I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: Sep 29, 2005 Posts: 456 Location: I heard we are not the real America..Eugene, Oregon.
Posted: Thu May 22, 2008 7:52 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
I had a friend who was offered a all expenses paid trip to Vegas last weekend from a wealthy friend and took her up on it. To make a long story short...my friend had a horrible wake up to reality trip...It's was actually good for her! Aside from being disgusted by watching this rich person drop 12K cash on new shoes and clothes...of which she does every 2 months, my friend said that what really disgusted her, besides everything in Vegas, was how the employees at the spa filled her in on how they managed the foreclosures reality in Vegas:
-Buy another house...smaller...piece of crap in a shitty area.
-let the bank take the big expensive house
-declare bankruptsy on all c cards, etc....
-Move into the new shack
Everybody does it she was informed.
I guess it's just another way to play the game?
Still, very Vegas if you ask me.....YUK!
catbox _________________ Punk is not really a style of music. It was more like a state of mind.
-Mike Watt
Yes, you read that correctly. A bunch of banks have lent to Countrywide to allow it to make interest payments to another bunch of lenders.
So there's nudging £300m in aggregate of mark-to-market losses for Countywide's lenders - which is fairly disturbing for a deal that's less than a year old.
It would be interesting to know whether the investment banks that advised on the deal, Goldman Sachs, Credit Suisse and Deutsche, kept any of the lovely debt for themselves, when they trousered the transaction fees. If so, they'll be part of the sorehead brigade that's woken up after the end of the buyout party.
Claims of wrongdoing hit Moody's - the share price, no lawsuits or regulatory action yet. _________________ Volatility. When life isn't exciting enough.
The fiat-money experiment and the monsters it's spawned have broken out of the lab and onto the street...
WHEN ALBERT HOFMANN – the Swiss chemist who discovered LSD – passed away at the start of this month, newspaper editors the world over reported it as the death of the man "who experienced the first ever bad trip."
But Hofmann's hallucinations seem little worse than most acid-induced visions. Or so people tell us...
"Beginning dizziness," he wrote in his lab journal for 19 April 1943. Looking to find a stimulant for the circulatory and respiratory systems, he'd just concocted – and taken – a big dose of lysergic acid diethylamide-25.
"Feeling of anxiety," he noted, before adding in due course "Difficulty in concentration. Visual disturbances. Desire to laugh."
Finally, Hofmann scrawled the words "most severe crisis". Then he fled the lab on his bicycle.
...
One in four middle-aged workers surveyed by the AARP says they're delaying retirement because of the crunch. The same proportion is withdrawing funds from pension and other savings accounts. The youngest baby-boomers are also failing to pay utility bills, reports MarketWatch – and "even cutting back on medications."
Well, they're cutting back on reported medications at least. Who can say what's being cooked up at home with the kids' old chemistry sets, dusted down from the attic?
...
"Over the counter derivatives outstanding?" the professor asked. "Well, if you'd asked someone to name that figure in 1987 it would have been a very small number indeed.
"Today we're talking about $450 trillion," said Ferguson. (He wasn't to know back in December that the global outstanding total of over-the-counter derivatives based on debt, currencies, commodities, stocks and interest rates had in fact expanded by 44% in 2007 to $596 trillion...)
A good read, enjoy
mark _________________ “It is only through labor and painful effort, by grim energy and resolute courage, that we move on to better things.” —Theodore Roosevelt
Posted: Fri May 23, 2008 7:42 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
As the credit markets contract, investors have turned to more insurance to hedge their bets and cover their butts. In doing so they have increased overall systemic risk, not reduced it. To pay out all the claims covered by the derivatives market, would now take ten times the amount of all the money in the world. Who is going to pay for these losses that are leveraged by 10 to 1 when they occur. This is the largest upside down pyramid scheme in history, and it can only end badly!
Quote:
Derivatives Market Grows to $596 Trillion on Hedging
May 22 (Bloomberg) -- The market for derivatives expanded at the fastest pace in at least a decade last year as the global credit crisis spurred trading in contracts used to hedge against losses, according to the Bank for International Settlements.
Derivatives, including those based on debt, currencies, commodities, stocks and interest rates, expanded 44 percent from the previous year to $596 trillion, the Basel, Switzerland-based bank said in a report today. The amount of credit-default swaps protecting investors against losses on bonds and loans more than doubled to cover a notional $58 trillion of debt.
``The credit crisis supported growth'' of the market, Naohiko Baba, an analyst at BIS who co-wrote the report, said in an interview. ``Fixed-income markets experienced big turmoil so had more hedging needs.''
Joined: Mar 18, 2005 Posts: 2691 Location: Minnesota
Posted: Fri May 23, 2008 9:48 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Well, we barely got thru most of the subprime issues...Now comes the 2nd wave, Alt-A foreclosures.
Yup, SUUUUUUREEE it's all getting better! If the Alt-As don't utterly destroy the banking system, then we'll have the 3rd wave (Option Arms).
Quote:
Delinquencies for Alt-A mortgages rated between 2005 and 2007 are climbing, with total delinquencies rising as high as 17 percent in some cases, more than 6 percentage points higher than previous estimates,
Posted: Fri May 23, 2008 8:40 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
RonMN said:
Quote:
Yup, SUUUUUUREEE it's all getting better! Laughing If the Alt-As don't utterly destroy the banking system, then we'll have the 3rd wave (Option Arms).
Then with 20 million households seeing falling evaluations and going ever more underwater on their home, and defaulting right and left on their HELOCs - what chance could the prime market have?
Something about a snowballs chance in hell on a hot afternoon comes to mind!
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Sat May 24, 2008 3:45 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
emersonbiggins wrote:
FreddyH wrote:
The economic models reveal that consumer expenditures, a proxy for GDP, rises and falls with families' perception of their net worth. This Wealth Factor will not invite a Recession 'til the USA nat'l home price avg declines below the 2002 threshold. Such a paper loss will induce consumers to pull back on spending and confidence...
Uhhh, the spigot of liquidity that took the form of $100k HELOCs has been effectively stopped dead in its tracks. That, and that fact alone, "will inducehas already induced consumers to pull back on spending and confidence." Augmenting annual incomes with your home ATM is a thing of the past. The 2002 threshold that you mention is worthless; negative equity is negative equity, and the historically high rate of turnover in the housing market makes an owner who bought their current house back in 2002 most definitely a "long-term" owner.
Your opinion is plain silliness. The 2002 avg home price of $204-k is today 304-k. The wealth of the avg american is enormously stronger. Your preoccupation of the few losers that bought at the height of the realty bubble is misguided...
Neither writeoffs nor arrears rates have reached the levels we saw in the Recessions. _________________ www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits)
Posted: Sat May 24, 2008 4:24 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
FreddyH wrote:
emersonbiggins wrote:
FreddyH wrote:
The economic models reveal that consumer expenditures, a proxy for GDP, rises and falls with families' perception of their net worth. This Wealth Factor will not invite a Recession 'til the USA nat'l home price avg declines below the 2002 threshold. Such a paper loss will induce consumers to pull back on spending and confidence...
Uhhh, the spigot of liquidity that took the form of $100k HELOCs has been effectively stopped dead in its tracks. That, and that fact alone, "will inducehas already induced consumers to pull back on spending and confidence." Augmenting annual incomes with your home ATM is a thing of the past. The 2002 threshold that you mention is worthless; negative equity is negative equity, and the historically high rate of turnover in the housing market makes an owner who bought their current house back in 2002 most definitely a "long-term" owner.
Your opinion is plain silliness. The 2002 avg home price of $204-k is today 304-k. The wealth of the avg american is enormously stronger. Your preoccupation of the few losers that bought at the height of the realty bubble is misguided...
Neither writeoffs nor arrears rates have reached the levels we saw in the Recessions.
Stop your blatant lying about the housing situation.
The so called wealth of the avg American is heavily skewed because of the wealth of the Uber-Rich from the past ten years.
In fact, what you label as avg American wealth is no more than empty rhetoric (read: debt writ large).
Americans, for the past fifteen years sold cows to buy milk. Now them cows are coming home to roost (moo). _________________ Civilization: the biosphere's skin disease
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Sat May 24, 2008 6:01 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
firestarter wrote:
FreddyH wrote:
emersonbiggins wrote:
FreddyH wrote:
The economic models reveal that consumer expenditures, a proxy for GDP, rises and falls with families' perception of their net worth. This Wealth Factor will not invite a Recession 'til the USA nat'l home price avg declines below the 2002 threshold. Such a paper loss will induce consumers to pull back on spending and confidence...
Uhhh, the spigot of liquidity that took the form of $100k HELOCs has been effectively stopped dead in its tracks. That, and that fact alone, "will inducehas already induced consumers to pull back on spending and confidence." Augmenting annual incomes with your home ATM is a thing of the past. The 2002 threshold that you mention is worthless; negative equity is negative equity, and the historically high rate of turnover in the housing market makes an owner who bought their current house back in 2002 most definitely a "long-term" owner.
Your opinion is plain silliness. The 2002 avg home price of $204-k is today 304-k. The wealth of the avg american is enormously stronger. Your preoccupation of the few losers that bought at the height of the realty bubble is misguided...
Neither writeoffs nor arrears rates have reached the levels we saw in the Recessions.
Stop your blatant lying about the housing situation.
The so called wealth of the avg American is heavily skewed because of the wealth of the Uber-Rich from the past ten years.
In fact, what you label as avg American wealth is no more than empty rhetoric (read: debt writ large).
Americans, for the past fifteen years sold cows to buy milk. Now them cows are coming home to roost (moo).
Housing prices are in general correlated to affordability. There have been several boom/bust cycles in this industry globally. The current usa prices should be in the $225,000 range and a return to the mean correction is under way. But it is a mere hiccup in context with the secular uptrend.
Historically, the more probable remedy is a multi-year flatlining than an agressive downturn. This would result in a $275,000 avg price in 2013 and/or $300,000 in 2018 and a correction to the secular price/income ratio.
It is in the UK where the situation may be dire. I don't track their affordability index carefully, but it would appear that the 187,000 Pound avg should be in the 100,000 vicinity.
In short, whereas the USA requires a 26% further correction, the UK faces one of 47% over time. This will indeed temper GDP growth in the UK for a decade.
Posted: Sat May 24, 2008 9:17 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
threadbear,
I used to drink with a fella like Freddy. He always said black when I said white. You know the type. They like to be argumentative for the sport of it. Freddy's posts are a waste of bandwidth and my/our time. I won't put him on ignore, but I'm going to try from here on out not to feed the troll.
p.s., threadbear, I just finished watching a delightful Canadian film called Away From Her, about a woman's battle with Alzheimer's. Julie Christie does a magnificent acting job. It's worth your time. _________________ Civilization: the biosphere's skin disease
Posted: Sat May 24, 2008 9:42 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
threadbear wrote:
Freddy, I'll just come out and say it. Your posts are a bit dingbat-ish.
How so? The most recent one seems logical. If, through lack of understanding inflation and speculation, the housing market takes off faster than inflation, then over time it will correct itself, likely through further inflation and loss of GDP relative to other places, since people aren't attracted to the idea of selling for a "loss", even if inflation will eventually incur the same "loss". _________________
Posted: Sat May 24, 2008 9:53 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
yesplease wrote:
threadbear wrote:
Freddy, I'll just come out and say it. Your posts are a bit dingbat-ish.
How so? The most recent one seems logical. If, through lack of understanding inflation and speculation, the housing market takes off faster than inflation, then over time it will correct itself, likely through further inflation and loss of GDP relative to other places, since people aren't attracted to the idea of selling for a "loss", even if inflation will eventually incur the same "loss".
Huh? Why do you think Congress and Wall Street are FIGHTING the correction so hard then? Apparently these entities are operating on the assumption that a correction in the housing bubble is a BAD thing. Might it have something to do with the trillions of dollars of gearing that will unwind if housing corrects back to its historical mean? Sorry, but Freddy's full of real hot air here. _________________ Civilization: the biosphere's skin disease
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) This article really puts the economic situation into perspective.
If the Alt-As don't utterly destroy the banking system, then we'll have the 3rd wave (Option Arms).
