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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Let’s get some local reports on the state of the changing colors of the fall foliage.
Why are they called the Toronto Maple Leafs and not the Toronto Maple Leaves?
Ask some of our self appointed Linguists and Architecture pros. You know…. the same ones who don’t know the difference between a roof and rooves.
A tax auditor once explained to me why they call a rose a rose when trying to explain the lunacy of varying tax scenarios at different points in time.
Because we can.
Why are they called the Toronto Maple Leafs and not the Toronto Maple Leaves?
Because they speak Canadian?
Eh
Ha! There is only one Leaf. Many who wear it.
What will the Yellen regime bring?
More of the same. The continued erosion of the American middle class. The continued enrichment of the 1% and especially the 0.1%. More stagflation.
Moar printing.
Continued dollar destruction.
Negative interest rates.
Government takeover of 401ks.
National Guard parked outside toilet paper factories.
Yellen will bring more hope that the Fed can do what it cannot do. The Fed can lend, but it cannot lend us into prosperity.
One of Yellen’s more famous quotes is, “For my own part, I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system… I didn’t see any of that coming until it happened.”
I glean a couple of things out of this. First, top leaders are not necessarily deep thinkers, but rather decision makers - people “willing to take responsibility”, something that gives many vertigo.
Second, at least there is a belated admission from a top official that there just might be a danger with securitization and conflicts of interest with the credit ratings agencies. Blindingly obvious to most of us, but something to which the financial orthodoxy has blinded itself, because these things are so lucrative for themselves and their associates.
On the other hand, she seems to very much believe the “Fed Conceit” that money injections into the economy and asset buying can do much to raise employment. It’s a warm fuzzy belief, but ignores the role of actual wealth creation in employment. And standard of living.
If all it took was manipulation of the money supply to reach full employment and a high standard of living, Haiti could do it while producing little or nothing of value and having no useful social institutions.
So, she believes in the “Fed Conceit”, while at least theoretically acknowledging the risks of the “privatize the profits, socialize the losses” economic model.
Net result: Bernanke II.
From the first URL: “The truth is,” she once told an interviewer about the family’s focus, “if you spent an evening at our house you would probably hear economics discussed over the dinner table.”
Truth is, we never discuss losses because we never lose.
What do slumping gold prices portend?
Related topic: Is a Fed taper really still on the table, or is the talk just more of an extended QE3 head fake?
The week is ending on a very happy note for U.S. stock owners. My condolences to gold bugs; though asset markets generally appear stable for now, the gold market is in a sheer state of panic.
What gives?
Oct. 11, 2013, 12:13 p.m. EDT
Gold trading briefly halted early Friday
NEW YORK (MarketWatch) — December gold GCZ3 -2.06% stopped trading on the Comex for 10 seconds on Friday morning after a big price move triggered a preset halt. The 10-second stoppage occurred at 8:42 a.m. Eastern time, said a spokeswoman for CME Group Inc. CME +0.23% , which owns the Comex. She said all trades will stand, adding that technology and markets functioned properly.
…
Between about 8:42 a.m. and 8:43 a.m., December gold lost nearly $15, according to FactSet data. The contract was last down $29, or 2.2%, to $1,267.90 an ounce.
tech was a bubble
Housing was a bubble
Gold was a bubble
next ?
Fed still looks strong. No telling when that one will pop.
I think our present Economy depends on more younger workers to tax and fewer retired people that get payouts from this tax.
The difference is profit for the government and FIRE industry.
Its ending now just like it did in Japan. Nothing will be the same.
Our grandparents would recognize it.
Are conforming loan limits destined to remain on a permanently high plateau, pricing out young American families from the housing market forever?
On what planet would this giveaway to old rich white guys be considered fair?
ft dot com
5:10am COMPANIES
Battle looms over mortgage guarantee threshold
Lobby group calls for less government involvement in mortgage loans
- Shutdown threat to housing recovery
- Vampire properties haunt US housing market
Will the government shutdown have any effect on the red hot DC housing market?
Silly, they are guaranteed the back pay. Actual cuts, that is what will shake the center, if/when that happens.
Just got a call from my mortgage company. Those kind-hearted souls want to lower my interest rate.
Mind you, they initiated the call, not me. And I doubt that they’d lower that rate for free.
Lady wanted my e-mail address, which I wouldn’t give out. Told her to send me something in the postal mail.
Something tells me that their refi business is way down. So, they’re beating the bushes by phone.
My ongoing concern is the fragility of the “recovery”.
Yes, I do believe that there is a faint recovery (less than a real 1% annually over the last five years). (GDP up 12% but take away inflation)
But gov receipts are tracking at about 2.5T and outlays at 3.5+ with interest payments equal to less than half the accrued debt of six years ago +.
This scene supports further modernization and profit enhancement which will reduce employee counts even more with attendant less demand.
Industry should be forced to repatriate their profits at full Repat tax rates with investment tax credits for every new job created and these ITC could be used to reduce only their repatriation taxes. (ITC rebated monthly)
Additional demand can only come from new jobs and the USA has a budget equal to a full year’s income sitting off their shores.
Personally, I think the Fed has been a hindrance rather than a help to employees.
They have assisted with the cash to modernize factories; they have reduced the incomes of every retiree, every scholarship fund, every sinking fund, every pension - every form of saving which has given strength to every faulting economy for the last two hundred years.
No doubt the Fed has helped the banks - who remain leveraged at 30 but pontificate about how easy they could comply with Basel at 17 if they wanted to !
And the gov debt has been easier too, but if it were even doubled it still could be managed.
I see the gov as having only one trump card left - foreign held profits. Wisely pursued they could create the largest stimulus package ever before used.
Best of all - in partnership with the people who are the only ones currently profitable.
We should be able to accelerate growth before equities get educated.
I bullish on gold. I’m bullish in gold stocks
Anyone feel the same breeze blowing?
Yes. I like mining stocks and ignore the GLD fund. I’m skeptical of that type. I prefer physical possession only.
50% of my new money outside my 401k, IRA, and non-deferred stock fund investing is going into precious metals and mining stocks. The other 50% into cash.
Gold is a store of wealth for sure. It is cheap in the long term view.
We are in the grist mill of a great deflation though and gargantuan leveraged investments have yet to unwind.
“We are in the grist mill of a great deflation though and gargantuan leveraged investments have yet to unwind.”
And Europe’s banks are leveraged way beyond ours.
Every dip is a buying opportunity…except perhaps for the dip a while back from $1900/oz.
I wish Aladinsane was here to make a comment. I used to really value his comments. In my opinion, gold cannot fall below 1100 dollars an ounce or there would be a huge shortage from lack of mining, but possible world mining needs to slow down so who knows what a market manipulator could do temporarily but their is an intrinsic value in a crumbling fiat world.
Aladinsane moved to the mountains of Mexico and is being tended to by Monks. I bet he feels pretty good about giving all his gold to charity, since it is already worth $64,000 an ounce in his mind.
You are yearning to be his pupil?
Luv it! Yes!
I lift a geoduck in solemn salute to this blog. and ask David Cote’s blessing.
Just purchased two different gold stocks that are both below 5 dollars trading. Is that risky? I feel with a two year period of patience, you couldn’t possibly lose. but if the market gets further manipulated I’m all in. At that stage your below production cost at 900.
“but if the market gets further manipulated I’m all in.”
What form of economic manipulation hasn’t been tried?
“I wish Aladinsane was here to make a comment.”
Don’t be so sure he isn’t.
“… huge shortage from lack of mining.”
Keep in mind that gold is not created nor is it destroyed, it is just extracted from a hole in the ground and then it most likely ends up being stored somewhere - stored with a lot of other gold that has been extracted from the ground over the centuries.
If a true shortgage of gold was to occur then that would suggest that gold was being consumed in some manner or other, such as oil or soybeans are consumed in some manner or other. But unlike oil or soybeans gold is not consumed, it’s recycled. So, looking at from this point of view, the argument that gold will experience a “huge shortage from lack of mining” loses its impact.
IMHO.
Gold is only one factore in a formula balanceado
no se lo olvide el petroleo donde hay el copa mundial.
So long as people are buying cars and houses, why does consumer confidence even matter?
Washington drives U.S. consumer sentiment to nine-month low
By Richard Leong
NEW YORK | Fri Oct 11, 2013 12:13pm EDT
A shopper walks down an aisle in a newly opened Walmart Neighborhood Market in Chicago in this September 21, 2011 file photo.
REUTERS/Jim Young/Files
(Reuters) - U.S. consumer sentiment deteriorated in October to its weakest in nine months as the first federal government shutdown in 17 years undermined Americans’ outlook on the economy, a survey released on Friday showed.
The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment fell to 75.2 in October, down from 77.5 in September. This was the lowest figure since January.
The early October reading fell short of the 76.0 forecast by economists recently polled by Reuters.
Prolonging the budget impasse that caused the government shutdown, which has kept hundreds of thousands of federal employees and contractors out of work, would exact a toll on consumer spending and the overall economy.
“The timing of the fiscal debacle is very bad for retailers going into the year-end holiday season,” said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York.
Economists had forecast a government shutdown would subtract at least 0.1 percentage point a week from the gross domestic product. They said the damage would intensify if the shutdown lasts more than two weeks.
While the sentiment gauge declined for a third straight month, the size of the decrease was relatively small, as worries about a protracted shutdown were mitigated by some optimism about income and inflation, survey director Richard Curtin said.
“Consumer confidence posted a surprisingly small decline in early October despite widespread awareness of the government shutdown,” Curtin said in a statement.
“The muted response may be due to consumers giving progressively less credence to the economic scare tactics that have framed the debates over the past few years,” he said.
The survey showed a modest pickup in household plans to buy cars and homes.
…
Is unconditional surrender the only option?
ft dot com
Last updated: October 11, 2013 11:42 pm
Obama sets stage for frantic budget talks
By Richard McGregor and James Politi in Washington
The White House has rebuffed initial Republican proposals to resolve the budget crisis, setting the stage for frantic negotiations to re-open the government and beat next week’s deadline to avoid the threat of sovereign default.
A sharp public backlash against the logjam in Washington had pushed Republicans to moderate their hardline stance on the budget, raising hopes of a deal with the White House and Democrats.
However, Jay Carney, the White House spokesman, said Barack Obama opposed a Republican plan for a six-week extension of the debt ceiling, and linking that issue to the budget negotiations that lie behind the partial government shutdown.
Senior Republicans were shaken by an NBC/Wall Street Journal poll showing the lowest ratings for the party since the survey started in 1989, adding urgency to their efforts to reach a settlement.
Eleven days into a partial government shutdown, and days before the country hits its statutory borrowing limit, Republican demands that the president cut funding for or delay his signature healthcare law now appear to be off the table.
The changes being considered include trimming health benefits for wealthier elderly Americans, cutting a medical devices tax and easing the across-the-board cuts in spending forced on defence and other departments in a previous budget accord.
However, the shape of any agreement remains unclear, with the White House and both parties in the Senate and the House of Representatives clustering around rival plans.
House Republicans kicked off the talks with the White House on Thursday with the proposal for a six-week extension of the debt ceiling, and Mr Obama met Senate Republicans on Friday. He spoke later with John Boehner, the Republican House speaker, and – according to Mr Boehner – they agreed they should “keep talking”.
Ron Johnson, a Republican senator from Wisconsin, said the meeting with Mr Obama went well, but it was still not clear that a deal could be reached. “The power is in the president’s hands. He continues to demand total capitulation,” he said.
…
Not everyone seems fully convinced that a debt default is out of the picture.
JP Morgan Chase sells short-term Treasury holdings
Ken Sweet, AP Business Writer 6:52 p.m. EDT October 10, 2013
Banking giant doesn’t want to be holding government bonds if the U.S. defaults.
Story Highlights
- JPMorgan Chase: None of its money market funds hold U.S. debt maturing or with payments due between Oct. 16 and Nov. 6
- A day earlier, Fidelity Investments, said it was selling off its government debt holdings maturing in the same period
- Treasury Secretary Jacob Lew warned Congress Thursday of dangers of waiting too long to address debt limit
NEW YORK (AP) — JPMorgan Chase says it has sold all of its exposure to short-term U.S. government debt out of its money market funds, following a similar move by other money market mutual fund managers.
The news comes a day after Fidelity Investments, the nation’s largest money manager, said it was selling all government debt it held that was coming due in late October or early November, the period in which the U.S. would default on its debt if Congress cannot negotiate new debt ceiling limit before then.
In a statement Thursday, JPMorgan said its money market funds no longer held any U.S. Treasuries that mature or have payments scheduled between Oct. 16 and Nov. 6. The bank says it has also increased its liquidity position in the funds.
While JPMorgan Chase & Co. says it believes the probability of a U.S. government default is low, it’s taking precautionary measures to protect investors.
On Thursday, Treasury Secretary Jacob Lew chided Congress in a hearing before the Senate Finance Committee for refusing to raise the nation’s debt ceiling, saying that waiting until the last minute to avoid default could prove “very dangerous.”
…
October 11, 2013
See how Washington’s bickering hit markets
Week in Charts: Claims surge in U.S., home prices fall in Europe
Those who doubt whether Washington’s drawn-out spending debate has hit markets should take a look at this chart showing the yield on 1 Month Treasury Bills (1_MONTH +5.91%). As MarketWatch reporter Ben Eisen writes, these bills “have become one of the biggest victims in the debt-ceiling standoff engulfing Washington,” as yields recently jumped as high as 0.522%.
Yields have been rising as the U.S. approaches its debt ceiling, which will be reached next week. A Thursday evening meeting between House Republican leaders and President Barack Obama ended without a deal to re-open the government or raise the U.S. debt limit, though both sides agreed to keep talking. International economic experts say it would be best for the U.S. to agree to a new debt limit that pushes out the next deadline for longer than just a few weeks.
—Ruth Mantell
The big boyz seem to not be willing to take any chances on a possible breakdown of negotiations that leads to default.
Stocks = dumb money
Bonds = smart money
Oct. 11, 2013, 12:39 p.m. EDT
BlackRock sells T-bills in debt ceiling crosshairs
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By Ben Eisen
NEW YORK (MarketWatch) — BlackRock said Friday it has cut exposure to all short-term Treasury bills in its money-market funds that could be impacted by a Congressional delay in raising the debt ceiling. That includes bills maturing in late October and early November, whose yields have jumped in recent days, said a BlackRock spokesperson. BlackRock joins J.P. Morgan Asset Management, Fidelity Investments, and others in taking similar actions. “Over the course of several weeks, we have actively managed our 2a-7 money market funds with an eye towards the possibility that the government could reach its borrowing authority after October 17,” the firm said in a statement to MarketWatch. BlackRock also said it has not seen an unusual amount of redemptions from its funds during the debt ceiling impasse.