Joined: Jun 18, 2005 Posts: 3886 Location: In a van down by the river
Posted: Sun Aug 05, 2007 9:06 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
What we are seeing happening now will be unlike anything that has happened before.
The Great Depression was an economic crisis what we are facing is an economic crisis and a physical crisis. During the great depression the physical energy was there to get us out.
Now as we enter this new depression, whenever we try and grow are way out we are going to be smacked down by PO.
Posted: Sun Aug 05, 2007 9:16 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
The day I walk out and look at the underclassmen parking lot of my local high school and find it empty will be the day I know we have reached the tipping point. There is plenty of oil in this country if we cut back consumption to 1929 levels.
Joined: Oct 23, 2004 Posts: 5882 Location: New Jersey
Posted: Sun Aug 05, 2007 10:04 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
shortonoil wrote:
Roccland said:
Quote:
The Fed may lower rates Tuesady. If they do that, the Amero would be on the streets Wednesday.
With the rest of the world’s central banks raising rates, and the MBS mess scaring the crap out of investors all over the world, if the FED lowers rates Tuesday, they will have to find a few more super tankers to help haul the money out of the US. Capital flight out of the country will go from a trickle to a flood. The bond market has already decided that risk has not be adequately factored into interest rates. For the FED to drop rates would be a disaster. One, that I don’t think they are going to want to face just to pass a few bucks to the poor housing market; a market that is already DOA. Anyway, it only represents the loss of 2 or 3 million more high paying jobs; when is the last time that anyone in Washington cared about that?
Most likely, the Fed will not immediately resort to lowering rates and instead will ease monetary policy first.
However a 'secret' easing of interest rates and/or large additions to the monetary base are also possible. After 9/11, the Fed reduced the Fed Funds target rate from 1.0% to 0.5% and added $100 billion of new money to the financial system - but made no formal announcement. Now you can read the Fed minutes – released with a five year delay - which explains what happened. Please also note that the Fed is keenly aware of the importance of oil to the economy.
Quote:
Indeed, one can envision a scenario--it’s a low probability scenario but scarcely zero--that this tragic event could create a fairly pronounced and significant shift in the political structure in the world and that as a consequence, the areas that in the last several decades have been of longer-term concern, mainly those relating to the availability of crude oil, could conceivably change.
We’re in an emergency situation. I think 50 basis points is the right amount.
It appears to me--with the combination of discount window borrowing yesterday, RPs, overnight overdrafts, and the Fed float--that we’ve added about $100 billion worth of liquidity. So it would be hard to imagine the availability of liquidity as an issue.
The only apparent restriction to the Fed's inflationary policies is market awareness that things are spinning out of control. Therefore to a great extent the Fed wants to manage expectations without causing panic. Once panic sets in, most likely a panic concerning the value of the US$, the game is over. _________________ It's already over, now it's just a matter of adjusting.
Last edited by DantesPeak on Sun Aug 05, 2007 10:23 am; edited 1 time in total
Posted: Sun Aug 05, 2007 10:16 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
Cloud9 wrote:
The day I walk out and look at the underclassmen parking lot of my local high school and find it empty will be the day I know we have reached the tipping point. There is plenty of oil in this country if we cut back consumption to 1929 levels.
Quote:
When 1929 began, there were in storage 625,000,000 barrels of crude oil, representing excess of production over consumption. Production during 1929 totaled about 200,000 barrels a day over consumption, so that at the end of the third quarter the 600,000,000 barrel excess had increased to 675,000,000 barrels, or about enough for eight months consumption. During 1928 oil wells produced about 900,000,000 barrels; during 1929 the production will reach an even billion.
675/8=84 84/30= 2.8 mbpd daily consumption in 1929
So, from 21 mbpd to 2.8 mbpd? 87% reduction?
But you are right. We produce about 5 mbpd, so we will have 2.2 mbpd of excess! _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Joined: Oct 23, 2004 Posts: 5882 Location: New Jersey
Posted: Sun Aug 05, 2007 10:21 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
Eli wrote:
Greenspan after 911 and the dot com. bubble burst lowered interest rates and created this whole housing boom. The other thing it did was also help US business that were in serious trouble stay afloat. Not just home loans got cheaper, corporate loans got cheaper.
Greenspan felt that you could loosen the purse strings encourage economic growth then slow it down once things got more stable. People thought he was a friggin genius, well the problem is that no one ever slowly let the air out of this credit bubble and it is now collapsing hard and fast.
This isn't a crisis for the man on the street so much but the gods on wall street are in the midst of financial Armageddon.
Horrible hyper inflation is one way to get out of this, make the debt held by the Chinese worth next to nothing, and a loaf of bread will be a days wage.
This thing was planned but all these guys honestly would like for the game to just continue as it did.
This sums things up – the Fed has created increasingly larger bubbles over the last 50 years. New bubbles have been created to overcome previous recessionary/deflationary economic trends, and the bubbles have become more frequent and larger.
However with housing bubble collapse problem so huge, only the very big new bubble of hyper-inflation may postpone a deflationary collapse this time. (Again it's not clear if this policy will work, or if it is even a good idea to pursue).
The Chinese, Japanese, etc., have accepted their role as bag holders for depreciating US dollars, but there is a limit to how much even they can tolerate. Since the amount of dollar purchases by foreign governments and central banks is now at record levels, it does however appear they are still willing to let the bubble making process continue – for now. _________________ It's already over, now it's just a matter of adjusting.
Posted: Sun Aug 05, 2007 2:39 pm Post subject: Re: Housing Boom Officially Over - Collapse Imminent
CNBC wrote:
Market Outlook: Analysts See Opportunity in Volatility
"Start by shedding the weakest sectors, such as home builders, mortgage lenders, investment real estate, REITs, most banks and brokerage firms and companies that depend most heavily on these industries," advises Martin Weiss, senior editor of Money and Markets.
Translation: Sell everything to do with property and financial services.
Instead they suggest gold, foreign currencies (only a sucker would buy dollars, but they can't say that), and, uh... Microsoft.
CNBC wrote:
"Microsoft has been a sleeping giant," Hardesty said. "It's been waiting for new product and now we have Vista. As Vista is adapted, it will make obsolete basically all the computers that are currently in place."
Tell that to the Chinese.
Meanwhile...
CNBC wrote:
Vince Farrell, managing director at Scotsman Capital, says it would make sense for the Dow to bottom between 13,000 and 13,300. "A 50% retracement in the Dow would take it to 13,000," he said. "A three to five percent correction is very typical. That would be 13,300."
"Either way," says Farrell. "That's a very normal move. A 5% correction happens all the time."
"I've seen this movie before. I'm too old to let it bother me," he said.
"If this becomes a full blown crisis, which it's not, the Fed will ride to the rescue," he said.
Joined: Jun 18, 2005 Posts: 3886 Location: In a van down by the river
Posted: Tue Aug 07, 2007 7:58 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
Another development in the housing come a part is the fact that banks are eliminating second mortgages.
This is a huge, because people would often take a second so they could get a house for no money down.
The other thing everyone was doing was taking out a seconds to buy furniture or do home improvements. Second mortgages will come back but their rates will be closer to credit card rates.
It becomes clearer by the day that we are headed into recession and with PO, breathing down are necks it would be more accurately called a depression.
Joined: Oct 23, 2004 Posts: 5882 Location: New Jersey
Posted: Tue Aug 07, 2007 10:21 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
Eli wrote:
Another development in the housing come a part is the fact that banks are eliminating second mortgages.
This is a huge, because people would often take a second so they could get a house for no money down.
The other thing everyone was doing was taking out a seconds to buy furniture or do home improvements. Second mortgages will come back but their rates will be closer to credit card rates.
It becomes clearer by the day that we are headed into recession and with PO, breathing down are necks it would be more accurately called a depression.
The mortgage problem is, somewhat counter-intuitively, also affecting high income groups. Mortgage rates for jumbo mortgages have risen rapidly lately.
Quote:
Mortgage Fears
Drive Up Rates
On Jumbo Loans
By JAMES R. HAGERTY
August 7, 2007; Page A1
Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, in the latest sign of rising anxiety among lenders and investors.
This surge in rates on so-called jumbo loans is particularly notable because rates on 10-year Treasury bonds have been falling. Normally, mortgage rates move in tandem with Treasurys, but market jitters have caused investors to ditch mortgage securities.
Lenders -- having already slashed lending to subprime borrowers, as those with weak credit records are known -- now are jacking up rates on jumbo mortgages for prime borrowers. These mortgages exceed the $417,000 limit for loans eligible for purchase and guarantee by Fannie and Freddie. They account for about 16% of the total mortgage market, according to Inside Mortgage Finance, a trade publication, and are especially prevalent in California, New Jersey, New York City, Washington, D.C., and other locales with high home costs.
Lenders were charging an average 7.34% for prime 30-year fixed-rate jumbo loans yesterday, according to a survey by financial publisher HSH Associates. That is up from an average of about 7.1% last week and 6.5% in mid-May.
WSJ
subscription may be required _________________ It's already over, now it's just a matter of adjusting.
Joined: Sep 16, 2004 Posts: 4403 Location: Southwest WI
Posted: Tue Aug 07, 2007 11:14 am Post subject: Re: Housing Boom Officially Over - Collapse Imminent
gnm hit it on the head. You can cut consumption, but you are going to have roving hoards of unemployeed looking for something to do and it probably won't be pretty.
I wouldn't mind seeing the FED drop rates and see how the Chinese and other borrowers respond. _________________ "Oil is going up because we use too much oil, and the capacity to replace reserves is dwindling"
-President Bush 11/07/07
Posted: Tue Aug 07, 2007 3:06 pm Post subject: Re: Housing Boom Officially Over - Collapse Imminent
Anybody watching the markets today
Talk about a roller coaster. There's your PPT hard at work for you.
btw, I added in the Canadian TSE (Red) for an interesting Side bar. Notice how the Canadian exchange lags but follows the American's at first, but then gives up as nobody can tell what the hell is going on. _________________ Angry yet?
Posted: Tue Aug 07, 2007 10:02 pm Post subject: Re: Housing Boom Officially Over - Collapse Imminent
FoxV wrote:
Anybody watching the markets today
I watch everyday! save for the weekends
Yes I know it's bad for my health --> wouldn't be surprised if I die of a heart attack at the age of 65. But it's my crack and I can't get enough of it.
Posted: Wed Aug 08, 2007 6:30 pm Post subject: Re: Housing Boom Officially Over - Collapse Imminent
cube wrote:
FoxV wrote:
Anybody watching the markets today
I watch everyday! save for the weekends
Yes I know it's bad for my health --> wouldn't be surprised if I die of a heart attack at the age of 65. But it's my crack and I can't get enough of it.
We had some good crack today huh? I'm about ready to buy a tin foil hat after that crap.
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