Posted on 01/03/2011 5:37:16 PM PST by Chunga85
I’d like to start off the year with another piece on the US housing situation as it looks to be heading into 2011, and its relation to the overall economy. In an interesting quote I read, economist Patrick Newport at IHS Global Insight says: "The economy has to recover for the housing market to recover, not the other way around." Thought I'd throw that in there, because it seems to get lost in translation from time to time.
Talking of quotes, I was going through the material I read the past few days, and I couldn't find a proper way to cut short the quotes and still provide you with the story as I see it, in a way that would be both comprehensive and clarifying. In other words, I think it's the quotes that tell the story, and without them the story is just not there. So this is going to be a long one, and I think the least I can do is to say as little as possible, and just let you absorb the data. And I sincerely hope that after you've gone through them, you’ll see the story I’m talking about.
Many people claim Stoneleigh and I must be crazy, and doomers and all that, for predicting an 80%+ drop in real estate values, but we in turn can't seem to understand why home prices would fall "only" 20% from here, or why they would fall "just" 40%, as Mish suggested for instance. We think that more than 20% is in the cards just because of the bubble coming back to earth; we think 40% is certain because of the bubble bursting, and we think 80%+ will then happen because the bursting bubble will take the entire financial system down with it. Pretty simple really.
(Excerpt) Read more at businessinsider.com ...
$nip>
But enough about us. Let’s hear some witnesses:
First off, L. Randall Wray, a Professor of Economics at the University of Missouri-Kansas City, who's co-operated quite a bit with Bill Black over the past year, throws more oil on the fire of foreclosure fraud, albeit from his own particular angle. Wray's claim is that Mortgage-Backed Securities are not backed by anything, since the MERS electronic securitization facility carried from its inception a number of plainly illegal concepts. Therefore, he says, most if not all US foreclosures are illegal, and all MBS are unsecured debt that the issuers will have to buy back - to the tune of trillions of dollars. Which entirely dooms the main US banks.
$nip>
Click through for the rest of the lengthy but fun story...
I’ve got two peeled onions under my eyelids and still can’t muster a tear for the deadbeat bankers ping.
This, I believe. I think there may be more housing pain in 2011 because of the increased chances of a double-dip recession in the housing market. There were some bad statistics last week that seem to point to this in the future.
A little whiff of CN or CS when the rioting starts will
open those tear ducts plenty.
I think Jethro Tull knew what that was about when they
sang, “...snot was running down his nose...”.
Increased chances? Oil prices are zooming up. Its guaranteed.
Try cloves of garlic.
You still might not get any tears, but at least it will keep the vampires away!
That’s completely unexpected! That just can’t be because this headline just popped up today!
2011: A hiring boom, even at 9% unemployment
http://finance.yahoo.com/news/2011-A-hiring-boom-even-at-9-cnnm-560578363.html?x=0
(excerpt)
“We’re looking at some leading indicators on employment, and they’re all flashing green lights,” said Bernard Baumohl of the Economic Outlook Group, a Princeton, N.J. research firm.
Though most economists still expect a painfully high unemployment rate of about 9% at the end of this year, some think that stat masks more important signs of strength.
Economists surveyed by CNNMoney are forecasting an average of 2.5 million jobs added to the U.S. economy this year, which would be the best one-year gain in hiring since the white-hot labor market of 1999.
Went to the mall yesterday at 2PM. Had to search for a parking place. 45 minutes prior to closing, cars were still patrolling around looking for parking places. After the mall went to a strip mall that had three large restaurants. Cars were patrolling looking for spaces. We had to wait 30 minutes for a table.
Where do you live? I have had the same experience here in the suburbs of Washington DC, which is supposed to have among the lowest unemployment rates in the US. Still, no houses are selling. People drop their prices to 50% of previous levels and still no one even comes to see these beautiful, convenient properties. I used to think that activity at the mall was some kind of indicator of economic health, but I don’t believe that anymore.
MERS has the potential of killing the country. For reasons too numerous to list but the bottom line is that the litigation is going to be off the hook. There are so many levels of lawsuits it is staggering. People who have been illegally foreclosed on suing the bank. People who then purchased the illegally foreclosed homes suing the bank after the "real" owners take the house back. Everyone suing title companies. Realtors will get hit for various reasons. Then the people that bundled and sold the "fake" securities that were made from the MERS bundles will get sued and so on. People who have had their credit hit by the banks who had no right to ding a persons credit will be sued. Then what about the credit reporting agencies who should have known that they were handling "fake" data? Etc, etc. The counties are suing MERS for billions too. because MERS illegally circumvented the counties.
On top of all of this what happens when many people find out that they can just stop paying their mortgage, keep their home and there is nothing anyone can do about it. And when they do this at some point it won't touch their credit.
* Unlike the counties who could not fight MERS the states would never allow anyone to do something like this with car liens.
Would this be a good time to sell our house and wait for home prices to drop even lower?
Housing is still grossly out of line.
Beats the heck out of me! I posted something along a similar vein by former Reagan advisor Stockman. I think the common theme of the 100+ replies was that Stockman was a bum.
It was widely agreed that Peter Schiff was the "go to" guy for financial advice. Schiff is quoted in this particular BI "doomsday" article.
I'm not sure anyone can answer your question.
Many people are now predicting this. Chris Whalen said BOA and Wells Fargo will have to be bailed out again and you saw the earlier article about them paying out to Fannie/Freddie though it’s said those few Billion was another gift from the government.
Why Mortgage-Backed Securities Aren’t (Backed by Securities): How MERS Toasted the Banks
“We understand what the problem is for Bank of America. They are insolvent. They still have huge losses to take on their mortgage book, and balance sheet. They also have to deal with everyone wanting them to buy-back mortgages.”
http://www.moneynews.com/Headline/christopher-Whalen-Foreclosure-Peak/2010/12/06/id/379123
Bank Of America Just Eliminated Its Fannie And Freddie Putback Risk
http://www.freerepublic.com/focus/f-news/2650899/posts
Chris Whalen: New Bank Bailouts Under Dodd-Frank For Bank Of America, Wells Fargo Within 12 Months
http://www.youtube.com/watch?v=lWOFfflnvQ0&feature=player_embedded
Yeah, it’s pretty surreal when you read financial news like this, which is becoming more and more commonplace, and then see full restaurants and busy shoppers. Maybe people think that if they act like the good times have returned, they really will.
OTOH, if a family’s income hasn’t changed and they’re not keeping up with the nitty gritty of economic news, then as far as they’re concerned, the world hasn’t changed.
That's a problem....
Suspect he is right.
NO area. People with money aren't selling. People without money are dumping their houses to short sales and then going out and celebrating.
Is everyone spending their mortgage payments again?
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