Housing Gets Even Worse And Gold Looks Even Better

To begin with, I wanted quickly to recount a conversation I heard this morning on CNN with South Carolina Senator, Jim DeMint.  DeMint has some type of "pledge" in which he wants all Congressional signees (presumably only Republicans might sign) to withhold their backing of the debt limit increase unless legislation is also passed which implements programs which would presumably lead to an eventual balanced budget.

This is pure theater of the absurd.  We wouldn't even be in this mess if our system was based on a gold standard.  DeMint's pledge paper is worthless and Washington DC will ultimately spend this country into collapse.  Period.  Here's a brilliant quote for Richard Russell: 

A few things you know for certain.  Gold will not go bankrupt.  Gold will always have a market.  All fiat money becomes worthless over time.  Gold is real tangible money, and it will be around when the last issue of fiat money is struggling to survive.  Gold has a five thousand year history of representing wealth.  No fiat money has ever lasted as long as a hundred years.

Taking from the real life example going on in Greece right now, this shows why gold is not even remotely in a bubble and it demonstrates the true flight-to-safety/wealth preservation nature of this precious metal (and silver):  Greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of a sovereign default and a run on the banks.  The entire article is worth reading, here's the LINK  (when you pull it up, if it asks you to register in order to read the article, copy the headline and type it into the google search bar and click on the article link after you search and you should be able to see the entire article).

Housing continues to crash, despite the best "spin" the media attempts to paint over the facts.  Recall that one of my premises is that the "shadow" inventory of homes is significantly larger than is widely acknowledged by anyone in the media, Wall Street and even most analyst/commentators. We know that banks are substantially slowing down foreclosures and default declarations and doing what they can to avoid taking on more REO.  It is my contention that the REO component of the shadow inventory is massively larger than is being published by the Government or private sources (the other primary "shadow inventory" component would be all those people current on their mortgage but would sell their house if they could get a price equal to their outstanding mortgage and all those who want to sell before the next leg down but are waiting for the market to "come back a little").

Well, the FT Blog published an article which attempts to quantify the growing REO (real estate owned) inventory at FNM/FRE/GNMA/FHA:

The federal share of REO property is also rising. For 1Q, RealtyTrac estimates that total REO property held by lenders totaled 872,000. Of this, we know from monthly or quarterly financial statements that Fannie Mae, Freddie Mac, and the FHA hold roughly 300,000 of these properties on their books, and that this inventory has been rising by more than total REO inventories over the last year. Over the next few quarters, the federally backed entities are likely to see their inventories of REO property become a larger share of the total

Here's the LINK  If you read the article, you'll see that it is likely that if the Government does not play "hide the salami" with its housing inventory the way banks do, the amount of homes streaming into the "for sale" inventory could increase by as much as 30%.   You still feel confident that we've reached the bottom of the housing crash?

Before you answer that question, take a look at this existing home sales data released yesterday, as existing home sales hit a six-month low:  LINK  Hmmmm, I thought we were in the peak selling season for housing...