Come on! Work with me people! Fear has to be here by now, eh? Let's get this crash over already and move on.

As the CEPR pointed out in their housing crash report the other day, Americans will be best off if we get this housing crash over quickly, versus the 10+ years Japan wasted.

If home prices are simply "Marked to Market", the old prices and expectations thrown away, then we could move on.

Home would start selling again. Builders could eventually start building again. Losses would be known, retirees would be able to prepare, new home buyers wouldn't go bankrupt, and existing home debtors wouldn't go out spending money they don't really have.

Or we can do this the long and painful way.

So work with me, people of America. Your home isn't worth anywhere near what it would have sold for in 2005. The funny money days are over. "Liar's Loans" are no more. Housing speculation is dead for a generation. The Ponzi Scheme is over.

And your house is worth what it was in 2000, at best.

Now deal with it.

Here's the thinking from the CEPR on this:

It is worth noting that from the standpoint of current homeowners and prospective homebuyers a quick unraveling is more desirable than a gradual one, even if the macroeconomic consequences may be more severe.

If a homeowner has a house that will lose a substantial portion of its value over the near future, then she will be better situated to deal with this loss of wealth if it happens sooner rather than if it is delayed for a substantial period of time.

For example, if the homeowner is preparing for retirement, she would benefit from knowing sooner rather than later how much equity she can actually expect to have accumulated from her house. This would allow her to plan her savings, and possibly her retirement decision based on her actual wealth rather than wealth that is only a bubble illusion.

Instead of slashing house prices for all to see, desperate builders go crazy with incentives, and increase the blatant realtor bribes

Got a few thousand homes that nobody can buy anymore, that are still insanely overpriced? Well, seems like the best thing to do at that point is cut the price, right? As in drastically cut the price?

Nope, not if you're a desperate new homebuilder. If you simply slash the price, then you've essentially "Marked to Market" (there's those damn three words again) your entire inventory of unsold homes - and also those of your competitors. And then it would be clear to everyone that the game was over.

So what are they doing? They're blatantly distorting the "median price", and are out trying to move dead inventory with crazy incentives, which in my book is simply mortgage fraud as the home is wildly overappraised versus true value. Plus they're paying bribes to realtors to steer unsuspecting sheeple into overpriced sh*tshacks. Yup, gotta love those meaningless NAR ethics.

Here's some of the incentives: No payments for X months. We'll pay your property tax and home insurance. Free cars. $100,000 upgrade packages. Pools. Garages. Closing costs. Flooring. And hookers & cocaine (well, not yet, but just wait)

And don't forget, in the middle of all this, there's blatant collusion and pricefixing now amongst the homebuilders... FLASHBACK: Here's Hovnanian's desperate CEO a few days ago, in complete violation of price fixing statutes:

"Raise prices," he said. "Buyers aren't buying because they think you're going to lower prices again. There's interest but there's fear. Raise prices 3-4 percent. And quit giving discounts.''

Here's the article on incentives. So remember, when you hear the NAR and US Government numbers on housing median prices, just laugh. And laugh and laugh some more.

Perks, Price Cuts Become More Lavish As Developers Grow Increasingly Desperate; Would You Like a Pool With That?

With the housing market looking increasingly frail, home builders and real-estate agents are going to new extremes to attract buyers, dangling lavish incentives and slashing prices.

Builders generally try to avoid outright price markdowns, in part because it angers prior home buyers who don't want prices in their subdivisions forced down.

In markets such as Denver and Seattle, builders are increasingly willing to pay agents substantially larger commissions -- as much as 4% of the home's sales price, up from 1.5% or less -- to help unload inventory homes

Fed Governor Poole just yesterday - "Only a calamity" would justify interest rate cut. The market and MSM got it wrong today.

The bankruptcy of Countrywide (I'm short) and a classic run on the banks would be a calamity. 10 Million homedebtors losing their homes would be a calamity. $8 Trillion in housing wealth going bye-bye would be a calamity.

What Poole told the market yesterday is that the Fed ain't gonna lower rates anytime soon, and not until something big happens (i.e CFC goes BK). And the market and MSM got it wrong today - the Fed didn't lower, they simply opened up the discount window. Big difference.

They opened the window to improve liquidity. They didn't cut the ever-important Fed Funds rate, which is what Poole was talking about. Those exploding ARMs are still exploding, Mozilo is still selling, Countrywide owns cancer loans, panicked customers and a defunct business model, housing is in meltdown, and the ARM homebagholders don't have any access to refi loot anymore. Tilt.

Bottom line - lowering the discount rate, or even the funds rate, won't make the bad man go away - they were called "liar's loans" for a reason don't forget... And don't forget that the Fed is hilariously for the first time taking mortgage CDO's as collateral. In other words, the lender of last resort (the taxpayer), like with the S&L disaster, is about to get slaughtered.

Here's Poole yesterday:

William Poole, president of the St. Louis Federal Reserve Bank, said the subprime mortgage rout doesn't threaten U.S. economic growth, and only a ``calamity'' would justify an interest-rate cut now.

Poole, who confers regularly with regional business contacts and votes on rates at the Fed this year, said in an interview yesterday that ``no one has called up and said the sky is falling.'' The best course is for officials to assess economic figures, including the August jobs report, when they next convene on Sept. 18, he added.

``It's premature to say this upset in the market is changing the course of the economy in any fundamental way,'' Poole, 70, said in the interview at the bank's St. Louis headquarters. ``If the Federal Reserve were to act when it turns out there is no impact, then clearly the market would say these guys really don't have the intelligence they need to have a policy actually based on solid evidence.''

Special open thread to talk about the housing collapse, stock swoon and mortgage meltdown - are you prepared?

"Cash is king"

Seemed like three silly words to so many before the crash hit. But now with global central banks rushing hundreds of billions of dollars worth of desperately needed cash to failing banks who were holding US mortgage cancer while lending to imploding hedge funds, "Cash is king" isn't a theory - it's reality.

What are you doing out there during the meltdown? Did you prepare, or did you get whacked? And do you think the Fed's panicked discount rate cut this morning will stop the bleeding? Or is it a sign of FedPANIC?

WASHINGTON (AP) -- The Federal Reserve approved a half-percentage point cut in its discount rate on loans to banks Friday, a dramatic move designed to stabilize financial markets roiled by a widening credit crisis.

HousingPANIC Stupid Question of the Day

Rightly or wrongly, will Americans come to blame George Bush (the worst president ever) and the GOP for the housing crash?

Bonus - will the housing crash be the #1 issue on voters' minds in 2008? And will large past campaign donations from the NAR and NAHB be candidate-killers?

The most important paper you'll ever read in your life - CEPR's "Midsummer Meltdown: Prospects for the Stock and Housing Markets.”

Folks, you must, I repeat, YOU MUST, not only read this paper (go to link and hit the PDF) on the US housing and mortgage meltdown from Dean Baker and the CEPR, but you must print it out or send it to anyone and everyone you care about. You owe it to yourself to read the whole report, two or three times if you need to.

Yes, some people still won't get it. Some people will refuse to listen. Some are corrupt and don't want the truth getting out. And many folks out there are just too dense to understand (supply? demand? huh?). But at least you will have tried. And you will have prepared.

Here's some of the key points from this paper - the most well written, thorough, explanatory and shocking expose I've ever seen on the US housing bubble and crash - and just think, this cancer will spread around the world... Get ready.

* Total loss of wealth with the collapse of the housing bubble and stock market will be $8 Trillion to $12.5 Trillion (or more if the crash overshoots)

* Real economists who were warning about the bubble were ignored by the MSM in favor of fake economists at NAR and NAHB

* There is no factor of supply and demand that led to an $8 Trillion housing bubble - and no increase in rents to justify it.

* Inventory of unsold homes is 50% above the previous record - and the inventory of vacant units for sale is more than 100% higher than the previous record, while rental vacancy rate for owned units is soaring

* Homeowners are not prepared for a sharp drop in housing prices - and will enjoy a much less comfortable retirement than they had anticipated

* Median Price reports during the meltdown will be deceiving, as mortgage meltdown decimates the affordable home buyer pool, skewing median purchase price in favor of more expensive homes - Case Shiller index only good gauge available

* Very severe recession coming, pension shortfalls, and annual consumption drops of $415 Billion to $950 Billion

FLASH - Right on schedule, panic and the run on the banks has now commenced. No surprises for HP'ers, shock and awe for everyone else

Even I'm surprised and amazed at what a Great Unwinding and Panic looks like in real life. Theory is one thing, and damn, we nailed it there, but to see it in action is, well, quite stunning. Trillions are going to be lost over the next few months. Trillions.

Prepare for more of this run on bank stuff... And if you have more than $100,000 exposed in any FDIC account, or if your accounts aren't FDIC insured, or god forbid, if you have ANY funds with Countrywide or IndyMac (I'm short), then what are you doing reading this blog - get down to the bank and get your cash out now!

A rush to pull out cash - Worried about the stability of mortgage giant Countrywide Financial, depositors crowd branches.

Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.

At Countrywide Bank offices, in a scene rare since the U.S. savings-and-loan crisis ended in the early '90s, so many people showed up to take out some or all of their money that in some cases they had to leave their names.

In West Los Angeles, a Countrywide supervisor brought in from another office served coffee to more than 25 people waiting calmly for their turn with the one clerk who could help them.

Bill Ashmore drove his Porsche Cayenne to Countrywide's Laguna Niguel office and waited half an hour to cash out $500,000, which he then wired to an account at Bank of America.

"It's because of the fear of the bankruptcy," said Ashmore, president of Irvine's Impac Mortgage Holdings, which escaped bankruptcy itself recently by shutting down virtually all its lending and laying off hundreds of employees.

"It's got my wife totally freaked out," he said. "I just don't want to deal with it. I don't care about losing 90 days' interest, I don't care if it's FDIC-insured -- I just want it out."