It was all an illusion. And the lenders and homebuilders have to do whatever they can do to keep the illusion going. Otherwise they stop going.

Cramer had an interesting point on his freak-out on Friday. He recommended that companies like Bear Stearns, who are obviously imploding, should just remain quiet

"Just keep your mouth shut during this period - don't say a thing" he said.

Some companies, like IndyMac and Countrywide, are trying the opposite tact - talking aggressively and confidently on how they're well-positioned for the downfall, how they'll gain share as all their competition goes belly-up, how they have great liquidity and funding and business models, blah blah blah.

In the case of Countrywide, that talk is actually corrupt, as their orange CEO desperately dumps $118 Million in shares as fast as he could while the company at his direction was buying back shares to try to hold the price up for him (unsuccessfully).

So why the lies? Why the aggressive spin?

Because they're scared. They're scared because they know that this whole Ponzi Scheme is now dominoing. And if they show any sign of trouble or weakness publicly, they can get American Home Mortgaged out of business right quick.

Then you have Loan Center of California, which is hilariously and stupidly trying to sue anyone who talk bad about them, or expose the truth.

In the end, none of their spin and blather will matter. Funding lines will get yanked. Toxic loans will get recalled. Market demand for buying junk loans is at zero. Business models will have gone kaput. And hundreds of thousands of REIC will be on the streets, box and plant in hand, unable to make their own mortgage payments.

It's over folks. It's all over. Don't listen to REIC lies. Don't listen to realtors on commission. Don't listen to the Investment Banks. Don't listen to homebuilders who call bottom. And especially don't listen to the liars at the NAR.

It's over.

And all of us here saw it coming. Almost all of us.

HousingPANIC Stupid Question of the Day

Still believe what the government, NAR, ratings agencies, analysts, REIC and MSM tell you now?

Talking Points for NAR's "Buy Now" Campaign - November 2006

Conditions are now ideal for buyers. Interest rates are comparable to 40-year lows, and inventories are higher than they have been in decades. Consumers have exceptional choice. But these conditions may not last. August pending home sales rose 4.5 percent, and prices are expected to rise again next year. Even the vice chairman of the Federal Reserve says that the housing market outlook is improving.

Real estate is an outstanding investment. House values rose 88 percent on a national average over the past decade. The number of U.S. households is expected to increase 15 percent during the next decade, creating a continued high demand for housing.

Conditions are improving for sellers. This year will be the third-best on record, and prices are expected to rise modestly next year.

The campaign opens on Friday, November 3, 2006, with full-page advertisements in the Wall Street Journal and USA Today, and will run Sunday, November 5 in the New York Times, Washington Post, Los Angeles Times, and Chicago Tribune. It will run in the same six newspapers again on the weekend of November 12.

This is the beginning of a campaign that will also include two new network television and radio ads, to begin airing in January 2007 as part of NAR's $40 million Public Awareness Campaign.

FLASH: The center no longer holds, and today was the day when it all fell apart. S&P admits to the biggest financial con game of all time.

In order for the Great Housing Con Game to work, the bagholders (the buyers of the toxic subprime and liar's loan crap) had to believe that one day they'd get paid back. Even though this garbage was being lent out to people who lied about their jobs, their income and their ability to pay. Or worse yet to people with no jobs, no credit, no income, no honesty, no problem gaming the system themselves and absolutely positively no possible way to make good on the loans once the Ponzi Scheme ended.

Yes, think Casey Serin. Think David Crisp. Think of all the get-rich-quick failed flippers, think the $30,000 income families buying $800,000 homes, think Phoenix, think Miami, think all the sheeple who thought real estate could only go up and up.

So why did the bagholders of these mortgages (China, hedge funds, pension funds, overseas investors), which were so nicely bundled up into neat little CDO's, think they'd get paid back? Why did they think that obvious hilarious loan garbage was worth the price they were paying?

Because the "unbiased ratings agencies" told them so.

Well, not anymore. S&P, one of the three major CDO ratings agencies, now staring lawsuits, jail sentences and the collapse of their game straight in the face, bitchslapped the housing and mortgage market today and simply came clean, in one of the ugliest financial mea-culpas I've ever seen. Simply put, the charade is over. And hundreds of billions, more likley trillions, will now be lost.

So now, the housing collapse goes into overdrive. The Subprime and Alt-A industries die. Hedge funds worldwide fail. Pension funds screw their retirees. Markets crash. China gets pissed. Lending tightens even more. Demand plummets even more. And home prices crash even faster.

It's all over folks. Now we just count up the damage and look for someone to blame.

S&P finally says subprime is mostly junk - New methodology is death knell for the troubled industry

WASHINGTON (MarketWatch) - Standard & Poor's just drove a huge harpoon into the heart of the mortgage credit bubble and it's going to take a long time to clean up the mess once the beast finally dies.

S&P, one of the three main credit-rating agencies that served as enablers of the subprime mortgage boom, announced Tuesday that it would lower its ratings on 612 bonds, a small portion of the mortgage-backed securities it had given its seal of approval to.

But the bigger news is that S&P isn't going along with the charade any more. S&P said it would change its methodology for ratings hundreds of billions of dollars in residential mortgage-backed securities.

And it would review its ratings on hundreds of billions of dollars in the more complex collateralized debt obligations based on those subprime loans.

A lot of debt will be downgraded to junk status. A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money.

S&P's announcement is a death warrant for the subprime industry. No longer will mortgage brokers be able to help buyers lie their way into a home. Fewer stressed homeowners will be able to refinance their mortgage, thus extending and exacerbating the housing bust.

"We do not foresee the poor performance abating," S&P said. Prices will fall, and foreclosures will rise. More mortgage fraud will be uncovered as the tide goes out.

For true HP wonks, you can read the whole nasty report here.

You wanted it, you got it. Announcing "LawrenceYunWatch" and TCLY

David (from DavidLereahWatch and Bubblemeter) and I have put together Lawrence Yun Watch, a little tribute site to the new hack at the NAR (TCDL who?)

I do kinda feel sorry for the little guy - for all I know he's a nice guy, had a good education, just wants a paycheck. But at the same time, there are honest ways to make a living. Lying, deceiving, manipulating and distorting can't be high on the list of what people want to do with their short time on earth. Right?

Lawrence - if you're listening, it's not too late. Resign immediately, apologize for your lies, and throw the NAR under the bus. It would be a housing bubble seminal moment. You can do good in this life - the choice is yours.

Enjoy the new blog HP'ers. It's 100% Yun, 100% of the time. The more he yaps, the more we'll post. Got any TCLY gems post them here and on the BubbleTalk thread so we can get them up at lawrenceyunwatch. Here's one from last week:

As senior economist Lawrence Yun explained further, "... we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter."

The Corrupt David Lereah's lies and distortion blamed on his sunny personality

The excuse Blanche Evans, Realty Times Deceiver in Chief, gave for TCDL's lies are especially galling, blaming his distortions on his having a "sunny personality". For all I know TCDL is a nice sunny guy. But that doesn't excuse the lies and deception, and doesn't excuse the horrific mess he personally helped create. TCDL helped ruin lives folks. What TCDL did was evil.

And Miss Evans, a note for your reference, REAL economists don't lie, distort and deceive. They use theories and evidence to try to come to understandings and the truth.

FAKE economists, like whoever the NAR employs, are paid liars who manipulate data to fool the American people into thinking it's always a great time to pay a real estate clerk a commission.

Have you no shame?

Meanwhile, nice to see Reuters pick up on David at davidlereahwatch. I'm tellin' ya, the NAR and realtors around the country probably have "how can we silence the bubble blogs" meetings. And they know their days are up, because they can't.

WASHINGTON, April 30 (Reuters) - The economist who prodded investors into the U.S. housing boom and has been skewered by bloggers during the bust is leaving a top real estate trade association, the group said Monday.

Still, others excoriate the former bank regulator and economist with the Federal Deposit Insurance Corp. for maintaining a rosy outlook on the home market even while the demand for homes has evaporated.


One blog, David Lereah Watch, cites passages from Lereah's books and his encouraging words about the housing market and asks him to "admit he cheerleaded this destructive housing bubble."


In October, Lereah said that he expected "sales activity to pick up early next year." In recent months, Lereah has pushed his expectations for recovery deeper into 2007 and has trimmed his forecast for home sales for the year

Blanche Evans, the editor of Realty Times, an online magazine for real estate professionals, said Lereah's outlook for the market is a reflection of his sunny disposition.

"That is part of his personality. He is one of the most bright and energetic people but that does not mean that he's a Pollyanna," said Evans, author of "Bubbles, Booms and Busts: Make Money in ANY Real Estate Market."

30 days ago, HP played this April Fool's prank. Today, The Corrupt David Lereah really DID resign

This stunner off the wires today will blow you away. But hey, we all saw it coming...

New York (Fox News) April 1, 2007

David Lereah, Chief Economist of the National Association of Realtors, resigned his position today, effective immediately, as Lereah was under increasing pressure to resign due to rebellion amongst the 1.3 million strong NAR membership and mocking in the media and amongst housing blogs.

Mr. Lereah held a press conference earlier today at NAR headquarters in Chicago, also attended by his lawyer Lirpa Loof.

"For too long I did the bidding of my evil masters at the NAR" said Mr. Lereah, in a hushed tone to start the briefing. "They marched me out as the bubble grew bigger and bigger, month after month, to say 'it's different this time - the fundamentals have changed - housing prices never go down'. Well, we all know how that line of bull turned out."

"They even had me write a book, which looking back on it must seem like a real hoot, called "Are You Missing the Real Estate Boom", later retitled "Why the Real Estate Boom Will Not Bust". And yes, that book, and my series of misleading quotes to the press as the bubble burst, has made me the laughingstock of the nation, if not the world, and caused irreparable damage to the nation, to families and to our economy."

"But today, everything changes. I have resigned my position with the NAR, I renounce 100% of my quotes and behavior over the past five years, I admit the housing bubble was the biggest con, the biggest Ponzi Scheme in world history, and I ask America for forgiveness."

Mr. Lereah went on to say that he will now be volunteering at a homeless shelter in Phoenix, the epicenter of mortgage fraud, realtor greed, and the housing collapse. His lawyer, Lirpa Loof, also confirmed that Mr. Lereah will be donating all of his book profits, and his entire NAR salary for the past five years, to the homeless.

In a related development, the NAR has hired Mohammed Saeed al-Sahaf as its new spokesman and Chief Economist.

Money supply, liquidity, asset bubbles, consumer spending, and the mother of all crashes to come

Man, next you'll hear Bernanke admit that the Fed pumped up money supply and liquidity in order to create a massive housing bubble, which was used to drive consumer spending so as to placate and confuse an American population who had lost their manufacturing base and world competitive position.

But I wouldn't count on it.

Here's the Bank of England last week though, in a stunning admission on their housing bubble cause and effect. What they didn't touch on (yet) is that all asset bubbles deflate, all financial manias die, and all periods of low risk premiums reverse.

Sometimes harshly.

"Investors are likely to take advantage of this ample liquidity and the associated easy credit to purchase other assets, driving risk premiums down and asset prices up," the BoE told parliament’s Treasury Committee on Feb 20th.

"In due course, those higher asset prices may be expected to feed through into higher demand for goods and prices, putting upward pressure on the general price level," the BoE concluded.