Guest Post: If Spin Were Reality - We'd Have A Recovery
Submitted by Nomi Prins
If Spin Were Reality - We'd Have A Recovery
Wouldn't it be awesome if spin could
actually solve problems? Then, you could just say the word 'recovery'
every time you gave a speech, ignore any negative data, assume the
markets are up because of general economic health and not a mass
infusion of cheap money, and it would be so.
It wouldn't matter that New Home Sales are at their lowest rate since reporting began in 1962.
It would be fine that Existing Home Sales (the number of completed transactions) were down 9.6% over the month, and 2.8% since last year.
It would be cool that Pending Home Sales were down 2.8% over the month, and 1.5% over the year.
It would be a symptom of recovery that
the average Sale Price for non-foreclosed homes is $246,358 - below
2003 levels, and for foreclosed homes, is $169,965.
It would just be a coincidence that 39% of homes sold in February were distressed (sold at a discount), many of those to investors, not to end-home-dwellers, up from 35% last February.
It wouldn't have anything to do with
people's housing situations, that Realty Trac, 'the leading foreclosure
online market' maintains a top ten 'Hot' foreclosure property states
list. (Ohio leads the list, with a 43% 'foreclosure savings' rate for
'investing' in a foreclosed property vs. paying up for a non-foreclosed
You could be the Treasury department,
and announce an 'orderly' sell program to get rid of 'up to' $10 billion
per month of your $142 billion agency-guaranteed mortgage-backed
securities portfolio (and yes, you would still be backing the agencies
guaranteeing those securities which has nothing to do with propping up
their value) - the one you bought as part of a multi-trillion financial
market bailout, ur 'stabilization' program - when you became a hedge
fund on behalf of the taxpayers. You wouldn't have to mention, ANYWHERE,
IN ANY SPEECH, ANYTHING about the $4.1 trillion of Treasury and other government debt you issued since September, 2008, because, what's $4 trillion when you're stabilizing the market - on behalf of the taxpayers.
You could be a mega bank, with a CEO that is also a Class-A NY Fed director (or Jamie Dimon) and impress your new soon-to-be-higher-dividend-receiving
shareholders, with your ability to reduce loan loss provisions, and it
wouldn't have anything to do with accounting rules that don't require
you to acknowledge the tremendous gap between the notional value of your
loans, and their underlying collateral (the real home values) or Fed
You could be a mega bank (as say,
above), pass your second stress test with flying colors, be assured by
the Fed that no details of the test will be disclosed, and act coy about whether you want to disclose them or not.
You could be the Fed Chairman, and disregard the idea of inflation, because if you don't count the cost of food or gas
or health insurance or clothes or anything else sporting a price that
has inflated, there is no inflation, and you can carry on buying,
holding or subsidizing, the various forms of debt sustaining the
Well, actually, if you looked at the
housing market or the financial condition of the majority of borrowers,
there wouldn't be any inflation. Maybe spin is reality. But, let me know
if I'm missing something.
- advertisements -