July 4, 2013

Mid-Year Housing Bubble Predictions

Please post your predictions here. Some from six months ago, “The US will run out of land.”

One said, “The misinformative media messaging and reality will continue moving in opposite directions and a growing number of people will begin to see that. It’s already happening. Ask around….. J6P will tell you ‘housing isn’t getting better around here.’ Of course we have to define ‘getting better’ but you get the drift. Contractors will continue to eviscerate comps and anyone who bought a house 1998-2012. You debt-junkies are going to get some schooling this year.”

A reply, “Really? with interest rates at all time lows?”

Another said, “Price of oil will go down below $80/brl due to dropping demand of US consumers and European consumers + new sources being brought online. US officially enters recession. Gold goes down below $1,500/oz. Canadian real estate begins to crater and Canada bails out its banks. China experiences another Tianamen Square incident as their economy cools.”

And this, “I predict a significant rise in municipal and pension defaults with subsequent fallout to domestic bondholders. Ironically, these bondholders will be the very pensioners and municipal unions holding the funds, so expect a lot of strikes and walkouts and sit ins. These will be noisy but mostly ineffectual, because Federal reserve funds will not adequately cover the shortfall and the US credit rating will drop again as a result.”

“As austerity kicks in for real and entitlement spending is reduced across the board, the public taste for military endeavors will wane as the State Department becomes ascendent. We may have to do some fancy horse trading (in the form of permanent residence visas and loosening of trade restrictions) to assuage some foreign creditors, but at the same time, a new biotechnology (most likely genetic modification of some cancerous disease) will develop commercially in the US that will suck some of those foreign funds back into US for development and possibly even first phase treatment protocols.”

“Major corporations, sensing blood in the pension waters, will follow governmental lead by declaring bankruptcy in order to discharge pension obligations, then reform and be bought up under the aegis of foreign conglomerates with US Boards of Directors using foreign labor. Small-time private investment in the stock market will come to a virtual standstill. The possibility of Citizens United going on the national chopping block will hit the media as states begin to line up to repeal it in advance of the next Presidential election. Gay rights will become federal law.”

“I also expect to see a significant (and organized) rise in college loan defaults which will be addressed politically with some sort of bailout (most likely in-kind public service.) And Wall Street will have a very bad year. Dow at 8500 again would not surprise me.”

Some specifics, “AZ will see their price increases flatten out as supply created through development restarting eases price pressures. CA will see their price increases continue (and accelerate to faster than 4% annually on the whole) as non-current loans shrink toward normal levels by the end of 2013. At least 2 companies will be taken public who own rental homes. New housing development will be at approximately 1.1MM to 1.2MM annualized by the end of 2013, helping with growth in blue collar and generally lower skilled jobs. The unemployment rate will fall faster than tepid job creation would otherwise indicate.”

And finally, “Credit continues to be king. House prices are bid up by credit junkies sporting 3.5% (borrowed, of course) down payments, and borrowing high multiples of yearly income. To make matters worse, inventory has been artificially limited by Megabank, Inc. holding properties off the market subsequently pushing up prices which diminishes cash purchasing power. It makes no sense to use hard-earned cash to compete with credit (and its junkies). Cash is not king. One day, cash will be king, but not until the easy credit is gone.”

RSS feed


Comment by Whac-A-Bubble™
2013-07-01 04:57:36

Discussion of a GSE wind-down will continue. This will ultimately lead to either a wind-down of the discussion with continuation of their operations as though the Fall 2008 collapse never happened, or else a wind-down of their operations with a hand-off to a new government agency established to carry on their roles in the financial system of mortgage securitization and federal taxpayer guarantee. Private mortgage securitizers and guarantors will continue to be crowded out of the market by federally-subsidized mortgage securitization.

Fannie Mae, Freddie Mac Shares Continue to Plummet on Bipartisan Reform Bill
BY Shanthi Bharatwaj | 06/26/13 - 12:32 PM EDT

NEW YORK (TheStreet) — Shares of Fannie Mae (FNMA_) and Freddie Mac (FMCC_) continued to sink Wednesday, as the fate of common shareholders who were wiped out during the 2008 bailout of the housing giants remains uncertain.

On Tuesday, Tennessee Republican Senator Bob Corker and Virginia Democratic Senator Mark Warner introduced a plan to replace Fannie Mae and Freddie Mac with a new system where private capital absorbs most of the risk, while the government acts as a reinsurer.

The proposal contemplates a five-year window to wind down the government sponsored enterprises or GSEs and their regulator the Federal Housing Finance Agency.

During this time, there will be no changes to the Preferred Stock Purchase Agreement between the GSEs and the Treasury. Essentially, the agencies will continue to sweep the bulk of their profits to the Treasury in the form of dividends.

Upon wind down, proceeds from the liquidation will be paid first to senior preferred shareholders — Treasury–, then to junior preferred shareholders and, finally, common shareholders.

FBR Capital analyst Edward Mills said in a note Wednesday that he believes the terms are structured in such a way that the “economic value” from the liquidation will not flow beyond the senior preferreds. In other words, common shareholders, who figure last in the list of who gets repaid, will likely get nothing, according to the analyst.

If the legislation passes, it crushes any hopes shareholders may be harboring of the companies being restructured and returned to private hands.

Shares of Fannie Mae were down more than 31% in Wednesday trading at $1.07, extending a 13% decline on Tuesday. Shares of Freddie Mac were shedding 28% to $1.07.

Year-to-date, shares of Fannie Mae are still up 430%, while Freddie Mac is up 315%.

Comment by oxide
2013-07-01 06:20:46

What does “wind down in five years” mean, in a practical sense, for us non-economists?

Fannie and Freddie are presumably holding millions of risky mortages which still have 25 years of payments left on them. Who is going to buy these struggling 20-year mortgages? Private capital? I doubt it. They knew the mortgages were risky when they sold them to Fannie. In fact banks wouldn’t have extended a risky mortgage in the first place if they couldn’t sell to Fannie. Or is private capital only going to buy Fannie’s post-2009 mortgages, which are generally backed up by 10% down and some proof of income?

I’ve heard about the slice-n-dice for the bonds, but again, how is this done, practically? Are individual houses kept intact in a tranche, or are they sliced-n-diced too? For example, is a first mortage put in one tranche and the second in a riskier trance? Is “year 1-7″ put in a tranche and “year 7-30″ in another?

This makes a difference in how Fannie would be wound down.

Comment by Ben Jones
2013-07-01 06:40:38

‘What does “wind down in five years” mean’

Nothing bad will happen until after the next election?

Comment by George Zimmer For President
2013-07-01 07:46:20

There’s another election after the next election.

(Comments wont nest below this level)
Comment by AmazingRuss
2013-07-01 11:28:06

Pshaaw… that’s like FOREVER from now.

Comment by snowgirl
2013-07-05 06:10:33

Any names we should be aware of in the losses category?

Upon wind down, proceeds from the liquidation will be paid first to senior preferred shareholders — Treasury–, then to junior preferred shareholders and, finally, common shareholders.

FBR Capital analyst Edward Mills said in a note Wednesday that he believes the terms are structured in such a way that the “economic value” from the liquidation will not flow beyond the senior preferreds. In other words, common shareholders, who figure last in the list of who gets repaid, will likely get nothing, according to the analyst.

Comment by Whac-A-Bubble™
2013-07-01 04:58:51

Long-term interest rates will continue to rise in a series of fits and starts right up until the day when headline unemployment drops under 6.5% and the Fed officially announces a phase-out of QE3.

Comment by Whac-A-Bubble™
2013-07-01 05:05:07

Who Goes to Cash Shows Extent Bonds Will Become Bear Market
By Mary Childs & Daniel Kruger - Jul 1, 2013 4:51 AM ET

Investors who poured $1.26 trillion into bond funds in the past six years pulled out record amounts of cash last month, leaving the world’s biggest fixed-income managers struggling to stem the flow.

The funds saw $61.7 billion of withdrawals as money market mutual fund assets rose $8.17 billion in the week ended June 25, according to TrimTabs Investment Research and the Money Fund Report. Bank of America Merrill Lynch’s Global Broad Market Index dropped 2.9 percent in the past two months, the most since the inception of the daily gauge in 1996, as Federal Reserve Chairman Ben S. Bernanke laid out possibilities for reducing the $85 billion in monthly bond purchases supporting the economy.

Market bears say losses are just getting started because yields barely exceed inflation, leaving little relative value in bonds as the global economy improves. Pacific Investment Management Co., BlackRock Inc. and DoubleLine Capital LP, which together oversee about $6 trillion in assets, said the worst is already over because the securities are fairly valued.

“We are at a definite inflection point,” Richard Schlanger, who helps invest $20 billion in fixed-income securities as a vice president at Pioneer Investments in Boston, said in a telephone interview on June 28. “If this thing continues in this vein, people are going to throw in the towel and you’re going to get this pain trade. And the markets can’t take it. They’d rather see a gradual rise in short-term rates versus a precipitous rise.”

Comment by Whac-A-Bubble™
2013-07-01 05:06:46

Seeking Beta In The Bond Market: Avoid Bonds
Jun 30 2013, 04:10
by Georg Vrba

Nearly 2 years ago, at the end of August 2011, the BVR model signaled the beginning of a down market for bonds. Since then, long bond funds have returned a total of about 6% and short bond funds about 2%, while SPY, the exchange traded fund tracking the S&P 500, gained almost 40%. Recently bonds lost a lot of value, but fund manager Grundlach feels that the worst is over, and “with the markets settling, there are deals to be had”. However, the BVR model is signaling continued weakness for the bond market.

The model’s message is loud and clear: Avoid long bonds and intermediate duration bonds as well until the BVR moves below the lower offset limit line and turns upward from there. The timeframe for this is uncertain; it could be months or years.

Comment by Whac-A-Bubble™
2013-07-01 05:24:44

Amy Hoak’s Home Economics
June 27, 2013, 11:15 a.m. EDT
Ultralow mortgage rates are going, gone
Interest rates notch biggest weekly jump since 1987
By Amy Hoak, MarketWatch

CHICAGO (MarketWatch)—Mortgage rates spiked over the past week, causing some to believe the ultralow rates of recent years could be gone for good.

What’s more, rising rates could put somewhat of a damper on the improving housing market.

The 30-year fixed-rate mortgage averaged 4.46% for the week ending June 27, up from 3.93% last week, according to Freddie Mac’s weekly survey of conforming mortgage rates. This week’s average is the highest since the week of July 28, 2011.

The spike marks the largest weekly jump for the mortgage rate since the week ending April 17, 1987, Freddie Mac reported.

Daily surveys by HSH.com show mortgage rates improving somewhat since the beginning of the week. HSH data showed the 30-year fixed-rate mortgage at 4.63% on Monday, 4.56% on Tuesday and 4.54% on Wednesday, said Keith Gumbinger, vice president of the consumer loan information firm.

“Early indications are that rates we gather today should be lower than yesterday. However, the market has been so volatile over the last five days that any dip might not be passed along immediately to the retail market,” Gumbinger said.

Mortgage rates started rising last week, after Federal Reserve Chairman Ben Bernanke spoke of the Fed’s intention later this year to scale back the stimulus program that kept rates low. Rates jumped again over the weekend, a reflection of the unsettled market.

“Following Fed chief Bernanke’s remarks on June 19th about the possible timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed. He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014,” said Frank Nothaft, vice president and chief economist of Freddie Mac, in a news release.

Comment by P.T. Barnum
2013-07-01 08:30:45

“Ultralow mortgage rates are going, gone.”

Spin this correctly and it can be used as a selling point.

Start off with “buy now or be priced out forever” and go from there.

Comment by kmo722
2013-07-01 10:18:06


(Comments wont nest below this level)
Comment by oxide
2013-07-01 10:55:22

A Realtor did exactly this on the radio last week. He said that people stayed on the fence a year ago because the dreaded increase in rates weren’t happening. They thought they had time. But now that the increase is actually happening, they are hurrying to lock in before rates go up any more.

(Comments wont nest below this level)
Comment by polly
2013-07-01 12:23:33

And those of us who are hopefully waiting for an increase in rates to turn our 35% downpayment into a 70% downpayment are still waiting.

Comment by Robin
2013-07-01 14:23:31

No kidding - the more we have saved means the more we are punished.

Comment by snowgirl
2013-07-05 07:06:01

Only in that you had to wait. I still think the people who waited for this bubble burst to resume will be well rewarded.

The only pressure I ever felt to buy was when I realized much of the shadow inventory in our area was not being properly cared for. And my husband having worked in construction in another life fears we could be looking at paper overed mold issues in the future w/o a clue. We watched a few properties that had major water damage “cleaned up” and put back on the market in an amount of time he felt was impossible to have properly taken care of all the water issues. We were aware of when this happened when they listed the house in its original damaged state. But we might not have a clue if it went from shadow inventory to flippers to MLS.

Comment by In Colorado
2013-07-01 13:35:57

Spin this correctly and it can be used as a selling point.

Start off with “buy now or be priced out forever” and go from there.

And it works because buyers aren’t thinking about selling later.

(Comments wont nest below this level)
Comment by Whac-A-Bubble™
2013-07-01 05:26:52

July 1, 2013, 8:24 a.m. EDT
Treasurys fall ahead of manufacturing data

NW YORK (MarketWatch) — Treasury prices fell Monday ahead of the release of PMI and ISM manufacturing data. The 10-year note yield, which moves inversely to price, was up 3.5 basis points at 2.528%. The 30-year bond yield was up 3 basis points at 3.532%, and the 5-year note yield was up 3 basis points at 1.427%.

Comment by Whac-A-Bubble™
2013-07-02 12:44:44

July 2, 2013, 1:31 p.m. EDT
Pimco fund sees June outflow of almost $10 bln

By Victor Reklaitis

NEW YORK (MarketWatch) — The Pimco Total Return Fund PTTRX +0.09% suffered a net outflow of nearly $10 billion in June, according to news reports citing Morningstar data released Tuesday. The withdrawals wiped out $3.45 billion in net inflow during January through April, said a Dow Jones Newswires report. In a note to investors last week, Pimco’s Bill Gross told investors that the bond-market ship is not sinking, and they shouldn’t abandon ship. The fund has lost 2.9% so far this year.

Comment by Whac-A-Bubble™
2013-07-02 20:15:28

Market Snapshot
Nikkei 14,014.90 -83.87 -0.59%
Hang Seng 20,284.30 -374.36 -1.81%
S&P/ASX 200 4,731.50 -102.50 -2.12%

Fed’s Dudley Sees Faster Growth in 2014 as Fiscal Drag Wanes
By Joshua Zumbrun & Jeff Kearns - Jul 2, 2013 2:22 PM ET

Federal Reserve Bank of New York President William C. Dudley, who has supported record stimulus, said economic growth will probably quicken in 2014, possibly warranting a reduction in the central bank’s bond purchase program.

“A strong case can be made that the pace of growth will pick up notably in 2014,” Dudley, who serves as vice chairman of the Federal Open Market Committee and has never dissented from a monetary policy decision, said today in a speech in Stamford, Connecticut.

“The private sector of the economy should continue to heal, while the amount of fiscal drag will begin to subside,” Dudley said in prepared remarks that were similar to a June 27 statement he made in New York.

Policy makers are debating when to dial back accommodation following comments by Chairman Ben S. Bernanke on June 19 that the Fed may cut $85 billion in monthly bond buying this year and halt purchases around mid-2014 if the economy meets central bank forecasts. Monthly buying of Treasuries and mortgage-backed securities has pushed up Fed assets to a record $3.48 trillion.

Dudley said in reply to an audience question that he “wouldn’t want to rule out” asset purchases exceeding the current monthly level of $85 billion if the central bank were to be “surprised on the downside” by weaker economic data.

The Fed must ensure that the U.S. does not slip into a prolonged deflationary slump like Japan’s, Dudley said in response to questions at a Business Council of Fairfield County forum.

‘Firmly Anchored’

“Inflation expectations are still pretty firmly anchored consistent with our 2 percent inflation objective and it’s really important that we keep it that way,” Dudley said. “Our policy is basically designed to prevent, to reduce to the absolute minimum amount possible, any risk of a Japanese-style outcome here in the United States.”

The New York Fed president repeated his comment last week that the central bank will probably prolong bond purchases if the economy turns out weaker than Fed forecasts.

If labor market conditions and the economy’s growth momentum were to be less favorable than in the FOMC’s outlook — and this is what has happened in recent years — I would expect that the asset purchases would continue at a higher pace for longer,” Dudley said again today.

Comment by Whac-A-Bubble™
2013-07-01 05:07:59

“And Wall Street will have a very bad year. Dow at 8500 again would not surprise me.”


Comment by Whac-A-Bubble™
2013-07-01 05:10:09

“Great rotation” into equities is underway, says ING
The asset management firm is optimistic about the outlook for cyclical growth stocks and particularly those in Japan, but remains very wary of emerging markets.
By Joshua Ausden, Editor, FE Trustnet Follow
Friday June 28, 2013

Equities are set to be favoured for the rest of the year as investor preference shifts away from income-generating assets towards growth-oriented ones, according to ING Investment Management.

ALT_TAG Valentijn van Nieuwenhuijzen, head of strategy at the firm, says a switch from bonds and real estate into equities is already taking place. He also sees a shift within the equity market itself – from defensive yielders to cyclical growth stories.

“Next to defensive equity sectors, other previously popular ‘yield’ plays like real estate equities and fixed income assets have come under significant pressure this year,” he said.

“Over the next couple of years, equity returns will start to firmly outperform fixed income returns and global reflation and higher interest rates will create more regulatory room to move towards higher equity allocations for pension fund managers and insurance companies.”

Comment by vinceinwaukesha
2013-07-01 07:18:44

Insiders spending PR money to get retail fools to buy = smartest guys in the room have a strong indication of anticipated decline and wanna get out.

Comment by Whac-A-Bubble™
2013-07-01 05:11:22

“Cash is not king. One day, cash will be king, but not until the easy credit is gone.”

In due time.

Comment by Whac-A-Bubble™
2013-07-01 05:15:34

Investors head for cash on China credit crunch fears
Fears of a Chinese credit crunch exacerbate concerns of possible QE tapering in US.
By Nick Reeve and Matthew Jeynes | Published 07:17

Investors were stockpiling their money in cash last week as the global asset lull snowballed into a full-blown downturn amid fears of a Chinese credit crunch.

Multi-asset managers told Investment Adviser they were building up their cash weightings to protect their portfolios from further volatility, and in the hope of a forthcoming buying opportunity.

The Chinese central bank warned it would not step in and prevent a liquidity drought in the economy, in a move that sent banks’ short-term borrowing costs spiralling and raised new questions about China’s murky ‘shadow banking system’.

This exacerbated the already febrile conditions that stemmed from the recent US Federal Reserve statement that it was set to start winding down quantitative easing (QE) later this year.

‘Safe haven’ gold suffered severe losses, with the price per troy ounce dropping to $1,200 – a level not seen since 2010 – as UK gilt yields hit their highest levels since 2011.

Chinese equities officially entered bear market territory after the Shanghai Composite index shed 5.3 per cent last Monday (June 24).

The FTSE 100 index suffered its first negative quarter in a year, in spite of conciliatory statements from central bankers later in the week.

Nicolaas Marais, head of multi-asset investments at Schroders, said his team had raised cash levels across their portfolios as “only the dollar and cash have given protection” as asset prices have fallen.

It would be irresponsible of us not to build the portfolio in response to more bouts of volatility. Markets are caught between a return to growth and the pain of less liquidity,” he said.

Comment by Combotechie
2013-07-01 07:44:34

“… but not until the easy credit is gone.”

Easy credit for some, maybe, but not for most.

Check out the number of payday loan stores that have popped up and check out the number of loan ads on radio and TV.

And then there’s the We Buy Gold people.

Comment by Combotechie
2013-07-01 07:53:38

Oh, and add in the number of 401Ks that have been looted.

Comment by Bluestar
2013-07-01 11:39:28

Here is a great new idea from American Capitalism;

“A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.
For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers. Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.
But in the overwhelming majority of cases, using the card involves a fee. And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.”

Well look at the bright side, at least they don’t have to spend what’s left of their wages at the company store.

Comment by In Colorado
2013-07-01 13:09:16

This should be illegal, but then again this is America, the “greatest country in the world”.

(Comments wont nest below this level)
Comment by Neuromance
2013-07-01 18:07:23

We have the best government money can buy.

Comment by (Neo-) Jetfixr
2013-07-02 12:48:05

Try depositing a check, when you are a 1099.

My bank typically only credits my account $500 on the first day. Then a couple of thousand 4-5 days later. Then the balance at the 10 business day mark.

Even if the check clears the bank that it was written on the day after the initial deposit.

USA, circa 2013……..aka “The Land of Financial Death by 1000 cuts”.

Comment by Steve J
2013-07-03 14:32:38

Try depositing 5 ozs of gold.

Comment by Happy2bHeard
2013-07-04 09:38:29

“My bank typically only credits my account $500 on the first day. Then a couple of thousand 4-5 days later. Then the balance at the 10 business day mark.

Even if the check clears the bank that it was written on the day after the initial deposit.”

Time to get a new bank.

Comment by Carl Morris
2013-07-01 13:09:54

Well look at the bright side, at least they don’t have to spend what’s left of their wages at the company store.

Although if the payment system gets the first cut, they’re all “the company store” now, right?

(Comments wont nest below this level)
Comment by (Neo-) Jetfixr
2013-07-02 12:49:31

Wal Mart = Defacto “Company Store”

Comment by United States of Moral Hazard
2013-07-02 08:49:25

Cash on hand means nothing. Available credit is the thing to watch. $0 down is still here. King credit reigns supreme.

Comment by United States of Moral Hazard
2013-07-02 08:51:41

“Check out the number of payday loan stores that have popped up and check out the number of loan ads on radio and TV.”

Easy credit.

Comment by rms
2013-07-02 17:21:44

“Check out the number of payday loan stores that have popped up and check out the number of loan ads on radio and TV.”

+1 Things are bad when the economy has to chum the losers.

(Comments wont nest below this level)
Comment by Whac-A-Bubble™
2013-07-01 05:17:36

The recent selloff in gold will turn out to have merely been a dip rather than a burst bubble, as the Fed backpeddles away from a near-term QE3 exit plan.

Comment by Whac-A-Bubble™
2013-07-01 05:20:25

Mortgage Freak Out: Fed Will Not Let Mortgage Rates Go to Six Percent
Published: Friday, 21 Jun 2013 | 1:19 PM ET
By: Bob Pisani | CNBC “On-Air Stocks” Editor

Will higher mortgage rates hurt housing? It could, but not where they are now. Not at four percent for a 30-year fixed rate mortgage.

Everyone is FREAKED OUT about the possibility that mortgage rates–which are roughly tied to 10-year Treasury yields–could go through the roof. How much? They’re four percent now, but everyone is concerned they could go to six percent. That would not be good, because it would add about 25 percent to the monthly cost of a home. Here’s an example:

$300,000 home at 4% rate = $1.432 monthly payment
$300,000 home at 6% rate = $1,798 monthly payment

Regardless, it’s highly unlikely this is going to happen any time soon. There’s a simple reason: Federal Reserve Chairman Ben Bernanke (and his likely successor, Janet Yellen) and the rest of the Fed won’t let it happen!

The Fed is dovish, and members have made it clear that if interest rates get too far ahead of the economy - if higher rates are a threat to economic growth - they will continue with QE3.

Comment by vinceinwaukesha
2013-07-01 07:10:28

Problem numero uno:
I went to an online mortgage calculator site and typed in 6% at $300K and the default for years, prop tax, PMI, and probably the usual ripoff fees added to the balance and got $2111 not $1798. Maybe outright lie, maybe fuzzy math, maybe a subprime ripoff bubble option payment product, who knows.

Problem two:
How it really works, as opposed to the article:
Harry Howmuchamonth can afford about $1500/mo from him and wife working $10/hr service jobs after they graduated with college degrees and $100K in student loan debt. Harry’s socioeconomic position means he WILL be living in the 50th percentile house (or whatever) Currently interest rates of 4% mean Harry will pay $1500/mo and the previous owner will get a check for $300K. If interest rates go up to 6% its not like Harry’s income will magically rise, or a 50th percentile dude will live anywhere but in a 50th percentile house. He will continue to pay $1500/month, its not like his income magically goes up. However the previous owner of the house will only get a roughly $150K check (from the same semi-questionable online calculator as above)

As if walmart is going to give Harry Howmuchamonth a $300/month pay raise just for fun because some percentage in a newspaper changed. LOL I’m rolling on the floor laughing, my ribs are hurting, stop stop.

Comment by In Colorado
2013-07-01 13:15:41

To be fair, only a small percentage of students are graduating with 100K in SL debt. The average for the class of 2011 was about 26K. Not chump change by any measure, but not 100K either.

(Comments wont nest below this level)
Comment by Ol'Bubba
2013-07-01 05:32:55

Ritholtz posted this entry this morning: Is Gold Overdue for a Bounce?

ritholtz dot com/blog/2013/07/is-gold-overdue-for-a-bounce/

Comment by United States of Moral Hazard
2013-07-02 09:27:10

Everything is bouncing.

Comment by Whac-A-Bubble™
2013-07-01 20:00:40

Fed Officials Try to Ease Concern of Stimulus End
Chip East/Reuters
William C. Dudley, president of the Federal Reserve Bank of New York, in 2012.
Published: June 27, 2013

The economy is the victim of a little misunderstanding, Federal Reserve officials said on Thursday, telling investors who have sent borrowing costs soaring that they are misguided in believing the Fed’s stimulus campaign is about to wane.

The message, delivered in three separate but similar speeches, reflects the Fed’s frustration with a broad rise in interest rates that began in May and accelerated after remarks last week by the Fed’s chairman, Ben S. Bernanke.

“I don’t want to be too cute about a serious matter,” Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta, said in Marietta, Ga., “but to make an analogy, it seems to me the chairman said we’ll use the patch — and use it flexibly — and some in the markets reacted as if he said ‘cold turkey.’ ”

Comment by goon squad
2013-07-01 05:38:43

‘growth … in generally lower skilled jobs’


not everybody gets to be an astronaut when they grow up. and in this current recoveryless recovery, not everybody gets to be middle class when they grow up.

Comment by vinceinwaukesha
2013-07-01 06:50:29

“not everybody gets to be middle class when they grow up.”

Insert unthinking mantra about we need more STEM graduates. Why, if they learn the right magic spells from ancient expensive wizards, the jobs will magically appear. Someone has to work at starbucks and the liberal arts grads have been screwing up the espresso machines and cash registers too much lately, so more STEM grads means we’ll have better trained/educated baristas.

I’ve noticed this as a “consumer” my favorite waitress is pretty good at spouting the party line about K12 educational theory, but not so good at the basic arithmetic on my bill. Some more STEM grads doing menial service labor would probably improve corporate profits quite a bit because the education majors and art history majors are totally screwing up minimum wage service jobs.

Comment by goon squad
2013-07-01 07:11:38

that’s hilarious.

look at the reader comments on any wall street journal piece about student loans or college graduate un/underemployment and they’re all ’stem, stem, stem’ to the point that we should just dismantle every college campus except for their stem buildings.

Comment by vinceinwaukesha
2013-07-01 07:46:34

That’s the funny part about encouraging STEM enrollment.

Thought experiment. My favorite waitress is like half my age, but lets assume we went to school together and extensive STEM propaganda results in her trying to get into my EE classes. What we are told will happen is she Will graduate and a high paying job Will magically be created for her, somehow as a direct miracle result of issuing the diploma. The reality is doubling STEM enrollments will mostly double dropout rates, so the dropout rate in calc or ac/dc fundamentals or circuit analysis or whatever your local filter class is, will merely increase from 80% to 90% and/or if they lower standards enough to boost grad rates, will merely increase unemployment such that my favorite waitress will continue to be stuck waiting tables, its just she’ll have bottom quartile grasp of ohms law rather than a bottom quartile grasp of modern (apparently failing) K12 education theory.

(Comments wont nest below this level)
Comment by Carl Morris
2013-07-01 08:13:59

its just she’ll have bottom quartile grasp of ohms law rather than a bottom quartile grasp of modern (apparently failing) K12 education theory.

And from what I see nobody even wants the one with the 50th percentile grasp. Everybody wants the top 10%…or the top 1% or better. Everyone else can work at Starbucks while we beg for more H1Bs due to the shortage of “qualified” applicants.

Comment by In Colorado
2013-07-01 13:33:07

Thought experiment. My favorite waitress is like half my age, but lets assume we went to school together and extensive STEM propaganda results in her trying to get into my EE classes.

If she is “average” she won’t be able to pass the required Calculus and Physics courses. She’ll be like Penny in the Big Bang Theory, who cries when she can’t grasp Sheldon’s quick and dirty intro to physics, lamenting that she’s stupid.

The reality is doubling STEM enrollments will mostly double dropout rates

Yup. These writers just don’t get that most people aren’t smart enough to be a successful STEM major. So unless we collectively can come up with something useful and productive for them to do, as opposed to Lucky Ducky jobs, then the “free sh*t army” is going to continue to grow by leaps and bounds.

Comment by What Is STEM?
2013-07-01 08:04:41

What is a STEM graduate?

Comment by Carl Morris
2013-07-01 08:15:07

No STEMs no seeds that you don’t need…..

(Comments wont nest below this level)
Comment by "Uncle Fed, why won't you love ME?"
2013-07-01 14:50:45

Lower-skilled jobs were once middle class.

Comment by Housing Analyst
2013-07-01 06:42:00

“The misinformative media messaging and reality will continue moving in opposite directions and a growing number of people will begin to see that. It’s already happening. Ask around….. J6P will tell you ‘housing isn’t getting better around here.’ Of course we have to define ‘getting better’ but you get the drift. Contractors will continue to eviscerate comps and anyone who bought a house 1998-2012. You debt-junkies are going to get some schooling this year.”

Hit a bullseye. And the dichotomy of a media driven housing recovery and reality will be exaggerated moving forward.

Housing is a disaster. Beware.

Comment by perkonkrusts
2013-07-01 07:26:53

“Debt junkies are going to get some schooling this year.. Hit a bullseye”

Do you really think any “debt-junkie” got a schooling this year from home ownership? Definitely 2007-2011, and maybe again next year, but not this year. That prediction was way off the mark.

Comment by Housing Analyst
2013-07-01 07:39:53

It’s dead on considering the fact that a sucker who bought in the first 6 months of 2013 couldn’t find a buyer for what they got in it.

What are your losses so far Crusty The Realtor?

Comment by perkonkrusts
2013-07-01 08:11:06

Oh, by “debt junkies getting schooling”, you mean that a person who bought a house in April 2013 couldn’t get that exact same price in July 2013? On the coasts you’re definitely wrong, but for the rest of the country you’re probably right. But if that’s the extent of the “debt junkie schooling”, then school’s not that bad.

“Debt junkies getting schooling” makes better headlines than “your home may have declined in value 0.2% in the last 90 days”.

(Comments wont nest below this level)
Comment by Housing Analyst
2013-07-01 08:15:30

“On the coasts” huh?

Is that why prices are sliding in NY, CT, ME, RI, DE, FL, GA, SC, NC, VA, MD, NJ, OR and WA?

Get honest Krusty….. besides…. you’re the same guy who lost money on 6 of 7 houses.

What are your losses on that dump you bought recently?

Comment by crusty perkins
2013-07-02 11:55:50

I lost money on over 100 flips but made it up in volume

Comment by Robin
2013-07-01 14:34:38

HA: Lost much so far this year in terms of opportunity costs? Like 20% or more? Where do you live?

Comment by Housing Analyst
2013-07-01 15:51:02

Hell…. you’re so far underwater that the amount really doesn’t matter.

Comment by vinceinwaukesha
2013-07-01 06:53:53

“Please post your predictions here.”

50/50 odds on to keep the “recovery” going we start redefining “out of the labor force”. If we redefine the “out” cutoff to a shorter interval, the headline numbers will dramatically drop.

Comment by Housing Analyst
2013-07-01 07:00:46

“Why buy at house at these massively inflated asking prices when everyone knows you’ll get ripped off? Rent for half the monthly cost and buy later after prices crater for 65% less.”

Comment by Pete
2013-07-01 16:01:49

“when everyone knows you’ll get ripped off?”

If everyone knows, then we have nothing to worry about.

Comment by 2banana
2013-07-01 07:01:46

In six months. Or Jan 1st, 2014.

The democrats will take a drubbing in the 2013 elections. These are mostly local elections so the democrats will say it means nothing.

2014 will be a different story. Those are the mid-terms. The dems want to keep the senate and take the house.

This will require more and more of easy and cheap money.

Since obama has appointed 6/7 members of the Board of Governors of the Federal Reserve (to include the chairman) - obama will get what he wants.

Federal deficits will dip slightly - but still be near the trillion dollar mark (per year).

We will see more and more QE - but they won’t be called that.


More and more house flipper shows on HGTV
Housing bubble v2.0 continues
Slight uptick in interest rates but no one will care (dude - who cares if you have to pay 0.5% more than last year - you will make a fortune flipping).
Obamacare, obama, higher taxes and more regulations continue to destroy the economy.
Unemployment stays stuck at historic high levels.
Democrats continue to blame Bush and the republicans for all that is wrong.
Cities continue to declare bankruptcy.

Comment by goon squad
2013-07-01 07:27:52

We have two State Senate recall elections soon, against Democrat State Senators who supported Colorado’s new gun laws (the 15 round magazine limit actually goes into effect today), and the momentum is building against them.

Comment by vinceinwaukesha
2013-07-01 07:16:03

Prediction: Obamacare will destroy about as many jobs as the previous boogeyman the FMLA act of 1993. It won’t do anything good, but it won’t do anything bad either.

I would like to see an over/under estimate for number of municipal bankruptcies. I’m thinking 2/month dropping to 3/year if you add a greater than 100K (current) inhabitant requirement.

Comment by goon squad
2013-07-01 07:30:07

“won’t do anything bad either”

Obamacare is corporate welfare for the insurance companies.

Comment by vinceinwaukesha
2013-07-01 07:54:27

My “mistake” in an urge to keep it brief for style reasons, results in less accuracy.

I think we’ve all heard how FMLA was guaranteed to Destroy American ™ resulting in an atlas shrugged style capital strike, dogs and cats living together, the rapture, the apocalypse, probably all at the same time. And the same PR campaign is being rolled out for obamacare, with probably about the same real world results in the end. Mostly, paper shuffling middle managers will have to shuffle different papers, perhaps slightly more papers, that’s about it.

Its politically impressive, just how much hot air on all sides for something that boils down to doing almost nothing for anyone.

Comment by vinceinwaukesha
2013-07-01 07:37:01

The “local” private college a couple blocks from where I work had a news release this weekend about applications going from about 5K apps to 24K apps over the past 14 years. Lately they’ve been sending 13K acceptance letters to get 1900 enrolled. So its interesting that they continue to admit roughly around the 50th percentile, its just the pool of applicants has dramatically increased.

VERY careful not to discuss why. My theory is the .edu bubble results in a thrashing around trying to find the best financial aid deal, with lots of rationalization and justification to avoid discussing it.

I also thought it odd that “everyone knows” that at least some high schools require students to apply to “X” number of schools in order to graduate, where X steadily increases… No one willing to discuss that? Weird.

Anyway: Six Month Prediction: the .edu bubble slowly creeps along and a significant fraction of the 1900 enrolled can’t afford to show up, leading to lots of justification and rationalization to explain why it couldn’t possibly be financial reasons and it must be a lack of climbing gyms and lack of big screen TVs, or really pretty much anything other than admitting the truth.

Comment by 2banana
2013-07-01 07:58:49

Part of the explanation is that most colleges now have standard applications.

You fill out one application and write one essay and it is good for nearly all the colleges you want to apply. Add in that colleges wave the application fee in many circumstances.

So why not apply to dozens? As you said, you could hit the financial jackpot lottery of a great financial aid package.

The .edu bubble will continue until:
Government STOPS guaranteeing student loans
Government ALLOWS student loans to be discharged in bankruptcy

Comment by goon squad
2013-07-01 08:16:05

Bailouts are coming, you’ll see.

The free sh*t army = Permanent Democrat Supermajority

Comment by kmo722
2013-07-01 10:51:46

although mostly bad, I do think the USG has a mixed bag of results on education, in general.. most USG ed subsidies / loans have helped increase the cost of education for all students.. typical of USG policy actually hurting those they intend to help.. they have done some good, however, for many lower income students.. that all said, the housing bubble and the push for consumer debt is really at the core of the problem with eduction costs in this country.. the notion that the USG is making any money on students today via student loans is a travesty.. the USG largely created the problem to begin with.. students should get their loan money at the Fed discount level, just like the banksters, and all student loans should be tied and for colleges that actually reduce their costs and place students.. college costs are out of control .. they are because they can be ..

Comment by crusty perkins
2013-07-02 12:01:40

You fill out one application and write one essay and it is good for nearly all the colleges you want to apply. Add in that colleges wave the application fee in many circumstances.”

75 bucks for each University of California college you apply to, but yes it’s one application.

Comment by Arizona Slim
2013-07-01 10:57:57

Anyway: Six Month Prediction: the .edu bubble slowly creeps along and a significant fraction of the 1900 enrolled can’t afford to show up, leading to lots of justification and rationalization to explain why it couldn’t possibly be financial reasons and it must be a lack of climbing gyms and lack of big screen TVs, or really pretty much anything other than admitting the truth.


Comment by In Colorado
2013-07-01 13:23:11

I also thought it odd that “everyone knows” that at least some high schools require students to apply to “X” number of schools in order to graduate, where X steadily increases… No one willing to discuss that? Weird.

Never heard that one before.

Comment by Robin
2013-07-01 14:40:29

Me neither, but I’m 60 and we don’t have kids.

Comment by goirishgohoosiers
2013-07-02 08:25:12

Never heard of that either, and I have two in high school now.

I still hear the old chestnut about applying to a couple of “reach” schools, i.e., ones that you’re not likely to be admitted, a few schools whose stats are more or less in line with yours, and some safety schools, you know, just in case.

Mostly I think that applying to a reach school is just an exercise in futility unless you are directly related to someone whose last name happens to appear on a few campus buildings, or you are all state in your chosen sport. I also suspect that many of our nation’s most elite schools encourage this behavior in order to keep the number of applicants high and the number of acceptances low in an academic version of the velvet rope syndrome.

Comment by polly
2013-07-02 13:11:06

It isn’t as vague as “velvet rope” syndrome. The US News and World Reports ranking specifically includes the percentage of applications accepted as part of their analysis. I think they also include how many of the acceptances are accepted by the students. This leads to the very odd situation in which U Penn has motivation to reject a student that they would love to enroll but who they believe will get into Harvard and will likely choose to head to Cambridge.

(Comments wont nest below this level)
Comment by Housing Analyst
2013-07-01 07:46:19

Sacramento County Housing Demand Craters 6%


And you all know what happens when demand craters

Comment by Housing Analyst
2013-07-01 07:50:07

“Houses depreciate rapidly.”

Comment by Robin
2013-07-01 14:43:16

Financially, physically, or both? Depends on the state you live in.

Comment by Housing Analyst
2013-07-01 15:48:56

Physics and finance only apply to parts of the earth.


Comment by Carl Morris
2013-07-01 08:22:37

My prediction is that my predictions continue to be worthless, right up until they aren’t. I think the most fundamental question is whether the Fed can run out of money for QE. I say it can’t…but opinions differ and I’m no expert on the Fed. If you say “they can’t print money, they can only loan money against collateral”, what stops them from valuing Beanie Babies at 1T each for the purposes of collateral?

If they can run out of money and do, or shut it off for any reason, we get the depression that we started into in 2008. If they can’t run out of money and choose to keep the spigot open then they slowly wring every bit of real value from the dollar to maintain the charade and then at that future time we have to restart our money system from scratch.

Comment by elmer fud
2013-07-01 09:23:14

Looking over the last 6 months predictions I predict most of the next predictions on this blog will be wrong also.

The Bond guy got it right though, bonds are toast

Comment by Housing Analyst
2013-07-01 09:59:16

Considering most of the forecasts made 6 months ago were quite accurate, the only one incorrect is yours.

Comment by kmo722
2013-07-01 10:30:26

My dire prediction..

US housing price appreciation, now completely supported by the FED, levels off and stalls this fall.. next spring, while QE3 is suppose to be winding down, the economy turns for the worse as our economy really only works w/rising home prices and the “wealth effect” it brings to J6P.. the flatting or falling of housing prices stalling economy starts to shed thousands of jobs (aka realtors and others making bank off of high home price turnover) by next summer.. this plays out unitl the winter of 2014/2015 and gets progressively worse as all the smart money leaves residential real estate for greener pastures after milking the taxpayers via the GSEs.. the losses (and estimated future losses for GSEs) starts to hit the media and discussion for winding the GSEs down sooner than later starts to take hold.. the Fed, recognizing that the house of cards only works with rising housing prices and ever increasing levels of consumer debt, announces QE4 and resumption of purchasing MBSs to the tune of about $40B again per month (or about 200,000 housing unit equivalents / month).. We, on the HBB, look on with horror and disgust as it all plays out .. I do believe all of the above will happen.. just a matter of when, IMO.. I could be off by ~ 6 months..

Comment by 2banana
2013-07-01 11:42:47

Good summary.

Now put it in to focus as the party the controls the Fed wants to stay in power.

QEs takes about 6 months to take hold.

Comment by In Colorado
2013-07-01 13:21:31

I think you got it backwards, the Fed controls the parties, both of them. Bush appointed helicopter Ben, and Obama reappointed him. Either that is a sterling example of non-partisanship, or its the Fed who calls the shots and both parties ask “how high do you want us to jump?”

Comment by 2banana
2013-07-01 13:38:41

Yeah. I read the memo.

When republicans are in charge they are the most evil of all creatures and MUST be voted out of office in the next election. In fact, all the evil of the world can be traced to them even when out of office for over five years.

But when democrats are in charge they are just suffering under circumstances that they can not change. They are trying really hard but the system is just stacked against them for them to do anything. It is really not their fault and it would have been much worse if a republican was in power so we should all keep voting democrat no matter how bad it gets.

(Comments wont nest below this level)
Comment by AmazingRuss
2013-07-01 13:41:46

It’s Obama’s fault that Bush appointed Bernanke, don’t you see? If only we’d give the republicans absolute power, all our problems would vanish and an endless golden age would ensue.

Liberals like to suffer, and they like to make others suffer with them, especially their children and extended family. They have a secret plan to destroy society, and they won’t be happy until we’re all fighting over rocks to boil and eat.

So vote republican, or it’s rock soup for little Bobby! Be afraid!

(Comments wont nest below this level)
Comment by Arizona Slim
2013-07-01 11:02:38

My prediction: Inventory is going to the moon! And beyond!

Meanwhile, home sales will slow down significantly. Because of things like job growth and income growth. Neither of which have been breaking records of late.

Comment by AmazingRuss
2013-07-01 12:40:25

A country full of empty houses, with people sleeping on the street.

Comment by Carl Morris
2013-07-01 13:11:25

Whatever it takes to save the village.

Comment by In Colorado
2013-07-01 13:17:10

A country full of empty houses, with people sleeping on the street.

Isn’t crony capitalism beautiful?

Comment by kmo722
2013-07-01 11:11:52

real far down the road, after the GSEs are finally put to bed, perhaps the FED, with no other recourse or options remaining, and being the one true ringmaster to this giant ponzi housing debt scheme, starts to buy houses directly from consumers to maintain prices as long as possible as commercial banks / mortgage companies all flee for the hills… although this may sound far fetched, but I suspect this last ditch “nuclear option” has already been discussed (or at least considered) as the final stage of all this BS..

Comment by Bluestar
2013-07-01 12:03:50

My prediction is FASB rule 134 stays suspended. No Mark-to-Market means trillion of dollars of MBS and CDO are still rated the same as US Treasuries. Makes sense since the FED balance sheet is stuffed with them.

It has been widely reported Ben Bernanke will exit soon. Selecting a new FED chairman is like getting a new Pope for Wall St.. I hope it’s a woman this time. Even better if she was gay :)

Comment by 2banana
2013-07-01 13:31:48

I hope it’s a woman this time. Even better if she was gay :)


I thought there is no choice in the matter.

Comment by George Zimmer For President
2013-07-01 13:50:59

I hope it’s a woman this time. Even better if she was gay

Why? A woman or gay (or lesbian) fed president would be better (or even different) how?

Comment by George Zimmer For President
2013-07-01 13:42:40

Rapture by 11/12/13?

Comment by "Uncle Fed, why won't you love ME?"
2013-07-01 14:31:21

In 6 months, I predict that the stock market will hurry up and crash already, and that housing inventory will be way up from where it is now. Prices may or may not start coming down in 6 months.

Comment by Patrick
2013-07-01 16:59:53

Bond losses up. House sales volume and selling prices down. Stock market down. QE on the way out. Deficit rate above 1T. Interest rates up. Employment (we might get truthful reporting !). Global economy down. Global unemployment up. Product prices even to down. Resources down. M&A activity undecided. Gold hopefully down. Bigger cities default. Canada recognizes it has hit a wall.

Maybe, just maybe - gov will let the economy try to fix itself because they sure haven’t done a good job of it.

But best of all I think the cap rate will increase. Maybe more jobs. Because 75% are still well employed, have products whose planned obsolescence was sped up by offshore suppliers, and besides their purchases have been stalled out of fear and their “stuff” has gotten old.

Confidence in their ability to keep earning will rule the day.

Comment by Whac-A-Bubble™
2013-07-02 03:08:32

“Gold hopefully down.”

Hater! How cruel of you to kick the gold bugs when they are down!!

Comment by Whac-A-Bubble™
2013-07-02 13:38:51

Oops…my hand slipped.

July 2, 2013, 3:19 p.m. ET
Stronger Dollar Saps Gold Rebound
Two-Day Rally From 34-Month Low Halted

NEW YORK—Gold futures ended lower, interrupting two straight sessions of gains as a stronger dollar and the swift recovery saw some investors sell their holdings to lock in profits.

Gold for August delivery, the most active contract, fell $12.30, or 1%, to settle at $1,243.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

The contract had rallied nearly $45 in the two trading days through Monday, rebounding off its lowest level in 34 months.

“Gold may have finally turned the corner, but the market is taking a breather here today,” said Matt Zeman, a senior market strategist with Kingsview Financial.

A stronger dollar, which advanced against the euro and other currencies, pushed gold prices lower. Investors who use other currencies tend to shy away from dollar-denominated gold futures when the greenback strengthens, as the contracts become more expensive for these buyers.

The ICE dollar index, which tracks the dollar against a basket of international currencies, was recently up 0.5% at 83.45.

Comment by Neuromance
2013-07-01 18:43:49

“YOU can always rely on America to do the right thing,” quipped Winston Churchill, one of America’s greatest 20th-century fans. “Once it has exhausted the alternatives.” — source

Has it exhausted the alternatives?

Comment by Carl Morris
2013-07-02 08:14:29

Has it exhausted the alternatives?

Can the Fed run out of money?

Comment by Whac-A-Bubble™
2013-07-02 02:52:30

Can denying the existence of problems make them disappear?

Comment by Whac-A-Bubble™
2013-07-02 02:56:59

If this works in China, perhaps we should try it here in America? After all, if mom-and-pop investors lose the faith here and across the Pacific, how will billionaire oligarchs be able to keep rolling in the dough?

ft dot com
Last updated: July 2, 2013 4:50 am
China censors urge media to curb ‘cash crunch’ coverage
By Simon Rabinovitch in Shanghai
A customer looks at a newspaper article displayed on a white board in front of an electronic stock board at a security firm in Shanghai, China©Bloomberg

With a cash crunch roiling the Chinese economy, propaganda authorities have told local media to tone down their reporting to help stabilise financial markets.

In a directive written last week and transmitted over the past few days to newspapers and television stations, local propaganda departments of the Communist party instructed reporters to stop “hyping the so-called cash crunch” and to spread the message that the country’s markets are well stocked with money.

Chinese propaganda officials regularly send guidelines to the nation’s media about sensitive political subjects, telling them which words to avoid and how to frame their reporting. But it is rare for such instructions to be sent to financial media.

Last week’s directive is an indication of the concerns in Beijing about the dislocation and growing panic in the country’s markets following the onset of the cash crunch.

First, we must avoid malicious hype. Media should report and explain that our markets are guaranteed to have sufficient liquidity, and that our monetary policy is steady, not tight,” the directive said, according to a text obtained by the FT.

Second, media must strengthen their positive reporting. They should fully report the positive aspect of our current economic situation, bolstering the market’s confidence,” it continued. “Third, media must positively guide public opinion. They should promptly and accurately explain in a positive manner the measures taken by and information from the central bank.”

The directive was written early last week when the Chinese stock market lost more than 10 per cent in a day and a half of trading. But it has just begun to spread more widely to the nation’s media outlets. An economics editor with a leading newspaper received it three days ago and a television producer in a large northern city said the message was conveyed to staff at a Monday meeting.

Investors have calmed down substantially since the middle of last week when the central bank vowed that it would backstop cash-strapped banks with direct injections of money. The stock market has clawed back some of its losses and interbank rates have eased from their unprecedented peaks, though they remain higher than their normal range before the turmoil.

The term “cash crunch” is still being used widely in newspaper headlines and television reports, but the tone of the coverage does appear to have been softened.

The central propaganda department did not immediately reply to requests for comment.

Comment by Whac-A-Bubble™
2013-07-02 03:02:45

Manufacturing in China Cools Further in June
Published: June 30, 2013

HONG KONG — Activity in China’s manufacturing sector continued to slow in June, two surveys showed Monday, underscoring concerns that the Chinese economy is likely to keep losing steam in the coming months.

The Chinese statistics bureau released an index that showed factory activity had barely expanded in June, a month that was overshadowed by a credit crunch in the banking system.

The official purchasing managers’ index came in at 50.1 points — just above the 50-point mark that separates expansion from contraction, and markedly below the May reading of 50.8.

A separate P.M.I. survey published by the British bank HSBC produced a reading of 48.3, likewise showing a marked decline from May, when it was 49.2. The June figure was the lowest in nine months, and represented a slight downward revision from a preliminary reading released on June 20.

Together, the surveys showed that a gradual slowdown that began to materialize earlier this year is continuing as the Chinese authorities — eager to wean the economy off excessive credit growth — refrain from adding stimulus.

Policy makers have made it clear in recent months that they are prepared to tolerate slower growth as they seek to shift the economy away from the headlong expansion of the past few decades and toward higher-quality and more sustainable growth.

A cash crunch in the commercial banking sector last month further underscored this, as Beijing took a tough stance on lending in a bid to foster more prudent banking activity.

The central bank last month allowed bank-to-bank lending rates to spike to record highs, sending a stern message to the banking industry that it needs to step up risk controls and improve cash management.

Although analysts said the move could be positive in the long term if it helps to instill more lending discipline, the crunch led to a big sell-off in the stock market as investors fretted about the impact that more restrictive lending could have on the already cooling economy.

Comment by Whac-A-Bubble™
2013-07-02 03:04:21

Is the Eurozone debt crisis finally over by now?

Comment by Whac-A-Bubble™
2013-07-02 03:05:39

Market Pulse Archives
July 2, 2013, 5:06 a.m. EDT
Troika gives Greece a 3-day ultimatum on bailout
By Karen Friar

LONDON (MarketWatch) — Greece has three days to satisfy lenders it can fulfill the promises it made under its bailout deal, or risk more conditions on the next 8.1 billion-euro ($10.59 billion) installment of rescue loans, Reuters reported Tuesday. The warning comes after the Greek government resumed negotiations on Monday with the “Troika” of lenders — the International Monetary Fund, the European Union and the European Central Bank — about unlocking the next injection of cash. Greece, which has seen six years of recession, has missed deadlines for public-sector reforms. The government will have to make a convincing case in a presentation to lenders on Friday, or risk having the €8.1 billion in aid delivered in three monthly payments, rather than a lump sum.

Comment by Housing Analyst
2013-07-02 08:18:08

6-18 Monther

Evil Men (Fed Res) will continue to buy down the yields yet some exogenous global event will interrupt this irrational policy and yields will spiral up rapidly prompting another round of “if we don’t do this, the end of the world will come” fixes.

Housing demand will continue to slip lower as it has been doing since 2007 and the paid PR hacks will continue to deny it. Great effort and money will be thrown at detracting from losses associated with paying inflated prices for houses from 1998-current.

Comment by B.Bernake
2013-07-02 12:20:28

Housing prices will continue up and Housing Analyst will be taken away raving about 50 dollar a square foot housing

Comment by Housing Analyst
2013-07-02 19:37:45

We don’t rave about it. We build it.

Comment by snake charmer
2013-07-02 08:26:42

The echo bubble bursts, and the association of the resulting economic turmoil with Obama results in the United States electing a far-right President and a far-right Congressional majority in both houses in 2016.

Comment by Resistor
2013-07-03 18:40:32

A year ago this would have freaked me out, but you know what? The following “wars on” will continue:

- savers
- public education
- privacy

Comment by nostradamus
2013-07-02 12:17:53

Prediction; taxes will go up, way up. Results in a new Dark Ages that will last a long long time.

Government will use the tax money to spy and manage its citizens, pay its debt, leaving less money for private enterprise and even less for joe sixpack to buy anything.

More people will rent leaving the uber wealthy to large estates where you can’t tresspass, see Dark ages, robin hood etc.

eventually somthing will kill 1/3 of the population and there will be a Renaissance just like before.

Comment by Whac-A-Bubble™
2013-07-02 13:22:24

Twenty percent plus annual home price appreciation in California will soon end.

Comment by rms
2013-07-03 23:21:05

“Twenty percent plus annual home price appreciation in California will soon end.”

Psst, my coffee Barista said otherwise. California. Fundamentals.

Comment by Whac-A-Bubble™
2013-07-02 13:26:06

National home prices jump 12% in May
A home that has found a buyer in Washington, D.C. (AFP / Getty Images)
By Andrew Khouri
July 2, 2013, 10:39 a.m.

National home prices soared in May, notching increases not seen for more than seven years, according to a new report.

Real estate information firm CoreLogic said Tuesday that home prices rose 2.6% from April and 12.2% over the year — the largest pop since February 2006.

Tight inventory, low mortgage rates and heavy investor demand have sent home values upward this year, raising concerns some markets are becoming overheated.

Home prices in California jumped 20.2% in May compared with a year earlier, while the Los Angeles area saw prices increase by roughly the same percentage. In the Inland Empire — an epicenter of investor activity — prices soared 18%.

“Home price appreciation, particularly in much of the western half of the U.S., is increasing at a torrid pace,” CoreLogic Chief Executive Anand Nallathambi said in a statement.

Comment by Arizona Slim
2013-07-02 14:17:38

Here in Tucson, inventory is starting to build. A lot of it is property that has been on the market before — and didn’t sell.

Comment by Whac-A-Bubble™
2013-07-02 14:45:00

California is not the only place seeing massive housing market improvements, as even Detroit is now seeing double-digit annual price improvements.

July 2, 2013 at 4:15 pm
Home prices in Detroit, Dearborn, Livonia up 10.5%

Home prices in the Detroit-Livonia-Dearborn area continued on their upward climb in May.

Real estate data provider CoreLogic said Tuesday prices in the three-community area were up 10.5 percent in May compared to May 2012, compared to 12.2 percent nationwide from year to year.

Detroit-Livonia-Dearborn prices from April to May of this year leaped by 5 percent — almost double the 2.6 percent rise recorded nationwide.

CoreLogic compiles sales and price data in 100 metropolitan areas in the U.S.

May’s 12.2 percent national increase, compared to the previous May, was the most in seven years, and suggests the housing recovery is strengthening.

CoreLogic said home prices rose from a year ago in 48 states, falling in only Delaware and Alabama.

Steady hiring and low mortgage rates have encouraged more Americans to buy homes. Greater demand, a limited number of homes for sale and fewer foreclosures have pushed prices higher. Despite the gains, CoreLogic said, prices are still 20 percent below the peak reached in April 2006.

Sales of previously occupied homes topped the 5 million mark in May for the first time in 3 ½ years. And the proportion of those sales that were “distressed” was at the lowest level in more than four years for the second straight month. Distressed home sales include foreclosures and short sales. A short sale is when a home sells for less than what is owed on the mortgage.

Home sales are expected to increase in the coming months. That’s because the number of people who signed contracts to buy homes rose in June to the highest level since December 2006. There’s generally a one- to two-month lag between a signed contract and a completed sale.

Comment by Ben Jones
2013-07-02 21:12:21

I mentioned recently that my regular searches of state run media in China were suddenly turning up nothing on the housing bubble.

‘In a directive written last week and transmitted over the past few days to newspapers and television stations, local propaganda departments of the Communist party instructed reporters to stop “hyping the so-called cash crunch” and to spread the message that the country’s markets are well stocked with money.’


Comment by Rental Watch
2013-07-03 09:41:39

I’ll try again:

1. The Federal government will continue to kick the can on deficit reduction and tax reform (not going out on a limb here);
2. The Fed will continue to print (not going out on a limb here), but by the end of the year as a way to calm markets as they wean them off the drug, they will more explicitly target long-term rates;
3. Mortgage rates will trend upward over the second half of the year, but have less of an impact than people think on home prices going up;
4. Home prices by the end of the year in AZ will be going up still, but at a slower rate than currently on a year-on-year basis (new housing starts will continue to increase);
5. Home prices in CA will still be going up at a rapid pace, but inland markets will start to show greater increases (year on year) than today, coastal markets will show equal or lesser increases (year on year) than today. New housing starts will increase considerably in CA, but still be below long-term trendlines;
6. Judicial states will start to foreclose a bit faster (non-current rates will decline at a faster pace than the 12 months to today), which will take a bit of the air out of the sails of those markets;
7. Housing starts will get to approximately 1.1MM per year by the end of 2013, improving the jobs outlook for blue collar workers;
8. Europe will continue to kick the can, the Yen will have massive volatility;
9. Inflation will stay muted, in part because apartment rent increases will be weaker than they are currently;
10. The Federal government will pass immigration reform, with some largely symbolic tweaks by the House;
11. The unemployment rate will continue to fall at a faster pace than tepid job creation would otherwise indicate–the Fed will start to emphasize low inflation more in their minutes, implying that they will keep their foot to the pedal even longer than a declining unemployment rate might indicate.

Comment by oxide
2013-07-03 10:29:03

I didn’t put in a prediction. I guess I predict that:

1. This will be the last season of substantial house price increases, probably for the next five years. The current bubblet is due entirely to excess cash chasing a return. Once the cash has left the building, prices will level off, or drop slightly. Upward pressure from general inflation will be canceled out by downward pressure from slightly rising interest rates and continued bleeding of shadow inventory. NAR propaganda will attribute the price decrease to seasonal rather than structural causes, so the lack of recovery next spring will be, as expected, “unexpected.”

2. Some time ago, I predicted a bi-modal price spectrum where trashed housing is sold for lower prices for flip fix-up and good-condition homes become more desirable to cash-strapped families wanting a livable house. The lower node will disappear as cash buys up the fix-n-flips. As a result, average comps may increase without any change in price in good-condition homes.

3. Rentals will continue to stay stable or decrease slightly as new inventory comes online. This will depend on how many new condos raise the white flag and re-partment.

Comment by Whac-A-Bubble™
2013-07-04 12:27:16

“Once the cash has left the building, prices will level off, or drop slightly.”

There is no rush to the exit of the burning building in your scenario?

Comment by doom
2013-07-05 10:27:35

I agree somewhat that any major upward pricing in housing will fizzle by early 2104. Prices will hold steady though, I say about late 2016 prices could head up again but not crazy increases.
Severely underwater folks have a very long road ahead to recover to break even will be a stretch. This will be good news for the Home depots and Lowe’s of the world and remodelers people will have to stay put and fix up their property which can be a good thing.

Comment by Housing Analyst
2013-07-05 20:34:53

Prices will “hold steady” like they did in 2006? or 2007? 2008? Or 2009? Or was it 2010? Maybe 2011? or was it 2012?

Comment by Resistor
2013-07-03 18:34:16

Midyear prediction:

Bob Toll wins
I loose


Comment by Resistor
2013-07-04 10:55:40

Coffee is for Toll Brothers.

Comment by Resistor
2013-07-04 11:42:54

*Emerges from mom’s basement

Comment by Whac-A-Bubble™
2013-07-04 12:25:37

Coffee is for non-basement dwellers.

Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post