Update On Housing And Government Economic Statistics

I take great pleasure when I post a view on an economic topic and then subsequently I find even more empirical evidence that my view is correct. After I published my updated thoughts on the housing market in this country - which of course runs contrary to the noise coming from the media and the bubblevision idiots - I found an article on housing which was actually written a day before my post on Monday.

I have been following the Dr. Housing Bubble blog for several years and the author posted a blog piece detailing the incredible rise in low-down-payment FHA insured mortgages since 2007.  I have been harping on this point for quite some time now, and this piece presents the hard data.  The FHA - aka the Taxpayer - is sponsoring 3.5% down payment mortgages, which have more than doubled in terms of the number of loans outstanding from 3 million in Q2-2007 to 6.8 million in Q2-2012.

Unfortunately, the performance characteristics - i.e. rate of delinquency/defaults - of FHA mortgages is starting to make them look like nothing more than taxpayer-sponsored subprime mortgages.  How do you all like that?  Here's the blog post, which I would urge everyone to spend time reading:  LINK  What I find ironically humorous is that the housing market cheerleaders are actually cheering us into the next big housing mortgage blow-up.  It's kind of like the chickens in the barnyard cheering for the success of Colonel Sanders...

On to the Obama Government.  As everyone who watches any television knows, Obama is taking full credit for a supposed saving and turnaround of General Motors.  Given the enormous taxpayer resources that have been shifted from the taxpayers to the bank accounts of GM upper management and union workers, any claim of success from an economic standpoint is highly questionable, if not outright a lie.  In stark contrast to Obama's boastful bullshit - something which has become one of his hallmark traits - it turns out the U.S. Treasury just released a new estimate of the cost of the bailout to Taxpayers.  Originally Geithner was claiming $21 billion.  He's now upped the ante to $25 billion:  LINK.  Please note:  this is just an estimate, which has been no doubt highly polished and massaged to cover up the true cost.

HOWEVER, the Treasury estimate would not include the big loss the Government/Taxpayer has in GM's stock.  The Govt still owns about 30% of the outstanding shares, the value of which has declined $6.1 billion since the GM IPO.  Add that to the $25 billion cost estimate and we're now north of $31 billion.  This assumes GM stock does not decline anymore before the Government unloads the rest of its stock.  GM stock is down 39% since its November 2010 IPO.  The Dow is up 18% in that time frame.  Imagine what happens to GM stock if the Dow goes back into bear market mode, which it will in spades if the Fed does not print up a lot more money.  If these numbers are considered "success" by Obama, I truly fear what a failure looks like...

Last, I wanted to delve briefly into yesterday's July retail sales report released by the Obama Government.  It reported that retail sales were up .8% for July from June, which was a lot higher than the .3% Wall St. estimate.  This number is highly questionable, and most likely substantially wrong.  First, understand that this number is computed using questionable sampling methods which involve contacting selected retailers and having them "guesstimate" what their sales will be for July based on early month trends:   Advance estimates are based on early reports obtained from a small sample of firms selected from the larger Monthly Retail Trade Survey (MRTS) sample. All other estimates are from the MRTS sample.

This description of the data sampling comes from the Census Bureau's report:  LINK  If you pull up that link, you'll see that the footnotes also describe the "adjustment" process the Government applies to the data to "seasonally adjust" the numbers.  Translation:  "we take questionable advance sales estimates and put them through our turkey grinder and adjust the results to fit our political needs."  Furthermore, they "revised" lower the number from June, which mathematically makes the "calculated" increase for July look even greater.

In addition, the data released by the Government is not in any way supported by the actual sales tax receipts for July from California, the largest State in the country with 12% of the population and the 8th largest economy in the world.  As you can see from this LINK, California's sales tax receipts were down 40% from July 2011 and were 33.5% below the estimated expectation.  So you can see just how accurate "advance estimates" can turn out in reality.  Quite frankly, a data sampling representing 12% of the U.S. population is likely a lot more accurate than the Government's loose advance estimate sampling.

Finally, a report released which contains Mastercard's retail sales data for small retailers for July showed that retail sales at small retailers plunged from July last year (consistent with the California data), but also dropped off month to month from June, quite contrary to the Government's claim:  LINK.

So do you want to place faith in actual cash-register data from the State of California and from Mastercard, or place your faith in the Government?  The truth is that the Government retail sales report is outright fraudulent.