We'll see how 3 months of IOUs in 5 states helps. Then add in increased unemployment. Include some additional shadow inventory coming into the light. Vastly reduced State government spending reciprocated with vastly reduced sales receipts revenue and income tax revenue. I'd say 3Q 2009 we'll see the familiar cliff diving line again toward the more adverse scenario and beyond.
--bh
Back out the $8,000 everyone gets and $18,000 in combined incentives first time California buyers are getting and tell me where the curve really lands.
The suprise we'll be when "unpredicabley" large number of the first time knife catchers default under the new incentivized system as unemployment still continues to adjust to a permanently lower demand environment.
From the BIS statistics, they appear to have managed to restart the Mortgage Backed Security pipeline first quarter this year to near 2007 levels, which should also help support prices at a higher level than would otherwise be the case. Presumably what's happening is that they're selling the loans that are being made to the foreclosure knife catcher's at the moment. Some of it may also be the GE loans CR highlighted yesterday. There's a certain irony in that, given that the original loans wouldn't have gone bad if the securitization process hadn't allowed them to make so many of them.
The other question of course, is who out there is still stupid enough to be buying them.
The suprise we'll be when "unpredicabley" large number of the first time knife catchers default under the new incentivized system as unemployment still continues to adjust to a permanently lower demand environment. --bh
California's $10,000 incentive fund runs dry next week. We'll see that in the DataQuick July data ~ Aug 20th.
So far, let's say 2 more years, I reject the hypothesis that prices will rise. IMO the best you get is a flat-line, for the next 10-20 years in RE. At best.
I see more room for decline, even with direct intervention and injection of "capital". The problem is that the capital is simply being destroyed in a matter/anti-matter collision between price fantasy and price reality.
Second, I don't see wage inflation.
Third, the outcome will be less stuff to buy, more work to earn less stuff. A kind of inflation, a kind of debasement of currency, and kind of "we will diminish".
CR: technical question more about the last thread: Are the declines from peak for the individual cities the declines from each city's individual peak, or from the time that the CS index as a whole rolled over? Not every city his its peak at the same time.
Annual inflation in the 16-nation eurozone dropped below zero for the first time, with consumer prices 0.1 percent lower in June than they were in June 2008, Financial Times reported June 30, citing figures published by Eurostat."
RD the $8-18K show its does indirectly back stops bank and property tax loss, By prices not dropping as fast. Tax money for banks and government the long way home. Consumers end up with over inflated expenses all around.
Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today in a report. First-time foreclosure filings on the loans rose 22 percent from the fourth quarter, the report said.
But but but the rate of personal savings ( personal income less personal outlays ) surged to 6.9 percent in May, a level last seen in December 1993.
Is this a green shoot ?
Seems like something "blew up" in the last 30 minutes? Don't normally see a dump like that... looks like money flowing from equities into bonds... went from +0.5 to -1.2 in 30 minutes...
YLSP said: "Seems like something "blew up" in the last 30 minutes? Don't normally see a dump like that... looks like money flowing from equities into bonds... went from +0.5 to -1.2 in 30 minutes..."
Speaking as a reformed bull, I think this means it's almost time to get short the market in a major way. Big rally in a long-term downtrend, coming into the absolute weakest season of the year, economic recession, looks like everything's lining up.
no question the rate of house price decline is slowing, I see it everyday. and someone above was correct, with this much money in the system it is inevitable that price declines will stop, and maybe even rise slightly.
someone else mentioned, take out the incentives and see how prices did. true, the incentives are making a huge difference from what i can see, but that is the inflationist's point, isn't it? free money is sloshing around the system and sooner or later it will result in inflation, and in the meantime it is landing in unequal ways. you can't offer this much support to the system and expect it not to make a difference. whether or not it was money well spent is another discussion.
what i wonder is what happens when we hit bottom. let's say house prices stop declining by the end of this year (just making this up). now we have a ton of homeowners sitting with underwater mortgages, that aren't getting worse, but aren't getting better. we have new homebuyers who, if they buy today, may not lose equity, but won't gain equity either, and equity extraction was a huge driver of the last bubble.
The only thing keeping the S&P 500 from falling below 600 is the threat of inflation via monetary foolishness. If people ever conclude that deflation is upon us stocks will get slaughtered.
Welcome to the brave new world of Macro Imprudential Mismanagement.
"The Labor Department says jobless rates in May rose from a year earlier in all 372 metropolitan area it tracks.
The unemployment rate in Kokomo, Ind., jumped to 18.8 percent, up 11.7 percentage points from a year ago, the largest increase of all metro areas. The second-highest jump occurred in Indiana's Elkhart-Goshen. Its rate jumped to 17.5 percent, up 11.4 percentage points from a year earlier. Both areas have been slammed by layoffs in transportation equipment manufacturing."
That Little Hoover is a compliment to Hoover and refers to the post-WWII commissions when Truman hired his respected friend ex-president Hoover to investigate government waste.
OT / Madoff
Why Not Confine Bernie Madoff to a Supermax?
,,, gary-weiss.com: Why Not Confine Bernie Madoff to a Supermax?
...
"I'd toss him in one of the supermaxes. There is one supermax facility in Florence, Colorado. (There used to be one in Marion, Illinois, but it ain't supermax no more.)
After a few weeks in FCI Florence, I'll bet his stonewalling on his accomplices will come to an end, and that he'll be squealing like a rat in heat--even if it means turning in his sons, his wife, or even his mother if she were still alive.
Bankrate is showing 30 yr fixed jumbo mortgage rates at 7.05%. Somehow, I don't think that is going to be a positive for the Case Shiller Index going forward.
Unemployment in some parts of California's Central Valley is @ around 40%, but all they do there is grow food, not something important like making land yachts or auto parts...
Unemployment in some parts of California's Central Valley is @ around 40%, but all they do there is grow food, not something important like making land yachts or auto parts...
They grow TONS of food in Indiana too [one of the top soybean, corn & livestock states]... just that this kind of food production requires very few bodies.
ghostfaceinvestah said: "...what i wonder is what happens when we hit bottom. let's say house prices stop declining by the end of this year (just making this up). now we have a ton of homeowners sitting with underwater mortgages, that aren't getting worse, but aren't getting better. we have new homebuyers who, if they buy today, may not lose equity, but won't gain equity either, and equity extraction was a huge driver of the last bubble."
IMO, you're lumping all homeowners together, as if they all made their MEW at the same time, when it may only have been the most reckless/short-sighted ones. In my case, my equity is huge, my HELOC has scarcely been touched, and I've got a huge MEW still ahead of me, i.e., daughter's college expenses and long-delayed home maintenance. If nothing else, me and other homeowners like me who were equally prudent will provide the new spending that will check the economy's slide, even if we don't turn things around.
Obamma,s policies may not be working as well as many had hoped:
1st 100 days - There are 2.9 million more people unemployed in May than there were unemployed in January. The unemployment rate went from 7.6% to 9.4%. Since May 2008, we have lost 5.5 million jobs. The biggest losers were: Manufacturing 1.5 million lost Finance & Prof Serv 1.5 million lost Construction 1.1 million lost Retail & Leisure 1.3 million lost
Where is nemo?
Nemo must still have a job... Too bad for him.... LOL !
Remarkable.
We'll see how 3 months of IOUs in 5 states helps. Then add in increased unemployment. Include some additional shadow inventory coming into the light. Vastly reduced State government spending reciprocated with vastly reduced sales receipts revenue and income tax revenue. I'd say 3Q 2009 we'll see the familiar cliff diving line again toward the more adverse scenario and beyond.
--bh
Which way does the seasonal adjustment push April data?
Back out the $8,000 everyone gets and $18,000 in combined incentives first time California buyers are getting and tell me where the curve really lands.
RD,
The suprise we'll be when "unpredicabley" large number of the first time knife catchers default under the new incentivized system as unemployment still continues to adjust to a permanently lower demand environment.
--bh
From the BIS statistics, they appear to have managed to restart the Mortgage Backed Security pipeline first quarter this year to near 2007 levels, which should also help support prices at a higher level than would otherwise be the case. Presumably what's happening is that they're selling the loans that are being made to the foreclosure knife catcher's at the moment. Some of it may also be the GE loans CR highlighted yesterday. There's a certain irony in that, given that the original loans wouldn't have gone bad if the securitization process hadn't allowed them to make so many of them.
The other question of course, is who out there is still stupid enough to be buying them.
beyond fubar.
-- w
Shnaps: Scribd (Page 6) Bottom
JP, the SA data shows a larger decline in April than the NSA data. But the opposite was true in the earlier months.
best wishes
All prices rise when you increase the money supply. wait till the banks start lending risk capital again....
HOME PRICE INDICES S&P/CASE-SHILLER
It's not the money supply that's the problem - it's the loan supply.
-- w
CR,
in case you didn't know about this
Little Hoover Commission
CA Little Hoover Commission
The suprise we'll be when "unpredicabley" large number of the first time knife catchers default under the new incentivized system as unemployment still continues to adjust to a permanently lower demand environment. --bh
California's $10,000 incentive fund runs dry next week. We'll see that in the DataQuick July data ~ Aug 20th.
so, we're comparing assumptions against averages....
that should work
warlock i think the loan supply is just right... then again i dont mind 4$/gallon gas and think thats about right too....
UnQualified,
So far, let's say 2 more years, I reject the hypothesis that prices will rise. IMO the best you get is a flat-line, for the next 10-20 years in RE. At best.
I see more room for decline, even with direct intervention and injection of "capital". The problem is that the capital is simply being destroyed in a matter/anti-matter collision between price fantasy and price reality.
Second, I don't see wage inflation.
Third, the outcome will be less stuff to buy, more work to earn less stuff. A kind of inflation, a kind of debasement of currency, and kind of "we will diminish".
--bh
Thanks CR. I assume that the smoothness of the scenarios indicate that Geitner et al were using SA numbers? (or were they lines on a paper.)
Dawg, your methodology question caused more posts in the pigged thread, fwiw.
That was an interesting discontinuity... did we just drop 1%? across all indexes? Maybe 0.75 %...
8550 to 8506 in 10 min on Dow
929 to 923 on SP500
Bit of a stumbled off a cliff...
Consumer confidence makes for unhappy players today.
CR: technical question more about the last thread: Are the declines from peak for the individual cities the declines from each city's individual peak, or from the time that the CS index as a whole rolled over? Not every city his its peak at the same time.
Dirk, the declines are from the peak for each individual city series.
best wishes
OT--truck index up 3.2% in May, down 11% y/y.
thanks for the carification CR
oops clarification, Ken could you add spell check to your wonderful system
No time to read thread, but msnmoney sez this is good news, 'cause
the drop was NOT A RECORD for 3 months in a row. Whoop de do.
liz: you need to get with the program, c'mon now, put a coat hangar in your mouth and show them pearly whites
Let them eat upside-down cake...
Dirk - see that "edit" link to the right of the comments you have made recently? It really works!
Elmo hungry! Me want breaker day!
Dirk - see that "edit" link to the right of the comments you have made recently? It really works!
And use firefox, the spell check is builtin.
Any other helpful suggestions required?
I guess if you are blind it is easier to get blindsided. From Bloomberg
Confidence among U.S. consumers slipped unexpectedly in June, reflecting a weak labor market.
Consumer Confidence in U.S. Slipped to 49.3 in June (Update1) - Bloomberg.com
" June 30, 2009
Annual inflation in the 16-nation eurozone dropped below zero for the first time, with consumer prices 0.1 percent lower in June than they were in June 2008, Financial Times reported June 30, citing figures published by Eurostat."
"Homequity" ...when there's so little equity left that you have to share a vowel movement.
RD the $8-18K show its does indirectly back stops bank and property tax loss, By prices not dropping as fast. Tax money for banks and government the long way home. Consumers end up with over inflated expenses all around.
Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today in a report. First-time foreclosure filings on the loans rose 22 percent from the fourth quarter, the report said.
Delinquencies Double on Least-Risky Loans, U.S. Says (Update2) - Bloomberg.com
I'm long unexpectation.
CR, you forgot the Stress Test Theme Song:
YouTube - Kenny Rogers & The First Edition - Just Dropped In
But but but the rate of personal savings ( personal income less personal outlays ) surged to 6.9 percent in May, a level last seen in December 1993.
Is this a green shoot ?
Reign of Error = Lies, Damned Lies, and Statistics
Seems like something "blew up" in the last 30 minutes? Don't normally see a dump like that... looks like money flowing from equities into bonds... went from +0.5 to -1.2 in 30 minutes...
Better Stress Test Theme Song:
YouTube -
RE: morning market action. Could be that nobody wants to be blamed for Thursday.
YLSP said: "Seems like something "blew up" in the last 30 minutes? Don't normally see a dump like that... looks like money flowing from equities into bonds... went from +0.5 to -1.2 in 30 minutes..."
Speaking as a reformed bull, I think this means it's almost time to get short the market in a major way. Big rally in a long-term downtrend, coming into the absolute weakest season of the year, economic recession, looks like everything's lining up.
Sebastian
no question the rate of house price decline is slowing, I see it everyday. and someone above was correct, with this much money in the system it is inevitable that price declines will stop, and maybe even rise slightly.
someone else mentioned, take out the incentives and see how prices did. true, the incentives are making a huge difference from what i can see, but that is the inflationist's point, isn't it? free money is sloshing around the system and sooner or later it will result in inflation, and in the meantime it is landing in unequal ways. you can't offer this much support to the system and expect it not to make a difference. whether or not it was money well spent is another discussion.
what i wonder is what happens when we hit bottom. let's say house prices stop declining by the end of this year (just making this up). now we have a ton of homeowners sitting with underwater mortgages, that aren't getting worse, but aren't getting better. we have new homebuyers who, if they buy today, may not lose equity, but won't gain equity either, and equity extraction was a huge driver of the last bubble.
The only thing keeping the S&P 500 from falling below 600 is the threat of inflation via monetary foolishness. If people ever conclude that deflation is upon us stocks will get slaughtered.
Welcome to the brave new world of Macro Imprudential Mismanagement.
MSA UE on rise...
"The Labor Department says jobless rates in May rose from a year earlier in all 372 metropolitan area it tracks.
The unemployment rate in Kokomo, Ind., jumped to 18.8 percent, up 11.7 percentage points from a year ago, the largest increase of all metro areas. The second-highest jump occurred in Indiana's Elkhart-Goshen. Its rate jumped to 17.5 percent, up 11.4 percentage points from a year earlier. Both areas have been slammed by layoffs in transportation equipment manufacturing."
Kokomo = Delphi
Elkhart = RV industry
That Little Hoover is a compliment to Hoover and refers to the post-WWII commissions when Truman hired his respected friend ex-president Hoover to investigate government waste.
OT / Madoff
Why Not Confine Bernie Madoff to a Supermax?
,,, gary-weiss.com: Why Not Confine Bernie Madoff to a Supermax?
...
"I'd toss him in one of the supermaxes. There is one supermax facility in Florence, Colorado. (There used to be one in Marion, Illinois, but it ain't supermax no more.)
After a few weeks in FCI Florence, I'll bet his stonewalling on his accomplices will come to an end, and that he'll be squealing like a rat in heat--even if it means turning in his sons, his wife, or even his mother if she were still alive.
Bankrate is showing 30 yr fixed jumbo mortgage rates at 7.05%. Somehow, I don't think that is going to be a positive for the Case Shiller Index going forward.
7.05%! Ouch!
From previous thread about Krugman's historically misguided use of Hoover in his "little Hoovers":
Hoover deficit-spent (ending the Coolidge surpluses).
Hoover's Deficit Spending | CEI
FDR attacked Hoover's deficits in the 1932 campaign--but ultimately ran his own deficts (similar to Obama's reversal after attacking Bush spending).
The Defining Moment: FDR's Hundred ... - Google Books
PS: Congress controls the purse.
Unemployment in some parts of California's Central Valley is @ around 40%, but all they do there is grow food, not something important like making land yachts or auto parts...
Fed Expands TALF To Include Legacy CMBS
Fed Expands TALF To Include Legacy CMBS
Unemployment in some parts of California's Central Valley is @ around 40%, but all they do there is grow food, not something important like making land yachts or auto parts...
They grow TONS of food in Indiana too [one of the top soybean, corn & livestock states]... just that this kind of food production requires very few bodies.
ghostfaceinvestah said: "...what i wonder is what happens when we hit bottom. let's say house prices stop declining by the end of this year (just making this up). now we have a ton of homeowners sitting with underwater mortgages, that aren't getting worse, but aren't getting better. we have new homebuyers who, if they buy today, may not lose equity, but won't gain equity either, and equity extraction was a huge driver of the last bubble."
IMO, you're lumping all homeowners together, as if they all made their MEW at the same time, when it may only have been the most reckless/short-sighted ones. In my case, my equity is huge, my HELOC has scarcely been touched, and I've got a huge MEW still ahead of me, i.e., daughter's college expenses and long-delayed home maintenance. If nothing else, me and other homeowners like me who were equally prudent will provide the new spending that will check the economy's slide, even if we don't turn things around.
Sebastian
Edit: Dinsdaled.
fwiw... Denver, the only market I care about, had it's largest month/month gain in seasonally adjusted home prices since 2001.
We need to stop the corruption by Goldman, bank of Amerika, and Jp Morgan. Stop the Geithner and bernanke. .
Financial Opinions Updated Daily iamned.com
read the full Rolling Stone [Taibbi] The Great American Bubble Machine article.
Obamma,s policies may not be working as well as many had hoped:
1st 100 days - There are 2.9 million more people unemployed in May than there were unemployed in January. The unemployment rate went from 7.6% to 9.4%. Since May 2008, we have lost 5.5 million jobs. The biggest losers were: Manufacturing 1.5 million lost Finance & Prof Serv 1.5 million lost Construction 1.1 million lost Retail & Leisure 1.3 million lost
good articles Financial Opinions Updated Daily iamned.com
recommended reading
Why isnt the stock market falling when the economy is sinking? Why cant we get change in Washington that we really need? Why vote?