Primary residences don't have to be liquid, people are just going to stay in them. If you can borrow on equity then they are liquid in that sense. Ability to sell a house is way down from a year ago for sure and not going to get better until the next business cycle. House saleability is definitely cyclical.
so whats up with BiNTo the entranced thread starter anybody seen him?? howz this housing bust thingie comin' along??
check it out. strong fundamental arguments as to why this is a suckers rally and the economy is headed towards a recession. This is based on data, history, and rationale, rather than optimism - which is "built-in" to the market and always skews data due to positive bias. http://www.rgemonitor.com/blog/roubini/152472
Well all I can say is boy am I ever happy that I am a sucker as the profits just keep rolling in. edit: Who's the real sucker, the people that didn't take advantage of this rally and stayed on the sidelines, or the one's that were part of it?
This is misleading. You're implying houses only go up b/c of currency depreciation. But house prices can go up independent of currency valuations due to speculation, demand, supply, etc. The dollar weakening is related, in part, to the easy credit and lax monetary policy of the current admin, but the current bubble was created due to easy credit and lending standards that then spurned a bubble when people realized they could MAKE RELATIVELY QUICK MONEY just by buying and selling houses. Not saving for a country is bad, just like not saving for an individual is bad. It may work short-term, but without money in the bank you are at the mercy of your lenders, which is the situation the US is in with China who holds over $1trillion in treasuries. The asians have to keep buying our treasuries in order to support the dollar. That's not sustainable indefinitely. We've actually gotten ourselves into a situation that REQUIRES unprecedented cooperation between the US and rest of the world in order to be resolved without calamity that people in this country haven't seen in a while. They aren't making out like bandits. They only way they make out like bandits is if they sell their houses for a gain. That would have been feasible had the bubble continued, but bubbles ARE bubbles b/c they are unsustainable."If they pay off their mrotgages" - many of the new homeowners in option ARMs and other exotic mortgages will not be able to pay their houses off b/c they were suckered into resetting mortgages that were way out of their income range. This is where the predatory lending practices come in. How do you know banks will let people stay in houses after they default on their mortgages? The only way that would happen on a national scale is if the govt introduced legislature and reform to allow people to stay in houses that they do not legally own. This would only happen if the bust reached a level that truly threatened the stability of the economy. Besides, if people are defaulting on their mortgages they are probably in a very dire financial situation. This means greatly reduced consumer spending - which leads to recession. There's never been a housing bubble in "modern" times (last 50 years) like the one we just had, so there is no precedent. The only precedent we have is the effect of the bust on consumer spending, residential investment, and jobs - and based on precedent a sizeable decline in those three indicators will lead to a recession. Roubini isn't just an advisor to fund managers - he runs a global economic consulting service and advises all sorts of financial organizations, including funds. He has been making accurate predictions about the economic indicators that have been released over the past 12 months - much more accurate than the economists in the Bloomberg survey. Your arguments seem to ignore timing and sequence. For example "banks will accept reduced payments instead of kicking people out of their houses." This is wrong, but assuming it's correct - if people can't make their payments then we are already in trouble - and that's what's going to start happening over the next 6 months unless the Fed can pull a big fking rabbit outta their hats.... but they can't it's impossible. We are now in a situation where deflation, stagflation, and hyperinflation are all strong possibilities in the near future. How did we get into a situation where future GDP growth estimates are being revised downwards with every new economic release and inflation has been above a 2% annual rate (Fed comfort zone is 1 - 2%) for over 30 months, and is now beginning to creep higher The longer we keep this facade going, the harder the fall is going to be. I'd love to hear a rationale explanation as to how we are going to emerge from the current dilemma. The Fed and all the big banks are currently working overtime to prop up the market and SPIN every piece of bad news out there - but how long can they last? Maybe long enough for them to cover their behinds...
Your "brilliant" article is spewing the same arguments that are 3 years old. Learn what really moves this market. It's not the fundamental BS that you see all over mainstream financial news. At best it will go sideway with a slight downward slope. Everytime time the Dow will be down 100 or more, the bears will start screaming recession and depression. It will just sucker in more shorts. Election is a little while away, the pump may not start for a few months. just enough time to allow any bad earnings news to be absorbed. Really, if you think you are so smart cause you can & understand www.rgemonitor.com, go get the latest copy of CPI and PPI and read it. Then make your own conclusions. Learn about money supply and how the current financial system works. You keep talking economic data that is publically released by BLS. It is so statistically engineered that it simply does not resemble reality. So exactly how smart are you and your source when you are using data that is applicable to fairy land before it is applicable to this country.
Some of your points are fair, but I think you misunderstand me. I agree that economic fundamentals don't move the market in the short-term, but they reflect REALITY over the long-term, which eventually must be reflected in the market. The market can't keep going up when there is true fundamental weakness in the economy. Eventually, earnings will reflect the extent of the weakness. I don't know where the markets going in the next 2-3 months, I don't know what the fed and its buddies have planned. But I DO know that the housing bubble has burst, (reported) inflation is (already high and) creeping into the system, and oil is PROBABLY not going below 50-55 (opec + geopolitics). as for our current global financial system - I have good basic knowledge and add to that knowledge on a continual basis. The more I learn about the changes to the system in the past 5 or 6 years, the more it becomes apparent to me that things are getting WORSE. Haha! Inflation is actually at 7-8%! Unemployment is much higher than reported! The government manipulates data to make things look BETTER than they are, and even their manipulated data is beginning to worsen noticeably. What's your point in this regard? I "think I'm so smart"...?? Is it just assumed that i'm an a$$hole/idiot hybrid now? =)
I was new to the forum and didn't understand the nature of the interaction on this forum... i wasn't being completely serious (with the title)