Weekend Topic Suggestions
Please post topic ideas here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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More photos of the voulntary house search in Watertown.
USA USA USA
: Americans Ordered Out Of Homes At Gunpoint …
http://www.infowars.com/shocking-footage-americans-ordered-out-of-homes-at-gunpoint-by-swat-teams/ - 74k -
“They can give me a cavity search right now and I’d be perfectly happy” — Daniel Wood, as quoted in AP article 4/15 just hours after the Boston bombings.
“perfectly happy” … that’s exactly what the Fear Industrial Complex wants.
Wikipedia:
An exigent circumstance allows law enforcement to enter a structure without a search warrant… It must be a situation where people are in imminent danger, evidence faces imminent destruction, or a suspect will escape.
Wiki cites People v. Ramey, 545 P.2d 1333,1341 (Cal. 1976)
http://westernrifleshooters.files.wordpress.com/2013/04/copy-of-fu-1.png
And our government is doing a fine job inventing exigent circumstances.
http://www.youtube.com/watch?v=F-t8PngHgWY - 218k -
Do you want me to read the card?
Weekend topic: gold spot price and whatever happened to “gold is finished?”
Topic Suggestion… the reinflation of the housing bubble. It’s not quite universal and it will be economically suicidal for many, but is it… happening? Crumbs of info suggest so. Have at it…
outside of the bubble coasts, the oil patch, and bubble pockets like austin, the fundamentals just aren’t there. as the hbb poster formerly known as turkey lurkey frequently mentions, half of the usa workforce makes less than 500 dollars a week. median incomes have dropped by 10 percent in the past several years. real inflation is underreported by at least 50 percent. and yes, overpriced housing = economic suicide.
half of the usa workforce makes less than 500 dollars a week. median incomes have dropped by 10 percent in the past several years ??
Maybe true…But, cost of capitol has fallen by 60% + in relationship to historical norms…That in effect is a increase in purchasing power just like a pay raise wether it be to buy a house, car or whatever…
The come to Jebus moment will be when that same $500. per week individuale must borrow at 6% +….That will act like a pay cut and will surely have impact on consumer spending…
Many of the people making $500 per week are not buying homes, unless they are pairing up with another person who also has an income (ie. a household income). Pegging what happens in the housing market to this group is faulty.
The $500/wk crowd are the ones who are going to be paying the rents in the Blackstone houses. Their ability to pay rent will dictate the price ceiling that Blackstone is willing to pay.
And they’re much more liquid and wealthier than you’ll ever be. Thank yourself for that predicament.
Tactic 14 from the Losing Debater’s Manual: “Make blanket assertions you have no hope to prove”
eg. “And they’re much more liquid and wealthier than you’ll ever be.”
Just sayin’…
Insertions? What kind of insertions?
Ox:
And how many of the $500k per week guys will be living in one of Blackstone’s 3bd homes?
Hey Liar…..
You’re lying again.
Consider also, that an entire generation of Americans have come to view <8% interest rates and 3% down on a mortgage as normal. When the economy inevitably readjusts and those 600K mortgage loans service at $6,000 a month (excluding taxes, maintenance, insurance et al), bubble-era prices will fall back into line with the historical norm.
It’s a bubble with a ceiling. The money to buy houses and run up demand 2003-2008 bubble was collateralized by nothing. We have an infinite pile of nothing, so money didn’t stop the bubble. ISTM that the ultimate limit on the amount of housing deals that could be made was the ability/desire of J6P to pay PITI (or partial PITI) on the back end.
This new bubblet is collateralized by foreign cash, OPM reserves, or, ultimately, the ability of responsible J6P pay PITI, or ludky duckies to pay consistent rent. All of those piles are finite. We will either run out of collateralization, or prices will rise to where J6P can no longer afford the required PITI or rent. This bubble may have another year in it.
IMO the $64 trillion question is what all those hedge funds will do when prices are so high that no one can sell, and the rental stream dries up. Will they dump housing in a fire sale, or will they find some other way to hold the spec house. And what condition will these houses be in after 5 years of semi-negligent landlording?
I’m interested in this bulk buying from hedge funds. Did some googling. They’re aren’t buying just singe-family houses. They’re buying condos too, but to their credit, they are only buying the very cheap condos. (like foreclosed condoze in Vegas.) What is the hedge fund agenda here? Are they simply speculating and selling later? Perhaps this is true in a place like Phoenix where houses really did craaater in 2009-2010; the funds are simply buying low and selling high.
Or do these funds really want to be long-term landlords? Do they intend to capiltalize by buying a house cheap and collecting Section 8, thus turning luxury condos into slums (like in Vegas). Do they intend to use rental income to cover costs, but ready to sell the moment that selling is more profitable than leasing the place out? That would be awful for J6P. Jeff/Hazard had his rental sold out from under him and that was bad enough. Just wait until hedge funds start doing this on large scale and with the speed of microsecond trades. “Get out, we have to sell! Quarterly numbers are a-waitin’!” Not only our retirement, but the roof over our heads will be at the whim of the DOW.
And just how are those rental bonds doing these days?
Rental Bonds Hit Snag
By JEANNETTE NEUMANN Jan 18, 2013
“Real-estate investors racing to create securities backed by the rental payments of single-family homes have hit a speed bump, with one of the major credit-ratings firms warning it would probably assign ratings just one to three notches above “junk” to a popular structure for the deals.
Moody’s Investors Service said the structure favored by bankers for the deals would pose serious risks to investors in the securities.
Wall Street banks and real-estate investment firms have been working furiously to figure out how to pool together, or securitize, the rental payments on thousands of homes to back a new kind of bond to sell to investors.*
That structure is less expensive for issuers, since there aren’t mortgages on the properties,** but “poses substantial credit risks” for investors, Moody’s analysts said. ”
http://online.wsj.com/article/SB10001424127887323783704578248230363035740.html
—————-
*Polly said something about selling rental bonds, but from the sound of this, rental bonds don’t quite exist yet. The bond are in the testing(?) phase for ratings. The bonds aren’t doing well; possibly because tenants are more transient compared to owners.
** Is this why they are indirectly borrowing the cash from somewhere else in order to buy the property outright, rather than directly borrowing for the property via a mortgage? Also, any losses would show up in the general bank sheet rather than a specific mistake, I guess. Easier to ask for a bailout that way?
Wall Street banks and real-estate investment firms have been working furiously to figure out how to pool together, or securitize, the rental payments on thousands of homes to back a new kind of bond to sell to investors.* ‘
I bet they are
Lower ratings limit how much you can sell, not whether you can sell at all.
Housing’s Reflating.
Where are the buyers?
Sales are flat,
realtors are liars.
Who cares if realtors are liars. Pretty much everyone is a liar.
Sales are not universally flat.
The buyers appear to be popping up (whether they *should be* popping up being a different tale altogether)
And so forth…
“Pretty much everyone is a liar.”
Speak for yourself, macfakedoc.
Tactic 1 from the Losing Debater’s Manual: “Absent anything of substance to offer, attempt to divert with Ad Hominem Insult”.
Just sayin’…
What’s an ad hominy? Are you selling grits? With butter?
Straw Man.
Hay man! What’s happnin?
Fascinating…
Indeed Spock.
It learns…
I love butter.
Again:
Referring to one’s opponent in third person to imply superiority, Tactic 14 from the Loosing Debater’s Manual.
Just sayin’….
———-
Comment by macboy
2013-04-26 05:15:06
From the Introduction to the Losing Debater’s Manual: “Spell ‘Lose’ as ‘Loose’”
Tactic 7 from the Losing Debater’s Manual: “Having nothing of substance to offer, adopt the tactics of the opposition”.
It is a big book. Let us explore it together…
———
Tactic 15 in the Loosing Blowhard’s Manual:
Confronted with inconsistency of argument, employ scorn to miss the point entirely. Strive always to deflect irony or whimsy.
By all means, evil. Let us thumb together
Tactic 7 from the Losing Debater’s Manual: “Having nothing of substance to offer, adopt the tactics of the opposition”.
This is known, too, as the unintentional honoring of one’s opponent. Fun things those unintended consequences…
Too, I’m surprised to see ahansen so sexist. Until someone points out its sex, I prefer not to make assumptions… Just sayin’…
Review of some of the current LDM tactics cited:
Introduction to the Losing Debater’s Manual: “Spell ‘Lose’ as ‘Loose’”
Tactic 7 from the Losing Debater’s Manual: “Having nothing of substance to offer, adopt the tactics of the opposition”.
Tactic 13 from the Losing Debater’s Manual: “While offering nothing of substance to the debate, accuse your opponent of using scorn, and be sure to do it scornfully”
Tactic 16 from the Losing Debater’s Manual: “Use CAPS”.
Independent Comment by Macboy: Quotes from the LDM are aimed at those who in a given thread do not contribute to issues, but merely repeat trite bromides and employ diversionary tactics.
We’re trite bro’s? Thank you!
Tactic 15.2 from Loosing Blowhard’s Manual:
Alienate your choir.
Tactic 7 from the Losing Debater’s Manual: “Having nothing of substance to offer, adopt the tactics of the opposition”.
This is known, too, as the unintentional honoring of one’s opponent. Fun things those unintended consequences…
Tactic 23 from the Losing Debater’s Manual: “Having nothing of substance to offer in a debate, presume to declare what is you opposition’s choir”.
Of note, and to refresh, this thread tangent started with a statement cluster,
“Housing’s Reflating.Where are the buyers? Sales are flat, realtors are liars.”
Macboy’s response,issues oriented, of course accompanied by Macboy’s famed wry cynicism:
” Who cares if realtors are liars. Pretty much everyone is a liar. Sales are not universally flat.
The buyers appear to be popping up (whether they *should be* popping up being a different tale altogether)
And so forth…”
Note all the subsequent criticisms of that perspective… none addressing the substance of the discussion, leaving their writers sitting ducks for the LDM.
Anyone care to show that sales *are* universally flat? The Universe is a big place. Anyone care to show that buyers are *not* popping up? It would be so easy to oppose the substance of my assertions… if my assertions were wrong.
But, I admit, the responses Macboy received were far more fun, if less useful to exploring the nuances of the housing bubble.
Bromides? I prefer flourides and chlorides.
It’s the obtuse debater who so invested in his own “wry cynicism” fails to recognize his base of support.
Caveat: Sometimes style overwhelms substance.
Straw Man
LOL. I’ll leave you to it.
Tactic 000 from Loosing Masterdebator’s Manual:
Claim you are debating somebody who has no interest in debating and declare yourself the victor.
Tactic 7 from the Losing Debater’s Manual: “Having nothing of substance to offer, adopt the tactics of the opposition”.
This is known, too, as the unintentional honoring of one’s opponent. Fun things those unintended consequences…
Tactic 19 from the LDM: “Declare you have no interest, even while engaging the debate, proving you do have interest”.
Tactic 21 from the LDM: “Declare your opposition has declared victory, even as the opposition has made no such declarations” (also known as “Whacky embraces Lying, thus he is a realtor” tactic”.
Just sayin’…
..Of note, and to refresh, this thread tangent started with a statement cluster,
“Housing’s Reflating.Where are the buyers? Sales are flat, realtors are liars.”
Macboy’s response,issues oriented, of course accompanied by Macboy’s famed wry cynicism:
” Who cares if realtors are liars. Pretty much everyone is a liar. Sales are not universally flat.
The buyers appear to be popping up (whether they *should be* popping up being a different tale altogether)
And so forth…”
Note all the subsequent criticisms of that perspective… none addressing the substance of the discussion, leaving their writers sitting ducks for the LDM.
Anyone care to show that sales *are* universally flat? The Universe is a big place. Anyone care to show that buyers are *not* popping up? It would be so easy to oppose the substance of my assertions… if my assertions were wrong.
But, I admit, the responses Macboy received were far more fun, if less useful to exploring the nuances of the housing bubble.
…
“Claim you are debating somebody who has no interest in debating and declare yourself the victor.”
Bingo.
“Arguing” and “debating”. heh
He’s a MASTERdeBATOR if ever one posted here…
Tactic 1 from the Losing Debater’s Manual: “When you have nothing of substance to offer, engage in Ad Hominem insult, in attempt to distract”.
Excellent.
Whats Ad hominy? Are you selling grits?
Straw Man. Just sayin’…
Don’t bother debating a troll. You both will end up smelling bad, and the troll will enjoy it.
Hay Man! what’s happnin??
Tactic 1 from the Losing Debater’s Manual: “Cry ‘Troll’”
Just sayin’
Tactic 0000 from the MASTURdeBATOR Troll handbook: Waste an entire thread on trying to score points in an imaginary debate.
Sales are flat and at 17 year lows.
Why?
Housing prices are massively inflated. And they’re going to stay flat until prices roll back levels under materials+labor+profit.
And that level is a long way down from here.
“sales are flat”. To a point. If it matters…
From Mercury News.
“Bay Area’s average homebuyers shut out by cash offers, investors”
s the Bay Area’s prime homebuying season begins, a witches’ brew of market forces is making this spring one of the toughest times in memory to purchase a home.
Arrayed against average buyers are fiercely competitive investors and others paying cash on the barrelhead, a scarcity of homes for sale, bidding wars that have run up prices and even problematic appraisals.
“The banks — they want all cash and they don’t really care,” said a frustrated Shannon Masse-Winks, who is searching for a home around Berkeley.
The
34-year-old Oakland designer, who is soon to be an architect, said she and her husband Peter began house hunting a year and a half ago.
“We totally got outbid at all times,” she said. “The homes were going to people paying all cash. It’s very frustrating, and now the prices have gone up about $100,000 since last year at this time. It is awful.”
“Sales are flat and at 17 year lows.”
I don’t know where you’re at but demand is collapsing here in the bay area.
http://picpaste.com/pics/1983434fcf829ef7d0a7d62f3ebedca9.1366992823.png
I was just going to post that article from the San Jose Mercury. The last paragraph is what’s difficult about this new bubble:
And renting is no solution, said Shannon Masse-Winks, the Oakland designer. “It doesn’t make sense to rent,” she said. “Rent has been skyrocketing. I think that’s really sad. It shouldn’t be that only if you are a corporate executive you can live here. That’s not what the Bay Area is all about.”
In 2006, it WAS way cheaper to rent than to buy. A lot cheaper. But now rents have gone up insanely, as has the price of buying.
I know a few people who are really stuck between leaving their jobs, their kid’s schools, etc. and moving vs. paying either high rent or inflated housing prices.
Rent’s have “gone up insanely”?
Rent’s in the Bay area fell 9% YoY.
http://picpaste.com/pics/6c7dc53f7a1275ab7f36d6a285c6a155.1366994213.png
“I know a few people who are really stuck between leaving their jobs, their kid’s schools, etc. and moving vs. paying either high rent or inflated housing prices.”
Entire families ventured west from St. Louis and New Orleans for exactly the same reasons, and they were willing to brave the Plains and Rockies filled with criminals, hungry predator animals, etc., because of the lack of opportunity; the good old days! Nothing has changed much except for the entitlement attitude.
Friend who has an under water house in Cambria (800 sq.ft.) just let me know they won a bidding war on a new place (2200 sq.ft.) for $790K so now they won’t have to tear down and rebuild the smaller one!
What kind of financing/mortgage did they get?
As of this weekend, one house in my nabe is “reviewing 3 offers” at $20K ABOVE the Zestimate.
I’ve seen houses around mine go “under contract” for 50k over Zestimate. Funny that some of these deals seem to fall through and the house goes back on the market at a lower price (maybe appraisal didn’t come out high enough). I can’t tell if they’re faking the “under contract” or what. I really don’t care, if idiots want to get fleeced, so be it.
Pimp and Pump, Deal Craters.
Remarket again at lower price, Craters Again.
This is what happens when prices are grossly inflated.
What type of financing? I’m waiting to find out. They said 30 day escrow.
How is it that you know how much the offers are for?
Exactly.
How about: What happened to the fraud? In all the debate over whether prices are actually rising or not in some places, everyone seems to be forgetting that much of the prior runup occurred because of fraud. Fraud on the applications, fraud in the comps, fraud by the banks lying to the eventual bagholders.
Now prices can rise back up to those bubble peak levels but there’s no fraud ? Gimme a break
The housing sales system is corrupt from top to bottom.
“The housing sales system is corrupt from top to bottom.”
More than just housing sales.
Corruption in housing exists in land use permitting and zoning, construction, appraisal, financing, title insurance, taxes, etc., and don’t think it’s exclusive to housing; the automobile industry is no different.
The book, “Cadillac Desert”, has a brief history of Senators and builders guiding the U.S. Army Corps of Engineers to construct levies in known Mississippi flood plains, pump it dry, and build homes knowing full well that massive continuous taxpayer funding would be required for annual levy maintenance. And occasionally, despite the best efforts, the levies do fail flooding hundreds of homes and destroying everything of value that these working class people own. Likely better to rent if you’re in a high-risk zone.
I have to wonder if the housing appraisers are inflating these prices. If an appraiser puts a fair market value on a property that’s way under the sale price can a bank just ignore it? The whole housing bubble Version 1.0 never would have happened if the appraisers didn’t look the other way and let these values run wild back in 2004-2007.
I have to wonder if the housing appraisers are inflating these prices.
Of course they are. Everyone in the RE business is in cahoots. When we bought our house last September, there was some worry that it would not appraise high enough.
RE agent puts together a fancy shcmancy excel doc with comps that he gives to the appraiser.
Voila! The house appraises for EXACTLY our offer price.
SUCKER!!!!
So you wanted to overpay for your house? Wow. Hard to believe this is how little people care about money.
Strange isn’t it? And they want to convince the unsuspecting public to make the same tragic error.
Foolish debt-junkies.
I understand that there is some discretion to massage comps to discard outliers and also take into account projected prices (increases of course).
so my income is 50k but I guess it will go to 150k next year, its time to get the Ferrari. Yeah, today will be a great day.
homes should be sold by an open bidding process where all bids are public, like eBay.
How many of us are feeling like we time travelled back to 2006? I live in Long Beach, CA — lots of friends in their 30’s and 40’s talking about flipping homes, condo’s, and buying rental properties with low single digit cap rates because they are certain the prices will increase.
Bonus flashback: AM radio news stations have been running ads for Rich Dad, Poor Dad seminars which will unveil the “new rules of money.”
Ohhh, boy, here we go again . . . .
ft dot com
On Wall Street
April 26, 2013 6:14 pm
Hunt for yield brings return of risky lending practices
By Stephen Foley
It is not just the speculators in Dell shares who are waiting on the outcome of a $24.4bn buyout offer for the PC manufacturer. In the debt markets, which will be asked to absorb most of the financing for the deal, there is a nervous excitement, too.
“It’s like a Judy Garland concert,” Ty Anderson, co-head of active asset management at Deutsche Asset and Wealth Management, said this week.
“You’re waiting for the curtain to go up, and wondering, ‘is she going to be there?’ ”
You might think the prospect of a flood of junk bonds and leveraged loans, should Silver Lake’s buyout bid for Dell be accepted, would be enough to chill debt markets, but you would be wrong.
Among the bankers who scoop up all these loans and package them into new securities for sale to investors, a common complaint is a shortage of “product”. Dell is product.
The complaint should be a warning sign. Too much demand from Wall Street could lead to riskier lending practices, as lenders race to get loans written and ready for selling on. It is a tail-wags-dog situation similar to the US housing market mania before 2007.
But investors are clamouring, and it is not hard to see why. With global economic growth still sluggish and central banks printing money through quantitative easing, interest rates are at rock-bottom.
…
But investors are clamouring, and it is not hard to see why. With global economic growth still sluggish and central banks printing money through quantitative easing, interest rates are at rock-bottom.
[Mr. Burns]Eeeexcelleeeeent[/Mr. Burns]
“Judy Garland concert”? An odd frame of reference, especially coming from Deutsche AWM. Wonder how many of their investors are vintage Las Vegas entertainers?
How much longer will it be from now until the housing bubble’s dead cat bounce gives way to resumed price declines?
Resale prices are already declining. Rental rates are falling even faster.
How much longer will it be from now until the housing bubble’s dead cat bounce gives way to resumed price declines?”
That is a good question and the main reason I visit this blog
Will RE stall ? Go back down ? or continue up ?
I think if we figure out where he money is comming from we can get closer to answer the question.
I still hear loans are hard to get unlike 2006 ?
Prices have already resumed their downward trend.
I think its already run out of gas - since the true buyers (owner occupants or self-funded mom and pop investors) are gone, the PTB are trying to create new, marginal buyers to pick up the slack. Surfer Steve, its 2006 again pass the Coors.
Got popcorn?
What became of the supposed gold price crash, which in hindsight looks like more of a flash in the pan.
April 26, 2013, 9:47 a.m. EDT
Gold set to rebound to the tune of 5% this week
By Barbara Kollmeyer and Sara Sjolin, MarketWatch
MADRID (MarketWatch) — Gold futures were set to finish the week around 5% higher, after the precious metal saw its biggest rally of the year the prior day, lifted further by news the U.S. economy grew by less than expected in the first quarter.
…
No-Nonsense Investing
The Decline and Fall of the Gold Market
Published: 4/18/2013
By Howard Gold, Editor-at-Large, MoneyShow.com
Based on a study of gold’s usefulness that goes back to Roman times, two experts are questioning everything we “know” about the metal, writes Howard R. Gold, also of The Independent Agenda.
On Monday, the rationale for owning gold collapsed along with its price. The yellow metal plummeted more than 10%, settling above $1,350 an ounce at the close before bouncing back a bit Tuesday.
That was its lowest level since February 2011, crashing through every support level in sight and pushing gold deep into bear market territory. It’s down 28% from its peak above $1,900 in August 2011.
But gold’s price could be headed much, much lower, said Campbell Harvey, a professor at the Fuqua School of Business at Duke University. Harvey has looked at gold prices over the centuries, and concludes that it’s still trading at lofty multiples of inflation.
At more normal multiples, he told me, it would be changing hands below $800 an ounce. If it gets there, many investors who loaded up on gold coins, bullion, shares of gold mining companies, and gold ETFs will get a rude awakening.
…
Up 8.3% since that article. Now at $1463
How is the economic recovery proceeding these days?
April 26, 2013, 11:13 a.m. EDT
Consumer sentiment falls to three-month low
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Consumer sentiment fell to a three-month low in April, led by lower expectations, according to data released Friday.
The University of Michigan-Thomson Reuters consumer-sentiment gauge fell to a final April reading of 76.4 — the lowest result since January —from a final March reading of 78.6. Economists polled by MarketWatch had expected a final April reading of 74, compared with a preliminary reading of 72.3.
…
How well-prepared is America for an incipient tsunami tide of Baby Boomer retirements, and in retrospect, did the 401(K) revolution help with the preparation effort?
401(k) documentary ruffles feathers
April 26, 2013, 11:11 AM
By Matthew Heimer
The PBS “Frontline” documentary “The Retirement Gamble” debuted on Tuesday night, and it made for a sobering introduction to the American savings crisis. If you’ve got 53 minutes to spare, and you’re the kind of person who’s galvanized by bad news, you can watch the entire report online at this link. I recommend it as a concise introduction to the biggest shift in the retirement landscape in our lifetimes – the migration from a corporate pension model to a self-funded model that depends on personal savings and investments.
Of course, the show may not improve your mood, as these viewer reactions should signal.
…
Final paragraph from the linked article. And it’s a doozy:
As Powell notes: “To be sure, Americans saving 15% per year will put more fees in the pockets of mutual funds firms. But it will also put more money in American nest eggs. And that, regardless of how much money Wall Street skims off our nest eggs, is a good thing, yes?”
And that, regardless of how much money Wall Street skims off our nest eggs, is a good thing, yes?”
HA we know what fees do and if you don’t watch the show
How much shell can you skin off an egg before you end up with a sticky mess?
“Signs The Housing Market Is Starting To Head South”
http://seekingalpha.com/article/1361191-signs-the-housing-market-is-starting-to-head-south
We’re already seeing it here in Monterey.
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Is glasnost working at the Fed?
April 26, 2013
5 things the Fed would rather not talk about
The Federal Reserve is a lot more transparent than it was 20 years ago. There are now lively debates about the wisdom of policy choices — in the current case, the Fed’s decision to make monthly asset purchases, known as quantitative easing, or “QE.” But every once and a while, it is a useful exercise to think about some issues that the Fed just doesn’t seem to talk about very much.Ahead of the Fed’s interest-rate-setting meeting Tuesday and Wednesday, here are five of the gnarliest questions that the Fed seems to steer clear of.
— Greg Robb
Is sequestration slowing U.S. economic growth, other than housing and the stock market, which always go up like rockets headed to infinity and beyond?
ft dot com
Financial Times
Last updated: April 26, 2013 7:40 pm
Spending cuts hold back US growth
By Robin Harding in Washington, Robert Wright in New York and Ben McLannahan in Tokyo
US GDP
The arrival of austerity in the US led to disappointing annualised growth of 2.5 per cent in the first quarter of 2013 as output was hit by a drop in federal defence spending.
The figures suggest that across-the-board cuts in government spending – known as sequestration – are trapping the US economy in a pattern of steady but mediocre growth despite a pick-up in the housing market.
The growth figures came out as Congress took a first step to roll back sequestration with a vote aimed at stopping temporary lay-offs of air traffic controllers, which have led to escalating flight delays across the US this week.
Analysts had forecast a growth rate of 3 per cent in the first quarter. The figures were expected to bounce after an artificially weak fourth quarter of 2012, when growth was only 0.4 per cent because of declining inventories and defence cuts.
In the first quarter, final sales to domestic purchasers – a measure that strips out exports and inventories to give a good indication of underlying demand in the economy – rose by a modest 1.9 per cent, compared with 1.5 per cent in the fourth quarter of 2012.
“On the whole it was a little bit disappointing,” said Mike Materasso, senior vice-president at Franklin Templeton, an investment manager. “It does seem as though the momentum has slowed a bit.”
…
The Government’s Mortgage Fix Is Failing
Published: Thursday, 25 Apr 2013 | 4:39 PM ET
By: Diana Olick
CNBC Real Estate Reporter
The U.S. Treasury’s mortgage bailout is failing at an “alarming rate,” according to a government watchdog, but architects of the four-year-old plan say that it is no worse than they expected.
“People read headlines that ‘foreclosures are at 2005 levels’ and cheer. I say the high-risk distressed loans and foreclosures are still out there. They have just been called something different by banks and the government and kicked down the road a few years,” says Hanson.
862,000 homeowners are currently in permanent HAMP modifications; 312,000 have defaulted on permanent modifications. In the next two years, many HAMP modifications will re-set to higher interest rates, and that could produce more defaults.
http://www.cnbc.com/id/100674924 - 71k