The Housing Bubble

we needs more Luna’s! I’ll take a Luna over a toothless, fat meth-addict Texan any day.

fat meth-addict

You do not find many of those, now toothless is common.

you are right, I presumed even the meth addicts are “bigger” in TX.

For example, Oxide was on here bleating a day or two ago about how sure the standards have been loosened and the loans are all 5 percent or less down, but not interest only stated income for strawberry pickers. So it really is just fine.

What everyone seems to forget is that Prime loans (e.g. documented income) went bad at numbers way higher than Alt-A and Subprime. Just cause they were/are really A-rated doesn’t mean they won’t walk away when their investment has clearly gone south. Heck, with all of the moral hazard instruction from the Fed, they might well go south at much HIGHER rates the next time around—after all, there is no downside, right?

History usually doesn’t repeat, but it does rhyme.

There are a number of things that so far, are different this time–the two big ones.

1. A lot less construction than the bubble years–especially for-sale product;
2. While there are low down payment loans available, no-doc and Option ARMs are still nowhere to be seen;

#1 and #2 combined led to lots of people buying homes as investments with money they had no dream of repaying. That was a big source of the distress that caused a lot of the wreckage.

Without #1 and #2, this cycle will look a lot less like the prior one, and a lot more like cycles experienced before.

#1 and #2 combined led to lots of people buying homes as investments with money they had no dream of repaying.

#1 and #2 fail entirely to explain why so many LLs were deciding not to pay their mortgages while still pocketing the rent money. It wasn’t that they couldn’t afford to pay the mortgage—after all, they had the rental income available to pay it with! They chose not to, because their “investment” was no longer performing in terms of asset price appreciation.

“They chose not to, because their “investment” was no longer performing in terms of asset price appreciation.”

If asset prices were flat, or slightly down, most would have continued to pay.

They chose not to pay because they were SO FAR underwater that they couldn’t see how they would ever be above water again.

#1 plus #2 combined to give us much higher prices than today and a much greater number of empty houses, which led to the formation and popping of the bubble. People walking away once they were 25-50% underwater was a byproduct.

If you look at the Case Shiller values over time nationally, you’ll see that this price peak looks a lot like a more traditional cycle, but with a lot less homebuilding.

Rental_Fraud,

There is no reason to build anymore more houses given housing demand is at 20 year low and 25 million excess empty and defaulted houses out ther.

More valuable than Sony? I heard the other day Uber’s “value” went from $10 billion to $50 billion based on a private funding round.

‘Those increases came as analysts and investors questioned why, exactly, this stock was increasing in the first place.’

Soon to become one of the most oft-repeated statements in the history of mankind…

China’s industries are getting to the point where they have to start dumping their products on the world market just to keep up cash flow. This will lead to cheaper prices for a while. But eventually all the debt they’ve accumulated is going to catch up with them.

There is no way that you can make that pair of shoes anywhere in the world for $7. So how can they be priced as such?

Sure you can, by making use of slave labor and similar “competitive advantages”.

Consider that the panels are made in plants with zero environmental, safety, and health standards.

That may explain why the prices are low, but not why they continue to fall.

I think it like so many things in this global bubble boom. Demand was projected to go up to infinity and capacity to produce followed. Excess capacity isn’t taken offline until everyone literally chokes on the production.

It’s also possible that some of that money was spent on R & D or factory automation.

Well sure, but if most of the players were on the skim, it is a very inefficient way of funding research.

Only if you believe AGW scam numbers is this number even remotely viable.

NASA keeps having to back track. Actually, we probably owe the fossil fuel industries much more in “subsidies” since the increased co2 levels have increased crop and timber yields throughout the world.

http://www.forbes.com/sites/jamestaylor/2015/05/19/updated-nasa-data-polar-ice-not-receding-after-all/2/

I sequestered a Ribeye steak yesterday. I hope this helps.

Can’t hurt, you save the world from bovine farts.

Not even close. That is my title.

Ronald Reagan was a saint.

Freedom is just another word for nothing left to lose.

How about we start with tort reform?

We can start with a lot of things, which will be easier to do once the current system collapses. Otherwise every single special interest group will fight tooth and nail to keep their snout in the the trough.

Do it right? As in what? More government and less freedom?

My European relatives NEVER worry about how to pay for their healthcare, whereas I always wonder how much it’s going to cost me.

Here’s a “for instance”: I just went to see a specialist because I thought I might have acid reflux. In addition to the $30 copay (which my European relatives don’t pay) I was informed that there is an extra “fee” for the procedure where he stuck a fibre optic thing down my nose to examine my throat. That will be subject to my $400 deductible and 10% “co-insurance”. So I will be paying a few hundred bucks for that, no doubt. Being aware that I was going to have to crack my wallet open, and wide, I debated whether or not to have it done. Since I can afford it, I had it done. And I do have acid reflux.

So tell me, who is more “free”?

Yeah, I figured you’d be all-in where single payer is concerned.

You mean like Medicare and Medicaid? How are those working out? What were the projections for Medicare back in 1967 and what are the real costs now?

You mean like Sweden? You might want to read up on what’s happening in Sweden nowadays. People there are pretty upset about their financial futures. The natives are leaving.

You mean like Greece? Like Brazil? Like South Africa? Americans aren’t going to be screaming, “Fix it with a government plan!” Obamacare torpedoed that prospect, too.

The window for single-payer has already passed. Millennials are turning 30 in large numbers now…old enough to have experienced firsthand what government programs do.

It’s no argument against Medicare to talk about budget projections. Or Social Security for that matter. As I’ve said before, anyone who’s against slightly raising taxes on the 1% in order to fully fund those programs deserves to live on cat food after retiring.

Medicare already had the cap removed and it was suppose to keep Medicare from going bankrupt but guess what it did not. Social Security needs to take into consideration that people are living longer and adjust retirement ages accordingly, of course any fair compromise does include more taxes on the 1% but alone it is not enough. They will reduce their pay and take stock options if you try to put all the burden on them.

Yeah, I figured you’d be all-in where single payer is concerned.

How much are you paying for your private sector, for profit health insurance?

When I told an Irish colleague (same company where I work) that our insurance costs $18,000 a year, he thought I was joking. He told us that the combined healthcare tax (employee and employer shares) over there (for a family) is 3000 Euros per year. I love telling Euros how much my insurance costs, it’s fun watching their eyes pop out of their heads.

But yeah, our system works so well, why change it? My employer paying the lion’s share of of the $18,000 that my plan costs has to be a competitive advantage, right? We’ll be even more competitive when it cost $28,000

Medicare already had the cap removed and it was suppose to keep Medicare from going bankrupt but guess what it did not

The cost of private health insurance has also rising rapidly. And MacBeth, please provide us with a link about people leaving Sweden.

that our insurance costs $18,000 a year,’

that’s about right for the company’s share, I pay another 5K but hey its pre tax.

scary expensive

You’d probably be on Medicare before any collapse happens.

Agreed, but because of our American Exceptionalism, there is no other way to accomplish true reform.

And it doesn’t have to be a total collapse. All it will take is for Medicare to become insolvent. We just need to reach the point where only the wealthy or those with “Cadillac” insurance plans will be able to afford healthcare.

“We just need to reach the point where only the wealthy or those with “Cadillac” insurance plans will be able to afford healthcare.”

Like you.

In other words, you have yours and you think you’re smart enough to tell the ‘have-nots” what to do - like allow themselves to be sucked into a single-payer system,

Does that system also mean that all Cadillac plans (such as yours) would disappear? Does that mean you, yourself, are willing to subject you and yours to socialized medicine? Forever?

If so, why are you in a Cadillac plan now?

Why aren’t you in ObamaCare right now? (I mean, if you’re in favor of single-payer, you would willingly subject yourself to ObamaCare to hasten introduction of socialized medicine. Apparently, it’s good enough for you that others suffer for the cause, but not you.)

Because it sucks?

Because it’s beneath you?

‘Medicaid enrollment under Obamacare is skyrocketing past expectations, giving some GOP governors who oppose the program’s expansion under the health law an “I told you so” moment.’

‘More than 12 million people have signed up for Medicaid under the Affordable Care Act since January 2014, and in some states that embraced that piece of the law, enrollment is hundreds of thousands beyond initial projections. Seven states have seen particularly big surges, with their overruns totaling nearly 1.4 million low-income adults.’

‘The federal government is picking up 100 percent of the expansion costs through 2016, and then will gradually cut back to 90 percent. But some conservatives say the costs that will fall on the states are just too big a burden, and they see vindication in the signup numbers, proof that costs will be more than projected as they have warned all along.’

http://www.politico.com/story/2015/05/skyrocketing-medicaid-expansion-obamacare-republican-governors-118011.html

In other words, you have yours and you think you’re smart enough to tell the ‘have-nots” what to do - like allow themselves to be sucked into a single-payer system

I want them to have insurance so that when they wind up in the hospital that you and I WON’T have to pay their bill.

As I said before, let’s repeal it. And I’m not being facetious. Obamacare sucks, it’s a bad solution. Let’s go back to the status quo and wait for it to collapse, then start over.

I does make me proud as an American that we are the only first world country where people worry about how to pay their medical bills medical expenses can bankrupt most citizens. I don’t have to worry because I have kick azz insurance.

The answer, MacBeth, is that he has insurance provided by his employer. If it’s very good insurance, that means that a large portion of his total compensation is not taxed. Many Americans have jobs with no insurance at all and have to pay taxes on all of their compensation. This is one way that some taxpayers pay for the insurance of other Americans.

The prices that hospitals can charge for even basic procedures is taking a bigger and bigger chunk out of our economy, and is probably the main reason that insurance is so expensive. But that’s what happens when what should be a social service is treated as a “free market.” The government can negotiate cheaper prices, but patients can’t.

All we have to do is

1. Cut out the middle man- 25% of insurance money goes for management CEO pay of 100,000,000 a year, financial management, advertising, marketing, dividends, etc. That’s a massive amount of money.

2. Allow medicare or national equivalent the ability to negotiate for lower costs on drugs. They push down doctors wages my brother makes less every year per procedure, but medicare prescription drug plan forbids medicare from negotiating lower prices. All part of the centralize wealth movement that is going on the globe over.

We are moving toward a system that is worse than either completely private pay or single party payer and that’s a system that privatizes the gains and socializes the losses. Most of those Medicare Medicaid folk are getting moved to plans managed not by the state but by for profit insurance companies. Despite the fact that they cost more (Medicare Advantage plans cost 10-15% more then Medicare)

And Walmart and retailers wonder where all their customers are going. We’re all going to be equivalent to Walmart employees in another generation. Good luck getting a business going with no middle class and entrenched oligopolies that control the government.

I should point out that the other gem of Obamacare is the tax on Cadillac plans - This of course hits upper middle income earners but certainly does not affect the elite. Tax policy is aimed at milking the last group of people with money that aren’t politically connected.

Agree with that point. The .1% wants to throw the rest of the 1% under the bus. Since the future competition for billionaires is millionaires, it actually works in their favor.

tax on Cadillac plans

The very name that everyone uses for good health coverage offends the bejeezus out of me. Cadillac is a brand long associated with luxurious pampering—a soft, gentle ride, generously appointed with high-end features and trim. The last two companies that I have worked for both decreased the quality of their health coverage in order to avoid this forthcoming “Cadillac tax”.

Since when is having decent health coverage considered a luxury good??

Agree 100%

It’s all marketing, they want the masses to believe that they are sticking it to the elite, but in reality they are sticking it to engineers, scientists, mid level businessmen, skilled craftsman, and a lot of other middle and upper middle class Americans.

Precisely. But the vast majority of people don’t realize that by controlling the language used in the debate, they are controlling the debate itself. Every time someone hears “Cadillac tax”, that false impression that they are sticking it to the elites is reinforced.

There is a word for this: propaganda. Welcome to 1984.

On a day when these brainiacs lost $19 billion in 24 minutes!

On a day when the EIA showed that storage of oil is falling and the yoy increase in oil production has gone from being up 1.2 million to being up just over 800,000 barrels a lost of 400,000 barrels in just two months. The Saudis are killing shale oil just like I predicted while many on this board said the shale oil industry could produce with oil in the twenties.

On a day when these brainiacs lost $19 billion in 24 minutes!

Sounds like one person lost most of it, and he was responsible for inflating the stock in the first place.

Dan, China is collapsing, in the case of many data points well below even the lowest estimates. It is what it is.

As for oil, we are down 40% YoY. Sure, the DXY is up almost 20% YoY, so we can explain away part of the move on the strength of the currency in which it is priced…but we are left with more than half of the move that needs to be explained another way.

This leads to the next discussion. Nothing sways oil prices like geopolitical risk. The world’s two top oil producing nations, Saudi Arabia and Russia, have spent the last year moving at breakneck speed down the line from ally to foe. The former is now in the market for enriched uranium and the latter is more at odds with every western power than any time in the last 25 years. Throw on top of that an entire region experiencing seismic shifts in power and you see geopolitical risk is at a decade’s high.

Why then, Danny boy, is oil still so relatively inexpensive? It isn’t complex. There is no engine of global growth anywhere, most especially not in that economic miracle you call China.

Why then, Danny boy, is oil still so relatively inexpensive? It isn’t complex.

Because the Saudis are working to keep it down with the help of the U.S. Obama to punish Russia and the Saudis to punish both Iran and Russia and to crush the shale oil producers. The demand figures are increasing by a 100,000 barrels a day a month hardly a collapse in demand by China since at a third of that increased demand is coming from China.

The funny thing is, I kind of agree with much of your thesis on this one. That was the initial intent in my eyes as well. But moving forward, we should not see any further material price gains…I suppose this is where our theses diverge. Stockpiles aren’t being depleted for any reason outside of the fact that it is just too darn expensive to store the stuff. There will be no long term increase in demand. Price will be sticky in the $50-$70 range for a long while, until at least geopolitical concerns or currency fluctuations give price a reason to recenter. None of this, however, changes the fact that what was previously $100 is now $60.

Big oil spill in Santa Barbara yesterday. 21000 gls into the ocean.

‘The Saudis are killing shale oil just like I predicted’

You said the Saudi’s were running out of oil.

You said the Saudi’s were running out of oil.

They are, horizontal drilling and production from fields that they mothballed years ago can hide the decline for a few years but “Twilight in the Desert” was correct.

It makes perfect economic sense to knock down shale oil in the short term if you believe that you will have declining production very soon. If you actually believe you have a long life, it actually does not make sense to knock down shale oil since it will eventually recover. Combine that with the political needs to hurt Iran and Russia, it makes perfect sense for the Saudis to do what they are doing.

“…braniacs lost $19 billion in 24 minutes…”

Hard broiled crow for dinner again!

BwahahHAhahHAhHAHAAHAHHAAHAHAAHAAAAAAAAAA!!!!!!!!

A 24-Minute, $19 Billion Wipeout Threatens a Chinese Company’s Solar Dream
A disastrous day
10:31 AM PST
May 20, 2015

Where’s Li Hejun?

That’s the question many were asking when the founder, chairman and principal owner of Hanergy Thin Film Power Group Ltd. failed to show up at his company’s annual meeting Wednesday — the same day the company’s stock price tanked 47 percent, wiping out $19 billion in market value in 24 minutes.

Li’s absence was all the more noteworthy because over the past year he has tirelessly championed his vision of a new era of mobile energy: thin, flexible solar cells. They would soon, he promised, be plastered on just about everything: cars, backpacks, phones, tents, satellites, flashlights, buildings, lamps, drones and clothing.

Under his stewardship, the company’s stock had surged more than sixfold in the past year, making it the world’s most valuable solar company worth more than HK$300 billion ($38.7 billion). That’s larger than Sony Corp. and seven times the size of First Solar Inc., the biggest U.S. solar manufacturer.

Then on Wednesday, trading was suspended after the shares spectacularly plunged amid speculation of market manipulation and questions about the viability of the company’s core technology.
…

It’s like when you go 100mph in your car for awhile - when you back off to 60, it feels like you are going really, really slow.

But it is an allusion 60 is really fast when the rest of the cars around you are going 20. Compare China’s present growth rate to the rest of the world they are moving fast.

China is more like a water bottle rocket. You pump it up with a tremendous charge of debt and let ‘er rip. Goes up really fast and then…

“Compare China’s present growth rate to…”

The present growth rate is not the relevant data point. It’s the deceleration due to the rocky road the economy is traveling.

Huh, indeed.

It’s interest rates that are as low as possible without causing inflation over 3% that have the policy for a long time. Currently, that bring rates close to zero, probably due to the global savings glut.

But it was not zero, the reason we did QE is it is very hard to go below zero.

He is the POTUS, there is no higher position on the planet!
So was Bush II and liberals had no problem calling even an idiot. I had no trouble attacking him either. We have had a legacy and an affirmative action president the last two times.

He is the POTUS, there is no higher position on the planet!

Uuhhhhhmmm… False.

The higher position is the one who pulls the strings connected to the POTUS mannequin.

That is it - the oligarchs who pull Otrauma’s you know what - Soros, Kristol - who -
Rally might be able to chime in here.

We all know by now, Bush is an idiot and people died, it is in the history books now. More harm then good.

Obama - 1 big failure and that is ACA. Done more good then harm.

I know, this is remedial for this crowd.

Yes, you probably couldn’t find that many girls without tattoo’s in all of Arizona.

Girls with tats are good for a Tinder hookup pump & dump

But no man with any self-respect will put a ring on that inked trash

Girls with tats = your future is cats

Unless you are an actress or rock star.

Tatoos on the outside, STDs on the inside. No thanks.

Girls with tats = your future is cats

Some of those tattoos make people look like they would prefer pit bulls or Rottweilers.

Lolas and Liberaces.

That’s precisely what is necessary for the economy to recover. Falling prices.

DONT FIGHT THE FED! ECON101

That’s right Poet. Hold onto every dollar you’ve got. You’re going to need them.

Refute the data. Prove your assertion.

You can’t do either.

How about this theory: list price is down 11% YoY, primarily because people are listing smaller houses. Turns out that the SIZE of houses listed has CRATERED 17% YoY!! It has plunged from 2440 sq-ft a year ago all the way down to 2030 sq-ft today.

It’s real data, right there on the link that HA provided; HA just likes to ignore the big picture and imply that some cherry-picked data-point means something that it doesn’t.

p.s. For a better comparison that is not so noisy due to mix-shift, consider that Median $/Sq. Ft is up very slightly YoY, to $339/Sq. Ft from $338/Sq. Ft a year earlier. Quite a CRATER!!

You need to refute it.

I’m not refuting anything; I’m referencing the data-source that YOU selected. Deal with it. That’s just the data. You apparently don’t like the data.