The Flawed Nature Of Economic Theory
A weekend topic on housing bubble awareness starting with the Bellingham Herald in Washington. “The steady drumbeat in local real estate recently is that inventory is tight and home prices keep rising. It appears some buyers have had enough. While inventory remains tight, sales are solid and home prices continue to rise, price reductions are also increasing along with homes being pulled off the market. Between June 13-20, 52 price reductions were made on homes for sale across Whatcom County, including 23 price reductions in Bellingham, said Darin Stenvers, branch manager at John L. Scott’s Bellingham office, adding that this is up from earlier this year.”
“Another telling statistic: Of the homes that have come on the market within the last 30 days, 46 Whatcom County homes have been pulled off the market, including 10 in Bellingham. Newly listed homes get taken off the market for a variety of reasons, including being priced too high and not getting offers. Troy Muljat of Muljat Group Realtors agreed there is a split happening in the market, and not just because some sellers are asking too much for a house. The rise in interest rates earlier this year has reduced the purchasing power of buyers who are taking out mortgages. ‘What prices are and what people can afford — that gap is widening,’ Muljat said.”
The Naples Daily News in Florida. “May also saw inventory levels continue to stabilize, according to the Naples Area Board of REALTORS®. There was very good news for buyers in the report as May’s overall median closed price dropped 5 percent to $337,000 from $355,000 in May 2017. Moreover, the overall median closed price for homes priced above $500,000 decreased 14 percent to $507,000 from $590,000 in May 2017. ‘We haven’t seen inventory levels in May this high since 2013,’ said Mike Hughes, general manager for Downing-Frye Realty, Inc. ‘I was concerned that the low end of the market would start shrinking after season, but the May report showed inventory increased 6 percent for homes under $300,000.’”
From Bloomberg on Canada. “The chill that has crept over some segments of the Toronto housing market may soon extend to one of its persistent hot spots: condominiums. Evidence of a slowdown is emerging as new rules make it tougher to get a mortgage and borrowing costs rise for the first time in almost a decade. Projects are taking longer to sell and, in some areas, developers are using incentives to move units. Unlike prices for detached homes, which are down almost 10 per cent from the peak last year, condo prices have continued to climb, reaching a record in May. But the pace of appreciation has slowed. At the same time, supply is rising.”
“Negative monthly cash flow reached $424 on average for resale condos in the first quarter of 2017, according to an April report. Many investors will accept negative cash flow as long as they see price gains on the underlying asset. However sustaining the recent pace of price gains over the longer term may be difficult, the Bank of Canada said in a report this month. ‘If expectations reverse and prices recede, speculators may quickly sell their assets, which could lead to large, rapid price declines.’”
From North Shore News in Canada. “Dear Editor: Allan Angell’s comments that the ‘NDP should be shot’ and the resulting ‘hear, hear’ from the crowd is a tragic reminder that, as the famous economist Thomas Picketty wrote, ‘No hypocrisy is too large when elites are forced to justify their positions.’ As an owner of a real estate brokerage, Mr. Angell has been one of the biggest beneficiaries from this phenomenal rising real estate market, and it shameful that he is the most vocal against a relatively small increase in education levy.”
From Nine News in Australia. “Painful though it may be for existing property owners who are selling, we are witnessing what a bubble slowly deflating back to reality looks like. Data showed that across Australia’s eight capital cities prices fell in the first quarter of 2017. Sydney was hardest hit. This downward price pressure is consistent with a reduction in auction clearance rates documented by CoreLogic. A big correction to property prices would require a major trigger. The most likely candidate for that trigger is interest-only loans. More and more attention is finally being paid to dangers caused by Australia’s profligate use of such loans. As written last year, at the peak a staggering 40 percent of residential mortgages in Australia were interest only.”
“The Australian Prudential Regulation Authority (APRA) stepped in last year, capping new interest-only loans at 30 percent of new loans. That, along with a tightening of underwriting standards by banks, has led to a sharp drop in such loans. In a moment of gaping honesty eight weeks ago, the RBA’s Chris Kent highlighted the difference between the average and marginal borrower. ‘About half of owner-occupier loans have prepayment balances of more than six months of scheduled payments. While that leaves half with only modest balances, some of those borrowers have relatively new loans,’ he said.”
“It doesn’t matter than some of them are new borrowers – other than that they bought at the height of the bubble, making them more susceptible to financial stress than other borrowers. The fact is that a whole bunch of folks are on the wire. If their payments go up they are going to struggle to make them. And if a lot need to sell at once then, as they say at NASA, ‘Houston, we have a problem.’”
“We are about to see a three-year wave of shifts to principal-and-interest loans. Worse still, the loans originated in those years were heavily mediated by mortgage brokers whose incentives were all about moving volume, not quality. The air may fizzle out of the Australian balloon, or it may burst violently. Either way Australians should be asking hard questions about why APRA waited so late to act on interest-only loans, liar loans and underwriting standards in general.”
From Domain News in Australia. “A financial crisis may be poised to swallow Australia’s housing-debt-laden economy and usher in the first recession the country has seen in 26 years, a leading Australian economist says. Australian household debt is now hovering at a record high of about 120 per cent of GDP – among the highest in the world and well above Canada, Britain and the United States. And with the bulk of that debt confined to mortgage debt, and house prices now falling in Sydney and Melbourne, economists are sweating.”
“‘Economic history shows that more often than not a rapid build-up of debt usually comes with a consequence,’ Capital Economics’ Paul Dales writes. ‘The only question is how bad will that consequence be?’”
“Banks have tightened their lending practices following intense scrutiny from the financial services royal commission, which held deeper and darker issues than were first thought. And housing finance has slipped, particularly in the investor and interest-only segments of the market, with experts doubting a reversal will occur any time soon. ‘In a financial-crisis scenario, credit conditions tighten significantly, credit falls outright and the resulting bigger fall in house prices and weakening in the economy calls into question the quality of banks’ assets,’ Dales writes. ‘Banks then tighten credit further, triggering further falls in house prices and a deeper recession.’”
From Multibriefs. “Several years ago, a picture was taken at night of the One Hyde Park development in London. The building is home to some of the world’s most expensive real estate, reaping in up to $180 million for a single apartment. In the photo, there was not a single light on in the gleaming tower. Because no one lives there. As real estate prices continue to steadily rise, seemingly endlessly, we have seen the concept of a ‘home’ become divorced from its original purpose as shelter, and becoming instead a financial asset class in built form.”
“The extension of financial thinking into housing has led to our homes being increasingly viewed as commodities. As Manhattan apartments become popular as a ‘pied-a-terre’ for holders of global capital, it has been reported that in some parts, up to 1 in 3 apartments lies empty for at least 10 months a year. Apparently, landlords in the city are sometimes making such a good return on their investment that they simply don’t want the ‘hassle’ of renting the apartments out to tenants — a process known as ‘warehousing.’”
“At the most shifty end of the spectrum, these properties serve as a haven for laundering money stolen from state budgets over the world. By using offshore companies, this means of parking your ill-gotten money can be largely untraceable. Stories abound of prime properties being bought with cash. If the investor needs an injection of cash, the building becomes their ATM. It can also act as collateral to leverage further investment. International property investment can serve another purpose too — sometimes buying their investor the ultimate prize, the so-called ‘golden passport.’ It appears that even citizenship is up for sale, and property can be one way to buy it.”
“Beyond the rarified world of the so-called ‘1 percent,’ however, the rest of the market is no stranger to the financialization of housing. The number of ordinary citizens who are beginning to think more like property developers than residents of a home in on the rise — fueled by TV programs like ‘Property Ladder.’ Home improvements today are often not made based on pragmatic needs, such as an extension to provide a bedroom for a growing family. They are now often made on the basis of the impact on sales value.”
From The Irish Times. “Almost every economic event or phenomenon is considered the product of the interaction of the laws of supply and demand, argues The Concise Encyclopedia of Economics. The ‘law’ is currently being invoked by those who believe the solution to the Irish housing crisis is to simply build more houses. It is an analysis echoed regularly by grateful developers and estate agents. But the ‘law’ of supply and demand is a micro-economic concept and applicable only to the ‘economy’ of individuals, households and firms.”
“The ‘economy’ of a globalised country such as Ireland is, in stark contrast, a macro-economic concept, the result of analysing the aggregate activities of more than four million people operating within global markets for housing and other assets. As evidence of the flawed nature of this fundamental micro-economic theory, we only have to look at Ireland’s housing market in 2006 – the year in which the market boomed before imploding catastrophically.”
“Further evidence can be found in the Irish housing market since 2006. One glance at the CSO’s 2016 census of housing stock makes clear that Ireland’s surplus stock is higher than it was in 1991 – then at 9.1 per cent. In 2016, the overall vacancy rate, including holiday homes, was 12.3 per cent. If holiday homes are excluded from the housing stock, the vacancy rate drops to 9.4 per cent. In 1991, Dublin’s surplus was 5.1 per cent of the total.”
“To understand Ireland’s housing crisis, and to formulate sound policy to deal with it, requires a macro-economic approach. As Josh Ryan-Collins and Laurie McFarlane argue in Rethinking the Economics of Land and Housing, land is inelastic, a gift of nature. It cannot be created and converted into capital. It cannot be produced or reproduced, or ‘used up.’ Above all, land (and property) is confined by boundaries. It cannot be moved out of Ireland.”
“The supply of credit, by contrast, is elastic and with the help of global central banks and financial institutions can be produced almost ad infinitum by both global but also Irish monetary and financial systems. And unlike land, credit and capital are not confined by boundaries. In our globalised world, capital is highly mobile and its unregulated flows unreliable and unstable.”
“To understand Ireland’s housing crisis we need to lift our eyes from the micro- to the global macro-economy. To follow ‘the Great Wall of Money’ – $453 billion (€390 billion) – aimed at global markets in real estate. Ireland is just one country whose finite and fixed stock of land and property is massively inflated by this onslaught of unregulated capital. The global owners of capital are in a frantic search for safe, high-yielding assets in which to park their capital.”
“House prices have been blasted into the stratosphere, not because of a shortage of supply, but by the excess of a potent propellant – finance. House prices will fall when the propellant is withdrawn – and flows of finance decline. Indeed, there are already signs that globally, capital flows are in retreat. Expect Irish house prices to follow suit.”
‘What prices are and what people can afford — that gap is widening’
Yeah, but this has been going on for years. In the past people stretched because they expected prices to go up - they were speculating. And speculation always ends. And when it does all the mental contortions fail to explain it. Hey media,why are we subjected to used house salesmen lecturing us about economics?
“Hey media,why are we subjected to used house salesmen lecturing us about economics?”
Maybe the media just presumes that everyone knows realtors are liars.
“…why are we subjected to used house salesmen lecturing us…”
Money talks, bullshit walks.
….. and DebtDonkeys bray.
I suspect that it was also driven by fear of “buy now or be priced out forever”. Of course there is that breaking point where buyers simply give up (the California exodus is a good example), and I think that we are reaching that point.
Also, it starts earlier at the edges.
Bellingham is closer to Vancouver BC than Seattle or even Everett, but far enough away from both. There is a university there, but the whole metro area is maybe 100K people.
You’re not going to get Seattle/Bellevue/Redmond refugees with tech jobs despite all the sellers wishing so, and their wishing prices. So the people who speculated are going to get burned.
Speaking of burned, maybe a remote wildfire is a good analogy for how I think a downturn will play out. The fire starts out away from the big cities, so the media says there is no fire. And it keeps advancing, and by the time the media ‘discovers’ the fire has reached the big city and declares it a ‘new thing’ and fall all over themselves to report, it’s already scorched a huge path getting there and everyone wonders how it got so big so fast.
“Bellingham is closer to Vancouver BC than Seattle or even Everett, but far enough away from both. There is a university there, but the whole metro area is maybe 100K people.”
I just spent two days up there moving-out my daughter from the dorms for the summer… total cluster f*ck. It’s a nice college town, and the WWU campus is beautiful. However, all the hip dining choices are expensive, and the hotties are there for the tips. Buck-up, dad.
I wonder how many of those ‘hotties’ are also out there looking for a Sugar Daddy. Apparently that’s a booming thing right now among the university crowd. I guess a confluence of multiple trends at work.
Larry Ellison’s “little-fella” prefers pretty Standford graduates, and I’m sure he’s settled a few outstanding student loan debts before the ink appears on the prenuptial agreement.
‘with the bulk of that debt confined to mortgage debt, and house prices now falling in Sydney and Melbourne, economists are sweating. ‘Economic history shows that more often than not a rapid build-up of debt usually comes with a consequence,’ Capital Economics’ Paul Dales writes. ‘The only question is how bad will that consequence be?’
If you read this, it’s the predictable “oh don’t tighten too far government, it’s gonna be doom and gloom!”
But if one suggested things were out of control back when something might have been done, you were a paranoid doom and gloomer.
‘Several years ago, a picture was taken at night of the One Hyde Park development in London. The building is home to some of the world’s most expensive real estate…In the photo, there was not a single light on in the gleaming tower. Because no one lives there.’
Again, the media fails us. When these stories were coming out a few years ago it was celebrated. “Safe deposit boxes in the sky!”
And “tanks in the street” if a few banks fail…
Hopefully manned by soldiers who are on the side of the 99% vs. the banksters.
The sounds of squalling children on every headline news story is leading to fratricide inside the GOP. (Queue up the personal attacks on George Will to deflect attention from my point.)
Conservative George Will says vote against Republicans in midterms
By Rachel Koning Beals
Published: June 23, 2018 10:09 a.m. ET
The congressional Republican caucuses need to be substantially reduced, Will writes
Getty Images
George Will, in 2009, at a Fox News event.
Calling lame duck House Speaker Paul Ryan and others the “president’s poodles,” conservative columnist George Will says the virtual radio silence from Republicans in power over President Trump’s border policy means the GOP has to go.
…
I’m glad you brought this up. Not just because it shows your wishful thinking, but a broader dishonesty in the globalist media industrial complex.
‘Will’s condemnation of a Trump policy is not new but the column shows little mercy for the GOP congressional leadership, and arguably, a party in flux…longtime Republican strategist Steve Schmidt dropped his party…He, too, called for a Democratic wave in the midterms.’
So these globalists are still butt hurt. Get used to it, a populist wave is sweeping the planet. Just how conservative is a person who says to put Maxine Waters and Nancy Pelosi in power? They aren’t. Conservative (nor liberal) doesn’t mean anything and hasn’t for a long time.
Check this out from the Associated Press:
‘President Donald Trump is railing against the treatment of his 2016 rival Hillary Clinton at a rally Wednesday in Duluth, Minnesota. Trump is also falsely accusing the media of making a big deal of immigration to distract the public from congressional inquiries into the Justice Department.’
This sentence should shock every person who has any idea of what journalism is. The AP has no basis to assert “falsely accusing”. Sure quote a person who says that but not inject it first person in a third person report. Shenanigans!
More on this point:
‘No one is allowed to dissent from the official Establishment line: that’s the new dispensation in the media, and it is being enforced by the political class, which has launched a series of smear campaigns against anyone who dares question the conventional wisdom. Anyone who questions the veracity of the media, starting with our President, is deemed an “enemy of democracy,” because the media is supposed to be the foundation stone of a free society.’
‘But what happens when the media becomes an instrument in the hands of Power, a weapon in the arsenal of a Deep State intent on exercising its veto over our democratically elected government?’
‘That’s a question fake-“libertarian” Conor Friedersdorf doesn’t want you to even contemplate. Why? Because then, like Tucker Carlson, you’d be “hurting America.” That’s right, folks: “Tucker Carlson is Hurting America Again”! Yes, again!’
‘Most of the piece consists of quotes from Carlson, supposedly contradicting his present skeptical view of the “mainstream” media. Yet this misses the point – deliberately, one can’t help thinking – being made not only by Carlson but by some of the few remaining rational pundits on the left who are disturbed by the weaponization of journalism as a sword in the hands of those who would slay the President. There’s been a sea change in the content and tone of the “mainstream” media, which has given up all pretenses of objectivity and lent itself to partisan purposes.’
‘This radical departure from the traditional news-gathering credo of old-time journalists has made our job here at Antiwar.com much harder: whereas before the default attitude toward the reporting of, say, the McClatchy News Service, was implicit trust, today we must approach McClatchy with skepticism for the simple reason that their output has taken on a polemical tone. And the content reflects that tone, which is brazenly biased against anything connected to Donald Trump, such as the Korea summit. The same is true of the rest of the legacy media: we have to check, and check again, just to make sure we aren’t being lied to.’
‘Friederdorf’s turnaround indicates that, in joining what he characterized as the “statist” press, he’s chosen to ignore his own warning that, in wartime, the “mainstream” media is not to be trusted.’
‘Wait a minute – war? What war? I’m talking about the liberal media’s war on Trump, which no one with eyes in their head and half a brain can deny. They are out to destroy this President. In league with the “intelligence community,” just like during the run-up to the Iraq war, they are embarked on a crusade for regime-change – only this time, the scene of their operations is right here in the United States.’
‘You don’t have to like Trump, or his policies, to see this as a mortal danger to our republic: does any libertarian want to give the “intelligence community” veto power over who occupies the White House? Do we really want to see the FBI and the CIA intervene in our politics?’
‘Tucker Carlson is absolutely right when he tells us: “If you’re looking to understand what’s actually happening in this country, always assume the opposite of whatever they’re telling you on the big news stations.”
‘We here at Antiwar.com have been saying exactly that since our founding – indeed, it is why we were founded in the first place. The media was an indispensable element in the campaign of lies that lured us into Iraq: without Judy Miller at the New York Times, and the dozens of fake news piece published by the Washington Post, and buttressed by dozens of pro-war editorials and op ed articles – not to mention the televised lies broadcast 24/7 – the worst foreign policy disaster in our history might have been avoided. The rest of the “mainstream” picked up this massive assault on truth and ran with it, and the rest is a tragic history indeed.’
‘Public distrust of the “mainstream” media didn’t begin with Trump and his followers declaring “fake news” to be “the enemy of the American people” – it started when the lies that dragged us into war were debunked and the liars exposed.’
Do you believe the child separation policy was a creation of the liberal media to discredit Donald Trump?
Let’s ask McClatchy:
‘President Barack Obama separated parents from their children at the border. Obama prosecuted mothers for coming to the United States illegally. He fast tracked deportations. And yes, he housed unaccompanied children in tent cities.’
‘Leon Fresco, a deputy assistant attorney general under Obama, who defended that administration’s use of family detention in court, acknowledged that some fathers were separated from children.’
‘Most fathers and children were released together, often times with an ankle bracelet. Fresco said there were cases where the administration held fathers who were carrying drugs or caught with other contraband who had to be separated from their children.’
“ICE could not devise a safe way where men and children could be in detention together in one facility,” Fresco said. “It was deemed too much of a security risk.”
‘One of the most controversial measures that Obama took was to resurrect the almost-abandoned practice of detaining mothers and children to deter future illegal immigration. The government had one lightly used 100-bed facility in central Pennsylvania and added three larger facilities in Texas and New Mexico holding thousands.’
‘The New Mexico facility would later close and Obama would face legal challenges that stopped him from detaining mothers and children indefinitely. A federal judge in California ruled that the Obama administration was violating a 20-year old case, known as Flores when it kept families detained for longer than 20 days.’
‘Obama took other controversial steps as well, including fighting to block efforts to require unaccompanied children to have legal representation and barring detained mothers with their children from being released on bond. The administration also deported a teenage mother and her son back to Honduras soon after she attempted suicide at Texas family detention center.’
https://www.mcclatchydc.com/news/politics-government/white-house/article213525764.html
What’s missing from this phony dust up? Why are these people fleeing at all? Wasn’t NAFTA supposed to raise all the boats and create a middle class in Mexico? We only gave it 30 years to work. Just what about modern economics is missing down south that people drag children, guided by viscous drug cartels BTW, into the desert in the summer? You know, if I left a dog in a car this time of year I’d go to jail. But these “mothers” can walk toddlers off into the bush in triple digit heat and they’re victims?
You don’t understand.
obama was “The first mainstream african-american who Is articulate and bright and clean and a nice-looking guy.”
– Senator Joe Biden, D-Del. Jan 2007
https://www.youtube.com/watch?v=EgIFV7jXBFQ
I guess the difference is that Obama kept quiet about child separation, while Team Trump trumpeted and greatly expanded the policy.
This is why Mexicans are fleeing: the criminals can kill, kidnap, rob, and extort with impunity thanks to the systemic corruption at all levels of the Mexican government and security forces. NAFTA has benefited only the wealthy multinationals and agribusinesses in Mexico, not the base producers (farmers, artisans, etc.) while further reducing the standard of living and blighting the future prospects of most Mexicans.
http://www.borderlandbeat.com/2018/06/violence-and-unemployment-dry-up.html
How NAFTA Failed Mexico
June 16, 2003
‘During the 1993 battle over the North American Free Trade Agreement, the proposal’s promoters’ most politically effective argument was that NAFTA would keep Mexicans out of the United States. As political writer Elizabeth Drew later observed, “Anti-immigration was a sub-theme used, usually sotto voce, by the treaty’s supporters.”
‘The voce was not always sotto. “We don’t want a huge flow of illegal immigrants into the United States from Mexico,” said former President Gerald Ford, speaking at one of then-President Bill Clinton’s pro-NAFTA rallies. “If you defeat NAFTA, you have to share the responsibility for increased immigration into the United States, where they want jobs that are presently being held by Americans.”
‘Ford’s argument made economic sense: If NAFTA were to create more jobs in Mexico, fewer Mexican workers would leave. When people can earn a decent living in their own country, they would generally rather stay put.’
‘ NAFTA proponents, on the other hand, claimed that merely opening Mexico to free trade and unregulated foreign investment would produce the job growth and rising incomes needed to create a stay-at-home middle class. It was the capstone on an effort begun in the early 1980s by a group of U.S.-educated economists and businesspeople who took over the ruling Partido Revolucionario Institucional (PRI) in order to build a privatized, deregulated and globalized Mexican economy. Among their chief objectives was tearing up the old corporatist social contract in which the benefits of growth were shared with workers, farmers and small-business people through an elaborate set of institutions connected to the PRI.’
‘NAFTA provided no social contract. It offered neither aid for Mexico nor labor, health or environmental standards. The agreement protected corporate investors; everyone else was on his or her own. Indeed, NAFTA is the nation-building template imposed on developing countries by recent corporate-dominated U.S. administrations and their client international finance agencies. It is the model for the proposed Free Trade Agreement of the Americas, as well as for the Bush administration’s development plans for Iraq.’
‘Americans’ understanding of NAFTA’s impact on the Mexican people is obscured in part by the gap between what Mexican elites tell U.S. elites and what Mexicans tell one another. Last December former Mexican President Carlos Salinas, who negotiated NAFTA, told a Washington conference of applauding corporate lobbyists, government officials and free-market think tankers that NAFTA was a great success. “The level of trade and type of products that cross the borders,” he said, “silenced even the most ardent critics.”
‘ The next day, in Mexico City, a large group of very ardent Mexican farmers broke down the door of the lower house of the Mexican Congress to denounce NAFTA and demand that it be renegotiated. Similar demonstrations — joined by teachers, utility workers and others — have erupted throughout the country, closing bridges and highways and taking over government offices. Polls show that most Mexicans think NAFTA was bad for Mexico. Largely because of the agreement, Salinas is the most unpopular ex-president in modern Mexican history.
NAFTA’s critics did not doubt that it would stimulate more trade; that was, after all, its function. Rather, they predicted that any benefits would go largely to the rich while the middle class and the poor would pay the costs, and that the promised growth would not materialize. They were right. NAFTA is not the cause of all Mexico’s economic troubles, but it has clearly made them worse.’
‘Since NAFTA’s inception in 1994 — indeed, for the 20 years of neoliberal “reform” — the Mexican middle class has shrunk and the number of poor has expanded. Economic growth has been below the old corporatist economy’s performance and substantially less than what is needed to generate jobs for Mexico’s growing labor force. During his 2000 campaign, Mexican President Vicente Fox promised that under his six-year term the country would grow 7 percent per year. Two and a half years after his inauguration, growth has averaged less than 1 percent.’
‘So the northward migration continues. Between the U.S. censuses of 1990 and 2000, the number of Mexican-born residents in the United States increased by more than 80 percent. Border-crossings diminished temporarily after September 11, but they are now as great as ever. Some half-million Mexicans come to the United States every year; roughly 60 percent of them are undocumented.’
‘The massive investments in both border guards and detection equipment have not diminished the migrant flow; they have just made it more dangerous. In the past five years, more than 1,600 Mexican migrants have died on the journey to the north, including 19 people who were found asphyxiated in a truck near Houston in May. Still, as a neighbor of one of the 19 who left told The Washington Post, “If you’re going to improve your life, you have to go to the United States.”
‘The failure of NAFTA to deliver on its promise of a better life for Mexicans represents more than just a misplaced faith in free trade. Behind the laissez-faire rhetoric, Mexico’s neoliberals were pursuing a large-scale program of government social engineering aimed at forcing Mexico’s rural population off the land and into the cities, where it could provide cheap labor for the foreign investment that the new open economy would attract.’
‘Neoliberalism was supposed to reduce the income gap between Mexico’s relatively rich border states and the poorer ones in the country’s middle and south. Supporters claimed that privatizing banks and opening them to foreign ownership would make more capital available for domestic firms in domestic markets. But — in the depressingly familiar pattern of privatization the world over — the PRI reformers sold off the banks to friends, then bailed out the new owners when the peso collapsed a year after NAFTA was passed. Made whole with more than $60 billion of the taxpayers’ money, these crony capitalists resold their banks at a handsome markup to foreign investors.’
‘Hope that NAFTA would enable Mexico to export its way to prosperity has largely vanished. In order to relieve the pressures of unemployment, Fox has been badgering George W. Bush to liberalize migration, create guest-worker programs, and provide Mexican migrants with civil rights and social benefits. The Mexican president regularly refers to migrants in the United States as “heroes,” and their remittances have become one of the country’s most important sources of foreign earnings.’
‘For Mexico’s oligarchs, the public focus on the condition of Mexican workers in the United States has the great virtue of diverting political attention from the condition of Mexican workers in Mexico. Fox has been eloquent on the maltreatment of undocumented migrants at U.S. farms and factories. Rightly so. But he has been silent about the harsh and brutal conditions suffered by Mexico’s own domestic migrants, including those as young as 11 years old who were found — after Fox’s election — to be working in his own vegetable packing plant.’
‘As in many developing countries, the largest part of Mexico’s economic problem lies not in restricted export markets but in the stifling maldistribution of wealth and power that restricts internal growth. The gap between Mexico’s rich and poor is among the worst in the Western Hemisphere.’
‘Of all the world’s developing countries, Mexico was by far in the best position to exploit the neoliberal model. Its proximity to the U.S. market and a domestic U.S. constituency of millions of Mexican American voters gave Mexico advantages under NAFTA that no other Third World nation had. The testimony of hundreds of thousands of Mexican workers each year making the hard and dangerous trip north is evidence that, after two decades, the model is not working in Mexico. If it is not working there, it is unlikely to work anywhere.’
Have you ever heard the MSM report that NAFTA is terribly unpopular in Mexico? Or why? Me neither.
This is the dishonest, globalist media that we are dealing with on every level. And they have been doing this for decades. “Sure, super expensive shacks are good for everybody!” Never mind that it practically locked up the global economy just a few years ago.
It’s no accident that the Zapatista uprising was launched on January 1st, 1994 - the day that NAFTA went into effect. The indigenous people of southern Mexico knew how badly they were going to get screwed over, and took up arms to resist being herded into the incorporated neoliberal plantation.
https://cagj.org/2014/01/nafta-zapatista-uprising-20-years/
This is why Andrés Manuel López Obrador (AMLO) is going to win the presidency in Mexico. He is a ideological leftist and a populist who has moderated his stance as the years go by.
The Economist writers seem to believe he will work better with Trump:
“”strangely absent from this populist brew is anti-Americanism, despite the unpopularity of America’s president. Mr López Obrador insists he will not recklessly provoke Donald Trump. “We have to have enough patience to get to grips with President Donald Trump, to maintain the relationship,” he said on June 10th.”
Tropical messiah
How Andrés Manuel López Obrador will remake Mexico
The Economist
The U.S. imports massive amounts of gulf oil from Mexico via pipeline, and the political magicians are very busy deceiving.
the Mexican middle class has shrunk and the number of poor has expanded
Straight out of the globalist’s playbook. The MSM likes to blame the crime wave in Mexico on the drug cartels, but the truth is that most crime there is committed by the poor.
Of course the MSM likes to tell us that globalization has raised standards of living in the 3rd world. Tell that to my unemployed cousin in Mexico City who has an engineering degree and still lives with his mother, even though he’s married and they have a kid (fortunately his mother’s apartment is paid for and property taxes in Mexico are very small)
While Mexico has always been an oligarchy, the United States, prior to turning over our money issuance to a criminal private banking cartel in 1913 called the Federal Reserve, was always a republic. Now, with the Fed facilitating the transfer of wealth and assets from the 99% to its .1% cohorts, and globalist mega-donors capturing “our” Republicrat duopoly, we too are well down the road to neofeudal serfdom under the not so benign rule of the oligarchs.
Six conglomerates own every single media outlet of note in the land of the free and the home of the brave (Google it, very eye-opening). The globalists who control these media outlets make sure the sheeple are feed a steady diet of MSM lies, half-truths, and propaganda to convince them to go quietly onto the oligarchy’s incorporated neoliberal plantation where they can be fleeced at will, while feeding on the shoots sprouting from the bovine excrement the MSM flings across their pasture.
NAFTA has benefited only the wealthy multinationals and agribusinesses in Mexico
Wow, what a coincidence…that’s the same people it benefited on this side of the border. What are the odds?
This isn’t Mexico. These are all Central Americans. The illegals in DC are mostly Honduran, El Salvadoran, or Dominican.
Just how conservative is a person who says to put Maxine Waters and Nancy Pelosi in power? They aren’t.
This.
George Will has revealed himself to be a globalist pawn. He can eff himself.
George Will is a neocon cuck and member of the elitist Council on Foreign Relations. When he starts clutching his pearls and hyperventilating, it means he’s getting ready to propagate The Narrative as dictated to him by his globalist masters.
The false duopoly is simply being undone.
‘Cesar Chavez was an American labor leader and civil rights activist who, with Dolores Huerta, co-founded the National Farm Workers Association (later the United Farm Workers union, UFW) in 1962.’
‘The UFW during Chavez’s tenure was committed to restricting import of immigrant labor. Chavez and Dolores Huerta, cofounder and president of the UFW, fought the Bracero Program that existed from 1942 to 1964. Their opposition stemmed from their belief that the program undermined U.S. workers and exploited the migrant workers. Since the Bracero Program ensured a constant supply of cheap immigrant labor for growers, immigrants could not protest any infringement of their rights, lest they be fired and replaced. Their efforts contributed to Congress ending the Bracero Program in 1964.’
‘On a few occasions, concerns that illegal immigrant labor would undermine UFW strike campaigns led to a number of controversial events, which the UFW describes as anti-strikebreaking events, but which have also been interpreted as being anti-immigrant. In 1969, Chavez and members of the UFW marched through the Imperial and Coachella Valleys to the border of Mexico to protest growers’ use of illegal immigrants as strikebreakers. Joining him on the march were Reverend Ralph Abernathy and U.S. Senator Walter Mondale.[citation needed] In its early years, the UFW and Chavez went so far as to report illegal immigrants who served as strikebreaking replacement workers (as well as those who refused to unionize) to the Immigration and Naturalization Service.[18][19][20][21][22] In 1973, the United Farm Workers set up a “wet line” along the United States-Mexico border to prevent Mexican immigrants from entering the United States illegally and potentially undermining the UFW’s unionization efforts.[23]‘
https://en.wikipedia.org/wiki/Cesar_Chavez
And unions support the most far left open borders progressives politicians too.
Same with the Sierra Club. More immigrants = diversity = high praises of the liberal left.
Saving union jobs? Saving the environment in the USA?
Not even in the top 10 of their concerns.
The Republicrat duopoly and its globalist moneybags are still reeling in shock that that peasants rose up against their anointed candidates, Hillary Clinton or her clone, Jeb Bush, and elected a candidate who ran explicitly as an economic nationalist who would stand up for the working and middle classes against the elites and their swindles. While Trump hasn’t delivered as much as I’d hoped on his promises to drain the swamp, I’ll give him credit for one thing: he kept Screech out of the White House, routed the craven toadies of the GOPe, and rocked the world of the globalists and their MSM mouthpieces.
The Gap Band has perfectly captured the reaction of the elites and their pearl-clutching cucks like George Will to Trump’s victory and the voters’ rejection of Wall Street’s Republicrat puppet show with “You Dropped a Bomb on Me.”
https://www.youtube.com/watch?v=17lkdqoLt44
The UFW during Chavez’s tenure was committed to restricting import of immigrant labor.’
many people don’t know this , why IDK ?
When I was living on the Mexico border in 2003, there was a free periodical which was printed in both English and Spanish. I always grabbed one because it was helpful to learning the language (I could read in Spanish and look at the English version if I got stuck).
It was that year I first read that the criminal cartels were making more money on human trafficking than drugs. These guys kill people in some of the worst ways anyone could imagine. (I could describe it but it would ruin your day.) But does the media tell us that these immigrants are paying the cartels to get to the border? Nothing moves in Mexico of any size that the cartels don’t get a cut.
One thing I’ve learned about the immigration and guest worker debate is that there are groups that make for strange bedfellows. For instance, often times so-called conservatives and GOP will talk a good game when it comes to curbing illegal immigration, but will tacitly allow it, even encourage it, because a lot of the businesses that support their campaign thrive because of low labor costs that is underwritten by illegal immigrants. Then you have ultra left open border types who are catering to identity politics who support lax immigration or no border immigration at all (e.g. future voters).
I do think the American populace is waking up. Americans want strict border enforcement done in a humane way. I’ve said over and over again that these are not mutually exclusive aims. You can use tech (like ankle monitors) to do humane treatment and the border and expedite the removal of illegal immigrants back to their country of origin. And, you have to strike deals with the recipient countries to prevent and deter the journey from starting in the first place, similar to what Italy has done with Libya to curb migrant inflows.
When boiling a frog one must be careful to do it slowly.
http://www.newsweek.com/americas-getting-less-white-and-will-save-it-289862
I grew up in SoCal. An old high school friend sent me, along with other classmates, an Email that contained numerous photos showing our school and various other old stomping grounds as they exist today.
He ended it with this:
https://www.merriam-webster.com/dictionary/genocide
Trump’s presidency could be the last opportunity America gets to stop this decades long invasion in a humane way.
The Financial Times
US immigration
Trump calls for deportations without trial
Undocumented immigrants must not be allowed to ‘invade’ US, says president
…
Bequeathing a $21 trillion dollar national debt (and rising fast) to future generations is a vast swindle that Nancy Pelosi, George Will, and their fellow pearl-clutchers of the Republicrat duopoly, in their so-faux concern for “the children,” will never utter a peep about.
George Will left the Republican part in early 2016 due to, among other things, his “Never Trump” philosophy.
There are two types of crimes: “malum in se” (bad because of their nature - violent crime for example); and “malum prohibitum” (bad because they’re prohibited - loitering for example). I think the general consensus is that illegal immigration is the latter, malum prohibitum.
As much as I hate to see children separated from parents as a result of malum prohibitum crimes, I hate open borders more.
The solution I think is deterrent level border security, like a wall, and prohibitions against employing illegals; and also economic development efforts in their home countries.
Again, this is not a binary choice. There is absolutely no need to separate children from parents when they are caught at the border (unless they are drug dealers, abusers, or there is some other grave concern, etc.). We can still have a wall (virtual or physical) and tougher immigration policies (end chain migration, diversity lottery, narrower version of what constitutes a family, etc.).
But the real solution to immigration is going to be enhanced eVerify and really stiff penalties that actually deter the hiring of illegal immigrants and reduce the demand pull of illegal immigration. The solution isn’t to go after the immigrants, its to go after employers of illegal immigration.
Thought it was not politically correct, Romney was right when he said “self- deportation” was the answer. The vast majority of illegal immigration is visa overstayers. One idea is to follow what Saudi Arabia is doing by increasing its tax on foreign workers. The problem with applying that to the US situation is that we don’t have a handle on illegal immigrant labor because they often work under the table. So you have to first bring everything into the system.
The Constitution clearly states that the Government is mandated to prevent the invasion of our Country.
Article IV
Section IV
The United States SHALL guarantee to every state in this union a republican form of government, and SHALL protect each of them against INVASION; and on application of the legislature, or of the executive (when the legislature cannot be convened) against domestic violence.
For those of you who don’t understand the legal definition of SHALL as it relates to Federal Law (any law, actually) it means you MUST do this as written. It isn’t a suggestion and one isn’t allowed to ignore it.
In relation to the tiring, never ending discussions that Americans have had to endure on the subject I no longer allow my enemies to define the debate on immigration, illegal or otherwise. For decades we have been having this discussion and the Country only gets more of the same.
The discussion is over.
Trump won the presidency because of the comments that he made during the campaign concerning immigration. Heaven help this Country if he doesn’t do what he promised. His failure to deport the DACA group enraged many. If he doesn’t get his fat ass in gear on the wall and mass deportations that he promised many Americans may find another way to deal with the problem.
These kind of sh!t articles has been thrown at us for years. The screed has increased since the election only because the PTB may now be realizing that they may have shot their wad too soon.
https://www.huffingtonpost.com/entry/donald-trump-noam-chomsky-white-mortality_us_56cf8618e4b0bf0dab31838f
I guess the question gets down to whether individual immigrants or immigrant households seeking asylum is the exact same thing as a military INVASION. It seems pretty doubtful, but I’m not a constitutional law expert like you claim to be.
exact same thing as a military INVASION
The Constitution didn’t bother to specify the KIND of invasion. You seem to be trying to change the subject.
They committed a crime. There is no need to separate them. Simply march them right back across the border.
Problem solved.
Why didn’t the GOP think of that!
Bend(Century West), OR Housing Prices Crater 16% YOY As Mortgage Fraud Permeates Housing Market
https://www.zillow.com/century-west-bend-or/home-values/
*Select price from dropdown menu on first chart
“The steady drumbeat in local real estate recently is that inventory is tight and home prices keep rising.”
Thanks in part to Housing Bubble denial, the MSM abysmally fails to explain the inventory shortage.
Some of the main reasons are:
1) Speculators (aka homeowners) have an incentive to HODL their houses so long as prices are increasing at historically unprecedented double-digit rates of appreciation;
2) People who “couldn’t afford to buy their own home” after years of outrageous home price inflation have a tendency to stay put;
3) Homeowner protection policies such as limits on property tax increases (Proposition 13) or foreclosure moratoriums tend to freeze many households in place who would otherwise have to move;
4) Affordable policies intended to stretch household home purchase budgets through federal government subsidies (low downpayment, low interest, federally guaranteed lending) have the unintentended consequence of stimulating demand and driving up prices faster than fundamental demand constrained by prudent lending standards would. Government housing stimulus is what primes the pump for item 1);
5) A plethora of Wall Street and foreign investors have piled into residential housing at unprecedented levels of penetration, further exacerbating the inventory shortage and price blowout.
These factors work together to restrict supply and drive up prices to a breaking point. Once the breaking point is reached where further price appreciation is no longer supported, the house of cards necessarily will collapse.
The main reason for insane housing prices are the cheap and easy fiscal policies of the obama administration.
The US Government guarantees nearly every mortgage. The Mel Watt programs of less and less deposit/income/even having a job. Bail out after bailout of banks. Not one banker in jail under obama. HARP, TARP, QE1, QE2, QE3, QE4, Operation twist. Adding more to the deficit than ALL other administration COMBINED and accounting for inflation. Zero percent interest rates.
etc. etc. etc.
“The main reason for insane housing prices are the cheap and easy fiscal policies of the obama administration.”
The Executive Branch’s tradition of supporting bad housing policies goes far deeper than the Obama administration. Bill Clinton opened the floodgates of federally guaranteed subprime financing by the GSEs plus the $500 thousand capital gains tax exclusion which sent the Housing Bubble aloft. George W. Bush passed the American Dream Downpayment Assistance Act to help low income minorities purchase houses they couldn’t afford. (Note also that race-based policies are officially illegal according to federal nondiscrimination law; albeit if the President does it, it’s legal.)
A little bit of research would show you that policies favoring American home ownership have roots in Executive Branch actions as far back as the 1920s.
Rising interest rates + DJT new tax laws + QE unwind = deflating the obama housing bubble
Questions:
1. Doesn’t everyone want to live the “Sex in the City” life in NYC?
2. Things are not different in NYC?
3. Are they making anymore land in NYC?
4. I thought the “rich” WANTED to pay their fair share?
++++
Did Trump’s SALT Deduction Limit Trigger A New Housing Glut In NYC?
ZeroHedge - 06/23/2018
In April, an op-ed in The Wall Street Journal titled “So Long, California. Sayonara, New York,” published by conservative economists Arthur Laffer and Stephen Moore, warned about a provision within the brand- new tax bill that could trigger a mass migration of roughly 800,000 people — fleeing California and New York for low-tax states over the next several years.
Laffer and Moore said capping the deduction for state and local taxes (SALT) to $10,000 will accelerate the velocity of the migration of high-income earners from New York and California to regions like “Arizona, Nevada, Tennessee, Texas, and Utah.”
New evidence suggests that New York City could be the first visible region where the mass migration could begin. Take, for example, the number of homes listed for sale in Manhattan, Brooklyn, and Queens had a parabolic spike in May, with inventory across 60 percent of the boroughs reaching all-time highs, according to the latest StreetEasy Market Report. While residential inventory traditionally peaks at the end of May, this year — the supply set new record highs and could continue through summer.
Housing inventory in Manhattan rose 16.7 percent compared to last year, the largest y/y increase on StreetEasy record. Brooklyn and Queens saw similar spikes, with inventory up 23.4 percent and 42.8 percent, respectively.
With housing inventory piling up across much of the boroughs, the total number of sales declined for the third consecutive month. StreetEasy said sales plummeted in every submarket across Brooklyn, Manhattan, and Queens; with more significant declines visible in the Upper East Side, Midtown and the Rockaways. Despite the flood of new inventory threatening to stall the market, the StreetEasy Price Index advanced in all three boroughs since last year.
“Sellers are betting on a wave of demand from the peak shopping season, but this summer’s market has turned out to be a crowded one,” says StreetEasy Senior Economist Grant Long.
As Bloomberg notes, the abnormal amount of supply hitting the NYC residential markets is not sufficiently being met with demand, which could eventually be problematic for prices and serve as a potential turning point. Recently, the mainstream media cleverly changed their narrative and called the ‘housing shortage,’ a ‘housing affordability crisis,’ as it sure seems that the housing bubble, or whatever you want to call it, is in the later innings.
‘Recently, the mainstream media cleverly changed their narrative and called the ‘housing shortage,’ a ‘housing affordability crisis,’ as it sure seems that the housing bubble, or whatever you want to call it, is in the later innings.’
This is sort of what I wanted to address for the weekend topic. We have always been up against media lies and slippery logic. Glut in NYC? Jeebus that was in 2016 at the latest! Go back and look in the archives of this blog.
In 2016 the fake legacy news media was throwing everything they had to get the third term of obama elected.
“Anyone claiming that America’s economy is in decline is peddling fiction. … I told you earlier all the talk of America’s economic decline is political hot air.”
– obama, State of the Union address to Congress, Jan 2016
Now The Narrative is that any challenge to free trade and unfettered neoliberal looting of productive economies will bring down the whole financial system. If that’s the case, it was a house of cards to begin with.
http://www.businessinsider.com/next-recession-could-stem-from-trade-war-wall-street-getting-more-worried-2018-6
I’ve noticed the MSM’s permabull shills and touts have redoubled their efforts lately to lure the last of the retail investor muppets into the Wall Street-Federal Reserve Looting Syndicate’s pump & dump “markets” before the bottom drops out. “Everything is awesome - buy moar stawks!”
The MSM will never in a million years acknowledge the central role of the Federal Reserve in creating the most insane housing and asset bubbles in human history, while simultaneously debasing every dollar in your wallet and mine.
+1 Real journalists obey.
They’re not journalists. They’re scribes.
Since their paychecks are contingent on their obedience, and they can be easily replaced if they get out of line, their obedience is guaranteed.
Most daily newspapers are losing money, but the globalists keep them open. Last weekend was “Pride Week” in Denver. If you read the Denver Post, you could be forgiven from thinking that was the only thing happening in Denver that weekend (the local Comic Con barely had a any coverage). And of course after that it was back to “Trump evil, Dems good”.
The Narrative needs its outlets, the newspapers will stay in business no matter how much money they lose.
Laffer and Moore said capping the deduction for state and local taxes (SALT) to $10,000 will accelerate the velocity of the migration of high-income earners from New York and California to regions like “Arizona, Nevada, Tennessee, Texas, and Utah.”
https://www.zillow.com/homedetails/4327-N-Hall-St-Dallas-TX-75219/26693211_zpid/
Ben - deleted the previous comment - I accidentally hit add while editing it -it was not finished.
Laffer and Moore said capping the deduction for state and local taxes (SALT) to $10,000 will accelerate the velocity of the migration of high-income earners from New York and California to regions like “Arizona, Nevada, Tennessee, Texas, and Utah.”
Calling BS on this narrative because…..
I can’t wait for them to move to Texas because of the property tax deductions. Of course they won’t want to be in the ‘regular people’s suburbs’. So lets say our fed up New Yorker buys this little house in Highland Park, TX (where the Dallas money’ed go unless they can afford University Park).
One of the cheapest SFH listings in the city at $1.15M : https://www.zillow.com/homedetails/4327-N-Hall-St-Dallas-TX-75219/26693211_zpid/
oh, look at that… over $20K a year in property taxes.. guess they will get less than half of that sweet deduction that supposedly was their motive for moving in the first place. (would love for some idiot to do just this anyway if I could see the look on their face at their first summer-time electric bill…)
So yeah, ain’t buying that narrative. Not to say there aren’t good reasons to get out of some of those cities, but personal tax deductions?
What happens when you deviate from long term historic housing prices and elect to pay more than $50 per square foot for a depreciating house?
Financial death. Tens of millions experienced it 2000-2018.
“A Generation of Americans Is Entering Old Age the Least Prepared in Decades”
https://www.wsj.com/articles/a-generation-of-americans-is-entering-old-age-the-least-prepared-in-decades-1529676033
Lesson?
A house is a rapidly depreciating asset that robs you blind every day it owns you.
Anti-gun protester David Hogg — protected by armed guards?
JUNE 22, 2018
BY VICTOR SKINNER
David Hogg is a VIP now.
The 18-year-old attended the Parkland, Florida school where a student murdered 17 people in February, then made himself famous with relentless calls for gun control in the wake of the tragedy.
Now he’s got a book deal, and publicists — and armed guards.
Sean Di Somma snapped some pictures of Hogg strolling the streets of New York City recently with his new entourage in tow.
http://www.theamericanmirror.com/anti-gun-protester-david-hogg-struts-through-nyc-with-armed-guards/
Hypocrisy personified. Has he kissed Bloomberg’s ring yet?
‘Allan Angell’s comments that the ‘NDP should be shot’ and the resulting ‘hear, hear’ from the crowd is a tragic reminder that, as the famous economist Thomas Picketty wrote, ‘No hypocrisy is too large when elites are forced to justify their positions.’ As an owner of a real estate brokerage, Mr. Angell has been one of the biggest beneficiaries from this phenomenal rising real estate market, and it shameful that he is the most vocal against a relatively small increase in education levy.’
2banana’s Rule:
Conservatives are more than happy to live under the same laws and taxes they want for everyone else.
Liberals/progressives expect to be exempted from the same laws and taxes they want for everyone else.
‘ The fact is that a whole bunch of folks are on the wire. If their payments go up they are going to struggle to make them. And if a lot need to sell at once then, as they say at NASA, ‘Houston, we have a problem.’
‘We are about to see a three-year wave of shifts to principal-and-interest loans. Worse still, the loans originated in those years were heavily mediated by mortgage brokers whose incentives were all about moving volume, not quality. The air may fizzle out of the Australian balloon, or it may burst violently. Either way Australians should be asking hard questions about why APRA waited so late to act on interest-only loans, liar loans and underwriting standards in general.’
Indeed. And we’ll be asking Mel Watt why he had his pedal to the metal.
April 29, 2018
“It’s been more than three years since Freddie Mac rolled out a conventional mortgage that only required a 3% down payment for certain borrowers. The program, which is designed for qualified low-and moderate-income borrowers, saw reasonable progress over the last few years, with Federal Housing Finance Agency Director Mel Watt telling Congress last year that Freddie’s 3% down program (along with a similar one from Fannie Mae) was continuing to grow. But now, Freddie Mac is about to supercharge its 3% down program and launch a widespread expansion of the offering.”
“Freddie Mac announced Thursday that it is rolling out a new conventional 3% down payment option for qualified first-time homebuyers. What makes this program different is that there are no geographic or income restrictions.”
http://thehousingbubbleblog.com/?p=10417
September 14, 2017
A report from the Sydney Morning Herald in Australia. “I have a ‘liar loan’ – a mortgage based on less than absolutely factual information. I’ve pretty much always had liar loans. And I recently obtained a ‘liar credit card.’ So what? Given readers’ (and therefore the media’s) love of stories that combine housing and doomsday scenarios, investment bank UBS received saturation coverage with its idea that $500 billion in ‘liar loans’ are a hanging over the Australian housing market, set to come crashing down on the economy at the first hint of trouble and damn us all to hell.”
“How many people want to do the work to supply detailed financial information about their mortgage application and, apparently, admit they lied? Something isn’t adding up. And there’s the particular case of the ANZ which received the worst result: ‘Of those who took out loans with ANZ in 2017 (directly or through a broker), 55 per cent of respondents stated their application was completely factual and accurate (implying 45 per cent of customers misstated their application), down from 66 per cent in 2016.’”
“The most obvious point is, when applying directly to your bank, the bank should know more about your finances than you do anyway. For my ‘liar loans,’ all my income and spending washes through the bank cheque account. I’m Australian – near enough is good enough.”
http://thehousingbubbleblog.com/?p=10201
And when that Aussie defaults, Mr. Australian Banker (Mr. Banker’s down under cousin) will take him to court and pick his bones clean, as the loans are all recourse.
The reality is this was all a setup in the rest of the “five eyes” countries - they saw what happened in the US and wanted that same opportunity to pull the rug out from the speculators, make a lot of bystanders poor(er), buy up housing on the cheap via cronies and turn the housing stock into another communist/fascist style state-corporate controlled industry, not unlike healthcare.
Its why they banded together to spy on Trump and try and defeat him. Communism, islam, etc. can not win in the market place of free thought, thats why it has to extinguish its competition.
90% of the mortgages issued since 2008 have been SubPrime yet nobody expects a problem?
They are federally guaranteed, so insured by the full faith and credit of the U.S. government against any future problems with that might ensue.
I heard part of a forum held by the ECB on finance news radio last week. It had four central bank chiefs, including Kuroda and Powell.
Powell was interesting in that he said the word “uncertainty” a few times, in the context of the central bank’s forecasting and perhaps theory. One would absolutely never hear that word from Greenspan, who was a master obfuscator (his press conferences were famous for their incomprehensibility) and Bernanke, who sounded an authoritative, technocratic tone.
Also, in his press conference after the last FOMC meeting, he again used the word “uncertainty” and also said the something to the effect that the central bank was “always learning” about economic phenomena.
This may indicate a movement away from the current monetarist paradigm of “I don’t know what exactly is wrong with the economy, but I do know that a big part of the solution is pumping purchasing power into the financial sector” (to understand the intellectual cover for this thinking, see this essay, penned by Milton Friedman )
Powell use of the word uncertainty suggests he has what no CB’er in recent history has had - humility. The number of variables and variety of processes that comprise a $20T economy is beyond our ability to understand (maybe AI and quantum computing will change that).
I never forgot the part of a Martin Luther King speech where he said “we should speak with all the certainty that our limited vision allows”
Yellen gave a speech last year on inflation that I thought was very keen and quite humble. It was basically an admission that the central bank really doesn’t fully understand inflation. Two relevant quotes from the speech:
“My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation.”
And:
“Our understanding of the forces driving inflation is imperfect, and we recognize that something more persistent may be responsible for the current undershooting of our longer-run objective. Accordingly, we will monitor incoming data closely and stand ready to modify our views based on what we learn.”
Hollywood, FL Housing Prices Crater 6% YOY As Coastal Property Market Turns Stone Cold
https://www.zillow.com/south-central-beach-hollywood-fl/home-values/
*Select price from drop-down menu on first chart
Apparently, landlords in the city are sometimes making such a good return on their investment that they simply don’t want the ‘hassle’ of renting the apartments out to tenants — a process known as ‘warehousing.’”
That sounds like the kind of thing that could result in unexpected amounts of inventory later.
‘May’s overall median closed price dropped 5 percent to $337,000 from $355,000 in May 2017. Moreover, the overall median closed price for homes priced above $500,000 decreased 14 percent to $507,000 from $590,000 in May 2017.’
Good thing everybody has been putting 20% down.
San Francisco(south of market), CA Housing Prices Crater 12% YOY As Tech Wreck Slams Housing Market
https://www.zillow.com/south-of-market-san-francisco-ca/home-values/
*Select price from dropdown menu on first chart
Bay Area housing bubble insanity shows no signs of abating as median home price hits a record $ 935K.
https://www.mercurynews.com/2018/06/22/median-price-tag-for-a-bay-area-home-hits-a-record-shattering-935000/
Median now over $1-million for a 3/2 spec in San Jose!
Did this info come from a realtor…. hard to believe it went up $65k in a day. Seems very a very realtorish observation or lie 🤔
It was a newspaper headline a couple of weeks ago, IIRC.
“Seems very a very realtorish observation or lie”
“In America’s most expensive metro, the median value of a house is north of $1 million”
https://www.marketwatch.com/story/heres-the-most-expensive-city-to-buy-a-house-and-its-not-even-close-2018-02-13
https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/0F5E1588-4976-11E8-86D4-1BDDA9795455
I guess if we are following the previous recommendations from marketwatch, it’s a great time to buy!
“I guess if we are following the previous recommendations from marketwatch, it’s a great time to buy!”
+1 Anytime is great to outbid and buy!
https://www.google.com/amp/s/www.sfchronicle.com/science/amp/Many-coastal-properties-may-be-flooded-out-by-13002375.php
Underwater “literally”. Picture of the lady canoeing in her living room looks a lot like meatloaf 🤔
Had a discussion with my neighbor (a realtor) who said you could never be “under water” with real estate (should have gave her this article), when I pointed back to the last bubble she said “that was different, Obama’s policies fixed that problem, it will never happen again.” Seems like all the realtors I have talked to have these clouded pipe dreams that forecast real estate only going up for ever. Isn’t that the definition of insanity.
A former coworker took a job with a multinational tech firm in Dublin. Pay is a fraction of US pay for a comparable job, and housing prices are stratospheric. His housing solution was to purchase a houseboat. He says the docking fees are a fraction of the cost of renting a tiny flat.
My understanding is that Dublin’s “silicon valley” mimics its American counterpart in an interesting way: a very large portion of employees are not locals. In Dublin’s case that means lots of eastern Europeans who will work for cheap.