Sunday, February 3, 2013

The Housing Recovery Myth

What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media.  The credit boom is built on the sands of banknotes and deposits. It must collapse. If the credit expansion is not stopped in time, the boom turns into the crack-up boom; the flight into real values begins, and the whole monetary system founders.  The final outcome of the credit expansion is general impoverishment.   - Ludwig Von Mises, "Human Action"
I've been talking about doing a write-up on the housing market. Most of this was written before the latest housing numbers for December were released, which show the high probability that this brief housing market bounce is over. 

The thesis is that a slight housing market bounce has been generated by $100's of billions in Government and Federal Reserve monetary stimulus and Government policy implementation with respect to mortgage underwriting and refinancing.  But when you analyze the critical variables underlying the housing market, it leaves no doubt that the market is still fundamentally damaged and overvalued, with a very high probability that market has another serious decline ahead of it. Furthermore, housing stocks have completely dislocated from market fundamentals and investors who hold them risk a significant loss of capital once the equity market discounts the underlying fundamentals outlined below.

You can read my analysis here:   The Housing Market Recovery Is A Complete Myth


  1. There has been huge amounts of supply taken from the market by foriegners. Many of the dirt cheap houses have all been taken off the market and are not rental properties (or in some cases now holiday homes). huge funds of money has also come into the market and bought literally thousands of homes or apartment buildings.

    I think if you wnated to analyse the housing market now, you would do better to look at the potential glut of rental properties now available rather than excess supply, as I think most of the excess has been reduced now.

  2. Interesting. In spite of record low rates (encouraging buyers) that artificially lower monthly payments (measure of affordibility)housing sales are still depressed. Just talked with a mtg broker friend of mine, he said all they do now is conventional FHA type stuff. Another note was they have to charge everyone the same now due to new regs, he laughed and said the funny thing is that their average is higher now that it was before the govt changed the regs to "help the homebuyer"... To many examples of govt stepping in and messing things up and hurting the average people. "saving" the banks, giving trillions while not a cent to the homebuyers who will / are end up screwed in the long run while the bankers "take it to the bank"... When will the average person see that the bankers write the rules and have the politicians implement them? I talked with a realtor about a short sale. I asked her how motivated banks are to sell those properties. She said the get govt money while they hold non-performing loans, the get got money if they sell at a loss, so it just becomes a risk / return decision, "do I hold this property and collect the govt "subsidy" and hope for appreciation (what I call the put your head where the sun dont shine and ignore reality non-strategy) or dump it and take the tax advantages and collect the govt money for "a loss". She said either way they decide, it is being subsized by the govt so they dont have a true business incentive to act... That is perhaps a big reason we have a shadow inventory.

    I am a little afraid what will bring them into the light of day, the only thing I see it is "blood in the streets", ie a major collapse of the banks, and what would allow that to happen now that we are on this money printing kick-the-can-down-the-road path is only a total failure of the current printing QE strategy...

  3. Bill Black: Yglesias Mimics “Mankiw Morality” and Bashes Bastiat

    I agree with Yglesias’ column on Bastiat, but there is a famous quotation by Bastiat, not mentioned in that Yglesias’ column, that warns about Mankiw Morality.

    When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it (Frederic Bastiat).

    The GBH doctrine, which Yglesias’ has endorsed in two columns, represents a legal system that now “authorizes” “plunder” and a “moral [free] code that glorifies it.” The SDIs’ CEOs became our rock stars during the bubble. Goldman Sach’s CEO, Lloyd Blankfein, famously claimed that the banks were “doing God’s work.” Yglesias may wish to read Bastiat about crony capitalism and examine (I wish I could say “reexamine”) the ethical issues inherent in the GBH doctrine.

    Declaring that our most elite banksters – the people who caused the financial crisis and became wealthy through their looting – should be exempt from the rule of law is I believe the most destructive public policy we could follow in the finance context. It is Yglesias’ indifference to injustice that causes me to call him out for his embrace of Mankiw Morality. We have an architect of torture teaching at Boalt Hall and Mankiw at Harvard, so Yglesias is small beer.

    1. Noam Chomsky: The Paranoia of the Superrich and Superpowerful
      "Is America over?" It’s a standard complaint of those who believe they should have everything.

      This was called “Grand Area” planning?

      Yes. Right after the Second World War, George Kennan, head of the U.S. State Department policy planning staff, and others sketched out the details, and then they were implemented. What’s happening now in the Middle East and North Africa, to an extent, and in South America substantially goes all the way back to the late 1940s. The first major successful resistance to U.S. hegemony was in 1949. That’s when an event took place, which, interestingly, is called “the loss of China.” It’s a very interesting phrase, never challenged. There was a lot of discussion about who is responsible for the loss of China. It became a huge domestic issue. But it’s a very interesting phrase. You can only lose something if you own it.

      Take the Clinton doctrine. The Clinton doctrine was that the United States is entitled to resort to unilateral force to ensure “uninhibited access to key markets, energy supplies, and strategic resources.” That goes beyond anything that George W. Bush said. But it was quiet and it wasn’t arrogant and abrasive, so it didn’t cause much of an uproar. The belief in that entitlement continues right to the present. It’s also part of the intellectual culture.

      Matthew Yglesias, a well-known and highly respected left liberal commentator, wrote an article in which he ridiculed these views. He said they’re “amazingly naive,” silly. Then he expressed the reason. He said that “one of the main functions of the international institutional order is precisely to legitimate the use of deadly military force by western powers.” Of course, he didn’t mean Norway. He meant the United States.

      Within several months of the toppling of [President Hosni] Mubarak in Egypt, he was in the dock facing criminal charges and prosecution. It’s inconceivable that U.S. leaders will ever be held to account for their crimes in Iraq or beyond. Is that going to change anytime soon?

      That’s basically the Yglesias principle: the very foundation of the international order is that the United States has the right to use violence at will. So how can you charge anybody?

      The main founder of contemporary IR [international relations] theory, Hans Morgenthau, was really quite a decent person, one of the very few political scientists and international affairs specialists to criticize the Vietnam War on moral, not tactical, grounds. Very rare. He wrote a book called The Purpose of American Politics. You already know what’s coming. Other countries don’t have purposes. The purpose of America, on the other hand, is “transcendent”: to bring freedom and justice to the rest of the world. But he’s a good scholar, like Carothers. So he went through the record. He said, when you study the record, it looks as if the United States hasn’t lived up to its transcendent purpose. But then he says, to criticize our transcendent purpose “is to fall into the error of atheism, which denies the validity of religion on similar grounds” -- which is a good comparison. It’s a deeply entrenched religious belief. It’s so deep that it’s going to be hard to disentangle it. And if anyone questions that, it leads to near hysteria and often to charges of anti-Americanism or “hating America” -- interesting concepts that don’t exist in democratic societies, only in totalitarian societies and here, where they’re just taken for granted.

      maybe we have the right to use fraud at will, too? sure seems like it.

  4. Europol: Champions League game in England among more than 380 matches fixed

    INVESTIGATORS from across Europe said today they had identified about 380 football matches that had been fixed across Europe, with one Champions League game played in England in the last "three or four years" involved.

    European police did not reveal the identity of the match they believe was corrupt in England for legal reasons.

    It could involve Manchester United, Manchester City, Arsenal, Tottenham and Chelsea, who have all featured in the Champions League in recent years.

    Other "corrupt" matches included World Cup and European Championship qualifiers and "several top football matches in European leagues" - bringing in €8m in profit.

    Speaking in The Hague, Europol head Rob Wainright said the joint investigation had identified about 425 corrupt officials, players and serious criminals in 15 countries and the investigation uncovered "match fixing activity on a scale we have not seen before."

    Matches fixed included World and European cup qualifying matches and top flight league matches in several European countries.

    "This is a sad day for European football," Mr Wainwright said.

    maybe now people will start to get upset?

  5. Breaking the Chains of Debt Peonage

    The corporate state has made it clear there will be no more Occupy encampments. The corporate state is seeking through the persistent harassment of activists and the passage of draconian laws such as Section 1021(b)(2) of the National Defense Authorization Act—and we will be in court next Wednesday to fight the Obama administration’s appeal of the Southern District Court of New York’s ruling declaring Section 1021 unconstitutional—to shut down all legitimate dissent. The corporate state is counting, most importantly, on its system of debt peonage to keep citizens—especially the 30 million people who make up the working poor—from joining our revolt.

  6. The growing wealth gap is unsustainable

    The ever-increasing many who are struggling cannot support a structure that favours a tiny number of the very rich

    The 10 most expensive boroughs in London, packed with Russian oligarchs, have a combined property "value" of £552bn, identical to that of Wales, Scotland and Northern Ireland combined.

  7. This Is Housing Bubble 2.0: David Stockman

    “It’s happening in the most speculative sub-prime markets, where massive amounts of 'fast money' is rolling in to buy, to rent, on a speculative basis for a quick trade,” he contends. “And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came.”

    By 'fast money', Stockman is referring to professional investors like hedge funds and private equity firms. To his point, global investment firm Blackstone (BX) has spent more that $2.5 billion on 16,000 homes to manage as rentals, according to Bloomberg. It’s now the country’s largest investor in single-family homes to manage as rentals, with properties in nine markets. And Blackstone is joined by others like Colony Capital LLC and Two Harbors Investment Corp. (SBY) in trying to turn this market into a new institutional asset class, Bloomberg reports.

    Stockman argues the problem in housing is the two forces needed for a recovery, first-time buyers and trade-up buyers, are missing. With the combination of 7.9% unemployment and staggering student loan debt, he doesn’t see a young generation of new home buyers coming into the market. And with baby boomers heading for retirement with less than adequate savings, he thinks they’ll be trading down with their homes, not up.

  8. Fred Hickey on Gold and Apple

    The editor of the High Tech Strategist newsletter believes money printing by governments around the world will lead to no good, and sees gold as a good place to hide. Apple, not so much.!C633CDC5-2BFA-4940-B01F-BC46DFA2AE5F

  9. Ledger Book Shows Rajoy Received 35 Payments Totaling €322,231; Rajoy's Incredulous Denial; Anger Rises

    Rajoy Denies Receiving "Undeclared" Money

    After waiting for days to make a statement, prime minister Mariano Rajoy stepped up to the plate with a fuzzy denial on Saturday following an emergency meeting of the Popular Party’s executive committee.

    "This is all false. I'm not in politics for money. I have never received undeclared money" said Rajoy.

    Questions Abound

    Where did the slush fund money come from?
    Who were the recipients?
    What were the totals?
    Were the payments legal?
    Did Rajoy really pay taxes on all of it?

    The reference to "undeclared money" went away in firmer denial from Rajoy, "Never, I repeat never, did I receive or hand out black money, not in this party nor anywhere else".

    I am not positive of the order of those denials, but based on article timestamps, I believe I have them in the right order.

    Adding fat to the denial fire, accounting books allegedly written and kept by Luis Bárcenas, the former PP treasurer, implicate Rajoy personally, to the tune of €322,231.

    Meanwhile, anger is mounting and police barricaded the PP headquarters in response to gathering groups of protesters.

  10. Argentina pegs supermarket price rises for two months

    The Argentine government has put a temporary price freeze on all products sold in the country's main supermarket chains to try to fight inflation.

    A group representing two-thirds of Argentina's supermarkets agreed to keep prices steady until the first of April.

    The move comes days after the International Monetary Fund (IMF) censured Argentina for issuing inaccurate economic data.

    The government says inflation is below 11% but economists say it is double.

    Analysts have accused Argentina specifically of understating the rate of inflation since 2007 in order to keep interest rate payments on its debt low, and to flatter the political regime.

  11. Off the topic. Do you monitor the situation in Japan closely? In my humble opinion, Japan will be the first domino to bring down the house of cards. Japan has the worst fiscal profile and demographic picture. However, Japan has been used by people like Paul Krugman to proclaim that "debt is not a problem". If Japan were gone, the contagion might bring down the US, the UK and Germany, just as Thailand did in 1997 and Greece did in 2009.

  12. Foreigners' accounts in U.S. banks eyed in tax crackdown

    At the heart of FATCA is a law requiring more disclosure by non-U.S. banks of information about Americans' accounts to the Internal Revenue Service, with the goal of exposing Americans' efforts to dodge U.S. taxes through secret offshore accounts.

    As Treasury has implemented FATCA, some countries - possibly including France, Germany and China - were said to be driving a hard bargain. They have been saying that if their banks have to tell the IRS about Americans' secret accounts, then U.S. banks should have to reciprocate by disclosing more information about the U.S. accounts of French, German and Chinese nationals.

    "The United States is committed to a policy of transparency and equivalence, where appropriate, in furtherance of international cooperation to combat offshore tax evasion," said a Treasury spokesman, declining to comment more specifically.

    1. What's Behind Moving Swiss Bank Clients From Unallocated to 'Allocated' Gold Accounts?

      Swiss Banking reactions

      So Swiss banks are opting for the pain-free option of having their clients own their gold in their own name, in ‘allocated’ accounts. This allows them to duck the issue of disclosure to the authorities and passes it to the clients themselves. It also allows Swiss Banks to step out of the way should the U.S. authorities want to reach out and take that gold! And we feel that this is a real reason behind their move.

      While gold dealers are not regulated and not treated as financial institutions, the concept of transparency will apply to them under certain circumstances, which could have huge ramifications in the future, for their clients.

      At the moment, there is no requirement for reporting gold holdings or other precious metal holdings offshore, but if the IRS does not extend such reporting to precious metal owners it’s a small step for them to do so and at their discretion.

      What future events are the Swiss Banks pre-empting?

  13. Lorenzino bashes IMF 'economical recipes'

    Economy Minister Hernán Lorenzino bashed the International Monetary Fund (IMF) by assuring that “its recipes include unemployment, higher taxes and level of international indebtedness.”

    The fiery comments came in face of the IMF censuring Argentina for the quality of statistics gathered by its national statistics bureau (INDEC), plus the harsh echoes coming from opposition ranks that are demanding President Cristina Fernández de Kirchner and the bureau’s statistics to be modified in order to reflect reality.

    “We all know the economical recipes recommended by the IMF staff: adjustments, massive lay-offs, higher taxes, and higher indebtedness”, the minister wrote on his Twitter account.

    Likewise, the official cited Economics Nobel prize winner Paul Krugman who said “those who defend fiscal adjustments as the perfect anti crisis remedy can’t find a single case in which this theory of them has effectively work.”

    Furthermore, Lorenzino stressed that “If the IMF is so worried about the credibility of statistics, they should take a look on how Wall Street altered all balance sheets in 2009.”

    To end, the Minister wrote “I wonder where the IMF sanctions to England for having manipulated the Libor rate are?”

  14. UK looks into how meaningless bank capital is
    The Wall Street Journal reports that UK regulators are looking into just how meaningless bank capital ratios are. Specifically, the regulators are looking at how banks assign risk weights to their assets.

    This exercise is exactly as useful as rearranging the deck chairs on the Titanic.


    Because since the beginning of the financial crisis, bank capital has been meaningless. The suspension of mark-to-market accounting combined with regulatory forbearance has effectively divorced what is reported in bank financial statements from reality.

    The OECD made the point that the suspension of mark-to-market accounting combined with regulatory forbearance distorts both the asset and equity accounts. This renders any bank capital ratio meaningless.

    Given the stakes, naturally the banks have an incentive to game the calculation of their risk-weighted capital ratios.

    A Europe-wide rule change in 2008 gave banks more freedom over calculating their risks and resulting capital needs. In combination with pressure from investors to boost their capital levels, that led to British banks systematically cutting their risk weights over recent years.

    The Bank of England recently published data showing that average risk weights for U.K. banks are at their lowest levels since 1987.

  15. A Reluctant Bear's Guide to the Universe

    The following chart presents data since 1929, to provide some idea of where Fed policy is at present. Interestingly, the only other time that the monetary base approached 17 cents per dollar of nominal GDP was in the early 1940’s, after which the consumer price index roughly doubled by 1952. Given the present size of the Fed’s balance sheet, the present options to unwind this position and eventually normalize short-term interest rates to even 2% are a) wait for nominal GDP to double, which would require about 14 years of real growth assuming a 2% inflation target; b) allow the price level to double; c) sell nearly $2 trillion of Treasury debt back into the market, adding to the amount of debt that must be absorbed by the public due to annual government deficits of about $1 trillion, or d) some combination of the above.

    As a side note, the Federal Reserve presently has a balance sheet of about $3 trillion, on total capital of about $54.7 billion, meaning that the Fed is leveraged about 55-to-1. At an average maturity of over 10-years, the duration of the Fed’s portfolio is about 8 years, meaning that a 100 basis point move in interest rates impacts the value of the Fed’s holdings by about 8% (about $240 billion). Since July, interest rates have increased by about 60 basis points, which has undoubtedly wiped out the Fed’s capital, making it technically insolvent (fortunately for Ben Bernanke, the Fed doesn’t mark its capital to market). As a practical matter, the only effect is that the interest that the public pays on Treasury debt cannot actually be remitted by the Fed back to the Treasury as usual, but must instead be retained by the Fed in order to recapitalize itself due to losses on the bonds it holds. The losses therefore effectively represent an unlegislated fiscal expenditure. Moreover, assuming an average interest rate of about 2.5% on Fed holdings, each further increase of 30 basis points in interest rates would wipe out a full year of additional interest payments. Needless to say, nobody cares. These observations aren’t central to our current concerns, but it’s worth understanding how reckless Fed policy has already become.

  16. Yale Suing Former Students Shows Crisis in Loans to Poor

    Needy U.S. borrowers are defaulting on almost $1 billion in federal student loans earmarked for the poor, leaving schools such as Yale University and the University of Pennsylvania with little choice except to sue their graduates.

    The record defaults on federal Perkins loans may jeopardize the prospects of current students since they are part of a revolving fund that colleges give to students who show extraordinary financial hardship.

    Yale, Penn and George Washington University have all sued former students over nonpayment, court records show. While no one tracks the number of lawsuits, students defaulted on $964 million in Perkins loans in the year ended June 2011, 20 percent more than five years earlier, government data show. Unlike most student loans -- distributed and collected by the federal government -- Perkins loans are administered by colleges, which use repayment money to lend to other poor students.

    “If you borrow to go to school, it may not be just the government that ends up coming after you if you can’t pay,” said Deanne Loonin, an attorney with the National Consumer Law Center, a nonprofit advocacy group in Boston. “We offer credit very easily.” If the student doesn’t benefit financially from the education, “the government or the school comes after them very aggressively.”

    I wonder when the chancellors/deans are going to stop gorging?

  17. Daniel Ellsberg: NDAA Indefinite Detention Provision is Part of "Systematic Assault on Constitution"

    A lawsuit challenging a law that gives the government the power to indefinitely detain U.S. citizens is back in federal court this week. On Wednesday, a group of academics, journalists, and activists will present oral arguments in court against a provision in the National Defense Authorization Act, or NDAA, authorizing the military to jail anyone it considers a terrorism suspect anywhere in the world without charge or trial. In a landmark ruling last September, Judge Katherine Forrest of the Southern District of New York struck down the indefinite detention provision, saying it likely violates the First and Fifth Amendments of U.S. citizens. We’re joined by Daniel Ellsberg, a plaintiff in the case and perhaps the country’s most famous whistleblower. Ellsberg leaked the Pentagon Papers in 1971, exposing the secret history of the U.S. involvement in Vietnam.

  18. MIchael Lewis and the Heart of the US Economic Policy Failure and Crisis

    "Corruption is a tree, whose branches are
    of an immeasurable length: they spread
    Everywhere; and the dew that drops from thence
    Hath infected some chairs and stools of authority."

    Beaumont and Fletcher, The Honest Man's Fortune

    Michael Lewis has written an excellent pocket analysis of the financial crisis in The New Republic, in his review of Greg Smith's book about why he left Goldman Sachs. I have to admit some prejudice, because he says all of the things which I have been saying, and says them very well.

    Crony capitalism has always been with us, but it took wing in the 1990's, and has brought us to this place where we would not wish to be.

    Michael Lewis does an excellent job of distilling the problem and its solution to the basics, without necessarily touching on the need to reform the political campaign process, and the revolving door that enriches the politicians and regulators through betraying the spirit, if not the technical word, of their oaths of office.
    Is a policy error still an 'error' if it is done purposefully?

  19. Ohio developer sentenced in credit union scheme

    Local businessman A. Eddy Zai was sentenced to more than seven years in prison and ordered to forfeit more than $23 million after he previously pleaded guilty to nine counts related to his participation in a fraud against St. Paul Croatian Federal Credit Union, law enforcement officials said.

    “Mr. Zai held himself out to the community as a successful entrepreneur, when in reality, he was part of a conspiracy that resulted in one of the largest credit union collapses in history,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.

    “Eddy Zai’s sentence and restitution amount reflect his extensive involvement in bribing loan officials, submitting false documentation, and obtaining millions of dollars in loans for numerous non-operational businesses managed by him,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Field Office. “The FBI will continue to seek justice for victims of the SPCFCU collapse and any other financial fraud scheme where trust and faith have been unwittingly placed.”

    Darryl Williams, Special Agent in Charge of the Internal Revenue Service-Criminal Investigations’ Cincinnati Office, said, “Honest and law abiding citizens are fed up with those who use deceit and fraud to line their pockets with other people’s money. Let these convictions stand as a warning to those who victimize the public that whether you are the main perpetrator of a fraud, or merely assist in its facilitation, the law will hold all guilty parties accountable.”

    Zai, 44, of Pepper Pike, pleaded guilty last year to one count of conspiracy to commit bank fraud and bank bribery, two counts of bank fraud, three counts of money laundering, one count of bribery, and two counts of making false statements of financial institutions.

    U.S. District Judge John Adams sentenced Zai to 87 months in prison, followed by five years of supervised release, and ordered him to pay more than $23 million in restitution.

    Zai conspired with others, including Anthony Raguz, the former chief operating officer of the St. Paul Croatian Federal Credit Union (SPCFCU), to submit false loan documents to the credit union, defraud the credit union of approximately $16.7 million, and pay bribes and kickbacks to Raguz for using his position at the credit union to approve numerous loans to Zai and the entities and nominee companies he controlled, according to the indictment.

    The conduct took place from December 2003 through March 2010, according to court documents.

    Certain of these entities were created primarily to operate as a “safe haven” for credit union proceeds, while others performed little or no legitimate business despite having loan proceeds intented for Zai’s “business” ventures, according to court documents.

    wonder how many others?

  20. Virginia coin moves closer to reality
    “Our nation’s most fundamental principles — equal rights, rule of law, private property rights, individual liberty — still require a dependable dollar to be meaningfully preserved,” the bill reads.

    It is unclear how Marshall’s measure will fare in the Senate. And Gov. Robert F. McDonnell (R) has said in the past that he does not support the commonwealth printing its own money. But that the bill has made it even this far underscores the depth of distrust among some surrounding the nation’s central bank.


  21. DJ Silver Wheaton To Buy Gold Streams From Vale Unit for $1.9 Bln
    Feb 05, 2013 (Dow Jones Commodities News Select via Comtex) --

    By Chip Cummins

    TORONTO--Silver Wheaton Corp. (SLW) said Tuesday it had agreed to buy long-term gold production from two mines owned by a unit of mining giant Vale SA, paying $1.9 billion for the two so-called gold streams, in addition to Silver Wheaton warrants.

    Silver Wheaton said it would pay $1.33 billion in cash for 25% of the gold output from Vale's Salobo mine, in Brazil, and $570 million for 70% of the output from mines in Sudbury, Ontario. Silver Wheaton said it would also pay Vale 10 million warrants, plus an ongoing per-ounce amount subject to market prices. The deal covers production over the next 20 years.

    Silver Wheaton is one of the world's largest precious metal "streaming" companies, holding a portfolio of long-term mining production commitments. The Vancouver-based company has typically focused on silver, but said in a release Tuesday the transaction with Vale would significantly boost its exposure to gold.

  22. There is no housing crisis. Fema has enough plastic houses to accomidate the entire country.

  23. AIG(AIG), Fortress(FIG) Unit Test ABS With Personal-Loan Securitization

    The consumer-lending joint venture of private-equity firm Fortress Investment Group LLC and insurer American International Group Inc. is planning a rare securitization of subprime personal loans as early as this week, in the latest test of risk appetite for asset-backed bonds, where soaring demand has pushed yields to record lows. The $604 million issue from consumer lender Springleaf Financial, the former American General Finance, will bundle together about $662 million of loans secured by assets such as cars, boats, furniture and jewelry into ABS, according to a term sheet. Some loans have no collateral.

    the collateral myth?

  24. perfect storm | energy, finance and the end of growth

    part four:
    The reliable data which policymakers and the public need if effective solutions are to be found is not available. Economic data (including inflation, growth, GDP and unemployment) has been subjected to incremental distortion, whilst information about government spending, deficits and debt is extremely misleading.

    Data distortion can be divided into
    two categories. Economic data
    has been undermined by decades
    of methodological change which
    have distorted the statistics to
    the point where no really accurate
    data is available for the critical
    metrics of inflation, growth, output,
    unemployment or debt. Fiscal data,
    meanwhile, obscures the true scale of
    government obligations.

  25. Don't forget that Bernanke is working on another subprime bubble to help the banks from here on:

    The question is, will this subprime scam gain real mass? Or will it crash and will it crash sooner or later? Those are the questions going forward.