March 13, 2007

HousingPANIC Stupid Question of the Day

"Bull Trap" dead ahead?


Anonymous said...

Keith, this quote from the Schiller Bweek interview is indicative that we are currently in a "bull trap":

Are there any signs of strength?
Yes. One part of the National Association of Builders/Wells Fargo Housing Market Index measures the traffic of prospective buyers, and it has started to go up. It's possible that the boom could resume.

We're talking about human psychology. If people think home prices will go up for some time, it becomes a self-fulfilling prophesy.

A silent spring of 07 will spell the end of the bull trap & illusion that everything is normal/soft landing.

Dimitris said...

In terms of the stock market, I'd say the Bear trap was last October. After the subprime crash (NEW), it's going to be hard case for the bulls to get anything going. I'm betting it's all down hill from here.

Falcor said...

Keith, any good UK RE blogs?


Dragasoni said...

Keith, you hit the nail on head! I'm 100% sure were approaching the "bull trap" right now!


keith said...

The lines of Sheeple outside new condos a year ago sure feel like "greed" and "delusion" now don't they?

It's nice to know exactly how this plays out, isn't it HP'ers? Let everyone else believe the "soft landing" and "we've hit bottom" BS.

We know the truth.

Anonymous said...

wow LENDdown 50% premarket and CFC down 5% T-I-M-B-E-R!!!

Anonymous said...

Well, I never though that my graph about bubbles and manias would turn up here... JPR

Anonymous said...

Anyone know the next mania bubble phase will be? I'd like to get in at the smart money stage.

jmf said...

great find!

here is homer on at the top of the curve....

Stuck in So Pa said...

Boy, home prices at the very bottom of that downward slide should prove very interesting and eye opening. Especially to the dimwits who are still buying on the way down. With the TV ads, scattergun emails, unsolicited cold calls on the cell, still plenty of free (stupid?) money out there.

devestment said...

I love the chart but feel we may have several “return to normal” adjustments” to flush all the speculators out of the market. There is still quite a bit of money on the sidelines.

In the late 80’s there was rampant speculation in rare coins which was fueled by Wall Street touting the investment and causing supply issues. There were many corrections in the downturn which lasted several years, this condition can compound problems in an investments image and make it difficult to buy even at the bottom.

I see a correlation to real estate in this scenario. I feel real estate is less likely to fall in one swoop as tech stocks did and more likely to step down over a long period.

Real estate is expensive to hold, even without a mortgage. As the easy money disappears from the economy it can become a real burden to service those second homes. My feeling is that these will be the first to go.

Anonymous said...

on the other side...

anyone else notice mcdonald's replaced the medium fry on the value menu with the small fry? Half the fries for the same price.

prices are going up at the same time incomes will drop. that's a disaster in the making.

Detachable Cletus said...

One of my more vivid memories of being a child in the early 80s was of walking through an empty parking lot behind a strip mall (the kind bordered by large concrete blocks to impede traffic flow) and wondering what had put a stop to the bustling activity which had created this place before my time.

I was vaguely aware of the adults on TV lamenting some mysterious force that had done this to us. The politicians seemed like superstitious shaman who's strange vocabulary formed incantations to economic recovery.

I know deep down that it's starting again - that I am about to witness a large scale long running economic destruction first hand. That I will soon learn the answers to the questions that have dogged me since I first saw the dried rust staining that parking lot.

Why can't I make myself believe it?

I keep sitting here, not shorting Country Wide Financial, thinking, "No, something is going to stop this. Even if they can't ultimately stop the fall, they will blow one last bubble to put off the day of reckoning for another three years. Asia can somehow withstand the loss of the American consumer; they will keep the world economy going..."

I realize now that the bulls have won. Just because they were wrong about everything didn't stop them from taking over, just as being wrong never stops anyone in a "tolerant" society.

Sure, they will fall in their turn, but this culture lacks the knowledge or the will to make a fresh start.

GrandInquisitor said...

We are caught somewhere between return to normal and fear right now. I'd say the denial phase has come to an end.

area 51 said...

Yo, "anonymous" CFC Cheerleaders, where you at now? Stuck in the bull trap? Or headed towards fear now?


Anonymous said...

Baltimore median price up 7% Feb '07 vs. Feb '06.

LA median price up 7.8% Feb '07 vs. Geb '06.

Call it what you will, I call it more evidence that this supposed crash is not happening.

Anonymous said...

Because of the crash in sub prime, the bull trap won't last very long. Without the additional liquidity and from the subprimes and the tightening of standards which all leads to increased mortgage rates, the bull trap won last past June. After that, it's a freefall from there.

I peg the recession announced in September at which time they'll revise the numbers to let us know that Q2 was negative as well.

Anonymous said...

Funny, that here in Austin TX prices are still going up. One particular builder I'm watching closely just incresed the prices last week on about 5K...

marxist said...

"We're talking about human psychology. If people think home prices will go up for some time, it becomes a self-fulfilling prophesy."

Yeah, until it becomes impossible for anybody to afford anything. Then what?

Anonymous said...

Personally Keith, I just want it over with.

I want to go back to a time when one's work meant something (not just his equities/RE portfolio) and that a person with a stable job can buy a place w/o having to think about HELOCs to cover fixtures (or even closing costs) and all the other headaches. I like the world of 15-20% down, and then having a mortgage that's within 1x to 1.35x the rent for an equivalent place. That's all I request.

FlyingMonkeyWarrior said...

Stocks Tumble on Subprime Worries
Mar 13 01:02 PM US/Eastern

Stocks plunged Tuesday as troubles for subprime lenders kept piling up and U.S. retail sales came in weaker than anticipated, leading investors to brace for a wilting economy. The Dow Jones industrials fell more than 150 points.

Investors fled the already deflated stocks of subprime mortgage lenders as the sector's problems mounted. The New York Stock Exchange said shortly before the opening bell it would immediately suspend trading in shares of New Century Financial Corp. and move to delist the stock. The lender, which saw trading in its shares halted throughout Monday's session, on Tuesday disclosed more details on the raft of financial hurdles it faces.

Word from Accredited Home Lenders Holding Co. that it is grappling with a liquidity shortfall also bolstered concerns that the sector's troubles are widespread, as did a report from the Mortgage Bankers Association, which showed that mortgage delinquencies and foreclosures climbed in the last quarter of 2006.

"The market's still jittery, and they're starting to get full-blown concerns over a bleed in the larger subprime mortgage market," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. He noted that the subprime market is a relatively small sector of the U.S. economy, but that Tuesday's selling was accentuated by options expiring and increased volatility since the market's big tumble in late February _ a drop that was caused partially by the problems of subprime lenders, who loan to people with poor credit.

The market was also worried Tuesday about retailers, which the Commerce Department said eked out a meager 0.1 percent rise in sales last month. The data overshadowed a profit report from Goldman Sachs Group Inc. that came in well above Wall Street's forecast.

In early afternoon trading, the Dow fell 159.58, or 1.3 percent, to 12,159.04. The decline, as of early afternoon, had erased three straight sessions of gains.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 18.86, or 1.34 percent, to 1,387.74, and the Nasdaq composite index slid 37.32, or 1.55 percent, to 2,364.97.

The worries surrounding subprime lenders and sluggish retail sales drove up bond prices. The yield on the benchmark 10-year Treasury note fell to 4.51 percent from 4.56 percent late Monday. Gold prices rose.

The dollar was lower against other major currencies, notably the yen. That movement renewed anxiety about traders unwinding their yen "carry trades," or taking money out of high-yielding dollar assets bought with the low-yielding yen.

Light, sweet crude advanced 59 cents to $59.50 per barrel on the New York Mercantile Exchange, as did gasoline prices, which have risen 18 percent at the retail level over the past six weeks _ raising some concerns about consumer inflation. Investors are eagerly awaiting the producer and consumer price indexes, key inflation gauges, which will be released later this week.

Tuesday's economic data didn't offer much support for bullish investors. The Commerce Department said sales at U.S. retailers rose 0.1 percent in February as wintry weather in much of the country kept shoppers away from stores. Investors had expected an increase of 0.3 percent from January.

"I think a big question mark on this is how much of this is weather- related," said Rob Lutts, chief investment officer at Cabot Money Management. "We had two or three days during the month which knocked out activity. ... I think it is causing a little bit of alarm short- term."

Several retailers fell moderately following the Commerce Department's report. Federated Department Stores Inc., parent of Macy's and Bloomingdale's, fell 64 cents to $44.30; Wal-Mart Stores Inc. slid 73 cents to $46.53; and Target Corp. fell $1.59 to $60.64.

Meanwhile Tuesday, New Century said regulators subpoenaed documents under inquiries into accounting errors that inflated the value of the company's loan portfolio. The Irvine, Calif., company said the Securities and Exchange Commission and the U.S. Attorney's Office for the Central District of California began the investigations two weeks ago.

Accredited Home shares plunged $7.46, or 65 percent, to $3.94, after it disclosed its own liquidity problems.

Investors trying to determine the breadth of the problems in the subprime sector pounced on comments from Goldman Sachs. The investment bank said strength remained in mortgages and credit products during the quarter and that while the subprime sector showed "significant weakness," the broader credit environment "remained strong." Goldman Sachs rose 28 cents to $202.88 after posting a best-ever first-quarter profit amid strong revenue from trading and investment banking.

The Mortgage Bankers Association's quarterly report on the mortgage market didn't surprise most investors, but confirmed their worries that the sector is struggling. Late mortgage payments soared to a 3 1/2-year high in the fourth quarter of last year, and new foreclosures hit a record high.

Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, where volume came to 1.03 billion shares.

The Russell 2000 index of smaller companies fell 15.67, or 1.99 percent, to 773.33.

Overseas, Japan's Nikkei stock average fell 0.66 percent. Britain's FTSE 100 fell 1.16 percent, Germany's DAX index fell 1.36 percent, and France's CAC-40 fell 1.15 percent.

Anonymous said...

The word crash is now being used in the news reports here in Los Angeles. What a change of tune.

Number one I would never buy a home from a flipper. Anyone who buys from a flipper in my opinion is probably getting taken advantage of.

Fippers are in it for your money and nothing else.

Before I would buy I would search for any mortgage liens against the property as well as the property tax records for the most recent assessed values and if any new construction was permited properly.

Flippers are really getting desperate now so you have to do your homework.

Anonymous said...

OC BIG STICK MAN SAYS- It is incredible watching the sheeple heard into buying wars in OC. Are people really that stupid? Do they not read the papers? Are we a nation of idiots? If this is the case then shit it should be easy to make a killing from the sheeple. Simple formula in 24 months they lose their house and we buy them at a 60%++++ discount. Wait for the market to move up again. Is that so difficult?

Anonymous said...

We're already past the bull trap in housing-related equities according to the chart on this site:


Creeping fear at the moment...slowly working it's way out of the mouths of formerly reticent biz news 'anchors'...
I anticipate we'll move quickly to despair around November this year and be there for a minimum 2 years.
Boomers will never see these prices again. There will be a leveling out at much, much lower prices than currently

Flagg707 said...

Holy Crap - the REIC's are already leaning on the Congresscritter's they've bought off to bail THEM out for THEIR corrupt lending practices. They'll claim it will be to "help the little guy" but $100 says that whatever bill that gets passed will be exactly what the lenders want to see and I guarantee it will be a hidden way to keep those foolish homedebtors in some sort of debt feudalism.

Read this article from Bloomberg for background:

Senate Weighs Aid to 2.2 Million Subprime Borrowers
By James Tyson

March 13 (Bloomberg) -- U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.

In other words - screw those of us who are renting and managing our finances appropriately.

Anonymous said...

Open letter to the Sheeple- As you lose your home equity and stock money you lose sleep at night, And I the HP'er will sleep tight counting sheeple as you are slaughtered one by one. Oh a 100K loss here a 500K loss there a 1.5 Mill hit there. Oh sheeple when will you learn. Will it be a mass slaughter oh yes it will. If you have any brain left sell that over-priced shit-box and equities and come join the right side of the force.

Jack Ablin said...

“Investors are poking around to see how much rotted wood there is here,” said Jack Ablin, chief investment officer for Harris Private Bank. “It looks like the notion was subprime was contained, and now we’re starting to see that maybe this problem has moved into other areas of the market. That’s causing investors great concern.”

Anonymous said...

We had a much worse real estate scenario brewing in the late 1980s.

Mid Hudson Valley ny said...


Dogcrap Green said...

It's all about timing. It must chap your hide that a housing bull nailed the subprime lenders the day before their crash.

Shakster said...

Frank Motek??? interviews a florida RE analyst and the guy spills the beans on some florida RE. Says he is seeing 25% drops as FBs try to get out.Check out the Sacramento blog,up to 30% decrease in home prices as FBzzz try to bail.The worst area for foreclosure Data now,according to CBS,is .......drumrollll.......................LAS VEGAS BABY.

reality bites said...

The bull trap was March 12 when the indices ran up on very light volume on "hope" of more M&A's

Today's heavy volume selloff was reality. Look for all the gains since last summer to be wiped out through margin calls

God said...

"This has connotations of religious proportions. Like reincarnation,
it is an event many people believe may happen but not a single human
being in our lifetime has actually seen it occur. Our life as we know
it will never be the same."

Anonymous said...

Those are some serious, serious problems.

Anonymous said...

"We're talking about human psychology. If people think home prices will go up for some time, it becomes a self-fulfilling prophesy."

You missed understand the nature the ponzi scheme. There is only a finite number of suckers and they, as arule, are suckers only once.

Jimmy Jones said...

Just because Jimmy Jones handed out free Kool-Aid in Jonestown, didn't mean everyone had to drink it!

Anonymous said...


Anonymous said...

Bottom line: Let other people be the guinea pigs

Anonymous said...

I am, quite frankly, amazed

lookout below said...

I'm seeing price reductions on some Westside L.A. condos; but still mostly just from "bend over" levels to merely "screw you" levels.

The upcoming RE collapse will make the early 1990s look like a dip in the market.

The average idiot's not even aware that our Corpgov overlords are bent on North American union by 2010. What do you think that will do to this country?

Anonymous said...

Here come the warnings in England.

March 13, 2007

Rates of 10% 'needed to control housing boom'
The cost of borrowing needs to rise above 8 per cent to prevent house prices spiraling out of control, according to a leading economistAli Hussain
Interest rates need to go above 8 per cent to control booming house prices, according to a leading economist.

Martin Weale, director of the National Institute of Economic and Social Research – which advises both the Treasury and the Bank of England – said that unless the property market is restrained it will suffer a crash.

His warning follows the release of new figures from the Department for Communities and Local Government showing that the annual rate of growth in house prices surged to 10.9 per cent in January - up from 9.9 per cent in December.

Mr Weale is concerned that homebuyers are too reliant on property for financial security during retirement and are failing to save for a pension or make other investments. He says the problem needs to be addressed urgently by hiking interest rates.

How to buy a house – a step-by-step guide
A basic guide to mortgages
Ten things to know about remortgaging
How to sell your home without an estate agent
Ten things to know about equity release
Related Links
Housing market studies differ on impact of rates
Homebuyers borrow to pay soaring stamp duty
The Bank of England base rate has already jumped three times since August to 5.25 per cent, its highest for six years. Further substantial increases would cause enormous strain for the 11.6m British homeowners with mortgages.

But an increase in rates is essential to stabilise the market, according to Mr Weale. “10 per cent might bring the boom under control or possibly 8 per cent would be enough to do it,” he said. “But a quarter-point here or there is not going to do it.”

Increasing base rates from 5.25 to 8 per cent could mean the cost of a typical £150,000 repayment mortgage at 2 per cent above base rising from £1,084 to £1,363 a month.

Mr Weale was one of the Treasury’s “wise men” responsible for setting interest rates before the Monetary Policy Committee was created in 1997.

He said: “The UK property market, in terms of its implications for the economy as a whole, is something of a disaster.

“It would be nice if the Government thought about this, instead of regarding it as an issue to be left to the Bank of England.

“I think it's a bubble and I think it could carry on for quite a long time. People don't bother to save because they rely on rising house prices to give them wealth without lifting a finger.

“That means when they get to old age they won't have enough to live on, or they will have to withdraw equity from their houses to keep going.”

anon666 said...

Great graph....

I think the Bull Trap/Return to Normal was at the end of last year/ beginning of this year.

With the subprime crash making it to MSM and the stock market, Fear is dead ahead. There is no point in denial anymore, there is no more upside. No subprime = a lot of first-time home buyers have simply vanished from the market. Smart money has been long gone but Big Money and J6P money are just now beginning to understand.

Paul E. Math said...

I think anyone who bought in the last year participated in the bull trap. Spring of this year could have been the continuation of that trap but with all the press received by the subprime meltdown it seems unlikely that anyone would be foolish enough to buy a home now.

Sure, there will always be morons but there won't be enough of them to constitute a bull rally in home prices at this point. Perhaps I'm giving the average consumer too much credit so perhaps I'm wrong about this but I think the bull trap is already over.

Anonymous said...

Senate Weighs Aid to 2.2 Million Subprime Borrowers (Update4)

By James Tyson

March 13 (Bloomberg) -- U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.

``The impact of losing 2.2 million homes I suspect will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,'' Dodd, a Democrat from Connecticut, told reporters in Washington after a speech to the National League of Cities.

Foreclosures involving homeowners who took out subprime loans from 1998 until 2006 could cost $164 billion, Dodd said, citing a December study by the Center for Responsible Lending in Durham, North Carolina. The government needs to provide at-risk homeowners ``forbearance or something like that to give them a chance to work through and get a new financial instrument here that they can manage financially better,'' Dodd said.

Missy said...

I think you might like this one from a local Mortgage Clerk here in Bend, OR.

“What it going on with all these subprime lenders going under?”

By: Larry Wallace

Here is what this letter will cover:

A) The 4 types of loans, what is in trouble and what is not.

B) Understanding why subprime is in trouble.

C) Understanding how all this will effect you as a Real Estate Agent.

D) The good news.

A) 4 Types of Loans:

1) “A paper”: Clean loans, good credit (usually <680 score), some reserves, no income problems. Many 100% loans still are A paper.

2) “Alt A”: Mostly A paper, but something small is off. Credit a little low (maybe down to 640), no reserves, etc. But a good file.

3) “Subprime”: Rough credit w/scores < 620. BK’s, Problems with income and assets. Loans still to 100% LTV. Stated income OK.

4) “Hard Money”: Private funds lent almost exclusively on the value of the property. Usually the LTV’s are low, less than 80%.

B) Why subprime is in trouble:

· At the heart of the turmoil is the subprime mortgage market, which has grown significantly over the last real estate boom (1995 – 2005). Approx. 35 percent of all mortgage securities issued last year were subprime, up from 13 percent in 2003. Pension funds, insurance companies, hedge funds and others all started investing in subprime during this period. Lots of money chasing the same subprime loans led to a drop in underwriting guidelines as each subprime lender tried to “compete” on lower rates and easier qualifications.

· In addition to rough credit, over 40% of subprime loans have not documented income. In theory, this is OK, since the higher interest rates are supposed to make up for the risk associated with these loans. Also, during an appreciating home market, borrowers in trouble sell before they default. However, a subprime borrower in financial trouble may not be able to sell if they bought in the last 2 years and put little or no down. It is these subprime borrowers that are defaulting at a rate much greater than the mortgage investors expected. Subprime has a current default rate at about 12.6% vs. 4.7% for all mortgages combined.

· Since the investors now do not know how to quantify risk on subprime loans, they have stopped purchasing them. Thus, the subprime market has dried up and many of the subprime lenders are going out of business.

· Lenders that have gone out of business, are in serious trouble, or have sold include: First Franklin, New Century (Home 123’s parent), Freemont General, Ameriquest, Option One, Accredited, OwnIT, MLN, REsMae, Decision One, Encore, Fieldstone, AmeriTrust, Aegis, Ocwen and over 20 others. Note: these are not your “known” mortgage lenders like B of A, Wa Mu, Wells Fargo, Countrywide, IndyMac, etc.

C) How will this affect you as a Real Estate Agent?

Some of the crazy deals we have been doing over the last 5+ years will no longer be doable. So that will effect you. But that is not the bulk of your buyers, so the loss of these deals should be minor. There is always going to be plenty of money available for good loans that make sense. As an example: we still have lenders offering 100% financing for A borrowers, full doc, with credit scores as low as 620! And 100% financing for Alt A borrowers, stated income and scores down to 680! These are pretty liberal guidelines!

D) The Good News

· “These [subprime] problems are likely to be contained and not spill over into the prime mortgage market.” – David Lereah, National Assoc. of Realtors, chief economist , 3/13/07

· Crazy underwriting guidelines may be gone, but very generous guidelines are still with us – as listed in the example in #C above.

· Interest rates are holding at very good levels.

· Nationally: “Existing-home sales are expected to slowly improve from what appears to be the cyclical low last fall, but we think there will be some additional pain in the new home market, which hopefully will start to rise later in the year.” – David Lereah, National Assoc. of Realtors, chief economist, 3/13/07

· Locally: Bend and Central Oregon continue to outperform the National Statistics.

So, don’t let the negative media scare you. There is money for almost all of your buyers.

Thanks for your business.

Larry Wallace

christiangustafson said...

WaMu WaMu WaMu WaMu WaMu ...

David said...

Lereah Calls Bottom For At Least The Fourth Time

Anonymous said...

Home builders will feel subprime's pain
Tighter lending standards expected to hit sales, exacerbate inventory glut

By John Spence, MarketWatch
Last Update: 2:54 PM ET Mar 13, 2007

Anonymous said...

Now that's what I'm talking about.

I bought AHM puts at 9am and they were worth 200 clams each by 10am.


Yesterday I made the mistake of not being pessimistic enough. I sold my LEND puts before it took its real dive.

Anonymous said...

It's over for the U.S.

We have a depression coming.

Brace yourself.

bozonian said...

Goldilocks dead. Film at 11.

Anonymous said...

Does anyone update this blog anymore?

a.creampuff said...

Tuned in radio to Market Place this morning - they played an extra slow, trombone version of "Stormy Weather" as Risdall claimed "Just when you thought it was safe...worst day on Wall Street in four years". "It started on Wall Street" - market down because investors concerned over more bad news with subprime lenders. He was talking about the 13th, not today. Bear trap indeed, Keithely!

a.creampuff said...

Oops, I misspelled Kai Ryssdal's name.
Here is a Market Place story with a subtle twist on how subprime may effect prime and the potential for a positive feedback effect in general.

honica jewinski said...

Dude, your blog is dying, get rid of the moderation already.

Mar 13, 2007 - It's the Dollar, Stupid!

Why do gold and silver usually decline along with the stock market these days when it should work the other way around?

Write down the following on a sheet of paper in big block letters with a felt-tip marker and pin it on the wall above your desk where you can see it every day: It's the dollar, stupid!

The dollar is the key. Watch it. Currently, they move heaven and earth to keep it above 84.0. That keeps gas cheap, the stock market inflated and people thinking that it is just another day. It went under 84.0 a bit yesterday. It sank further today.

They push the dollar up by manipulating precious metals (PM) and stock index futures markets.

They couldn't wait to shore up the dollar until Friday this week because momentum was building from yesterday. Friday is their favored day because (1) so many traders take 3-day weekends, (2) there is no overseas market until Sunday (because it already is tomorrow in Japan, due to the International Date Line) and (3) the lesson of a drop in the price of gold and silver is best imprinted on the minds of an off-work, Internet-surfing, hand-wringing public that must live with their PM losses until the markets open again on Monday.

Right now, in the overseas markets, gold and silver are being hammered down - it is easier to do in that much smaller, thinner market. Already, the indicator for the dollar has gone positive, as a result. Expect more tomorrow. Expect lots more on Friday if tomorrow doesn't do the trick and past patterns hold up. When the dollar gets back above 84.0, they let up. Just watch and see if the dollar doesn't move back above 84.0 on Friday if it doesn't manage to get there tomorrow.

If we are lucky, by Friday silver might well be bashed down near $12.00, which is a good next buy point. Other buy points might well exist for every 50 cents they knock silver down below 12, if we are lucky enough for that to happen. When the prices of gold and silver come back, it will happen too fast to get on board the train, so put that thought out of your mind. Yes, you are that obvious.

Eventually, the dollar's floor-at-any-cost will have to drop to 83.0, then 82.0 and so on. Gold and silver will plateau upward in lockstep with the dollar's stair-step controlled descent. How far can it go? How deep is the ocean? Can you say Z-E-R-O, boys and girls?

To keep the dollar Ponzi scheme afloat, they keep increasing the money supply, which originates in debt. If for no other reason, this fact alone guarantees our invading Iran and setting off WWIII. The debt must be blamed on something other than the perps running the system.

It is a juggling act where the juggler keeps throwing another ball into the air to add to the in-progress performance, else the audience begins to lose interest. Logic demands that, eventually, he will start dropping balls - probably all of them because he will try to save the first one he misses, then the second, then....

Now that the housing market no longer is sopping up all those excess dollars that must be created, over and above those we give China for toaster ovens and those we expend in the Middle East, they have to go somewhere. The stock market will not decline - they are holding it level to keep middle America complacent (pensions and IRAs, donchaknow) and have been doing so for so long that it now has set a record for sideways stability. Nor will they allow the market to pump up again like they did a few years ago before it laid an egg (the money leaving it went into real estate and commodities). Where will those dollars now leaving real estate go, do you suppose? Been to the grocery store lately?

Just yesterday, the dean of Wall Street, Richard Russell, said: "The best measure of the dollar is that number of dollars it requires to purchase a measure of pure wealth -- an ounce of gold. Gold is both the unit and the messenger. The government and the central bank fear the messenger. The reason why they fear the messenger is obvious - they are frightened of the message."

The message? The dollar is doomed and hyperinflation can be seen just over the horizon. Yet another reason for war, upon which they will blame it all.

It's the dollar, stupid.

Yes, it is just that simple.


Anonymous said...

no one is updating this blog anymore, WHY?

Anonymous said...

Does anyone manage this blog anymore?

jymkata said...

To me it feels like the Bull Trap is what happened in the stock market from last July until the end of February.

Remember all the reports about being "near the bottom" in housing. The Goldilocks economy, etc etc. The recovery of all the homebuilders that fell of a cliff in early 2006. Now it's all falling apart, it's time to go straight to fear.

Anonymous said...

This selloff really feels, like the first time, like the housing crisis has really entered the minds of the mainstream Americans. That is an important event in itself, as it will ultimately feed the psychology of the downturn in real estate prices -- right at the moment when the so-called "Spring Buyers market" was supposed to materialize and bail out all the sellers with unrealistically high prices.

Anonymous said...

Hello! anyone update this thing anymore?

Anonymous said...

I'm not clicking on any Google ads if this blog is not updated!

Mad as hell said...

I guess no one takes care of this blog anymore, oh

Anonymous said...

Party like its 1999 (right into the Bull trap)

Last gasp of mortgage fraud right next door, here in Seattle. To protect the guilty who just walked right into the bull trap, two modest houses, in highly sought after neighborhood, just closed on our block and they were 20% over priced, one going for 1.128 million. One of the buyers said he paid 100k more than he should have, but the free money spigot hasn't been turned off yet.

An addicted flipper I know, sitting on her 750k time bomb that she's not quite finished with, said that she was looking for another turnaround deal (which go for 500k right now) after she sells. When I told her about this site, she quickly changed her mind and said she was taking her loot offshore to Panama. Today when I scare her with more facts, I will use bull trap. It sounds like good cuss words anyways.

Colonel Kurtz
King of the Bitter Renters

brokersleaveyoubroke said...

I just read that a record number of PRIME mortgages are in trouble (2%). Also, a lot of people with prime mortgages have sucked out all their equity with HELOC's (I personally know several) and now they have big payments and no more equity to suck out. I think it's optomistic to think that subprime will be the only source of forclosures.

Anonymous said...

Will someone please update this blog!

Anonymous said...

"This is the end of the liquidity party,"

Anonymous said...

Crash? What crash? In the world's top cities, real estate has never been hotter.

Anonymous said...

spectacular growth in many parts of the world, make a property meltdown unlikely.

Anonymous said...

There's a lot of faith in glamor cities, but these cities have been around for hundreds of years, going up and there's no stopping it.

Anonymous said...

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Markus Arelius said...

Yeah Keith,
but if we'd only listen to what David Lereah has to say, there's always a sunny side.

Isn't it nice to know the future tranquility afforded by the NAR to current homedebtors and future homesellers alike?

Damn, sometimes I get dizzy from all of this sarcasm.

Anonymous said...

Get ready for a full scale depression and a draft. Save your money in you mattress. We may win, but at what cost?

Anonymous said...

Grow some balls people

Anonymous said...

More and more the federal government is looking like one big circle jerk sponsored with taxpayer money.

Hello Kitty said...

Its so sad to see retards quote median price stats.

"2 million dollar homes sold last month, the median price is now a MILYUNN DOLLERZZ!"

Also note there will be MULTILE bear traps and bull traps. that graph is a concept only but good one.

Anonymous said...

>> More and more the federal government is looking like one big circle jerk sponsored with taxpayer money.

1907 just called to remind us that nothing has changed.

LauraVella said...

Brokeleavesyoubroke said:"I think it's optomistic to think that subprime will be the only source of forclosures".
Do you really think so?

It's only the beginning.

There are so many people with good credit that bought into this ponzi game, there is no way this credit bubble is limited to just subprime loans.

I personally know many people with good credit that bought homes within the last 4 years with adjustable mortgages that are set to reset sometime in the near future.

It will blow up prime loans as well.

I'm starting to research small private owned banks that dont offer home or equity loans of any kind. I do have to say though, there's not too many of them...does anyone have any other ideas to share?

Anonymous said...


Thanks for the moderating (or maybe the jerks just left blog town)but I'm back to reading the comments again. The rest of your work - amazing as always. :)

Anonymous said...

In yet another example of Wall Street manipulation:

Yesterday AM:
" Market down due to sell off of fiancials due to subprime worries"

Yesterday PM:
"Market up due to investors snapping up undervalued finacial stocks"

Did the subprime melt down disappear? Isn't it just getting started? Does anyone believe the worst is over?

Plunge Protection team jumped in and stopped a 200 point plunge from extending into the next trading day again erasing any hope of investing on fundamentals in the US market.

Anonymous said...

BTW, if anyone wants to read the analysis that comes with the graph:


Anonymous said...


Anonymous said...

Just watched the Mozilo interview with Maria Bartiromo.

That is one strange looking buy, but he is smooth.

However, he is completely delusional because he still believes in sub prime loans.

LoOsE SkRew said...

LoOsE SkRew said...
I'm glad there's a lot of great informative comments of what's going on in real estate. I thought it was me for a while thinking "Dam" I must be on the bottom of salary earning indivuals. In the summer of 2005 when I was looking for my first home. I couldn't find anything I felt in my price range. Everything seem highly priced and less for my hard earned dollars. I don't remember how I landed here, but extremely glad discovering from various bloggs, that my fate is not to become mortgage slave! I have a bad taste in mouth for everyone related in the real estate family. I'm sitting on the sidelines waiting and knowing today is not the day to purchase a home. I thank everyone for their insight keep up the great work and please don't stop!

Anonymous said...

Baltimore median price up 7% Feb '07 vs. Feb '06.

LA median price up 7.8% Feb '07 vs. Geb '06.

Call it what you will, I call it more evidence that this supposed crash is not happening.

Your cherry-picking two local markets and extrapolating the data from them to the entire nation is evidence of your low IQ.

Nobody is buying your propaganda, so do us all a favor and shut the hell up!

Anonymous said...

I've got an HP question for the day. If one Baby Boomer CEO (see Toll Brothers, Mozzy, etc.) a*s rapes his fellow Baby Boomer "Investor" via deceptive theft (thinly veiled as legal insider sale of stock) of his 401k cash contribution, is there a squealing sound?

HB Bear said...

We are in the midst of the "bull trap" right now. Prices are rising due to a culling of the buyer herd and only the affulent are making purchases right now, hence the Feb rise in OC prices.

When their appetite has been satiated and/or they get a clue, we will see a return to rational price declines.

Anonymous said...

Angelo Mozilo, President of Countrywide, apparently doesn't believe this is confined to only the so-called sub-prime lenders, as he's been selling his own stocks in CWF for quite some time now (per his mandatory FTC disclosure; notice CWF's CFO AND head economist have also been selling).

BTW, I don't know if anyone else noticed Angelo swallowing hard during the Bartilomo interview she when asked about what kind of exposure CWF faced: he stumbled, and actually choked over his 2% estimate (or did he actually say 20%: hard to tell, even after replaying it on the Tivo. I swear he said 2%, then corrected himself and said 20%..)

Wish I knew more about shorting stocks right now: these idiots have cost our country billions with their bubble and loose spigots to any idiot who bought a Carlton Sheets course....

FlyingMonkeyWarrior said...

, there's not too many of them...does anyone have any other ideas to share?
Local Credit Unions are safe, I have read.

sinis said...

Asked a friends wife who is a RE agent if the low ball offers I have been making to other RE whores has to be passed onto the client. She said yes, and that it is illegal for the RE whore not to pass on the bid, even if its low. She did say to keep in mind that the client may have told the RE whore not to accept any offers below a certain threshold, and that may be the reason the offers are not going any further.

Then she makes the comment to me that NOW IS A GOOD TIME TO BUY, AND THAT PRICES ARE GOING TO GO UUUUPPPP here shortly. I told her thank you, but my research indicates that that is not true and prices will plummet, even if there is a short term "rise", over the long run. She just stayed quiet. Don't think she knew what to say, especially since I chimed in about the sub-prime meltdown.