The Golden Truth: More On The Housing Sector

Thursday, July 19, 2012

More On The Housing Sector

Of course Obama didn't hesitate to release his taxes, any politician who has never had a real job or worked as a builder of businesses in the private sector is always happy to release their taxes. But then again, I guess Obama made Romney's businesses happen for him. - friend of mine from NY

I wanted to do a quick follow-up to yesterday's post on housing. I have been postulating since late last year that the housing market "stability" was completely a function of the foreclosure moratorium that went from the middle of last year until the mortgage fraud settlement early this year plus the low/no down payment mortgage products rolled out by the FHA - and subsidized by you and me.

Yesterday I posted an article which showed that FHA mortgage delinquencies jumped 26% from last year. Now foreclosures are ramping up:

"Thousands of foreclosures that were stuck in process due to delays over the so-called "Robo-signing" paperwork scandal are working their way through a revamped banking system and heading toward final bank repossession."

Here's the report: LINK Even more troubling:

Even more indicative of this new surge in processing is that repeat foreclosures hit an all-time high in January, representing 47 percent of all starts, according to LPS. Repeat foreclosures are either failed loan modifications, or loans that banks were attempting to modify but couldn't.

Delinquencies and foreclosures are ramping back up. Inventory will ramp back up as well. And then we get today's monthly existing home sales report which showed that existing home sales dropped "unexpectedly" by 5.4% to an 8-month low. It was not unexpected by me as I've been tracking mortgage purchase applications on this blog, which has indicated that home buying activity is in decline (refinancings are going through the roof because the Fed, in combination with FHA refi programs, has made money almost free with near-zero interest rates out to 10-years).

But wait, isn't this supposed to be the seasonal peak of the home buying season? If home sales are declining through the peak selling season, imagine how bad it could get for the rest of the year. And combine that with seriously deteriorating economic fundamentals and we are setting up for another housing/bank catastrophe. 2008-squared.

Circling back the quote at the top, make no mistake by thinking that I support Romney. I actually don't care who wins the election at this point because it's irrelevant. Either candidate is controlled by the banking and defense company interests that pay for their election (see Citizens United v Federal Election Commission for why this so: LINK). I wish Romney would select Herman Cain to be his running mate because then at least we would have some serious entertainment. As it is, my only interest in this election is to see just how brutal the mud-slinging will become.

4 comments:

AnonymousThursday, 19 July, 2012
Exclusive: Ex-Goldman mortgage chief plans foreclosed home fund

(Reuters) - Former Goldman Sachs Group Inc. (GS.N) executive Donald Mullen, one of the architects of the subprime mortgage trade, is trying to raise at least $500 million for a fund that will buy foreclosed homes with an eye toward renting them out.

As a senior mortgage executive at Goldman, Mullen was actively engaged in derivatives trades that became widely known on Wall Street as "the big short." The deals provided a way for traders and hedge funds to bet against the housing market in the run-up to the mortgage bust.

Before joining Goldman in 2001, Mullen had held top jobs at Bear Stearns, Salomon Brothers and Drexel Burnham Lambert.

The sources familiar with Mullen's fund said it will raise money to go after homes being sold at foreclosure or taken over by banks. The fund will target homes that are selling for between $70,000 and $190,000 and mainly in the southeastern and southwestern regions of the United States.

http://www.reuters.com/article/2012/07/19/us-usa-housing-goldman-idUSBRE86I1AJ20120719?

who knows what gov't incentives will be thrown their way to clean up the shadow inventory
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AnonymousThursday, 19 July, 2012
To vote is to voluntarily participate in your own enslavement by a sociopathic parasite who, at best, will completely ignore you or, more likely, will use his newly granted power to ram his dick that much further up your wazoo. The politicians don't give a damn, never have given a damn, and based on that track record, likely never will give a damn. All they care about is power, how to obtain it, how to hold it and how to expand it. The electorate? Screw the electorate. They just don't give a damn. Nope. Don't think I'll be casting a ballot this year or anytime soon. I'll keep what little power I've got for myself and to myself rather than vesting it in some asswipe politician who thinks he knows better than me how to govern my life. Fuck them all, each and every one of them (Ron Paul excepted). Better we should be governed by names randomly drawn from a telephone directory that a bunch of self serving, hypocritical scumbags.

1) If voting made a difference, we wouldn't be allowed to do it (Mark Twain)

2) It's not who votes that counts, it's who counts the votes (Josef Stalin)

Signed, severely pissed off Libertarian
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AnonymousThursday, 19 July, 2012
Holy shit you just gave me a reason to care about the election... A Romney/Cain ticket would be hilarious! Nice to get a laugh out of such a pathetic situation. Keep up the good work.

AG
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AnonymousFriday, 20 July, 2012
Wrong Reasons

One of those reasons, according to Victor Nava and Anthony Randazzo, has to do with the nature of the obligations that are being taken on.

This added debt is coming from increased levels of borrowing on revolving lines of credit. Households are struggling to pay their bills, leading credit card usage specifically to jump 11 percent in May. Essentially, households are taking on more debts with high servicing costs - not low rate home and business loans.

The latter, for the most part, are paid down over time, leading to reduced debt loads and stronger household balance sheets, while the higher rates and open-ended repayment structure of credit cards and other revolving debt tends to have the opposite effect, leaving consumers worse off. Hence, the authors conclude,

while the Federal Reserve's recent consumer credit report may appear to paint a rosy picture of Americans who are spending money, taking out bank loans at a growing rate, and generally feeling better about the economy, closer inspection suggests a stagnant economy that is failing to create jobs, and Americans resorting to their "plastic safety nets" just to get by.

But even if one takes issue with this assessment, it's not hard to find other evidence that suggests the debts being racked up now are increasingly a matter of necessity rather than choice.

A new report from the Pew Charitable Trust, for instance, detailed by the Huffington Post in "Poorest Americans Turning To Payday Loans To Afford Food, Electricity," reveals that

http://www.financialarmageddon.com/2012/07/wrong-reasons.html
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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.