration done by UN 10-20, the Russians, or French colonials years ago that had been forgotten. For instance, a tiny company called Sundance a few months ago picked up a billion tonne iron ore deposit in Ivory Coast that had already been discovered, and reported by UN, and for no more than the promise to develop and a token royalty. They were 2 cents at the time, now 46, and blue sky above. A few years before Sphere did the same thing in Mauritania…it went from 2c to 360c. I could mention the first big new era uranium mine, paleochannels in Namibia, discovered years ago, and reported in public docs on Namibian gov website. Paladin shares were a few cents then, the company a few million dollars, now billions. Whatever commodity, there are small Oz miners out there looking and finding. I could mention a hundred companies in a hundred countries. Finland to Bulgaria, Kazakhstan to Mongolia, China to Laos, Sierra Leone to Namibia, Botswana to Egypt, Pakistan to Thailand, plus of course Argentina/Chile to Colorado and even Quebec. There are just so many to choose from. The only problem is finding a baby elephant rather than a mere baby pygmy hippo! Happy hunting!
David Kemp What can we say except, "c'mon Aussie, c'mon!"? --------------------------------------------------- Joel's Endnote: A quick thanks to everyone that wrote in with suggestions of things to do and see in Budapest. We are looking forward to getting out to Eger to sample some wine, visiting the parliament building, taking a night boat down the Danube, eating chicken paprikosh at the Fisherman's Bastion and avoiding the pizzas. Before we hand you over to Addison and Ian for your 5-Minute Forecast, which should be arriving shortly, we should quickly remind you that you only have three days left to get in on our lifetime subscription, the Agora Financial Reserve. If you haven't already done so, check out all the details here: Agora Financial Reserve - Final 3 Days If you have any thoughts of your own, Rude or otherwise, that you would like to share with us, send them to aussiejoel@the-rude-awakening.com . You don't even need a stamp, so what's stopping you? We'll be back with your regular reading on the morrow. Cheers, Joel Bowman
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