This page has been archived and commenting is disabled.

NAHB Builder Confidence Drops Again, Misses Expectations, Back To April 2009 Levels

Tyler Durden's picture




 

Today's National Association of Home
Builders/Wells Fargo Housing Market Index update for July was yet another confirmation of the deterioration in the economic sentiment, and the US consumer's unwillingness to spend on homes absent tax rebates and other forms of stimulus, regardless of mortgage rates. The index came at 14, below expectations of a 16 reading, and a drop from downward revised 16 in June (prior 17). Ben Shalom is looking at all these deteriorating data points and getting closer to QE2 by the hour.

The chart says it all:

From the press release:

Builder confidence in the market for newly built, single-family homes
declined for a second consecutive month in July to its lowest level
since April of 2009, according to the National Association of Home
Builders/Wells Fargo Housing Market Index (HMI) released today. The HMI
fell two points from a downwardly revised number in the previous month
to 14 for July.

"We continue to see a lull in home buying activity
following the expiration of the federal home buyer tax credit program,
as many of the sales that would have occurred this summer were likely
pulled forward to meet that program's deadline," noted NAHB Chairman Bob
Jones, a home builder from Bloomfield Hills, Mich. "In addition,
builders are reporting continuing consumer hesitancy regarding home
purchases due to uncertainty in the overall economy and job markets."

"This
month's lower HMI reflects a number of underlying market conditions
that builders are seeing, including hesitant home buyers, tight consumer
credit, and continuing competition from foreclosed and distressed
properties that are priced below the cost of construction," said NAHB
Chief Economist David Crowe. "The pause in sales following expiration of
the home buyer tax credits is turning out to be longer than anticipated
due to the sluggish pace of improvement in the rest of the economy.
That said, we do believe that favorable factors such as low mortgage
rates, affordable prices, and demographic trends will help revive
consumer demand for new homes this year, and that new-home sales will
improve by 10 percent in 2010 from 2009."

Derived from a monthly
survey that NAHB has been conducting for more than 20 years, the
NAHB/Wells Fargo Housing Market Index gauges builder perceptions of
current single-family home sales and sales expectations for the next six
months as "good," "fair" or "poor." The survey also asks builders to
rate traffic of prospective buyers as "high to very high," "average" or
"low to very low." Scores for each component are then used to calculate a
seasonally adjusted index where any number over 50 indicates that more
builders view conditions as good than poor.

Each of the HMI's
component indexes recorded declines in July. The component gauging
current sales conditions fell two points to 15, while the component
gauging sales expectations in the next six months edged down one point
to 21 and the component gauging traffic of prospective buyers fell three
points to 10.

Regionally, the HMI results were mixed in July. The
Northeast, which has a smaller survey sample and therefore is prone to
greater monthly volatility, posted a seven-point increase to 23 this
month, while the Midwest posted a one-point improvement to 15. The South
and West each posted five-point declines to 14 and 9, respectively.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 07/19/2010 - 10:17 | 476812 johngaltfla
johngaltfla's picture

Pass the sunscreen, this "summer of recovery" is giving me a burn. But don't worry, this is just another one of those "lagging indicators" that really doesn't mean much.

Until it does.

Mon, 07/19/2010 - 11:02 | 476887 Inspector Asset
Inspector Asset's picture

PLEASE HELP!

i AM FREAKING OUT.

gOOGLE IS PLAYING WITH MY EMOTIONS/HEAD GAMES.

So I have this site, www.GoldmanSAchsExposed.blogspot.com

It is my conspiracy story from 2 years ago.

But when I put that link into my other blog, www.WallStOnion.blogspot.com, THE LINK NO LONGER WORKS BUT IS REDIRECTED TO SOME PARKING PAGE FOR BLOGGER bodisparking.com

What the hell is google trying to do to me?

Please help,

Parnoid and scared.

Mon, 07/19/2010 - 15:07 | 477318 weinerdog43
weinerdog43's picture

"Please help"

Posting when you are intoxicated is not usually a good idea.  I'm sure ZH'ers can offer other tips as well.

Mon, 07/19/2010 - 15:21 | 477341 johngaltfla
johngaltfla's picture

I concur. However going long while intoxicated is a great idea. Let me give him a list of stocks to go long and let me know where to send that 750 ml of grain alcohol so he can have the Googleblackcopters chasing him as he listens to Cwamer and just goes out and buy, buy, buy.

Mon, 07/19/2010 - 10:19 | 476814 papaswamp
papaswamp's picture

Afternoon ramp job...all is well....one little report won't dampen HAL9000's spirits

Mon, 07/19/2010 - 10:20 | 476820 jtmo3
jtmo3's picture

Ignore it like the market seems to ignore everything else, and all will be well. After all, the market is the economy...right. We don't need to worry about those houses and such, as long as the market moves higher.

Mon, 07/19/2010 - 10:20 | 476822 tecno242
tecno242's picture

What good would QE2 really do?

Banks are perfectly willing to lend.. nobody wants to borrow.

How low do they think they can get mortgage rates? 

Would we really see 30 year fixed at 3.5%?

Even if it got there.. would we see anything but refinancing?  I think there just isn't any homebuyers left.

The only thing QE2 would get you if the 30 year fixed actually dropped to 3.5% is more refinancings, and lower payments for everyone that still has equity.  How much spending you get out of that?? probably not a lot.

Mon, 07/19/2010 - 10:25 | 476835 -Michelle-
-Michelle-'s picture

Would we even see much refinancing?  Most homeowners who had the equity to refinance have already done so.  Without lenders willing to refinance regardless of LTV, there will be no more refinancing.

Mon, 07/19/2010 - 10:41 | 476859 HEHEHE
HEHEHE's picture

You are exactly right.  The only thing QEII is good for at this point is re-pumping the stock market.  That's why it won't happen until you get another crash.

Mon, 07/19/2010 - 11:52 | 476989 Assetman
Assetman's picture

You are probably on the right track.

The only thing that QE 1.0 was really effective at was propping up asset price levels, whether that be adding another 600 points to the SPX; or keeping housing prices from collapsing.

QE 2.0 will need to be bigger in size and scope to get the same effects the next time around as QE 1.0... and the latter was only effective in borrowing time-- at a cost.

Chances are, Ben Shalom didn't learn his lesson the first time around, though.  So he will probably give QE 2.0 with guns a-blazing... but only when the stock market has tanked pretty hard, and there's urgency to "do something".

Mon, 07/19/2010 - 12:18 | 477042 Breaker
Breaker's picture

"and there's urgency to "do something"."

I would not underestimate the "urgency" of reelecting the folks in Congress who protect the Fed. If that's the case, the market better be up in 60 days and better not crash again before then.

Mon, 07/19/2010 - 16:28 | 477499 Assetman
Assetman's picture

Point well taken, Breaker.

Unforunately, the re-electing of folks in power is already a lost cause.  It doesn't mean a gallant attempt won't be made, though... however futile that might seem.

Mon, 07/19/2010 - 10:41 | 476860 HEHEHE
HEHEHE's picture

You are exactly right.  The only thing QEII is good for at this point is re-pumping the stock market.  That's why it won't happen until you get another crash.

Mon, 07/19/2010 - 10:44 | 476864 MachoMan
MachoMan's picture

What good could QE 1.0 really do?  Do not presume for a second that it was ever meant to "work."  It was a hail mary on actual, organic "success."  It had the outside chance of working...  how do you think the amount of stimulus was determined?  It was not picked out of a hat...

Like all political endeavors, the powers that be win both ways.  It was meant to: (a) shore up cash position for all hogs at the trough; (b) buy time for those left in the cold to shore up cash position; and (c) begin to whittle away at non performing assets and sell them for pennies on the dollar to those in the club...  among other things.

It also has a neat psychological effect.  When TARP was passed, the country was resoundingly against it.  When TARP fails, our egos become confirmed and we then "know" stimulative efforts will not succeed.  This leads us to demand austerity.  What our creditors wanted all along...

Do not presume the bailout(s) were ever meant to truthfully "succeed."  Just like the stress tests were never meant to be a truthful simulation.

I suspect though, in the end, austerity will succumb to outright repudiation (as opposed to inflationary/devaluation default).

Mon, 07/19/2010 - 11:12 | 476903 tecno242
tecno242's picture

it DID work somewhat though..

we would not have mortgage rates sitting at 4.5% for a 30 year fixed without QE1.

All that shitty mortgage paper would still be sitting on the banks balance sheets instead of cash to pump into treasuries.

Mon, 07/19/2010 - 14:04 | 477210 MachoMan
MachoMan's picture

It was a success in the same sense our public school system measures "success," by completely ignoring glaring deficiencies and reshaping measurement metrics to ensure a congenial outcome.

Further, do you want to surmise on the deleveraging and deflation that would occur had the stimulus not happened (and that is going to happen anyway)?  We had a pretty hefty ride, during which the dollar was the world's safe haven and people actually paid uncle sam for the pleasure of taking his short dated debt instruments.  I do not think, at all, it was a foregone conclusion we would have higher mortgage rates...  what do you think that would do to demand in an environment when any marginal increase in cost makes virtually any activity cost prohibitive?

Also, newsflash, all that shitty mortgage paper is still sitting on the banks' balance sheets...  much of it has just found a temporary home in the FED and GSEs before the "bad banks" get liquidated to the club members at firesale prices.

Last, I thought it was universally acknowledged that the effects of the first stimulus are now worn off...  systemically speaking, we are in as bad of shape as when we started if not worse...  if moses parts the red sea long enough for lemmings to begin running on the dry path, only to get washed away halfway through, was his parting of the sea a success?  Even if your assertion is true, that the stimulus has dramatically reduced mortgage rates (past what the natural market would have resolved), it's over now and we're still in the same boat...  in effect, you're just saying "it worked for a very short period of time in a very specific market."  Not very practical...  nor responsive really...  we can't get people to take on new debt (and refinancing is difficult to sell) at 4.5%...

Again, the stimulus worked to the extent cited in (a) through (c) in my earlier post...  everything else is window dressing and a distant second to those objectives.

Mon, 07/19/2010 - 12:34 | 477073 traderjoe
traderjoe's picture

Plus - increase value of (illiquid) mortgage securities on balance sheet, proceed to sell to Fed at inflated prices, next use proceeds to buy Treasuries.

Reap fees on tons of mortgage refinancings, including getting mortgages off the books into FNM/FRE/FHA, even underwater mortgages. 

Mon, 07/19/2010 - 10:21 | 476823 Turd Ferguson
Turd Ferguson's picture

The BDI was up today!!! WooHoo!!! All is well! BUYBUYBUY!

http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Mon, 07/19/2010 - 10:23 | 476830 Tense INDIAN
Tense INDIAN's picture

how dare is the BDI up

 

Mon, 07/19/2010 - 10:36 | 476851 -1Delta
-1Delta's picture

Actually, if you adjusted for the currency it is priced in... dollars it is still down (if u r using the dollar index per se)

 

Mon, 07/19/2010 - 10:22 | 476824 Herne the Hunter
Herne the Hunter's picture

When squinting, the similarities to the BDI are uncanny...

Mon, 07/19/2010 - 10:23 | 476831 Waterfallsparkles
Waterfallsparkles's picture

I think that one way the Government could stimulate Housing sales would be to buy down Interest rates for the first 3 years.  Example 2% first year, 3% second year, 4% third year and 5% thereafter.

Housing inventory would drop dramatically as Buyers would scramble for the Buy Down.  With the Fed Funds Rate at 0% I do not think that this would have a financial impact on the Debt.

This would also help the Banks unload all of their Forclosure Inventory.  Housing prices would go up so the Mark to Market would improve on the Banks Balance Sheet as well.

Mon, 07/19/2010 - 10:28 | 476838 Plug In Baby
Plug In Baby's picture

what makes it the government's role to stimulate housing sales? why not just let the prices come down naturally to what people are willing to pay/can afford?

Mon, 07/19/2010 - 10:40 | 476856 bmoreland
bmoreland's picture

The Government has a vested interest in keeping housing prices up. A large portion of state revenues (and schools) come from housing taxes. Housing goes down, taxes go down. Not sure many politicians want to raise tax rates on homes right now.

Home Builders, Realtors and Politicians (state & local) all have a vested interest in having home prices go higher. The only one who doesn't is the buyer. My wife and I have been looking to build and/or buy resale and all we hear is that everything is "cheap" right now. "Just look at the tax valuation... See, it's cheap."

Mon, 07/19/2010 - 11:29 | 476945 -Michelle-
-Michelle-'s picture

They may not want to, but they are.  Jacksonville, FL is looking at a second 9% increase in property taxes to make up for the lost revenue from decreasing home values.

http://jacksonville.com/news/metro/2010-07-13/story/peyton-will-chart-ci...

Mon, 07/19/2010 - 11:45 | 476977 firstdivision
firstdivision's picture

That will go over well I'm sure.  Great way to get re-elected. 

Mon, 07/19/2010 - 10:36 | 476850 papaswamp
papaswamp's picture

I think the problem has to do more with first time home buyers (typically younger, not too long out of college) are one of the higher unemployed groups. Those of us that might consider a second home won't buy since the risk of home ownership at this point, doesn't justify purchases...coupled with most municipalities raising property taxes in the face of declining revenues and an ugly economy...just not worth it.

I think the former belief that buying a home is a good 'investment' might be dead. Now open undeveloped property...that is a different story.

Mon, 07/19/2010 - 12:42 | 477088 traderjoe
traderjoe's picture

Plus add in the unfavorable demographics of the retiring Boomer generation, the massive inventory overhang, and the need for increased labor mobility, and I too think housing as a 'good investment' is dead. Bull markets end with a long slow loss of confidence - ending in an aversion to the asset class. You could have a generation or two of Americans that only want to rent, and enjoy the freedom that it brings. Debt = servitude to the banksters. 

Lower interest rates would only subsidize prices for a bit. Once the low interest rates went away prices would fall again. Ending subsidies is always tough - better not to do it at all. Perhaps today's buyers understand that low interests are only good if you plan on owning the home for the entire life (or long enough) of the mortgage contract. 

 

Mon, 07/19/2010 - 11:03 | 476888 mephisto
mephisto's picture

More government debt to support house prices? Instead, why not let house prices fall back to sensible multiples of earnings, sensible fractions of GDP?

There's no way to fake this - housebuilders, homeowners, banks, bondholders, everyone who profited on the way up has to lose on the way down.

Mon, 07/19/2010 - 11:43 | 476971 Caviar Emptor
Caviar Emptor's picture

+10

Mon, 07/19/2010 - 12:09 | 477022 Assetman
Assetman's picture

Ordinarily, that wouldn't be a bad idea, but...

Interest rates aren't really the central issue here-- it's incomes.  To be more specific, it's underemployment and compressed wage trends.

You might get a temporary boost from a subsidized interest program, but it wouldn't drop housing inventory dramatically-- it would likely only help at the margin.

Unless you can dramtically change the employment picture on a dime (and I think the problem is structural), housing prices are going to have to clear at lower level than where they are today.  I certainly don't want to hear that personally, because I bought my house at the market peak... so now I have an expensive rental on my hands.

That being said, the program you propose might help those that want to refinance and are currently struggling to meet those payments.  If the true market rate for mortages spike, however, there will be a significant cost to the taxpayer.

Mon, 07/19/2010 - 16:07 | 477450 Iam_Silverman
Iam_Silverman's picture

"Housing inventory would drop dramatically as Buyers would scramble for the Buy Down. "

I only see two issues here - would these be speculative buyers?  You know, the ones that bubbled up the housing market to where it popped?  The other issue is - with rising unemployment numbers, how are all of these new buyers going to be able to afford to take advantage of this great deal?

Mon, 07/19/2010 - 10:24 | 476832 stoverny
stoverny's picture

think I'll wait for some more free money from my fellow taxpayers before I buy that house.  I'm hoping for $15K by October.

Mon, 07/19/2010 - 10:25 | 476834 Everyman
Everyman's picture

Tyler, could you make a posting of the "leading economic indicators" and all the graphs or have Robo do it.

 

Something like this NAHB/WF Home BUlders Index

Baltic Dry Shipping INdex

ECRI

MRI

UE Actual Data

M3 Money Supply

Net Outflows from Equities

Sulphuric Acid PRice Index

Lumber Price Index

 

I think that would tell the whole story that nobody is making anything and nobody is going to buy anything.  The bits and pieces are fine, but for the retail investor and the rest of the "talking heads" need a hard hitter showing the reality that Larry Kudlow's "green Shoots, Green Shoots"  are DEAD DEAD!

 

 

Mon, 07/19/2010 - 10:34 | 476848 -1Delta
-1Delta's picture

M3? good luck!  cant get it, but i can assure u lending SSSSUUUUUCCCCKKKKSSS

 

Deflation BITCHEZ!

Mon, 07/19/2010 - 10:41 | 476861 Duuude
Duuude's picture

 

+Everyman+

Excellent idea

 

Mon, 07/19/2010 - 10:58 | 476882 lizzy36
lizzy36's picture

Green Shoots, is so 2009. QE 2.0 is the buzzword of 2010.

Everyone knows leading indicators are the ones that go up, lagging are the ones that go down.  Simple.  Try and refudiate (sarah palins presidency is going to be the gift that keeps on giving) that wisdom.

 

Mon, 07/19/2010 - 11:06 | 476892 firstdivision
firstdivision's picture

Don't forget the NYC Cocaine Index, and NYC Prostitute Index.  That would definitely be leading indicators.  If Wall Street is not spending on excesses, then it is all going to be slowing down. 

 

Mon, 07/19/2010 - 11:12 | 476900 Everyman
Everyman's picture

I forgot about those indexes.  We need to include them as well!

Mon, 07/19/2010 - 13:25 | 477168 Ned Zeppelin
Ned Zeppelin's picture

Add domestic rail and trucking data to the Baltic Dry Index. I read somewhere we're supposed to see some "surprising" upside numbers on rail by 7/30. 

Yeah, I know, propaganda but I'd like to see the numbers.

Mon, 07/19/2010 - 10:28 | 476837 Blano
Blano's picture

If ol' Bobby is living in Bloomfield Hills, he's still doing alright, or at least pretending to.

Mon, 07/19/2010 - 10:30 | 476842 Segestan
Segestan's picture

'Unwillingness to spend'....... hilarious!  People are broke, unemployment through the roof in most every sector, .., banks won't lend. Whats not to understand?

Mon, 07/19/2010 - 10:34 | 476847 Ripped Chunk
Ripped Chunk's picture

Just the beginning of the horror show on housing, consumer spending, everything.

Mon, 07/19/2010 - 10:39 | 476854 Cyan Lite
Cyan Lite's picture

Rates are too low to lend.  Would you lend somebody $250k for a house and have your money locked up for the next 30 years at a 4% rate?  I can get a better yield by juicing the stock market with that $250k (considering the 1000 shares per day volume in many stocks, I could perform my own afternoon ramp job)

Mon, 07/19/2010 - 10:50 | 476872 bmoreland
bmoreland's picture

Traditional Bank Lending has been corrupted by the federal government in the past 18 months. It used to be that banks took Deposits, paid 3% as interest and then lent at 6% for that car, boat, mortgage... The bank had 300bp to manage risk, cover costs and make a little profit.

The new model is borrow from the government at near 0% and then lend back to the government by buying 3% 10 year treasuries. They get the same 300 bp, but now don't have to manage risk. They make more. Banks are happy, government is happy. Simple.

Mon, 07/19/2010 - 12:22 | 477033 Assetman
Assetman's picture

+11

 

The "new model" you mention is the greatest scam currently going in the banking system.  The original thought from the Fed (and Bernanke can be quoted on this) is that ZIRP was designed to get banks to increase lending again.

It did no such thing.  All it created was a symbiotic money laundering relationship between the major banks, the Fed, and the Treasury.  Very little of this surge in Fed credit easing has made it into the real economy. 

And despite what Ben Shalom said at the outset, ZIRP was designed to primarily recapitalize the banks; and secondarily, provide a funding source for upcoming Treasury issuance.  It's a brilliant plan on the surface.  But it only serves a very narrow swath of the population.

Mon, 07/19/2010 - 14:42 | 477265 MachoMan
MachoMan's picture

Absolutely, it was about recapitalizing banks all along...  there is no increase in lending...  there is a short burst of urgency by the lead lemmings to owen hart themselves, but the others wise up and run away from the cliff.  The administration wants to create rules that would help small/community/regionals lend more to small businesses.  Well, take a look at CRE brainiacs...  what the fuck demand do you think there is?  At this juncture, they're still confusing a liquidity crisis with a solvency event...

There is demand for loans...  it's just by people who have no alternative and are unwilling to delever.  Anyone with any credit worthiness whatsoever has run the fuck away from the trough...  obviously there are exceptions along the way, but I'll let someone else argue those against the rule...

When will we get the stomach to ween them from our teets?  They're supposed to be vicious bears...  but instead they're 8 year olds still sucking on mom's tits, destined to become nancy boys...  completely incapable of shitting in the woods and breaking a bull's back with one swath of the paw.  Perpetual dependents.  They've managed to find our dump site and an endless supply of picinic baskets...

Mon, 07/19/2010 - 11:28 | 476942 ABCStore
ABCStore's picture

"Would you lend somebody $250k for a house and have your money locked up for the next 30 years at a 4% rate?"

 

Yes, if I were allowed to do fractional reserve lending at infinity:1 like the banks are.

Mon, 07/19/2010 - 10:43 | 476862 Rider
Rider's picture

When the scum in wall street will accept the Stocks should be at April-March '09 levels already?

Mon, 07/19/2010 - 10:55 | 476878 mephisto
mephisto's picture

Your 401k isnt long enough yet. Give them time.

Mon, 07/19/2010 - 11:14 | 476910 barkingbill
barkingbill's picture

when they look in the mirror?

Mon, 07/19/2010 - 10:50 | 476871 Amish Hacker
Amish Hacker's picture

I'm amazed there is any significant activity in the new home market this year, given that the banks are still kicking people out of the houses that were built last year. Government efforts to keep house prices artificially high may allow banks to maintain the illusion of solvency for a little while longer, but what 's really needed is a grind lower to an honest, market-clearing price. I don't see how any real recovery can begin until then.

Mon, 07/19/2010 - 10:53 | 476877 centerline
centerline's picture

Dead cat bounce.

Mon, 07/19/2010 - 10:57 | 476880 PiratePiggy
PiratePiggy's picture

Its not whether there or not there should be QE/QE2, but who should get the money. It won't be you and it won't be me.  It's the fellow that paid his campaign contribution fee. The fairest approach to printing money would be to just forgo income taxes for a few years- that will incent everyone to work hard.

Not all QE2 is bad, in fact, some of it is outstanding: http://www.youtube.com/watch?v=xrV2Vqeh_rQ

 

 

 

 

Mon, 07/19/2010 - 11:22 | 476929 ejmoosa
ejmoosa's picture

How can new homes even compete in this market? 

 

Around North Atlanta, there are dozens of neighborhoods partially finished.  You could move in and be looking at eyesores around you for years to come.

Or you can buy a resale in a neighborhood at steep discounts.

It's a simple decision.  But like any factory, they will keep rolling out product until they are out of money.

 

Mon, 07/19/2010 - 11:31 | 476950 trav7777
trav7777's picture

Only gov't is borrowing at this point.

The banks are borrowing from them and lending back to them, creating money.  The expectation was that all this excess reserves profit would end up out in the economy.  But without us stupid peons doing the right thing and levering up further in the face of inarguable declines in income, the money just sits there, parked.

Gov't is going to have to spend it into the economy but every dollar they appropriate seems to end up right back in the pockets of the elites

Mon, 07/19/2010 - 11:32 | 476953 JLee2027
JLee2027's picture

This bad news and the Ireland debt downgrade = falling Gold/Silver and a rising stock market.

Insane.

Mon, 07/19/2010 - 11:34 | 476954 jtmo3
jtmo3's picture

Quite insane.

Mon, 07/19/2010 - 12:04 | 476955 John McCloy
John McCloy's picture

   What can they possibly do? Let's map this out of the Fed & Govt end game is to reflate housing?

  The only way that could occur is for banks to unleash their reserves at anyone willing to lend and return to a zero standard of lending to anyone with a heartbeat. So then what occurs? The speculation then resumes and home prices begin to rise once again perhaps if they throw out a 10k tax credit but what good does that do?

   The banks are well aware if they do that then they will be sitting on new fresh loans waiting to go bad which will only make the ensuing collapse even worse for their already insolvent balance sheets. What occurred before was the complete perfect formula of greed at a time where Americans had jobs solely because states were doling out cash and entering deficits and the government would just keep handing them cash in return for debt to pay city and state employees. We also had 5% unemployment and a stock markets that had not collapsed destroying 12 trillion in global wealth. So even if banks lend like mad we would see a mild uptick yielding less results and banks would scramble to securitize these new loans and unload them as quickly as possible knowing that they are defualts waiting to happen.

    There is not a chance AAA can be rated on these new securities and global pension funds have already been sucked dry and are in the stage where they are suiing the charlatan banks for selling them poision. What does the Fed actually expect will happen?

    I have believed all along this entire year long charade was done to afford banks some time and pump their shares to make offerings to get some sort of private capital as a backstop and every gimmick was utilized. Endless employment benefits, multiple housing tax credit extensions, ZIRP, Accounting changes along with the lowest mortgage rates in history. If they are still so stubborn to believe that all that is needed is stimulus x5 than these people cannot be trusted with our money. They may as well flat out say we are going to use the U.S. blackcard that is the printing press and the middle class to blow up another bubble...EVEN THOUGH THE PREVIOUS TWO BUBBLES HAVE BEEN EATING US ALIVE.

     To me this is fraud under the guise of government meant to cater to a select few. The only reason the President is pushing for a fresh round of benefits is because he needs to keep the pitchforks at bay and like any false "politician" to grace the oval or capitol in recent memory they only know one thing: 1) Spend other people's savings to garner vote. 2) Stay elected to cater to corporate special interest so they can stuff my wallet from the money extracted from the middle class I am sworn to protect while tip toeing around the constitution.

  All anyone need keep in the back of their mind is the following. It is all about inhrenently good and inherently evil. Throughout history there has is always a trait within within human nature in a select few to dominate and exploit the weak.They have existed in every society either modern or ancient. The use of violence and exploitation of labor to benefit the few within the circle. They have no compassion and exist only to be suppress. From the British Monarchy throughout history, Genghis Kahn, Feudalist Japan, Southeast Asian dictators tyranny and a fascist nearly always arise. The 200 year plus U.S. experiement will be no different unless action is taken.

     It is harder to recognize this time around because the tyrants are well aware that the United States is a special circumstance and it requires cautious and slow moving actions to be turn the U.S. into a tyrannical state. Violence through armies and secret police is too overt to succeed in the U.S. which is why it must first be achieved economically and liberties slowly extracting.

    The founders created that wonderful piece of paper and established our Republic to act as a guardian against these evil men knowing full well given enough time they would arise here in the United States as they always have throughout history. For this reason they constitution has been slowly chipped away at by them and here we stand today where the United State of America is controlled by a bank which is controlled by elites and the wealth hoarders giving us modern day tyranny more difficult to spot.

Mon, 07/19/2010 - 12:13 | 477036 Caviar Emptor
Caviar Emptor's picture

    I have believed all along this entire year long charade was done to afford banks some time and pump their shares to make offerings to get some sort of private capital as a backstop and every gimmick was utilized

We're on the same wavelength here. Greenspan himself tipped his hand during an interview last year. He stated that the rising stock market served to "re-liquify" capital markets.

To fully grasp the meaning, just follow the money. The Fed had mechanisms to recapitalize and liquify the banking system. But given that most large cap corporates rely on credit just to meet monthly obligations, they needed a fast cash infusion by March 09 (since things were utterly frozen).  So one key backdoor mechanism was to reflate the stock market to allow for issuance of secondary stock offerings. This also had the additional benefit of a "wealth effect" to investors and an important geopolitical signal that Uncle Sam is still a Gorilla, perhaps a bit slimmer. 

Mon, 07/19/2010 - 12:24 | 477053 Everyman
Everyman's picture

So that means we are remove the "tyrants" at any possible means and dispatch?

I am all in on that one.

 

Personally, I think the financial, investing, and bankers neeed to run a gauntlet of US Taxpayers that are armed with tube socks full of wood screws.

 

And they have to make it through the 150 million or so that are paying taxes.

Mon, 07/19/2010 - 12:36 | 477080 John McCloy
John McCloy's picture

    Luckily the founders also devised a government that meant this can occur without violence and through elections. The concern however is that these use their wallets as clubs to continue to fund their puppets and keep the cash flowing to their captured media to spin the story in their chosen direction.

Mon, 07/19/2010 - 12:44 | 477091 Everyman
Everyman's picture

NOthing said about needing to "vote" to change our a bad form of government, and they will not go willingly.  That will be seen in the mid-term elections. 

They will only leave if FORCED to leave, "by whatever means necessary", and I ma completely comfortable with that.

"That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."

Mon, 07/19/2010 - 12:47 | 477094 traderjoe
traderjoe's picture

Elect who as replacements? Republicons = democrates. 

Mon, 07/19/2010 - 17:23 | 477625 MachoMan
MachoMan's picture

It should come as no surprise that Obama is going to beg to pass more unemployment benefits.  This is what we have been doing for as long as anyone can remember.  Our social safety net has nothing to do with our kind hearts, but rather everything to do with our fear of collective bargaining through violence of the morts.  To a large extent, our entire system of law is centered around protection of private property and unemployment crumbs are no exception.

As for our liberties, I believe we will merely change masters...  the public beast traded for maniacal robber barons...  each has its own pros and cons...  but, we will get something absolutely necessary to progress in the process, a massive reduction in the size of all governments and, therefore, the complexity of their rules and regulations.  It may be impossible to achieve real justice in our near future (we're almost there as it is), but it will not be all bad either.

I welcome our robber baron overlords.  Their presence means we may once again begin this whole process...  destined to fuck it up again in a crescendo of credit destruction.  I guess that's the devil of induction...  just because we made it out alive every other time doesn't mean we will this one...  but, I'm not sure what else we have to go on...

(I presume many corporations/separate entities will be jettisoned by the elite as they have all become "bad banks" to a certain extent...  and as input costs increase without the ability to pass on the benefits to consumers...  will just shut doors instead of delever).

Mon, 07/19/2010 - 12:39 | 477083 SheepDog-One
SheepDog-One's picture

'Elections', yea Zimbabwe and Iran has em too, lotta good is does them.

Mon, 07/19/2010 - 12:40 | 477086 SheepDog-One
SheepDog-One's picture

Hmmm seems as usual its no biggie...ramp up the DOW as pre-planned!!

Mon, 07/19/2010 - 13:21 | 477163 Ned Zeppelin
Ned Zeppelin's picture

Housing is so dead right now I'm surprised we didn't get a negative number from the homebuilders. 

Mon, 07/19/2010 - 15:20 | 477339 BigSkyBear
BigSkyBear's picture

ANY number below 50 IS a negative Number.

 

Heading to Zero Bitchezz!!

 

:-D

 

I.F.O.!

Mon, 07/19/2010 - 13:30 | 477172 Invisible Hand
Invisible Hand's picture

Well, I am about to sign a contract to build a custom home. Yeah, I know that is stupid (from the financial viewpoint) but it makes sense from the perspective of our personal situation.

Interesting point though relating to our community (in Rust Belt) .  The builder starts with standard floor plan and customizes.   The "standard" price on all his models have dropped 20% since Jan '07 (I saw an old price list).  This is more than Zillow (for what that is worth) shows existing houses having declined.  All real estate is local and here, foreclosures are uncommon (maybe since the major employer is a military base).

As a previous commenter noted, in Atlanta (our old home) foreclosure prices drove the market.  We sold our Atlanta house (closed last Friday) about 15% below the 2003 price (40% below 2006 price) and about 10% above the foreclosure price (we are pleased, to say the least, to have sold now before the next wave of foreclosures drives prices lower).

Real estate prices, IMO, have not bottomed but you have to live somewhere and there comes a time in your life that doing the practical thing is not necessarily the smart thing.

Mon, 07/19/2010 - 15:01 | 477304 digalert
Mon, 07/19/2010 - 15:39 | 477390 Everyman
Everyman's picture

With this crappy number, how the heck is DRV DOWN???

Mon, 07/19/2010 - 16:16 | 477474 Iam_Silverman
Iam_Silverman's picture

Now, how will the NAR spin this positively?

I see more "Now Is The Time To buy!" commercials being queued up.

Tue, 07/20/2010 - 00:56 | 478226 BigSkyBear
BigSkyBear's picture

"There are NO American Troops in Baghdad!!!"

 

 

Tue, 07/20/2010 - 08:39 | 478444 Iam_Silverman
Iam_Silverman's picture

Heh, that IS funny.  Maybe they should make ol' Baghda Bob their new spokesperson?

Do NOT follow this link or you will be banned from the site!