The Housing Bubble

Home ownership is path to nirvana.

Vanguard finally gave me the feature of looking at my ten year investment performance. My personal performance with all my Vanguard funds (as a whole) exceeded the “buy and hold” of any single fund on the last ten years. Yes I do have a money market fund in the mix and a short term TIP ETF.

How about 9.99% average annual gain over the last ten years despite the depression between 2008 and 2011.

Has anyone’s stucco box appreciated 9.99% per year the last ten years? That would be 257% of the original value.

List prices are falling and sale prices are falling in that zip too. Time is on your side.

How were prices there in 2010-11? Did they go up to a stupid level since then because of the deliberate govt intervention? We are going back to those same prices in the same or sooner time frame, then we’ll keep going lower.

Why can’t you wait a year? At this point what does it matter?

Thanks for reminding me. Saturday is the day I pull out some fiat from my bank and stuff my wallet.

You’ll get poor in a hurry by paying grossly inflated prices for rapidly depreciating assets like houses.

IMO, we’ve slow walked into a really bad situation. We need capitalism to prosper, and we got none in the housing market, for one:

‘Home loans to lower-income Americans are dwindling as Washington regulators and major banks continue to haggle over who pays when riskier mortgages go bad. Federal Housing Administration loans, given to borrowers with weaker credit scores and requiring small down payments, plummeted 19 percent in the nine months ending June 30 compared with a year earlier.’

“The government is worried about access to credit. They’re looking at volume numbers, and they know it’s a serious problem,’ said Brian Chappelle, a former FHA official and partner at Potomac Partners LLC, a consulting firm for lenders in Washington.’

Why is this the governments problem? Because they took over the entire industry and won’t let it go.

‘Back in 1999, the average household made $56,895 in today’s dollars. That number took a hit when the dot-com bubble burst and never reached the same high note again. It plummeted once more during the Great Recession and has slinked lower through the recovery. That middle-of-the-road household is now making $51,939. In other words, for the past 15 years, a growing economy has failed to translate into rising incomes.’

‘Summers notes that continually blowing asset bubbles and trying to staunch the bleeding when they pop is not exactly a brilliant macroeconomic policy. “A strategy that relies on interest rates significantly below growth rates for long periods of time virtually guarantees the emergence of substantial bubbles and dangerous build-ups in leverage,” he wrote. His big idea is just to have the government run deficits in perpetuity, supplying the demand that the great swath of American middle-income households can no longer supply. Improving worker skills and boosting exports would help, too.’

I’ll say it again; these people are freaking idiots. They shouldn’t be running a lemonade stand. But we just let them take over the majority of the economy and run it into the ground. Then the media sits around all butt-hurt and broke and wonders how it happened.

“Another thought crossed my mind about the availability of resources. Is it just one big pie and everyone has a chunk of it?”

No. The size of the pie and distribution of the chunk size depends on the system of governance.

For instance, central planning tends to produce an ever-smaller pie over time, and smaller pieces for all individuals except a shrinking pool of pig men.

“Seems like some of the people getting rich are the ones using shareholders as a stepping stone.”

It pays well to be a darling of the Wall Street/Silly Valley printing press money conduit.

I guess yellen was telling all the poor people to get rich this week.

Let’s face it: a lot of poor people remain that way because they are unintelligent and make poor choices, i.e. they are DNC entitlement voters even though the DNC (like the GOP) has been bought and paid for by the Wall Street grifters.

So while the average Obama Zombie may have a dim perception they were sold a bill of goods, they lack the intelligence to grasp the full magnitude of how badly they, and the country, are being screwed by the .1%.

I don’t think it’s possible for everyone in China to get rich, but I do think it’s possible for tens of millions of them to be well off the rest of their lives (if they take themselves and their wealth out of China).

Let’s imagine 50 million rich people. I think that is possible. And why do you think they have to be confined to a certain area? They can invest internationally and I certainly do invest internationally. I think it’s possible for 1/6 or more of the USA population to be rich and well off the rest of their lives.

I used to live in CA, but now in live in AZ. AZ is far more regulated than CA, contrary to popular belief. All the regulations in AZ are tilted in favor of those with vast funds.

I’m sure having a hard time remembering which Fed chair I voted for in the last election!

‘they are not stupid by any means’

I’m not talking about intelligence, but their policies. Yellen had the nerve to talk about poor people just one paycheck away from blah blah. What about these high house prices Janet? Ever think that might be making things harder for poor people? Stop buying MBS, sell some of those foreclosures you bought. Stop giving wall street money to drive up prices!

These policies are nuts, and we put our hands in our pockets and can’t figure out why nothings there? It’s not hard; houses and house prices don’t create jobs. It’s a consumption. Yet that’s the Fed’s big plan! It’s not a secret.

Then it doesn’t work, and what happens? We sit here and listen to even bigger idiots tell us we need space aliens or some crap. Yes, I think when someone starts talking about space aliens and the economy, we are listening to a freaking idiot. And most of what passes for economic planning these days isn’t too far from Krugman’s foolishness. Oh, we’ll print money! Let’s all get rich on walkie-talkies made in China, or some Chinese IPO, that does what exactly? And the house! We’ll flip houses! I bet right now there are reality TV shows running on flipping houses. After how many years, and people are still flipping houses?

‘People like Robert Rubin, Hank Paulson, Ben Bernanke, and the other Goldman Sachs plants who have captured our economic and monetary policy have succeeded brilliantly at facilitating the most egregious rip-off in history: the massive transfer of wealth and assets from the 99% (who willingly voted for their own economic destruction) to the 1%.’

And what was our means of backlash after that? Occupy Wall Street? Which got shot down quickly as it was treated as a spoiled kid’s temper tantrum party.

A sizeable bloc denizens living unhappily under the misrule of “former” Goldmanite Rajoy, undeterred by Scotland’s “no” vote for independence (and escape from the City of London banksters and their Parliament), are getting poised to go their own way, despite the Establishment status quo informing them a referendum is illegal and they must return to the sheep pens.

http://www.telegraph.co.uk/news/worldnews/europe/spain/11109234/Defiant-Catalans-push-ahead-for-independence-referendum.html

A US LibroCon dream date.

It’s a wonder news like this doesn’t show up in share prices.

ft dot com > Markets >
beyondbrics
September 19, 2014 1:55 pm
IMF warns of emerging markets slowdown
By Robin Harding in Washington

Emerging markets are suffering an unprecedented and broad-based slowdown that threatens the future of the global economy, researchers at the International Monetary Fund have warned.

Not only did emerging market growth stall in the wake of the financial crisis, it has kept falling across a wide range of countries and unlike in advanced economies the IMF does not forecast a recovery.

The slowdown marks a big change in the pattern of global growth and the spillovers could hurt advanced economies, too, warn the researchers.

“Emerging markets as a group were growing at about 7 per cent before the crisis,” said Hamid Faruqee, a division chief in the IMF’s research department. “We now see them growing at about 5 per cent going forward.”

The Fund’s paper finds that growth is slower across a swath of developing countries, not just the largest economies such as China and India. Expansion rates in more than 90 per cent of emerging markets are lower than before the 2008 turmoil.

“The slowdown seems to be quite broad based,” said Mr Faruqee. Such a synchronised deceleration is unique outside of a recession or financial crisis.

According to the IMF research, trade links are an important reason for the slowdown, with emerging markets suffering from weaker growth in their trading partners. But there are also signs of deeper problems, with evidence that productivity improvements are contributing less to growth.

Real GDP growth

“The fact that we project some rebound in growth for the advanced economies and are lowering it for the emerging economies is suggestive of something internal among the EMs,” said Mr Faruqee.

According to the IMF’s estimates, a one percentage point slowdown in emerging market growth lowers growth in advanced economies by quarter of a percentage point because of reduced trade.

That means the 2 percentage point reduction in emerging market growth since before the financial crisis could mean a 0.5 percentage point reduction in growth for rich countries such as the US. This suggests the weakness in developing countries could be an important reason for the recent growth disappointments in advanced economies.
Developed and emerging econmies

The IMF said an emerging market slowdown could also mean lower commodity prices and possible trouble for banks that have overextended their lending in countries where growth has abated.
…

Markets
China’s Central Bank Injects $81 Billion Into Top Banks to Counter Slowdown
Economists Warn More Stimulus May Be Needed
By Lingling Wei
Updated Sept. 17, 2014 12:38 a.m. ET

China’s central bank has opened its spigot to a certain extent. Heard on the Street columnists Alex Frangos, Aaron Back and Abheek Bhattacharya debate what this means for the economy.

BEIJING—China’s central bank is injecting 500 billion yuan ($81 billion) into the country’s five major state-owned banks as it moves to counter slower-than-expected growth in the world’s No. 2 economy, according to a senior Chinese banking executive.

The move contributed to a rise in Asian markets early Wednesday, but falls short of a more sweeping effort, such as an interest-rate cut, to lift the economy, showing that Beijing is continuing to use targeted measures. (Latest: China Home Prices Weaken)

Some Chinese bankers and executives doubt the measure will do much to help rev up economic activity, pointing to sagging demand for loans from businesses due to the gloomy economic outlook.

Economists also warned that the move may not be enough, and that Beijing may face growing pressure to adopt more broad-based stimulus measures if momentum weakens further.
…

China, Singapore slowdown weigh on Q3 Asia business sentiment
MUMBAI Wed Sep 17, 2014 9:28am IST
A woman in a wedding gown and a tourist (2nd R) pose for photos with the skyline of the financial district of Singapore at Marina Bay August 22, 2014. REUTERS/Edgar Su/Files

(Reuters) - Business sentiment among Asia’s top companies fell sharply in the third quarter, weighed down by worries about China’s slowing economy, a possible end to the U.S. Federal Reserve’s stimulus policy and a decline in the outlook for regional economic hubs like Singapore, a ThomsonReuters/INSEAD survey showed.

The ThomsonReuters/INSEAD Asia Business Sentiment Index fell to 66 in the third quarter from 74 in the previous quarter, its steepest decline in three years. A reading above 50 indicates an overall positive outlook.

Companies in India were the most positive with a maximum score of 100 for the second consecutive quarter after pro-business leader Narendra Modi was elected prime minister.

In contrast, Taiwanese businesses were the most negative, with a score of 33.

“While growth is still robust across Asia, businesses are grappling with a number of challenges, including worries about rising interest rates as the Fed begins to press the brakes,” said Frederic Neumann, the Hong Kong-based co-head of Asian economic research at HSBC.
…

ft dot com
August 29, 2014 3:43 pm
Brazil’s economy slips into recession
By Joe Leahy in São Paulo
The Christ the Redeemer statue looks out over Guanabara Bay in this aerial photo taken in Rio de Janeiro, Brazil, on Friday, Aug. 22, 2014. Brazilian analysts reduced their 2014 economic growth estimate for the 13th straight week after consumer confidence dropped to the lowest since the recession of 2009. Photographer: Dado Galdieri/Bloomberg©Bloomberg

Brazil’s economy suffered a technical recession in the first half of this year, with two consecutive quarters of contraction, dealing a blow to President Dilma Rousseff’s bid for re-election in October.

Gross domestic product declined 0.6 per cent in the second quarter, when Brazil hosted the start of the 2014 soccer World Cup, compared with the previous three months, while the first quarter was revised down from positive 0.2 per cent to negative 0.2 per cent, said IBGE, Brazil’s national statistics agency.

Brazil’s benchmark equity index, the Bovespa, rose 0.59 per cent in early trade on hopes that the poor performance would lead to a change of government.

“We believe that this contraction is largely a temporary effect caused by the reduction of business days during the World Cup,” Itaú-Unibanco said in a research report. “However, the data already available for the third quarter show weaker-than-expected recovery.”

Brazil’s economy has been flirting with recession for some time after a series of quarters in which growth has been stagnant, inflation near the top of the central bank’s target range and investment and consumer sentiment weak.
…

Sep 16, 2014 10:43AM ET / Russians in Ukraine
Russia Is Teetering on the Edge of a Recession
Polly Mosendz
AP Photo/Alexander Zemlianichenko, Pool

Former Russian finance minister Alexei Kudrin has a warning for Kremlin officials: Russia is dangerously close to a recession. Kudrin’s analysis comes just after the European Union and United States announced increased sanctions against Russia, including a hit to Russia’s oil sector and financing options. Kudrin believes that because Russia is not investing heavily enough in their own economy, they are decreasing their own chances of successfully surviving increased sanctions.
…

Europe News
Germany Economic Outlook Weakens
Uncertainty in Eurozone and Effect of Sanctions Against Russia Weigh on Sentiment
By Todd Buell
Updated Sept. 16, 2014 7:16 a.m. ET

MANNHEIM, Germany—The German economic outlook weakened in September, a survey of financial analysts released Tuesday showed, suggesting that uncertainty over the eurozone economy and the effect of sanctions on Russia continues to weigh on sentiment.

Still, the decline in the sentiment index—compiled by research institute ZEW—isn’t necessarily a cause for grave concern, analysts said, noting the German economy remains in good position for a resumption of growth after a small contraction in gross domestic product during the second quarter.

The lead indicator of the ZEW survey declined to 6.9 in September from August’s 8.6. Economists polled ahead of the release by The Wall Street Journal had forecast the indicator to fall to 5.0. The indicator for current conditions fell sharply to 25.4 from 44.3, well below expectations of 41.0. The lead expectations indicator hit its lowest level since December 2012.

Analysts, however, cautioned not to read too much into the data, which is highly sensitive to swings in financial markets. Surveys of purchasing managers and other business leaders are typically eyed more closely as a gauge of economic activity.

“The predictive power of the ZEW index has to be taken with more than a pinch of salt. For example, the current assessment component increased throughout the second quarter, while growth actually turned out to be negative,” said ING economist Carsten Brzeski in a research note.

“Deteriorating sentiment is not exactly good for growth. However, our own assessment is that while German growth might be somewhat slower in [the second half of the year] than it was in [the first half], it will remain in positive growth territory,” wrote BNP Paribas economist Evelyn Herrmann.

German GDP contracted by 0.2% in the second quarter from the first, or 0.6% at an annualized rate, but that was after strong annualized growth of about 3% in the first three months of the year.
…

Japan News
Japan Cuts September Economic Assessment
First Downgrade to Cabinet Office’s Overall Economic View in Five Months
By Alexander Martin
Updated Sept. 18, 2014 9:31 p.m. ET
Pedestrians crossing at the Shibuya intersection in Tokyo. Agence France-Presse/Getty Images

TOKYO—Japan downgraded its overall assessment of the economy in September for the first time in five months, as poor summer weather weighed on consumption, raising further questions over the viability of pushing ahead with a second sales-tax increase after the first one in April hurt demand and stalled growth.

In its monthly economic report released Friday, the government cut its assessment of private consumption, saying it appeared “to be pausing recently” as typhoons and record downpours pummeled Japan this summer. While it said the economy was still on the path to a “moderate recovery,” attention should be paid to the lingering impact of the April 1 tax increase to 8% from 5%.

Economists and policy makers are closely following how the economy is responding to the higher tax rate, following a spending surge before its implementation that saw the economy grow 6% in the January-March quarter. A pullback in demand, however, saw the economy shrink 7.1% in the April to June quarter, heightening concerns that the tax rise is taking a greater-than-expected toll on the economy.
…

Why Does Obama Describe the Islamic State as ‘ISIL’ Instead of ‘ISIS?’

September 9, 2014 By Matthew Burke

Many of even the most casual observers have noticed that virtually all news organizations (not to mention the terrorist organization themselves), refer to the Muslim terrorist group as the Islamic State of Iraq and Syria, or ISIS.

That is everyone with the exception of the Obama regime, who in robotic lockstep refer to the evil, barbaric, and subhuman group of beheaders, not as ISIS, as the rest of the world does, but as ISIL, which stands for the Islamic State of Iraq and the Levant.

So what’s the difference? What’s the big deal? And why is the Obama regime going to such organized contortions to go against the grain of the established name?

Two journalists, Chuck Todd, who just took over NBC’s Meet the Press from David Gregory’s failed tenure as the long-running political show host, had one take on the regime’s obsession in trying to cram “ISIL” down everyone’s collective throats, stating that Obama doesn’t like dealing with the last “S” in the abbreviation, as it stands for Syria, another of his failed foreign policies.

“Obviously, we refer to it at NBC News as ISIS,” Todd explained during his first time as full-time host of the program that he is commissioned with bringing back the to its former glory days under deceased former legendary host Tim Russert. “The Obama administration, the president says the word ‘ISIL.’ The last ‘S’ stands for Syria. The last ‘L’ they don’t want to have stand for Syria.”

The word “Levant” encompasses a much larger area of land, which included Syria, the area referred to as Palestine, Lebanon, Israel, Jordan, and parts of Turkey, according to Al Jazeera, the Middle East media outlet owned by the oil-rich country of Qatar, who purchased “Current TV” in the U.S. for $500 million from global warming huckster Al Gore.

FOX News’ Harris Faulkner issued an even stronger criticism of the Obama Democrat Machine’s insistence with using ISIL over ISIS on Outnumbered last week, in speaking with fellow panelists Ainsley Earhardt and Jesse Watters. She said that Obama was giving the terrorist group a hat tip:

Ainsley Earhardt: “They changed the name in the middle of all this to ISIL. they don’t have the right to do that. We’re going to continue to call them ISIS.”

Harris Faulkner: “So our president is tipping his hat to them.”

Ainsley Earhardt: “They changed the name…”

Jesse Watters: “And I think the president doesn’t want to have it be just Iraq and Syria because that brings to mind the president’s failed policies in Iraq. which, he said the Iraq war was over. And Syria, which he drew the line and basically vacated it. When they say ‘Levant,’ that’s broadening it out and it kind of doesn’t remind people that this is his policy.

Roughly a year ago, the Obama regime, as well as a handful of Republicans like John McCain, were arguing to help ISIS, who they then referred to as “rebels,” in toppling the Bashar al-Assad regime in Syria.

That could have something to do with the Obama machine’s reluctance to remind the American people of that inconvenient truth.

http://www.tpnn.com/…/why-does-obama-describe-the-islamic-state-as-isil-instead-of-isis/ - 39k -

Eddie Lampert’s Ayn Rand mgmt style should have Sears battle Walmart for retail supremacy in a few years.

Dude, did you cut Oxide’s feet off? That was not nice.

Because nothing makes your point like SHOUTING!

It’s got a 1.6 acre lot. What an abortion of a house.

If you are the bagholder trying to hold on by your fingernails after you lose your job, can’t find another one, are out of cash and out of options…you won’t even be able to grow your own food or have your own cow. Or go to the woodlot to get fuel to stoke up the ol’ woodstove during the six months of winter. Place likely has an HOA Gestapo as well.

Too bad, so sad.

Daily Intelligencer
September 19, 2014 9:05 a.m.
Will the Economy Ever Be As Good As It Was in the ’90s?
By Annie Lowrey

Pull on your Doc Martens, button up your flannel, tease up your bangs, and throw some Mariah on. This week, the Census Bureau came out with its big annual report on income and poverty in the United States, and it reconfirmed that as a country, we peaked in the late 1990s.

To be more specific, median household income peaked. Back in 1999, the average household made $56,895 in today’s dollars. That number took a hit when the dot-com bubble burst and never reached the same high note again. It plummeted once more during the Great Recession and has slinked lower through the recovery. That middle-of-the-road household is now making $51,939. In other words, for the past 15 years, a growing economy has failed to translate into rising incomes.

It is a big problem. And it goes a long, long way to explaining the squeeze lower and middle-income families feel. If the economy had kept on performing the way it did in the late 1990s, that median household would be making $20,000 more than it currently is. But forget a world where the 1990s lasted forever, where there was no Iraq War and no mortgage bubble. The latest findings raise a more modest question: Will we ever get back to where we were?
…
Growth itself has become more anemic, too. To help explain why, let’s turn to another throwback, top Democratic policy mind Lawrence Summers, who just happened to be Treasury secretary in 1999. Of late, Summers has talked a lot about what he calls “secular stagnation.” The big idea is that the economy cannot achieve strong growth and low unemployment absent some kind of extraordinary policy intervention.

That extraordinary policy intervention is often really loose monetary policy and growing deficits. The modest expansion of the 2000s only happened under the aegis of the housing bubble, he points out. And today’s modest rates of growth are only happening because of the Federal Reserve’s aggressive asset purchases and insistence on leaving interest rates at scratch. (Those bang-up growth rates and rising median incomes in the 1990s also owe a lot to the froth of the dot-com bubble, it is worth noting.)

Summers notes that continually blowing asset bubbles and trying to staunch the bleeding when they pop is not exactly a brilliant macroeconomic policy. “A strategy that relies on interest rates significantly below growth rates for long periods of time virtually guarantees the emergence of substantial bubbles and dangerous build-ups in leverage,” he wrote. His big idea is just to have the government run deficits in perpetuity, supplying the demand that the great swath of American middle-income households can no longer supply. Improving worker skills and boosting exports would help, too.

But right now, deficits are falling and the Federal Reserve is planning on stepping back, rather than doing more. Growth is not translating into higher wages, or lifting median earnings by much. There is little to suggest that the middle class will start growing and feeling flush again. In short, 1999 levels of median income might still be nothing but a fantasy for the next five years of growth, or ten. But at least we have our flannels, scrunchies, and Mariah to soothe us.

Those were the days

I remember colleagues in the early-1990s predicting that if Bill Clinton were elected, the U.S. economy would go to hell in a hand basket. It didn’t turn out that way, though.

The lesson I learned from those eight years was one of the economic moral hazard problem facing any sitting U.S. president. There is a standing incentive to adopt policies which goose the economy while you are in office and leave your successor holding the bag.

Case in point: Housing policies to goad lenders into making subprime loans to low-income households, plus a $500K capital gains exclusion for sale of a primary residence, which served to kick the Housing Bubble into overdrive. GWB was left holding the bag on the subsequent collapse.

That Clinton-era “prosperity” was enabled by epic scams and swindles by banksters and crony-capitalist insiders like Citigroup’s Rubin Rubin, with the bills landing on the US taxpayer in 2008.

http://www.businessweek.com/articles/2012-09-19/rethinking-robert-rubin

After he stepped away from Treasury in 1999, Rubin moved to Citigroup (C), and until 2009 he served as chairman of the executive committee and, briefly, chairman of the board of directors. On his watch, the federal government was forced to inject $45 billion of taxpayer money into the company and guarantee some $300 billion of illiquid assets. Taxpayers ended up with a 27 percent stake in Citigroup, which was sold in 2010 at a cumulative profit of $12 billion. Rubin gave up a portion of his contracted compensation—and was still paid around $126 million in cash and stock during a tenure in which his serenity has come to look a lot more like paralysis. “Nobody on this planet represents more vividly the scam of the banking industry,” says Nassim Nicholas Taleb, author of The Black Swan. “He made $120 million from Citibank, which was technically insolvent. And now we, the taxpayers, are paying for it.”