April 30, 2008

America has been down in the dumps before. It's just been awhile since it's sucked this much

* Home values crashing

* Record gas prices

* Soaring food prices

* Job losses

* Flat incomes

* Lousy savings rates

* Plummeting dollar

* Stuck in a middle-east quagmire

* Loss of trust and respect for America around the world

Yup, I'd say things are looking good for the Incumbents this November.


The good news? I'm not sure it can get much worse, so maybe (except for houses) we're hitting rock bottom.

Check out this video on Canadians swooping into housing crash and foreclosure-central Phoenix Arizona to pick the meat off the bones

It probably looks tempting for the maple-syrup-eaters flocking in Phoenix. All those half-off deals, the sea of foreclosures, the ruined families to take advantage of, the thousands and thousands of bank-owned debt-traps. But it's still not close to the bottom. Not even close. It's the P/E stupid. It'll always be the P/E stupid.

You just know there's a bunch of Phoenix ramen eating realtors who have moved all their advertising and cold calling to north of the border. They ran out of suckers in the US, time to import.

Here's the CBC video. Enjoy.

Worthless. Shameless. Priceless.




HousingPANIC Stupid Question of the Day

In what year will Ben Bernanke's successor have to raise interest rates to 10%+, in a desperate attempt to repair the damage caused by the biggest wuss ever to hold the office?

Countrywide loses $893 million for the quarter while Angelo Mozilo cashes in for $143 million

Seriously, if BofA completes the CFC acquisition, you'll know something funny is going on with Hank Paulson and Ken Lewis. Countrywide is AIDS, Chlamydia, Genital warts, Herpes, Gonorrhea, Hepatitis and Syphilis all rolled into one. BofA would be dealing with lawsuits, losses and employees going to jail for years and years.

Watch for the other shoe to drop soon here. And watch for the FBI to announce formal charges against Countrywide execs, and Angelo Mozilo by the end of Summer.

And oh, get your popcorn.

Countrywide Financial Corp. said Tuesday it lost $893 million in the first quarter, as rising loan defaults amid a deepening housing downturn forced the nation's largest mortgage lender and servicer to sharply increase its provision for loan losses and book other credit-related charges.

Shareholders saw their stake in the company dwindle as Countrywide shares lost 80 percent of their value by the end of 2007. Shares had hit a five-year peak of $45.03 in February of that year.

Meanwhile, Mozilo was paid more than $22.1 million and cashed out $121.5 million in stock options last year.

And then people figured out living 50 miles away from work was really, really stupid

You're going to be shocked at how high gas prices will go.

You're going to be shocked at how worthless homes in the Wal-Mart exurbs will get.

April 29, 2008

HousingPANIC Strange Observation of the Day


Gonna be on the road the next couple of days

Heading to Varna Bulgaria, doubt I'll find internet on the way (or paved roads)

Let me know what I missed here. And if you're looking for a travel tip, get to Budapest before everyone else finds out. Great town and your dollars are still pretty good.

What do you do when you made the biggest financial mistake of your life, closed on that Florida condo, and now you have no neighbors?

This article is so full of cliches I figure I'll just let you guys at it. Funny captions get bonus points....

Where's the wine and cheese everyone?
For that matter, where IS everyone?
I paid what?
Come here doll - I want to show you my granite countertops, and my checkbook.

FLASH: Iowans Riot Against Foreclosures

Iowans Riot Against Foreclosures

Des Moines: Sporadic outbreaks throughout the farm belt against mortgage foreclosures reached a climax today when Gov. Clyde Herring, of Iowa, declared martial law in Plymouth County after a mob of 150 farmers dragged Circuit Judge Charles C. Bradley from the bench, manhandled the 60-year-old jurist and threatened to lynch him unless he promised not to sign further foreclosure orders.

Tonight, 300 national gaurdsmen are patrolling the main streets of Lemars, the county seat and scene of yesterday's outrage, while detachment of the machine-gunners has guns set up at strategic points to guard against a further outbreak.

- Iowa, April 1933
-America, ????

FLASH: Here's the latest S&P Case-Shiller numbers that Lawrence Yun, the NAR and realtors on commission like Greg Swann do NOT want you to see

"We think the housing market has now hit bottom"

- Lawrence Yun, NAR Chief Propagandist, January 2007

"The BubbleBloggers will someday bawl balefully in private, but they will never, ever admit that they have been very publicly very foolish."

- Greg Swann, America's Most Discredited REALTOR™, July 2006


Housing prices post record declines - Las Vegas, Miami and Phoenix all saw prices plummet by at least 20%.

Home prices posted another record decline, as most of the nation's largest markets suffered double-digit drops over last year, a survey released Tuesday shows.

The S&P Case/Shiller Home Price Index, which tracks 20 of the largest housing markets, showed prices plummeting by 12.7% in the 12 months ending February. That's the biggest fall since the index began tracking prices in 2000.

"There is no sign of a bottom in the numbers," S&P spokesman said David M. Blitzer, said in a prepared statement. "Prices of single family homes continue to drop across the nation."

Atlanta -5.6%
Boston -4.6%
Charlotte 1.5%
Chicago -8.5%
Cleveland -9.2%
Dallas -4.1%
Denver -5.5%
Detroit -16.5%
Las Vegas -22.8%
Los Angeles -19.4%
Miami -21.7%
Minneapolis -12.5%
New York -6.6%
Phoenix -20.8%
Portland -2.0%
San Diego -19.2%
San Francisco -17.2%
Seattle -2.7%
Tampa -17.5%
Washington -13.0%
20-city composite -12.7%

Is throwing open the borders with Mexico and Canada the solution to the Great Housing Crash and Entitlement Ponzi Scheme?




Oh dear.

Seriously though, if the US threw open their borders and did an "EU-thing" with Mexico and Canada, that would add 108 million Mexicans (a good chunk of which are already in the US illegally) and 33 million Canadians. First step would be an open-immigration economic zone, next step would be a common currency, and then a hundred years from now, one big country. And why stop with Mexico and Canada - watch for a massive increase in visas for workers from around the world.

The United States is $53 trillion in debt, we have 20 million vacant homes ready to move into, we have 78 million Baby Boomers retiring soon, and soon we'll only have two workers supporting every one retiree (down from 3.3 today and 15 to 1 at the start of the Social Security ponzi scheme).

In other words, at this rate we'll need people. Lots and lots of taxpaying, baby-producing legally-registered people. And if we decide we want the Big Ponzi Scheme to continue, we need them now. If we DON'T want the Ponzi Scheme to continue, and we want to preserve America, then we need to kick out the illegals, raise the Social Security retirement age and dramatically cut spending (by bringing all of our troops home for starters). The time to choose is now here.

Our leaders are also eyeing Canada's resources, and Mexico's land. Mexico for their part wants our investment, jobs and trade, and Canada, well, they'd just be nuts to join, so maybe we'll just have to invade them like we do other countries with oil.

You know my take folks - I think the US has lost control of its border and its credibility as a nation of laws thanks to decisions made by the corrupted Democratic and Republican leaders in DC and the illegal invasion. I don't see the US kicking the illegals out, the anchor babies are here no matter what, and this was all planned.

Whether you like it or not, I think we're about to see the borders thrown wide open, the illegals made legal, and a radical change in the ethnic and social makeup of the United States. And with McCain, Clinton or Obama leading the way, the deal is now done.

Welcome to the New United States. The old one is dead, never to be the same. It's already happened in Europe, where if you go to Great Britain you're more likely to meet someone from Poland, Lithuania, France or Spain than you are a Brit. It's globalization, it's 'progress' and with our current leaders and asleep voters, it's a done deal.

$53 trillion in debt. 20 million empty houses. Just waiting for people.

More reading here, here and here.

A nation of 300 million people has nearly 20 million vacant and unwanted homes. "Home Vacancies Set Record"

What this means:

* Rents will stay low
* Prices will keep falling
* realtors will keep lying
* Drastic government intervention into the free market is on the way

What will we do with all these empty homes? How can we as a nation have been so incredibly stupid? And what will become of vacant-home foreclosure ghost towns like Maricopa Arizona? Time to send in the bulldozers?

Home Vacancies Set Record

The share of homes vacant and for sale, an important measure of the nation's housing supply, set a record in the first quarter in a signal that the glut of homes on the market isn't improving.

The homeowner vacancy rate, which measures the number of vacant homes for sale, rose to a record 2.9% in the first quarter from 2.8% in the fourth quarter, about one percentage point higher than normal, according to new Census Bureau data. The vacancy rate has jumped nationwide and in cities, suburbs and rural areas since the housing bubble popped. From 1995 until the fourth quarter of 2005, the rate held between 1.5% and 2%.

About 2.2 million vacant homes were for sale in the first quarter, up from 2.1 million in the fourth quarter and about one million more than was typical before the housing bubble burst.

Economists say the rising vacancies indicate that home prices won't stop falling and home builders can't ramp up construction until the glut of vacancies can be worked down.

"It's the worst piece of housing news that we've heard in the past couple of months," said Patrick Newport, U.S. economist at Global Insight. "It means home prices will continue to drop at least for the remainder of the year."

Meanwhile, a record 4.1 million vacant homes are for rent, with the rental vacancy rate rising to 10.1% in the first quarter.

The end of the world as they know it for realtors is now here: Ramen costs set to soar

Here's the bad news from South Korea - coming soon to America.

RamenPANIC is here!

The Lee Myung-bak administration has laid out a series of measures to fight inflation, including eliminating or reducing import duties on grain and oil products.Still, the price of ramen soared 12.8 percent from a month earlier while bread jumped 8.8 percent.

April 28, 2008

Bubble Sitters, Bitter Renters and HP'ers, do you feel like you've been a part of (or a leader in) a growing resistance movement these past few years?

HousingPANIC Stupid Question of the Day

Will The Great Housing Crash offer a positive lifetime financial lesson for those under 25?

HP Special Post

An HP'er in the know wrote this letter to a friend who was thinking of buying a house, trying to recap for her the Great United States Housing Bubble and Crash, while warning her NOT to buy until this little crash thing is over.

The letter was so good, I post it here, in its entirety. He asked to remain anon, as he's in a position to see how bad it is, and how bad it's gonna get.

XXXXXX, I am delighted to explain. Some of this is theory and some is fact, but I feel very confident I am painting a very accurate portrait.

The early part of this decade was marked by the bursting of the tech bubble and 9-11, and resulting subsequent economic disruption. The many free trade agreements signed during the 1990's led to bleeding of middle-class manufacturing jobs that used to be the backbone of our economy. Since Bush took office, nearly 4 million manufacturing jobs have been lost. But it goes beyond that. American companies, looking for increased profits, have outsourced millions of white collar jobs so that careers that were supposed to be "the wave of the 21st century", such as computer programminng, engineering, and other high-tech areas, have continued to see negative growth.

In order to keep the economy going, the government did a series of unwise things. Our leaders were happy to have our economy heavily dependent on consumer spending (nearly 75% of total GDP) and debt (consumers have had a negative savings rate the past several years: only time since the Depression!). Moreover, the government greatly expanded legal immigration through H1B and L1 Visas. Much of this was done at the behest of the business community, which has continuously sought cheaper labor costs.

Part of the reason for this increased immigration was that the government wished to stimulate economic activity by expanding the population. Consistent with this, the government wished to greatly expand homeownership, in order to boost the land development and homebuilding industries, along with other related industires such as landscaping, real estate brokerage, and home improvement (Home Depot, etc.). Bush (also known as the Worst President in History: rest easy James Buchanan) regularly boasted about the "ownership society".

Of course, as has always been the case, these millions of first-generation immigrants (along with American renters) had little to no savings and work in service jobs with generally low household income. Notwithstanding that fact, the government and the private sector did a number of things to enable this homebuying orgy. All of these actions were unwise in the long run and are coming home to roost now.

First, Fed Chairman Allan Greenspan, the most overrated public official in American history, lowered rates more than 15 times and kept them extremely low far beyond what was dictated by circumstances. The rate cuts allowed the mortgage industry to offer unprecedented levels of adjustable-rate mortgages to unqualified borrowers, many using "teaser rates" that have huge built-in increases. The rate cuts also encouraged increased consumer borrowing for an already debt-laden society. This allowed Bush to brag about economic growth and "the ownership society" but the consequences of the rate cuts have been enormous. Consumer debt has led to unprecented levels of foreclosures and bankruptcy. The rate decreases have destroyed the value of the dollar. Now the impact of the rate cuts is being felt in terms of inflation. They have been a factor in the huge spikes in oil prices, as more people invest in commodities when dollar-denominat ed investments fall in value and inflation expectations rise.

Of course, the biggest factor in the increased oil prices has been demand from China and India. This was an unintended consequence of the aforementioned globalization, as American companies have been all too happy to outsource their production to the cheaper labor markets. Needless to say, retailers like Wal-Mart have been happy about these developments, and they have pushed hard for expanded so-called free trade. But the rapid growth of these overpopulated (both over 1 billion) third-world backwaters has hugely impacted global oil supply.

Another factor has been the greedy developers and greedy financial industry. These greedy developers, with state and local officials in their pockets, have managed to get subdivision after subdivision approved, many over the objections of the local communities. Because these developers control the politicians, they have not been forced to pay any impact fees. Consequently, taxpayers have been forced to pick up the tab for roads, schools, hospitals, and other infrastructure needs that have exploded due to unprecedented levels of hombuilding activity. Of course, this unprecedented growth has impacted traffic, the environment, schools, hospitals, and every other aspect of quality of life. Now states across the country, led by California, are going bankrupt as they try to keep up with all these costs. An unspoken factor in all of this is the fact that the homes have been built by an enormous wave of illegal immigrants from Mexico, who have been illegally hired by the greedy builders and developers. Needless to say, these low-wage, low-skill (Mexican immigrants average a 7th grade education) immigrants have been an enormous burden on social services, not to mention traffic and other factors.

As noted above, the government sought ways to put millions of people in these homes. The private sector contributed to this effort by disregarding the most basic banking fundamentals. Whereas lenders would hold mortgages in portfolio years ago, they almost never do today. Consequently, they have no concern whatsoever about the repayment capacity of the person to whom they are lending: they make their income from the origniation fees. The aforemenntioned Greenspan rate cuts allowed these lenders to offer adjustable-rate mortgages with very low rates. The lenders could then sell the loans to private investors, who would chop the pools of loans up into thousands of pieces and sell them as CMO (Collateralized Mortgage Obligations) or CDO (Collateralized Debt Obligations) tranches. Since worldwide rates have been very low, investors seeking higher yield have been all too happy to buy these, as they general ly did offer higher yields. Those investors were usually hedge funds and foreign governments, as American consumers with their negative savings have no money to invest.

Needless to say, since these CMO's and CDO's were so esoteric and chopped up, it is doubtful that anyone knew what they were holding. But no one worried because the investments were secured by American homes and, as we all know, residential real estate always increases in value (sarcasm font). What the investors didn't count on was artificial home price inflation caused by compromised lending standards (no down payment, no verification of employment and income, low credit scores, minimal job history, and high debt-to-income ratios) and "flippers", those investors that came in and drove prices up in hopes of selling the home they don't live in and making a quick buck. The CMO's and CDO's were given the AAA stamp of approval from all the rating agencies, including Moody's, Standard and Poor's, and Fitch. Of course, what people did not know (and the lazy American media failed to report) was that these agencies were getting huge fees directly from the bond issuers, a nd they were therefore interest-conflicted and incentivized to give good ratings.

The run-up in home prices, and the unsustainability thereof, were demonstrated by price-rent ratios. These ratios have historically moved in tandem but became hugely out of whack in recent years, a true red flag that the homes were overvalued. If one wasn't inclined to look at these ratios, they could simply apply common sense. Here in Atlanta, the median household income is less than $60,000 per year. Yet you can't touch a new home for less than $250,000. It doesn't add up. And, in terms of home price compared to household income, Atlanta is way better off than places like LA, Phoenix, Washington DC, Las Vegas, and Miami. But, once again, our lazy media was asleep at the switch.

The growth in homebuilding and homeownership was greatly fueled by government-sponsored agencies FNMA and FHLMC. Historically, subprime and more marginal mortgages have been sold to private investors. The primo stuff has historically been sold to "Fannie" and "Freddie", who have securitized the mortgages into CMO's and CDO's as described above. But, during the current decade, Fannie and Freddie bent their standards and they purchased and securitized billions (maybe trillions) of mortgages they would not have done previously. Consequently, a number of economists are predicting that an enormous taxpayer-funded bailout of these agencies will be necessary.

Upon taking office, President Bush appointed a Texas banking buddy, Donald Powell, to be FDIC Chairman. Mr. Powell ran a small national bank in Texas that came within an eyelash of failure in the early 1990's. Powell had a severe disdain for regulation and regulators and immediately proceeded to gut the staff. He publicly stated that "all of these small community banks could fail and it would make no difference." He implemented the MERIT program, which equated to drive-by examinations. Banks throughout the nation (particularly here in Atlanta) proceeded to go crazy making nothing but Acquisition, Development and Construction loans to developers and builders. These local bankers lent millions to developers without regard to the fact that those borrowers were overleveraged and they continued to lend like crazy even when it became evident that the market was oversupplied. Underwriting was poor, to say the least. In other words, bankers did exactly what the banking industry did in the 1980's only on a bigger scale.
We as regulators stood by and let it happen. Now, development loans are defaulting at an incredibly rapid rate and the financial industry is likely to see massive bank failures.

So there it is. Incompetent government leadership, excessive desire by government leaders to make GDP and job growth numbers look good, corporate greed and short-sightedness, have led to an implosion of unprecedented magnitude. And the sad thing is that all of it could have been prevented by applying the most simple and basic fundamentals. But greed, politics, and stupidity took over.

As I have stated before, when the dust settles, this largely government-induced financial and economic implosion, which I think will rival the Depression, will be an even greater black mark on the nightmare that is the Bush legacy than even Iraq.

Countrywide Home Loans is in tha house. True that.

Pick up ya phone


Countrawide can man

April 27, 2008

HP'ers - A fringe bunch of nuts, hoping for a big housing bust, screwing up the entire economy

So here's how HousingPANIC (I assume it's us) is positioned by the mainstream media in a recent interview with a couple of investors:

Reporter: What do you think of bloggers who seem to root for an even bigger bust?

McEnearney: I'm not seeing that.

Foster: Good Lord. I'm not either. I'm hoping it's just a fringe bunch of nuts. Because, you know, I think that would be awful for the whole economy.

So I guess a few questions and statements come to mind:

1) We're indeed rooting for home prices to come down. Do you want to know why? BECAUSE THEY'RE TOO DAMN HIGH, NOT BASED ON THE FUNDAMENTALS, AND NOT GOOD FOR SOCIETY OR FUTURE GENERATIONS. GOT IT?


3) These investors apparently have never googled "housing bubble". Too bad. Lots of good stuff on that crazy google thing nowadays.

Meanwhile, while you weren't watching, 27% or 220,000 Republicans in Pennsylvania went to the polls last week to vote AGAINST John McCain

It's too bad the winner-take-all GOP rules wrongly gave the nomination to McCain so early. Most of the states didn't get a voice in choosing the Republican nominee. And if the GOP had had a REAL nomination battle, instead of a short-circuited snoozer, I seriously, seriously doubt McCain would have emerged as their standard-bearer in November.

McCain is a math error. Huckabee and Romney simply cancelled each other out, and McCain's 1/3 took the delegates. And now true Republicans don't have a candidate this fall.

Here's to the 220,000 Republicans who went to the polls in PA to embarrass McCain. And here's to the 16% of the PA voters who voted for Ron Paul.

How McCain Lost in Pennsylvania

27 percent of Republican primary voters didn’t just tell pollsters they would defect from their party’s standard-bearer; they went to the polls, gas prices be damned, to vote against Mr. McCain.

Though ignored by every channel I surfed, there actually was a G.O.P. primary on Tuesday, open only to registered Republicans. And while it was superfluous in determining that party’s nominee, 220,000 Pennsylvania Republicans (out of their total turnout of 807,000) were moved to cast ballots for Mike Huckabee or, more numerously, Ron Paul.

"The government ignores the prudent ones"

"In all this discussion about all these poor people losing their homes, they never talk about people who didn't buy homes in this chaos. They said this is stupid, I'm not going to buy a house that is wildly overpriced. I'm going to wait until prices come down. The government ignores the prudent ones."

- Christopher Thornberg, April 2008


Visit Stop the Mortgage Bailout

Sign the no-bailout petition here

Write your congressman here

Write a letter to your local newspaper

Or start something yourself. Take over an office. Disrupt an event. Mount a protest. Or just take it lying down like they want you to.

April 26, 2008

Angelo Mozilo is a pig. One more time - Angelo Mozilo is a big fat pig.

Countrywide CEO Made $132M In 2007 Pay, Stock Sale

Do you watch housing porn? Do your friends and family use housing porn? Does it make you feel dirty?

By the way, on this house, I'd pay $120,000. Tops.

Now I need to go take a shower.

HousingPANIC Quote of the Day

“We’ve had a tremendous surge in mortgage fraud investigations, and we expect them to grow even more. I’m not sure at this point we can see the extent of the surge.”

- FBI Director Robert Muller, April 2008

(note - too bad the FBI was asleep at the wheel when the rampant fraud was going on. you know, when cracking down actually would have done some good... meanwhile, angelo, they're coming. slowly and surely, they're coming...)

HousingPANIC Stupid Question of the Day

When home prices have bottomed, the housing panic is over, and it's cheaper to 'own' than rent, how will you feel?

Call centers in India now calling down-on-their-luck American debtors

When I first moved to Phoenix in the mid-90's, the place was swarming, and I mean SWARMING, with call centers. Someone find me a stat, but I'd bet call centers were 10% of the workforce and 30% of the new jobs.

Anyway, we know what happened next. The call centers closed down, the jobs got sent to India, and the call center jockeys got jobs as realtors, mortgage brokers and appraisers, and the housing bubble saved the day. For a few days.

Well, now that the jobs are gone and the bubble has blown, guess what the call centers in India are doing now?

They're acting as collection agents, calling screwed and jobless debtors in Phoenix (and all over the United States) asking people to pay their credit cards, auto loans and mortgages.

"Sorry. Can't do that, Charanjit. You see, our jobs got outsourced to India, and then the REIC jobs we stumbled into blew up in spectacular fashion, and there's nothing left to replace 'em. Except maybe Burger King, or Wal-Mart."

Well, maybe the Indian call centers can offer unemployed Americans a job in India - assuming they'll work for $2 a day and sleep on the floor too.

Debt collection done from India appeals to U.S. agencies

GURGAON, India: In a glass tower on the outskirts of Delhi, dozens of young Indians are on the telephone, calling America's out of work, forgetful and debt-stricken and asking for cash.

"Are you sure that's all you can afford?" one operator in a row of cubicles asks politely. "Well, how do you take care of your everyday expenses?" presses another.

Americans are used to receiving calls from India for insurance claims and credit card sales. But debt collection represents a growing business for outsourcing companies, especially as the American economy slows and its consumers struggle to pay for their purchases.

April 25, 2008

HousingPANIC Quote of the Day

"One of the reasons that millions of families face foreclosure and/or the loss of their life savings is that the ideologues of homeownership continued to promote homeownership even when it was clear that buying a home would be financially detrimental."

- Dean Baker, April 2008

This is what the end of a Ponzi Scheme looks like. And these are the housing gamblers who better not get a penny of taxpayer money.

Destroyed housing gamblers.

Failed flippers.

Exposed mortgage fraudsters.

Homes as lottery tickets.

The vast majority of people "losing their homes" are not the innocents portrayed in the media or by Hillary Clinton, taken advantage of by "predatory lenders". They're just your typical losers, chain smoking at the casino, hoping against hope for 'the big score' that never came. They're gambers who bet and lost. They're people who committed mortgage fraud, yet won't see a day in jail.


Thanks Seth for the link... Great series on the crash at the Minn. StarTribune. Read 'em all, and you'll be especially enraged with the rampant illegal cash-back schemes that were out there. Crime paid HP'ers, even for the gamblers going into foreclosure. Why? They got to keep the cash, and mortgage fraud isn't a crime anymore in the United States.

Housing bets gone bad

Wright County was a haven for speculators -- until they got burned in the downturn.

Across the country, from the desert suburbs of Las Vegas to the treeless subdivisions of Wright County, many homeowners face a predicament of their own making.

They gambled big that housing prices would continue to shoot up. Some bought homes as often as others buy new jeans, occasionally in return for thousands of dollars in kickbacks. These investors ranged from small-town working people looking for a quick payday to sophisticated real estate professionals who bet with other people's money, occasionally defrauding lenders in the process.

Now, with home prices falling and mortgage payments rising, panic has set in. Investors are dumping houses on the market before prices collapse further, or simply turning the keys back to the lender. That, in turn, is dragging down values for even longtime homeowners, wiping out the equity they'd built up over the years.

UK report: Grocery prices up 15% in the past year. Yet the UK government, like their lying peers in the US, reports inflation is under control

If you believe the government inflation data in the US or UK, you are a fool.

I repeat, you are a fool.

How the government can report 2% to 3% inflation with a straight face is beyond me. Just go to the grocery store. Just try to fill up your gas tank. Just try to send a kid to college, or buy healthcare. Just go to the dentist (oops, sorry, scratch that one). Just try to get by.

2% to 3%. Who are they kidding?

Families' annual grocery bill rises by £800

Families are having to spend almost £800 more on their annual grocery bills as the highest rate of food inflation for a generation drives up supermarket prices, research suggested yesterday.

A kilo of Tesco garden peas has increased from £1.10 to £1.79; a dozen medium free-range eggs from Sainsbury's has climbed from £1.75 to £2.58; and a bag of fusilli pasta from Asda has almost doubled, from 37p to 67p.

The increases suggest that supermarket food inflation is more than seven times the official rate of inflation.

People of America, what advice would you give to our friends in the UK in regards to their now-started housing crash?

The US went first, so I figure you've got some good advice.

Funny thing is that people in England BLAME the people in the US for THEIR housing crash. Their media reports it as the "subprime crisis", which spread then to the UK and stopped the part right when it was getting good.

Yes, the US went first. But the US didn't cause the UK housing crash. It would have happened on its own. It's called gravity.

So have at it HP'ers. You're the experts now on housing crashes. Let our mates in England, Wales and Northern Ireland know what's coming. Let 'em know who to believe. And let 'em know that a "projected 6% drop" this year is laughably wrong.

UK housing market has dropped 'alarmingly' in recent weeks

The UK housing market has dropped 'alarmingly' in recent weeks and prices are set to fall by 6 percent in 2008, Citigroup said in a note on Frida.

Do you understand that the United States is $53 TRILLION in debt - and not the $9 trillion you are led to believe?

Just wondering. 'Cause I bet 99% of Americans believe what their political leaders tell them too, versus the truth.

Meanwhile, one lonely unnoticed office in the government (thank you David Walker, US Comptroller General)
IS reporting the $53 TRILLION number. It's just that not a lot of folks choose to believe it. Or pay attention to it.

If our Presidents or Congressmen were CEO's, they'd be jailed for Sarbanes-Oxley violations. If the budget director was a CFO, he'd be indicted for fraud.

So why do our political leaders and presidential candidates (and our mostly compliant and incompetent MSM) get away with reporting the $9.3 trillion number, when one department in our own government is now reporting $53 TRILLION?

It's because our leaders in DC, unlike our corportations, made it so they don't legally need to report the value of future promised liabilities (social security, medicaid, medicare, military health benefits, etc) on our nation's balance sheet. It's as if they didn't exist. Which is understandable I guess, because indeed, they might not exist. Oh, sorry (non-boomers), you weren't really counting on social security or medicaid being there in your retirement, where you?

Can you imagine if Ford didn't have to report the value of their pension liabilities? Can you imagine if Boeing didn't have to account for the projected healthcare costs of their retirees? Can you imagine if GE put out an announcement today that they weren't going renege on their retirement liabilities?

Well, that's what the Congress, the President and all three major candidates are doing. And almost every single person in the country believes The Big Lie. Baaaaaaa.

David Walker was recently pushed out for speaking out, and I doubt the next Comptroller General will be so honest and vocal. But the truth is now out there.

This issue HP'ers, along with global warming, islamofascism and commodity wars, will dominate the rest of your time here on earth.

Here's some MSM reporting of the issue, that just doesn't seem to want to gain any traction yet. But get ready. The boomers are retiring. And the bill is coming due.

Federal government addicted to debt,' U.S. comptroller says, and the consequences could be dire

Walker: Economic mess awaits unless action is taken

The $53 trillion asteroid

April 24, 2008

HousingPANIC Stupid Question of the Day

Given the housing crash, Iraq quagmire, entitlement bomb and $53 trillion debt of the United States, will it make a hill of beans difference who wins the US presidency?

Bernanke's plan: Stopping massive deflation with massive inflation and hope it all comes out in the wash

Grocery prices are soaring. Gas prices are soaring. Hell, most prices are soaring. Thank you Helicopter Ben.

But about the only thing that ISN'T soaring is the price of homes. In the middle of this rampant (consumables) inflation and dollar destruction, you have historic (asset price) deflation. Just as most HP'ers have predicted.

Eventually though, home prices will stop falling. Probably quite some time from now, when the historic housing P/E ratio is restored, confidence is somewhat restored, pre-bubble prices are back, and it's cheaper to 'own' than rent.

And when that happens, and home prices stop falling or god forbid start going up, the NAR and the few realtors who are left will start saying "home prices stable!". But when you factor in the wild inflation underway (the real inflation, not the government-reported inflation), real home prices will still be in freefall, and the crash will have been much worse than people think, and the combination of flat incomes, job losses and rising consumable and service prices will be devastating.

Here's a new editorial on the inflation solution, which is well underway I believe. Meanwhile, got gold? Got food?

The Inflation Solution to the Housing Mess

The policy alternatives in the post-housing-bubble world are painfully unpleasant. In my view, the least bad option is for the Federal Reserve to print money to help stabilize housing prices and financial markets.

Yes, use reflation to soften the pain for Main Street and Wall Street. If instead we let housing prices fall another 25%-30% – as predicted by the Case-Shiller Home Price Index – it's almost certain that Washington will end up nationalizing the mortgage business.

While there is a substantial risk that inflation may rise for a time – this would be the policy goal – monetization is more easily reversible than nationalization of the mortgage market.

The worldwide housing crash hits Europe. You thought the US was bad? Wait until you see what happens in Spain, Ireland and the UK. Got Milk Duds?

I spent the last few days back in England, looking at flats to rent (heading back in June). Still the same dynamic - renting is SIGNIFICANTLY cheaper than "owning". But what did change from when I left in December is the amount of listings, the falling prices, the government backstabbing, and general sense of panic.

Even the realtors (aka "estate agents") told me they're swarmed with listings, nothing is moving, and people can't get a loan. And I could sense that they knew. They knew the Ponzi Scheme was over, they knew they were about to lose their jobs, and they knew home prices were already cratering and had much, much, much further to fall.

"Got Popcorn" might do for the US. But in the UK and other parts of Europe, you're gonna need more than that. Got popcorn, nachos, the supersize Coke, some Jelly Bellys, some Goobers, and hell even grab the Milk Duds.

And get ready to enjoy the show.

The Great Phoenix Housing Bubble and Crash will be one for the history books

Good post on doom the other day about the historic Phoenix crash. We saw it coming, but to see the death spiral in full bloom is stunning.

As long-time HP'ers know, Phoenix was REIC-infested Housing Ponzi Scheme ground central, and an obvious one at that.

Phoenix was the town that inspired a good share of the leading bubble blogs. A town full of get-rich-quick scamsters and fraudsters, fly-by-night flippers, lying and ignorant realtors, illegal Mexican laborers, greedy builders, corrupt appraisers, incompetent "rolodex-of-realtors" REIC-bribed media, corrupt realtor politicians and scum mortgage brokers. A nice town in the 80s and 90s that got killed by a corrupt and out-of-control REIC.

The post-crash Phoenix area is now littered with foreclosures, blighted neighborhoods, jobless illegals, unpaid credit card bills, and years worth of unwanted homes for sale. Phoenix based its fake economy on housing, the people went along for the ride, and now that its #1 industry has blown up in spectacular fashion, Phoenix will become the new Detroit.

And that should come as no surprise to HP'ers.

Ready for the wars, riots, protests, social unrest and toppled governments that come with FoodPANIC?

Before you go out and try to catch a falling knife...

5% off - great deals! I'm buying!

10% off - wow, can you believe my luck! I'll buy more! Double down!

20% off - holy crap, this is too good to be true! Load up the truck!

40% off - hmmm... maybe I shouldn't buy, I guess ____ could always go lower

60% off - now we've hit bottom! Buy buy buy!

70% off - OK, NOW is a great time to buy!

80% off - Hello, suicide hotline?

Man, you'd have thought the dot-com crash would have taught people a lesson. Just because it's on sale doesn't make it a good deal. It's the P/E stupid. It will always be the P/E stupid.

Just ask the pets.com shareholders. Or people who listened to idiot realtors on commission and tried to catch a condo knife in Phoenix, Miami, San Diego etc. last year.

April 23, 2008

Yale's Shiller says housing crash may exceed the Great Depression's 30% fall. And HP'ers ask - "yeah, and that's like news to anyone?"

We told you what was going to happen.

And then it happened.

We weren't smarter than anyone. We just read Manias, Panics and Crashes.

Too bad people didn't listen. Too bad people didn't do their own research. And too bad people listened to idiot realtors on commission. Hopefully they never will again.


Yale’s Shiller: U.S. Housing Slump May Exceed Great Depression

Yale University economist Robert Shiller, pioneer of Standard & Poor’s/Case-Shiller home-price index, said there’s a good chance housing prices will fall further than the 30% drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15% since their peak in 2006, he said.

“I think there is a scenario that they could be down substantially more,” Mr. Shiller said during a speech at the New Haven Lawn Club.

Mr. Shiller, who admitted he has a reputation for being bearish, said real estate cycles typically take years to correct. Home prices rose about 85% from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Mr. Shiller said. “Basically we’re in uncharted territory,” he said. “It seems we have developed a speculative culture about housing that never existed on a national basis before.” Many people became convinced that housing prices would increase 10% annually, a notion Mr. Shiller called crazy.

April 21, 2008

HousingPANIC Quote of the Day

"We paid $585,000. It was the peak of the market, but no one told us. We would probably have to spend the next 20 years trying to get right on the mortgage. That's crazy."

Joan Shaffer - Screwed Phoenix homedebtor, failed housing gambler, realtor and now jingle mail sender, April 2008

You think the US housing bubble and mania was bad? You ain't seen nothin'. The UK wrote the book. And now they're screwed.

The housing gambler cancer in the UK spread out throughout Europe and beyond these past few years. Brits were buying up "off-plan" properties sight unseen in far-flung no-income places like Bulgaria and the Ukraine. They were using Polish labor to fix up "buy-to-let" places in London for a quick flip. They were buying second and third houses throughout Europe.

And they were FRICKING OBSESSED with property speculation.

You thought the US had a housing porn problem? Take a look at this sickening list of housing mania TV shows that infected Britain the past few years.

And then the music stopped.

A Place By the Sea
A Place in Greece
A Place in the Sun
A Place in the Sun: Home or Away
Build a New Life in the Country
Build, Buy or Restore
Changing Rooms
Did They Pay Off The Mortgage In 2 Years?
Escape to the Country
Extreme Makeover
Grand Designs
Grand Designs Abroad
Home From Home
Homes Under the Hammer
Honey I Ruined the House
Hot Property
House Auction
House Busters
House Chain: Under Offer
House Doctor
House Hunters in the Sun
House Invaders
House Price Challenge
House Race
Houses Behaving Badly
How Not to Decorate
How To Be a Property Developer
How to Rescue a House
I Want That House
I Want That House Revisited
Living in the Sun
Living etc
Location Location
Making Space
Moving Day
My Place in the Sun
Nice House… Shame About the Garden
Other People's Houses
Our Home
Pay Off Your Mortgage in 2 Years
Property Dreams
Property Ladder
Put Your Money Where Your House Is
Relocation, Relocation
Restored to Glory
Room For Improvement
Selling Houses
Staying Put
Streets Ahead
Super Agents
Through the Keyhole
To Buy or Not to Buy
Trading Up
Uncharted Territory
Up Your Street
Would You Buy a House with a Stranger?

HousingPANIC Stupid Question of the Day

So what do you think the hundred million illegals* in the US are doing now that their #1 industry (housing) has completely tanked, and state governments are getting tough?

* DISCLAIMER: My 100 million number is as accurate as any the government puts out. Nobody knows the truth - they're ILLEGAL and UNCOUNTED.

Ron Paul's new book - "The Revolution - A Manifesto" drops on April 30th

Not a lot of information on what he's got to say, except this blurb from his campaign:

"In "Revolution: A Manifesto," Dr. Paul pulls back the benevolent mask of the state and explains how big government is eroding our freedoms, but also offers solutions about how Americans can restore liberty while offering guidance to grassroots activists about how they can advance the political movement his candidacy inspired."

I won't be able to get it over here for awhile, but I hope he drops some "oh, crap, did he really say that!?" bombs.

Damn, I miss him. Maybe the Libertarian or Constitutional party will draft him?

FLASH: UK taxpayers (via Bank of England) buy up $100 billion in depreciating mortgages, with $100 billion more expected to come

And then the REIC-sponsored governments, right on schedule, socialized the housing crash, bailing out the lenders who made the crap mortgages (while earning billions in commissions) so that they could go out again another day and do the same. Moral hazard? Nah, never heard of it.

Meanwhile their fiat currencies, and taxpayers, pay the price.

Nice job bankers. You took control of the corrupt governments of the US and UK, and now you run roughshod over their clueless people.

50 billion pound bailout for banks may be doubled

LONDON (Thomson Financial) - An unprecedented 50 billion pound injection to bail out Britain's ailing banking system could be doubled if it fails to stave off a collapse in the housing market, the Times reported.

Alistair Darling will today tell MPs that the Bank of England is to allow lenders to swap assets for government-backed bonds in an attempt to restore confidence and ease the effects of the credit crunch.

The initial offer is for 50 billion pounds worth of bonds, but senior Treasury sources told The Times that further cash injections up to a total of 100 billion pounds were possible.

However, they admit that there is no guarantee that the bailout will lead to banks offering cheaper mortgage deals.

April 20, 2008

HousingPANIC Stupid Question of the Day

Who's smarter?

1) Renters renting for a fraction of the cost of "owning"

2) Interest-paying homedebtors paying a bank for the right to live in a depreciating home when they could have rented the exact same home for a fraction of the cost

3) True homeowners who have no mortgage

HousingPANIC Harsh Reality of the Day

They're eating dirt now in Haiti.

Try to keep that in mind when you get in your SUV filled with ethanol-blend and drive to Wal-Mart today.

Thank you Alan Greenspan, Angelo Mozilo and the realtors of America for ruining families. Hope it was worth it.

Hope it was worth it, you know, all those profits. All those commissions. All those bonuses. Meanwhile, watch for the divorce rate in the US to soar. Along with the crime rate, the domestic violence rate, the foreclosure rate, the murder rate, the unemployment rate, the inflation rate, the bankruptcy rate, ..........

Home Mortgage Crisis May Boost Divorces in U.S., Experts Say

The home mortgage crisis in the United States has spawned problems in the mortgage, real estate and banking industries, and many consumers are now facing mortgage payment increases in the coming months that could cause the number of home foreclosures to climb even higher. And all of those financial woes may be spawning another problem as well -- an increase in divorces, experts say.

Scott Daniels, an Ocala, Fla. Realtor, doesn’t need a study to tell him what he already knows -- the mortgage industry crisis is causing an increase in the number of couples who are getting divorced.

"In the last three months, we have accepted five listings which are divorce sales. In each instance, it’s due to the obligation of meeting their mortgage payments,” he wrote in a blog he posts regularly on the Internet. “Faced with pressure, these couples are blaming one another! Rather than attempt to work together to resolve the problem, they find it easier to separate. They each have in common the same exact problem: No one is able to make a decision on what price to sell for! "

Gonna be traveling for a few days, should be able to keep up but have patience...

Make my job easy, let me know what I need to post about here

Back to London for a bit... Home of the $25 movie ticket and $10 pint of beer


April 19, 2008

Special HP open thread to rip on the NAR's Twins of Lies & Deceit: Lawrence Yun and David Lereah



And now we have "HomedebtorsassociationPANIC"

"I'm in a state of panic. How can I operate an association with one-third of the funds not coming in? It's a serious problem that's going to explode in the next few months."

- Norman Silverstein, Carriage Pointe (Boca Raton) homeowners association manager, where one out of every three homedebtors aren't paying their bills, and which just leveled a special $60,500 special assessment against the homedebtors that still can be found, April 2008

(update - hat-tip doom for the pic and check out her HOA post)

Uh, not sure if you noticed, but oil just hit $117. Thank you George Bush. Thank you Dick Cheney. Thank you Ben Bernanke. Thank you gas guzzlers.




At one point soon, some folks (think Wal-Mart worker) are gonna have to decide whether they're better off driving to work, or just not working. And those far-flung homes in places like Maricopa Arizona? Getting more and more worthless by the day.

Some experts are crying "bubble" and saying the price is gonna collapse soon. Others are pointing to the millions in India and China lining up to get into cars, and the lack of an energy policy in the USA.

I'm not sure, but it does look like a bubble. But I think we all know now that bubbles can go on longer than anyone ever thought possible. I happily hardly ever get in a car, and consume or purchase very little, so it doesn't hit me much, but $117 oil means pretty much everything will be going up in price. $200 oil? That's another ballgame.

Experts divided on how high oil will go

As prices in New York reached a new high of more than $116 US per barrel Friday, finding common ground among observers proved difficult.

For oil price analyst Walter Zimmermann, a New Jersey-based vice-president with ICAP United, $125 US is the magic number at which technical and psychological forces will reach a "crescendo" and create a new market reality.

When did you know for certain that the realtors were lying, and that the US housing market would crash?

Southern California housing crash now in full bloom - Riverside down 27%, San Bernardino down 28%, San Diego off 19%, SoCal down 24%. Ouch.

Trillions have been lost.

Trillions more will be lost.

And big SoCal lenders like WaMu, Wells Fargo, Indymac, GMAC, First Federal - and Fannie and Freddie who bought the junk loans - are in a heap of trouble.

It's not subprime folks. It's everything. And it's one ginormous Housing Ponzi Scheme that blew up in spectacular fashion.

No matter what discredited California REIC shills like Connie De Groot, Gary Watts, Leslie Appleton Young and Tom Adkins would have you believe.

Hat-tip to SoCal Bubble for the latest #s. Hat-tip Casey Serin for crashing the market.

Corrupt and discredited REIC stooge Nicholas Retsinas at the Harvard Joint Center for Housing Studies has a moment of brilliance

"The numbers indicate that if price goes down, sales go up."

- Nicholas Retsinas, April 2008

April 18, 2008

276 days left

Lawrence Yun, Chief Propagandist of the NAR, finds himself in a hole and keeps on digging. And digging. And digging.

That's it. I've had enough.


Ah, screw it. He's the gift that keeps on giving. I hope he stays until they board up the NAR HQ. I hope he stays long enough to testify in front of Congress.

Here's Yun in economic collapse and housing crash ground zero Michigan, saying there's no recession, no contraction, and anyone who buys today is going to have huge equity gains in 2 years.


HousingPANIC Stupid Question of the Day

What's the ONE memorable highlight so far of the Great Housing Bubble and Crash?

The one moment or story that sticks in your craw, when you knew there was a massive problem, or that was just too ludicrous or corrupt or stupid to forget, that twenty years from now, when you're swapping stories about this time, you'll do a

"boy, I remember this one ........."

(note - there's a thousand pics I could have put up - just threw up a few at random)