Refuting The Housing Recovery Falacy Courtesy Of... The Fed?

Tyler Durden's picture

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gwar5's picture

Yes... we are a Banana Republic.

Yes... we still have no bananas.

Id fight Gandhi's picture

We will tell our great grand children od the days when man used to walk on the moon. How planes carried people in under three hours to Europe, how men produced goods in factories. It will take the next world war to rebalance things.

SheepDog-One's picture

Banana republic...and we dont even have the benefit of having fuking BANANAS!!

IQ 145's picture

 Hawaii; a united states state; (supposedly); I can see the bananas out my window. many, many bananas. I'm not sure if this is significant, tho.

EvlTheCat's picture

Come on SD1, we have lots of bananas.  They are all centrally located in Washington, D.C. in a place called Congress.

one useless 'banana' is a shame, two is a law firm, and three or more is Congress.

jeff montanye's picture

imo all three branches (executive, legislative and judicial) are involved.  have you forgotten about our (constitutionally mandated) checks and bananas?

101 years and counting's picture

we may not have bananas, but we are really good at committing fraud and printing inflation and exporting it around the globe.

docj's picture

Benron needs a contrarian point of view that can be laughed-at and then dismissed out of hand - so he can go before The Elected and The Media say something like "Sure, we considered all available options and decided the best bet is STEADY AS SHE GOES!!"

Looks like DiMartino-Booth and Luttrell drew the short straw this month.

Irwin Fletcher's picture

Yep, short straw successfully passed from Thomas Hoenig. DAMN THE TORPEDOES!!!

bronzie's picture

"With nearly half of total bank assets backed by residential real estate, ..."

not to mention a significant portion of the several hundred trillion dollars worth of derivatives floating around the planet right now

residential real estate underpins the whole economic system in the western world

aint no fortunate son's picture

it simply means QE3 and 4 are a lock

Beatscape's picture

The other 40% is commercial real estate, which the banks have done a fabulous job of extend and pretend.

TheGoodDoctor's picture

LOL. That was my thought. "How much is CRE then?" As Jim Lahey says, "There's a shit storm brewing Bubbles. A shit storm."

Cindy_Dies_In_The_End's picture

GoodDoctor: You score extra credit points for using Trailer Park Boys, and yup with CRE they're  takin' the shit tornado right back to Oz.


I suppose this makes us the shit hawks.

jeff montanye's picture

take a good long look at that home price chart.  reversion to the mean?  can anyone doubt it will be plumbing the second (third?) standard deviation below the mean?  

scrutinize 1893 (panic of) to 1920.  nearly three decades of relative slide (we've had four years).  followed by twenty more years in the crapper culminating in "the great depression".  approaching the remaining life time of a newly minted labor market entrant.  

telling our grandchildren of men on the moon?  tell them about when people owned real estate for "investment purposes".

Kyron95131's picture

i would expect this to continue through 2011 easy... if not grow exponentially

ghostfaceinvestah's picture

How ironic coming from the biggest Central Planning organization in the history of mankind.

Liars Poker's picture

Visit , he has a very good strategy. What do you guys think?

mark mchugh's picture

Two things:

How can anyone discuss house prices without discussing interest rates?

And let's remember the "housing crisis" is mostly a problem for the banks, how many more people could live comfortably in your residence if necessary?

Real demand for housing is going to be slack for quite a while.

Racer's picture

With the Wikileaks taskforce and now this, it really is WTF is going on with the gubbmint!

bronzie's picture

only 22 years left until the current real estate downturn bottoms according to Martin Armstong's cycle work

some factors supporting his prediction:

- Boomers downsizing into coffins and urns

- rising unemployment

- increasing duration of unemployment

- more than 8 months of for-sale inventory on MLS (anything over 8 months typically means price pressure is downward)

- millions of units of shadow for-sale inventory that will have to be cleared at some point

- clouded titles / ownership uncertainty (robo-signing, foreclosure crisis, mortgage fraud, etc)

- aftermath of real estate bubble popping - humans tend to stay away from the once-bubbly asset category for a full generation (26 years being a generation perhaps?)

stock up on popcorn - this will be a long running show ...

Logans_Run's picture

...and remember to buy the fucking dip! Sarc off

jeff montanye's picture

again, look at the home price chart 1893 to 1942.  instructive.  

Cdad's picture

You know, just how bad the US housing market is IS something I DO know about.  So I don't need any convincing that this mess is going to get A LOT MESSIER as we bravely go forward into the wildest dreams of J. Hatzius's sense of 2011.  That would be a great big duh....although I doubt J. Hatzius will feel the TRUTH of things in his bonus check this year, anyway.

However, when I read:

Given that time has not proven beneficial in rendering pricing clarity, allowing the market to clear may be the path of least distress."

I nearly came out from under my big pile of coats in the closet...[I said nearly]... on that WOWZER...considering those words belong to a Fed official. 

As for all those sweet charts about the total bumble-u-no-what in the US housing market, those charts will only prove one thing...that folk over at the Blow Horn [CNBC] will NOT BE TALKING ABOUT US HOUSING any time soon. 

One Ton Lady's picture

Look everybody. Its fuckin Cdad, the original thread cleaner. Look out and don't say anything he doesn't like or else.

velobabe's picture

I like fcking Cdad, he is german, take photographs of miss..ey in skirts, blowing up from the street man hole covers, and lives in the clothes closet. i hide in my clothes closet a lot 2.

jeff montanye's picture

thank you (!) for that link.  hubba hubba (for her mind).  brooksley born, bethany mclean, meredith whitney, dimartino booth.  impressive and ongoing, apparently.

Id fight Gandhi's picture

When this country get worse, where will you move?

What country has most prospects for a better life?

Jason T's picture

Where liberty dwells will be my country.  


I can't think of any :/

OddFieldIsStrong's picture

Seriously we don't want any more of you jumping rats. Go to Australia. It's better cultural fit for you people.

jkruffin's picture

This whole mess could have been taken care of 2 yrs ago, and we would have already been in a major recovery, if Obama and his cronies would have just listened to me, and yes, I wrote Senators, Obama, and the works about it; repeatedly.

I said the FED should have bought out all mortgages (which was @$11.3 Trillion at the time), and consider them all paid, pay the banks their crooked money, and people could come back in and tap up to 50% of the new equity to pay off cc debt and other high interest loans.  The stipulation was it had to be primary residence and living in it for 1 yr minimum to do it.  The FED and Treasury together are already working on $9 Trillion wasted and counting in 2yrs time, and this mess is far from over, and in the initial stages of a major collapse again.  I guess Benny Boy and Timmah aren't as smart as they want people to think they are.  People could have afforded a higher tax rate if done the way I suggested, yet now we just added more debt by extending tax cuts and more unemployment.  Go figure.  This death spiral will continue too. The FED is trapped. We could have already been back on our way to a balanced budget by now.

Missiondweller's picture

I think Karl Marx had a similar plan.

Cdad's picture

Well said Missiondweller. 

CD's picture

See, there you go assuming that solving the problem was the goal of the exercise in the first place...

jkruffin's picture

Obviously, I have to agree with your statement!

Deep's picture

What about all the people who had paid off their mortgages? And many other things i can't even think off right now. 

I like your posts jkruffin, but this one i dont i agree with.


jkruffin's picture

This was just a short of what I had suggested, just to touch on the bulk of the mortgage problem, and there were suggestions for those who rent and had paid off mortgages too, so they weren't seen, or feeling, as the ones "paying" for others.  It was pretty much a lump sum check.  The total of everything was about $13 Trillion for what I had figured up based on the taxpayer count then and the number of mortgages.

Even when I wrote it though, I knew there would always be tweaks needed, but it was a great foundation to get started to a boom back in the U.S.  However, the bankers obviously didn't approve of parting with their quaff. Our political leaders have been on vacation for about 8 years now as well, so I didn't expect to get far with them either.

Lucius Cornelius Sulla's picture

Off topic but I would like to know why the heck CHASE is advertising on this website! 

CD's picture

Contextual advertising placement (finance/banking topics) + attractive (self-reported) demographic of middle age/older, affluent, educated male readership --> prime targets for "premium" Chase credit cards, luxury cars [Caddy, Beamer]. Make sure to click often, and check out the "fantastic deals" they are offering - esp. JPM. I try to cycle through all of them at least a few times a day...

velobabe's picture

attractive (self-reported) demographic of middle age/older, affluent, educated male readership -->

<--------- i knew why zerohedge had me

@ on a long enough timeline, the survival rate for everyone drops to Ø

wisefool's picture

I think it has to do with the words on the page and the way web advertiser frameworks work. When we discuss a company their adds show up here. I just wish the fed would join the advertising pool. Lemme try this.

"Federal Reserve notes. Dropped out of helicopters at your house! click here! You don't have to be a primary dealer, or have an MBA or a PhD in economics. Mouse over for more details"

Lucius Cornelius Sulla's picture

I love the irony of Tyler and crew getting advertising $$$ from them :)

janchup's picture

The author of the piece has been fired for dabbling in reality.

Rainman's picture

Or maybe the author finally got the memo that 1 in 3 California mortgages are underwater. Rainman don't mean rainstorm either.


CD's picture

OT, but a fellow reader showed me this crew, and I feel obliged to share the wealth:

Thievery Corporation

The song most fitting here might be 33 degrees:

I'm the president of the shadow government
The grand governor of the federal reserve
Public enemy of the society
The one you cannot see the thirty three degree
Before you call the shot but now it's our turn
Blow up the system now and tables have turned
Your hidden knowledge you thought I'd never learn
I strike a match and make the whole place burn
I'm the real WMD
I'm your number one public enemy

velobabe's picture

i was just listening to this song this morning. on that same album, a lot of relevant lyrics, applied to this mess. they rock, HARD.