The Housing Bubble

sed auctor non tam beatus

It’s now in the denial phase of collapse.

Wow, did I just read a post singing the praises Fed Chair Yellen and the other Fed Chiefs for being wise economic stewards??

Several spy agencies likely have formidable bit-coin accounts.

Agree.

LOL, it’s been a carnival for the last few years! The party is almost over.

For those who don’t know what Carnival is, it’s what we gringos call Mardi Gras.

Alot to learn.

David Crosby is my favorite CSNYer but I like each of them. I wish I had the courage of any of them–note how they never sold out like the vast majority of icons of that time. I love many of the non-Y tunes. Suite Judy Blue Eyes is obvious but it would be a long list… Carry on, Wooden Ships, Find the Cost of Freedom, Our House, etc. Favorite song overall is Ohio; obviously Neil is on that. And obviously neil was there @ Woodstock.

Lola says it is fun to stay on the YMCA

LOL “Lola” and stay “on” the YMCA. And “homo-ho’s” too?

You have a lot going on in that little head of yours don’t you?

So you’re really going to like this imagery. Grab a beer.
Ok, Sunday, I left my paid off house (that’s almost quadrupled in value) (In Rio dude!) on a bike and passed this preCarnival street party with tanned bikini clad girls doing the samba with their firm beach bodies shakin’ it, and one in high heels smiled at me and had a tiny bead of sweat dripping down her tanned skin towards her… (Never mind, you don’t care)

OK, what you’d be interested in hearing is that as I passed her by, I saw 2 obviously guys, dressed in girls underwear wearing makeup and blond wigs (guys do that all the time during Carnival in Rio) And I thought it was funny but boring because I see it all the time during Carnival, but I swear that the thought that came to my mind was that Adan would like to see that now, and I laughed and thought “Wouldn’t Albuquerquedan love to see that?” I mean it’s in your head and stuff.

You would have loved it. (Not that there’s anything wrong with that)

Think about it.

I am in your head and I love using your own Saul Alinsky tactics against you.

The 1870’s called and they want their memes back.

Southern Democrats become Republicans.

Liberal Republicans in the North who supported abolition and Reconstruction/Civil Rights are now ______ (you fill in the blank).

Liberal Republicans in the North who supported abolition and Reconstruction/Civil Rights are now ____Dead__ (you fill in the blank).

Southern Democrats become Republicans.

Give up. These people don’t know history or their country. They wave the flag representing a reality that never was.

The Republican party has always had a strong business and a strong libertarian wing. Ending slavery and ending Jim Crow was supported by both since it helps the free market to have free access to a labor supply and it is certainly libertarian. Now, if you start mandating affirmative action and not merit hiring and you raise taxes and regulation, don’t expect the Republican party to go alone.

On the other hand the Democratic party has always been the party that wants to redistribute wealth and once blacks could vote in the South due to large measure because of Republicans both black and white, the Democrats that had obtained office by promising such a redistribution to poor whites had no problem switching over to making such promises to blacks. Now, the whites, even middle class whites, had to worry about their money be taking for the poor blacks.

That is the history and why this switch occurred. It is logically consistent and it is not because the parties switched their roles just the facts changed.

the Democratic party has always been the party that wants to redistribute wealth

What a simplistic and/or ignorant statement.

The greatest wealth distribution in our lifetimes was America embracing Reagan’s Trickle-Down economics. It redistributed massive amounts of wealth and opportunity from the middle-class to the rich. Now this is fact. We lived it.

So let me properly rephrase your vapid statement:

The Republican party’s concept of Trickle-Down economics has been the factor that has most re-distributed wealth from one class to another in our lifetimes.

The greatest wealth distribution in our lifetimes was America embracing Reagan’s Trickle-Down economics

Real earnings went up for the working class under Reagan. That is why he won re-election with just under 60% of the vote not 52% like Obama. Under Obama working person’s wages have not gone up and the recovery has been eaten up by the 1% but don’t let the facts get in your way, you never do.

Real earnings went up for the working class under Reagan.

There it is again. Your penchant to not see the big picture. You only see snapshots in time, not the real deal. You do this with every subject. It’s chronic with you. It was not just Reagan. It’s 34 years of following a failed economic concept - Trickle-Down. Get it? 34 years. Can you think that deeply or are you still thinking about those guys in women’s underwear? (Not there’s anything wrong with that)

Read my statement.

The Republican party’s concept of Trickle-Down economics has been the factor that has most re-distributed wealth from one class to another in our lifetimes.

Remember minorities - democrats are your friends.

————–

In Mississippi, 72% of the Babies Aborted Are Black
cns news | Michael W. Chapman

Although whites outnumber blacks in Mississippi by nearly 2-to-1, 71.67% of the babies aborted in Mississippi are black, while 26.6% are white.

Based on data published by the Centers for Disease Control and Prevention (CDC), 39,052 black babies were killed by abortions in Mississippi between 1995 and 2010. During that same time period, 14,529 white babies were aborted in the Magnolia State.

It’s 34 years of following a failed economic concept - Trickle-Down.

comrade, since you seem to be an expert in ‘trickle down’, would you tell us all how it works? please don’t just give us the other name for it and run to wiki, because that only proves you don’t know how it works.

Although whites outnumber blacks in Mississippi by nearly 2-to-1, 71.67% of the babies aborted in Mississippi are black, while 26.6% are white.

So why do so many Republicans so vehemently want to outlaw abortion? Because it’s so much fun to disenfranchise black voters? It makes no sense at all.

So why do so many Republicans so vehemently want to outlaw abortion? Because it’s so much fun to disenfranchise black voters? It makes no sense at all.

Making EVERYONE show the same ID you need to show for buying cigarettes, buying alcohol, buying a car, registering a car, getting on a plane, cashing a check, getting welfare, jury duty, getting into a Federal building, etc. in order to vote = disenfranchise black voters

Aborting more black babies than born alive (NYS) or aborting black babies at rates 4x that of white (MS) = empowering and creating opportunities for the black community

>please don’t just give us the other name for it and run to wiki, because that only proves you don’t know how it works.

lol TJ is still pissed that I hold him to the common usage of a phrase, and not some arbitrary meaning in his head of it, since i cited wikipedia as the common definition for “free trade”…

however TJ “trickle down” is getting the spin factor these days too, and people are trying to label it as “redistribution upwards”. Once again, meanings are going to change and you have to stop using spin words and phrases. “redistribution” has historically meant government taking from one group via taxes and handing out to another group.. All via direct action. Even the wikipedia article is still biased in that direction:http://en.wikipedia.org/wiki/Redistribution_%28economics%29

However, lately people are using the term to refer to 2 things : 1 the low capital gains rates in comparison to middle class income tax rates (ok usage imho) and
2) corporate earnings from sale of goods concentrating wealth into hands of the owners (not ok usage imho)

However, there it is, so when you say “redistribution” you can’t just count on people not taking both meanings into consideration. This means you have to clarify your usage of the term if you are explicitly including or excluding some factor in its colloquial usage. Just like with free trade… Again, it’s bullshit because it becomes another “spin phrase” to pitch political battles over, but that doesn’t mean you get a free pass to ignore common usage.

TJ is still pissed that I hold him to the common usage of a phrase

comrade’s history of running to dictionaries has a long history before yesterday. you aren’t as important as you think you are.

since i cited wikipedia as the common definition for “free trade”

which proves you know nothing about it.

however TJ “trickle down” is getting the spin factor these days too, and people are trying to label it as “redistribution upwards”.

that’s what my comrade is doing.

However, there it is, so when you say “redistribution” you can’t just count on people not taking both meanings into consideration.

i wasn’t talking about ‘redistribution’. you quoted me in your response. who were you answering? my comrade or me?

but that doesn’t mean you get a free pass to ignore common usage.

i don’t ignore it, i go beyond it.

i don’t give a rat’s ass how you define words.

>i don’t give a rat’s ass how you define words.

maybe you would have more success in your communications if you did… otherwise your sentences might as well be :

grblldurfhump dongblather rugnarfotin!

typical lowbrow response.

So, 2b, what you are saying is that allowing abortion, which is mainly used by blacks, empowers black people, which is something the far right opposes. Therefore outlawing abortion keeps black people down. Mission accomplished.

Got it.

It don’t get more f-ed up than that.

TJ makes 2Banana and JingleMale look like Einstein and Oppenheimer.

yeah, you’re a real brainiac.

You are paying for current retirees. That’s how SS is set up.

Which makes it very much like a Ponzi scheme instead of a properly vested retirement account.

>You are paying for current retirees. That’s how SS is set up.

This is the best lie ever told… SS taxes are “supposed to” go to the SS fund. The fund is supposed to have reserves to weather fluctuations, and the fund is supposed to pay for current retirees..

If it was just a direct money in-money out to retirees, i might even get behind SS… However, the second you let the feds have control over “the fund” get get the mess we have today… all the reserves have been “borrowed” (spent on useless crap and war). The cake is a lie…

40 years ago we were so sure SS would fold before we got there. I do hope I can stay amazed and wrong for another couple of decades!

“all the reserves have been “borrowed””

Should the government have invested Social Security funds in the stock market or real estate? Or would you have preferred that they put them under a mattress?

Yes so if we trade the incompetent (Obama) for the incontinent(Hillary) expect more of the NSA, fiat currency, open borders and globalization.

If Romney was in the White House we would have eliminated the PATRIOT Act and dismantled the NSA by now.

“Romney, BAH!” — Ben Jones

Don’t drag me into this.

“The NSA has the full support of Republican and Democratic leaders.”

The NSA has the dirt on Republican and Democratic leaders.

nice looking house.

I just noticed that RAL “pinned” this just a minute ago on his Pinterest page.

So it is just all the other Drudge readers who are mouth breathing, knuckle dragging, Drudge Report link clickers, right?

More from the testimony, in another part (not included here) he talks about times when the co2 in the atmosphere was ten times what it is now:

Today we remain locked in what is essentially still the Pleistocene Ice Age, with an average global temperature of 14.5°C. This compares with a low of about 12°C during the periods of maximum glaciation in this Ice Age to an average of 22°C during the Greenhouse Ages, which occurred over longer time periods prior to the most recent Ice Age. During the Greenhouse Ages, there was no ice on either pole and all the land was tropical and sub-tropical, from pole to pole. As recently as 5 million years ago the Canadian Arctic islands were completely forested. Today, we live in an unusually cold period in the history of life on earth and there is no reason to believe that a warmer climate would be anything but beneficial for humans and the majority of other species. There is ample reason to believe that a sharp cooling of the climate would bring disastrous results for human civilization.

Poor trash Lola’s case.

i like to hear what Dan has to say. and you’re trying your best to censor him. just like you did with SF bayarea. like most socialists, you’re trash.

Thanks I have been busy all day. He actually wants to silence all voices opposed to Obama. He tries to use classic Saul Alinsky tactics of subjecting them to ridicule. That is why it is so funny that HA has subjected him to ridicule by creating his Brazilian tranny persona. I am happy to pay my part helping him. Lola is actually the only person on this board that I believe is a totally made up persona, except for the ones like Amy Hoax who appeared to be creations just to amuse.

Lola could shove it up everyone’s keister by just posting a faceless picture of her giving the middle finger over a Brazilian ocean view with a sign saying “HBB This”. That she has not done so, even though she seems to spend countless hours combing the internet for old articles to post, shows what a fraud she is.

And there it is. It really is that simple.

Lola is no less a fraud that JingleFraud.

Jingle Funny! I gave Ben $500 when Rio agreed not to talk to HA! That was HA-larious. Everybody wins!

“I’m a general contractor fraud”

yup.

Wow…where to begin…

He sounds like the Glen Beck version of a financial pundit…kernels of truth leaping from conclusion to conclusion amidst a generally disjointed rant…I guess I’ll start at the beginning.

The very first thing he says is that he was surprised by the housing numbers, but rather than picking apart those numbers, goes right into a rant on the Fed, misallocation of resources, etc.

First he comments that mortgage applications at a 20-year low as an indicator of housing weakness…without making any mention of all-cash buyers squeezing out more traditional buyers…42% of buyers were all cash in December 2013…up from 18% in December 2012.

Are the high numbers of cash buyers an indication of the Fed propping up the housing market? I would submit that it’s not a direct propping up…the Fed is not creating a massive number of new borrowers by making housing more affordable vis-a-vis lower interest rates. The Fed is propping up housing by pushing capital into housing…but apparently NOT by making more people borrow.

(The cash buyers COULD be pushing prices way out of whack, IF you believe the cash buyers are not buying based on rental yields, but speculation…I don’t believe this is the case.)

He then goes on to state that despite these new homes numbers, he is saying that the Fed housing stimulus is obviously ending since people aren’t applying for mortgages.

He then asks how is the US economy better off if we simply sell homes to one another. And he’s right, we aren’t better off by simply selling homes to one another. But this has nothing to do with new homes.

(I’ll ignore his furniture rant…he might as well be ranting at the plastic toys that we import.)

He then equates having homeless people to needing new housing, and then simply declares a glut of single family homes.

My favorite quote:

“If we got so many single family homes that first time homebuying is at a record low and that hedge funds are buying the homes because actual families can’t afford them, what is that telling you… we need lower home prices, we don’t need to build more homes. We need to let the prices of the homes we have already built to come down.”

Um…OK…hmmm…I would expect that a glut of housing and low interest rates would result in 1) a hell of a lot of buying with mortgages and/or 2) stagnant home prices, and 3) DEFINITELY relatively high vacancy rates.

But instead we have 20-year low in mortgage applications, rising home prices, and falling vacancy rates…a very strange effect if there is a glut of housing.

I’ll stop here just a second to draw a comparison between the 2005-2007 bubble and today.

During the bubble, we were coming off of a very stimulative Fed (rates were kept too low for too long). The housing bubble was marked by people borrowing TONS of money on crazy terms (Option ARMs, NINJA loans, etc.) buying huge number of homes…many of which were empty. The only thing that allowed these homes to be purchased at higher and higher prices were the low effective interest rates (teaser rates, etc.) to the borrowers. There were not many cash buyers…not NEARLY the number of cash buyers as today. The whole thing was built upon a shoddy credit standards, manic buying using debt, etc.

THAT is what a debt fueled housing boom despite a housing glut looks like.
1. Tons of borrowing and manic buying, but at the same time:
2. Having a rental vacancy rate of over 10% in 2005, and a homeowner vacancy rate rising up to nearly 3% by the end of 2006 (2.7% in Q4 2006 and 2.8% in Q1 2007)

Fast forward to today: By his own admission, individuals aren’t borrowing to buy homes (a 20-year low in home applications), so whatever is happening with home prices isn’t happening because people are borrowing ever-increasing amounts of money at ridiculously low rates. There are lots of cash buyers (perhaps pushed into housing by the Fed, but it’s not because of borrowing more money that they can’t afford to repay).

If there is a glut of housing amid very low numbers of loan applications despite ultra-low interest rates…how in the hell are home prices going up? Hedge funds? Is that the answer? They have bought what, 200k homes over a several year period out of how many home sales, 5MM per year? Foreign buyers? Not enough of them either. If there was a glut of housing, these type of purchasers wouldn’t be enough to soak up the glut.

He doesn’t even mention vacancy rates, which IMHO is the real measure of whether there is a glut or not. NOT the number of homeless people, which has more to do with people not having jobs, than not having enough housing.

Per the Census, the rental vacancy rates have fallen from over 10% during and just after the peak of the bubble to 8.2% in the most recent reading. The AVERAGE from 1956 onward was 7.4%, with the average from 1980-present at 8.0%. Homeowner vacancy rates are now at 2.1% (Q4 2013), down from nearly 3% at the peak. The average from 1956 onward was 1.6%, with the 1980-present number at 1.8%.

Do we still have a “glut” of excess housing? If you say yes, by what measure is there a “glut”? Is there a “glut” in some markets? Definitely. Vacancy rates in some markets are still way too high, but it’s not universal, and certainly not nationwide.

He talks about the surge in NY/NJ foreclosures without recognizing the difference between their insane foreclosure process as compared to other states (and the national numbers).

He then claims that the effect of the Fed’s stimulus is wearing off.

And then he is trying to figure out who is buying the homes…and guessing that it’s the speculators, and tries to discount the data, and expects housing to have a long, long way down.

Here is how I see things:

1. You don’t need to get back to the same number of jobs in the economy as before the crash in order to have roughly the same demand for housing. This is a key point that I’ve never seen anyone discuss. Why is this the case? Think of a family that needed two incomes to buy a house in 2005, and they borrowed too much and did just that. Then one person lost their job in 2008…what happened next? The family didn’t become homeless…they lost the house to foreclosure, and rented a place (either equivalent or smaller). Net increase in vacant housing? 0. Net increase in number of jobs? -1. When that lost job comes back, does it go to the person in that household? Or the new college grad (probably some of both)?

2. We have had years of the musical chair turmoil of families “right sizing” their living situation relative to their new employment situations. HOWEVER, at the same time, we have added 13 million people to the US from 2007 to 2012, but added 4.6 million housing units from 2007-2012. This has contributed to the falling vacancy rates…more people, not enough additional housing.

3. Eventually new housing development will mean revert, and we will be back to about 1.5-1.6MM new housing units per year. We are in the process of mean reverting now simply based on population growth, the need to house them, AND the need to replace obsolete structures (which are included in the 1.5-1.6MM number).

I’m afraid that Schiff is going to continue to be surprised at the number of new home sales, even as the Fed dials back the stimulus (he seems to think that Yellen will soon need to reverse course). I won’t be surprised, nor do I think Yellen will be reversing course anytime soon. On the contrary, I think by the end of the year they will be discussing a more accelerated pace of increasing rates.

well, you sure didn’t tell me “he stinks” or “he was great!”

i’m going to defend schiff a little, but i want you to remember i’ve been critical of him right here on this blog. he gets most things correct except when it comes to currencies. when his show first started i called in and told him that 20 dollar gold eagles were fiat currency. he said “no it isn’t!!” and moved on to a commercial. but little hints now tell me that he might not disagree with me anymore.

oh, and remember when you and azdude were asking about the difference between money and currency? you had it pretty close. i just corrected you on ‘legal authority’ vs ‘trusted authority’. after all, zimbabwe had legal authority, and look what happened to them.

still, neither of you went after true understanding of money or currency. just the difference between them. which doesn’t tell you much. if the difference between two numbers is 7, does that tell you what the other two numbers are? of course not. the 7 is just a piece of the puzzle. a guide.

when i tell you that i’m the only one i know of who understands currency this well, i’m seen as arrogant. but what am i supposed to do? there’s no one i can point to to tell you. not schiff, jim rogers, faber, tamney or anyone else. and especially not guys like krugman. i’ve read their articles, listened to them, and i can tell that they don’t know.

i could point you to a website that helps to understand money better, but in the end, they offer no definition. and they don’t have a clue as to what currency is. don’t you imagine that you would be able to make much better investment decisions if you thoroughly understood money and currency? knowing the difference isn’t enough.

anyway, that’s enough for that tangent. (most people won’t be reading this page anyway, because it’s a day old now.)

in defense of schiff, remember that he hadn’t had time to think any of this through because he just got the news as he was going on the air. admittedly, his off the cuff remarks were a little disjointed, but i can understand that.

your post is pretty long so i’m not going to answer you line by line. i’ll pick a few things to respond to and hopefully it will cover most of what you said..

then equates having homeless people to needing new housing, and then simply declares a glut of single family homes.

he advocates against building more new homes. he said we need lower house prices so more of the poorer people can afford the homes that are already here.

And he’s right, we aren’t better off by simply selling homes to one another. But this has nothing to do with new homes.

again, he wasn’t for building more homes. he wants the housing we already have to be used.

I would expect that a glut of housing and low interest rates would result in 1) a hell of a lot of buying with mortgages and/or

are you also considering the weakening economy?

2) stagnant home prices,

depends on the ratio of glut to rates, and the condition of the economy.

3) DEFINITELY relatively high vacancy rates.

lower interest rates should help lower vacancy rates.

The whole [2005-2007] thing was built upon a shoddy credit standards, manic buying using debt, etc.

yes, including falling rates and incentivized tax breaks. and don’t forget massive fraud.

If there was a glut of housing, these type of purchasers wouldn’t be enough to soak up the glut.

but they might be pushing up the comps.

When that lost job comes back, does it go to the person in that household? Or the new college grad (probably some of both)?

it is coming back in part time and lower wage jobs. two part time jobs by one person is being counted as two people holding one job each. lower wages, less work means less houses being sold.

And then he is trying to figure out who is buying the homes…and guessing that it’s the speculators, and tries to discount the data, and expects housing to have a long, long way down.

he admits to guessing, true. but at the end of the day, housing still has to fall to at least equilibrium or lower. whether in real or nominal dollars remains to be seen.

I’m afraid that Schiff is going to continue to be surprised at the number of new home sales

my guess is that this is just a blip too. i believe the crash will be hard.

(he seems to think that Yellen will soon need to reverse course)

i think he’s right there too. although i don’t know if it will be as soon as he thinks it will.

On the contrary, I think by the end of the year they will be discussing a more accelerated pace of increasing rates.

they always ‘discuss’ raising rates. but wait until they believe that the economy is tanking. they’ll be in a panic, but they’ll still try to keep a lid on rates. none of the dingbats in charge knows how an economy works. and that is going to hurt all of us.

reading your post, the one thing i don’t think you’re giving enough consideration to, is the state of the economy. we are in much worse shape than the PTB are telling us. and i believe that they know it too. they just think they can turn it around with time. but they can’t. not if they continue with their economy destroying policies.

Let’s see if you respond, given the time and days that have passed.

I have some (albeit very minor) visibility into tenant demand for commercial space in a few markets (we own some different commercial properties in various markets in the west). There are a couple of trends that I’m seeing grow in strength:

1. More tenant activity generally and vacancies falling…more businesses deciding to sign leases, more businesses expanding (moving from an x,000 square foot space into an (x+y),000 square foot space.
2. For particular properties, during the worst of the downturn, despite rents being ultra, ultra low, tenants only wanted to sign short-term leases (2 years, 3 years). Now at those same properties, tenants are trying to sign up for longer term leases to lock in the lower rates.

Rent growth is commencing. It is REIT dividend increase season, and I’ve been pleasantly surprised by the magnitude of some of the dividend increases in the REITs that I own.

In other words, if businesses are really concerned about the economy, they aren’t showing it in their activity vis-a-vis commercial property and signing lease commitments, even at increasing rent levels.

I don’t think the economy is on the precipice of collapse.

Secondly, what I think Schiff (and others on this board) often overlook is that the housing market is NOT a homogeneous market. There are some markets where there are too many homes still (Florida anyone?), and some markets where there are not enough given the demand (SF Bay Area as a simple example).

During the bubble, too many homes were built generally, and too many homes were built in most markets. However, in some markets the bigger problem was mainly overpricing driven by easy credit (in some cases driven even higher by a lack of supply), not overbuilding.

I know CA more than any other market, but to keep up with population growth, it is estimated that there needs to be a bit over 200k homes built per year in the state (this is on a base of 14MM homes, and a population that is growing by 300-400k people per year)…we only exceeded that twice from 2000-2010. I’ve frequently compared CA to Spain (about 20% larger). During the housing bubble, they were building 700K+ housing units per year in Spain for many years in a row.

Both CA and Spain saw massive run-ups in price during the bubble. IN PART, the run up in CA was due to supply/demand realities (free credit and mania also contributed in a big way). In Spain, it was entirely the credit bubble/housing mania–they were building FAR too many homes. Without the credit/mania, home prices would not have gone up nearly as high in Spain (and may easily have been flat given the amount of supply added). In CA, even without the easy credit/mania, the supply demand dynamics would have put upward pressure on prices.

Leaving that aside, as time has passed, there are more and more markets where the physical supply and physical demand have come more into balance, supporting new development. As more markets come into balance, new home development will creep back toward long-term averages.

Aside from abolishing the Fed, what does Schiff propose to lower home prices? I believe that increased development generally leads to lower home prices, and an article in the WSJ from today supports this view. They broke down the 20 Case Shiller markets by those with more or fewer land constraints and showed how prices have moved over time.

In short, more land constraints (and thus more constraints on homebuilding) led to a more volatile housing market (greater swings), and greater increase in prices. Fewer land constraints led to less volatility and over long periods of time, lesser increases in prices.

Since you can’t easily simply move homes from where there are excess units to where there is a shortage, we are bound to have an uneven recovery in new home development. As new home development increases, it will further increase economic activity (as those jobs are hard to outsource). From what I see, positive feedback loops are strengthening…what precisely about the economy do you see that makes you think it is FAR weaker than the PTB are letting on…weak job growth? Weak wage growth? Anything else?

if businesses are really concerned about the economy, they aren’t showing it in their activity vis-a-vis commercial property and signing lease commitments, even at increasing rent levels.

most business owners are reactive not proactive in their decisions. they don’t understand economics just because they know how to run a business.

I don’t think the economy is on the precipice of collapse.

i don’t think anyone can predict with any accuracy, when an economic event will happen. most of the time events take longer than anticipated to happen. i think this is because it’s so easy to underestimate the size of an economy. the bigger it is, the longer it takes for most things to happen.

Secondly, what I think Schiff (and others on this board) often overlook is that the housing market is NOT a homogeneous market.

if you talk about the world housing market, is it homogeneous? if you talk about the US market, is it homogeneous for the US? if you talk about the local housing market, is it homogeneous locally? in your analysis for the US market, do you account for every market of similar size? if not, how can what you’re examining be rendered accurately for the US? the more precise we attempt to become, the greater chance of inaccuracy.

I’ve frequently compared CA to Spain (about 20% larger).

you shouldn’t do that. every country has different laws and different tax systems that makes their economy unique. start with the same inputs and you end up with different results.

Aside from abolishing the Fed, what does Schiff propose to lower home prices?

schiff doesn’t like what the fed is doing, but he has said you’d better think very carefully about abolishing the fed. i agree, and not only that, i don’t believe it should be abolished, just returned to it’s original mission and confined there. it needs to be run by competent, honest people.

to think in terms of lowering or raising home prices is to think in terms of a command economy. that is wrong and dangerous. home prices would go down naturally and continually in a free market economy. that is the only correct answer.

As new home development increases, it will further increase economic activity (as those jobs are hard to outsource).

housing doesn’t drive the economy. the economy drives housing.

what precisely about the economy do you see that makes you think it is FAR weaker than the PTB are letting on…weak job growth? Weak wage growth? Anything else?

what else is needed? hearing the quivering voices of people unable to make ends meet? there are many and they are growing in number. if you want to see it, start looking for the signs. look for the growing number of people in distress and not understanding what’s happening. job downsizing and losses are part of it. as well as a growing feeling of desperation. more business will close. the dollar will continue to lose value. don’t forget that home prices are generally in a bubble, so they can drop even when the dollar loses value.

i don’t trust any government numbers anymore. they are proven liars and they have a lot of their skin in this game now. they should never have been involved, but it’s too late. i’m not saying that all their numbers are inaccurate, i’m just saying i don’t trust them now.

our bitter lesson is just getting started.

There are no “land constraints” no more than there are “housing supply constraints”.

There is a tsunami of excess, empty and defaulted inventory of houses and empty land in California and it’s coming down the barrel right at you.

Are you prepared?

It’s funny that you reach this conclusion, then say commodity based currencies are bad.

i wish you’d stop saying that i have said things that i’ve never said. and i’ve never said commodity based currencies are ‘bad’. they work. but they’re not as efficient as a well run fiat currency.

metal by weight currencies are intrinsically valued. fiats are extrinsically valued. that’s an advantage for fiats. fiats can grow in value just like they can lose value. but an ounce of gold is always worth an ounce of gold. yet it is much more volatile in price due to many circumstances. well run fiats are much more stable than gold.

for instance, would you lend or borrow a thousand ounces of gold with a 30 year mortgage? would you trust the price not to swing wildly at some point? the answer is probably no. i know that i wouldn’t do it. most banks probably wouldn’t either.

that means that big projects would be harder to finance and more expensive because of the risk of rapidly changing gold prices over the life of the loan. less big projects like factories results in less wealth in the world. less wealth means fewer jobs that pay even less.

They have the property of not being able to be mismanaged via printing for inflation

but they also have the problem of counterfeiting in the public’s hands. each type of currency faces a different kind of counterfeiting. and counterfeiting is the bane of every type of currency.

and are therefore inherently “better” for anyone using the currency as a store of value.

fiats can be a better or worse store of value depending on how well they are run. it seems that government fiats always get run into the ground by bad management. it’s possible that men simply can’t be trusted to run one. i don’t know. if that’s the case, then metal by weight is the next best choice. but we then pay a steep price in efficiency. but i guess it’s better than letting dishonest thieves and incompetents run it and ruin it.

Feds just don’t like it because individuals are better able to hide their money and the feds can’t get their greedy little hands on it.

they could still get their greedy little hands on it through taxation. if everyone had to deal in gold, the taxes would have to be paid in gold. BUT.. it would be next to impossible to spend gold wildly. they might be a little more careful about foreign aid and everything else.

as you can now tell, i’m not against gold and silver currency. all i said was that a fiat could be the best if it was run correctly and honestly. the founders originally had the death penalty for intentional mismanagement of the nation’s currency. it should return to that. pay the guys in charge well enough to take the job, but with the understanding that if they intentionally mismanage the currency, and it can be proven, they get the death penalty.