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Title: See, I Told You So (Again: Housing)
Source:
http://market-ticker.org/
URL Source: http://market-ticker.org/
Published: Sep 15, 2010
Author: Karl Denninger
Post Date: 2010-09-15 13:56:59 by Nebuchadnezzar
Keywords: None
Views: 2743
Comments: 7
See, I Told You So (Again: Housing) Time for me to drag out the old “Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco. “Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year.” Yep. In 2007 I've pointed this out - 2013 was the best case for a reasonable bottom, followed by income-level growth only thereafter. For three years I have heard that "housing will be in shortage by 2010" (Cramer), "it's bottoming now" (many people, all through the last three years), and of course Benranke's famous claim that there was no bubble in the first place. “The best thing that could happen is for prices to get to a level that clears the market,” said Shapiro, who predicts prices may fall another 10 percent to 15 percent. “Right now, buyers know it hasn’t hit bottom, so they’re sitting on the sidelines.” Oh, how are we going to do that? STOP TRYING TO KEEP PRICES FROM FALLING! “The efforts to date have been worthwhile,” Blecher said in a telephone interview from Denver. “They both helped borrowers stay in their homes and kept that supply of distressed properties on the market somewhat limited.” Sorry, but wrong. Until housing bottoms the economy will not turn. It can't, because there are too many people in this country who have their entire net worth tied up in their house - or their net liability, as the case may be. Until we clear the market these people who are upside down cannot move to places where there are jobs - and opportunity - because they're trapped in an underwater house. We would be far ahead to flush the pipeline and expedite bankruptcy for those people who are deeply underwater, along with the banks that are in over the heads. Yes, it would hurt. For a short while. But if we don't do it we're going to have a lost economic decade - or more. Until we clear the market on a general basis, which means getting rid of about half of the total outstanding debt in the system, we cannot clear the economy. This is the lesson of Japan. Despite all their screwing around once they blew a bubble in real estate their economy and market was done. They have not recovered precisely because they have not forced those who are underwater to eat the losses, along with those who lent the money to the underwater people and businesses. As such the economy is stuck as people cannot move to meet and create opportunity, capital is frozen in mark-to-make-believe prices that have no economic value, it cannot trade at this inflated value (nobody's dumb enough to pay beyond true value any longer) and the entire economic engine becomes crippled and unable to accelerate. The Nikkei, despite 3% moves when the Finance Ministry comes in and plays hell with the FX markets, is trading at about 30% of where it was at the peak. Despite many monstrous rallies it has never recovered its prior values, and has no indication it ever will. The nation is literally drowning in debt. While the government and central bank continue to issue into a "favorable" environment nobody thinks the nation could pay if JGBs were to rise to, say, 4% interest. That would absorb all of their tax revenues - simply to cover the interest expense! If that happens, it's an instant "ka-boom" - and inevitably, it will happen. We have the advantage of having watched Japan screw this up. We can therefore do it differently. But instead, what Bernanke and his pals, along with Congress and the President, are doing exactly what they did - extending, pretending, allowing people to lie and refuse to take the losses they already incurred. Yeah, I know they're big losses. Yeah, I know they'd bankrupt most of the big banks. But we need a banking system, not individual banks. Where there is a vacuum in the banking system there will immediately be a new entrepreneur to enter the business, or existing smaller institutions who will step up and take over. The charades being run now do not and cannot work. I've been sounding this trumpet since 2007. Now, three years later, you have a whole host of people from the finance and housing industry saying the same thing. We could have saved the wasted three years and $4.5 trillion we've blown by listening earlier, but if we don't listen now, we will - at best - re-run the Japanese experience. And that's if we're lucky.
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#1. To: All (#0)
Yeah, I know they're big losses. Yeah, I know they'd bankrupt most of the big banks. But we need a banking system, not individual banks. Where there is a vacuum in the banking system there will immediately be a new entrepreneur to enter the business, or existing smaller institutions who will step up and take over. But, since the banks and their confederates in Wall Street (such as Goldman) own the Congress and Administration, we'll see no effort made to make the banks take their losses. We'll play this shitty game for twenty or more years unfortunately.
Clinton and Cuomo are the true bandits who lit the fuse to this economic crisis we're now in. All in the name of getting more minorities in houses: http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=12554
All of the points in this article are correct. My question to you (since you continue to post remarkably similar stories) is the following: Since Bernanke surely knows this information, and has flatly stated he will NOT allow deflation to occur, what will he do? Connect the *dots,* Neb... Factor in the QE2 agenda, and his speech at Jackson Hole... Do you SEE, yet?
The current members of the "You're a worthless sack of shit" list includes WAR, calcon, e_type_jack-off, mad-dog (more like rabidly stupid), ibluafartsky and the fascism-shill no gnu taxes (aka 400 bucks, happyfunball, 50yardline, etc, etc.) If you're on the list, don't bother writing, 'cause you're a waste of flesh.
What? You think Bernanke is God? Shit, he's done everything he can to keep home prices up and he's failed going on three years now. He can't stop the deflation you keep bloviating about that's here. It has a death grip, like a Vulcan death-grip, on the economy and it won't let go.
Clinton and Cuomo are the true bandits who lit the fuse to this economic crisis we're now in. All in the name of getting more minorities in houses: http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=12554
And THAT is the flaw in your logic. Read the transcript from the Jackson Hole speech, and get a CLUE... As to your nasty attitude, if you want to be a dick, then fine. When I'm proven right, I won't hold my breath, waiting for an apology...
The current members of the "You're a worthless sack of shit" list includes WAR, calcon, e_type_jack-off, mad-dog (more like rabidly stupid), ibluafartsky and the fascism-shill no gnu taxes (aka 400 bucks, happyfunball, 50yardline, etc, etc.) If you're on the list, don't bother writing, 'cause you're a waste of flesh.
We either default on ChiComs payments and stiff them, and get cutoff from all their manufacturing and sh*tty goods....OR pay them by printing up a gazillion Zimbabwe-like greenbacks. Scenario #1 means deflation and limited goods. Scenario #2 mean inflation. Another consideration - the US government cuts a deal with the ChiComs and surrenders federal lands as compensation.
Deflation would force the government to rein in spending. And they WON'T do that, because without the payola going to their cronies, there'll be no kickbacks, favors, "gifts," etc. Inflation allows them to stay in power, as the population starves, since they'll be able to give bigger and bigger payments to the cronies, and the gravy-train rolls on (in economic terms, this is about "first-mover status," where disbursement of government funds are concerned. The last one... I'll admit, is a wild-card. But I don't think the public will ever allow that to happen... I hope not. If the government repudiated the debt, the American public would be hurt, but not so bad... while the government would suddenly find themselves with nobody to finance their "largesse," and most of 'em would beat-feet, with an updated resume. Throughout history, every time this has occurred, the bankrupt government has always chosen inflation, and thrown the public to the bankerster wolves... Nothing I have heard or seen- and I do mean NOTHING- indicates that our government will deviate from that long-established historical pattern. Nebbie is a friggin' loon, if he thinks the government parasites will voluntarily cut off that which they love most- POWER.
The current members of the "You're a worthless sack of shit" list includes WAR, calcon, e_type_jack-off, mad-dog (more like rabidly stupid), ibluafartsky and the fascism-shill no gnu taxes (aka 400 bucks, happyfunball, 50yardline, etc, etc.) If you're on the list, don't bother writing, 'cause you're a waste of flesh.
In a related story...sun rises in east...sets in west,,,film at 11. Dpon't tell us what we know. Tell what you see and what it means.
We have the advantage of having watched Japan screw this up. We can therefore do it differently. But instead, what Bernanke and his pals, along with Congress and the President, are doing exactly what they did - extending, pretending, allowing people to lie and refuse to take the losses they already incurred.
#2. To: Nebuchadnezzar (#0)
Mad dog gets
"calibrated..."
#3. To: Capitalist Eric (#2)
Since Bernanke surely knows this information, and has flatly stated he will NOT allow deflation to occur, what will he do?
#4. To: Nebuchadnezzar (#3)
What? You think Bernanke is God? Shit, he's done everything he can to keep home prices up and he's failed going on three years now. He can't stop the deflation you keep bloviating about that's here
Mad dog gets
"calibrated..."
#5. To: Nebuchadnezzar, Capitalist Eric (#3)
#6. To: Liberator (#5)
Mad dog gets
"calibrated..."
#7. To: Nebuchadnezzar (#0)
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