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Wall Street ended a turbulent week with another astonishing show of volatility Friday, with stocks plunging, recovering and then plunging again as investors absorbed another wave of downbeat economic news.(Nov. 14)

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http://www.interest.co.nz Today, we'll look why consumer confidence has slumped so sharply when we still have record low unemployment and we'll look ahead to see what it might mean for interest rates And then we'll do some speculating about house prices. Just how much could they fall and how long before we see prices back at their levels of a couple of months ago. The answer is frightening for property investors and not that encouraging for first home buyers. Story 1 But firstly we delve a bit deeper into why we've seen such a stunning drop in consumer confidence in March. Westpac's McDermott Miller survey for the March quarter found confidence slumped to a 10 year low and now pessimists outnumber optimists. This really is remarkable. Unemployment is at a record low of 3.4%. Consumer spending is still reasonably strong and we're seeing an unprecedented boom in dairy prices. House prices are only slightly below their peaks from November last year and remain almost double what they were 6 years ago. The last time we were this grumpy was in 1998 when we had over 200,000 people unemployed and we were in a sharp recession triggered by the Asian crisis and a drought. Now we've just come out of the longest period of economic growth we've had since the 1950s. So why are we so grumpy now? Well this simple answer is we're moaning about higher prices and higher interest rates. The difference this time around is we're so much more indebted than we ever have been. Since 1999 household debt has ballooned from around NZ$70 billion or NZ$50,000 per person to around NZ$160 billion or NZ$100,000 per household. We used that debt to boost house prices and to go on a 7 year long spending spree. We spent around NZ$1.14 for every dollar we earnt. House prices rose 80%. So now we care an awful lot more about debt, about interest rates and about the value of our homes. Most importantly, we care about disposable income. And lately the news has been bad for all of those things. Higher petrol and food prices are hurting. So are higher interest rates. But the thing that is really depressing us is the end of the housing boom. The median house price is down 4% since November and is falling fast. So our disposable income is under intense pressure and our main store of wealth is being eroded in front of our eyes. And the prospects for an improvement? Not much I'm afraid. Interest rates are unlikely to fall this year and may even rise higher if the global credit market turmoil continues. Petrol prices will likely hit NZ$2 a litre soon, thanks partly to high oil prices and thanks to higher taxes. And house prices have further to fall. More on that now Story 2 The key question for home owners and property investors now is when can they expect capital gains again? The simple answer is a long time, perhaps even a decade. Here's our prediction. We expect house prices will fall 30% from their peak in the next two years. High interest rates and low migration will force sellers to drop their prices to the point where it becomes affordable enough again for regular first home buyers to return to the market. Currently it costs more than 80% of the median take home pay to afford the mortgage on a median house. That needs to drop to 40% for housing to become affordable. Given our wages are rising only slowly, then it's going to take a long time for our ability to service the mortgage on a home to catch up with current house prices. So if prices fall 30% in the next couple of years, we expect it would take another 8 to 10 years for prices to grind their way higher to get back to the NZ$352,000 peak we saw in November last year. So anyone who bought at the peak who expects capital gains will have to assume another decade of waiting. This is more pessimistic than many analysts, who are forcasting a year or two of prices falling before things getting back in the swing of things by 2010. Our bet is don't expect capital gains until 2018 at the earliest. On that cheery note... I'm Bernard Hickey from interest.co.nz with the Daily Briefing. We'll see you on Thursday.

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NM Gov. Bill Richardson today sharply contrasted his record of leadership with those of the other Presidential candidates during a conversation on education and jobs in Sioux City, Iowa.

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Senator John "what the hell is wrong with your neck" McCain was sharply rebuked by the honorable Ron Paul. Even the audience boo'ed McCain's attempt to pass off the prefered propaganda of choice of the pro-zionoist lobby. I actually had indifference towards John McCain until this incident during the debates, but for me, this was the last straw. Keith Olberman called out McCain the following day on Countdown: http://www.youtube.com/watch?v=KBfAedeP_PI Let's take a moment and laugh at sleepy Senator John McCain. http://www.youtube.com/watch?v=6TPN00EofE8

Tags: ron paul john mccain hillary clinton barack obama election 2008 youtube debate cnn fox hannity neocon
New figures have shown that UK manufacturing output is falling at its fastest rate for 27 years.

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Shameless debut gig 13th December 2008 at O'Sullivans La Napoule, Sacha vocals, Mike guitar, Wayne drums, Alex bass

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Bleak outlooks from Intel, Alcoa and Time Warner along with unnerving signs about unemployment sent stocks sharply lower Wednesday. (Jan. 7)

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PlusViolence Up Sharply As Afghan War Nears 7th YearViolence Up Sharply As Afghan War Nears 7th YearThe Associated PressWhile Iraq enjoys a lower level of violence, attacks in Afghanistan have spiked. The AP's Sagar Meghani reports from the Pentagon. (July 14)(FILE Iraq) as violence in Iraq has dropped sharply (NAT UP soldiers firing in Afghanistan) it has shot up in Afghanistan, seven years into the war SOT: Michael O'Hanlon, Brookings Institution 13:59:08 dc ohanlon afghan intv "We have a serious problem. Our strategy, you'd have to begin to conclude, is not working." (GRAPHIC Pentagon report) A Pentagon report to Congress late last month signaled more trouble ahead (GRAPHIC page flipping) saying the Taliban had regrouped into a "resilient insurgency" (NEXT PAGE) and forecast more attacks to come (NAT UP whatever else) for the first time, more international troops were killed in Afghanistan each of the past two months than in Iraq. SOT: Mark Laity, NATO spokesman (dateline Kabul) AFG LAITY INTV 08:55:31 "If you said to me, does this mean we're losing the war or things are going badly, I'd answer by saying, if last month there had been no ISAF soldiers lost, I'd be very happy, but I would not say it meant we won." (LOCATOR MAP FROM 7/13 piece) an attack on a military outpost in the volatile east that killed 9 US forces has sharpened the focus on Afghanistan, and what officials say are more complex, intense and better coordinated attacks (Pakistan?) Afghanistan's beleaguered government is also accusing Pakistan's intelligence service and army of not only failing to stop insurgents from crossing in and out of Afghanistan..but f being behind the insurgency itself SOT: Mark Laity, NATO spokesman "What we have seen over the past couple of months...Pakistani Army hasn't been as active as before." SOT: Michael O'Hanlon, Brookings Institution 14:01:52 dc ohanlon afghan intv "The fact that the Taliban and AQ have sanctuary in Pakistan is probably reason why we should continue to be worried and why we shouldn't be too surprised about this turn of vents." (any more good file of shooting) and as the violence in Afghanistan has risen, it's brought up comparisons with Iraq from months ago (any good file of soldiers on patrol in iraq) an Iraq now enjoying its lowest levels of violence in years. (more file) but knowing those big attacks could return SOT: Major General Kevin Bergner, US military spokesman (dateline Baghdad) IRQ BERGNER INTV 0930 09 "It is a very dynamic environment, so it is difficult to look very far into the future with any degree of certainty." STANDUP: One thing Afghanistan's had which Iran's hasn't is broader public support, as the battle that, at least in the US, has been in the shadows. But as the casualties and attention grow, some analysts wonder if that sentiment will shift...and put BOTH wars on equally bad public footing. Sagar Meghani, The Associated Press, the Pentagon

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The number of approved mortgages has slumped to a record low & house prices have plummeted .

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NINJA 2 - RUSSIA & CHINA ANTICIPATES US COVERT TACTICS RATCHETING UP SHARPLY IN 2009... US PLANS ATTACK ON IRAN - RUSSIA & CHINA ARE PREPARING WITH SPECIAL FORCES & NINJAs... SASUKE (NINJA WARRIOR).

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Music video using footage from both of Tim Burtons Batman-Movies. Music by ZZ Top - Sharply dressed Man

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Forex TV - Fed Reserve cuts rates by 75bps to .25%. Crude lower ahead of OPEC cuts. USD falls to EUR, JPY. FXDD's Michalowski with his FX forecast.

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In 2000 John McCain denounced George Bush's visit to Bob Jones university, and his refusal to denounce anti-Catholic bigotry.

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Forex TV - Election day - Factory Orders lower than expected, RBA cuts rates. National Futures' President, John Person, with his FX forecast.

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NINJA - 1 - RUSSIA & CHINA ANTICIPATES US COVERT TACTICS RATCHETING UP SHARPLY IN 2009... US PLANS ATTACK ON IRAN - RUSSIA & CHINA ARE PREPARING WITH SPECIAL FORCES & NINJAs... SASUKE (NINJA WARRIOR).

Tags: Education NINJA
Huge Losses and the Market remains nervous. If even one of the big three is forced into chapter 11 we'll see this economic downturn morph into a true depression. The very roots of our financial system are in doubt. The weak economy has investors running and losses soaring to multi-year lows. http://sharewave.org

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Producer Price Inflation falls the most ever. Paulson, Bair and Bernanke testifying in front of congress.

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NINJA 3 - RUSSIA & CHINA ANTICIPATES US COVERT TACTICS RATCHETING UP SHARPLY IN 2009... US PLANS ATTACK ON IRAN - RUSSIA & CHINA ARE PREPARING WITH SPECIAL FORCES & NINJAs... SASUKE (NINJA WARRIOR).

Tags: Education NINJA
Giles McMullen talks to Jim Mellon about the UK housing market. His view is that the market will fall by between 20 - 40 percent and that falling interest rates won't save the market. The full interview can be heard at www.financialradio.co.uk

Tags: jim mellon uk housing market crash giles mcmullen house prices property price
etvFutures - Commodities: Crude oil, natural gas, gold, silver. Crude-oil futures fell sharply, as strength in the USD and news that BP's Forties pipeline will restart operation within days pressured energy prices. Alaron's Firestone comments.

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KXTV News10 Report on Foreclosure activity and auctions in Northern California. Alexis McGee of ForeclosureS.com comments on the rise of adjustable rate mortgages.

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The Dollar rose sharply against it's biggest counterparts despite a continued deterioration in home prices.

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German business confidence report shows weakness dropping Euro to recent record lows. British housing markets also deteriorating sending Sterling lower.

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Flag Carrier: Velaria. Healer Extraordinaire: Shirai. Awesome Support: Sharply Surreal, Moonrunner

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