October 31, 2008

The REIC's Inman News just posted the "25 most influential bloggers in real estate". So here's HP's "25 most discredited hacks in real estate" list

1) David Lereah
2) Lawrence Yun
3) Mike Norman
4) Blanche Evans
5) Catherine Reagor
6) Greg Swann-dive
7) Tom Adkins
8) Connie De Groot
9) Kendra Todd
10) Nicholas Retsinas
11) Hank Paulson
12) Angelo Mozilo
13) Bob Toll
14) Leslie Appleton-Young
15) Dick Gaylord
16) Charles McMillan
17) David Asman
18) Michael Perry
19) Larry Kudlow
20) Donald Luskin
21) Kim Carpenter
22) David Crisp
23) Brian Brady
24) Sonny Shrivastava
25) Suzanne

I know I had to have missed a few, so get 'em in now.

And get your vote in for the big winner of The HousingPANIC Most Discredited Hack in Real Estate 2008!

Paranoia runs deep ... It starts when you're always afraid. Step outta line, the man come and take you away.

Hey, anyone want to "buy" a house (rent money from a bank)? Great! Because jumbo mortgage rates at Wells Fargo are only 10% today! Rush right down!

Gee, you wonder why home prices are plummeting and will keep plummeting.


Product Interest Rate APR
Conforming1 Loans

40-Year Fixed 7.625% 7.844%
30-Year Fixed 6.625% 6.860%
20-Year Fixed 6.750% 7.060%
15-Year Fixed 6.250% 6.631%
5-Year ARM 6.500% 6.119%

Jumbo Loans – Amounts that exceed conforming limits1

30-Year Fixed 9.875% 10.061%
15-Year Fixed 9.250% 9.520%
10-Year ARM 9.625% 8.601%
5-Year ARM 7.875% 6.610%

FHAloan limits vary by county.
30-Year Fixed 7.000% 7.749%

Here's the clueless Alan Greenspan admitting he didn't see the housing bubble until it's tippy tippy peak in 2006

One word:


MV=PT. 1%. ZIRP. Deja vu?

HousingPANIC Stupid Question of the Day

What are the five best positioned companies in the world today?

* long aapl goog

October 30, 2008

Doomed? Or safe haven?

HousingPANIC Stupid Question of the Day

Do you think housing flippers, fraudsters, gamblers and speculators will be getting back into real estate anytime soon?

A chapter straight out of Manias, Panics and Crashes, when cash became king, and sheeple did the exact wrong thing at the exact wrong time (again)

So now that the sheeple are out of the stock market, and are putting their dollars under the mattress, shouldn't we be doing something else?

Here's John McCain, Communist, wanting to rip up contracts, cut the amount housing gamblers owe, and artificially inflate home prices

Why does John McCain hate renters?

Why does John McCain hate would-be first-time home buyers?

Why does John McCain hate capitalism?

Why does John McCain hate the free market?

Why does John McCain want a nation of laws and contracts to be Venezuela?

Why does John McCain want to give taxpayer money to people who recklessly gambled and lost?

Why does anyone in the GOP still support John McCain?

He calls Obama a Socialist. Well, HP calls John McCain a Communist.

HP also calls John McCain a loser, a disaster, and a clueless idiot.

See ya later, John McCain. Thanks for playing. You, your stupid ideas and your washed-up campaign are no longer needed.

HousingPANIC Stupid Question of the Day

Housing has crashed.

Stocks have crashed.

The fake wealth is gone.

HP'ers were right.

And yet the criminals walk free.

So, how do you feel now?

October 29, 2008

10 ways the US government could stop the housing and stock market crash tomorrow

If you want the housing and stock market crash to end, and the US to avoid a deep recession or depression, here's 10 things the government could do tomorrow to stop the bleeding:

1) Raise the 401k max contribution to $100,000 in 2008, 2009 and 2010

2) Raise the Roth IRA max contribution to $50,000 in 2008, 2009 and 2010

3) Permanently eliminate taxes on savings accounts earnings held in US banks

4) $10,000 immediate tax credit for any home purchased for residence or investment with 10% or more down in 2009 or 2010

5) Offer 40-year 4% fixed rate refinance mortgages to any qualified homedebtor on up to 90% of current appraised value with the government to receive 20% of any gross profit if home is sold

6) Eliminate forced withdrawals from 401k's for 2008, 2009 and 2010

7) $5,000 one-per-person matching funds check from the US government good towards the downpayment on any bank-owned or foreclosed home in 2009 or 2010

8) Allow up to $20,000 to be withdrawn from 401k's tax free in 2009 or 2010 if used toward the purchase of a house with at least 10% down

9) Arrest Angelo Mozilo, Dick Fuld and Michael Perry

10) Charge a nationwide 10% tax on all rents starting in 2010

I'm not recommending all of these HP'ers. I'm just brainstorming the kinds of things the government could do, and may do, to end the housing and stock panic, even if it puts off the day of reckoning and creates even more moral hazard down the road.

Stay tuned. And get ready for some serious incentives to buy homes and stocks. You ain't seen nothin' yet.

The United States is desperate. And desperate leaders of desperate countries do desperate things.

Suzanne Researched It (now with subtitles)

October 28, 2008

Try to sum up the Great Housing Ponzi Scheme and Crash in twenty words or less

Here's my shot at it:

Unregulated obscene leverage gambled and lost by fraudsters, sheeple and thieves while corrupt and incompetent politicians and reporters slept.

Or the simpler one-word version:


FLASH: US Home Prices plunge 16.6% from last year. Phoenix and Vegas, despite year-round-golf and pro athletes, plunge 30%

And anyone who listened to a realtor on commission got slaughtered.

Any questions?

Home prices see record plunge

Prices of U.S. single-family homes plunged a record 16.6 percent in August from a year earlier and plummeted more than 30 percent in Las Vegas and Phoenix, Standard & Poor's said on Tuesday.

Home prices in 20 major metropolitan areas fell 1.0 percent in August from July, according to the Standard & Poor's/Case-Shiller Home Price Indices.

The composite index of 10 metropolitan areas declined 1.1 percent in August from July for a 17.7 percent year-over-year drop, also a record, S&P said in a statement.

"The downturn in residential real estate prices continued, with very few bright spots in the data," David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, said in the statement.

A huge supply of unsold homes, tighter lending standards and record foreclosures have pushed down home prices, deflating a bubble from the early part of this decade.

For the fifth straight month, prices fell in every region on an annual basis, he said.

FLASH: Consumer Confidence Drops to 41-Year Low

Thank you realtors. Thank you mortgage brokers. Thank you Congress. Thank you bankers.

You wrecked the world.

And to think, it's only gonna get worse.

WASHINGTON (AP) -- A private research group says consumer confidence in the U.S. economy plunged in October to its lowest in 41 years, as stock markets dropped sharply and companies began laying off workers.

The Conference Board reported Tuesday that the consumer confidence index fell to 38, down from a revised 61.4 in September and significantly below analysts' expectations of 52.

That's the lowest level for the index since the Conference Board began tracking consumer sentiment in 1967, and the third-steepest drop.

Commodities have completely crashed and the US dollar is becoming the strongest currency in the world. Was Peter Schiff wrong, or will he be right?

Schiff nailed the housing bubble, credit crisis and crash, and is a HP hero no matter what.

But I think we need to admit now that that his prescription of foreign currencies, foreign stocks and commodities is in a world of hurt today, as all three have now completely collapsed.

As of today, except for US dollars (and yen), there was no safe haven. Not commodities. Not foreign stocks. Not Euros. Not gold. Not oil. Nothing.

I think Schiff's prescription may still come out on top, as I have zero confidence in the US dollar.

But this selloff in foreign stocks, commodities and foreign currencies is brutal, as deflation takes hold.

Inflation then deflation then inflation?

In one week, a glimmer of hope

These are some of America's darkest days. We fell off the cliff. It all spun out of control. People lost their homes and their life's savings and their jobs. And America lost its way.

And then, as we have so many times since the birth of the nation, we changed course, reinvented ourselves, pulled together, and started a new journey.

I've never seen America in worse shape than it is today. These are truly dark, dark days.

But I'm an optimist that things will get better.

The first step comes next week, as Obama wins in a landslide, and a record number of incumbents are thrown out on their asses.

Even if 40% of the nation, mainly the ignorant and the uneducated, refuse to do the right thing.

Good news? The US Dollar and Japanese Yen are rallying like never before. The bad news? The other currencies of the world are in total meltdown.

Books will be written about these days for the rest of time. And a special chapter will be dedicated to the unwinding of the biggest bubble of all - the Yen Carry Trade.

And seriously HP'ers, who amongst us would have predicted that the US Dollar would emerge from this carnage even more solid than gold, or Euros, or oil?

Cats are sleeping with dogs now. Up is down. All trust is gone. And countries from Iceland to Hungary, from Romania to the UK, are seeing declines in their currencies that may soon lead to significant social unrest.

Get some popcorn, get some ammo, horde those dollars and yen (for now, until they blow up?), and watch the world implode as panicked frogs jump from lillypad to lillypad in a desperate attempt to stay afloat.

Europe on the brink of currency crisis meltdown

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.
“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.

“The system is paralysed, and it is starting to look like Black Wednesday in 1992. I’m afraid this is going to have a very deflationary effect on the economy of Western Europe. It is almost guaranteed that euroland money supply is about to implode,” he said.

October 27, 2008

Everything we predicted is coming true...

And that's not a good thing

Too bad nobody wanted to listen. It didn't have to get this bad.

Here's the 90 day chart for US Steel, which has collapsed 82% in the past few weeks. So, is the end of the world now here?

I wasn't around in 1929 - 1933 when US Steel last collapsed, so seeing a chart like this in present time amazes me.

Seeing a chart like this also leads me to believe that nobody alive will EVER trust the stock market again.

90 days.. That's all it took for the financial world to end.

If this chart is to be believed, we'll never build another home. We'll never produce another car. We'll never open another factory. We'll never construct another bridge.

If you believe this chart, then you must assume not just a second Great Depression, but something even worse.

US Steel, and most of the companies around the world, after the worst month in stock market history, are trading like the end of the world is now here.

And maybe it is.

This is getting really, really ugly now.

HousingPANIC Stupid Question of the Day

Is your neighborhood littered with foreclosures?

Are there for-sale signs everywhere you look?

What are your friends and neighbors saying?

How far do you think home prices have fallen in your city/town? How much farther do you think they have to go?

60 Minutes, three years too late, takes on the housing crash, CDO's, derivatives and the mortgage debacle

Too bad the MSM was (again) asleep at the wheel when they could have done some good.

A special HousingPANIC message to the reporters of America: You failed us. Again. We expect our political leaders to fail us - seeing as how they're corrupt. But when the media also fails us, well, then we're truly f*cked.

And now, as we've all come to see, we're truly f*cked.

HousingPANIC Quote of the Day

One more time, a HP classic...

Turning and turning in the widening gyre
The falcon cannot hear the falconer
Things fall apart
the center cannot hold.

- Yeats

October 26, 2008

The National Association of realtors (on Commission) talks to the sheeple about "building wealth" through housing. Isn't it time to stop them?

I truly believe that the NAR should be shut down by an act of Congress for racketeering, restraint of trade, collusion, corrupting of public officials, and fraud.

I'm dead serious about this.

The National Association of realtors on Commission is perhaps the most destructive and evil group operating today in America. They must be targeted, they must be investigated, and they must be stopped.

It's time to stop these evil-doers and their members, before they do even more damage to America and the free world.

I'd like to track down the actors or ad agency responsible for the "Suzanne Researched It!" commercial, and make them famous.

Maybe we could get an apology for their bit part in this debacle.

March on soldiers.

I don't think the Bush Administration and the FBI could have done a worse job. Nope, I think they screwed America about as bad as was ever possible.

When a nation of laws stops enforcing its laws, you get what we got.

Thank you George Bush. Thank you for wrecking America.

History will be brutal.

Did the housing crash destroy the McCain campaign, or did the McCain campaign do a fine job of destroying itself?

October 25, 2008

Here's a picture of a granite countertop. You know, the crack cocaine of the housing binge. Granite countertops that blew up the financial system.

We destroyed the world economy for these?

Man, how stupid was that?

And we move closer and closer to the bottom (for stocks, not housing).. "Panic turning to despair"

"I'll never buy stocks again"

"The market is rigged"

"I've lost everything"

"I'll never be able to retire"

"F*ck Jim Cramer"

"Dow is going to 2,000"

"Stocks are a horrible investment"

Yes, music to my ears. HP'ers know I'm not a perma-bear. I believe everything is cyclical. And I believe the chart below isn't just a chart, it's a fortune teller.

Keep your eyes and ears out for disgust, despair, despondency, depression and capitulation. I believe we're getting there.

Now on housing, that's a different thing. I'm STILL hearing denial.

Fire away...

HousingPANIC Quote of the Day

"The fine fix we find ourselves in is mainly the work of idiots. Idiots with Ph.Ds. Idiots of a rather specialized genus, whom I call savants idiots, of whom the former Fed chairman is perhaps the most visible and emblematic example"

- Financial author Michael M. Thomas discussing the monkeys who got us into this mess, led by the discredited hack Alan Greenspan, October 2008

October 24, 2008

HousingPANIC Stupid Question of the Day

How do you feel now that everyone knows?

Here's hedge fund manager Andrew Lahde who made a fortune betting against the housing bubble, in his farewell "f*ck you" letter to his industry

Here's the letter in full and some highlights


Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye...

On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government. Capitalism worked for two hundred years, but times change, and systems become corrupt.

Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let's stop the rhetoric and start thinking about how we can truly become self-sufficient.

With that I say good-bye and good luck.

All the best,

Andrew Lahde

Special Bloody Friday Open Thread

Well, here's the headline from October 24, 1929, aka "Black Thursday", as history repeats itself...

And here's a recap of that 1929 selling as we close out October 2008, perhaps the worst month for stocks in the history of the world.

Thank you realtors. Thank you mortgage brokers. Thank you bankers. Thank you Congress, SEC, Bush, Dodd, Mozillo, Perry, Fuld, FBI, flippers, appraisers, homebuilders, MSM, housing porn shows, and above all, thank you Alan Greenspan and the Fed.
You Wrecked America.

1929 Stock Market Crash

Three phrases - Black Thursday, Black Monday, and Black Tuesday - are used to describe this collapse of stock values. All three are appropriate, for the crash was not a one-day affair.

The initial crash occurred on Black Thursday (October 24, 1929), but it was the catastrophic downturn of Black Monday and Tuesday (October 28 and 29, 1929) that precipitated widespread panic and the onset of unprecedented and long-lasting consequences for the United States.

The collapse continued for a month.

October 23, 2008

Go get some eggs and warm spit. Cover your computer screen with cling wrap. Then play this video of Alan Greenspan, and hit him with your best shot

History will be cruel.

The SEC's incompetent chairman Chris Cox: "Somewhere in this terrible mess, laws were broken" Gee, Chris, ya think?

He also said the government was doing the best it could to identify and pursue lawbreakers.

HousingPANIC would like to help him. Uh, Chris, you might want to look here for starters:

Man, what a flipping idiot.

January can't come soon enough.

America - a once proud nation of laws, where thanks to incompetent and corrupt officials like Christopher Cox, lawlessness reigned, and a country was brought to its knees.

S&P ratings agency employee email: "Let's hope we are all wealthy and retired by the time this house of cards falters"

Here's another gem from another just-surfaced email, this one from a Moody's employee:

"It seems to me that we had blinders on and never questioned the information we were given.. Combined, these errors make us look either incompetent at credit analysis, or like we sold our soul to the devil for revenue.''

Folks, the next few years will be spent uncovering the truth of what happened. The incompetence, the corruption, the bribery, the greed. And this will take place against the backdrop of a worldwide financial disaster.

I can't wait to see Angelo Mozilo's emails. And Michael Perry's. And Chris Dodd's. And Dick Fuld's. And Barney Frank's. And Alan Greenspan's. And Hank Paulson's.

They're going to make you sick.

And some of these bastards better go to jail.

Here's some testimony from one of Moody's idiots on their criminal role in the debacle that destroyed the world economy and the trust in America

Well, I guess it's nice to see the corrupted monkeys in Congress finally getting around to investigating the ratings agencies and their criminal activity.

Only about five years too late.

Kucinich is good, but Rep. Mark Souder goes off pretty good at 7:30 in the video. Watch the whole thing.

F*ck I want to see some of these idiots arrested. If it wasn't for the criminal negligence and outright bribery seen at the ratings agencies, this whole mess wouldn't have been possible.

S&P and Moodys and their employees are traitors to America.

And the Great America Going Out of Business / Hedge Fund Liquidation Sale of 2008 continues

Leverage, fun on the way up, sucks on the way down.

Thank you Hank Paulson (at Goldman) and Chris Cox (at SEC). Yup, 40 to 1 ratios, sounds like a GREAT idea. FABULOUS idea!


The Hedge Fund Contagion

Stocks, bonds, and commodities will suffer as funds dump assets. Anyone with a 401(k) will get hit

Investors on Main Street have another reason to fear opening their brokerage statements: the rapidly shrinking hedge fund industry.

In the coming months, hundreds of hedge funds may shut their doors, sparking a massive fire sale on all sorts of investments. Just about anybody with a 401(k) or pension plan will feel the pain, since the sell-off will only exacerbate the plunge in stocks, bonds, and commodities—which make up the core of most people's portfolios.

HousingPANIC Stupid Question of the Day

Do you feel like you're reading a history book, but that it's actually happening in real time?

Seriously, the headlines today are straight out of 1929. The names may have changed, but that's about all.

Even thought HP'ers knew it would come, it's amazing when it actually comes.

Let's see if this book turns out any different than the original...

October 22, 2008

We have seen / are seeing panic, capitulation and despondency. How long will this period last, and when will hope begin again?

"The final phase is a self-feeding panic, where the bubble bursts. People of wealth and credit scramble to unload whatever they have bought at greater and greater losses, and cash becomes king"

-Manias, Panics and Crashes, the HousingPANIC bible

Depending on the situation, for most Americans with crashed home values, destroyed 401k's and the prospect or reality of job loss, panic is now here. As well as capitulation, despondency and depression.

Talk to someone who's lost their life's savings, who's been removed from their foreclosed home, and who has no job or prospect of getting a new one, it's bad.

And yes, it can still get worse.

But all in all, I think we saw true panic a couple of weeks ago when the market went into freefall and the governments bailed out the banks, and now we're in capitulation and despondency as people deal with the reality that they can't retire, that they've lost everything, and that they're on their own.

But that's unfortunately what has to happen if we are to finally start with the recovery.

So, how long will this period last, will it get worse before it gets better, when will the recovery start, and what will the world look like after we emerge?

And when will hope begin again?

One more time...

October 21, 2008

HousingPANIC Quote by yet another politician who's never read "Manias, Panics and Crashes" of the day

"We will not put hard won economic stability at risk. No return to short-termism. No return to Tory boom and bust."

-Gordon Brown, UK Labour Party leader and current Prime Minister, in his party address before the whole big UK housing ladder ponzi scheme took off, and boom turned to bust, September 2000

October 20, 2008

Redemption. Reform. Renewal. Change. It may be too early to see now but good things will come out of this Great Unwinding. What will they be?

As I've said for years, America needed an enema. And boy, are they getting one.

People equated debt with wealth. America became a nation of spenders and not savers. Houses became lottery tickets and not homes. Frugality and live-within-your-means were seen as laughable traits. Poor people thought they should and could live like rock stars. Payola to Congress became the accepted. Liars were quoted in the MSM as if they were truthtellers, and truthtellers were portrayed as liars. Keeping up with the neighbors became a consuming passion, instead of helping the neighbors. And a nation sold out its morality and reputation for a quick buck.

And then the Great Housing Crash hit.

And hopefully, everything changed.

So, what good will come about because of this economic collapse? What lessons will be learned? What behavior will change?

Fire away.

HousingPANIC Stupid Question of the Day

Who's better off?

Guy A: Buys a house today for $200,000, that fell 50% from the peak, puts 10% down and finances with a 30 year 6% mortgage. House has negative $500 a month cash flow if rented.

Guy B: Buys an exactly similar house for $150,000 a year from now, that fell another 25% versus today, puts 10% down and finances with a 30 year 8% mortgage. House has negative $500 a month cash flow if rented.

Guy C: Rents house from Guy A or B

It never made sense why the FBI and Bush Administration didn't enforce the laws of the land, and let financial fraud run rampant these past few years.

Well, now it does.

Bush and Mueller had 1/3 of the FBI criminal investigators leave their posts, and never replaced them.

And nobody was left minding the store.

took their eye off the ball, they didn't enforce the basic laws of America, they didn't hire the necessary agents, and they destroyed America as financial terrorists planted bombs all over the land.



Monkeys folks. We truly are run by untrustworthy and corrupt monkeys. We've been writing about the fraud going on for three years now, calling for the FBI, SEC, Justice Department and local authorities to crack down on the mortgage fraud and financial crimes. And nothing has been done. The guilty roam free. And trillions and trillions and trillions and trillions have now been lost and confidence has been shot.

There should be outrage. There should at a minimum be high-profile arrests. And there should be justice.

F.B.I. Struggles to Handle Financial Fraud Cases

WASHINGTON — The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis, according to current and former bureau officials.

The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the nation’s economic woes.

The pressure on the F.B.I. has recently increased with the disclosure of criminal investigations into some of the largest players in the financial collapse, including Fannie Mae and Freddie Mac. The F.B.I. is planning to double the number of agents working financial crimes by reassigning several hundred agents amid a mood of national alarm. But some people inside and out of the Justice Department wonder where the agents will come from and whether they will be enough.

So depleted are the ranks of the F.B.I.’s white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible frauds of millions of dollars.

Since 2004, F.B.I. officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism.

“We only had a finite number of white-collar crime agents available to address the threat that mortgage fraud posed,” said Joseph Ford, who retired from the F.B.I. this year and once served as its chief financial officer.

October 19, 2008

Seriously, in theory, even though prices are plummeting, doesn't it feel CONTRARIAN now to buy a house or to buy stocks?

And doesn't that make you wonder?

Usually when I see all the sheep going one way, I stop in my tracks and make sure I'm not with them.


Aren't the sheep all going the same way now?

And doesn't that make you wonder?

In finance, a contrarian is one who attempts to profit by investing in a manner that differs from the conventional wisdom, when the consensus opinion appears to be wrong.

A contrarian believes that certain crowd behavior among investors can lead to exploitable mispricings in securities markets. For example, widespread pessimism about a stock can drive a price so low that it overstates the company's risks, and understates its prospects for returning to profitability.

Identifying and purchasing such distressed stocks, and selling them after the company recovers, can lead to above-average gains. Conversely, widespread optimism can result in unjustifiably high valuations that will eventually lead to drops, when those high expectations don't pan out. Avoiding investments in over-hyped investments reduces the risk of such drops. These general principles can apply whether the investment in question is an individual stock, an industry sector, or an entire market or any other asset class.

Some contrarians have a permanent bear market view, while the majority of investors bet on the market going up. However, a contrarian does not necessarily have a negative view of the overall stock market, nor does he have to believe that it is always overvalued, or that the conventional wisdom is always wrong.

Rather, a contrarian seeks opportunities to buy or sell specific investments when the majority of investors appear to be doing the opposite, to the point where that investment has become mispriced. While more "buy" candidates are likely to be identified during market declines (and vice versa), these opportunities can occur during periods when the overall market is generally rising or falling.

As I said over two years ago, the Housing Crash would be the #1 issue in the 2008 election, and it would change everything

Any questions?

October 18, 2008

IcelandPANIC: HP dedicates this song to the broke people of Iceland. You didn't deserve your fate. Your bankers and government screwed you.

Think about the people of Iceland tonight. People who scrimped and saved and endured, only to have their life's savings and economy destroyed by greedy bankers on commission, and a corrupted and willing government.

There but for the grace of god go us.

Diversify. Paper money goes away. Diversify.

They do make some pretty groovy music up in Iceland. Here's Sigur Ros, who've taken over from Bjork as my favorite Icelandic act. Enjoy.

Here's the Case-Shiller Home Price Index for Phoenix, LA, Vegas and San Diego. We're back to 2003 - 2004 prices today. Where will it stop?







Wasn't there something about the year-round-golf and pro athletes that was supposed to prevent this kind of thing?

Investigate them. Arrest them. Imprison them.

Incompetence is not an excuse.

Follow the money.

New York Times article: "Home Prices Seem Far From Bottom"

This entire historic ridiculous bubble is going to get washed away folks, and then some.

We'll be back at prices last seen in the 1990's pretty soon.

But oh, what a bubble it was. The biggest financial bubble in the history of humanity. The perfect storm of greed, corruption, ignorance and incompetence.

And to think, nobody saw it coming. Right?

Home Prices Seem Far From Bottom The American housing market, where the global economic crisis began, is far from hitting bottom.

Home prices across much of the country are likely to fall through late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession.

In hard-hit areas like California, Florida and Arizona, the grim calculus is the same: More and more homes are going up for sale, but fewer and fewer people are willing or able to buy them.

Is SEC Chariman Chris Cox the single most incompetent and destructive public official of all time?

Michael Brown had this one sewn up, but then along came Chris Cox.

The exact wrong man for the exact wrong job at the exact wrong time. To the benefit of Michael Perry, Angelo Mozilo, Stanley O'Neal, Dick Fuld and all the rest.

If you could jail someone for pure incompetence, Chris Cox would be the first thrown in the clink.

History will be brutal when it comes to Chris Cox. And to George Bush and the US Congress, who allowed this travesty to continue.

I have no idea what's driving Cox. Maybe he got a sweetheart loan from Mozilo? Maybe he's short he market? Maybe he hates America? Maybe he's part of al-Qaeda? Whatever it is, it's bewildering. And it's sick.

Here's a good expose in Bloomberg for starters. The damage has been done, but I would like to see him testify under oath.

The Invisible Man

SEC Chairman Cox has often been missing in action during the financial crisis, even while Treasury Secretary Paulson and Fed Chairman Bernanke tread on his turf.

The Today show asks (again) - Have housing prices hit bottom? The 'expert's' advice? Drive four blocks and count the for sale signs. Brilliant!

I truly believe we're seeing the dumbing down of America. Either the 'experts' and 'journalists' are getting dumber, or they're being told to treat their audience like children.

And then the realtor backlash started - "How realtors Destroyed America"

If Congress won't break up the NAR (their #1 donor) and put warning labels on realtors (you know, like cigarettes and other things that are bad for your health), then it's up to the people of the economically destroyed nation to turn on these conmen and run them out of town (you know, like Ponzi)

REALTORS - The Profession That Destroyed the American Dream

(thanks Ty for the video)

October 17, 2008

Will anyone ever trust a realtor again?

Warrent Buffett is buying. Are you?

Here's Buffett. Can't say I disagree. Not one bit.

I'm buying, although I hope prices go even lower. Stocks are the only things people buy when they're overvalued and sell when they're on firesale. And yes, I'm a massive Buffett fan too.

Buy American. I Am.

The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.


A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Nouriel Roubini on what's happened, and what's to come

Sometimes, even when you know what's going to happen, it still kinda sucks. Ignorance can in some ways be bliss.

But I think in the end I'd rather know.

Side note - how much longer until Roubini testifies in front of our corrupted Congress and shames them, Bush, the SEC and the Fed for the whole world to see?


Inflation, then deflation, then inflation? Jim Rogers has some thoughts

Lawrence Yun and the NAR keep spinning, the incompetent MSM keeps printing it, and our NAR-PAC-corrupted congress does nothing

I think it's kinda funny that Lawrence Yun is still acting as the NAR's mouthpiece. You'd figure that the laughingstock of the world, with absolutely zero credibility left, would be moved aside for a new stooge. You know, like when the hilariously discredited Lereah was moved out to be replaced by Yun.

But no, that would be the competent thing to do. And as we all know now, the NAR is run by monkeys.
Keep it up Lawrence. Great work. You're word is gold out there. America trusts you.


Here's Yun last week:

Lawrence Yun, chief economist for the National Association of Realtors, agrees that now is an excellent time to purchase a home: “Buyers are taking advantage of drastically lower prices-many related to distressed foreclosed sales - and sellers are highly motivated to negotiate,” he said in a recent news release.

Yet didn't Yun say this in December?

“Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008. I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation,” Yun said.

And then of course, there was this gem in July:

Yun also predicted that the economy is not headed for a recession--"A slowdown, yes, but the definition of a recession is two consecutive quarters of negative GDP [gross domestic product] growth," said Yun. "It's not in the cards, no matter how you look at it."

Why the MSM allows the NAR and its hack to spin them is beyond me. Every quote from the NAR should come with a warning or disclaimer.

I also believe that a full-blown criminal investigation should now be launched, including outright bribery of our Congress, criminal misrepresentation and fraud by NAR members (aka 'realtors'), and the US RICO anti-racketeering laws should be thrown at the NAR and their restraint of trade.

But of course, that would depend on the bribed monkeys in Congress investigation the bribery of Congress, and cutting off their own funding from their #1 source. And we know the chances of that.

HousingPANIC Quote of the Day

"The sentiment has been dominated by fear and panic, and when people are scared, they just keep selling."

- Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney, talking about the collapse in oil prices.

Here's the city by city housing affordabilty numbers from 2007 on housingtracker.net. How's your city shaping up now?

It was the P/E stupid. It will always be the P/E stupid. Too bad people didn't understand that in 2004, 2005, 2006 and 2007. I bet they do now.

Here was how the numbers looked from Q3 2007. I'd love to see an update.

Percent Income:
The percentage of the local median family income required to make payments on the mortgage for a median (sale) priced single family home given a 20% down payment and a 30-year fixed rate loan at prevailing rates.

Mortgage to Rent: The ratio of the mortgage payment on a median (sale) priced single family (again assuming 20% down and a 30-year fixed rate loan) to the local median rent for a 3 bedroom apartment.

Price to Income: The median single family home sale price divided by the median family income for the metro area.

Price to Rent: The median single family home sale price divided by the local median monthly rent for a 3 bedroom apartment.

City, State

Percent Income
Albuquerque, NM
Atlanta, GA
Austin, TX
Baltimore, MD
Boise City, ID
Boston, MA
Cape Coral, FL
Charlotte, NC
Chicago, IL
Cincinnati, OH
Cleveland, OH
Columbus, OH
Dallas, TX
Denver, CO
Detroit, MI
Edison, NJ
Grand Rapids, MI
Greensboro, NC
Greenville, SC
Honolulu, HI
Houston, TX
Indianapolis, IN
Jacksonville, FL
Kansas City, MO
Las Vegas, NV
Long Island, NY
Los Angeles, CA
Louisville, KY
Memphis, TN
Miami, FL
Milwaukee, WI
Minneapolis, MN
New Orleans, LA
New York, NY
Newark, NJ
Oklahoma City, OK
Omaha, NE
Orange County, CA
Orlando, FL
Philadelphia, PA
Phoenix, AZ
Portland, OR
Raleigh, NC
Reno, NV
Richmond, VA
Riverside, CA
Sacramento, CA
Salt Lake City, UT
San Antonio, TX
San Diego, CA
San Francisco, CA
San Jose, CA
Sarasota, FL
Seattle, WA
Spartanburg, SC
St Louis, MO
Tampa, FL
Tucson, AZ
Virginia Beach, VA
Washington, DC

October 16, 2008

HousingPANIC Quote of the Day

"Until houses drop from retarded prices people won't feel like buying"

- HP'er "CrisisGuy", pretty much summing the whole thing up, October 16, 2008

Will the Great Housing and Stock Market Crash of 2008 have a lasting impact? Will it serve as a catalyst for needed change?

I think everyone would agree that Americans are resilient and optimistic, and that the nation has had to constantly reinvent itself.

But is this time different?

This time, did we really step in it?

If we are to come out of this, reinvent ourselves, reform, change our ways, and move on for the better, what would that entail?

Me? I believe we'll see tough times ahead. But I see this is a catalyst. The crisis that finally made America think about its role in the world, and its problems at home.

We need to stop being the world's policeman, close our military bases, and bring our troops home. We're broke. We can't afford that crap anymore.

We need to radically reform our runaway entitlements programs.

We need to arrest the guilty, seize their assets, reform or destroy the REIC, independently investigate our Congress, Fed and SEC, change our laws, and clean up this mess.

We need to end the debt and credit lifestyle, and teach the importance of frugality, savings, having a financial education, and living within your means.

Hard times are coming, that can't be avoided now that the credit has dried up and the wealth has gone away. But we've seen hard times before. It's the nature of the beast called capitalism.

The question for America, and for the world, is what comes after the crash.

Buckle up. It's gonna suck. But then it gets better. It always does. It hath been foretold.

Here's the latest on IcelandPANIC - now they're possibly going to run out of food. Iceland. Flipping Iceland. Thank you REIC. Thank you bankers.

Makes you think, what would America look like if our imports got cut off next week.

No oil. No credit. No autos. No electronics. No cheap crap from China.

At least we have farms and food, although without oil it would be tough to get to the shelves. But countries around the world on verge of default (Pakistan, Ukraine, Kazakhstan, Argentina) could see some pretty serious stuff in just a matter of weeks.

And Iceland. Well, they have fish. But they no longer have currency, they no longer have stocks, they no longer have savings, and they no longer have their wealth.

And to think, it all went away for them in an instant. That's gotta suck.

REYKJAVIK, Oct 15 (Reuters) - Iceland has food stocks for about 3 to 5 weeks, but needs quickly to restore a proper foreign exchange market so importers can get back to normal business and avoid shortages, importers said on Wednesday.

Since crisis broke out on the north Atlantic island of 300,000 people, involving the government taking over the top three banks, suppliers to Iceland have cut credit to importers. Some have also demanded pre-payment for goods.

Though the central bank has said it has foreign reserves for eight to nine months of food, importers said a cash injection from abroad was the only solution to avoid shortages.

What a mess he'll have on his hands.

So, now that the debt-fueled lifestyle of Americans is over for the time being, what cities are going to take it on the chin the worst?

When the housing ATM shuts down, the credit cards are maxed out, and the jobs go away, the results won't be pretty.

That said, certain towns and cities in America needed an enema. Places where debt was perceived to equal wealth. Places where keeping up with or showing up the neighbors was more important than helping the neighbors. Places that frankly needed to be taught a lesson when it came to money and morals.

So, have at it. Where will the debt bomb be felt the most? And on the flipside, are there any places that didn't get caught up in the madness, and now will be just fine?

Did government-subsidized easy access to debt cause a Great College Tuition Bubble, similar to the (Late) Great Housing Bubble?

In other words, did the schools, like homebuilders and realtors, rape the over-leveraged students simply because they could?

And like housing after the credit and buyers went away, will college tuition costs now crash back down to earth?

Steep debt will enslave many college graduates

The near doubling in the cost of a college degree the past decade has produced an explosion in high-priced student loans that could haunt the U.S. economy for years.

While scholarship, grant money and government-backed student loans — whose interest rates are capped — have taken up some of the slack, many families and individual students have turned to private loans, which carry fees and interest rates that are often variable and up to 20 percent.

Many in the next generation of workers will be so debt-burdened they will have to delay home purchases, limit vacations, even eat out less to pay loans off on time.