April 29, 2007

HousingPANIC Stupid Question of the Day

Why is everyone seemingly so surprised with the housing crash?

Do we need to buy Manias, Panics and Crashes for every man, woman and child?

Geeze. It's just so damn OBVIOUS for HP'ers, and real economists (vs. TCDL).

So, when it comes to the housing crash underway, why are so many so damn clueless?

15 comments:

Anonymous said...

Mortgage brokers getting very desperate ... http://baltimore.craigslist.org/vol/320500011.html

FlyingMonkeyWarrior said...

Greenspan was surprised, according to him.

FlyingMonkeyWarrior said...

But I do not believe it.

Ben Franklin said...

I find it impossible to fathom that Greenspan was actually surprised to see these markets as asset bubbles, when he helped build TWO of them in series. In all that time, no one considered this as a possibility? Poppycock.

Deniability and diffusion of respnsibility is the cornerstone of American Gov't nowadays.

Anonymous said...

Because the name of the game is having movement, whether up or down. Markets are like big ocean liners, having lots of momentum. It takes a lot to get them going and once they get going, it's pump, pump, pump to maximize profits. Then those in the know, quietly exit long and shift to short positions for a great ride down and even more profits. Those who are lazy, gullibale, don't pay attention, get hosed. It will just be a matter of how much they are taken advantage of and whether they stir enough to pick up pitchforks and torches to protest the game. All the more reason for the rules to be set for a stable, profitable future and avoid ponzi schemes.

Anonymous said...

I only see what I wanna see
I only hear what a I want hear
I only retain the info
They want to regurgitate
and chain-mail it to infiniteum
ad-nauseum.
(Sung to a punk-ska beat)
Coconutz!

Clear-Sky-Day said...

I think that the banks knew they knew they would be bailed out if need be.

The right wing conservative libtards in Washington will pass some legislation labeled "Save the poor home debtors". But the effect of the legislation will be to bail out the banks.

You middle class folks who bought in at the top.....too bad. You're working for the bank now....as indentured servants.

Anonymous said...

There is no surpise! Only those that will not accept (denial) that they paid too much, and they are losing value!

Anonymous said...

Best comment I ever heard from a guy 'Way in over his head'! When I said, 'so you lower the price'!

Quote,
"Why should I take a Loss"?

Anonymous said...

It's Simple,

Overpriced,

Overvalued,

Over supply

Greed....creates overprice

Denial....creates over supply

A very vicious circle indeed!

serindippity said...

I find it impossible to fathom that Greenspan was actually surprised to see these markets as asset bubbles, when he helped build TWO of them in series. In all that time, no one considered this as a possibility? Poppycock.

I'm sure there were plenty of people in the Fed who did.

The conversation probably went like that of a reality-based economist versus Larry Kudlow.

Ideological faith-based brainlock.

I think that the banks knew they knew they would be bailed out if need be.

Ding ding ding! What's the ROI on lobbying? Got to be 1000%+.

The best thing Ben Bernanke could say in Congress?

"If there had ever been such a thing as a 'Greenspan put' protecting the downside of abnormal risk-seeking speculation, I guarantee that it has expired."

Ben won't be getting those 100K speeches (i.e. payment for past work) that Greenspan is getting, he'll have to go back to school.

(He was my Econ 101 prof many years back.)

by the way the proper policy responses to the bubbles (dot com & fake estate) is not interest rate rising, but cutting off speculative credit. For stock bubbles: raise the margin level. For RE bubbles: raise underwriting standards.

In a speculative bubble 5% interest rates versus 5.25% or 5.5% interest rates make NO difference---the bubblers have their greedy eyes on 50% or 100% returns in a few months so they don't respond to those tiny changes.

But if you just plain take away their ability to buy in the first place that will work. Of course it's against right wing economic ideology because certain desires were "artificially" not fulfilled on account of government intervention.

Ben Franklin said...

by the way the proper policy responses to the bubbles (dot com & fake estate) is not interest rate rising, but cutting off speculative credit. For stock bubbles: raise the margin level. For RE bubbles: raise underwriting standards.

In a speculative bubble 5% interest rates versus 5.25% or 5.5% interest rates make NO difference---the bubblers have their greedy eyes on 50% or 100% returns in a few months so they don't respond to those tiny changes.

But if you just plain take away their ability to buy in the first place that will work.


Give that man a cigar!

In a real estate frenzy, manic buyers couldn't give a hoot if interest rates were 5% or 25%: we had a bubble occur in 1980 and 1990, under conditions where rates were significantly higher (what, like 10% and 15%, was it?). In fact, we found they didn't even care if the loans were sustainable vs. toxic: most borrowers planned to bail out in a few years, if the going got rough.

Guess what? Alot of buyers will be bailing. People tend to bail out of an "investment" property when it's not the house they live in (what a NOVEL concept there, huh?)

So the Feds playing games with interest rate hikes has almost NO effect on specuvestors; but if you cut off their ability to gamble irresponsibly with OPM, they'll be forced to stop, or, God Forbid, use their OWN money <*gasp!*>.

Darn, I was going to Vegas this weekend, and was so hoping I could locate a lender to finance my "investment", using none of my own money.

Frankly, investing $100k in roulette on black seems like a much better bet than gambling in real estate.... So let's call a spade a spade: fliptards like Casey Serin weren't investing in real estate but gambling with real estate, with him buying (8) houses in (8) months. Hey, it was the road to American Wealth and Eternal Riches. So easy, anyone could it.

It ain't investing: that word used to suggest borrowing $ to invest in building capabilities that in turn PRODUCE something of value, AKA a product. An assembly line, a sweat shop, an auto repair shop: these all provide something of value.

Believe it or not, houses are not factories: they don't PRODUCE anything of value. They provide a benefit, so they're actually a PRODUCT, not a means of production (e.g. home construction businesses PRODUCE a product, the house).

So the benefit that houses PROVIDE (namely, shelter) is there regardless of WHO buys it, and the shelter is produced 24/7, whether it's occupied or not.

The irony is that Casey's letting the houses sit unocccupied shows that he's actually removing a benefit provided to society and the economy, and the fact he's let the houses fall into decay and disrepair only proves how this was gambling, which is nowhere close to anything like investing.

Anonymous said...

Bingo!!!!

Anonymous said...

dont ya just love it when the numbers and the paperworks add up

Anonymous said...

I don't get it either. It's quite obvious if you look at data from USA, Australia or england that it cannot continue. It's always been that way...