The Housing Bubble

First-time homebuyers blocked by cash

“The Jansons never imagined they would compete with so many investors while looking for a place to start. Two out of every three homes in their price range had been swallowed by a river of cash.”

http://www.tampabay.com/news/business/realestate/first-time-homebuyers-blocked-by-cash/2133554

Some great comments — see Matthew’s…

buy a house today and your guaranteed some free equity tomorrow?

William Wilkins

William J. Wilkins

BOLO (”Be on the lookout”) instructions

House close by came on the market yesterday @ 285k. Bought it last year for 200k. If they get their list price that would be 85k gain. Take out 15k for the realtor and you have 70k left. They lived in the house so possibly take the capital gains exemption. Though they did not live in it for 2 years there are some exemptions to the 2 yr rule. One being if your work forced your move. They did some work on the house before selling. Laminate flooring, baseboards, new raised panel doors, backsplash, tile, paint, front and rear landscaping. My estimate is @ least 20k for that.

So 285- 200 -15 - 20= 50k gain in a little over a year or 25%.

The Federal Reserve Is Bailing Out FOREIGN Banks … More than the American People or Economy

Washington’sBlog
July 28, 2013

Federal Reserve Policy Mainly Benefits Big Foreign Banks

We’ve extensively documented that the Federal Reserve is intentionally locking up bank money so that it is not loaned out to Main Street. Specifically – due to Fed policy – 81.5% of all money created by quantitative easing is sitting there gathering dust in the form of “excess reserves” … instead of being loaned out to help Main Street or the American economy.

And we’ve extensively documented that a large percentage of the bailouts went to foreign banks (and see this and this). (A 2010 Fed audit also revealed that of the $1.25 trillion of mortgage-backed securities the central bank purchased after the housing bubble popped, some $442.7 billion - more than 35% – were bought from foreign banks.)

It turns out that these themes are all connected.

Specifically, most of the Fed-created money which is gathering dust is actually being held by foreign banks.

The Levy Economics Institute noted in May:

Excess reserves are the surplus of reserves against deposits and certain other liabilities that depository institutions (loosely called “banks”) hold above the amounts that the Board requires within ranges set by federal law. The general requirement is that covered institutions maintain reserves at least equal to ten percent of liabilities payable on demand. For the first time in history, there is statistical evidence that as much as one-half or more of excess reserves are held for United States banking offices of foreign banks.

Zero Hedge reports today:

As per last night’s [Federal Reserve] H.8 update, commercial bank deposits rose by $94 billion in the week ended July 17: the fourth largest weekly increase in history …. This took total commercial bank deposits to an all-time high of $9.54 trillion.

The entire difference can be attributed to the $2+ trillion in excess reserves created by the Fed since the start of the [global financial crisis] .

Foreign banks continue to be the biggest beneficiary of the Fed’s monthly $85 billion liquidity largesse, just as they were the biggest winners during QE2.

In fact, the total reserve cash distribution continues to favor foreign banks, which now have a record $1.13 trillion in cash, or $9 billion more than all Domestically-chartered banks, at $1.122 trillion. The notable shift of cash reallocation from domestic to foreign banks since QE2 can be seen on the chart below.

To nobody’s surprise, global liquidity (as created by the Fed) continues to be infinitely fungible, and increasingly benefits offshore-based (mainly European) banks.

(And see this earlier report from Zero Hedge).

We’ve repeatedly noted that loose Federal Reserve policy benefits of the super-elite at the expense of Main Street, the U.S. economy or the average American.

It now appears that the policy benefits foreign super-elite even more than the elites in the U.S.

The Federal Reserve – like many parts of the U.S. government – are sucking the prosperity out of America … and shipping it abroad.

This article was posted: Sunday, July 28, 2013 at 4:52 am

http://www.infowars.com/the-federal-reserve-is-bailing-out-foreign-banks-more-than-the-american-people-or-economy/ -

Is there anything to the “Skyscraper Index”?

Would you do better investing in a hedge fund or just buying an S&P500 Index Fund?

Yes We Can: Obama Funding Syrian Rebels Beheading Christians, Using Child Soldiers

Anthony Gucciardi
Infowars.com
July 28, 2013

Remember when al-Qaeda members were the bad guys? Obama is now pushing massive funding for Syrian rebels who have not only been linked to al-Qaeda, but are gruesomely beheading innocent Christians and using 14-year-old child soldiers

And virtually no one seems to even be questioning the Obama administration’s support of these chaotic troops who kill innocent citizens using US-funded arms in a bid to throw Syria’s current system into insanity. What’s perhaps even worse is that Obama has been pushing to continue this funding in a battle with reasonable lawmakers in a move that highlights his continued support of Syrian rebels who massacre innocents in public beheading sessions (that are met with applause and cheers).

It’s even hidden in the mainstream news, yet the media pieces on the subject somehow fail to generate any social media sharing or view counts for the most part. Just look at the August 2012 Reuters admission that Obama secretly went ahead and enabled support for Syrian rebels while bypassing any form of checks or balances. Flash forward to June 2013 with the headline ‘Syrians behead Christians for helping military, as CIA ships in arms’ inThe Washington Times publication, and we’re still letting this happen.

ARMING THE CARNAGE ON RECORD

From the report in The Washington Times:

“A priest and another Christian were beheaded before a cheering crowd by Syrian insurgents who say they aided and abetted the enemy… The reported beheading of the two Christians comes about the same time America has started sending arms to rebel fighters, the Wall Street Journal revealed this week.”

In other words the supposedly ‘Christian’ (a laughable declaration) Obama not only allows for these rebels to kill all Christians who do not convert and pay excessive taxes to the rebel army, but is the driving force behind it. How truly Christian of him. In fact, let’s look at the options innocent Christians are given by the Syrian rebels who wield CIA-given weaponry as according to the missionaries who have been to the Christian communities in Syria:

1. Renounce their Christian faith and convert immediately to Islam (to potentially have your life spared after swearing to the Syrian rebels and Islam).

2. Pay an extremely heavy tax to the Syrian rebels to potentially save your life and be able to secretly continue being a Christian (unless they decided to behead you anyway).

3. Immediately choose death, likely via beheading in the center of town to scare off your friends and family from challenging the Syrian rebel army.

4. Flee for your life and hope the Syrian rebels don’t find you or kill your family. All of your belongings left behind now belong to the Syrian rebels.

As you can see, these are the truly ’humane’ options supported by the United States government. And they’re getting away with this thanks to the general public having no idea what’s going on. In two months, the funding officially runs out — at least for this fiscal year. Amazingly, however, the House and Senate Intelligence Committees both went ahead and approved the continued support of the Syrian rebels. Just like how our elected officials recently sided with the NSA in continuing the gargantuan funding that fuels the agency.

The media is doing a great job on covering a bogus debate (if they cover the subject at all) over whether or not they need more funding to take down Assad, and once again it’s up to independent news outlets to blast this information out.

If you ever had doubts as to the true nature of the sociopaths inside government and the lengths they will go to secure their agenda, you now have proof.

This article was posted: Sunday, July 28, 2013 at 4:50 am

http://www.infowars.com/yes-we-can-obama-funding-syrian-rebels-beheading-christians-using-child-soldiers/ - -

Conjecture: The eventual collapse of the current protracted credit bubble will lead to a vindication of Austrian economics and a repudiation of neoclassicism.

Exclusive: 4 in 5 in US face near-poverty, no work

WASHINGTON (AP) — Four out of 5 U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.

Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor and loss of good-paying manufacturing jobs as reasons for the trend.

The findings come as President Barack Obama tries to renew his administration’s emphasis on the economy, saying in recent speeches that his highest priority is to “rebuild ladders of opportunity” and reverse income inequality.

Hardship is particularly on the rise among whites, based on several measures. Pessimism among that racial group about their families’ economic futures has climbed to the highest point since at least 1987. In the most recent AP-GfK poll, 63 percent of whites called the economy “poor.”

“I think it’s going to get worse,” said Irene Salyers, 52, of Buchanan County, Va., a declining coal region in Appalachia. Married and divorced three times, Salyers now helps run a fruit and vegetable stand with her boyfriend, but it doesn’t generate much income. They live mostly off government disability checks.

“If you do try to go apply for a job, they’re not hiring people, and they’re not paying that much to even go to work,” she said. Children, she said, have “nothing better to do than to get on drugs.”

While racial and ethnic minorities are more likely to live in poverty, race disparities in the poverty rate have narrowed substantially since the 1970s, census data show. Economic insecurity among whites also is more pervasive than is shown in government data, engulfing more than 76 percent of white adults by the time they turn 60, according to a new economic gauge being published next year by the Oxford University Press.

The gauge defines “economic insecurity” as a year or more of periodic joblessness, reliance on government aid such as food stamps or income below 150 percent of the poverty line. Measured across all races, the risk of economic insecurity rises to 79 percent.

“It’s time that America comes to understand that many of the nation’s biggest disparities, from education and life expectancy to poverty, are increasingly due to economic class position,” said William Julius Wilson, a Harvard professor who specializes in race and poverty.

He noted that despite continuing economic difficulties, minorities have more optimism about the future after Obama’s election, while struggling whites do not.

“There is the real possibility that white alienation will increase if steps are not taken to highlight and address inequality on a broad front,” Wilson said.

___

Sometimes termed “the invisible poor” by demographers, lower-income whites are generally dispersed in suburbs as well as small rural towns, where more than 60 percent of the poor are white. Concentrated in Appalachia in the East, they are also numerous in the industrial Midwest and spread across America’s heartland, from Missouri, Arkansas and Oklahoma up through the Great Plains.

More than 19 million whites fall below the poverty line of $23,021 for a family of four, accounting for more than 41 percent of the nation’s destitute, nearly double the number of poor blacks.

Still, while census figures provide an official measure of poverty, they’re only a temporary snapshot. The numbers don’t capture the makeup of those who cycle in and out of poverty at different points in their lives. They may be suburbanites, for example, or the working poor or the laid off.

In 2011 that snapshot showed 12.6 percent of adults in their prime working-age years of 25-60 lived in poverty. But measured in terms of a person’s lifetime risk, a much higher number — 4 in 10 adults — falls into poverty for at least a year of their lives.

The risks of poverty also have been increasing in recent decades, particularly among people ages 35-55, coinciding with widening income inequality. For instance, people ages 35-45 had a 17 percent risk of encountering poverty during the 1969-1989 time period; that risk increased to 23 percent during the 1989-2009 period. For those ages 45-55, the risk of poverty jumped from 11.8 percent to 17.7 percent.

By race, nonwhites still have a higher risk of being economically insecure, at 90 percent. But compared with the official poverty rate, some of the biggest jumps under the newer measure are among whites, with more than 76 percent enduring periods of joblessness, life on welfare or near-poverty.

By 2030, based on the current trend of widening income inequality, close to 85 percent of all working-age adults in the U.S. will experience bouts of economic insecurity.

“Poverty is no longer an issue of ‘them’, it’s an issue of ‘us’,” says Mark Rank, a professor at Washington University in St. Louis who calculated the numbers. “Only when poverty is thought of as a mainstream event, rather than a fringe experience that just affects blacks and Hispanics, can we really begin to build broader support for programs that lift people in need.”

Rank’s analysis is supplemented with figures provided by Tom Hirschl, a professor at Cornell University; John Iceland, a sociology professor at Penn State University; the University of New Hampshire’s Carsey Institute; the Census Bureau; and the Population Reference Bureau.

Among the findings:

—For the first time since 1975, the number of white single-mother households who were living in poverty with children surpassed or equaled black ones in the past decade, spurred by job losses and faster rates of out-of-wedlock births among whites. White single-mother families in poverty stood at nearly 1.5 million in 2011, comparable to the number for blacks. Hispanic single-mother families in poverty trailed at 1.2 million.

—The share of children living in high-poverty neighborhoods — those with poverty rates of 30 percent or more — has increased to 1 in 10, putting them at higher risk of teen pregnancy or dropping out of school. Non-Hispanic whites accounted for 17 percent of the child population in such neighborhoods, up from 13 percent in 2000, even though the overall proportion of white children in the U.S. has been declining.

The share of black children in high-poverty neighborhoods dropped sharply, from 43 percent to 37 percent, while the share of Latino children ticked higher, from 38 to 39 percent.

___

Going back to the 1980s, never have whites been so pessimistic about their futures, according to the General Social Survey, which is conducted by NORC at the University of Chicago. Just 45 percent say their family will have a good chance of improving their economic position based on the way things are in America.

The divide is especially evident among those whites who self-identify as working class: 49 percent say they think their children will do better than them, compared with 67 percent of non-whites who consider themselves working class.

Last November, Obama won the votes of just 36 percent of those noncollege whites, the worst performance of any Democratic nominee among that group since 1984.

Some Democratic analysts have urged renewed efforts to bring working-class whites into the political fold, calling them a potential “decisive swing voter group” if minority and youth turnout level off in future elections.

“They don’t trust big government, but it doesn’t mean they want no government,” says Republican pollster Ed Goeas, who agrees that working-class whites will remain an important electoral group. “They feel that politicians are giving attention to other people and not them.”

Encore
A blog about living in and planning for retirement
Is this the worst time ever to retire?
July 25, 2013, 5:26 PM
By Matthew Heimer

With interest rates stuck at historically low levels for most of the past 5 years, it’s certainly been hard for recent retirees to generate income from their nest eggs. But Chris Kahn, an analyst for the financial-information website Bankrate.com, thinks the trouble won’t stop any time soon for retiring boomers. Thanks to those low yields and the disappearance of corporate pensions, Kahn writes in a piece this week, “baby boomers may be leaving [the workforce] at the worst time in a generation or more.”

Words like “worst” are always eye-catching (hey, I put “worst” in my headline), and after I said a silent prayer of gratitude for the fact that my parents retired in the mid-1990s, I was eager to read Kahn’s article. Much of his discussion focuses on the way that some of the risks of retirement have been shifted away from third parties and on to retirees. The fact that the 401(k) has replaced the pension, of course, means retirees are essentially responsible for generating much more of their own income, and assuming all of the investment risks involved. Out-of-pocket health-care costs have risen, Kahn notes, and Medicare is under continual budget pressure; the housing crash hurt boomers’ wealth, too.

The heart of Kahn’s critique, though, is the fact that both bond yields and dividend yields are so low today. Working with Research Affiliates, an investment-management company, he looks at likely investment outcomes for people who retire with $355,000 in a portfolio with a 60-to-40 ratio of stocks to bonds. Someone who retired in 1980, he notes, would have been able to withdraw 4% a year from such a portfolio and would still have had plenty of savings left 30 years later; someone with that profile now, however, “would run out of money in 25 years.” And good luck backstopping your retirement with an annuity, since, as Kahn explains, a 65-year-old man today would need to invest $15 to earn $1 of guaranteed annual income, compared with a ratio of about $9 to $1 in 1990.

That’s all true, as far as it goes, but the analysis has one significant flaw: It assumes that today’s dividend yields and bond interest rates will stay low, or, at least, that retirees’ portfolio returns will be locked in at today’s rates. One key slide in Kahn’s report notes that Research Affiliates is “using current market rates to estimate future returns.” That’s a rather bold expression of faith in an unchanging financial world. The Bankrate report also seems to assume that if inflation revives, retirees won’t be able to adjust their portfolios to keep up with it.

All that said, low rates do make retirement more challenging, and Kahn’s report has set other finance columnists buzzing about how to make the best of the current situation. Linda Stern of Reuters notes that a 25-year retirement will almost inevitably include cycles of higher yields; she also points out that retirees can “invest like a young person” by owning more stocks, in a bid to capture growth in market’s like today’s where yields are pokey. Drawing on the insights of MarketWatch RetireMentor Michael Kitces, she also discusses ways that retirees can tweak their withdrawal rates when yields are low, the better to extend the lives of their nest eggs.

Last but not least, for those who really do think it’s a crummy time to retire, Fast Company contributing writer Anya Kamenetz writes today about how boomers can extend their working lives without resenting the extra time on the job.

“25-year retirement will almost inevitably include cycles of higher yields; she also points out that retirees can “invest like a young person” by owning more stocks” Take this advice at your own peril. If we are to see cycles of higher yields, then stocks will then have much stiffer competition than they have now. The reason stocks are doing so well right now is because the Fed has orchestrated a negative rate situation. You are losing money big time in money market accounts. I recognized that a couple of years ago and made it a point to get rid of my cash. But, if rates start going up, as they should, you can bet your bottom dollar that I would start moving some money into cash. By the time they start raising rates, it will already be too late to go into the stock market.
…

One-hundred percent of all people born in these precarious times faces certain death.

“Housing” - Is It Really Recovering?

There has been much hoped placed on the “housing recovery story” over the last couple of years as it relates to the economy. With each passing month all eyes have been glued to television screens, and headlines, as the latest estimations of housing starts, completions, new and existing home sales, etc. are trumpeted as a sign of a renewed housing cycle. This is no trivial matter as real estate is seen as a bedrock to economic strength as much as it is the sign of achievement of the “American Dream.”

http://www.streettalklive.com/daily-x-change/1774-housing-is-it-really-recovering.html

7-26…The Home Builders…This isn’t what a “fundamentally driven”, long-term sector recovery is supposed to look like

Yesterday after Horton’s negative earnings surprise and continued plunge in builder stocks I put the following chart together.

That’s because lost in the ‘mega housing recovery’ headlines and daily upgrades of Bank of America, Home Depot and all the other high-flyer, housing “related” names is just how poorly the leading indicating builder stocks are performing on an absolute basis and relative to the S&P 500.

These stocks and their awful performance tell us clearly that something isn’t right in Nirvanaville; that the best is over in the housing sector.

http://mhanson.com/archives/1411

“We need to remember that this isn’t just about cutting budgets.”

Pretty good week “phony scandals” and “false crises”

Lew warns GOP to avoid ‘false crises’ over spending, debt limit

By Peter Schroeder - 07/28/13 09:00 AM ET

Treasury Secretary Jack Lew warned Republicans to avoid “false crises” over a government shutdown and the debt limit in the coming months.

Appearing on ABC’s “This Week with George Stephanopoulos,” Lew continued to hammer the message President Obama has been touting this week, about renewing a focus on boosting the middle class and avoiding self-inflicted wounds on the economy.

“We need to remember that this isn’t just about cutting budgets. Obviously, we need to have our fiscal house in order,” he said. “What it’s about is building the foundation for a strong economy.”

http://thehill.com/blogs/on-the-money/budget/313903-lew-warns-gop-to-avoid-false-crises-over-spending-debt-limit - -

Uh oh BOLO

BOLO (”Be on the lookout”) instructions

Lew Won’t Say Whether Chief Counsel Has Been Asked About IRS Scandal

9:55 AM, Jul 28, 2013 • By DANIEL HALPER

Treasury Secretary Jack Lew refused to say on national TV this morning whether the politically appointed counsel of the IRS, William Wilkins, has been asked about his participation in the federal agency’s scandal:

Treasury Secretary Jack Lew refused to say on national TV this morning whether the politically appointed counsel of the IRS, William Wilkins, has been asked about his participation in the federal agency’s scandal:

“Chris, I am leaving the investigation to the proper people who do investigations,” said Lew. “I don’t think it’s appropriate for me to do the investigation.”

http://www.weeklystandard.com/blogs/lew-wont-say-whether-chief-counsel-has-been-asked-about-irs-scandal_741115.html -

I’m not going to lie: I’m starting to like Florida.

COMEX Gold Inventories: Every Top-200 Hedge fund can buy all the Registered gold At COMEX

http://tinyurl.com/lmgbsx6

ft dot com
Global Market Overview
July 29, 2013 4:18 am
Japanese markets lead Asia decline as yen gains
By Sarah Mishkin in Hong Kong

Monday 04:45 BST. Japanese markets led Asia into the red as the yen showed signs of strengthening and data showed domestic retail sales shrank month on month.

The Nikkei 225 was down 2.6 per cent while the broader Topix was off 2.8 per cent, a fall that all but erased gains made in July.

Retail sales growth in Japan accelerated year on year, rising 1.6 per cent in June following May’s 0.8 per cent gain, giving a “solid boost to GDP growth” for the quarter, said Marcel Thieliant, Japan economist for Capital Economics in a note. But sales fell 0.2 per cent from the previous month, disappointing expectations of a 0.8 per cent increase, he noted.

The yen also strengthened in early trading, gaining 0.3 per cent against the US dollar to Y97.8. That weighed on shares of exporters.

In Hong Kong, the Hang Seng slipped 0.4 per cent with resource and energy stocks on the back foot. PetroChina was down 1.2 per cent.

Balancing that out were gains in technology stocks, including Lenovo, which was up 1 per cent. Analysts say Lenovo is the group benefiting most from the shakeout in the personal computing industry.

Australia’s S&P/ASX 200 was one of the region’s few indices to gain, edging up 0.1 per cent. Transpacific led the rise with a jump of 8.8 per cent after reporting the sale of a business unit.

Monday’s performance followed a softer tone for global markets at the end of last week.

The S&P 500 touched record highs at the start of the week, but then saw its upward momentum falter in the face of a mixed batch of US earnings reports and closed Friday flat for the five-day period.

Investors’ mood has also turned cautious ahead of a Federal Reserve policy meeting and some important US economic figures this week.

Most market participants expect the Federal Reserve to begin scaling back, or “tapering”, its quantitative easing programme in September.

But there is a growing acceptance that any rise in interest rates is still a long way off, particularly given recent emphasis by Ben Bernanke, Fed chairman, that policy moves remain data-dependent.
…