Wednesday, May 12, 2010

Mortgage Finance Index: There's More Than the CNBC Headline

CNBC reported this morning that the Mortgage Bankers applications index jumped 3.9% last week.  On the surface this looks healthy.  If you bother to go to the MBA website and read their actual press release - CNBC and Bloomberg don't typically bother with this, especially if the details belie the headline - you'll find that the purchase applications actually dropped 9.5%.  The increase in the index was from refi applications, which jumped nearly 15% as interest rates dropped last week.  Here's the link:  MBA Finance Index.

The housing market is about to take another cliff-dive, as home buyer tax credit expired on April 30, foreclosures and bank owned housing inventory spike and the "jingle mail" phenomenon - where underwater homeowners hand the house over the bank - becomes more pervasive.  I saw a statistic last night which reported that 23% of all homeowners are now underwater.

While not many actually believe the Government reports and White House smoke-blowing about a recovering economy and improving job market, it's difficult to hide the decaying housing market, especially when "for sale" and "for rent" signs continue to proliferate on a daily basis.  The big banks have marked most of their unsaleable credit paper up to fantasy.  As the underlying asset base - housing and commercial real estate - continues to decline in value, expect that either the Fed will engage in a massive QE2 program or we'll have another big credit market accident later this year. 

13 comments:

  1. RUMOR:

    Germany to Ditch Euro and Return to Mark

    http://prudentinvestor.blogspot.com/2010/05/new-kitco-dem-page-lets-rumors-about.html

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  2. So we can also manufacture some bullshits, ehm rumors... I know for sure goldprice.org provides pricing in DEM not for about a week, but already at least for many months.

    My favorite coin shop in Germany is nearly sold off today, premium on silver seems to be nearly 10 percent points above normal. There is only about like 30 % of usual sortiment listed and some of the stuffs of those 30 % are not in stock -- I have never seen before.

    ... While PHYS is falling like a rock.

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  3. Hopium, better read the comments on the link you provided. It sounds like the story is old news (?)

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  4. stibot, it looks like Europe and especially has really ramped up its gold/silver accumulation. the Austrian mint reported selling more gold bars in the last 2 days than in the whole 1st qtr.

    we know we're nowhere near a top in the metals because Americans are still unloading their gold/silver into Cash4Gold buyers.

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  5. Yes, in Germany are many shops closed or have sold everything - gold and silver.Those selling have a spread from 8-10% or even more.
    How do you call that?

    Are the Europeans more afraid or what?

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  6. Europeans, especially the Germans, understand the role of gold vs. reckless Govt currency debasement. Americans are idiots. They dump their gold/silver into cash for idiots ads they see while watching American Idol or something like that. Americans will start chasing gold when it's over $2000 - at least the ones with any savings left will...

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  7. And how do you go about buying something with a 1 oz. gold coin? Are we going to start clipping again? It's all fiat. We attribute this silly value to Gold based on a old tradition. You can print more money just like you can dig up more gold. Do you expect me to believe that there will be a sudden change world value and wealth from say a professional with a savings account to a brother with flashy four-fingered ring? Take a look around, I overheard four moms at the local grammar school talking about gold over $1200. Sell all that useless yellow crap, buy into a good quality, product producing company and watch gold crash and burn like you were Randolph and Mortimer Duke.

    But then again, I could be wrong.

    I am Sofa King...

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  8. LOL. Well, just today I had my BMW serviced and I paid for it with 2 rolls of silver eagles. The rings the brothers wear are mostly low-grade, 12karat crap. The real wealth transfer will occur when China has accumulated 10k-15k tonnes of gold and then roll our a gold-backed currency and revalue gold up by about 5-10x.

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  9. dave r u gordon_gecko over at zh?

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  10. Must read:

    http://jessescrossroadscafe.blogspot.com/2010/05/jim-rickards-on-may-12-imf-meeting-to.html

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  11. @Anonymous: LOL - no. I didn't even know there was a gordon_gecko at ZH. Durden won't approve me as a comment poster because I used to post comments that exposed his lack of true understanding of a lot of issues. I will say that he is finally understanding the physical vs. paper issues. But he also makes a lot of wild assumptions that aren't always backed by proof (of course, I guess we all do)

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  12. Sofa king--you need to get off the sofa and learn something about gold fundamentals especially when it changes from a commodity to a currency--Housing crash 2 will be undeniable in the US by Aug 10 and the Equity and Bond markets will crash soon after--Gold will value upwards rapidly----Anonymouse

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  13. anon,

    Here is some astro that lines up with your Aug 10 date.

    All the stock mkts are going to crash, that is what the Cardinal T-Square is all about that will be triggered when transiting Moon fills in the empty leg on Aug. 6/7th.

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