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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.


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Mon, 02/04/2013 - 21:45 | 3215166 Blano
Blano's picture

Amen to that.

Mon, 02/04/2013 - 18:57 | 3214662 blindman
blindman's picture

if only the world were a mere bubble factory....

Tue, 02/05/2013 - 00:51 | 3215526 Seer
Seer's picture

It's infinite!  Well, according to the perpetual growthers, the New Flat Earth Society (http://www.albartlett.org/articles/art1998jan.html)

Mon, 02/04/2013 - 18:59 | 3214665 riphowardkatz
riphowardkatz's picture

except real estate was one of the only means of wealth preservation in Wiemer. You wont get wealthy but you might have a chance to perserve some.

Mon, 02/04/2013 - 19:02 | 3214675 francis_sawyer
francis_sawyer's picture

I'd never trust it in an environment where property taxes could be changed on a dime...

Mon, 02/04/2013 - 19:10 | 3214704 forwardho
forwardho's picture

Francis, I have disagreed with you in past but in this your advice is rock solid.

Own my house outright, until such time as I can no longer afford property taxes.

Was it ever really mine?

Mon, 02/04/2013 - 19:25 | 3214747 francis_sawyer
francis_sawyer's picture

It's NEVER really yours...


The same concept is one I use to argue AGAINST folks who include "arable farmland" in their mega-portfolios... If the shit really hits the fan, you want to be as 'outta-sight' as possible... Anyone who REALLY knows what they're doing should be able to manage with a small acre or so [providing it's situated nearby to other crucial things [not to mention, ATOP a well]...

That's the 'starter course'...

Post Revolution French farmers learned this lesson the hard way...

You're NEVER truly safe... But your ODDS improve if you live in a state where defense of property rights are part of the inherent culture...

Mon, 02/04/2013 - 19:37 | 3214786 Manipuflation
Manipuflation's picture

LOL.  I always have a laugh at the city boys who are going to buy farmland and live off the fat of the land even though they couldn't grow a dandelion of they tried.  Reminds me of "Of Mice and Men".  George, we's a gonna us get some rabbits and live off the fat of the land.  Really now?  I'm all for gardening and such but I haven't seen a lot of soil science threads on this board.

Mon, 02/04/2013 - 20:23 | 3214931 francis_sawyer
francis_sawyer's picture

Threads don't appear very much, but occasionally you'll find that topics get discussed WITHIN the threads in a spontaneous way... I got turned on to 'Hugelkultur' recently that way... It's just another thing... But the bottom line is that it requires quite a bit of time, sometimes money, & mostly FLEXIBILITY, to get away from the grid...  

Mon, 02/04/2013 - 20:37 | 3214967 NotApplicable
NotApplicable's picture

I was just cutting down some black locust yesterday to add to my Hugelkultur supply pile. Once I get another Fukushima Dome (high tunnel hoop-house) over it, I'll have another cesium-free garden space.

Mon, 02/04/2013 - 21:06 | 3215037 francis_sawyer
francis_sawyer's picture

Yeah, that's pretty awesome...


ISOLD OUT from 'suburbia' a couple of years ago & moved to the sticks... In the process of renovating the house, I was making regular trps to the landfill... The 'organic' part of the landfill had dumping that they would turn in to various forms of compost... Occasionally ~ I'd run into someone who was dumping stuff that 'seemed' viable for something, so I would just fill up my truck with it... Later it became my Huglekultur starter kit...

My more mature beds have a soil temp 1-2 degrees warmer than the regular soil... My spinach & lettuce haven't died yet this winter [despite multiple sub-freezing days]...

Mon, 02/04/2013 - 23:31 | 3215389 Manipuflation
Manipuflation's picture

I like being mobile.  If you need more properties in the sticks I can help you with that.  It's hunting land, not agriculturally viable really although I did grow a successful deer plot there.  I rather like your idea of one acre or so of good soil for a garden vis-a-vis the water.  One property at a time though.

Tue, 02/05/2013 - 00:59 | 3215539 Seer
Seer's picture

"In the sticks" should mean that there are sticks!  Anyone who wishes to be "off the grid" on only one acre ain't going to be doing so up north, not where there are plenty of heating days to be reckoned with.  No, here is where you need plenty of sticks to stuff into the stove.

At one point I was so specific on the property I was searching for that I was specifying the kind of trees and the amount (percentage of, based on total timber on the land).  If I'm going to spend energy cutting wood I'm not going to be using it on anything like pine.

Not all land is equal.

Tue, 02/05/2013 - 01:46 | 3215607 Manipuflation
Manipuflation's picture

Seer, I would wager that I have cut far more oak firewood than most.  Pine is good for campfires and not NYC chimneys.

Tue, 02/05/2013 - 07:54 | 3215795 tip e. canoe
tip e. canoe's picture

question for you both:   what is pine good for (besides campfires)?   what is its value as timber?

Mon, 02/04/2013 - 23:18 | 3215346 tip e. canoe
tip e. canoe's picture

N>A, check out these discussions before committing your black locust to the hugel pile:



YMMV, but it might make sense to bury the locust at the bottom of the pile and layer some fast decomposers on top.

Tue, 02/05/2013 - 01:06 | 3215548 Seer
Seer's picture

tip e., great catch!  I just kind of glossed over that mention.  Yeah, you WANT the stuff to break down IN YOUR LIFETIME!

Use locust for fence posts or such.

I've got a spot where I'm planning on redistributing some crap wood (punky stuff that's not fit for the wood stove) that was intended for Hugelkultur.  Have a good sized area, but need lots of good compost to dump on top (need to figure out best strategy for getting loads in there).  And compost is something that people ought to be careful about:


If it ain't one thing it's another!

Tue, 02/05/2013 - 07:28 | 3215800 tip e. canoe
tip e. canoe's picture

yeah, what to layer on top is a conundrum.   my best guess right now is to dig out some forest soil to shove in the gaps of the branches to get the fungal decomposition goin and to minimize the use of compost.    have about 5 55 gallon drums of homemade compost cooking right now in the cold, but i was able to do so much cuz i've been scavenging food waste & carbon from the city.   still not sure if it will be enough, even it's limited to the top of the pile.

i agree, bringing in compost from an external supplier is a major roll of the dice.   at the least, you should have it lab tested so you know what you're dealing with.   most people forget that when they're eating veggies that they're actually eating transmuted soil.

Tue, 02/05/2013 - 10:25 | 3216072 tip e. canoe
Mon, 02/04/2013 - 21:49 | 3215179 Manipuflation
Manipuflation's picture

Yes, I have been involved in horticulture for what amounts to around three decades or so.  All the way from pulling weeds when I was a kid, through a bachelor's degree in horticulture,(not that the degree was really neccessary) and into a career in the industry.  I am basically a consultant/sales rep now for a seed/fertilizer company.(non-GMO)  The phone doesn't ring much this time of the year save for my crystal ball prognostications on the water levels in the Mississippi River which I refer to the local weatherman.  This drought is ostensibly going to affect prices of certian commodities a great deal more than people realize if we have to start shipping urea by rail from the Gulf.  There is not much snow in the upper Midwest at this time.

As for Hugelkulture, I have done the raised beds.  This is not new technology.  It really all depends on the water and the soil type.  Raised beds tend warm up faster in the spring thus promoting germination of seeds which is great.  Raised beds also lose water at faster rate than flat soil which is not great.  In certain situations, something like Hugelkulture can be a great thing while in other situations it is a pointless endeavor.  It depends on your local conditions and the ease of availability of water.

Since everyone usually wants a one line quick and simple answer to every thing, I can offer this:  Check your growing medium's PH, salinity levels and organic matter content BEFORE you plant.  That and keep an eye on soil temperature and NOT air temperature to know when to plant.  This can be done by a novice gardener easily enough. 

When the NYC penthouse owner who is going to flee to his farmland fortress and grow a cornicopia is where it will all fail.  When the diseases strike, which are usually spread by insects, but can also be airborne or spread by other vectors depending on crop, they will be wiped out.  Anyone have any experience with the Colorado Potato Beetle?  Anyone have any experience with what Monsanto does with it's open pollinators such as corn if they check your crop and find the Monsanto gene present?(which it will be)  Genetics? 

The division of labor/liars has become so specialized, largely into financial fraud, ponzi schemes and political vomit that not many remember how to actually grow anything of value except a portfolio risk exposure to financial derivatives or some other such nonsense.  When I was in university, there were aproximately 20 horticulture majors but there were something like 1500 business admin majors who all wanted an MBA and I went to small university.  See that ratio?   

Mon, 02/04/2013 - 22:29 | 3215249 francis_sawyer
francis_sawyer's picture

Classic Story


Humans think they can control & engineer everything due to arrogance... Nature informs them otherwise... [This applies to MANY things besides horticulture]...

Mon, 02/04/2013 - 23:18 | 3215347 Manipuflation
Manipuflation's picture

True that.

Tue, 02/05/2013 - 01:10 | 3215556 Seer
Seer's picture

Mother Nature bats last!

I pick and choose my battles with MN.  In the future when I can no longer use my tractor I figure I'll have far less "wins."

Mon, 02/04/2013 - 20:31 | 3214952 Ricky Bobby
Ricky Bobby's picture

Funny but you don't have to grow a dandelion they sprout like "weeds" cause they are.  I know I will never starve in the spring because the leaves are damn nutritious.

Mon, 02/04/2013 - 20:38 | 3214971 NotApplicable
NotApplicable's picture

Pssst. That's the joke.

Mon, 02/04/2013 - 21:02 | 3215039 francis_sawyer
francis_sawyer's picture

make damn fine tea & wine...

Mon, 02/04/2013 - 23:19 | 3215352 MisterMousePotato
MisterMousePotato's picture

The Latin name Taxasomething Offialsomething means The Official Remedy for Disorders. Dandelion is either the second or third most nutritious plant according to various sources (including, iirc, the FDA). Taste is like endive, only worse, but if I had to forage for dandelion to stay fed, well, I'd hate to have to live on the fish I can catch. (Did that make any sense?)

Tue, 02/05/2013 - 01:17 | 3215570 Seer
Seer's picture

And supposedly the roots can be roasted and then ground up to make a kind of coffee.  I haven't tried this yet, so I really can't make an endorsement of it as a coffee substitute: it's just one of those gaps that I feel I'll need to address before regular coffee becomes unaffordable!

From one of my favorite people (Gene Logsdon - he'd once stated that he was stupid for not "cultivating" dandelions, seeing as they readily grew and had many uses):


Tue, 02/05/2013 - 07:22 | 3215802 tip e. canoe
tip e. canoe's picture

reaading that book now, indispensable.

Tue, 02/05/2013 - 19:39 | 3218158 MisterMousePotato
MisterMousePotato's picture

Coffee futures have gone from $300 a year and a half ago to $144 today. Patience, Grasshopper.

Mon, 02/04/2013 - 21:03 | 3215040 Ricky Bobby
Ricky Bobby's picture

Understood the joke but said farmer probably never ate a dandelion in his life.

Mon, 02/04/2013 - 19:26 | 3214759 Manipuflation
Manipuflation's picture

"Own my house outright, until such time as I can no longer afford property taxes.

Was it ever really mine?"

Spot on and in the same position here.  I have property on the market but there is no interest but of course it is winter.  Hell, I don't even live there! The other thing to consider is that it is much harder to relocate if need be if you own a house.  Let's be honest about "home ownership", the house owns you and not the other way around.

Tue, 02/05/2013 - 01:29 | 3215583 Seer
Seer's picture

Depends on what you're "owning."

I have a "home" (not a "house") on Ag property, which also has timber for my heating needs.

It's all the price for living.  Those that like blowing with the wind are much more flexible, for sure.  And one-night stands can also be fine, though eventually those also get tiring...

Obviously you're not into marketing, otherwise you, someone with something to sell, would be proclaiming it to be exquisite! :-)

When one finds the "spot" one's views tend to change.

Mon, 02/04/2013 - 19:12 | 3214703 CheapBastard
CheapBastard's picture

The Nazis carried out a program of Jewish property seizures that stripped European Jews of billions of dollars worth of cash, housing, businesses and personal belongings.





Unfortunately, houses are one of the easiest targets for taxes, confiscation, etc. The Jews and other persecuted groups were able to carry their gold out along with some art work. Harder to move (or hide) a house.

Mon, 02/04/2013 - 19:21 | 3214744 larz
larz's picture

dont have to look all the way to Nazi Germany our fearless leaders jammed imminent domain through not too long ago.

Tue, 02/05/2013 - 01:34 | 3215587 Seer
Seer's picture

Are you meaning "eminent" domain?  If so, this has been around for a LONG time. (or, for party pussies, it came along during the Bush or, depending on the pussy's party, Obama administration)

Mon, 02/04/2013 - 19:58 | 3214864 optimator
optimator's picture

Some sent their liquid wealth out of the country, for example into U.S. Dollars.  When they brought it back they were rich beyond belief.  Those that hung onto Gold Marks did well too.

Tue, 02/05/2013 - 08:18 | 3215832 riphowardkatz
riphowardkatz's picture

they need you to stay here. 

Mon, 02/04/2013 - 19:04 | 3214679 kekekekekekeke
kekekekekekeke's picture

so I am a prospective first time homebuyer thinking about getting married in the next 1-2 years

what do y'all recommend?  rent?  buy a house we can easily afford on one salary?

Mon, 02/04/2013 - 19:10 | 3214706 King_of_simpletons
King_of_simpletons's picture

Buy a subprime McMansion and live beyond your means. Don't feel ashamed to declare bankruptcy and start over again and repeat the same thing. That's the new American way.

Shame, Fear and Guilt are three things keeping you away from prosperity, happiness and material living.

Mon, 02/04/2013 - 19:12 | 3214714 kekekekekekeke
kekekekekekeke's picture



Went to my friend's new boyfriend's house for a super bowl party.  He's my age (27) and has a 3 bedroom 3 bath $300,000 McMansion (in our area that's A LOT) he lives by himself and is a virgin.  He's a nice dude, but fucking priorities, man

Mon, 02/04/2013 - 21:11 | 3215061 CPL
CPL's picture

Tell him to voluenteer at an animal shelter a couple times a month.  If it doesn't happen being surrounded by women with animals then I don't know...hookers and blow.

Mon, 02/04/2013 - 19:14 | 3214719 Ookspay
Ookspay's picture

Buy! In the best area you can afford. Take advantage of 3% mortgage rates, As little down as you can get away with. Buy PM's with alll left over cash and wait...

Mon, 02/04/2013 - 19:41 | 3214796 Auntie Lo
Auntie Lo's picture

Buy two, one where you need to be now and one for if the SHTF where you might surive or use as a "vacation" place if things go well.

Mon, 02/04/2013 - 20:02 | 3214874 GrinandBearit
GrinandBearit's picture

I recommend you don't get married and keep all your money.

Mon, 02/04/2013 - 21:27 | 3215113 kekekekekekeke
kekekekekekeke's picture

I'd make him sign a prenup I have way more assets than him but fortunately I can keep them mine

Tue, 02/05/2013 - 01:42 | 3215600 Seer
Seer's picture

I married someone that also had a bit of money (and no debts).  We're a kick-ass team.  Nothing like having a "partner" that can get in the ditches with you AND is beautiful, highly intelligent and frugal!  Every day is a holiday for me, even if I'm busting my butt, aching and tired...

Mon, 02/04/2013 - 20:04 | 3214882 Handful of Dust
Handful of Dust's picture

mmm...don't get married. It'll be way more expensive then ANY house you'll ever buy.

Mon, 02/04/2013 - 20:32 | 3214958 fukidontknow
fukidontknow's picture

Consider becoming a Mormon or Muslim and marry more than one woman that way you'll all be able to work and be mortgage free much sooner.

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