Santelli And Shiller On Housing, Animal-less Spirits, And Bernanke's Impotence

Tyler Durden's picture

"We've seen rallies that fizzle before" is why Bob "I don't see the reason to call this a major turning point" Shiller is not calling the bottom in the housing market as he notes that while momentum helps, "right now it is partly seasonal" in an excellent reality-based discussion with CNBC's Rick Santelli. From the rise and fall of Greenspan's nationwide housing market correlations (not convinced this is anything but idiosyncratic) to the fact that a 'bottom' does not mean a recovery is coming and his expectations of longer-to-wait; the esteemed gentleman, dismissing concerns over rising interest rates and house prices - and pointing out how mortgage rates do not help forecast a house price recovery, makes a vital point: "Why the urgency" to buy a house? Despite the 'money for nothing', Shiller and Santelli explain there is "no way for Bernanke to change our 'animal spirits'" and his ZIRP is in fact psychologically damaging not invigorating. Absolute must watch! 


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limo_888's picture

We are bottoming and go throw the floor into the sewer.

AldousHuxley's picture

housing prices all depend on government regulations.

it is not a free market

california has plenty of land, but government restricts buildable zones and even less on education funding

meaning homes in good school districts are overpriced because nancy pelosi uses government power to overinflate her assets invested in real estate via her husband's real estate development company.





Earl of Chiswick's picture

But Dimon Jim called a housing bottom earlier today and he put your money where is mouth is by reducing loan loss reserves for JPM's s RE holdings by almost a billion. If this wasn't the bottom then he never would have done that. 

Bunga Bunga's picture

Stopped counting the endless bottom calls. I'll wait until the bottom callers throw in the towel.

TheSilverJournal's picture

Housing set to drop at least 75% from here. Imagine what the picture will be like when interest rates go through the roof and it becomes a cash and carry market. Not to mention how poor Americans will get when the bond/fiat/credit/debt/government/service sector bubble bursts.

hidingfromhelis's picture

...or dollar set to drop at least 75% from here while housing remains stable in nominal dollars.  Realistically, I bet it lies somewhere in between the two.

TheSilverJournal's picture

Do I have to say this every time? Housing will drop 75% IN REAL TERMS. You can't measure any future price in dollars because the dollar is on a course to become worthless.

AldousHuxley's picture

housing bottoming out while everyother thing increases 5-10%/year means

in real terms, housing assets LOST 5-10%


in Japan, people buy houses knowing that value will depreciate in real terms. It is just a matter of how much less depreciation.


home ownership = you have to buy bunch of shit to fill it AND pay 1-3% TAX every year!!!!!


buy what you need, rest of the money should go with most productive investments.

FEDbuster's picture

First, it depends on the market.  Second, I don't think you will see and additional 75% from here (excluding nuclear war).  The rent/own ratio is pretty favorable to own in many markets.  I think you will see a stealth easing of credit standards by Fannie, Freddie and FHA to encourage more sales.   Prices will bounce around the current level (up 5% or down 5%).  In many areas prices have stabilized at cost of production, the variable seems to be lot prices. 

dwdollar's picture

Sounds like Ben or CONgress needs to subsidize building materials and labor!

Or better yet, set a new minimum wage in construction!!!

TheSilverJournal's picture

Housing prices have nothing to do with the cost of construction. Housing prices come from supply and demand. Housing is WAAYYYY overbuilt due to ultra low rates.

The next big business is going to be tearing down empty houses.

AldousHuxley's picture

1) housing prices in attractive markets is all about land price the house sits on.

2) housing prices in unattractive market is all about construction price since land is almost worthless.


#2 can be artificially controlled by government restricting buildable land. not allowing supply of land to be free, so demand is propped up.

boooyaaaah's picture



UN Agenda 21/Sustainable Development is implemented worldwide to inventory and control all land, all water, all minerals, all plants, all animals, all construction, all means of production, all information, and all human beings in the world.   INVENTORY AND CONTROL.

Have you wondered where these terms 'sustainability' and 'smart growth' and 'high density urban mixed use development' came from?  Doesn't it seem like about 10 years ago you'd never heard of them and now everything seems to include these concepts?  Is that just a coincidence?  That every town and county and state and nation in the world would be changing their land use/planning codes and government policies to align themselves with...what?

First, before I get going, I want to say that yes, I know it's a small world and it takes a village and we're all one planet etc.  I also know that we have a government of the people, by the people, and for the people, and that as cumbersome as that can be sometimes (Donald Rumsfeld said that the Chinese have it easy; they don't have to ask their people if they agree.  And Bush Junior said that it would be great to have a dictator as long as he was the dictator), we have a three branch government and the Bill of Rights, Constitution, and self-determination.  This is one of the reasons why people want to come to the US, right?  We don't have Tiananmen Square here, generally speaking (yes, I remember Kent State--not the same, and yes, an outrage.) So I'm not against making certain issues a priority, such as mindful energy use, alternative energy sponsorship, recycling/reuse, and sensitivity to all living creatures.

But then you have UN Agenda 21.  What is it?  See our videos and radio shows at the bottom of this page (or search YouTube for Rosa Koire) or buy BEHIND THE GREEN MASK: U.N. Agenda 21 by Rosa Koire click here


Considering its policies are woven into all the General Plans of the cities and counties,  it's important for people to know where these policies are coming from.  While many people support the United Nations for its peacemaking efforts, hardly anyone knows that they have very specific land use policies that they would like to see implemented in every city, county, state and nation.  The specific plan is called United Nations Agenda 21 Sustainable Development, which has its basis in Communitarianism.  By now, most Americans have heard of sustainable development but are largely unaware of Agenda 21.

In a nutshell, the plan calls for governments to take control of all land use and not leave any of the decision making in the hands of private property owners.  It is assumed that people are not good stewards of their land and the government will do a better job if they are in control.  Individual rights in general are to give way to the needs of communities as determined by the governing body.  Moreover, people should be rounded up off the land and packed into human settlements, or islands of human habitation, close to employment centers and transportation.  Another program, called the Wildlands Project spells out how most of the land is to be set aside for non-humans.

U.N. Agenda 21 cites the affluence of Americans as being a major problem which needs to be corrected.  It calls for lowering the standard of living for Americans so that the people in poorer countries will have more, a redistribution of wealth.  Although people around the world aspire to achieve the levels of prosperity we have in our country, and will risk their lives to get here, Americans are cast in a very negative light and need to be taken down to a condition closer to average in the world.  Only then, they say, will there be social justice which is a cornerstone of the U.N. Agenda 21 plan.

Agenda 21 policies date back to the 70's but it got its real start in 1992 at the Earth Summit in Rio de Janeiro when President Bush signed onto it.  President Clinton signed it later and continued the program in the United States.  A non-governmental organization called the International Council of Local Environmental Initiatives,  ICLEI, is tasked with carrying out the goals of Agenda 21.  Over 600 cities in the U.S. are members; our town joined in 2007. The costs are paid by taxpayers.

It's time that people educate themselves and read the document and related commentary.  After that, get a copy of your city or county's General Plan and read it.  You will find all sorts of policies that are nearly identical to those in U.N. Agenda 21.  Unfortunately, their policies have advanced largely unnoticed and we are now in the end game.  People need to identify their elected officials who are promoting the U.N.'s  policies and hold them accountable for their actions.  Only when we've identified who the people are and what they are trying to do will we be able to evaluate whether or not we approve of the policies they are putting forward.  Some people may think it's appropriate for agencies outside the United States to set our policies and some people will not.  The question is, aren't  Americans  able to develop their own policies?  Should we rely on an organization that consists of member nations that have different forms of governments, most of which do not value individual rights as much as we do?  It's time to bring U.N. Agenda 21 out in the open where we can have these debates and then set our own policies in accordance with our Constitution and Bill of Rights. 

Bunga Bunga's picture

The next big business is going to be tearing down empty houses.

Who will pay for the desctruction of capital?

Bicycle Repairman's picture

Rents are going to head down, so be careful with (today's rent) to own ratio.

Bunga Bunga's picture

First, it depends on the market.

FEDbuster, That sounds so 2000ish. Today only muppets believe in market.

duo's picture

didn't California have 1 million real-estate agents (licensed) in the mid 2000s?  Probably another half a million lining the intestinal walls of the mortage colon.

AldousHuxley's picture

1 in 10 Americans live in California.


california have millions of all kinds of crazies.

nothing surprises long time california residents.

azzhatter's picture

"no way for Bernanke to change our 'animal spirits'" and in fact his ZIRP is in fact psychologically damaging not invigorating



That's the money line, right there

ToNYC's picture

That's the destruction of the meaning of stored income. BernanKing plays PeKing from PrinceTown grinding independent and later-developing stored ideas, crippling future plans with deadened money. He's blessed by his Member BanKings in eliminating independent's power so his cohorts and enablers can have more serfs at the ready. Cripple money and cripple Freedom. BenanKing is a corporate tool destroying individual freedom.

knukles's picture

Please don't be so cynical after that blow out expose by Plugs last night.

Fire Cat's picture

First post ever, bitchez! But is Shiller drunk, or is that normal for him?

Money 4 Nothing's picture

If I was in his position, Bloody Mary's for breakfast would be my choice also :)

I am on to you's picture

Sounds more like,his nose i full of Cia first quality,and the other shill,is on methamp:

And its money for nothing,great world we live in!

And Bitch them on that,girls!

Fluffybunny's picture

That's just how these professors are.

mendolover's picture

He very well may be a little loopy if he thinks the Bernanke is 'well meaning'.

Whoa Dammit's picture

Shiller needs to get with the program and start a market food price index. Housing is done. No one cares about it anymore.

Silvertrader's picture

Harsh times ahead! That is certain. But for a CFD trader this doesn't matter much. More volatility in the markets is potentially bigger profits!

ebworthen's picture

Shadow inventory not cleared.

Assessments coming in low intentionally to rob equity and get FHA backed loans through (again, for many who still can't really afford the place).

Or, those elites who benefit from FED cotton candy buying places to rent at exorbitant rates to those who lost their house when they got laid off.

It will take 20 years of this ZIRP bullshit market to clear things.

That is, if they can keep rates low.

When rates go up because it becomes clear the U.S.S.A. is insolvent, watch housing and the country go the way of Spain and Greece.

Peter Pan's picture

There are only two things that will resurrect the housing market. More jobs and more well paying jobs. Everything else is smoke and mirrors.

AldousHuxley's picture

get rid of artificial regulation of where you can build and almost everyone will be able to afford housing and have money left over for other stuff.


housing eats up half of your after tax money because owners of US government....elite landholders....want you to pay overpay for their lot of shitty land.

Offthebeach's picture

Banksters need high prices. 1, for their portfolio. 2, to force muppets to take loans. Can't have free and clerk muppets. No telling what idea might befall them. No, all hampster stay on the wheel.

honestann's picture


Low prices is the only natural way to stimulate the market for homes.  Remove all artifice, let prices crash to their natural level, then prices will stablize and become worth consideration.

dwdollar's picture

Until the Federal Reserve is thoroughly discredited and its minions are banished back to hell, this market is going anywhere that hurts you and helps them.

Dr. Engali's picture

They can talk about rates all they want, but when the banks refuse to lend houses aren't going to move. We have a couple of banks around here that will write nothing but Fannie and Freddie loans. If they can't sell it to the governmnet they aren't going to write the loan.

Offthebeach's picture

Ballpark, something like 90% of all mortgages run, backdroped by fedgov agencies. Fred, Fran, vets, HUD, FHA. Coupled with Bernanke ZIRP, you got a Weekend With Bernanke corpse housing market.
Cue Monty Python Dead Parrot sketch.

FreeMktFisherMN's picture

Anyone have any insight into the validity of what SilverDoctors posted about this Benton group saying silver will explode the 16th this month?

Waterfallsparkles's picture

I agree with Santelli.  No urgency.  People will sit on their hands.  If people though interest rates were going up they would have to get off the sideline and step up to the plate and buy before it would cost them more.  Because if people started to buy on higher interest rates, then house prices would also go up because the existing housing on the market would quickly disappear, which would cause a limited supply of houses to buy.

Bernanke has it backwards.  But what do you expect from a Fed Chairman that only worries if Stocks go up.  He has blinders on.  I also wonder what possible personal gain he has in his decisions.


j0nx's picture

If interest rates start to go up then nobody with ANY amount of gray matter between their ears is going to buy a home because it will cause home prices to drop to the cellar and then they will just wait it out for a price bottom and buy then. The effect you mention might come about for a VERY brief amount of time and only in desirable locations. Low rates is the only thing keeping prices stable right now. Once that stops then all bets are off and home prices will tumble and make 2008 look like a dip. Better to buy when rates are high and home prices are at their lowest anyway.

Bicycle Repairman's picture

And sometime in the next 10 years interest rates will go up.  So why own an illiquid leveraged investment like housing?

MachoMan's picture

Simple, utility.  If you deleverage, downsize, or do what you have to do to mitigate any outstanding debt on your personal residence, then you have a cave from which to wage your war on inflation...  that is probably protected by a myriad of homestead laws even if you should succumb to the financial monster.

Waterfallsparkles's picture

Banks are taking a bath on anyone with good credit that can refinance at these low rates.  They are losing higher interest loans and giving loans for 30 years at below par interest rates.  They do keep the higher interest rate loans on the sub par borrowers but then they also are carrying the risk that those borrowers will default.

 Banks are also losing on Credit Card interest for the good credit borrowers.  Today you can switch your Credit Card for a total of 2% up front and 0% interest.  I have done this many times.  Although, I have paid off most of my Credit Card debt.  But, the 3% up front interest has helped me to do exactly that.

adr's picture

Very wrong sir. The spread between the rate the banks pay for the mortgage and the APR charged to the borrower has almost never been higher.

The banks are making more money off 3.69% loans than they were with 7% loans. Not to mention the fees that have skyrocketed.

Offthebeach's picture

Spreads have never been higher. FedRes is giving free money. Why'd JPM report so good, 'cause economy is so hot?

freedogger's picture

Housing prices are distorted from a certain fund buying all property in specific areas below a fixed dollar amount. This will drive up prices and they slowly sell back into an inflated market while renting the rest out. So this *improvement* in housing stats could very possibly be just a result of these kinds of games.