HousingPANIC Thought of the Day

It's time like these it kinda sucks we've lost our
manufacturing base, eh?

The manufacturing sector and its workers were hardest hit by the growth of Wal-Mart’s imports. Wal-Mart’s increased trade deficit with China eliminated 133,000 manufacturing jobs, 68% of those jobs lost from Wal-Mart’s imports. Jobs in the manufacturing sector pay higher wages and provide better benefits than most other industries, especially for workers with less than a college education.

HousingPANIC has a Special Message for our new landlord and owner, Communist China

China, sitting $414 billion in US treasuries (that won't get paid back) and over $100 billion in US mortgage backed securities (that won't get paid back), and over $1 trillion total in US dollars (that are becoming toilet paper), plus a recent big investor in Blackstone's hilariously failed IPO (man, that's gotta hurt), has gotta be getting PISSED OFF lately. Welcome to American capitalism comrades, where you can get suckered by con-men and lose it all!

Seriously, could the royal screwing of these corrupt communist jackasses, who helped ruin America with their evil cozy partner Wal-Mart, be any more perfect?

A Special HousingPANIC message to the corrupt leaders of Communist China:

Thank you for selling us all that cheap crap these past few years and enabling our housing bubble by artificially surpressing our interest rates.

Thank you for ruining our manufacturing base by manipulating your currency and dumping your goods on unpatriotic and clueless Americans. And thank you for destroying the character of our towns and cites by enabling your evil partner Wal-Mart to destroy its competition with an endless supply of cheap dangerous crap from your sweat shops.

And by the way, you really didn't think we'd ever pay you back, did you?

Sincerely, HousingPANIC (and the Deadbeats of America)

China shying from shaky US mortgage market

While China is eager to invest a portion of its US$1.33 trillion foreign-exchange reserve overseas, it is unlikely to take a chance on buying additional US mortgage-backed securities (MBS) as they are now considered too risky, Chinese economists said.

"The Chinese economy is benefiting from high-yielding, safe investments in US mortgage-backed securities. Here at home, American homeowners are benefiting from lower interest rates on mortgage loans resulting from greater Chinese demand for these securities," Jackson said.

Our Great Landlord China keeps racking it up

One day, when Americans wake up, we'll wonder how we let a communist country come to own us. Unless we decide to just not pay it back.

Under an overturned nest, can there be unbroken eggs?

China's trade surplus in April rose to $16.88 billion - almost double the March level.

The trade gap for the first four months was $63.3 billion, 88% higher than a year earlier.

The expanding gap, in particular with the US, comes two weeks before US Treasury Secretary Henry Paulson and Vice Premier Wu Yi meet for a trade summit in Washington. China this week announced that it will buy more than $4 billion of US technology, seeking to narrow the surplus and head off claims that China benefits from an undervalued currency.

FLASH: GM runs out of gas, blames housing crash

I guess the fact that GM makes overpriced gas guzzling crappy cars nobody wants is just a side note.

Seriously, for a company this screwed and mismanaged (a car company that owns subprime loans!), I don't know how they can avoid bankruptcy. And the fact that (as HP predicted) the housing crash helped kill the US automotive industry is mind boggling.

For GM, all that cash-out refi loot is gone, never to return. I'd guess HELOC money bought half the new cars purchased these past few years (anyone know the #?). And how many trucks were purchased by people in the homebuilding profession? Those days are over...

Had enough? Here's more... The yen is undervalued. Toyota is kicking their behind. Their pension situation is a time bomb. Their cars are crap. Their workers make a hundred times someone in China would require. They still own 49% of subprime cancer GMAC. And now desperate homedebtors are flooding the used car market with inventory in an attempt to raise cash.

And yes, I'm short GM via put options at time of writing...

Mortgage 'meltdown' hits auto sales: GM's Lutz - Vice chairman sees entire sector hit by problems in home financing market, truck sales to suffer.

LOUISVILLE, Ky. (Reuters) -- The crisis in the U.S. mortgage market has hurt U.S. auto sales this month, General Motors Corp. Vice Chairman Bob Lutz said Monday.

"The market as a whole has been a little weakish. That has come as a result of the housing market problems and the mortgage industry meltdown," Lutz told Reuters. "A lot of people are finding themselves in a position of reduced affordability and that has had an impact, not just on us, but across the industry."

What (if anything) can pump up American consumer spending now?

Or are we out of catalysts and bubbles?

Cheney almost bites it. China stocks drop 10%. Dow tanking. Subprime in meltdown. NAR puts out bogus report.

Interesting day so far, eh?

The Corrupt David Lereah, on today's bogus NAR numbers:

"For the last several months I have been hemming and hawing on whether we have reached bottom," said David Lereah, chief economist for the Realtors. He said that the January report was an encouraging sign that the bottom for sales activity was reached last September with sales expected to stabilize this year.

China and US action:

Stocks Slide after China Sell-Off - Shanghai's major index dropped 8.8%, prompting equity weakness worldwide. Investors were also spooked by a big drop in durable goods orders. In early trading, the Dow Jones industrial average fell 131.14 points, or 1.04%, to 12,501.12

China Stocks Post Biggest Drop in Decade - China Stocks Fall 8.8 Percent, Sending Ripples Through Markets From Hong Kong to Singapore

Cheney:

Cheney takes refuge in shelter after Afghan blast

U.S. Vice President Dick Cheney was whisked into a bomb shelter immediately after a Taliban suicide bomber struck the main American military base he was visiting in Afghanistan on Tuesday.

Subprime:

Mortgage finance company Freddie Mac will no longer buy subprime mortgages that have a "high likelihood" of payment shock and foreclosure, the company announced Tuesday.

Shopping at Wal-Mart is the most un-American, un-patriotic, selfish, hurtful and self-destructive thing you can do

I know intuitively Wal-Mart seems harmless. Low prices, efficiency, capitalism, low inflation. Those are all good things, right?

Nope. Not when taken to an extreme. Not when an unchecked monopoly overtakes a market.

Wal-Mart folks has destroyed America. You just don't realize it yet, because it sure is fun to get stuff for so much cheaper than it used to be. Especially when so many things are so much more than they used to be (healthcare, college, homes, day care, movies, etc). Wal-Mart seemed like the only way to stay ahead for most people.

What people don't realize though is that Wal-Mart has destroyed the middle class. Wal-Mart has destroyed the American manufacturing base, and tens of thousands of small to medium sized American businesses. Wal-Mart has killed the character of American towns. And Wal-Mart caused the housing bubble, by creating a massive trade imbalance which caused China to reinvest their reserves in US t-bills, thus deflating interest rates and inflating home prices.

Wal-Mart is evil. And people who shop at Wal-Mart need to see that they're hurting America every time they walk through those doors.

Here's an interesting take on the catch-22 caused by our addiction to low prices and Chinese crap.

“The China trade deficit really reflects the state of the global economy: China is the world’s factory and the U.S. is its supermarket,” Gereffi said. “It’s not caused by any nefarious Chinese strategy.” Gereffi said efforts to improve conditions in the U.S. by finding fault with China’s monetary or labor practices are misplaced. Answers to American challenges are best found at home, he said.

“Pressing China to let the yuan appreciate -- the current policy of the American government -- even if successful, would contribute only slightly to an already steady U.S. economy,” he said. “Far more fruitful would be addressing the anxieties of American workers about job security, retirement and health care with new ways of providing the social supports once found in pensions, lifelong employment, company health insurance, Social Security and Medicare.

“Cheap Chinese goods and labor have pitted the American consumer, in love with inexpensive goods, against the American worker, in fear of cheap labor,” Gereffi said. “Unfortunately, these are often two sides of the same coin: America’s workers are also its consumers. It’s time to stop fighting with ourselves on this front

Your basic Housing Ponzi Scheme thinking

Here's how it goes down. Doesn't matter if it's land in Tokyo, tulip bulbs in Holland, or pre-construction condos in Phoenix.

* My cousin Joey just made some money selling his home

* Hey, my neighbor is putting his house up for sale for way more than we both paid

* Oh, man, I'm rich! My home just went up in value 20%!

* Maybe I should buy some investment property

* Another house just sold down the block for 100% more than the guy paid

* Hello, Cheap Mortgages with No Money Down? I'd like to take out a loan on an investment condo

* Everyone is getting rich buying and selling homes! It's so easy! Why work for a living

* Yes, you're right Mr. New Home Sales Guy, why buy one when I can buy two! Let's do it

* You're right, Mr. Cheap Mortgages with No Money Down, I should take advantage of that no-doc, no-down, option-ARM thing you're recommending. Are you sure I can lie about my income? Cool! I'll buy five of those new condos, not two!

* Grandma, you gotta buy another condo in Florida! We're all getting rich rich rich rich!!!!!

* Hmmm.. I wonder if being $4 million in debt is OK, after all I only make $40,000 a year. But it must be if the bank would lend me that kind of money

* OK, I've closed on all my new condos, time to flip them for massive profits!

* Hmmm... it's been 30 days and no offers. And it is strange that nobody actually LIVES here in this new condo building. I wonder why that is.

* It's the damn realtor's fault, why can't they sell my units. I'm gonna fire 'em and get a new one! One that knows the market!

* OK, it's been six months, and still no buyers, and I'm out $30,000 in carrying costs so far. Hmmm... That's more than I bring home in a year. My credit cards are getting closed to maxed out. Oh well, it's OK, I'll just drop the price a bit and still be rich rich rich rich!

* OK, it's been a year. I can't make the payments anymore, still no offers, I'm on my tenth realtor, still nobody lives in this damn condo building and what happened? My realtor and mortgage broker and appraiser and David Lereah and everyone said I was going to be rich! It's their fault.

* I can't believe I just got foreclosed on. I've lost everything. Oh well, it wasn't my money after all and in a few years my record will be clean and I'll try again! I do wonder though who did take the loss on all my condos, since it wasn't me? Hmmm...