I think Mish has painted himself into a corner. He was right early on, but needs to change his tune to fit the changing times...
Hyperinflation needs a tangible vehicle, be it debased coinage or debased currency. We will not see that beast, but a different kettle of fish heretofore unseen, so we have no idea what to look for, hidden away inside our enigma machines.
May 2009 absolute sales below May 2008 sales May 2008 absolute sales below May 2007 sales May 2007 absolute sales below May 2006 sales May 2006 absolute sales below May 2005 sales. May 2009 absolute sales 30% below May 2005 sales.
Sebastian, this is your recovery?
[OT: The Transports are driving the markets again today. ]
Hyperinflation needs a tangible vehicle, be it debased coinage or debased currency. We will not see that beast, but a different kettle of fish heretofore unseen,
The fish is staring straight at you, with big eyeballs.
If you saw a car wreck on the street, you would say "That's a car wreck."
When you see currency debasement right in front of you, as in Quantitative Easing, why is it so hard for people to say: "That's currency debasement"?
Leaders have deluded people into not believing what they see. The Fed isn't gonna raise any time soon. The Fed isn't gonna unwind. That's delusion
JD - The Big Picture had a good article a while back on the people who have got it right and the people who have gotten whacked. Basically people that were even keel and not hyper extreme ended up doing a lot better thru this turmoil than the extremes. Nothing's static... (I dont know BR's portfolio returns over the last 5+ years but I bet they are stellar. He went back 25% in right at the last major drop. I bet he's up 30+ percent on that, he was largely cash and T-Bills going in to the crash...)
I would write my Congressional reps to oppose Summers as FRB chair, but I figure it's a waste of time. I'll just get back a canned response 6 months later telling me why I'm incorrect.
rich the USD had been doing ok as of late no? I think the Euro might get hammered over the next 3+ years. Spain and Ireland are in lots of trouble, France is hurting too... Will Japan be able to keep the Yen down (or up as they always invert that ratio) is a big question in my mind. I'd agree that the Yuan should smoke the dollar in the future but then again they also have a reason to suppress it so who knows... USD vs Pound is a wash in my mind...
Face it Americans are tapped out in all sectors, personal, corporate, and public. We talk and talk about recovery and Green shoots, but never ever brought up in the conversation is swindle" and "fraud.
Kunstler is correct " The reason they're missing is because if they happened to enter the conversation, something would have to be done about them, namely investigations and prosecutions.
I am thinking instead of concentrating our efforts toward a recovery we all know is bunk, we should be putting our best foot forward prosecuting the people that caused the mess.
Why does anyone even pay attension to the Fed "debate" over rates. They don;t have a choice. ECB Weber of Bundesbank fame saif this am that the "room" to cut rates is gone and no more stimuls. As they race heats up to attract capital to sovereign debt, investors will vote not the FOMC. This is going to get itneresting...
I think there is a compelling case that shadow inventory is added to the market over years, coupled with further employment deterioration, coupled with further boomer economic portfolio deterioration (honey we just can't keep the 3rd timeshare beach-house), coupled with further demographic mortality--that is all to say, this will be a generational event of at best flat housing prices. Inflation adjusted, housing will return to the norm of being a horrible investment.
I don't advocate defaulting on your debts, I'm saying widespread debt dumping rooted in insolvency can catalyze with political dissent into a neutron bomb that leaves no banker standing. The bad banks could conceivably be forced to fail by the people.
The bankers steal, they gamble, they pay bonuses today with money borrowed against future tax dollars earned by unborn grandchildren. They renege on their debts and bad bets with impunity.
How long before consumers refuse to play by rules that no longer exist all the way to the highest levels of government?
There may be a point where the adult population looks around and sees that almost everyone they know has ruined credit. At that point, defaults could explode as people decide it is futile to pay back debts if nobody else does.
Say credit card defaults go to 50% and 50% of mortgages go into foreclosure, would that be a tipping point or critical mass of widespread insolvency that could exponentially compound, finding expression in the realization that to refusal to cooperate with the confidence game would end the confidence game that is destroying the country.
What happens when people can't play the game anymore? How long before there are so many losers in the game that those who still have the means to continue gambling in the ponziconomy refuse to play?
If everyone ends participation in the credit system, the credit system dies. If the suckers forsake the casino, the casino gets shuttered. Revenge against the suicide bankers by consumer debt renouncement could be an unintended result of Total ethical failure of US financial institutions and regulators.
The debts of the US and it's citizens are not serviceable at current low wage and diminishing price levels.
US citizens could all of a sudden decide to act together and teach the gods of finance a lesson.
Americans are trained that the only way they can affect their universe is by altering their purchasing habits.
A credit boycott could have the same end as debt destruction through monetizing hyperinflation except banks die instead of profiting on the destruction.
Their is a real danger of an American revolution where people participate by doing nothing.
News flash: "EVERETT, Washington (AP) -- Boeing Co. said Tuesday it has again delayed the first test flight of its long-awaited 787 jetliner, citing a need to reinforce part of the aircraft."
These people have as much credibility as Geithner; they've been making it up as they go along. More negative for the PNW.
More importantly IMNSHO, the May 2009 vs. May 2008 decline was proportionately larger than the April 2009 vs. April 2008 decline...and that with the Fed buying agency MBS and an $8K incentive...
JD did you know who Thomas was or did you have to look him up? Either way LOL....
One of the greatest contrasts in America, is West Point and Newburgh, NY.
On one end you have an austere healthy vibrant well kept college of war and just 20 minutes down the road they are doing drug deals on the street and poverty is apparent.
Thomas Selfridge's tombstone in the cemetery @ West Point is quite amazing, with a state-of-the-art 1908 propeller look to it.
Hypothetically, the USD could be the strongest currency in the world even though it is worth only 1% of a 1912 dollar when compared to a loaf of bread.
Rob Dawg said: "...Sebastian, this is your recovery?"
May 2002 absolute sales above May 2001 sales, May 2003 absolute sales above May 2002 sales, May 2004 absolute sales above May 2003 sales, May 2005 absolute sales over May 2004 sales. Rob Dawg, is this your collapse?
See how dumb that "argument" sounds?
As I said on the other thread, I'm not seeing any "green shoots" anywhere, but automatically denying all information that doesn't fit your position is a great way to get blindsided.
Exactly. i remember when the bubble first started deflating and David Lereah did his best Chip Diller imitation calming the masses by emphasizing that y-o-y was the metric and those first instances of m-o-m declines were an aberration and seasonal variation.
If they were let into the playoffs and awarded a bye, and THEN you'd have the U.S. Dollar.
If they were let into the playoffs and awarded a bye, and their opponents couldn't afford the air charter to the game (conceding), and THEN you'd have the U.S. Dollar.
....if financiers and CEOs of the top companies are selling their companies stocks 22X over purchases ($120m bought vs. $2.6b sold) and bonuses are up, looting will be continuing until the major breakup and subsequent mushroom shaped clouds appear on the horizon.
When the mice jump overboard, folks, you assume there are leaks.
Debtor's prisons would not even be possible with perhaps 30% of the US population insolvent.
The USA, has about two percent of her population imprisoned, already the largest convict population in the World. Even if they let all the pot dealers go there is not enough room in jail.
Since it is impossible to create an actual debtor's prison another alternative is for the Gov-O-Bankers to use ubiquitous surveillance and a cashless society to monitor all transactions and enforce poverty for debt slaves through unavoidable wage garnishment.
Yea but the EU Team only shows up with the defensive line, no quarter back and sans a kicker... Japan sends only its sumo wrestlers and China fails to show at all...
As I said on the other thread, I'm not seeing any "green shoots" anywhere, but automatically denying all information that doesn't fit your position is a great way to get blindsided
I will agreed with Seb on that point, but if the information is a blatant lie how else is one suppose to interpret it? Housing is dead...except it.
Gents, Seb is using non-seasonally adjusted data and the mean and not the median or CS index. I think he's just looking for a rise out of you... Anyone who's read more than 3 posts by CR would see the faults in the logic....
It will get better some time. No doubt.... Just not yet...
but then the fed gives ford 5 billion today and that will be to buy subprime car buyers because it's portion of buying pool has grown substantially...the continuing saga of credit score destruction!
whats amazing is that with the low interest rates we had during that time, the fairly substantial tax credit (especially as a % of a low home price) and the rise in equities, that we dont see even better numbers than this. What this tells me is that it is going to be a very difficult second half "recovery". When I think of home sales recovering now, I basically think, recovering back to their recent low, and then heading further south. Only thing that stops this now is the potential rise from 8k to 15k on the credit. Fundamentals are not driving this market, and the months supply numbers are completely wrong, because there is massive undercounting of inventory.
JimPortlandOR (profile) wrote on Tue, 6/23/2009 - 11:16 am replyIgnore userAny speculation on the treasury auctions?
There will be some, more each month, until everybody has had too much turkey.
You did mention that the turkey smelled a little gamey, and the neighbors have been wondering if you've seen their mule, gone run oft now 5 days ago...
Sebastian,
The point of my exercise was to show there isn't so much as an inflection point being hinted at. If we can't get an inflection going into the peak selling season then we aren't going to get one until at least next year.
Regardless, declining sales rates and declining medians and declining averages means that equity destruction proceeds apace. There will be no recovery until the net cumulative value of US real estate stops declining.
Benny boy bought a 1/3rd on offer yesterday...why would it be any different today?
They'll just continue to buy up the issues no matter what they are "worth"...it's alot like using BAC for a depository of ML and CFC. We all know they are/were fairly worthless but that didn't stop the actual transaction from happening. It's the same with any debt issued by the T.
Business as usual....as long as GS gets to be the intermediary and book whatever fee's it see's fit to charge for being "selected" to do so. I have no respect for any of these guys in a trading environment simply because there is no skill or knowledge required when someone does all the work for you and you just cash a check.
Someone wrote above that they are sure quantitative easing is increasing the money supply sufficiently to cause hyperinflation.
Two things to remember:
Most of the money supply is created by bank lending through the multiplicative action of the fractional reserve mechanism. If loans outstanding fall due to banks' unwillingness to lend, and the public's unwillingness to take on more debt, the multiplication factor falls, and the Fed has to push that much more money into the system just to keep the effective money supply stable.
The fundamental equation is PQ = MV -- price times quantity-of-sales equals money-supply times velocity. So even if the quantity of money is stable, prices can fall if velocity -- the pace of transactions -- falls.
It was for these two reasons that the Bank of Japan was unable to halt deflation there through its quantitative easing exploits. Read Richard Koo's "Balance Sheet Recession".
People are entirely too disbelieving of coincidence. They are far too ready to dismiss it and to build arcane structures of extremely rickety substance in order to avoid it. I, on the other hand, see coincidence everywhere as an inevitable consequence of the laws of probability, according to which having no unusual coincidence is far more unusual than any coincidence could possibly be.
German exports fell 21.2 percent year-on-year in the first quarter of 2009, RTTNews reported June 23, citing a report from the Federal Statistical Office. Exports to countries outside the EU dropped 19.6 percent, while shipments to China fell 3.3 percent. Shipments to Switzerland were down 7.3 percent, and exports to India dropped 8 percent. Above-average decreases were seen in exports to Turkey, which fell 38.7 percent, and to Russia, which fell 31.4 percent. Exports to the United States were down 26.4 percent, and those to Japan fell 22.4 percent."
The falloff in monthly home sales from the 2005/2006/2007 peaks to the 2008 levels is dramatic. The drop from 2008 to 2009 is far smaller. Clearly not a recovery, but in any turnaround the first thing that has to happen is for the deterioration to slow down, and that's precisely what's happening. Not because I say so, but because CR's own chart does.
Or look at CR's chart of existing homes' months of supply. It illustrates an even more striking and compelling example of how much the housing market deterioration has slowed.
Want to make the argument that housing is dead now and will be for years to come? Fine with me, I get it. But making such an argument by denying information isn't the way to go about it. That's the point that I'm trying (and clearly failing) to make, not that housing and the economy are improving right now.
shill (profile) wrote on Tue, 6/23/2009 - 10:56 am
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Face it Americans are tapped out in all sectors, personal, corporate, and public. We talk and talk about recovery and Green shoots, but never ever brought up in the conversation is swindle" and "fraud.
Is it possible we don't talk about it is because virtually everybody is into fraud and swindle: we don't recognize it any more or worse still accept that we would do the same under those conditions/
Couple of examples- the most obvious the use of the home as an ATM but also the stink that some credit card holders are making because they might lose some of their perks. It apparently didn't occur to them that those perks are being paid for by the swindle of the victims of credit card abuse.
All their credibility is gone and all the credit has evaporated, not just nationally for US consumers but globally for the US government. The US government will default on it's debt one way or another and so will the US consumer.
It is inevitable. We can only speculate on the ultimate response of the citizen consumer.
But,
What if the consumer won by keeping all their crap and not paying for it?
What if the US consumer got the last laugh by opting out first?
blackhat: the pension crisis pretty much reflects how Ponzi our economy really is, needing a constant influx of capital at the base to sustain the top.
"...poverty for debt slaves through unavoidable wage garnishment."
That was the Soviet way, except that there was no garnishment, simply low wages. Taxes were low, but with low wages that was a meaningless benefit to wage earners.
However, such a system is not possible in a market economy, since there is no scarcity of consumer goods and the system depends on buying power to stay airborne.
sebastian - look at 2007, and you'll see that any midcourse improvement does not necessarily have to be sustained. This one wont be either. Once the bottom fishing slows, the next step is the collapse of the mid to high end markets. Only when that market starts a recovery in a few years do we get any kind of real overall market balance. And even then, there's no good reason to think we'll see any solid improvement. We are literally mortgaging this country's future right now, and continue to do so more each day.
Sebastian,
Surely you are familiar with base levels above zero and exponential decay.
Back in 2005 there were 85m houses and 6m+ sales. 2009, 90m houses and 4.8m sales. 14yr rollover to a 19yr churn rate. Collapsing less fast is still collapsing.
otizhertz,
I've been thinking along similar lines recently. We got a lot of cheap goods from China and gave them paper in return. Who is the dependent party? I'm thinking its the Chinese. They need us to make good on the debts; but if we defaulted we still have the stuff. Not all of it is worthless...a lot of things like basic tools are really low tech anyway.
What I see here is demand being pulled forward, and new home buyers jumping into a market that could quite possibly leave them underwater on their shiny new mortgages within a year.
Has anyone attempted a cost-benefit analysis on whether $1.8T in new debt, and the $7T in implicit guarantees (not including the rest of the $13.9T not yet allocated) is actually providing a better value than doing nothing would have?
just bustin your balls Sportsfan. Its a shame we wont have him to kick around anymore. At least weve got Yun and many others always ready to make their monthly appearances. I wonder how many bloody marys Yun has to toss back at the end of each monthly reporting cycle?
Notice how when the market went up the last few months, how all the cranks here disappeared...sebastian was due to appear soon. And of course, his timing is typical for him...completely wrong. He comes in when the market and economy are ready for their next leg down. Heck, Jas might as well show up for a buttkicking about now too...He'll pile back into treasuries just long enough to set himself up for bernanke's next slaughterhouse move.
Just watch, this summer, the comments here are going to become unreadable again. Just hope it doesnt make more good commenters like csc and ehp disappear. That was a bummer.
The "appraisal problem" that Yun talks of is that many appraisers are in CYA mode and just appraising 15% below current comps. That wouldn't be bad if the comps were from last year during the seller's strike, but going off comps in the last 90 days.
This makes it hard for people to agree on price, for buyers to get financing, especially brutal for custom homebuilders who were crazy enough to build on spec.
Right, and the US consumer can continue making purchases in the Craigslist economy for years while the PTB are busy washing the ostrich shit out of their hair.
We have all that we need right here in the good ol' USA, and what we don't have we can and will make. Other things we have been sold we never really needed. How much of what we get from China is essential to survival? Do they need our food?
The US is going to be a manufacturing powerhouse again. The way I see it, this is the positive part of currency debasement. After an initial freak out, US citizens will foresake consumerism, turn off the party organs, and go to work.
We can sell short the unabankers, we can sell short the US government, we can sell the market, we can sell the dollar, we can sell bonds, but the US citizen will ultimately kick ass.
"The US is going to be a manufacturing powerhouse again."
How is that going to happen after we've spent the last 20 year's dismantling it? Try and get a loan to start up any business, let alone something that produces hard goods. Oh and while you're at it who is going to buy them? The Chinese?
I've thought about this 16 ways from Sunday, and I've concluded that most of the housing market (in my area at least) is "optional," that is, people who want to move but don't really, truly have to move. If that's the case, it explains why prices are so sticky around here, and why remodeling is still going on. In other words, people during the boom were moving on a whim, just to collect their winnings and get a nicer kitchen. Now, they're either desperate, or not serious at all, just fishing. (I'm not talking about the alt-A and other distressed sellers here.)
Conceivably some of these "shadow sellers" will keep testing the waters, until they either give up or capitulate, making the shadow inventory a constant trickle over a longer period of time, rather than a sudden flood. Maybe we will see 10-12 months of inventory as the new permanent normal.
FWIW the bankers I have talked to (we're looking to refi just to get the 4 1/2 % interest rate) tell me that refis are strong-- but new mortgages are not happening. IMO many "shadow sellers" are "parking" for the long run.
"Has anyone attempted a cost-benefit analysis on whether $1.8T in new debt, and the $7T in implicit guarantees (not including the rest of the $13.9T not yet allocated) is actually providing a better value than doing nothing would have?"
I don't know about that but $14T into 300 million is $46,666.66 per US citizen. Lot's of beneficial things could have been done with that money like creating a massive wave of optimism, health and prosperity by replacing the death care cartel with free health care for everyone.
It is hard to doubt that this option would have had a greater economic impact and would be more politically stabilizing than paying the suicide banker's ransom.
shill said: "I agree Seb, all I am saying is that the ATM portion of Housing is gone for quite a long time."
For some homeowners I'm sure that's true. But for the ones who were more conscientious it's not.
Take me, for example. I have considerable home equity and got a big HELOC last Fall, most of which is untouched. However, between a daughter going to college soon and some long-delayed home maintenance I'm going to be spending a ton of money this year and my spending will be at above-average levels for the next 4 years.
And my neighborhood and the other ones around me are filled with people in much the same position.
GDD9000 said: "...Notice how when the market went up the last few months, how all the cranks here disappeared...sebastian was due to appear soon. And of course, his timing is typical for him...completely wrong. He comes in when the market and economy are ready for their next leg down...."
I don't know who you are or from whence you came, but you're clearly behind the times, at least in terms of your familiarity with my positions on the stock market and the economy.
I've been waiting (impatiently) for this next leg down in the stock market, and expect the broad indices to retest their March lows, at least. Needless to say, I'm looking for a good short entry.
As for the economy, there is no end in sight for the recession, although it's important to keep an open mind, since neither expansions or contractions last forever. I follow the NBER's data points for measuring the economy (theirs are as good as anyone else's). The last month for which all 4 pieces of NBER data were available was March, and all showed "recession." In April, 3 of the 4 showed "recession" and for May 2 of the 4 showed "recession."
So if you're going to hang out here, you'll need to get more current than you are.
We have a culture that confuses motion with action- therefore to be doing "something" will always be regarded being better even if doing nothing is in fact the better option.
I think Obama will pay the political price for his hubris. Trying to lead with a stimulus plan even if it was the right thing was politically dumb. He now owns the economy. I think he would have been better advised to have spoken truth to the American people - we have lived beyond our means and the time has come to pay the bill. However, while we right size our economy and restructure we should make sure that the basic services- healthcare housing and food are available to the victims of the readjustment.
Tactically if you are going to intervene you have to make sure its going to work. The federal government catching a falling knife doesn't work any better than a private individual. Had the stimulus been delayed 6 months or so the cliff diving would have continued and the stimulus would have kicked in from an oversold condition and actually improved things rather than making them bad less quickly.
Blue - yes, there were, at least here on the West Coast. I refinanced my house a month and a half ago and locked a 30 year fixed at 4.7. I had many options as to who to go with as well, it was a matter of who was giving me the least closing costs.
These are great, CR. You should consider producing graphs more often.
Nemo's monkey is back from hatzius....
(offal leftovers)
I think Mish has painted himself into a corner. He was right early on, but needs to change his tune to fit the changing times...
Hyperinflation needs a tangible vehicle, be it debased coinage or debased currency. We will not see that beast, but a different kettle of fish heretofore unseen, so we have no idea what to look for, hidden away inside our enigma machines.
May 2009 absolute sales below May 2008 sales May 2008 absolute sales below May 2007 sales May 2007 absolute sales below May 2006 sales May 2006 absolute sales below May 2005 sales. May 2009 absolute sales 30% below May 2005 sales.
Sebastian, this is your recovery?
[OT: The Transports are driving the markets again today. ]
The fish is staring straight at you, with big eyeballs.
If you saw a car wreck on the street, you would say "That's a car wreck."
When you see currency debasement right in front of you, as in Quantitative Easing, why is it so hard for people to say: "That's currency debasement"?
Leaders have deluded people into not believing what they see. The Fed isn't gonna raise any time soon. The Fed isn't gonna unwind. That's delusion
JD - The Big Picture had a good article a while back on the people who have got it right and the people who have gotten whacked. Basically people that were even keel and not hyper extreme ended up doing a lot better thru this turmoil than the extremes. Nothing's static... (I dont know BR's portfolio returns over the last 5+ years but I bet they are stellar. He went back 25% in right at the last major drop. I bet he's up 30+ percent on that, he was largely cash and T-Bills going in to the crash...)
I would write my Congressional reps to oppose Summers as FRB chair, but I figure it's a waste of time. I'll just get back a canned response 6 months later telling me why I'm incorrect.
rich the USD had been doing ok as of late no? I think the Euro might get hammered over the next 3+ years. Spain and Ireland are in lots of trouble, France is hurting too... Will Japan be able to keep the Yen down (or up as they always invert that ratio) is a big question in my mind. I'd agree that the Yuan should smoke the dollar in the future but then again they also have a reason to suppress it so who knows... USD vs Pound is a wash in my mind...
Face it Americans are tapped out in all sectors, personal, corporate, and public. We talk and talk about recovery and Green shoots, but never ever brought up in the conversation is swindle" and "fraud.
Kunstler is correct " The reason they're missing is because if they happened to enter the conversation, something would have to be done about them, namely investigations and prosecutions.
I am thinking instead of concentrating our efforts toward a recovery we all know is bunk, we should be putting our best foot forward prosecuting the people that caused the mess.
Why does anyone even pay attension to the Fed "debate" over rates. They don;t have a choice. ECB Weber of Bundesbank fame saif this am that the "room" to cut rates is gone and no more stimuls. As they race heats up to attract capital to sovereign debt, investors will vote not the FOMC. This is going to get itneresting...
Debasement is lagged Rubin policy.
I think there is a compelling case that shadow inventory is added to the market over years, coupled with further employment deterioration, coupled with further boomer economic portfolio deterioration (honey we just can't keep the 3rd timeshare beach-house), coupled with further demographic mortality--that is all to say, this will be a generational event of at best flat housing prices. Inflation adjusted, housing will return to the norm of being a horrible investment.
--bh
I don't advocate defaulting on your debts, I'm saying widespread debt dumping rooted in insolvency can catalyze with political dissent into a neutron bomb that leaves no banker standing. The bad banks could conceivably be forced to fail by the people.
The bankers steal, they gamble, they pay bonuses today with money borrowed against future tax dollars earned by unborn grandchildren. They renege on their debts and bad bets with impunity.
How long before consumers refuse to play by rules that no longer exist all the way to the highest levels of government?
There may be a point where the adult population looks around and sees that almost everyone they know has ruined credit. At that point, defaults could explode as people decide it is futile to pay back debts if nobody else does.
Say credit card defaults go to 50% and 50% of mortgages go into foreclosure, would that be a tipping point or critical mass of widespread insolvency that could exponentially compound, finding expression in the realization that to refusal to cooperate with the confidence game would end the confidence game that is destroying the country.
What happens when people can't play the game anymore? How long before there are so many losers in the game that those who still have the means to continue gambling in the ponziconomy refuse to play?
If everyone ends participation in the credit system, the credit system dies. If the suckers forsake the casino, the casino gets shuttered. Revenge against the suicide bankers by consumer debt renouncement could be an unintended result of Total ethical failure of US financial institutions and regulators.
The debts of the US and it's citizens are not serviceable at current low wage and diminishing price levels.
US citizens could all of a sudden decide to act together and teach the gods of finance a lesson.
Americans are trained that the only way they can affect their universe is by altering their purchasing habits.
A credit boycott could have the same end as debt destruction through monetizing hyperinflation except banks die instead of profiting on the destruction.
Their is a real danger of an American revolution where people participate by doing nothing.
News flash: "EVERETT, Washington (AP) -- Boeing Co. said Tuesday it has again delayed the first test flight of its long-awaited 787 jetliner, citing a need to reinforce part of the aircraft."
These people have as much credibility as Geithner; they've been making it up as they go along. More negative for the PNW.
RD,
More importantly IMNSHO, the May 2009 vs. May 2008 decline was proportionately larger than the April 2009 vs. April 2008 decline...and that with the Fed buying agency MBS and an $8K incentive...
Month over Month is just misdirection.
We have temporarily arrived at the New Normal.... ;-0
(from last thread by nades)
JD did you know who Thomas was or did you have to look him up? Either way LOL....
One of the greatest contrasts in America, is West Point and Newburgh, NY.
On one end you have an austere healthy vibrant well kept college of war and just 20 minutes down the road they are doing drug deals on the street and poverty is apparent.
Thomas Selfridge's tombstone in the cemetery @ West Point is quite amazing, with a state-of-the-art 1908 propeller look to it.
I would write my Congressional reps to oppose Summers as FRB chair, but I figure it's a waste of time.
Writing your Congressperson would be a waste of time. Only the Senate confirms.
Hypothetically, the USD could be the strongest currency in the world even though it is worth only 1% of a 1912 dollar when compared to a loaf of bread.
Basel,
Right. I was referring to members of Congress in the large sense; Congress = House + Senate, no?
Leaving equities and in to treasuries... Jas will be back....
Congress = Fornicate + Lepers, no?
--bh
Imagine if the Oakland Raiders had a 4-12 season and were let into the playoffs in spite of their record, and you'd have the U.S. Dollar.
Rob Dawg said: "...Sebastian, this is your recovery?"
May 2002 absolute sales above May 2001 sales, May 2003 absolute sales above May 2002 sales, May 2004 absolute sales above May 2003 sales, May 2005 absolute sales over May 2004 sales. Rob Dawg, is this your collapse?
See how dumb that "argument" sounds?
As I said on the other thread, I'm not seeing any "green shoots" anywhere, but automatically denying all information that doesn't fit your position is a great way to get blindsided.
Sebastian
JD,
If they were let into the playoffs and awarded a bye, and THEN you'd have the U.S. Dollar.
--bh
We have temporarily arrived at the New Normal.... ;-0
"The Trouble with normal is it always gets worse"
-- Bruce Cockburn
Month over Month is just misdirection.
Exactly. i remember when the bubble first started deflating and David Lereah did his best Chip Diller imitation calming the masses by emphasizing that y-o-y was the metric and those first instances of m-o-m declines were an aberration and seasonal variation.
If they were let into the playoffs and awarded a bye, and THEN you'd have the U.S. Dollar.
If they were let into the playoffs and awarded a bye, and their opponents couldn't afford the air charter to the game (conceding), and THEN you'd have the U.S. Dollar.
Sebastion,
One data point is a great way to get suckered.
--bh
Jim,
I stand corrected.
--bh
One important consideration about the housing bubble, is homes are really useful.
(Not tulip bulbs, silver, beanie babies, John Law schemes, tin, baseball cards, or other usual bubble debris)
....if financiers and CEOs of the top companies are selling their companies stocks 22X over purchases ($120m bought vs. $2.6b sold) and bonuses are up, looting will be continuing until the major breakup and subsequent mushroom shaped clouds appear on the horizon.
When the mice jump overboard, folks, you assume there are leaks.
Debtor's prisons would not even be possible with perhaps 30% of the US population insolvent.
The USA, has about two percent of her population imprisoned, already the largest convict population in the World. Even if they let all the pot dealers go there is not enough room in jail.
Since it is impossible to create an actual debtor's prison another alternative is for the Gov-O-Bankers to use ubiquitous surveillance and a cashless society to monitor all transactions and enforce poverty for debt slaves through unavoidable wage garnishment.
There will be no freedom in a cashless society,
Yea but the EU Team only shows up with the defensive line, no quarter back and sans a kicker... Japan sends only its sumo wrestlers and China fails to show at all...
As I said on the other thread, I'm not seeing any "green shoots" anywhere, but automatically denying all information that doesn't fit your position is a great way to get blindsided
I will agreed with Seb on that point, but if the information is a blatant lie how else is one suppose to interpret it? Housing is dead...except it.
Gents, Seb is using non-seasonally adjusted data and the mean and not the median or CS index. I think he's just looking for a rise out of you... Anyone who's read more than 3 posts by CR would see the faults in the logic....
It will get better some time. No doubt.... Just not yet...
In other News:
Austria has announced it will sell debt denominated in USD, CHF and JPY. Good to see someone's fair opinion of what is most overvalued in this world.
ZeroHedge
A friend drives 90 miles to and from the prison where he works, and he says the real danger is letting out all the meth-odd actors...
"There will be no freedom in a cashless society"
....other things take its place even now..........glod, silver, beans, corn, a chicken, a 1/2 dozen eggs, etc., etc.
nice rant --- - .. ... .... . .-. - --..
When consumers return to citizens we all win!
but then the fed gives ford 5 billion today and that will be to buy subprime car buyers because it's portion of buying pool has grown substantially...the continuing saga of credit score destruction!
this ones got some legs today... this could be a killer week.....
Any speculation on the treasury auctions?
whats amazing is that with the low interest rates we had during that time, the fairly substantial tax credit (especially as a % of a low home price) and the rise in equities, that we dont see even better numbers than this. What this tells me is that it is going to be a very difficult second half "recovery". When I think of home sales recovering now, I basically think, recovering back to their recent low, and then heading further south. Only thing that stops this now is the potential rise from 8k to 15k on the credit. Fundamentals are not driving this market, and the months supply numbers are completely wrong, because there is massive undercounting of inventory.
what black hat said above.....+1
"who knows what evil lurks.......the shadow INVENTORY knows"
Just another in a long line of denial for Mr. Wright B. above. Clinging to a report issued by N.A.R. is desperation at it's finest.
Ciao
MS
Someday China doesnt show up and refuses to buy (for a short period of time) just to make a point.... Its not this week tho... Business as usual...
Any speculation on the treasury auctions?
There will be some, more each month, until everybody has had too much turkey.
The one-armed outdoor bandit is getting well over $3 for go-juice now.
If people were freaked out by high gas prices back when they had jobs last year, imagine what it feels like now?
JimPortlandOR (profile) wrote on Tue, 6/23/2009 - 11:16 am replyIgnore userAny speculation on the treasury auctions?
There will be some, more each month, until everybody has had too much turkey.
You did mention that the turkey smelled a little gamey, and the neighbors have been wondering if you've seen their mule, gone run oft now 5 days ago...
--bh
Sebastian,
The point of my exercise was to show there isn't so much as an inflection point being hinted at. If we can't get an inflection going into the peak selling season then we aren't going to get one until at least next year.
Regardless, declining sales rates and declining medians and declining averages means that equity destruction proceeds apace. There will be no recovery until the net cumulative value of US real estate stops declining.
mmmm roast "turkey" with mule gravy and biscuits.
Benny boy bought a 1/3rd on offer yesterday...why would it be any different today?
They'll just continue to buy up the issues no matter what they are "worth"...it's alot like using BAC for a depository of ML and CFC. We all know they are/were fairly worthless but that didn't stop the actual transaction from happening. It's the same with any debt issued by the T.
Business as usual....as long as GS gets to be the intermediary and book whatever fee's it see's fit to charge for being "selected" to do so. I have no respect for any of these guys in a trading environment simply because there is no skill or knowledge required when someone does all the work for you and you just cash a check.
Ciao
MS
Someone wrote above that they are sure quantitative easing is increasing the money supply sufficiently to cause hyperinflation.
Two things to remember:
It was for these two reasons that the Bank of Japan was unable to halt deflation there through its quantitative easing exploits. Read Richard Koo's "Balance Sheet Recession".
Thanks for that post.
FT.com / Global Economy - OECD warns on pensions crisis
OT, but nice little piece from FT on looming pension crisis.
This will be part of the lost decade/s. Cutting the benefits and eating the seedcorn of the younger underemployed workforce.
--bh
People are entirely too disbelieving of coincidence. They are far too ready to dismiss it and to build arcane structures of extremely rickety substance in order to avoid it. I, on the other hand, see coincidence everywhere as an inevitable consequence of the laws of probability, according to which having no unusual coincidence is far more unusual than any coincidence could possibly be.
Asimov
" June 23, 2009
German exports fell 21.2 percent year-on-year in the first quarter of 2009, RTTNews reported June 23, citing a report from the Federal Statistical Office. Exports to countries outside the EU dropped 19.6 percent, while shipments to China fell 3.3 percent. Shipments to Switzerland were down 7.3 percent, and exports to India dropped 8 percent. Above-average decreases were seen in exports to Turkey, which fell 38.7 percent, and to Russia, which fell 31.4 percent. Exports to the United States were down 26.4 percent, and those to Japan fell 22.4 percent."
jm,
right.
--bh
OT - Ed McMahon no longer with us. A long saga comes to an end:
Ed McMahon dead at 86 -- latimes.com
shill said: "Housing is dead...accept it."
Or you could look at CR's own charts.
The falloff in monthly home sales from the 2005/2006/2007 peaks to the 2008 levels is dramatic. The drop from 2008 to 2009 is far smaller. Clearly not a recovery, but in any turnaround the first thing that has to happen is for the deterioration to slow down, and that's precisely what's happening. Not because I say so, but because CR's own chart does.
Or look at CR's chart of existing homes' months of supply. It illustrates an even more striking and compelling example of how much the housing market deterioration has slowed.
Want to make the argument that housing is dead now and will be for years to come? Fine with me, I get it. But making such an argument by denying information isn't the way to go about it. That's the point that I'm trying (and clearly failing) to make, not that housing and the economy are improving right now.
Sebastian
sportsfan - you are correct sir! but totally OT!
shill (profile) wrote on Tue, 6/23/2009 - 10:56 am
* reply
* Ignore user
Face it Americans are tapped out in all sectors, personal, corporate, and public. We talk and talk about recovery and Green shoots, but never ever brought up in the conversation is swindle" and "fraud.
Is it possible we don't talk about it is because virtually everybody is into fraud and swindle: we don't recognize it any more or worse still accept that we would do the same under those conditions/
Couple of examples- the most obvious the use of the home as an ATM but also the stink that some credit card holders are making because they might lose some of their perks. It apparently didn't occur to them that those perks are being paid for by the swindle of the victims of credit card abuse.
creditcriminalslovetarp,
All their credibility is gone and all the credit has evaporated, not just nationally for US consumers but globally for the US government. The US government will default on it's debt one way or another and so will the US consumer.
It is inevitable. We can only speculate on the ultimate response of the citizen consumer.
But,
What if the consumer won by keeping all their crap and not paying for it?
What if the US consumer got the last laugh by opting out first?
blackhat: the pension crisis pretty much reflects how Ponzi our economy really is, needing a constant influx of capital at the base to sustain the top.
"...poverty for debt slaves through unavoidable wage garnishment."
That was the Soviet way, except that there was no garnishment, simply low wages. Taxes were low, but with low wages that was a meaningless benefit to wage earners.
However, such a system is not possible in a market economy, since there is no scarcity of consumer goods and the system depends on buying power to stay airborne.
sebastian - look at 2007, and you'll see that any midcourse improvement does not necessarily have to be sustained. This one wont be either. Once the bottom fishing slows, the next step is the collapse of the mid to high end markets. Only when that market starts a recovery in a few years do we get any kind of real overall market balance. And even then, there's no good reason to think we'll see any solid improvement. We are literally mortgaging this country's future right now, and continue to do so more each day.
GDD, between a famous foreclosure and cash4gold, I thought it marginally relevant, but, yes, OT.
Have a good day, folks. Off to what passes for work.
Sebastian,
Surely you are familiar with base levels above zero and exponential decay.
Back in 2005 there were 85m houses and 6m+ sales. 2009, 90m houses and 4.8m sales. 14yr rollover to a 19yr churn rate. Collapsing less fast is still collapsing.
otizhertz,
I've been thinking along similar lines recently. We got a lot of cheap goods from China and gave them paper in return. Who is the dependent party? I'm thinking its the Chinese. They need us to make good on the debts; but if we defaulted we still have the stuff. Not all of it is worthless...a lot of things like basic tools are really low tech anyway.
I agree Seb, all I am saying is that the ATM portion of Housing is gone for quite a long time.
So other than Credit cards and of course employment what other form of credit extraction can the middle class tap to sustain or implement a recovery?
Note: Your child's piggy bank is not credit extraction facility
What I see here is demand being pulled forward, and new home buyers jumping into a market that could quite possibly leave them underwater on their shiny new mortgages within a year.
Has anyone attempted a cost-benefit analysis on whether $1.8T in new debt, and the $7T in implicit guarantees (not including the rest of the $13.9T not yet allocated) is actually providing a better value than doing nothing would have?
just bustin your balls Sportsfan. Its a shame we wont have him to kick around anymore. At least weve got Yun and many others always ready to make their monthly appearances. I wonder how many bloody marys Yun has to toss back at the end of each monthly reporting cycle?
Notice how when the market went up the last few months, how all the cranks here disappeared...sebastian was due to appear soon. And of course, his timing is typical for him...completely wrong. He comes in when the market and economy are ready for their next leg down. Heck, Jas might as well show up for a buttkicking about now too...He'll pile back into treasuries just long enough to set himself up for bernanke's next slaughterhouse move.
Just watch, this summer, the comments here are going to become unreadable again. Just hope it doesnt make more good commenters like csc and ehp disappear. That was a bummer.
The "appraisal problem" that Yun talks of is that many appraisers are in CYA mode and just appraising 15% below current comps. That wouldn't be bad if the comps were from last year during the seller's strike, but going off comps in the last 90 days.
This makes it hard for people to agree on price, for buyers to get financing, especially brutal for custom homebuilders who were crazy enough to build on spec.
KungFU Panda,
Right, and the US consumer can continue making purchases in the Craigslist economy for years while the PTB are busy washing the ostrich shit out of their hair.
We have all that we need right here in the good ol' USA, and what we don't have we can and will make. Other things we have been sold we never really needed. How much of what we get from China is essential to survival? Do they need our food?
The US is going to be a manufacturing powerhouse again. The way I see it, this is the positive part of currency debasement. After an initial freak out, US citizens will foresake consumerism, turn off the party organs, and go to work.
We can sell short the unabankers, we can sell short the US government, we can sell the market, we can sell the dollar, we can sell bonds, but the US citizen will ultimately kick ass.
Bet on it.
"The US is going to be a manufacturing powerhouse again."
How is that going to happen after we've spent the last 20 year's dismantling it? Try and get a loan to start up any business, let alone something that produces hard goods. Oh and while you're at it who is going to buy them? The Chinese?
I needed a good laugh.
Ciao
MS
Looks like Pavel was right: there is a God.
Harvard University to Cut 275 Jobs as Endowment Sinks (Update1)
Harvard University to Cut 275 Jobs as Endowment Sinks (Update3) - Bloomberg.com
I.V. League
I've thought about this 16 ways from Sunday, and I've concluded that most of the housing market (in my area at least) is "optional," that is, people who want to move but don't really, truly have to move. If that's the case, it explains why prices are so sticky around here, and why remodeling is still going on. In other words, people during the boom were moving on a whim, just to collect their winnings and get a nicer kitchen. Now, they're either desperate, or not serious at all, just fishing. (I'm not talking about the alt-A and other distressed sellers here.)
Conceivably some of these "shadow sellers" will keep testing the waters, until they either give up or capitulate, making the shadow inventory a constant trickle over a longer period of time, rather than a sudden flood. Maybe we will see 10-12 months of inventory as the new permanent normal.
FWIW the bankers I have talked to (we're looking to refi just to get the 4 1/2 % interest rate) tell me that refis are strong-- but new mortgages are not happening. IMO many "shadow sellers" are "parking" for the long run.
"Has anyone attempted a cost-benefit analysis on whether $1.8T in new debt, and the $7T in implicit guarantees (not including the rest of the $13.9T not yet allocated) is actually providing a better value than doing nothing would have?"
I don't know about that but $14T into 300 million is $46,666.66 per US citizen. Lot's of beneficial things could have been done with that money like creating a massive wave of optimism, health and prosperity by replacing the death care cartel with free health care for everyone.
It is hard to doubt that this option would have had a greater economic impact and would be more politically stabilizing than paying the suicide banker's ransom.
Problem is, your government prefers that you die.
shill said: "I agree Seb, all I am saying is that the ATM portion of Housing is gone for quite a long time."
For some homeowners I'm sure that's true. But for the ones who were more conscientious it's not.
Take me, for example. I have considerable home equity and got a big HELOC last Fall, most of which is untouched. However, between a daughter going to college soon and some long-delayed home maintenance I'm going to be spending a ton of money this year and my spending will be at above-average levels for the next 4 years.
And my neighborhood and the other ones around me are filled with people in much the same position.
We just don't happen to live in California.
Sebastian
Have you tried to access that HELOC lately? I'm guessing it's a lot less than it originally was.
GDD9000 said: "...Notice how when the market went up the last few months, how all the cranks here disappeared...sebastian was due to appear soon. And of course, his timing is typical for him...completely wrong. He comes in when the market and economy are ready for their next leg down...."
I don't know who you are or from whence you came, but you're clearly behind the times, at least in terms of your familiarity with my positions on the stock market and the economy.
I've been waiting (impatiently) for this next leg down in the stock market, and expect the broad indices to retest their March lows, at least. Needless to say, I'm looking for a good short entry.
As for the economy, there is no end in sight for the recession, although it's important to keep an open mind, since neither expansions or contractions last forever. I follow the NBER's data points for measuring the economy (theirs are as good as anyone else's). The last month for which all 4 pieces of NBER data were available was March, and all showed "recession." In April, 3 of the 4 showed "recession" and for May 2 of the 4 showed "recession."
So if you're going to hang out here, you'll need to get more current than you are.
Sebastian
Comrade Alexei Mikhailovich: "Have you tried to access that HELOC lately? I'm guessing it's a lot less than it originally was."
You'd be guessing wrong.
Honest to God! Has this board gotten even more polarized than it was before?
Calculated Risk is on his way to becoming a victim of his own success.
S.
So have you tried to access it?
We have a culture that confuses motion with action- therefore to be doing "something" will always be regarded being better even if doing nothing is in fact the better option.
I think Obama will pay the political price for his hubris. Trying to lead with a stimulus plan even if it was the right thing was politically dumb. He now owns the economy. I think he would have been better advised to have spoken truth to the American people - we have lived beyond our means and the time has come to pay the bill. However, while we right size our economy and restructure we should make sure that the basic services- healthcare housing and food are available to the victims of the readjustment.
Tactically if you are going to intervene you have to make sure its going to work. The federal government catching a falling knife doesn't work any better than a private individual. Had the stimulus been delayed 6 months or so the cliff diving would have continued and the stimulus would have kicked in from an oversold condition and actually improved things rather than making them bad less quickly.
Blue - yes, there were, at least here on the West Coast. I refinanced my house a month and a half ago and locked a 30 year fixed at 4.7. I had many options as to who to go with as well, it was a matter of who was giving me the least closing costs.
good reading...recommended articles