The Golden Truth: Oops! Looks Like My New Year's Housing Call Is Going To Be Right

Thursday, April 7, 2011

Oops! Looks Like My New Year's Housing Call Is Going To Be Right

Please do not mistake this post as being some sort of celebratory "end zone" or "grave" dancing. But I have been criticized and mocked for my views on housing and the economy for the better part of the last decade and even now people think I'm nuts for thinking housing has not bottomed. BUT, here's the lastest data:

Home prices fell for a seventh straight month in February as a wave of distressed properties continued to wash over the U.S. market, real-estate data company CoreLogic Inc. said Thursday

And here's the article link: HOME PRICE INDEX DROPS 6.7% IN FEB

This will get worse as foreclosures pile up and real unemployment persists. I have read numerous accounts of people with contacts at banks telling them that delinquency and default rates keep getting worse, despite the seemingly cheery economic news that is shovelled at us from NYC and DC.

Here is my early January post, for your reading leisure: LINK

How does this relate to my QE3 view? I do believe that the Fed will jerk us around and maybe even play "chicken" with reality by following thru with the signals it is sending right now and will temporarily cease implementing the QE programs. We may go for a few months without any overt money printing, although I'm not sure how the Government Treasury auctions will be funded (see this report from zerohedge if you wonder why I say this: LINK).

But you need to ask yourself, if you do fall into the mistaken view of believing the garbage coming from the Fed and Obama, have any of the problems that created the banking system collapse in 2008 been solved? The answer is unequivocally "NO." In fact, the papering over of the problems and shifting a substantial amount of bad financial industry debt onto the Government balance sheet have served to exacerbate and magnify the true endemic/systemic problems. Ultimately the Fed will "blink" as the economy collapses again and we'll get served up a huge helping of QE3, justified by the "problems" inflicted upon us by the "evil-doers" in the Middle East and the collateral economic damage caused by the Japan disaster.

And if the market truly believed that QE3 would not happen, wouldn't that be reflected with a big rally in the dollar? Got or getting gold/silver everyone????

10 comments:

bix1951Thursday, 07 April, 2011
Housing does not turn on a dime. These are usually around 6 year cycles. But the real world never quite fits any predictions.
I would like to remind you of a real miracle of growth and return.
Like an acorn into an oak tree
Or one grain of corn into a cornstalk with ears of corn
or look at how many tomatoes come from one seed
some things grow very rapidly
but there is still winter
ReplyDelete
Replies
SatyaPranavaThursday, 07 April, 2011
out of curiosity, dave, who are those who criticize your views? i don't see many that critical when i view your comments section.

on a related topic, at whom do you think jesse was taking a stab when he yesterday poked at those who are angry and demeaning to others?

understanding where ppl stand just helps put all these rival-rous viewpoints into an appropriate context.
ReplyDelete
Replies
Dave in DenverThursday, 07 April, 2011
Friends and acquaintances where I live. I think most people who read this blog are of the same mind-set as me.
ReplyDelete
Replies
AnonymousThursday, 07 April, 2011
As real estate was going up, the housing bubble bloggers were ridiculed as fools, much as you sadly were for seeing housing as a bubblein the making (Dot com part 2).

When the bubble burst, the bubble bloggers were blamed by many as the cause the bubble burst (overpriced real estate and loans that could never be repaid had nothing to do with it.)

When will housing stabilize and go up in value?

As one wise bubble blogger posted, when investors say "Real estate? YUCK!"
When Real Estate is looked upon with the distain that 'experts' had for gold and silver in 2000, then will be the turnaround.
ReplyDelete
Replies
GalloFriday, 08 April, 2011
This is the strangest feeling I've had: elated and scared at the same time. The dollar appears to be cracking and on its way to making new lows which is likely over weeks not months. I can't imagine what this will do to oil and the economy in 6 months. As for the PMs, well that's where the elation part comes in. Yikes!

Guarda! Ecco. Caio Dave. E buona mattina a Buffalo. Ma fai fredo. (My Italian may be abit off)
ReplyDelete
Replies
Dave in DenverFriday, 08 April, 2011
Ciao Gallo. Tuo l'italiano é benissimo! I think you wanted to say "it is cold," which would be "fa freddo."

SILVER ALLA LUNA! (Silver to the moon)
ReplyDelete
Replies
GalloFriday, 08 April, 2011
Grazie! Si, "freddo". Mi dispiace. Fa fresco adesso. Divertiti oggi. I think:)
ReplyDelete
Replies
Dave in DenverFriday, 08 April, 2011
Va bene! Anche lei. Fa caldo a Denver oggi. Giochero tennis questo pommerigio! Buon fine settimana!
ReplyDelete
Replies
GalloFriday, 08 April, 2011
I have a close fried who lives in Denver. My fiancee and I were just there a few months back. When we return, I'll let you know and if our schedules coincide maybe we could play a set or two. I'm a strong 3.0. Have played up to a 3.5 but that's pushing it just a bit. If you're above a 3.5, it won't be much fun for you

Love your posts by the way.

Anecdottaly, my fiancee is trying to sell her townhouse in a north Boston suburb. She bought it about 7 years ago. We're learning she'll be lucky to break even we hope. We were both quite surprised at the pricing of the townhouse market in Boston.

And yet rental downtown properties are supposedly hot.

Go figure.
ReplyDelete
Replies
Dave in DenverFriday, 08 April, 2011
Definitely let me know when you are back here! I'm a 4.0 but that's okay - i'll play anyone anytime!
ReplyDelete
Replies

Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.