Here's Ben's comments on housing today. If he thinks everything's OK, house prices are still rising, and doesn't see the epic real estate collapse is underway, then yup, he's raising again in August.
Maybe he should read more HP and less NAR though... And I guess he doesn't know any realtors, mortgage brokers, condo developers or illegal immigrants. They'd set him straight.
Outlays for residential construction, which have been at very high levels in recent years, rose further in the first quarter. More recently, however, the market for residential real estate has been cooling, as can be seen in the slowing of new and existing home sales and housing starts.
Some of the recent softening in housing starts may have resulted from the unusually favorable weather during the first quarter of the year, which pulled forward construction activity, but the slowing of the housing market appears to be more broad-based than can be explained by that factor alone.
Home prices, which have climbed at double-digit rates in recent years, still appear to be rising for the nation as a whole, though significantly less rapidly than before. These developments in the housing market are not particularly surprising, as the sustained run-up in housing prices, together with some increase in mortgage rates, has reduced affordability and thus the demand for new homes.
July 19, 2006
Bernanke blames bad housing numbers on the weather, thinks prices are still rising. No, I'm not kidding.
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These Fed governors with their fancy mcmansions, limo shuttles and lavish meals bought by taxpayers have no f'ing clue what's goin' on down in the streets. You think they give a shit that milk costs $4 a gallon or that Mr. and Mr.'s Smith are paying their mortgage with credit cards? They're puppets for the rich and they'll protect them to the end. If I lived in a bubble, I'm sure I'd have some wacky theories too. Blame it on the weather... give me a F'ing break.
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Furthermore,
Go ahead and pause... make my day. He'll end up eating an inflation sandwich in no time. Either way, the housing market is toast.
I'm a minority opinion, but I think Bernanke is actually probably pretty smart, and less of a toady than Greenspan.
Let's remember who his audience is: Congressmen
He wants to stop them from trying to """""fix""""" something even worse than it is already.
He is shoveling some nice BS for them. Kinda like the prison psychologist telling our Aryan Brotherhood that it isn't a good idea to cut somebody up today, because it's Jello pudding day at the cafeteria.
I mean supppose he said something like, oh perhaps the truth,
Yeah, thanks to you and the senile predecessor of mine that you so lurved, we are gonna get impaled on the on the tail end of the mother of all housing bubbles. Whatever's left of the consumer is gonna be raped worse than a prom queen at a lacrosse fraternity party. The fiscal situation of the government and the people is completely FUBAR and we owe our ass to the Chinese already. Don't you dare try any of that idiotic protectionist crap either, since we got a fucking Depression last time. And the few you Ayn Rand drooling goldbug nuts, that goes double for you---nurse! double their Haldol dose. In sum, Congress, I'd have to say 'yall're doing a heckuva job'."
What Would Congress Do?
Why of course! More Tax Cuts For The Rich! (TCFTR)
TCFTR! it slices! it dices! It cures inflation, deflation, stagflation, baldness, that annoying new strike zone, your yes-of-course-I-am-an-active-studly-man-
but-sometimes-jeez-does-my-prostate-ache prostate aching and high gas prices! Good for soccer moms, NASCAR dads, plutocratic CEO's and even Zygote Zack, our newest embryonic pre-voting member of the Republican tent!
Bernanke didn't want to shake up the crowd. He wants the downturn first, then react. Dangerous game, but the downturn is closer than you think and Bernanke, IMO knows it, thus his reaction to it, is only a 6 months away.
I still think rates are going up next month. He stated that inflation was higher than expected so....
I bet they pause. Evidence of a slowdown is too strong.
"Evidence of a slowdown is too strong."
Saving the dollar comes first, that affects the solvency of the whole banking system/OTC forex, the economy's second to that.
He is shoveling some nice BS for them. Kinda like the prison psychologist telling our Aryan Brotherhood that it isn't a good idea to cut somebody up today, because it's Jello pudding day at the cafeteria.
LMFAO!
Evidence of a slowdown is too strong."
Saving the dollar comes first, that affects the solvency of the whole banking system/OTC forex, the economy's second to that.
Thursday, July 20, 2006 1:04:41 AM
I AGREE, totally...
I'm also in the camp that is not yet ready to call Bernanke a lackey. (However - I do suspect he may have too much ivory tower confidence.) We won't know how tough or independent he is, until he's really tested.
I lost faith in Greenspan around 1998, after the LTCM mess and his willingness to buy into some of the "new era producivity" hooey.
If the economy goes into a deflationary spiral as the result of falling RE prices et al the main defense of the fed will be to lower interest rates.
Interest rates can not be lowered significantly until they are first raised significantly.
Maybe Ben is playing defense.
Rates can infuelnce but not control the markest, and even then not always as intended. Most people, per the AP press and other news sources, give the fed too much credit to control a free market. btw, what happens when you raise rates? fewer dollrs chase the same goods. The old supply and demand kicks in. Thus, increased prices, otherwise known as inflation. the conventionsl wisdom that higher rates ease inflationary pressures should not be taken as gospel. The opposit preassure may prevale
Yep - there is more at stake here than just housing market and inflation. Ben is trying to balance it all.
He will care about the $ first, housing second. A burst will ultimately be good (and is inevitable anyway ) so he is probably not as concerned about it as we think...
Rates will be raied 1/4 on August 28th.
Did you see Bernanke's RIGHT WRIST in his senate testamony? There's a BUBBLE growing on it.
June housing starts fall more than expected
Latest data add to signs of a broad cooling in the U.S. housing market
Reuters
Updated: 9:37 a.m. ET July 19, 2006
WASHINGTON - The pace of U.S. home building fell more than expected in June as groundbreaking on single-family units logged the slowest pace in 1-1/2 years, according to a government report on Wednesday that added to signs of a broad cooling in the housing market.
The Commerce Department said June housing starts fell 5.3 percent in June to a 1.850 million unit annual pace, from a downwardly revised 1.953 million unit pace in May. May’s rise had interrupted a string of three straight monthly declines.
Economists had expected June housing starts to decline to 1.90 million units from May’s originally reported 1.957 million unit pace.
Permits for future groundbreaking, an indicator of builder confidence, fell 4.3 percent to a 1.862 million unit pace, the slowest since May 2003. Economists polled by Reuters had expected June permits to fall to 1.920 million units after an upwardly revised 1.946 million units, originally reported as 1.932 million.
U.S. single-family housing starts fell 6.5 percent to an annual pace of 1.486 million units, the slowest since November 2004.
Single-family housing starts in the U.S. Northeast plunged 32.8 percent to a 92,000-unit annual pace in June, registering their biggest monthly drop since March 1984 and the slowest annual pace since January 1996.
Total Northeast housing starts fell 11.5 percent in June, while total Northeast permits rose 6.1 percent, driven entirely by multi-family plans as Northeast single-family permits fell 3.9 percent in June.
In the West, total housing starts fell 10.2 percent, with single-family starts down 5.9 percent, and total permits down 7.6 percent. June housing starts in the South fell 4.0 percent, while permits fell 5.3 percent. In the Midwest, June housing starts rose 3.0 percent, but permits dipped 1.6 percent.
Construction of multifamily buildings, which had been showing some lingering signs of strength in recent months, were weaker in June, as starts for buildings with five or more units fell 4.1 percent to an annual rate of 306,000. Permits for such buildings, however, rose 6.1 percent to annual pace of 397,000.
The data comes a day after a confidence index for U.S. home builders plummeted to its lowest level in more than 14 years in July as buyers canceled contracts and investors pulled back from housing.
The National Association of Home Builders said sentiment among home builders dropped 3 points to a reading of 39 in July, below forecasts from economists and the lowest since December 1991, when the U.S. was emerging from a recession.
Copyright 2006 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.
URL: http://www.msnbc.msn.com/id/13935220/
Anon 7/20 3:19 wrote, "Yep - there is more at stake here than just housing market and inflation. Ben is trying to balance it all."
Well said.
I think the herd behavior of crowds is worth looking at here. In recent years, the markets have paid increasing attention to the Fed Chair. We now scrutinize every word, even measure the width of his briefcase in the hope of diciphering the next rate move.
Isn't it also obvious that because of the ultra high level of scrutiny and wide impact of even the most banal remark, the Chairman of the Fed - actually, every member of the Board of Governors - must carefully weigh everything uttered in public?
Yes, I know the massive impact of the rate moves. Yet, the question remains. Why does the herd put such weight onto the words of people who have so many masters? I'm serious.
Even if Bernake's thoughts were fire and brimstone, it'd come out in creamy vanilla words. There seems little point in trying to read the tea leaves when you know it's mush to begin with.
Did anyone read the comments from professional twit Sen Bunning R-Kentucky. How this former mediocre baseball player can tell the Fed chair, in a pretty disrespectful tone I might add, that inflation is NOT happening is beyond me. No wonder Timre rated him as one of the 5 worst senators!!!
Home prices in the Portland, OR/Vancouver, WA area are beginning to drop a little and the time on the market is increasing. Some homes listed for $300K last month are now listed for $289,900. Of course the RE's up here are saying tht it is due to people on vacation, kids at camp, etc., and that there's never been a better time to buy. Ever heard the latter remark before? When you can rent a nice home for less than half what the monthly mortgage payment would be, why buy now? Wait until the forclosures hit the street next year. These RE parasites and flippers have just about bled this place dry. I can tell them where the local bankruptcy court is located. These people priced a lot of us out of the market but we are patiently waiting.
I can't wait for the bubble to burst up here... A little divine justice would be nice!
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