It’s Friday, and I liked the above quote so much I decided to use it to kick off today’s discussion. Here’s more from writer Joshua Holland:
Theoretically, if you could reinflate the bubble to some extent by increasing the number of people looking to buy, it’d help distressed homeowners, who would be able to refinance at lower rates or for longer terms, and it’d help lenders, who would have fewer "nonperforming" loans on their books. And it would help the financial industry unwind all those complex "toxic" mortgage-backed securities. In theory.
But nothing in that equation would change the fact that home prices were out of line with the fundamentals of the economy. It also wouldn’t change the crucially important underlying issue: that American families are maxed out in terms of debt, have no savings, and all but the top ten percent haven’t seen their real wages increase in 35 years. For these reasons (and I’m simplifying here), this approach: A) won’t work, and B) even if it were to work, it would only kick the problem down the road a bit. After all, that which is unsustainable shall not be sustained.
Just because it won’t work won’t stop the government from giving it a try. [Let's see what this $15,000 tax credit that has been approved by the Senate does. My bet is- not much.]
So what else should we see today? Is there any stories we should hear? Links to be added to the sidebar? This is an open thread, so please tell us what is on your mind.
Ohio Fraudclosure
UK House Bubble
Northern Virginia Housing Bubble Fallout
Bubble Meter
Mish's Global Economic Analysis
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
I wonder if the NAR has given any donations to the campaigns of any of the senators who thought this up. Just wondering
The article below was written in 2004.
http://www.angelfire.com/in/Gilbert1/tt.html
Notice that no oil price was mentioned for the end of 2008.
It only says that we head for a depression which will last for decades.
I still believe that we are on this exact course.
We will not see any recovery in 2010 as some economist like to propose.
.
The reason is that our economies are based on cheap plentiful oil and energy, and these are all finally beginning to run out.
Our monetary system is based on the same energy principals and not the reverse.
As soon as our economies begin to recover, the energy prices will be driven up rapidly, causing an increasingly more severe recession to depression.
Only SUSTAINABLE activities are of much value, so if you don,t prepare now, much worse is to come.
.
One place to start is to Google “surviving peak oil” .
As I said many years ago and repeat again, We will find out who is correct soon enough.
.
i will tell you what the 15K credit will do. TICK off everyone that purchased a home in 2008. that’s about all it will do. sure, there may be a handful of people on the fence that will be enticed to buy now. but take a 200K home for example. yes you get 15K tax credit, but all it takes is a 7 1/2% drop in prices for that 15K to disappear. and you still have to be able to show income, have good credit, AND put money down. that is the real reason that many people who want to buy….cannont.
AZSaluki-
I agree. When you are looking at the current downside risk, $15K is chump change. First time buyers buying small homes might be tempted, but in this economy, it would take a lot more than $15K to tempt most of us.
doc -
I don’t subscribe to ‘peak oil’. First, we haven’t hit it, or OPEC wouldn’t be scrambling so much to try and prop the prices back up. Obviously, it’s a finite resource, so we will someday…
I strongly believe the reason we’re still using oil is because its cheap, but that does not mean there is not another cheap, plentiful fuel source. We just have not found out how to tap it yet – why bother, when oil is so cheap? Think about it for a minute – for years, cars got ~20 MPG, and people were happy. For over 50 years. With all the other technology out there, we couldn’t increase efficiency? Then, oil hits $4. Now several car makers are making hybrids that easily double that number (my friend gets 70 MPG in his Prius). I think we simply haven’t bothered to seriously look for an alternative yet.
Linenoise -
the Doc has some funny ideas, but on this one he’s pretty sound.
Peak oil is for real. Did you really think the liberation of Afghanistan was to make elementary school education safe for Pashto-speaking girls? Things are so desperate that Western planners actually convinced themselves of the Great Game mirage of pacifying a southern export route for natural gas exports out of Turkmenistan, breaking Russia’s present monopoly. It’s that bad.
The depressed oil & gas prices resulted from Hank Paulson’s one-time effort to “… fire all your guns at once and explode into space.” I don’t think the rest of the world was real pleased with this exercise in financial / economic aggression, and it looks like they might be about ready to stop financing the rounds that have been landing on them.
People are looking at energy alternatives but they won’t be cheap. V + windmills seems to be the best solution to sustainable and insanely expensive power in the future. Let’s hope V is no more toxic than is commonly assumed, and we don’t end up buried under sea squirts or something similarly silly when wars over the stuff end up dumping huge quantities into the environment.
Meanwhile, the guys who developed the IP over on the Left Coast have just finished collapsing. I suppose that’s also a bit of collateral damage from the ABCP fiasco. Funny world.
“VRB Power Completes Sale of Assets”, Press Release, CNW Group -source: VRB, January 30, 2009.
John,
Please don’t misunderstand me or think I’m a nut (which I am). Peak oil in theory is correct. However, noone knows how close we are to the peak. We could be past it, days from it, or it could be generations or even millennia away. Besides, “peak” is a subjective term when speaking of economics.
The biggest flaw of peak oil theory (and it’s a doozy) is that it was based on steady and growing demand. It is not even remotely based on current to-date economics understanding. It is scientifically dishonest to not recognize that demand and supply are intertwined. And that linenoise is absolutely 100% spot on. As oil becomes too expensive with all of the current subsidies and externalities, something else will replace it. First partially, and perhaps later permanently and completely.
I can with a fair level of certainty say that $100 oil is unsustainable in the long run (at least at today’s present dollar value). When it made a run above $80, it’s fate was sealed. It was a bubble plain and simple.
With all of the speculation and dollars floating around in the world and not finding its way into consumers inflation, it will inflate assets. First internet stocks, then houses, then oil, now gold. It’s all interrelated. maybe it’ll next flow back into stocks, or just inflate the gold bubble beyond belief like houses. Who knows. But any way you look at it, oil will not go back to $150 any time soon. That’s my prediction.
Chuck Ponzi
For Chuck ponzi. Oil is limited.People will use it until it runs out.When gas was over $4/gal. people in US drove about 6% less.
It went up aroung 100% in say 10 months and they reduced consumption 6%. 6000 products made from oil.5000 new net cars each day sold worldwide.Everyone in China , India , Russia,
Eastern Europe (where I just was)wants a car.
Inflation is the growth in money supply.
Inflation is a CURRENCY phenomenon.
http://en.wikipedia.org/wiki/Inflation
The term “inflation” once referred to increases in the money supply.
“Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.”
Seen the monetary base lately?
http://research.stlouisfed.org/fred2/series/BASE?cid=124
Add roughly $8,000,000,000,000.00
http://www.jbs.org/index.php/jbs-news-feed/4199
A trillion here a trillion there ,we are talking real money.
Here is another way to view the money supply
http://en.wikipedia.org/wiki/Money_supply
See below at bottom of post.
Now people use “inflation” about whatever they want.
Too many cars on XYZ dealers lot? XYZ car dealer has “inflation”. This is totally wrong, XYZ car dealer ordered more cars than he could sell.
The more fiat “currency “ printed ,the more inflation EVENTUALLY will occur.
Gold is manipulated for the moment. See gata.org.
Redemptions by heggies, pension funds, mutual funds, off shore funds, investors selling US stocks and simply giving up. When all these sellers sell, it goes into USD. Most fiat currencies get real strong before they get weaker or crash.
Many just leave it in the USD. The EURO is weak now, so it is not a better choice.
Deflation. in Oil, wheat ,corn, exists, it’s a reversion to the mean in a long term bull market. In housing it was a bubble made by Greenspan,Dodd,Frank.
Gold/silver is the oldest medium of exchange known.
In 1990 my wife lived in a country where the currency became worthless overnight.
Many problems existed. The country was in chaos. Many people suffered.
Imagine if gold/silver was the currency and not some paper fiat garbage.
I’m aware you/I can’t “live in“gold or eat it. Same with the USD , EURO , etc.
To keep no gold and think that the USD will always be strong is foolish. To keep most or all in gold is probably not the wise route either.
1.2 trillion dollar deficit for 2009 and 67 trillion promised for next 30 years.
http://www.youtube.com/watch?v=O_TjBNjc9Bo
Chart the dollar and gold for any 10 year period you want and or chart gold vs. the dollar since 1971 (when we went off the gold std.). Report back.
ALL fiat currencies fail
ALL.
I do think gold may head down for a few months and even test 800-ish before going $ 1500 in 2009 and $3000 to $5000 by 2012.
Gold/silver miners beat most stocks during depression/inflationary times.
Buy AUY, MFN, GG, NAK, SLW
Also of interest.