Rental vac's
On the Up and up.

Renting in Silicon Valley has never been better.

If only Sun Microsystems would finally die and lay everyone off, my utopia would be complete.

Congress is the snake that will swallow itself, but probably not before it ruins us too.

Ive been calling my representatives about this housing credit, trying with logic to stop it. Please don't make me feel alone

(202) 224-3121. Congress - Switchboard, Ask for your rep (during normal business hours so write this down now for tomorrow)

I'm just not as loud and shrill as NAR realtors. I need your help.

"Welcome to the Fed's nightmare."

Ouch... that really stings, CR!

"...falling rents are already pushing down owners' equivalent rent (OER), and my guess is OER will probably turn negative soon. Since OER is the largest component of CPI (and almost 40% of core CPI), this will push down CPI for some time."

If the Fed had not switched from using sales prices of homes to OER, we would have had headline inflation far higher earlier on and they would have had to tighten policy and should have prevented the bubble IMO. Of course, we would have been reading stories about "The Great Recession" in 2003, IMO as well.

I propose a new misery index. UE + RRE vacancy + CRE vacancy + Case-Shiller = Equity Evaporation Index

The EEI is waiting for Case-Shiller tomorrow morning.

CR needs more roast beef.

The EEI is waiting for Case-Shiller tomorrow morning.

Don't hold your breath for more misery tomorrow -- it may take a couple more months:

http://2.bp.blogspot.com/_F-Z51q1pTp8/Sp292j_kU_I/AAAAAAAAAOU/y88Lq7s8Ozo/s1600-h/forecast-0908.png

"The S&P500 will be where 3 years from now?"

in 2009 or 2012 dollars?

black halo...

2012 dollars I guess.

"i think that 95 to 99% of economics is really applied mathematics with a political agenda."

I agree.

"i don't have the intellectual firepower to engage in this kind of discussion anyways."

I disagree.

"If the Fed had not switched from using sales prices of homes to OER, we would have had headline inflation far higher earlier on and they would have had to tighten policy and should have prevented the bubble IMO. Of course, we would have been reading stories about "The Great Recession" in 2003, IMO as well."

You are so right, Doc Holiday. Of course, the intent all along was to avoid having to take away the punchbowl, and if that meant changing the breathalyzer, well, so be it.

for the first time in quite some time, CR, I disagree, and strongly, with your view

OER just will not show (or be allowed to show?) the reduction in rents that is predicted, and even if it does, other parts of CPI will continue to offset it due to the slow but steady dollar devaluation (relative to hard assets, commodities, PMs etc).

I would actually argue that this is an intended consequence (of sorts).

Failure of the smaller banks and preservation of the money center banks is the most important aspect of the Fed's de facto 'plan.'

Yes, we will have a stagnant economy, but that was going to be the case once we entered into the grand experiment of intensive government interference.

Pressure on rents, mild deflation (which will show up in CPI-U as 0-1% inflation), these are fine for those holding large amounts of cash - and the first holders of that cash are those who most needed it and they are - yes the money center banks.

I do not think very mild inflation or even trivial deflation will be a true Fed nightmare. This was one of the outcomes they could 'live with.'

Japan on some scale is being repeated. It wasn't the end of the world there, and it won't be here.

It certainly isn't the best result though.

Rob Dawg wrote:

Rather I expect two more reports up and then flat until spring.

I was with you until you got to the flat part...

Never underestimate those pesky senior citizens and the lack of COLAS. There will certainly be some lump sum payments to lessen the negative financial impact.

" senior citizens and the lack of COLAS."

No COLA for SS in 2010. Boomers aren't collecting (much) SS yet.

Renting in Silicon Valley has never been better.

Please give some details...

"I don't think that US citizens will be as passive as their Japanese counterparts."

In what sense?

with minimal snark, let's just say that their liabilities are all of our liabilities now

TBTF is national policy now, or did you forget?

"smith's wealth of nations.....is the basis of our, er, entire system."

Arguably, no. The world that Adam Smith described was vastly different than today .. And anyway, you are putting Smith in the same boat as the Vasco de Gama crowd, who explored continents merely for riches.

Read Jared Diamond's 'Guns, Germs, Steel" (or watch the PBS series if you don't like big books), "People's History of the United States" if you have time.

Finish off by reading a little Thomas Malthus, then a little about Schumpeter's creative destruction ... and then read 'Extraordinary Delusions and the Madness of Crowds" to understand bubbles and malinvestment.

Finish it by reading 'Collapse' and James Kunstler's weekly column in 'clusterfucknation.com"

You won't be any better off emotionally, spiritually, financially, or make better comments.... but it'll keep you off the streets for a while.

I can't tell if you are kidding...

Try Catton's "Overshoot" for a little pick me up there...

U.S. citizens have lots of guns at their disposal, I think is what is being conveyed here...

Q: WTF is this dude talking about??

Monetization of U.S. Treasury Bonds In Isolation :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website
A key point must be mentioned. We are fast in the land of the non-linear, where discontinuous events occur, and disjointed price movements are highly likely. The ground from under the currency market is shifting in an unstable fashion. See the British Pound Sterling in the last week. It has jumped up and fallen down by 200 basis points in several days. Even the Euro has shown unstable movement. That is akin to a hanging lamp in your study, or a displayed chandelier in the living room, and see it shift to and fro in grand swings. Something big is coming and soon. All billboards scream it!!

JPMorgan sees 'perfect storm' for yen in Q4 - The China Post

The yen's momentum will accelerate as the global economy recovers and interest rates in countries including the U.S. and the UK stay near zero, he said.

Loynes emphasised he saw no indication that the sterling exchange rate had become “detached from fundamentals”, or any “danger of dropping through the floor”.

He considered sterling’s fall a “fairly rare ray of light” amid the “general gloom surrounding the economy”.

Loynes said it could be the UK’s “best chance” in what “looks likely to be a fairly severe fiscal squeeze over the next few years”.

“The U.K. is pretty well set for a recovery but the banking sector is not in good shape and it will take a long time before the balance sheets of the banks are fully repaired and the ability to provide credit to the economy to finance expansion will be returned to normal,” the Newcastle Journal cited him as saying in a Sept. 24 interview. The pound’s drop is “very helpful” in rebalancing the economy, King said.

Japan’s Deflation Deepens as Prices Fall Record 2.4% (Update2) - Bloomberg.com

Japan’s consumer prices fell the most in at least 38 years in August, heightening the risk that prolonged deflation may hamper the country’s recovery from its deepest postwar recession.

YouTube - Lucy in the Sky with Diamonds

"I keep reading comparisons of the USA's economic future to the past 15 years in Japan. I don't get it. Let's look at Japan:"

I keep comparing the US to UK circa 1930....more interesting.

Comrade Misean is Dope wrote:

I keep comparing the US to UK circa 1930....more interesting.

So a militarized Mexico aligned with Venezula attacks the down and out US until China comes to our rescue? [ducks]

I keep comparing the US to UK circa 1930....more interesting.

Perhaps we should call our Treasury bonds "guilts"

Anyone keeping an eye on things, like I have KNOWS that the real threat comes from seething Granadans.

I thought it was the Canadians about to pour across our 3000 mile undefended border in search of our high-quality health care?

energyecon, re: your posted story of natgas storage, muted price signals
Every derivative is a bet, and they can affect price so long as they can create sell more derivatives to absorb the difference between demand and production. Usually the derivative makers win or manage their capitulation. Not often we get to see them hit the wall of limited physical storage. Cataclysmic that they will hit oil and natgas at the same time. That was one of the few strong economic sectors, other than capital intensive/price sensitive exports such as pulp+paper/chemicals/agriculture.
Did I mention that weakening commodity prices will force unwinds of short dollar positions and cause lack of confidence in the decoupling/risk-on trade -- which will hurt the export sectors. I should note that nominal currency derivatives are down YoY, but not as much as trade and the interest rate arbitraging no longer provides the steadying influence on the financial flows side. The industrial production already arrived in Q3 and will either be flat or cut in Q4. All that is left is the shrinking of the trade deficit and government stimulus to add to GDP. We're looking at +0-2% GDP in Q3 and -4 to -7% in Q4 depending on the strength of the USD and what employment decisions are made. Possible -8% annualized rate if retail/restaurants weakens early, while USD climbs, govt spending is constrained, and employers adjust their spending to sideways demand all at once. (not bothering to check, but narrowing trade deficit added ~2% in Q2 and should be slightly more for Q3 and govt stimulus should add at least 3-4% in Q3. all one off increases for the growth rate)
I know there's a lot of economists transfixed on their models heavily weighted to SA industrial production, stock market performance, and time since peak in initial claims calling for GDP to be around +4% in Q4 -- but if I was wrong, we would see their scenario today be increasing:
- temporary staffing
- improvement in hours worked
- restaurants and retail raising guidance
- P&G not be cutting prices
- increases in oil consumption
Instead we will see auto sales on Thursday below 9mn SAAR (Ford and GM need 12mn to avoid layoffs by year end, and for Ford to avoid bankruptcy). Auto Sales - Markets Data Center - WSJ.com
Now keep in mind across the globe it took 3,6,8 months to bring various stimulus programs into effect. The only one with a significant plan in place ready to turn on is China, and govts there are trying to raise tax revenue 100bn yuan to reduce the budget deficit. Merkel is expected to allow the crackdown on companies having their workers collect the slack time subsidy despite working fulltime. Spain and Greece are in free fall economically and socially. All across the world governments are getting popular pushback against spending cuts/tax increases because the sentiment is that we've passed through the worst, but those governments cutting the most are majorities.
This is all insane. Complacency of the idiots.
oh, and based on some fiddling around with the census age demographic projections and an econ paper published in 2002. P/E ratios should decline into the single digits by 2012. Combined with the pro-credit con-equity factors of no more cheap credit to fuel unprofitable M&A deals, it's something you can bank on. If that wasn't enough, there should be low growth too because of overcapacity in existing goods/services demanded. And there isn't the fallback of expansionary monetary policy this time because we don't have another world's cheap factory to unlock and offset the current easy money policy in conjunction with decreasing prices of goods. We can't even trade for lower savings, lower quality, or lower interest rates -- have have hit all the limits. It could a series of crises over decades to build up these delayed adjustments, and I remain convinced that it's different this time. Back in 2001 no one knew what would lead the way out, but by 2002 the trend of easy credit could be seen. We're a solid year in, and the only thing we can be sure of is for another major downleg across the board.

CR,
I ended up thinking about why the early 1980s recession may have felt worse than today, and have a few questions and leads.
First of all the question: when did it start to feel 'bad', and approximately how long did it last? How much of it was carried over from events in the 70s?
As for the leads
refer to: FRBSF Economic Letter: New Highs in Unemployment Insurance Claims (2009-28, 9/8/2009)
unemployment is different this time.
More people eligible for UI do claim it
The share of newly unemployed today is much more those who were in long term steady jobs and then laid off. So they have savings to fall back on, unlike the majority of newly unemployed in the early 80s who were young people just entering the work force. People today may even have a house they're living in rent free.
There could have been a cycle that has passed with regards to drug and crime.
Today's recession can challenge the early 80s on just about every metric I have seen, notably labor force turnover / duration of unemployment / opportunities per unemployed. All that remains to be seen is how long it lasts, and that could be a very important part of how 'bad' it feels. The early 80s had ~4 (?) years to fester

OT Congressional action on Health care:
I hadn't heard that a medicare contractor landed in hot-water over mailings warning seniors that their benefits might be cut by ObamaCare.

The text that got everyone pissed off was this:
Leading health reform proposals being considered in Washington, D.C., this summer include billions in Medicare Advantage funding cuts, as well as spending reductions to original Medicare and Medicaid. While these programs need to be made more efficient, if the proposed funding cut levels become law, millions of seniors and disabled individuals could lose many of the important benefits and services that make Medicare Advantage health plans so valuable.

Hahahaha... I guess these plans gave up their "free speech" when they become gov't contractors?

p.s.: Misean!!! Don't be such a stranger! Stick around and have a

The Montreal Canadiens have a skilled and fast, but small and fragile team this season. Unless it's a specialized major surgery like hockey hips, they'll probably have it taken care of when they get back to Montreal.

Oh so long ago Patrick Roy was a Montreal Canadian... hockey is an old-man-friendly sport...

The "Fed's Nightmare?"

They desire cover for the massive reflation attempt. You illuminated the optimal scenario for the Fed: OER declines and RE prices are propped up. Some CRE gets burned in the process. Few scenarios are perfect.

"Few scenarios are perfect."

Then there's ones cooked up by Ivy-League Ebubblemists working for the Feral Reserve....

No way kick the can has come to an end.

The debt ceiling will be raised... and then some more pumping can continue...

EHP, great analysis. All I would add is to not expect China to add much to the table except a nice platter of black swans -- they're juggling massive amounts of cash and debt, and as novices to the game. have shown every novitiate's tendency to error. But the size of what they now manage means any miscalculation will be brutal for the rest of the world, and they won't have the "expertise" (can I call it that?) of the Fed at the helm.

"they're juggling massive amounts of cash and debt, and as novices to the game. have shown every novitiate's tendency to error. But the size of what they now manage means any miscalculation will be brutal for the rest of the world,"

"However, once the pound-gold price stabilizes, they can be left off the hook...."

Back to where I started. Nytol.

Davids and Goliaths online - Views - livemint.com

Minch’s video has let loose several threads of debate on many websites. While many people have voiced support and sympathy, others have taken the opportunity to talk about the inherent perils in America’s credit culture.

All it takes for an Ann Minch to get her grouse out to millions is a few moments with her computer, perhaps with a webcam. For companies, by contrast, such a video or blog post can be the equivalent of someone standing outside every single branch office shooing away customers.

How do companies respond? After all, complaints and irate customers are unavoidable.

Last week, ECRI Managing Director Lakshman Achuthan told
Reuters that the group expects an "unstoppable" recovery with
"no relevant roadblocks." Fears over mounting unemployment,
debt-laden consumers, and dips in recovery are typical of
recessionary times, he said.

Supposedly we'll see positive job growth within a month, 2 at the most. Idiot is unphased that the gap between his leading and lagging indicators is growing. Nor is he concerned that the leading index is based on a plethora of false signals ranging from credit markets that are effectively regulated, to the stock market, to SAAR data that is thrown off by rescheduling of production.

"Deflation causes trouble because purchases get delayed,"

I'd argue with this silliness, and point out that deflation is a monetary phenomenon, but I'm a bit peckish, as I've heard food will be cheaper next week, so it's been I bit since I ate.

Something here does suggest that there is a lack of equilibrium and that there is a lot of chaotic "logic" being used, or is this just distorted wishful thinking ....

“Deflation is engulfing the country and the slump in Japan’s economy will likely worsen, pushing investors to sell companies depending on domestic demand.”

The Nikkei and Topix lost 5 percent in the previous two days, the most since March 31, on concern the dollar’s depreciation will eat into companies’ profits. Yesterday, Nikkei-listed shares traded at 39.3 times estimated net income for this year, the lowest level since July 16, according to data from Nikkei Inc., which compiles the gauge. Japan Stocks Rise, Outweighing Deflation Concern; Nomura Climbs - Bloomberg.com

“My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel.”
—Saudi saying

Is there a means where one can trade camel futures?

Interesting post from Chris Martenson's blog:

"...the Federal Reserve is not just supporting the housing market, it is the housing market.

....Ultimately the mortgage may pass through several sets of hands but ultimately it lands with a terminal holder.

In that chain, the mortgage might get sold off several times, or perhaps sliced and diced by Wall Street wizards, but all that matters is that some company (with cash) is there at the end to buy the mortgage to keep the whole chain moving along.

Lately, the "terminal buyers" in that chain have increasingly ended up being the federal government (through the GSEs) and the Federal Reserve.

And not just by a little bit, but by a lot.

Here are the numbers:..."

100% - Federal Reserve Buys More Than 100% of Mortgages Issued in 2009 - Sep. 28, 2009 | Blogs at Chris Martenson - 100%, Chris Martenson's Blog, Federal Reserve, mortgages

Hmmmm, it doesn't feel like vacancy rates are above 10 percent; I would have expected to see more 'Move In Specials' or first month free type deals, like in the early '90s.

Rent deflation will pull down home prices, while increasing RRE and CRE defaults.

and in the event that the CRE and RRE defaults are made whole on the banks books by backdoor 'printing' (purchase of deafaulted bonds/ABS)?

It is awfully hard to get a substantial true wage price deflation spiral in a fiat currency system...

Completely agree. Real cap expenditure that would generate productivity growth that would result in increased standard of living can't generate the same rate of return short term that the finance/outsourcing house of cards does. So capital flows into the credit bubble until it goes bust.

Oh, and CR's chart of the long term rental vacancy rate is an argument for zero investment in multifamily RE for quite a while.

YouTube - TWIST & SHOUT- The Isley Bros on WAND (124)

We can't rely on the growth from regular innovation because it can't provide the rates of return at the global level necessary to match the assumptions made when planning was done relying on credit growth to continue its acceleration to provide a steady rate of growth in the economy which justified the new borrowing itself circularly.

Translate into English rather than Canadian, EHP... you're saying that deflation makes debt too damn expensive for even good ideas to risk funding?

Well, I would point to Japan as a counter argument. They have falling wages and general falling prices, after almost 20 years of inflationary fiscal and monetary policy.

The carry trade wisked away all attempts at local inflation. We may suffer the same problem, if China does not play along.

His post doesn't make any sense - he is comparing home sales to MBS issuance?

a large part of MBS issuance this year was refis.

Having said that, the Fed is buying nearly ALL of Fannie and Freddie's new MBS issuance. THAT is the real hidden story - Bernanke is enabling the Administration to put off reforming Fannie and Freddie, so they can use them as off-balance-sheet policy tools.

Without Bernanke, the Fannie/Freddie MBS market implodes. FHA would have an 80% market share.

That's a good point. The excess money supply in Japan was a significant factor in inflating asset prices around the world. Now that the yen carry trade is dead, we should expect to see galloping inflation in Japan in the next few years. Except that the capital flow back to Japan is just sitting in bank reserves, I think.

I am returning to your comment We can't rely on the growth from regular innovation which is the effect of innovation on economic growth, and the implication of it being squeezed out. *Whatever *your credit/debt equilibrium is, unless there is some ponzi at the side promising outrageous returns, eventually we'll have to rely on investing on growth from true innovative functions.

As a technologist, I am only interested in when the system is ready to start investing again in core technological advances: sounds like it is still wrapped up in pricing the value of its old mistakes?

DCRogers,
Can you name an innovation that create $5.5tn of new demand (10% of global GDP) this year, $6tn the next, and so on? It doesn't exist. Most big technology related returns are from assuming market share. Eventually competition commoditizes the innovation and the profitability goes to maintenance mode. So we need all-new demand. Like a toilet that will give you diagnostics every time you use it (already exists btw). Why do you think the best and brightest found it logical to pursue finance instead of R&D? The virtual/promised/ponzi financial returns exceeded what real centers of innovation could provide. I'm not talking about a theoretical upper limit of innovation growth rate. I'm talking about what has empirically happened. Can you tell me why we didn't have a terraforming planets bubble instead of a a financial one like housing? Why not an augmented reality revolution instead of CDOs?

DCRogers,
During the carry trade windup inflation did increase, and vice versa deflation increased during carry trade wind down. Trust me on that or look up the data yourself

I'll rely on trust here, and re-think this problem.

edit: my assumption was that the Japanese were trying to inflate their way out of deflation, and the carry trade stopped them in their tracks -- I'll have to look closer now.

DC,
There's a chart Japan Economy Watch: Japan Emerges From Recession, But The Slump Continues at the link that shows Japan's retail cpi since 2006.

Japan,
BIS carry trade: http://emsnews.files.wordpress.com/2009/06/japanese-carry-trade-graphs.png?w=650&h=572
Ministry of finance CPI: http://www.fundsupermart.com.my/main/articleFiles/webarticles/63/MY/2008AugJapan4.jpg
quick google search that show adequate data. it's harder to spot the connection, but it's there. notice the change in 2005-2007 when the carry trade ramped up as the easy yields ran out and leverage was the answer

Ouch, that's pretty hazy: as a statistician, I'd call it uncertain, and want statistical backup. But being that it is late at night, I'm willing to let this one go.

Comrade Gibbon: Nice anecdote.

2001: unwind. deflation.
2005: windup. inflation.
left to its own devices, there is a natural deflation domestically with government stimulus programs factored in. The government is just maintaining the total domestic pile of debt level. It would need to grow that debt pile in order to spur inflation. Keep in mind the changes in the domestic economy over that time period.
carry trade shifts it in either direction. dominant theme post-asian flu
It also makes logical sense. Borrow Yen, Buy USD, Buy Commodities. Yen is down, commodities are up in USD, so inflation is up in a yen based economy. similarly a carry trade unwind indicates a lack of global growth, and likely decreased capacity utilization in Japan which is an added deflationary force
Download the data directly, and you will be able to convince yourself.

DCRogers,
They do say that about emerging economies, because they only need to apply already developed technology. However, if that were right then Africa would have the worlds' highest growth rates and China's infrastructure projects would be able to cover their costs within the project lifetime. Things get complicated. fwiw -- I don't think it has ever been empirically backed up, it's more of a talking point for people selling investments

non-bank outrage of the day

Video of 16-year old honors student beaten to death 
The tone in this article should anger everyone...
But while that investigation goes on, students say they will remember Derrion Albert as a good kid. A quiet, smart kid with no gang affiliation. But just a kid who may not have had enough street smarts to go another way.

Yes, its his own damn fault for getting involved...

Sorry for getting in the way of monetary discussion beyond my height...

Re: default vs. devaluation

There is however one escape route that might enable the US to avoid the indignity of ending up like Zimbabwe, and that is for it to “surrender” to its creditors and submit to being economically carved up by them. In effect sovereignty would be lost, but face-saving measures might be permitted such as allowing the inhabitants to continue to celebrate Independence Day, and to fantasize that the Constitution of the US still applies and to plaster flags everywhere...

Large tracts of Real Estate and other assets will be taken over in lieu of debt repayment. The Hamptons may be largely peopled by Asian entrepreneurs. There will be work for Americans in their own country, however, with plenty of vacancies bagging groceries and stacking shelves in supermarkets at decidedly modest rates of pay and plenty of other service opportunities for their new masters such as gardening and window cleaning. “Green cards” may even be permitted for the lucky few - not to enter the country but to leave.

Kitco - Commentaries - Clive Maund

OK, I'll admit to being a bad person.

Tomorrow I sign on the dotted line for a house purchase on which I will take the 8K credit. I've been renting with no outstanding debts and buying gold since 2004/2005.

I am buying a house with 20% finanaced with 80% of my gold stash.

My payment will be less than 1/5 of my take home pay.

My oldest has moved out to take my place on the rental rolls.

I will be stimulating the economy with over $10K of immediate home improvements.

I could turn around and rent this house tomorrow for more than my mortgage payment.

The house is in an area not hit by the housing madness and one of the few areas of the country showing job growth.

How am I being stupid here?

How am I being stupid here?

By feeling guilty?

You just painted a "I can afford to pay more in taxes to my state when they raise the property tax" sign on your chest...

*You just painted a "I can afford to pay more in taxes to my state when they raise the property tax" sign on your chest... *

Somehow, I don't think Alabama is going to be going hog wild over taxes. Not compared to other places I've lived.

And thanks. My wife is going to be a LOT easier to live with going forward. After rolling her eyes for the first couple of years when the Eagles and Buffaloes were coming in the house, she even wanted to make sure I didn't get rid of all of it for the house. LOL

Nice -- made me wish I knew more control theory.

I'll leave you with this. One of the things that modern economists seem to be striving for is to even out or eliminate swings due to the business cycle. I wonder if they're making a fundamental mistake.

There is a very simple control system, the bang bang controller otherwise known as a thermostat. It has the advantage of being simple, stable, and predictable as long as you don't mind that it's always bouncing around. If you look at the graphs from the 1940's through the 1960's it seems like that is the type of control being used. After that you see long cycles followed by a crisis when the rot get out of control or something external upsets the apple cart.

Seems that one advantage of having a business cycle is to clear out the rot, something that won't tend to happen with otherwise. IE, the rot becomes entrenched and politically powerful. The other reason would be to keep business leader on their toes looking out for the next down turn. IE, keep the business cycle in line with humans two to three year time frame.

One of the things that modern economists seem to be striving for is to even out or eliminate swings due to the business cycle. I wonder if they're making a fundamental mistake.

This is why IT guys don't make good economists,... too logical. Also willing to accept the premise that economists are striving for reasonable attainable goals, hah! That quote by Keynes:
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

It links politics and economics (as they are in fact linked) showing that simple economic theory will always play second fiddle to political idealism. And even IT guys know politics is messy.

Rent deflation will pull down home prices, while increasing RRE and CRE defaults.

Here in the DC suburbs my rent increased this year. Section 8 subsidies are expanding upward and outward, keeping the landlords happy. I don't understand all the dynamics of pricing here, but, my initial lease stipulated that if my income increases I have to inform the landlord.

GAO Report on 401(k) plan "leakage"... report here
Looks like gov't might be trying to make sure people cannot get their funds until they are needed for retirement...

To prevent unnecessary leakage and increase compliance with existing regulatory requirements, the Secretary of the Treasury should clarify that the loan exhaustion provision applies to all plans that permit both participant loans and hardship withdrawals, and require plans to document that participants have exhausted available plan loans before allowing a hardship withdrawal.

Another GAO report, "Understanding the Primary Components of Annual US Financial Report", report here

I think the govt is trying to 'help' because they may know Soc Security is broke...'leakage' means people can't make it with current wages & salaries because of crushing (manipulated) debt burdens and they want their friggen money while they still have some due to stock market and home equity 'leakage'...the whole thing is leaking from every orifice...

*I will be stimulating the economy with over $10K of immediate home improvements.

...
How am I being stupid here? *

If you aren't completely joking, only by assuming home improvements are a benefit to anyone but you.

merchants of fear -..Fed Reserve or no Fed Reserve...

Is there an option for a Fed Reserve that actually is responsive to the citizens and not wall street?

BBC NEWS | Business | Japan prices continue record fall

"How would you characterize inflation over the past year?"

Economic contraction is deflationary. Devaluation is the standard prescription for nations with excess debt. It apparently is difficult for many (including Mish) to realize that the govi absolutely controls the value of money despite the significant impact of debt deflation. Imagine if the Fed monetized ALL govi debt as well as GSE debt.

It's just me:

Nice decision, you've worked out all the factors so far as I can tell. How secure is the income stream? And yeah, wife no longer rolls her eyes here, either.

Merchants of Fear: Fed vs no Fed? Whole scenario has expanded in quantum fashion from a problem in the HB/Fin areas to now affecting national debt levels and currency. Hey, are you really surprised that it's now a question?

What does this mean for Christmas shopping - a projected 15% drop in Halloween spending:
U.S. consumers plan to spend an average of $56.31 on Halloween this year, down from $66.54 in 2008, according to a National Retail Federation survey.

The co-director of Brookings' economic studies program has come out swinging on the first-time buyers tax credit.

http://www.realestateeconomywatch.com/2009/09/brookings-economist-blasts-first-time-homebuyers-credit/

MBIA-insured bonds have been trading as if the event occured over a year ago. It's priced in there.

Anyone still hiding behind an investment grade rating of MBIA for a derivative contract is getting what they deserve at this point. The writing has been on the wall for ages.

I haven't seen a single acknowledgement of the MBIA downgrade in fixed income land so far today.

Nothingburger, side of fries.

Like a toilet that will give you diagnostics every time you use it

Diagnostics about what?

I believe we are in the midst of "The 10 days that rooked the world"

The financial pressure-cooker is about to blow up in our faces...

JD: Beware the oracle that speaks date specifics.

The stock market doesn't mean diddily-squat in the scheme of things, it's window-dressing.

in other news, tax credits and false hope found to increase home prices 1.6% on a monthly basis.

Blitzer quote from the C-S press release cited by Rob Dawg:

These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer’s Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures.”

Not to mention a potential increase in interest rates as the Fed stops buying oer 80% of the new mortgages and half the new-issue Treasuries.

I'm also very curious how the different segments of the market fared in this report. We've been talking for some time about the bottom segment of the market perking up, but the higher-end (especially Jumbo territory) having more trouble. Will try to look that up...

More from the report:

From the peak in the second quarter of 2006, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%.

Ouch. Looks like the "bounce" off the lows has only raised the indices by about 3% off the bottom.

Your analysis does not acknowledge demographic growth and thus increased household formation. As population continues to grow, current excess inventory (both rental units and owner occupied homes) will be consumed. It is not as though demand is static for housing, population growth in the United States is still positive, thus rental demand is not a zero-sum game. Just because a previous renter now buys a new home, it does not follow to assume that there are no new renters to fill the demand. The tax credit provides an incentive for first time buyers to invest their savings into housing. This additional incentive provides some assurance for first time buyers to invest in what is currently perceived as a risky asset class.