Stock Market Crash! Blog

Gold, Silver Rise to Highest Since Early 1980s; Palladium Jumps

Gold and silver prices surged, trading at the highest since the early 1980s, as investment funds bet precious metals will outperform U.S. stocks and bonds. Platinum and palladium also gained.

Gold has gained 14 percent this year, and silver has soared 31 percent, outpacing a 4.2 percent increase in the Standard & Poor's 500 Index. Investment in the StreetTracks Gold fund linked to the price of the precious metal has jumped by about a third this year to 11.2 million ounces. A similar fund for silver is under review by regulators.

``Precious metals are booming,'' said Herwig Schmidt, a trader at Triland Metals Ltd. in London. ``If you have a huge amount of money and limited commodities, this is what happens.''

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Number of Illegal Immigrants Hits 12M

The number of illegal immigrants in the United States has grown to as many as 12 million, and they now account for about one in every 20 workers, a new estimate says.

Efforts to curb illegal immigration have not slowed the pace, said a report Tuesday by the Pew Hispanic Center.

Instead, the report's author said, those efforts are having an unintended consequence: People who illegally enter the United States from Mexico are staying longer because it is harder to move back and forth across the border.

The report estimates that 850,000 illegal immigrants have arrived in United States each year since 2000.

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Ben Stein - Standards of Life in the Future: Think Grim

Ben Stein, the actor and economist, goes bearish in his article in which he says that, "a catastrophe of declining standards of life is heading our way."

According to Stein, "Retirees and those who will soon retire are far from financial safety. I recently calculated that the Baby Boomers need to have saved -- on average -- $400,000 per household to even start to come up with what they need to live on. Instead, they have saved about $50,000 per household if they have a rental home and about $110,000 if they own their home.

So, what will they do when they retire? What will it be like to cut pills in half, to have to sell your home and move into a trailer, to be faced with unaffordable repairs for your car?"

Stein goes to further say, "Try this experiment: Imagine you have to slash your spending by half. What goes first? Restaurant meals -- fine. Vacations -- fine. New clothes -- fine. But that won't even come close to cutting spending in half for most people.

The sad fact is that retirees will suffer. And for the leading edge of the Boomers is: It's too late. Many of them cannot escape a drastic ratcheting down in income and lifestyle. A crisis akin to the Great Depression is racing our way: A ruinous drop in standards of life.

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Yahoo! Special: Get Ready for a Housing Slowdown

After climbing steadily for a decade, the nation's homeownership rate appears to have leveled off.

New data released late last month by the U.S. Census Bureau put the homeownership rate at 69% in the fourth quarter of 2005, down from 69.2% a year earlier. While the decline itself is too small to be considered statistically significant, it is the third quarter in a row that the rate hasn't posted a year-over-year gain -- and it's the first time since 1994 that the rate at year-end hasn't increased from the previous year.

It's not entirely clear why the homeownership rate seems to have plateaued. Some economists say that the new data could be a sign that declining affordability is finally taking its toll on first-time homebuyers. Other possible explanations include economic weakness in the Midwest, where the drop in the rate is sharpest (down to 72.8% in the fourth quarter from 73.7% a year earlier), and demographic shifts.

The portion of U.S. population who own homes began climbing in the mid-1990s, propelled by moderate interest rates and strong economic growth. It has continued to move higher, bolstered by low interest rates, creative mortgage financing and the desire of many Americans to get in on the housing boom. The homeownership rate reached an all-time high of 69.2% in the second quarter of 2004, up from 63.8% a decade earlier. Since then, it has edged sideways.

"You've got seven quarters in which the homeownership rate basically has done nothing," says Jan Hatzius, chief U.S. economist for Goldman Sachs. "It's fair to say that it's stagnating."

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Housing Slowdown Ripples Through Economy

The five-year housing boom is indeed over, judging from growing statistical evidence and the performance of some of the nation's leading builders, and the slowdown is already rippling through the economy.

In the last week, the Commerce Department reported that January sales of new single-family homes fell 5 percent — the fourth decline in seven months — and the backlog of unsold new homes hit a record. And the National Association of Realtors said used home sales slipped 2.8 percent in January, the fourth straight drop and 5 percent below January 2005.

David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, D.C., area "have the largest potential for a price slowdown."

The rising prices in those markets were fed by speculators who bought homes intending to "flip" or sell them for a quick profit, Seiders said. "The biggest fear I have is investor-owned units coming back on the market in large numbers," he said.

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