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The Second Housing Bubble Ends With A Bang, Not A Whimper, David Stockman Warns

Tyler Durden's picture




 

Following our earlier discussion of the echo-boom in housing, David Stockman appeared on Yahoo's Daily Ticker with Lauren Lyster to pour come much-needed cold water 'reality' onto the hopes of an increasingly sheep-like investing public. Homebuilder stocks up 100%-plus simply reflects that "we are in a bubble once again." The former CBO Director added that "in a world of medicated money by the central bank, things aren't what they appear to be," as he explained there is "no real organic sustainable recovery."

 

Stockman further contends, "It's happening in the most speculative sub-prime markets, where massive amounts of 'fast money' is rolling in to buy, to rent, on a speculative basis for a quick trade. And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came." Critically, he points out we live in a world of boomers looking to be trade-down sellers, not one of trade-up buyers, as "the fast money will sell as quickly as they can and the bubble will pop almost as rapidly as it’s appeared.

 

He concludes that the American Dream of home-ownership 'forced' upon the citizens was a huge policy mistake as he chides, "let the market decide," as he clearly sees Bernanke recreating yet another speculative bubble.

 

Click image for full clip (no embed):

 

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Mon, 02/04/2013 - 21:25 | 3215105 kekekekekekeke
kekekekekekeke's picture

I don't think they approve of gay marriage

Mon, 02/04/2013 - 19:04 | 3214681 YouAreBliss
YouAreBliss's picture

From the 2005 CDO "Managers of the Year"

BlackRock Sued by Funds Over Securities Lending Fees

...Also named are BlackRock president Robert Kapito, Michael Latham, the chairman of Ishares Inc., and seven other officials of whom are trustees of iShares Trust and directors of iShares Inc....

http://www.bloomberg.com/news/2013-02-03/blackrock-sued-by-pension-funds...

 

 

Mon, 02/04/2013 - 19:05 | 3214686 Never One Roach
Never One Roach's picture

Salt Lake County Council passes property tax increase

 

"Fiscal responsibility is not just cutting," County Councilman Arlyn Bradshaw said. "This government has already cut significantly."

In his endorsement of the 16.2 percent increase...."

 

http://www.ksl.com/?nid=148&sid=23403620

 

Have fun!

Mon, 02/04/2013 - 20:03 | 3214877 ebworthen
ebworthen's picture

A supposedly Republican state, raising taxes instead of cutting spending.  Why does that sound familiar?

And all those Temple Recommend Card (ticket to Heaven) eligible Mormons are already paying 10% to the church.

OUCH!

Mon, 02/04/2013 - 19:06 | 3214688 billsykes
billsykes's picture

There will be a bust- but I don't think it will be until assets are fully fully flated then the GS will come in an the only new housing starts will be fema camps. So another 3-5yrs

 

Mon, 02/04/2013 - 19:08 | 3214701 Black Markets
Black Markets's picture

It's inflation you dumbass.

All assets rise as the worlds central banks devalue the currency in your pocket.

They're inflating away the debt, inflating collateral, inflating everything that isn't tied down.

Get out of cash. Cash is crashing. All markets are rising.

It's very simple. BUY BUY BUY. Get out of cash. Cash is bad. Real rates are negative. Cash on deposit generates a negative real return. Get out of cash, get into index linked or fixed assets.

Very simply stuff. The central banks tell us every day what they are doing.

They are pumping inflation into the system. Pressing the short end of the curve.

Mon, 02/04/2013 - 19:57 | 3214861 Kastorsky
Kastorsky's picture

bingo.

there will be no rates rising until inflationary collapse is here. QE ist going anywhere.

but then no one will give a shit about rates - inflationary will be followed by a currency collapse.

Mon, 02/04/2013 - 19:29 | 3214765 Atlantis Consigliore
Atlantis Consigliore's picture

theres 1 million realtors hooking on the sidelines waiting to pimp those no doc loans;

you you you, dont think the 5 banks are going to get the gold rush going do you?   once again the barrell bottom on refis is done;

maybe we can trick 11 million illegals to homestead,  if  you buy you get citizenship;  that will be the bailout  last chance to get out...

in Illniois you cant give houses away, 20,000 teardowns in each county; empty;  and  minimum 25% down,  FHA.  giggle giggle,  whats that.?

maybe just maybe Rahm can panic and put on an income tax and cause the last of the great white flight from the gunfights on the streets to the suburbs;

that will be the last chance to dump.

Mon, 02/04/2013 - 19:53 | 3214846 Kastorsky
Kastorsky's picture

Illinois Lost 1 Resident Every 10 Minutes During Last 15 Years

http://www.thegatewaypundit.com/2011/12/new-study-reveals-illinois-lost-...

 

Mon, 02/04/2013 - 19:44 | 3214804 nmewn
nmewn's picture

"He concludes that the American Dream of home-ownership 'forced' upon the citizens was a huge >>>policy<<<mistake"

Yep.

Mon, 02/04/2013 - 19:50 | 3214832 TotalCarp
TotalCarp's picture

Well that depends on whether your policy goals are the next 6 months of stability and so called prosperity or something lonegr term. Since last 4 administrations were incapable of thinking further ahead then the length of their dicks "at the time it seemed like a good idea". Just like qe.

Mon, 02/04/2013 - 19:50 | 3214831 HoaX
HoaX's picture

You probably all seen it but in case you haven´t yet, PBS Frontline 2013: The untouchables

http://www.youtube.com/watch?v=q65_MVpmOL0

Histoire se repete?

Mon, 02/04/2013 - 20:05 | 3214883 devo
devo's picture

Sucks that Lauren Lyster jumped the shark. Wonder if she regrets leaving CA yet.

Mon, 02/04/2013 - 20:05 | 3214886 Handful of Dust
Handful of Dust's picture

"This time is different" my realtor told me.

Mon, 02/04/2013 - 20:07 | 3214889 Tango in the Blight
Tango in the Blight's picture

I miss Capital Account.

And those legs.

Mon, 02/04/2013 - 20:44 | 3214988 WmMcK
WmMcK's picture

The camera angles on Yahoo are not as good as on RT, for sure.

Mon, 02/04/2013 - 20:12 | 3214896 ebworthen
ebworthen's picture

Sold my boat anchor of a house in suburbia.  Payed off the jackwads at GMAC, so glad to not be sending them interest every month. 

Took a little bit of a loss but not bad considering.  Got the equity out and am now looking for arable land where I can grow stuff, have dogs and chickens, and shoot.

Good states for this?

Tennessee?

Tue, 02/05/2013 - 02:05 | 3215622 Seer
Seer's picture

I looked at property out in Eastern Tennessee, east of Knoxville.  I liked it there.  Only downside is air quality and the nuke plants (north).  I figure air quality is going to get worse for some time as we head in to collapse, but eventually (hopefully there are trees left to hold the soils) it's got to improve.  This area is buffered from hurricanes (Smokey Mountains blocks them- as far as I know) and less exposure to tornadoes (central and western TN really get them).  Floods are bit of an issue on the mountains, but that's just the way it is.

Good call on having dogs.  Dogs are the first security device you should have (mine wears two hats- protects the homestead AND protects our fowl).  Note that bigger dogs tend to injure themselves; mine's about 80 lbs and runs like a fucking freight train- pulled up lame the other day (more vet bills in the future, sigh).  If you can stand them, Guinea fowl are excellent alarms: kind of entertaining too; would be good in TN in helping keep down ticks; best, however, to keep them a bit of a ways from the house, as they DO get noisy (which, can work against you if you're looking to "hide").  And if you're going to keep chickens look to electrify your pen: our operations are totally portable, coop and electrified netting; this combo plus our dog = no losses to predation (aerial OR ground; have all kinds).

Tue, 02/05/2013 - 02:16 | 3215645 ebworthen
ebworthen's picture

Thank you!

Mon, 02/04/2013 - 20:12 | 3214904 q99x2
q99x2's picture

Hedge funds that control other people's money are the ones going for the bacon. But they are going in for the long haul. That is why I think Bass is wrong on parking his clients money there. Maybe there are no good places for large sums of money any longer.

Small money can buy night vision scopes, guns, food etc. But big money no. If you don't take responsibility over managing it yourself you may have some problems coming up.

Tue, 02/05/2013 - 02:10 | 3215635 Seer
Seer's picture

"Maybe there are no good places for large sums of money any longer."

Not like in the past, no.  The pressures for returns are going to start tearing things apart, as seen with the latest suit against Black Rock.

"But big money no. If you don't take responsibility over managing it yourself you may have some problems coming up."

China, the big oil producers... imagine the scope here!  Being flooded with USD and where to funnel it?  Can you say Hot Potato?

The bigger they are the harder they'll fall.  Eventually the field will shrink until it's down to two titans.  If it ever does get to this point I'd like to think that there's no one left who doesn't see that this isn't going to turn out well...

Mon, 02/04/2013 - 20:25 | 3214937 Rick Blaine
Rick Blaine's picture

I like her...

A LOT.

Mon, 02/04/2013 - 20:30 | 3214947 Pinefox
Pinefox's picture

I live in Seattle.  We have a highrise apartment building boom in downtown Seattle. Cranes every where.  Cheap money deployed to once again over build the market.  I don't know who is going to be able to pay the rent and where all the renters are going to come from.  Headlines in newspaper today touting not enough money for the 5600+ homeless people in the area.  Property taxes, bridge tolls, tunnel tolls, HOV lane fees, head tax on employees, tax on office space, all going up and now they are thinking about highway taxes based on the miles one drives.  Not much left over for rent.

Tue, 02/05/2013 - 01:11 | 3215561 bunnyswanson
bunnyswanson's picture

High rise apartments in cities will be the new normal.  Freeing up the rural property from ownership will help global warming, according to the UN Agenda 21 (nonbinding) - who is going to each and every country, offering grants to struggling municipalities (binding) - rezoning, redevelopment so the NWO can provide "sustainable lifestyles" to their descendents and the rest of us (the slaves).

Australia deals with Agenda 21: 

http://www.youtube.com/watch?v=sES6_OXPwOU&list=LLZZ8y4r4xv4fUNmozg2i4_w

"We are in trouble.  We have a few years at most...years, not decades." 

China (1-child policy- ghost cities (not) are Agenda 21 plans - the cities will be filled with the people from the countryside eventually.  (they have a web site stating same.  Google it, it is not hiding from anyone.   Facebook has agenda 21 plan.  it sounds so pretty but what isn't stated is the facts that are presented here by these BRAVE WOMEN WHO HAVE COME FORWARD IN SPITE OF THE REPERCUSSIONS OF GETTING IN THE WAY OF THE MOST POWERFUL PEOPLE IN THE WORLD.

There are a million hits on google on this subject but the ones I would suggest are www.postsustainabilityinstitute.org  and www.democratsagainstUNAgenda21.com  with Rosa Koire (forensic real estate appraiser who specializes in eminent domain).

No one is talking about this.  Jokes and accusations of conspiracy theorists gone wild are abundant but is is on the United Nations web page for everyone to see.

This is called a "profound reorientation of human lifestyle" and when that comes from a group who are well known to be behind the wars, the 9-11 attack and the collapse of nation after nation's economies, you'd better sit up and take notice or go to the grave knowing you've left your beloved children a world in which he has no choices.

I hope you will take the time to investigate this. zerohedge may ahve an article on this; if so, I haven't seen it.  Agenda 21 is behind every decision being made.  It's the foundation for the NWO.  New names when the conversation by the cattle gets too hostile has occurred but there is nothing stopping these people.

 

Tue, 02/05/2013 - 02:39 | 3215675 Seer
Seer's picture

I've said it before and I'll say it again: BAD SYSTEMS FAIL.  If the "Agenda 21" "system" is so bad (and the idea isn't exactly in line with my thinking), then why the hell do people spend so much energy over this?  Do people NOT recognize that things are pushing apart instead of together?  It's more administrative overhead when there's no energy to support it.

That "some" may want this, and that that "some" may have a lot of power, wanting and getting are two different things.  The world is far too complex.

I can separate different issues, such as humans desire for power (and, for some, benevolence) from climate change.  Someone (POWER) ALWAYS profits off of things, whether those things are "good" or "bad."

China's policy is a lure of control.  It likely has little to do with any "Agenda 21" whatever.  It's just plain old political manipulation to keep the ruling elite propped up.  Humans, like so many other animals, tend to be attracted to things that glitter, and cities tend to have a lot of glitter.

Bottom line: Earth is a sphere, in which case it's resources are limited- the numbers of humans that it can support is limited.  Humans are burning through a lot of reserves (just like they've been burning through credit).  These are facts, "Agenda 21" or not.  Anyone with any intelligence has to ask what will happen with the lot of us if we continue as we have.  Again, there will ALWAYS be people that are looking to profit off of whatever, and just because this is the case that don't mean that the thing itself is sinister (because of profits, though greed IS greed).

Tue, 02/05/2013 - 02:21 | 3215652 Seer
Seer's picture

I wonder whether this was stuff that was on the drawing board pre-2008?  It takes MANY years to plan, arrange financing and then construct these things.  At some point folks just decide to carry on with the project.  And with interest rates essentially making money free I figure this tends to make all these folks have tunnel vision (thinking we'll all come out of this down-cycle ready to rock-n-roll).

I continue to marvel at what's happening up in Vancouver, B.C..  There are, however, some cracks starting to appear.

It's really pretty par for the big-city types.  That's where the money is.  And that's where technology springs forth from: those who salivate over technology need to make this connection; it's why I do NOT believe that technology can save us (and instead believe that it's the thing that will enslave us).

Cheer up.   If you think it's bad there you ought go to Manila.  Here's an area that's not to far from where my wife was born:

http://www.flickr.com/photos/thehousekeeper/4656435881/in/set-7215762407...

Mon, 02/04/2013 - 21:07 | 3215052 evernewecon
evernewecon's picture

 

 

 

 

It's amazing how much evolving history and economics is based on what's essentially a very PETTY duplicitous mortgage bubble gambit.

 

http://www.zerohedge.com/news/2012-12-19/six-month-delinquent-mortgages-amount-more-half-bank-americas-market-cap
 
And Massive Free Reserves For Banks And Over-Paying For
Their Assets For The Purpose Of Every Person On The
Planet One Way Or Another Buying That Bubble
 
http://www.nysun.com/editorials/the-fiat-dow/88174/
 
The “Fiat Dow” Is Simply A Throw-In With The Fiat
Mortgage Market And Real Estate Market,
Except The Latter Involves The Sequestering
Of Inventory, Whereas There’s No Such Thing As
Sequestering The Dow.
 
http://www.zerohedge.com/news/2012-12-19/six-month-delinquent-mortgages-amount-more-half-bank-americas-market-cap
 

http://www.doctorhousingbubble.com/housing-inventory-back-to-2001-levels-real-estate-inventory-for-sale/

@3:30
http://finance.yahoo.com/blogs/daily-ticker/house-prices-nowhere-near-bottom-says-analyst-125114464.html
3rd Qrtr 2012
70 Foreclosures--
L.I. (3 Million People)
ENEN:
Manipulated/Illusory--Banks'
Hands' Helped In Not Presenting
Losing Collateral (At Your Expense)

Jurow Vs. Wachter (Wharton)
/Bloomberg TV  1/25/2013
Historic Credit Bubble Burst;
Ocean Of Delinquencies, Massive
Portion Of Market; High Re-Default
Rate

http://www.bloomberg.com/video/u-s-housing-in-fragile-recovery-wachter-says-L6ak6rFoRvaJ_xihRSJd3g.html

What Jurow Is Much More
Consistent With Than Is
Wachter, And, For Me, How
We Best Know The Real
Estate Crash Is Sill On:
Remember:
You Would Be Getting More
Than Nothing On Your
Safe Money
(Remember?
When You Wake Up, And
Go To The Bank, You'll
Learn Your Safe Money's Is
Earning Nominal Interest
And Negative Real
Interest) If The Banks Didn't
Need Bernanke's Carrying
Of Their Own Self-Created
Bubble (Still.)
(4 Years Of That Now.  It
Looks Like Wake Up, Go To
The Bank, Find No Interest
On Savings This Year Too.)

http://pages.citebite.com/y9b2m0d5frpp

http://www.bloomberg.com/news/2013-01-07/cheap-money-era-that-saved-u-s-housing-seen-bottoming.html

http://pages.citebite.com/x8e7h5d8tlyj

@1:40 A Pre-Eminent Realtor And Real
Estate Economist Says COMPARE PRICES
PER SQ. FT., NOT CASE
SHILLER AVERAGE SALES PRICES!
http://finance.yahoo.com/blogs/daily-ticker/house-prices-nowhere-near-bo...

What Makes Us Buy Back The Bubble
Involuntarily Already Simultaneously
Crushes Affordability For
The Whole Market
http://www.zerohedge.com/news/2012-12-10/mysterious-case-americas-negative-real-wage-growth

Re-Defaults Are The Main
Story In Actuality.
http://pages.citebite.com/b8i3v2s7trsw

"Biggest Philly Fed Miss In 7 Months
Ignored As Fed Injects Reserves Via Repo"
http://www.zerohedge.com/news/2013-01-17/biggest-philly-fed-miss-7-months-ignored-fed-injects-reserves-repo

Very Welcome Detailing As To
Misconceptions Arising From The
Fed’s Reflating The Banks’
Mortgage Bubble
http://www.zerohedge.com/news/2013-01-25/guest-post-visible-hand-fed

http://www.nbcsandiego.com/news/local/Popular-Produce-Prices-Skyrocket-187543901.html

Bond Bubble Will Be Bigger
Catastrophe than Real
Estate Bust: Casey
Lauren Lyster, Daily Ticker, 1/17/2013

http://finance.yahoo.com/blogs/daily-ticker/bond-bubble-bigger-catastrophe-real-estate-bust-casey-161402082.html

Delinquent Jumbo Loans In
Coastal California
Pollute Bank Balance Sheets
OC HousingNews, 1/21/2013
http://ochousingnews.com/news/delinquent-jumbo-loans-in-coastal-california-pollute-bank-balance-sheets

"...we have a housing market almost
exclusively dependent on rates stimulus
and supply suppression.
They rigged the market creating
absolutely unsustainable supply and
demand conditions..."

"...the constant re-leveraging efforts
only serve to lengthen the time it
takes to truly de-lever...."
US Housing 2013; The Hangover
Mark Hanson, 1/7/2013

http://pages.citebite.com/x9a6m4p0hnwb

http://pages.citebite.com/c9h6f4a1cgih

"...Digging under the surface,
much of the drop in the unemployment
rate over the past two years is nothing
but a statistical mirage.  Things are
much worse than the reported
numbers indicate...."
Mish's Global Economic
Trend Analysis, 2/1/2013

http://pages.citebite.com/x9q8y7k1vqta

http://www.zerohedge.com/news/2013-01-30/shrinkage-us-economy-declined-01-q4

http://www.dallasfed.org/news/speeches/fisher/2013/fs130116.cfm

http://online.wsj.com/article/SB10001424127887323701904578275970591998986.html?mod=ITP_pageone_0
Low Rates Force Companies to Pour Cash Into Pensions

http://www.marketwatch.com/story/no-money-down-home-loans-are-back-2013-02-01
No-money-down mortgages are back

Healthcare's an oligarchy too cause it's also an
entrenched monopoly with an elaborate rich profit
regime mostly devoid of clinical rationalization.

It's As Though Open Source Got
Eaten By Paid Software, Which
Imposed Contracts Extracting Huge
Profits, But Then Adding All Manner
Of Everything Wrong To Doctors'
And Patients' Lives, And Especially
To The Task Of Health Maintenance.


http://www.nomiprins.com/thoughts/2012/11/10/real-danger-of-obamacare-insurance-company-takeover-of-healt.html

http://www.dailykos.com/story/2009/10/14/793112/-Schumer-Leahy-Take-on-Insurance-Antitrust-Exemption-Video-Added

http://pages.citebite.com/p8i5t8h6mphi

http://news.yahoo.com/insurers-nervous-over-prospect-romney-victory-115914066--finance.html

http://www.guardian.co.uk/commentisfree/2012/dec/05/obamacare-fowle

Mon, 02/04/2013 - 21:28 | 3215118 Bunga Bunga
Bunga Bunga's picture

If it ends with a gang bang, I will come to that housing bubble party.

Mon, 02/04/2013 - 23:01 | 3215309 holdbuysell
holdbuysell's picture

Just a sec. He said buyers were coming in with cash, then later goes on to say it's cheap money at low interest rates that's fuelling the bubble. That's a non sequitur. Which is it? Are they borrowing in advance and then buying the properties with said cash with no encumbrances on the property?

Did anyone notice that?

Tue, 02/05/2013 - 03:46 | 3215716 socalbeach
socalbeach's picture

I didn't notice because they're not contradictory.  X% buy with cash and Y% use cheap financing, I don't remember the percentages.  Or like you suggest you could do a combination of both.  A prop I purchased in 2011 was paid partly with a 5% variable rate HELOC on my primary residence.  Then I refinanced it into a 7/1 ARM at 3%.  Paying all cash allowed me to purchase the prop at a discount since it was an REO, and the bank knew it would close quickly.

I agree with Stockman that certain areas are now in the process of re-entering bubble territory, and the bubble will burst.  The question though is at what level will housing prices head downward.  It could be at much higher prices than currently, depending on the area. 

I disagreed when he said rising interest rates would necessarily cause housing to drop.  More important in my mind is the level of real interest rates.  If monetary velocity starts picking up and overall prices continue rising, we could end up with a situation like the 70's where home prices and nominal interest rates went up.  Homes didn't keep up with inflation, but combined with a low fixed interest rate loan one came out ahead if you purchased in the early 70's.  If interested, see Daniel Amerman's free mini course for details. According to him, that's what bankrupted the S&L industry since they had to start paying higher interest rates to depositors than they were receiving from the loans.

Tue, 02/05/2013 - 07:32 | 3215803 tip e. canoe
tip e. canoe's picture

"that's what bankrupted the S&L industry since they had to start paying higher interest rates to depositors than they were receiving from the loans."

that's a great point that no one ever thinks about and probably why the gov't is financing 90% of the mortgages made right now.

Tue, 02/05/2013 - 01:29 | 3215584 Augustus
Augustus's picture

Having that fool Stockman appear on a "news analysis" program is an insult to all viewers.  Bankrupt as an economisist, fund manager, and personally.

Tue, 02/05/2013 - 02:24 | 3215658 Seer
Seer's picture

So, does that mean what he was saying was incorrect/misleading?

Tue, 02/05/2013 - 03:19 | 3215698 Bunga Bunga
Bunga Bunga's picture

At least he went bankrupt when others are TBTF.

Tue, 02/05/2013 - 05:29 | 3215757 arsenal009
arsenal009's picture

His thesis is based on the Fed rasing interest rates, which isn't going to happen...

Tue, 02/05/2013 - 11:46 | 3216329 dark pools of soros
dark pools of soros's picture

no more RT glass table gam cam pan and zooms??

sad sad sad day it is  T_T

Tue, 02/05/2013 - 23:35 | 3218819 FecundaGoat
FecundaGoat's picture

Real estate goes higher!!  New boom is FED backed and built on a foundation of "under-appraisels" and minimum 20% down low interest loans....

 

Wake up and Follow the big money!!

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