Wednesday, March 12, 2008 10:47:54 AM

Why Hydronic Radiant sales will rise higher.

      Firstly lets begin why? Many people have realized that a Real Estate Boom had occurred, which was Fueled (in part) by 9/11 emergency Fed Funds cuts. These series of emergency cuts brought down the Fed Fund interest rate to 1%. Obviously, Greenspan had to keep the US together after 9/11 by restoring confidence. Other factors too had led to a loosening of credit so that Willie the Janitor could buy a Million dollar home with no money down. So everyone agrees:

FACTS: that Fed Funds rates were cut from  6.54 percent on July 2000 to a free money  rate of 1.00 percent on Jan 2004.


Option One: Traditional loan
So in a nut shell a 30 year with 50% Interest and 50% Principal paid Monthly is:

$1,000,000 Home at 1% = $3,216.40 Per Month
$1,000,000 Home at 2% = $3,696.19 Per Month
$1,000,000 Home at 3% = $4,216.04 Per Month
$1,000,000 Home at 4% = $4,774.15 Per Month
$1,000,000 Home at 5% = $5,368.22 Per Month
$1,000,000 Home at 6% = $5,995.51 Per Month


Option Two: Interest ONLY loan adjustable rate
$1,000,000 Home at 1% = $ 833.33 Per Month! Yeah Willie can afford this right?
$1,000,000 Home at 2% = $1,666.66
$1,000,000 Home at 3% = $2,500.00
$1,000,000 Home at 4% = $3,333.33
$1,000,000 Home at 5% = $4,166.67
$1,000,000 Home at 6% = $5,000.00


Willie the Janitor has an unscrupulous mortgage broker who wants his commission. Willie qualifies mysteriously for all of the above loans. While not all Mortgage brokers were bad some got away with this and now the DOJ has arrested some of these guys. In either case Option one Willie eventually can't survive and taps out. However, Option number two Willie can survive the $2,500 per month payment but only if interest rates don't go higher!!

Hence the Fed is saving all Willies......Temporarily by lower rates! 

Others talk about “food inflation” or “energy inflation” as if there were different kinds. There is only one type of inflation, which is an expansion of the supply of money and credit. Prices do not inflate; they merely rise and fall. When people refer to rising food prices as being “food inflation”, they are shifting the blame for inflation to rising food prices, rather than attributing the rise in food prices to inflation itself.

I have heard others maintain that rising commodity prices are merely a supply problem. However, tight supply is a function of the artificial demand created by inflation. If the government handed out million-dollar bills there would be a shortage of Ferrari’s as everyone would want to buy one.

Mostly all commodities such as GOLD, SILVER, COPPER AND OIL. YES OIL rise as the interests rates fall. When Interest rates fall you have a easing of credit when they rise you have a tightening of credit making money harder to get causing a drop in prices including oil. But remember that China and India are taking as much Oil as they can regardless of our economic status.

Global economic expansion is driving what the International Energy Agency says is the biggest increase in oil demand for 24 years. There is higher than expected demand in industrialized countries and China's rapidly expanding economy has created a huge demand boost. US demand has risen because of strengthening economic recovery and greater need for higher grade crude oil suitable for processing into petrol (gasoline) for the fuel-hungry Sport Utility Vehicles (SUVs) popular with US drivers. Chinese demand is up 20% over the past year. Traders are betting this rapid growth will continue for several years although there is some chance that the economy will "overheat" and oil demand growth will slacken. Among suppliers only Saudi Arabia has significant spare capacity that it can make available to the market. Just recently they voted to reduce capacity not increase capacity. Bush got pissed but to no avail its OPEC not USA controlling the liquid gold.

The producers' cartel Opec accounts for about half of the world's crude oil exports and attempts to keep prices roughly where it wants them by trimming or lifting supplies to the market. In the past, Opec ministers tended to wait for prices to dip before agreeing to cut output. Cutting output means less oil and higher prices! Gee do they like higher prices...ahh yes. Remember it takes more US dollars as they fall in value so a higher price is needed to be at parity. Thus, Opec is really getting the same dollar amount even as the price increases. Eco 101. If your dollar buys less..you need more dollars to buy the same item. Hence INFLATION or stagflation because of the real estate market is depressed while everything else is on fire inflation wise!


Now that you have a basic understanding in World Politics here's what you can expect.
Since yesterday the US Gov is pumping 200 billion in the economy you can expect the dollar to fall sharply!!!!!!!!!!!!!!!!!

Expect $150 per barrel of OIL and Over $1,000 per ounce of gold...soon! I mean very soon like this summer. Electric Cos. have dual fuels Oil and gas. Guess what they will burn gas. Nat Gas will rise and so will rates of electric consumers.

How does this effect us? Look at GM and Ford. They are in trouble because gas guzzlers sales have plummeted. Fed Ex ,UPS, Post Office are raising prices. US airlines depend on OIL so for traveling cheap.... I can go on an on.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak. Many analysts believe the dollar's decline is the reason crude futures have surged to new records in 12 of the past 13 sessions, despite the fact that crude supplies have risen 10.2 percent since early January.

Now for Radiant Heat which is a tiny sector of all existing homes sales.

Today after the banking crisis of Billions in write off from Morgan to Bear to Wamu. They all have suffered massive One time losses on loans to real estate sub prime mortgages. Never again will they loan money to Willie the Janitor. Try to get a loan today. Just try. You need A rated paper.

Thus even though rates are coming down the Avg. Willie is screwed, so he must keep what he has and fix it up. Hence remodels will rise.

And with remodeling comes Radiant Heating. Initially all types will rise however In my opinion, I believe only Solar Hydronic will be the leader because of its ability to completely receive free sunlight btus heat. It may be years before this technology is perfected, but at least it will give you free or a reduced energy consumption bill in a thirsty energy commodity driven planet.

Go Radiant Energy. Go Green.



Mike

I agree that if OIL is $100 plus much longer...people will drop like flies. Darwinism...survival of the fittest. I also agree that many people will desire radiant heat homes. Knowing what you know about heat loss and radiant heating if there are two identical homes same price one with radiant heat system and one without which one do you buy? Definitely Radiant heating Home.
 
While you might think that no one going to have the money pay for Radiant Solar, I know people will..Rich ones at first, then the Middle class. It's only a matter of time before it's massed produced and capitalized on with the same design. Right now there are so many different designs, vacuum pressures, yet there is no standardized design yet.

http://www.solar-rating.org/SUMMARY/Dirsum.pdf

Can anyone compare prices? I bet they vary significantly by Co.

I can assure you when orders start rushing in many new companies will pop up with a less expensive mousetrap. Heck, you can make your own Solar Collectors for a fraction of the cost. You can do it, it won't be great but you can do it.

http://www.beyondoilsolar.com/solar_water.htm

 
In short, it really comes down to what energy cost is at a stated date in time. We are all just guessing on hypotheticals. However lets just play with the "what if" scenarios.

What if Heating Oil was $6.00 per Gallon?
Or Gasoline $6.50 per Gallon?

That is the question ... but what if it were a fact?

We agree that many Americans will suffer but will survive.

Americans will simply look for alternatives!

From cars to heating systems. People will command alternatives so I believe in fact that radiant heating Products and Professionals will be in demand greater than todays demand. I also believe that the number of Radiant Heating Products and Professionals will grow larger even though that number may be a small percentage ... it will be a massive number!

We all are in the same boat but at least we can swim.

The U.S. solar energy industry continued its double-digit annual growth rate in 2006. Fueling this growth were record high energy prices, the impact of state Renewable Portfolio Standards, increased focus on global warming, and the Energy Policy Act of 2005 (EPAct) which took effect in January 2006, providing tax credits for solar installations.

As demand for solar energy continued to grow, the solar energy industry was shadowed by the steep increases in the cost of raw materials like copper and high-grade silicon. Also putting upward cost pressure on solar energy equipment was the shortage of trained workers, as several new firms began competing with major manufacturers for the same work force. Also during 2006, solar companies from China and Germany exhibited a strong interest in entering the U.S. solar energy market.

Solar Thermal Collectors

Total solar collector shipments surged 29 percent in 2006 to 20.7 million square feet (Figure 2.1). Domestic shipments of solar thermal collectors rose more than 33 percent to 19.5 million square feet during the year (Table 2.1). Forty-four companies were actively involved in shipping solar thermal collectors, an increase of 76 percent from 2005 (Table 2.2).

Agreed. Super insulate!

But lets think in terms of "How many TOTAL HOMES (percent of America) that are currently super Insulated?" nil to almost none percentage wise. So many people do not have Super Insulation or even hay bales in the walls. Am I correct?

My entire point being is that the US Economy is in deep deep trouble and that the banking industry is on the verge of collapse. On the News last night BEAR Stearns is broke and underwater from loans. Every one of their customers ran to the bank to withdrawal all cash. Now if they go, its the domino effect!  Washington Mutual lost BILLIONS will they be next? If all of WAMU customers show up Monday Morning..........yikes. Not likely but it could happen. The FED must now lower rates to keep Willies Payment going to the bank on time. Heck Willies payment may drop allow him excess capital to spend. If Willie stops paying all the banks suffer...here we go again. Another emergency rate cut of 1 percent next week! Eventually, inflation hits so hard that interest rates must go higher...killing Willies. The Fed wants small organized foreclosures not a mass destruction of Middle Class.  

I think that we can all agree that consumers will be very cautious in spending on any NON-Essentials items since higher prices.

Now here's the big question which is unknown to date:

What will the AVG Willie do when energy prices rise to record highs because of a declining dollar?

Who ever can answer this question correctly will be rich...or richer or be just able to eat.


Now I can show you how to hedge against inflation..buy gold silver and oil at your brokerage firm. My house has copper in it woopie. But like most Americans your credit card is maxed out so you can't buy a hooker, unless your the Governor of NY.

Mike

President Bush says don't worry be happy.

http://link.brightcove.com/services/link/bcpid203719194/bclid86272812/bctid1456742379

You see where we are! Fear mongering and B.S are rampant. We have a government that is killing our children and lying all the way to the bank. All we can do is take out a (potentially) great governor because he liked sex. Ok, there's a little more to it than that but in comparison, the rest should be taken out and shot!

Congacox,

Question?

Can we make a Solar Hydronics Cheaper? I think the promise of Solar Hydronics just got some more attention today. Thanks to the Fed.

Yes thank god no political talk but since you mention it...

As you know the IRS has doubled its staff and now this morning the Government just printed 30 billion of Monopoly Money and flushed it down the drain for bad loans. Guess who is paying for this and how they will collect it?