Wednesday, March 16, 2011

Not To Belabor The Obvious

But the housing market is crashing again.  The MBAA mortgage purchase index tanked hard again after a 1-week bounce from historically low levels.  The purchase index is 15% lower than a year ago.  Forget the refi index because because refi's do not create new production/growth.  So that you don't have to sift thru the well-spun garbage from Bloomberg or CNBC, here's the report from the source:  LINK

This mortgage indicator is confirmed by today's release of new housing starts, which fell to its lowest level since April 2009.  It's not good that homebuilders and buyers are not ramping up their activity as we go into what should be the seasonally strong period for the housing market.  Of course, if I get time to sift thru the next round homebuilder 10Q's, I'm sure I'll find a lot of accounting grey area manipulation that is hiding cash flow problems and bloated inventories.  Here's the housing starts article:  LINK

The relative activity in the housing market is and has always been considered one of the 3 pillars of major economic activity in this country (the other two being autos and Govt/defense).  Even at its apex, technology only produced 10% of the GDP.  I am predicting that the housing emporer will prove to have no clothing on and there will be some problems in the banking industry and at FNM/FRE that will precipitate a new round of QE - QE-whatever-they-call-it to try and obsfuscate the truth about what they're really doing - in order to attempt to prop up the mortgage market PLUS continue feeding the ever increasingly voracious spending appetite of Obama's Government. 

Greenspan is in the news with a speech in which he blames the current housing woes on the Government.  He is partially correct.  Here's the LINK  But the Truth is that if Greenspan were to abide by the golden truth ("the dude abides"), he would blame himself for 90% of the mess, because he was the "Maestro" who inflated the damn housing bubble in the first place.

I have said since 2002 that Greenspan will hopefully live long enough to see his name go down in infamy once the mainstream media and hoi polloi understand just how catastrophically destructive Greenspan's Fed was to the system (of course, we can debate whether or not he was just following orders from his banking masters, but now here, not now).  There are some comments in that above article which suggest that some people are having that epiphany.

Do yourself, and your family a favor, go buy as much gold and silver as you can and make sure you see the "Atlas Shrugged" movie when it opens.  Here's a link to pre-purchase tickets:  Who's John Galt?


  1. Dave, Given the massive oversupply of housing relative to demand, I'm surprised you don't think it's beneficial that housing starts are low. Seems to me that will help get the housing market back to equilibrium a little quicker. Of course, reduced housing starts are going to hurt the economy in the short-run just as the housing boom helped the economy in the short-run.

  2. The Government shouldn't interfere in the market but the central bankers can?

    WTF...Honestly, I think Greenspan can see the irony in his statement. After all he wrote the Gold standard paper in 1968 and how it links to Freedom.

  3. just added your link on the front page of my blog, keep it coming!

  4. Do you have any energy stocks as well, or do you just favour the PM's? Thanks.

  5. Getting ready to go down on a milk bill? 9.3 million ounces is a milk bill when you consider that they sold 520 million.

    Thus the total number of silver oz standing in this delivery month is as follows:

    4,235,000 oz (served) + 5,110,000 oz (to be served) = 9,345,000 oz

    Yesterday we had 9,550,000 oz standing so we lost 205,000 oz to cash settlements or this is a comex reporting error on OI.

    Ted Butler reported today that he has never seen greater than 50% of oz of silver to be served vs served this late in the delivery month. He also stated that this has never occurred in any metal or any commodity since the comex officially began. I reported this to you yesterday and I am glad that he affirmed this.

  6. If they don't do some POMO today the market will crash according to the CBOE SPX VOLATILITY INDX.

  7. "Priceless Quote From Richard Russell
    On Larry Summers: This doofus practically ruined Harvard when he headed it. I can't think of a worse choice to be chief economic advisor. I wouldn't trust Summers to manage a Starbucks franchise."

    Starbucks does not franchise. I would buy one if they did.