This league (the NFL) is a Mona Lisa and they're painting a moustache on it - Rick Reilly on the set of ESPN after the replacement referees stole the game from Green Bay and gave it Seattle on an obviously bad call on the last play of the game.I was going to rant about the replacement referee situation in the NFL, but I decided anyone who cares can tune into ESPN to see the problem. I will say that it was revealed this morning that three of the referees on last night's crew were former Pac-12 referees who were fired for poor performance.
Toll Brothers is having a "national sales event starting Friday - incentives, low-rate mortgages and free customization" - I thought the housing market was strong...why the incentives? - a long-time market colleague, "Hal" from ChicagoMany of you probably turned on the business news this morning - or will hear it tonight when you get home from work - to hear that housing prices rose strongly in July vs July last year and that the increase was bigger than was forecast. If you bothered to read my post yesterday and the links in it from Mark Hanson, you would understand why the Case Shiller 20 city price index is statistically problematic. You would also understand that a small price increase over last year was expected for several reasons, including the fact that mortgage financing rates are at a record low and credit standards have deteriorated. In fact, Hanson said this:
Based on various other more real-time prices indices – and even NAR’s monthly existing sales data, which do a great job leading CS by a quarter — prices trended “higher” this spring and summer, as they usually do for the ‘season’...Obviously, the monthly Case-Shiller index will now ‘rise’ through Oct representing the rise in purchase prices from March through July we already know occurred. Then in Nov the CS will start heading lower again for the season. Because the index will still be comping against the CS 2011 “double dip” readings for many more months prices paid will be the last to fall into the “triple dip” occurring now, yet they will experience significant headwinds beginning shortly LINKI really hate to rain on the parade of optimism regarding the housing market. But to me it's one of the glaring areas in which the Wall Street, political and media spin-masters are having a field day manipulating the emotions and expectations of the public ("If you tell a lie big enough and keep repeating it, people will eventually come to believe it" - Joseph Goebbels, Hitler's Propaganda Minister). Thus, I'm not really raining on a parade, rather my interest lies in getting out the truth. And truth ain't gonna be found in the mainstream media, Capitol Hill or Wall Street.
The fact remains that the housing market is getting ready to fall off another cliff. The Fed's mortgage purchase QE program will provide some tenuous support and it might delay the inevitable, but housing is going lower. A lot lower. The basic ingredient to support housing values, even more important than credit availability, is income levels. Real income levels are declining - pretty quickly I might add. That plus true oversupply adds up to lower housing prices. There is not any public policy implementation that can fix this. The only fix is to let the free market fix the problem. What the Fed is doing, and what the politicians are doing, is only succeeding in transferring a lot more wealth from the middle class taxpayer to the bankers, mortgage brokers and Wall Street mortgage trust syndicators...