June 13, 2007

Revisiting the HousingPANIC Manifesto

This was probably the most controversial and misunderstood or mispositioned post in HP's brief history.


This post was about Change (with a capital C). It was about getting America (and the world) off of an addiction to the crack of consumerism, and back to a world where we cared about future generations and our fellow man more than what we drive, what we buy or how big our house is.

It was calling for a long-needed intervention, which if you're honest with yourself can and will only come via an economic meltdown. And folks, it's already here, in the form of an historic housing crash, and it's having the desired effect.

The housing crash underway in the United States stopped the corrupt and out of control housing industry in its tracks. It destroyed the flippers, and it made people realize (finally, and too late) that home prices can and do crash, it discredited the fools and charlatans, and it proved, once again, that the fundamentals do matter.

People now look at 2005 home prices and wonder what the hell were people thinking. People now laugh at 2006's out of control subprime lending and bankrupt lenders. People are disgusted with the failed flippers, lying realtors and corrupt mortgage brokers. And people are watching homes sell for less and less every day.

Bottom line - the only way we're going to get Change is through a catalyst, and the medicine of an economic collapse, although painful, is the only way our sick patient will get well.

Think we're addicted to consumer spending? Think it's pathetic that the US savings rate is negative? Disgusted by illegal immigration? Sick of trade deficits, out of control government spending, a $60 Trillion US debt, and our do-nothing REIC bought-and-paid-for government? Well, I was, and I am.

Here's the Manifesto again. I think HP'ers understand. And I think the REIC, MSM and self-obsessed simpletons don't. And that's OK by me.


Change.

This may disturb some of you. This may surprise some of you. This may disappoint some of you. But it has to be said.

After denying it for sometime, to you dear reader and even to myself, the truth is now clear. And you should now read this blog in the context of what I am about to say.

I am rooting for an epic housing collapse, a disastrous recession, the collapse of the stock market, a complete replacement of our current partisan leadership, a questioning of our country's current economic model, and a severe and historic financial meltdown.Period.

Before, I thought just a correction would do the trick. A cleansing of the debt-and-greed-fueled housing balloon we as a society created. But I've come to the conclusion that will not be enough to right the wrongs and fix the problem, so that future generations will not be burdened with the current generation's misguided and self-centered ways.

Pure and simple, I want Change (with a Capital C), and I now feel that only an historic financial meltdown will create the environment where Americans wake up from their current slumber, and call for new leadership, new thinking, and above all, change.

Something went awry in the US over the past decade. Something changed, with our government, our system, and our collective conscious. And this change was not for the better.

Greed overcame and infected so many of us - the idea of getting rich without working, and an overwhelming need to consume, consume, consume. We no longer worked for the benefit of our common man - we worked only for ourselves. We said "screw the next generation - I want mine, and I want it now!". And we went on a debt-fueled orgy of spending, never stopping to look at the bills coming due, and never stopping to think about the repercussions.

Now, dear reader, it's time to stop. It's time to pause, and consider where we went wrong, and above all, how we can fix it.

So, in conclusion, the fate that awaits us, this cleansing of our ways and of our system, in the form of an epic real estate market and financial collapse, in my simple opinion is a fate of necessity, and will serve as a catalyst for needed Change.

And away we go. Good luck to all of you, and know that I believe that we will come out of this stronger, wiser and determined to Change.

76 comments:

Anonymous said...

Keith,

Brilliant now, as it was then. Keep up the great work.

Anonymous said...

WOW. What A CRASH!!!!

dopes!

Anonymous said...

The Truth is HERE

Anonymous said...

Now tell me, what would you like the US sytem to be replaced with? The Euro/british liberal enabler stuff? Or should we have Scharia law like in some british muslim ghettos>>?
Give me a break..

Kenduffelsniffenspotzen said...

Be careful what you wish for......

Anonymous said...

Suggested - Robert McElvaine's "The Great Depression"

Social moods change.

There is nothing new under the sun. After the French revolution, they embraced egalitarian ideals and turned from same to Napoleon - see Bill Bonner's Daily Reckoning.

Here's to hoping we don't follow suit on the Napoleon routine.

Smug Bastard

Mammoth said...

While out with a friend at a bar in Seattle last Saturday night, I got into a conversation with a real estate agent.

I told him in no uncertain terms exactly what HP'ers think about his type, having gotten stinkin’ rich these past few years by leading the ignorant masses into financial ruin. And I told him in no uncertain terms, that real estate agents must change their ways NOW.

This guy got really belligerent, so my friend and I decided to leave. Well, he followed us out of the bar, calling me names and threatening me. By that time, I’d really had enough of his sh!t, and when he pushed me I drew back and punched him.

“What did he do, Mammoth?”

Well, he kinda skidded about 30 yards across the parking lot, then ricocheted off of a light pole and careened into the signpost in front of FB’s Granite and Marble.

I looked back over my shoulder at him as we were getting into my friend’s car, and he was still trying to get up off the concrete.

No doubt he wasn’t feeling too good during his Sunday open house…

-Mammoth

Anonymous said...

>> WOW. What A CRASH!!!! dopes!

Hey, supreme dumbass! The next time you decide to buy ANYTHING half-off (like houses in Fort Meyers, FL on Monday), let me know. You pay half, and then send the other half - since you don't care - to my PayPal account.

On second though, go fuck yourself...

Keyser Soze said...

Keith,
I'm more optimistic than you, but only if the following 2 steps are followed:
1) implement a sliding scale for social security benefits...sorry folks, has to be done.
2) cease the mind-boggling 'end of life' medicare expenses.
Then we only have to tend to the national debt of around $8T.

Where have the fiscal conservatives gone....long time passing.

Anonymous said...

Dow's up huge again today. Look like the crash of last week was yet againa figment of your imagination.

Keep holding your money in 5% cds suckers.

Anonymous said...

You are dopes!
Fort Meyers! Well that is good if you are one of the few people that live there, but here in NY there is no crash and there never will be where people actually live!
Things here are still going up, rents and houses!
Some crash!
DOPES!

Anonymous said...

The ultimate crash may be delayed for a few months - maybe even a year or so.

But all of history indicates that economic Karma is never successfully avoided. Come it will, and those who are not willing to listen to warnings will be wiped out.

For those who have heard the warning and chose to laugh it off, they will get what they deserve.

wiserenter said...

Dow's up huge again today. Look like the crash of last week was yet againa figment of your imagination.

Keep holding your money in 5% cds suckers.

--

So I suppose now we're going to hear how stock prices never go down. Go back to Fox News and await your next thought instructions.

TM said...

"Dow's up huge again today. Look like the crash of last week was yet againa figment of your imagination.

Keep holding your money in 5% cds suckers."

----------

Will do.

But you are aware that most of us are profiting from the market, too, right?

True, the bulk of my money is in bank deposits and cds, but like most sane people my money is also spread around a bit, with a significant chunk in the market.

If you're implying that you have all your dough in stocks, I suggest you visit a financial advisor.

Anonymous said...

Anonymous said...
The ultimate crash may be delayed for a few months - maybe even a year or so.


You idiots have been saying this for the last 5 years. This supposed crahs is always just around the corner. Next month, next quarter, next year.

Yeah whatever.

Anonymous said...

Crash on its way. A long slow time in the making, but it is happening. 2 million forclosures, 82 BK lenders. F ord and GM BK, the consumer adding more to his credit card.

Enter the latest bombing in the Middle East and the Hamas overthrow of fatah. Iran is next, $200 oil is next.

Haliburton has the detention camps built and W has the authority to impose martial Law at his will.

No Gas, empty supermarket store shelves, rioter in the streets and bank failures are going to happen within 3 months of the Iran strike. It will then really get bad once the undergorund sleeper cells and MS13 begin to gun down the masses in their own homes.

Too bad all of our boys (soldiers) are in the ME, the real war will be on US streets and citizens will be imprisoned or shot by UN peacekeepers.

The dollar collapse will provide the perfect spark to meld the US, Canada and Mexico into one STRONG UNION to fight the evildoers and restore a currency backed by the natural resources of Canada (oil sands etc).

You have been warned.

the only tradeable goods will be toilet paper and imported wines/booze and other little luxaries.

Stockpile tuna cans, toilet paper, booze - Jack Daniels will be the difference between safe passage or death-, condoms, asprin, tampons, soap, crackers and cans of beans.

If you have the means, a horse will be very valuable, both as transport and meals.

thickbozonelayer said...

I think you should dedicate a post to this: http://news.zdnet.com/2100-9588_22-6190628.html?tag=nl.e550

or tinyurl

http://tinyurl.com/32khua

Anonymous said...

"Or should we have Scharia law like in some british muslim ghettos>>"

It's Sharia, moron, and it is most fully enforced in Saudi Arabia, the monarchy that is on excellent terms with the Bush family.

http://tinyurl.com/28v28v

Kissy, kissy, Georgie Porgie.

Anonymous said...

You may be interested in Silvio Gesell who wrote a book called "Natural Economic Order" in 1906.
http://www.systemfehler.de/en/neo/index.htm

and the local currency in West Mass.
http://www.berkshares.org/

Anonymous said...

biggest up day of the year today. where is this stock market crash everyone's talking about?

Anonymous said...

So I suppose now we're going to hear how stock prices never go down. Go back to Fox News and await your next thought instructions.

June 13, 2007 8:24 PM



Ouch. Typical of the socialist here and elsewhere. Can't make an intelligent comment so you a) mention Fox b) mention Walmart or c) a combination of a and b.
moron. Oh well I assume you attended publik skool so it's not your fault.

rcochran said...

Keith, I've given you a hard time on your blog, but I think you have the makings of a really good independent economist. Keep learning and growing as you have challenged others to do.

rcochran said...

You idiots have been saying this for the last 5 years. This supposed crahs is always just around the corner. Next month, next quarter, next year.

Yeah whatever.


______

It's happening NOW, and has been unfolding dramatically over the last year.

If you don't see that, YOU'RE the idiot.

Anonymous said...

YTD S&P500 up almost 7% some crash.

GT said...

http://tinyurl.com/2mgpf2

viva la mehico

Chase: Free Money Transfers From NYC To Mexico

Anonymous said...

I wonder if all the anon "no bubble/market up again" trolls will be blaming bloggers in the future for any severe economic downturn. From "Wow. What a CRASH!!!" and "Keep holding your money in 5% cds suckers" to "I hope you people are happy. People are homeless now thanks to your blogging. This isn't funny."

Only time will tell.

Anonymous said...

Agreed.

Anonymous said...

Retail sales up big in May
Dow up huge today and yesterday
New home sale up 16% last month


If this is an economic crash I can't wait for the boom to start.

Anonymous said...

"Bottom line - the only way we're going to get Change is through a catalyst, and the medicine of an economic collapse, although painful, is the only way our sick patient will get well."

That's why the DOW went up 187 points today???

Anonymous said...

The housing bubble is just the appetizer. The main attraction is still to come 5-10 years down the road. It's called peak oil. $5, $10 a gallon, or how about zero gallons at any cost? Got to suck having a big vanity vehicle and no fuel.
That's why I enjoy riding the gravy train right now. Better get ready, the good times ain't gonna last forever.

Hpy Babybmr in Glndle AZ said...

"Senate conservatives have been warned by Republican leaders that they must either accept a series of largely symbolic floor votes on a handful of amendments to the immigration reform legislation or see themselves shut out of the process altogether when the chamber resumes work on the bill later this year, GOP lawmakers and aides said Tuesday. The warning came as President Bush met privately with Senate Republicans in an effort to restart immigration talks that stalled last week after a failed effort by Senate Majority Leader Harry Reid (D-Nev.) to end debate on the controversial measure," Roll Call reports

This is the time to call your senator and lodge a complaint. If you don't do it, nobody else will.


Read the article, There is a list of phone numbers in the responses.

http://www.steinreport.com/archives/2007_06_13.html#010449

Anonymous said...

Keith said - "It was about getting America (and the world) off of an addiction to the crack of consumerism, and back to a world where we cared about future generations and our fellow man more than what we drive, what we buy or how big our house is."

Keith,
This is just what I scream at the TV! You should have seen the giddy Nightline crap on last night. Seems North Carolina is in the middle of an echo boom. The reporterette acted like she was gonna have a little OG right there in the realtors car. I just about had to go throw up in the sink when it was over.

The bubble is a manifestation of the ego, hubris, pride, and materialism that have become the new american values. This crap is not sustainable and it will come crashing down, not if, but when.

dwr said...

"Now tell me, what would you like the US sytem to be replaced with? The Euro/british liberal enabler stuff? Or should we have Scharia law like in some british muslim ghettos>>?"

How about with the US system circa 1955?

dwr said...

"No Gas, empty supermarket store shelves, rioter in the streets and bank failures are going to happen within 3 months of the Iran strike. It will then really get bad once the undergorund sleeper cells and MS13 begin to gun down the masses in their own homes."

Now that is one paranoid mother _______.

Paul E. Math said...

I am worried what kind of leadership this country will turn to when tshtf. France got Napoleon. Germany got Hitler. Americans remain too ignorant and arrogant to accept their own responsibility for the coming economic meltdown. Our electorate will blame whatever or whoever it is most convenient to blame. Tough to tell right now who that might be. Chinese communism? Socialist South American demagogues? Middle-eastern oil Sheiks? Canada?

Much as I agree that we need a serious attitude adjustment, this bubble has taught me that we lack the objectivity and maturity to tell right from wrong.

Anonymous said...

What?

Retail sales up big in May ?
Dow up huge today and yesterday ?
New home sale up 16% last month ?

This is FINAL AND CONCLUSIVE PROOF that the economy will skyrocket forever, no matter what happens!

FREE MONEY FOR EVERYBODY!!!!
WOOOOOHOOOOOOOOO!!!!!!!!!!!!

Anonymous said...

Retail sales up from a slow month means sales still down. Need year-over-year numbers.( I don't have the report or the numbers.)

The HUGE move up today, was not as huge as the move down last Thursday. The question is, Can tomorrow close above today? Fact is, this rally is running out of steam. That does not imply that it is straight down from here! It means that this month or next is probably the high, unless something really surprising happens.

As far as new home sales; read comment about retail sales.

It's all about credit. The failure of 70 or so mtg. brokers/lenders is only a starting point for this misadventure. Hang on and enjoy the ride.

When driven by insane levels of credit, the markets - houses,stocks,bonds, whatever - will go higher. When easy credit ends, they go lower. Interest rates moving higher = less credit.

Calling people names will not change the rules.

Good work HP!

Another Reader

Anonymous said...

Hate to break it to you, but NOBODY works "for his common man." Work is something you do because you get something out of it, not because you "want to help someone else."

While I agree with you that the present economy is an abomination, it's mostly so because it's full of people who don't *want* to work -- and lots of people who either get rich or get by on the backs of others.

It cuts across "class" by the way. Whether it's someone who gets rich because of who he knows in Washington and "making connections," someone who gets rich quick through riding the Yen carry trade, or some guy who doesn't want to work and buy his own health insurance but instead calls for socialized "universal care," there's a dearth of people who are willing to work their butts off for what they want.

Further, there are LOTS of people who are willing to condemn those of us who DO work our butts off and are tired of the freeloaders and wondering just what the hell we're doing on the treadmill.

Over 50% of Americans are now dependent on government for their incomes -- either as direct or indirect government employees, or welfare/assistance recipients.

All it will really take for things to get bad is for the minority doing productive work in the private sector to decide that the treadmill is too fast, the burden too oppressive and the personal reward too small to keep running on the treadmill.

I see this everyday -- when my neighbor, a well-paid 9 to 5 government employee with the local city tells me "how fortunate" I am to be paid what I am, how I make more than him. . . when he gets a nice cushy 9 to 5 job with unlimited insurance (all paid for by my tax payments), while I skip yet another weekend in a row to fly to wherever my job needs me, to work yet another 12 hour day.

"Fortunate" my ass. If taxes and costs of living go up any higher (and I live in the Bay Area so they probably will), what's the point? I'll be making less money when all is said and done than in some boring 9 to 5 job in Philadelphia or St. Louis or Atlanta -- and since I'm not a homedebtor, I'll be able to easily take it.

However, with my luck, after a couple years of VERY high taxes that keep going up to keep my neighbor employed (and bail out homedebtors), the economy's collapse will leave me unemployed and with no savings to live on thanks to all the inflation, taxes, and cost of living increases.

The day that happens to the privately employed is the day the "revolution" comes.

wiserenter said...

Ouch. Typical of the socialist here and elsewhere. Can't make an intelligent comment so you a) mention Fox b) mention Walmart or c) a combination of a and b.
moron. Oh well I assume you attended publik skool so it's not your fault.

--

So I suppose you're one of those sheeple who will start to think "stock prices will never go down." And listen to who talks about ignorant responses. You assume I'm a socialist when in fact, I'm not. You neo-conned-bush-wacked couch patriots always make references to "liberals," "dems" and "tree-huggers." Truth is they're all f***ed. Would you like to be driven off the edge of a cliff in a Ford or a Chevy?

sam said...

"Keep holding your money in 5% cds suckers."

I love the game as much as anyone anon, but as a wise man once told me, "You got to know when to hold 'em, know when to fold 'em, know when to walk away and know when to run."

Been a nice run the last couple years, eh?

Anonymous said...

Yeah. What an amazing boom. It is so so wonderful to have all housing in any desirable region of my area (Los Angeles) priced at about 8 to 10 times our household income. I am sure it can only go up from there, and I will wish that I had bought now. I expect soon that this boom can only continue as Anonymous suggests, and houses will soon trade at 20x my salary. $4M starter houses anyone?

Same for stocks... we have historically high P/E ratios, but the rally must go on forever. Private equity firms will soon buy everything, fire everyone so expenses will go near to zero, profitability will soar, and a few more billionaires will be minted. Idiots will buy more crap that they don't need or use. Gotta have a Sea-Doo in the garage and a $5K bbq. Good times.

For those cheering the rallies, do you care at all for our future generations?

Chip said...

Geeze! Thats amazing!!!!
Totaly awesome!

http://fordrealty.net/

Anonymous said...

I think our resident troll is none other that Suzanne.

Anonymous said...

I've never seen a bigger group of people hoping for the demise of so many others. You should be ashamed of yourselves. Does it make you feel better to have other experience trouble?

Anonymous said...

Sign of the times?

Tonight I went to look at a car I'm interested in. Private sale, guy is asking $14,800 for it. Originally had it listed at $16,500 but no sale. Got to chatting with him, he said before me he had 3 other people look at it. First one wanted it but couldn't get a loan. Second guy same thing, couldn't get a loan. Third one decided it was too much and he couldn't afford it.

Now of course the seller could be lying to me but I doubt it. He seems like an OK dude. And telling me all that is to my advantage as a cash buyer anyway, so I have no reason to doubt him.

I find that absolutely amazing that someone would have trouble getting a $15K car loan. I mean shit banks were giving away $500K mortgages to anyone with a pulse not so long ago and all of a sudden $15K car loans are hard to come? YIKES!! Maybe this is a sign that the easy money party has come to an end. Maybe it was just 2 complete deadbeats and means nothing. Who knows.

Just thought it was interesting and thought I'd share.

I'll offer him $12.5K cash (of course) and I'm pretty sure he'll say OK. Car is a '98 BMW 740.

Shakster said...

Uh Kieth,I been thinking,ayand I ah ,well I have to go with the System as it is.Yessirree.IRS,ATF,FBI,Voting,The Holocaust was all about the Jews,housing only goes up,you know.I gotta Flip Flop on this one.Brokers love all mankind,Americans are the only true freedom lovers,the Pope is good ,and all that.Yep,The OL-FlippiddyFlop for me.
The Iraqis should be extinct by now,Oil had nothing to do with it,but we may as well take it anyway,it's cool.Since all Americans are suddenly ,and truly rich beyond their wildest dreams,and means for that matter I have to say that this system is unsinkable ,and magic.Run by Wizards,and Religeous types who speak to GOD Almighty himself!Can't argue with that.Plus I want to run for congress ,and be assassinated so I can become a martyr,and have 7 RealTor babes when I go to heaven.I haven't Decided if I will be Jewish or Christian Though.I do get to take All my diamonds,and chains with me though if I Go Jew.So on this one I will have to say you're blowin it.
NOT!!

Dragonsbane said...

One thing that is rarely mentioned is the obscene amount of money that is there to be made in market "crashes". Not corrections, but real crashes. When markets crash and prices get distorted, the bright people of the world come out on top counting their gains in multiples of hundreds of percentage points (that's not including leverage). Not 10, 20 or 50 percent. I for one am not ashamed to say I still care about what car I drive and what house I live in. And many years down the road (not just one or two), I'll be preying on the stupid as they throw the baby out with the bath water, just to laugh it up a few years later.

Good luck boys, keep your eyes open and plan for the future.

Anonymous said...

I love the guys who say "market's up, there's no crash," as if the performance of heavily globalized U.S. stock market indices is a reflection of U.S. housing sales & supply.

It's no longer a handful of bear bloggers saying there's a real estate crash. It's here, now, and questioned by nobody beyond desperate flippers leaving comments on blogs.

Foreclosures are up 90% over last year, double digits over last month. In the big Southwest markets including "can't go down" Los Angeles, sales are down 38% and more, while the only places showing miniscule "median price increases" are thanks to dead sales in the sub-$500,000 market -- the working/middle class market out here.

Keith, I think interesting things are happening, too, but I don't think it's going to turn out rosy for people on the wrong side of the top 1% of U.S. household income.

Hell, I'm in the top 1% and don't feel so swell about the future -- the top tenth of the top 1% can afford fortified compounds on mountaintops. Yeah, I rent a great house in a great neighborhood for about 1/3 what a mortgage would cost here with 20% down, but I'll still be running for the countryside with my family when the shit hits the fan, as it most certainly will out here.

One of the weirdest, most tragic things about America -- and it was all done On Purpose -- is that being in the top 1% of U.S. earners these days is the same as being middle class when I was growing up. Exactly the same. You just have to pay for everything that used to come with being an American taxpayer: You have to pay for a decent school, pay for a toll road to take you around the parking lot public highway, pay for private patrol to watch your street as the cops are busy fighting gang wars in the ghetto, pay for reserving a campsite in Yosemite that you still have to pay for when you get there, pay a premium for a hybrid so you can afford gas .... it's incredible.

The new America is here and it's like this: The top .01% owns more than that tiny fraction of humanity has owned since just before the 1929 crash and following Great Depression. But this time, there will be no FDR to save the masses. That's over.

If you can, you might want to get out of the United States, soon. Or at least to some very small isolated community with its own food and water supply.

If you can't, watch the movie "Idiocracy" and you'll have an idea what's coming, soon.

Anonymous said...

It's not missunderstood - denial goes along with addiction (U.S consumerism)

Even if a great leader (Ron Paul like) tackles this addiction we have to deal with withdrawl and recovery periods

...can't believe I'm drivng a previous...it's the right thing to do from my grandkid's future...what will the think of my at line dancing this Friday...better sneak out early and left my wife drive...

Anonymous said...

It's not an economic crash yet...it's a housing / asset bubble crash...if we invade Iran in time and start WWIII then we can postpone the economic crash indefinitly until evolution re-creates a human like species...if you don't believe in evolution then Jesus will be here soon.

Anonymous said...

Read a book called the Coming Boom Ahead and the Roaring 2000's. These books were prophetic up to a point. That point being an unpopular war. Huge Federal Debt. Oh and this housing bubble that stole a couple of trillion from the stock market the last couple of years. Even though Harry Dent predicted real estate would boom it was never supposed to get STUPID. However it was coincidently supposed to peak in 2005.


However look what Harry Dent got right.

The Japanese Depression coming and going.

The DOW hitting 10000 in the year 2000.

There being a correction and ultra low interest rates and inflation the first few years of the 2000's.

The recent run up and possible further run up of the stock market from here. I seriously doubt the market will get to 20000 but stupidier things have happened like a housing bubble.

All this is based on research of how people spend from cradle to grave. What drove the boom was the boomers themselves going through their peak spending years. Well folks thats all coming to an end and very soon next year or 2009.

We will most likely have a depression very similar to or possibly worse than the 1930's. I have followed his advice for years the only time I ever lost money was when I left the beaten path and stayed in stocks to long in the early 2000's.

Sequoia512

Anonymous said...

I believe the post said we need a kick in the pants. Even if the crash is not happening, do you really think the way we do things is sustainable? If so, you are ignorant of where you are - namely a miniscule, threatened biosphere, a closed ecosystem on an insignificant planet in a hostile, uncaring, mostly empty universe. Our collective behavior approximates that of cancer on the human body. Get some perspective.

housing crashing said...

Stock market's up while broke-ass homedebtors and realtrolls have no money to invest. HAHAHAHA

Anonymous said...

AMNESTY BILL COMING BACK.... SOON

GET OUT THE WORD TO FIGHT IT.

FAUX NEWS ALSO SAYS ...GUESS WHO ARE THE TOP CONTENDERS FOR PREZ???

YEP...NO MENTION OF RON PAUL

investing genius said...

I will listen to the expert economist David Lereah who has decades of experience. He says that housing has bottomed and he has no reason to misinform the public.

I am going to get rich by listening to the experts like Abby Joseph Cohen. They say it's a new paradigm.

Seneca said...

It is true that some data is conflicting, but an economic downturn is not necessarily 'all bad news, all the time'. One month of 'good sales data' is not a trend.

A rising Dow can be quite rational in the context of massive M3 growth and a depreciating $US.

Rising home sales make a lot of sense - if prices have begun dropping, there will be a lot of pent up demand from people who believe (and they might be correct) that it's a temporary lull.

There's the funny thing about the market. Knowing what is going to happen is different from knowing when. The exact timing of course is the difficult bit.

Looking at the debt increases, the M3 growth, distortions in markets, activities and size of derivative markets and other little understood financial instruments, the growing power of countries that are not really part of the 'club' of developed economies - there seems to be a lot of risk there that really doesn't seem to be accounted for.

As always, diversify and hope for the best.

buy_high_sell_low said...

Keith,

http://tinyurl.com/yop8bd

edd said...

The U.S. only "came into its own" in the mid 20th by default.
Other parts of the World were
still self-destructing, or just developing at that time.

Reality emerged long before 2000, while we kept pretending that the
U.S. had actually earned its place
in the World order due to the
caliber of its workers and its vaunted (shells) of institutions.

About once a year from 1975 to 2005, I would see a small clip in
the paper about the test ranking of students in developed nations.
We were always near the bottom; but why worry ?

Productivity ratings were often cited, but they were often legacy
effects, and partly due to inherent
advantages that goosed numbers; not all from the health, drive,
and knowledge of the people.
Our grad schools are highly rated, but guess what; many of the better
grad students are on student visas,
even while coping with a second
language.

My fancy engineering school was a
joke, and the several engineering
departments I survived were also.
The point is that we are about to be dumped into an icy river, and
we just might save the crew if
we become healthy, competent, committed, and self-educating;
either today, or yesterday.

The past & future is found in the
the national balance-of-payments
deficits. I don't see much of a
future without major Shock Therapy.

Doktaire said...

It seems clear to me, that neither purest capitalism nor purest socialism works in the end. Each system has merits, but the extreme form of each is distastrous. Therefore the ideal system, must be some mixture of both, unless some genius has invented something entirely different.

You know, I think some parts of Europe might have it right, I had thought Britain, but the housing frenzy over there has cast doubt on that.

But they do have a lot of things right. A vibrant capitalist society, with a range of social saftey mechanisms. And ABOVE ALL, access to college level education for ALL who are ABLE, not just the rich. To say that coming out of college, with what is effectively a MORTGAGE, is not the way to build a healthy future society.

The current problem in America is the insane greed of the BABY BOOMERS!

Doktaire said...

The DOW was DOWN yesterday, so that means nothing. A large part if the rise in stock prices is due to the weakness of the dollar, which means you need more of them to buy stocks, bear in mind many of the listed companies are actually NOT AMERICAN.

RJ said...

People keep mindlessly insisting that the stock market is on some sort of tear. In real dollars the Dow is still below its Y2K high and has to hit around 14,000 just to break even (using official inflation rates. Actual inflation is much higher). If you measure the DOW in anything else, oil for instance, the Dow has lost tremendous value. The Nasdaq is still way down from its Y2K high. Measuring anything in nominal value is largely meaningless. Like housing, the only thing that matters is when you buy in, when you sell and whether or not your investment beat the inflation rate.

As for the housing industry, all the numbers indicate a recession. The fact that markets in different areas vary as to sales activity and pricing doesn't mean a thing in the context of the overall economy. Not all areas will decline at the same rate. Overall, the industry is suffering a decline in housing starts, sales, and mortgage applications of about 20% yoy. That's a hellavu lot of lost jobs, less spending and less tax revenue.

Also, the ten year note is up to 5.12%. It has put a temporary floor under the dollar but the outlook for ARM resets is not good.

Anonymous said...

Doesn't matter how long it takes to get to the crash.

The people like the poster who says things like "you idiots" are the most likely to be wiped out.

To the poster who assumes I am in CDs:
I am not. I assure you that I am on the other side of the transactions that will wipe you out, and take the smirk off your face as a bonus.

The bears will eat your lunch; we're very patient. The fun part will be watching the looks on your faces when it finally turns. Even if you are smart enough to get out early - good for you - you will still have to endure the pain of having been wrong. Which apparently matters very much to you. Your puerile behavior in this thread shows how insecure you really are.

Your only two possible outcomes are humiliation; either with our without financial ruin, depending on when you capitulate.

:)

RJ said...

Please folks. Post some data to back up claims. Here's some good reading.

"Message to FED: Housing is falling much faster than reported" John Burns RE consutltants
http://tinyurl.com/yqsedw

"U.S. Mortgage Foreclosure Filings Rise 90% in May" Bloomberg
http://tinyurl.com/yvqlhz

"Shller: Mr. Worst Case Scenario" CNN Money
http://tinyurl.com/2mqx6k

"Receding Horizons" Energy and Capital
http://tinyurl.com/2edcav

"The Cavalry Stays Home" Energy and Capital
http://tinyurl.com/ywah6g

Threw in a couple of articles on energy because that is another factor which will ultimately crash the U.S. housing industry.

Anonymous said...

Keith,
You seem to have got it all wrong, hence keep sucking your thumb.

The reality is the enormous power of survival of the Poor of China/India. They will do anything even if it mean the stupidity of supporting Fraud US Housing market.

Take it from me, not a chance of meltdown.

Please read the History of Communist China and India.

Anonymous said...

Doktaire said...
The DOW was DOWN yesterday, so that means nothing.

June 14, 2007 6:08 AM

_________________________________

Dude check again. DOW was up amost 200 yesterday.

Anonymous said...

dwr said...
"Now tell me, what would you like the US sytem to be replaced with? The Euro/british liberal enabler stuff? Or should we have Scharia law like in some british muslim ghettos>>?"

How about with the US system circa 1955?

June 13, 2007 10:56 PM

__________________________________

Ahh yes the good old days when blacks were lynched for looking at a white woman, when women were barefoot and pregnant, when abortion was illegal, when we had 3 networks on TV.

Boy oh boy can we please, pretty please go back to then?

sushil yadav said...

Keith,

I came across your blog while I was doing a search on Consumerism. My post is not directly related to Housing - it is about Consumerism in general.

Before Industrialization humans killed Environment primarily for Food. After industrialization humans are killing environment for Food and [unnecessary]Consumer Goods.

Industrial Society is destroying necessary things[Animals, Trees, Air, Water and Land] for making unnecessary things[Consumer Goods].

In this context I want to post a part from my article which examines the impact of Speed, Overstimulation, Consumerism and Industrialization on our Minds and environment. Please read.

Industrial Society Destroys Mind and Environment.

The fast-paced, consumerist lifestyle of Industrial Society is causing exponential rise in psychological problems besides destroying the environment. All issues are interlinked. Our Minds cannot be peaceful when attention-spans are down to nanoseconds, microseconds and milliseconds. Our Minds cannot be peaceful if we destroy Nature.

The link between Mind and Social / Environmental-Issues.

Subject : In a fast society slow emotions become extinct.
Subject : A thinking mind cannot feel.
Subject : Scientific/ Industrial/ Financial thinking destroys the planet.
Subject : Environment can never be saved as long as cities exist.

Emotion is what we experience during gaps in our thinking.

If there are no gaps there is no emotion.

Today people are thinking all the time and are mistaking thought (words/ language) for emotion.

When society switches-over from physical work (agriculture) to mental work (scientific/ industrial/ financial/ fast visuals/ fast words ) the speed of thinking keeps on accelerating and the gaps between thinking go on decreasing.

There comes a time when there are almost no gaps.

People become incapable of experiencing/ tolerating gaps.

Emotion ends.

Man becomes machine.


A society that speeds up mentally experiences every mental slowing-down as Depression / Anxiety.

A ( travelling )society that speeds up physically experiences every physical slowing-down as Depression / Anxiety.

A society that entertains itself daily experiences every non-entertaining moment as Depression / Anxiety.


Fast visuals/ words make slow emotions extinct.

Scientific/ Industrial/ Financial thinking destroys emotional circuits.

A fast (large) society cannot feel pain / remorse / empathy.

A fast (large) society will always be cruel to Animals/ Trees/ Air/ Water/ Land and to Itself.

To read the complete article please follow any of these links :
PlanetSave
FreeInfoSociety
ePhilosopher
Corrupt

sushil_yadav

dwr said...

"Ahh yes the good old days when blacks were lynched for looking at a white woman, when women were barefoot and pregnant, when abortion was illegal, when we had 3 networks on TV."

I was kind of talking about small government, but those are all good too.

james dean said...

An excerpt about the reasons behind the stock market crash of 1929:

1. Stock were overvalued
Some people thought that, according to P/E ratios and price/dividend ratios, stocks were overbought. In 1929, stocks were trading at an average P/E of 60.

2. Margin Buying
At that time, you could put 10% down to buy stock. Thus if you wanted $10,000 in stock of GE, you would only need $1,000. Then you could make monthly payments to pay for the rest. Margin buying accounted for 5% of the total stock market value in 1929. This was not enough to drag the entire market down.

3. Fed Policy
Adolph Miller was the new president of the Federal Reserve Board and he set out to tighten monetary policy. He aggressively raised interest rates on broker loans.

4. Bad Banking Structure
In the 1920's, banks were opening up at the rate of 4 to 5 per day. There were few federal restrictions to determine start-up capital needed for a new bank, or how much of its reserve could be lent. As a result, most of these banks were highly insolvent. Banks were closing at the rate of 2 a day between 1923 and 1929. When banks moved to invest heavily in the stock market, it proved to be a disaster when the market crashed. By 1932, 40% of all banks were wiped out.

Replace "banks" with "lenders/ brokers" and "stocks" with "housing" and you are summarizing housing pretty good.

Dale said...

Scary, but accurate. We need a total cleansing of the financial and political systems of this country and a return to the original Federal style system. Alternatively, if we abolished DC and returned all of the functions it performs to the individual states this country would quickly return to the glory as a beacon of freedom it experienced in the early years of the Republic. States would be forced to compete to become the most stable and free, and those with good laws, sound finances and stable systems would attract residents, while those that mismanaged their resources and systems would see a mass exodus that would force reform or lead to internal collapse. Whatever the solution, it is obvious that the path we are currently on leads to the abyss.

Doktaire said...

"Dude check again. DOW was up amost 200 yesterday.
"

OK, then the day BEFORE yesterday, for you, whichever time zone you are in, bozo! My point is, that the DOW being up on one single day, says nothing at all about the overall state of the economy. One day it might be up, one day it might be down.

Doktaire said...

LOL, I bet that, measured in "houses" the DOW is at an all time low.

Doktaire said...

And why is that the Republicans go on and on about how they are for SMALL GOVERNMENT, when every time they are in charge, the federal deficits and the national debt balloon. For all the waffle the Reagan is lauded for the debt went up massive amounts during his tenure. Then Bush Snr conitnued the same thing, only Clinton actually brought the US back to anything that even approaches solvency, then of course Bush Jr came in and DOUBLED the national debt in 6 years. Forget all this other stuff, while it is bad, I think the impending financial crunch is the greatest threat America faces today.

Doktaire said...

If you don't believe me, take a look at this graph. Bottom line is, the Republicans suck when it comes to fiscal discipline, the cut taxes, but actually increase spending. And they increase it on things that don't really benefit the nation as a whole.

Doktaire said...

Oops, here is the link to the graph

http://zfacts.com/p/318.html

Anonymous said...

Keith, Did you ever see the movie "Logan's Run" about a future society that kills people when they reach a certain age, for the common good? Maybe the idea will catch on...sure would solve the social security, medicare issues. I saw an AARP add this morning that used small children and talked about the good of future generations, I almost puked. The Boomers are the most self centered generation ever. How could they be a product of the Greatest Generation? Sorry, don't even get me started...

Small Hat