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Guess Who Is Propping Up The US Housing Market

Tyler Durden's picture


A month ago we showed a chart that, in our humble opinion, summarized all that is wrong with the US housing market. The chart in question showed the April breakdown of existing home sales on a Y/Y basis by pricing bucket.


Needless to say, what the chart showed was the symptomatic, and schizophrenic, breakdown of US housing into two camps: the housing market for the 1%, those costing $750K and above, where the bulk of transactions are mostly between non-first time buyers, and typically take place as all cash transactions, and the market for "everyone else" which continues to deteriorate.

Moments ago the NAR released its May data, which on first blush was widely lauded as bullish: the topline print came at a 4.9% increase, rising from 4.65MM to 4.89MM, above the 4.74MM expected. Great news... if only on the surface. So what happens when one drills down into the detail? As usual, we focused on the last slide of the NAR breakdown, located at the very end of the supplementary pdf for good reason, because what it shows is hardly as bullish.

So how does this "housing recovery" in which the NAR has proclaimed the "sales decline is over" look on a granular basis.

The answer is below, and it is even worse than the April data. It also explains why first time buyers have dropped to even further cycle lows of just 27%, down from 29% both a month and year ago.

This is bad because while in April there was a modest increase sales in house buckets from $250 all the way up to $1MM +, in May the only bucket that had an increase in sales from a year ago was that exclusively reserve for the ultra-richest, i.e., those who benefit the most from the Fed's non-trickle downing wealth effect policies. In fact, on a price bucket basis, the May data was unformly worse than April!

The logical follow up question: what is the total percentage of sales by given price bucket? The answer, once again, below.

Housing recovery? Maybe for the richest, and even they are far less exuberant about purchasing $1MM+ mansions. For everyone else, enjoy "plunging" hedonically-adjusted LCD TV prices. Everything else is, well, noise.

Source: NAR


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Mon, 06/23/2014 - 10:28 | 4885432 Cognitive Dissonance
Cognitive Dissonance's picture

What's good for the 1% goose is good for the gander?

Mon, 06/23/2014 - 10:39 | 4885460 sunaJ
sunaJ's picture

There is no housing for the unwashed masses?  Why, then let them live in chateaus. 


Mon, 06/23/2014 - 10:43 | 4885496 Winston Churchill
Winston Churchill's picture

Bullish for adverse possesion.

Mon, 06/23/2014 - 11:21 | 4885629 RevRex
RevRex's picture

George Bush is propping up the housing market?




If it happened on Bush's watch it was Bush's fault, and if it happens on Obama's watch, it's Bush's fault......proof that the Socalist Semite Democrat Media is NOT biased!

Mon, 06/23/2014 - 11:26 | 4885644 zeroheckler
zeroheckler's picture

Belgium propping it up

Mon, 06/23/2014 - 22:18 | 4887996 philipat
philipat's picture

looking at MOM data in a market with such pronounced seasonality (Weather, School schedules etc) is grossly misleading and is an old trick of the NAR propoganda machine that it is. Only YOY data has any meaning when looking at housing. And YOY May is DOWN.

Mon, 06/23/2014 - 23:08 | 4888124 Handful of Dust
Handful of Dust's picture

So I'm going to take a wild guess here and go out on a limb and say these numbers are....



... and ...


"There's never been a better time then now to buy a house."


Whew! Got that off my chest.

Tue, 06/24/2014 - 00:42 | 4888306 dubbleoj
dubbleoj's picture

its a shame the drudge readers dont look at the articles on ZH that arent posted to drudge

Tue, 06/24/2014 - 06:17 | 4888546 negative rates
negative rates's picture

You have less than 1000 moments left, use them wisely.

Mon, 06/23/2014 - 11:34 | 4885669 firstdivision
firstdivision's picture

How do Bush's balls taste? Is the flavor complimented with Red or Blue whine? 


Mon, 06/23/2014 - 19:42 | 4887471 swmnguy
swmnguy's picture

Could you give the RedTeam rah-rah shit a rest, please? And the "Socialist Semite Democrat Media" meme you're trying so hard to establish is bullshit too.

Those of us who have been active on this site since before, say, this past Feb. 21 understand that it's all about the merger of corporate and State power; the media, the government, the rigged markets, the war machine; the whole shittin' shebang.  Bush II was as much a part of it as Obama. Same goes for Clinton, Bush I, and Reagan, for that matter.

The way you keep finding stark differences between Obama and Bush II suggests you're holding your binoculars backwards.  You're obsessed with minutiae and you've missed the whole point.  And it's gotten really fucking boring.  If you get greenies here it's because nobody else likes Obama or the media either.  Don't flatter yourself it's respect for your insight.

Tue, 06/24/2014 - 01:11 | 4888340 sylviasays
sylviasays's picture

"Could you give the RedTeam rah-rah shit a rest, please?"

Just 7 percent of journalists are Republicans. That’s far fewer than even a decade ago according to a new study of the media conducted by two Indiana University professors. 

Could the BlueTeam news media give the rah-rah propaganda shit a rest, please?

Tue, 06/24/2014 - 09:55 | 4889034 swmnguy
swmnguy's picture

I'm not talking to paid partisan shill professional journalists. I'm talking to "RevRex."  If I wanted to read partisan talking points masquerading as analysis, I have a plethora of options, and I wouldn't be hanging out on ZH.  Though perhaps 93% of "journalists" favor "Tastes Great," I don't see how understanding is improved by getting more exposure for "Less Filling."  Bullshit is bullshit.  The act of "balancing" bullshit is supremely pointless.  My opinions and interests are not represented on the spectrum presented to me by the corporate agenda-driven media in the US.  If 50% of journalists were Republicans, then we'd have slightly different completely irrelevant bullshit to read in the corporate media.  And that would improve

I'm not arguing that the two parties are the same.  I'm saying they're both worthless to everyone except their primary sponsors at the moment, who tend to switch sides pretty regularly.

Tue, 06/24/2014 - 03:17 | 4888442 Serenity Now
Serenity Now's picture

I like RevRex.  It's about time some conservatives showed up around here.  The only time you guys give your Red-Team-Blue-Team-Are-The-Same argument is when a conservative makes a good comment.  You never, ever, EVER say that when a blue team member shows up to make a leftist comment.

You think you're clever with your ridicule, but you aren't.  We've read Rules For Radicals. You aren't persuading anyone.

Tue, 06/24/2014 - 06:14 | 4888543 Tall Tom
Tall Tom's picture

Perhpas you are correct that swimguy is not persuading anyone.


But you and RevRex (if you are not redundant accounts...) are not persuading anyone either.


Anarchocapitalism is the way forward as the Nationalist Fascism (Corporatism) which you support just leads to destruction.


Take your Red Team/Blue Team bullshit elsewhere as it is both lame and shallow.


Go Gold Bitchez. Vote your pocketbook, opt out of the Statism, and BUY GOLD. AVOID CORPORATIONS LIKE THE PLAGUE.


Fight Club lives. Liberty and Freedom reign supreme. I will NEVER vote for any Democrat or Republican again....EVER!!!  (And there is not one damned thing that you STATE LOVING PSYCHOPATHS can do about it.)

Wed, 06/25/2014 - 07:03 | 4892413 Serenity Now
Serenity Now's picture

Tall Tom,

I might not persuade many people here.  It would be hard to do so, with 99% of the posters interested only in what they have to say.  I have never in my life encountered more jerks that "know" everything about everything.  It's pretty pathetic.

I stick to a mantra of tell the truth, then give your opinion.  I don't post on every thread, or even every day.

Now, that being said, who the hell are you to tell me that I support nationalism or fascism?  Fuck you.  I support economic freedom.  And no, I'm not against corporations or rich people.  The vast majority of corporations are small businesses.  And the majority of rich people have honestly earned their money.

You are the one with the team bullshit.  You are as leftist as any leftist I've ever come across.  You are intellectually dishonest.

Tue, 06/24/2014 - 09:43 | 4888973 swmnguy
swmnguy's picture

SN, I like RevRex too, when he makes a good Conservative comment.  And he does.  What I'm sick of is "O'BowelMovement," "Socalist Semite Democrat Media," and the relentless promotion of the false duopoly of US politics.

I've worked in and around advertising, PR, and corporate-speak my whole career.  I know how the game is played and I recognize the techniques and their applications.  The purpose is not only to avoid communication, but to prevent it.  We see it applied to our political system on a moment-to-moment basis, and it's part of the destruction of America.

I think most of us, at least those of us who try to analyze the facts we see around us, have come to recognize that Republican does not equal Conservative.  If it did, we wouldn't understand the term "RINO," and we wouldn't have a Tea Party candidate defeating Rep. Cantor, etc.

I attack President Obama with venom, when the facts I observe warrant it.  Which is, actually, most of the time.  Interestingly, the reasons for which I attack President Obama are very often the same as the reasons for which I used to attack President Bush.  And, thinking back, the same reasons I used to attack President Clinton.  My realization that I was attacking these supposedly different politicians for the exact same reasons was eye-opening for me.  Just on Healthcare Finance, I can attack Presidents and parties on the exact same grounds going back to Nixon.

The more I look, the less I see that correlates to the Red/Blue, media-marketed false dichotomy of US partisan domestic electoral politics.  When I wonder what that means, it becomes increasingly clear that there's no accident about that.  Sure, there are differences between the parties.  Whose back gets scratched is modestly different.  The parties cater to different factions among the elites.  My problem is with what the elites themselves, overall, are doing to us.  In May of 2008 I read the Sen. Obama was getting more in contributions from Finance than either Sens. Clinton or McCain.  In 2012, Gov. Romney got more from Finance than Pres. Obama, after 4 years of Obama sluicing the wealth of the nation through Wall Street's vaults and exempting them from any semblance of the rule of law.

The examples of the utter corruption of both parties go on and on.  I'm not arguing that the two are equivalent or the same.  I'm saying that they are both a diversion.  This is basic stuff for most ZH'ers.  It's a non-partisan opinion.  I haven't voted for a major-party candidate for a significant office in years, because neither party advocates for, or even acknowledges, my needs.  And how obscure and individual are my needs?  I'm a 47 year-old white man, self-employed, married with 2 teen-aged kids, own a home and 2 cars, have modest retirement investments, etc.etc.  I am, in a word, the very picture of what used to be called the middle class.  I understand that bills need to be paid, and that gratification must at times be deferred for greater eventual satisfaction.

Parrot-like repetition of focus-grouped partisan catchphrases actually harms my interests by substituting cliches for actual thought and analysis.  "RevRex" makes some pretty incisive posts when he doesn't spew the doltish cliches.  Take that crap to HuffPo or FreeRepublic depending on your taste.  Bring your brain to Fight Club, please.  That's all I'm saying.


Wed, 06/25/2014 - 07:19 | 4892428 Serenity Now
Serenity Now's picture


I don't have time for a lengthy response, but I do try to respond to people who take the time to reply to me:

Republican does not equal conservative.  True.  (And that's a huge problem.)

Red team / blue team is the same.  A lie.  (And that's a huge problem.)

People bringing their brain to Fight Club.  Wishful thinking.  95% of the comments these days are emotional, nothing more.  (And, yes, that's a huge problem.)

Tue, 06/24/2014 - 10:00 | 4889059 swmnguy
swmnguy's picture

SN:  If you've read "Rules For Radicals" you've wasted your time completely.  The only people who've read that stuff in the past 3 decades are Glenn Beck and those who enjoy that sort of entertainment.  Same goes for the "Cloward-Piven Strategy."  I have to hand it to Beck.  He, or one of his Producers, is willing to undergo a lot of tedium to find catchphrases and fodder for hours of fulminating and pontificating.  I'm sure irrelevant, effete intellectuals owe Beck enormous gratitude for the royalties they've collected in recent years.  If Beck and those like him could do some analysis on their own without offending their corporate sponsors, the Saul Alinsky's of the world wouldn't have collected a thin dime since Reagan's first term.

Wed, 06/25/2014 - 07:25 | 4892442 Serenity Now
Serenity Now's picture

Thank you for your absolutely unsolicited opinion.  It's valuable, however, as you have completely outed yourself as a leftist.  

No worries, I prefer clarity over agreement.  

Mon, 06/23/2014 - 19:48 | 4887495 Seer
Seer's picture

Go the fuck away you Party Pussy!

Mon, 06/23/2014 - 22:01 | 4887963 fledermaus
fledermaus's picture

YOU are part of the problem! Simpleton FuckTard.

RED/BLUE team cheerleaders / fighters, playing into the divide and conquered -while the middle class and 99% is destroyed.

You idiot, troll, fuck-  WHEN WILL YOU 'party' TROLLS wake up and see the forest through your trees?

Tue, 06/24/2014 - 01:09 | 4888343 sylviasays
sylviasays's picture

New Survey of 1,000 Journalists: Four Times More Identify as Democrats Than Republicans...

Those who dispense propaganda to the low information crowd are the 'party' trolls

Read more:

Tue, 06/24/2014 - 01:52 | 4888390 Richardk888
Richardk888's picture

If you pick your news based on the reporters party affiliation you are already beyond help anyways.

Tue, 06/24/2014 - 06:18 | 4888547 Tall Tom
Tall Tom's picture

Who cares what party affiliation is reported as they both serve the same corporate interests?


It is so moot. You are beyond help. Enjoy your enslavement.

Tue, 06/24/2014 - 03:24 | 4888446 Serenity Now
Serenity Now's picture

You're the simpleton for buying into that nonsense.  Name me one Republican congressman who is even remotely as stupid as Hank "Guam will tip over" Johnson.  

Republicans are being corrupted by leftist ideology; there is no doubt about that.  But that does not mean that there are no differences between the two sides.  THAT is idiotic.

Tue, 06/24/2014 - 06:29 | 4888557 Tall Tom
Tall Tom's picture

Both factions are Tax and Spend.


Hell the Republicans SUPPORT OBAMACARE.


The Republican Congress voted to FUND OBAMACARE in October, 2013. They FINANCIALLY SUPPORT IT. Financial support is the BIGGEST SUPPORT that anyone can give.


(All funding ORIGINATES IN THE HOUSE. The House of Representatives can VETO any law through REFUSAL TO FUND. That is one of the supposed "Checks and Balances".)


So tell me all about these "fundamental differences" because when it comes to the cream, which raises to the top, the God Damned Republicans are just as fucking SOCIALIST as the Heathen Democrats.


Oh...By the way...You can thank John Bohener (Republican) and Senator Mitch McConnell (Republican) for drafting that "compromise" as they were demonstrative of the point.



Tue, 06/24/2014 - 07:21 | 4888605 Jlasoon
Jlasoon's picture

I find it quite hillarious that some assholes actually believe that an electronic voting machine connected to the intranet would not be manipulated, by let's say, "the powers that be" for the sole purpose of advancing and fucking over those same assholes who regularly vote for "change".

As though one peon fron Iowa is going to make a difference in a world run by goons, banksters and the NSA.

But look on the brightside, woman do have a right to vote.   

Wed, 06/25/2014 - 06:49 | 4892398 Serenity Now
Serenity Now's picture

Tall Tom,

I believe in the mantra, "First be honest, then give your opinion."

Not one Republican voted for Obamacare.  Not one.  It's true that spending originates in the House, but it only ORIGINATES there.  The Senate has to vote on the spending bills as well, and Harry Reid REFUSED to put any of the House's bills up for a vote.  So the government shut down last October.  I was happy about that, frankly (the shutdown).  

But the Republicans were scared of the shutdown and caved.  I didn't support that at all.  But to suggest that the R's and D's are EXACTLY THE SAME is lazy and intellectually dishonest.

And let me tell you something else:  The only time anyone says that R's and D's are the same is when they are blaming R's for something.  How on earth can you intellectually blame R's for Obamacare when not one of them voted for it?  You need to blame D's for the mess that is Obamacare.  

I will join you in the disappointment that Obamacare didn't get de-funded, but I will not join in on your emotional and disingenuous assessment that R's are responsible for Obamacare. 

Tue, 06/24/2014 - 04:42 | 4888492 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

Right-wing nuts like yourself make me laugh. =)

Mon, 06/23/2014 - 10:49 | 4885504 nope-1004
nope-1004's picture

I find it so strange that the place that I sleep, crap, relax, argue with the wife, raise my kids, enjoy having friends over, and keep warm and dry is an "economic" indicator.  Makes me wanna puke the way this shitshow of an economy has morphed into clear class slavery over simple human needs.

 Realtors, like the FED, add NOTHING to the economy.  Good thing they aren't an educated bunch... they may make their data believable then.

Mon, 06/23/2014 - 10:59 | 4885552 Ghordius
Ghordius's picture

agree with the sentiment, but disagree on realtors. they are entrepreneurs in the very French meaning of the word, "go-between". they bring buyers and sellers together, which then generates a deal which otherwise would not have happened

ok, I understand that realtors are quite hated in the US. yet... when did America's gov start to support the housing market? before or after WWII? Freddy and Fanny? Are realtors behind them?

Mon, 06/23/2014 - 11:08 | 4885588 greatbeard
greatbeard's picture

>> are quite hated in the US. yet..

They are only hated because they are lying, conniving shitbags.  Otherwise they are pretty decent people. 

Mon, 06/23/2014 - 11:14 | 4885605 viahj
viahj's picture

in a world with internet, FISBO should be gaining momentum but the realtors have such a tight grip on housing, from MLS listing to holding the mortgage company by the short and curlies.  most realtors are morons who make serious mistakes in writing the sales contract and they make 3-6% right off the top. 

Mon, 06/23/2014 - 12:21 | 4885866 Almost Solvent
Almost Solvent's picture


See: Used Car Salesperson

Mon, 06/23/2014 - 20:03 | 4887572 Oldwood
Oldwood's picture

As a small business person I have had to struggle with my retarded salemanship. I spend more time trying to talk people out of buying, but that's a personal problem.

On the other side, my wife is a realtor. I see how hard she works, almost endlessly, trying to sell houses that sellers believe to be worth substantially more than the market will bear while lying or omitting important relevant facts about the property. Then she has to deal with lying scumbag buyers who lie about loan qualifications for loans, make ridiculous demands at the last moment prior to closing and can be just generally shits. Then she has to deal with the banks, title companies and governments. Trust me. It isn't an easy job, especially if you do it well. Granted there are tons of supposed realtors who simply try to get listings and then do as little as possible from there on out. If you hire someone to represent you, as a realtor does, you should demand what you are paying for, not excuses. Like hiring a plumber, its not easy to find a good one, and you sure as hell won't find them in the yellow pages (do they still have those?).

Other than that, find anyone who won't lie to you to sell something and you have got a winner!

Mon, 06/23/2014 - 22:08 | 4887983 in4mayshun
in4mayshun's picture

Realtor are like Politicians, Wood...I know there are a few good ones, I just don't know any.

Mon, 06/23/2014 - 23:04 | 4888114 Handful of Dust
Handful of Dust's picture

Despite zero-down mortgages and/or very little down mortgages, very lax job verification, and incredibly low rates, the house market barely budges.




People are beginning to realize house prices are still about 300% overpriced. Besides, they are broke and in serious debt with stagnant wages in an inflationary environment where food, gas and other essentials are rapidly rising. AND, as Tyler [and NPR] pointed out today, a huge number of Merikans have less then $100 in their savings account!


Tue, 06/24/2014 - 04:44 | 4888494 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

It's another form of financial engineering really. The fundamentals, meanwhile, seem to continue to either remain sluggish or slowly deteriorate.

Mon, 06/23/2014 - 21:53 | 4887947 Escrava Isaura
Escrava Isaura's picture

viahj.... If I may ask...

What do you do for a living?

Mon, 06/23/2014 - 11:16 | 4885608 NoDebt
NoDebt's picture

Fanny Mae was set up in '38 as part of the "New Deal".  (Freddie Mac was set up as a competitor to it in 1970, but it does pretty much exactly the same thing).

In reality, the whole housing thing went gangbusters after WWII.  The real estate lobby in DC has CONSIDERABLE influence and throws a lot of lobbyist money around.  

It's why you can deduct the interest payments on your mortgage against your taxes (with some limitations).  You can also do it with your beach house.  And your house in the mountains.  And on as many properties as you have mortgages.  

It's why the mortgage interest deduction will probably still be around long after the government has confiscated all the private retirement plan money.  They want you to "Buy, Buy Buy!" not "Save, Save, Save!"

Mon, 06/23/2014 - 22:08 | 4887980 Christophe2
Christophe2's picture

The real winners from the real estate tax breaks are the BANKS.  They know that prices will go as high as people can bear (ex: 1/3 to 1/2 of income), so by giving a tax break on the INCOME paid to the banks, people can afford to pay a lot more to these banks than they could otherwise.

Prices going up and creating bubbles is more of a secondary benefit, IMO, and the real estate lobby is basically a front for the banks, who peddle mortgages and need lots of shitty, manipulative salesmen to con people into bad deals.

Tue, 06/24/2014 - 00:59 | 4888265 NickVegas
NickVegas's picture

Those "tax breaks" are converted to price on the front end, and you pay usury the whole way. Fuck the banks. The have captured the whole economy.

Mon, 06/23/2014 - 22:12 | 4887992 disabledvet
disabledvet's picture

What you have to measure is house SIZE too.

This is what made the housing bubble under "W" so truly massive.

"As with the 90's square footage was exploding."
In short "housing is very expensive" making Alan Greenspan a total dipshit.

In short "where will the incomes come from to support that housing stock?" And of course his answer was "phuck you!!!!!"

That strikes me as bad math.

So now we have a housing implosion...but not just any housing implosion...but the type of which "anything more than 500 sq feet and more than ten grand is uneconomic."

And we're gonna solve his problem by building more roads and bridges whilst taking on trillions of dollars in debt? "And pushing energy prices to the moon"?


"Say hello to Holy Shiite."

This is no longer the "free money Fed."

The bill came due over a year ago.
I'm no expert in State and Municipal finance...but I sure don't think I have to be either. Where is the demand for the debt going to come from with interest rates this low? That's VERY expensive debt.

Where is your small business creation? Your jobs recovery? Your "recovery period"?


Tue, 06/24/2014 - 03:38 | 4888459 Serenity Now
Serenity Now's picture


If I recall my research correctly, that's when (1930s) the 30-year mortgage was invented as well.  It did not exist in the nation's history prior to the 1930s.  It's part of the inflation (increase in the money supply) that I talk about so often on ZH.  

And of course, inflation = increase in demand = increase in price.  That's why people can't afford to buy a house with cash.  

Mon, 06/23/2014 - 11:40 | 4885695 QQQBall
QQQBall's picture

My buddy is a Realtor and told his clients to wait to buy in 2006 and 2007. Very few of his competitors can afford to give that kind of advice and quite frankly they didn't and don't.

Mon, 06/23/2014 - 17:28 | 4887090 CH1
CH1's picture

Glad there are a few that still have souls.

The rest......

Mon, 06/23/2014 - 14:29 | 4886357 daveO
daveO's picture

Realtors are parasites(flea is too nice a term) on the back of the world's greatest credit bubble. The last one I dealt with intentionally tried to get me in trouble with the building inspectors. She thought I is was hard up for money and would sell, to her relative, at a discount. I told her exactly where to go. Then, I sold the house for $9000 more w/o a commission at all. Never ever again!

Mon, 06/23/2014 - 20:09 | 4887596 johnconnor
johnconnor's picture

"they bring buyers and sellers together, which then generates a deal which otherwise would not have happened?"
It would have happened but without the cut they get for pretty much opening the door lock and tell you how pretty is the house in question. Realtors add no value whatsover, just subtract it, and employe an army of middle age uneducated women that couldn't work on anything else

Mon, 06/23/2014 - 23:40 | 4888195 cynicalskeptic
cynicalskeptic's picture

Realtors perform a very important function - at least in their minds (which may be why so many are the wives of local politicians).

They see themselves as the 'gate-keepers' for a community - keeping out the undesirable and steering people towards  'appropriate houses in 'appropriate' neighborhoods.  All blatantly illegal but they manage anyway.

New buyers will be steered towards 'starter' houses - those that are problematic and would not be bought by anyone with experience or common sense.  Truly great bargains are saved for the insiders - unless you stumble across one by accident.  Those with money to spent will be milked of as much of it as possible - if they allow so and some will be encouaged to spend more than they can afford.  The best houses seem to sell via word of mouth - excluding realtors entirely.

Very much an insider business with realtors referring you to home inspectors that will say what's desired, appraisors that will do as told, etc....That's why the market got so overblown in the first place.   Nobody actually doing their job - all working to keep the merry go round turning.

Tue, 06/24/2014 - 03:45 | 4888464 Serenity Now
Serenity Now's picture

Yep, there's no reason for a real estate agent in a free market, unless you WANT to pay one.  In a free market, buyers and sellers come to agreements.  In real estate transactions, you might need to pay a lawyer $500 to do the paperwork, but that's a hell of a lot less than paying a real estate agent 6% for doing absolutely nothing.

Let's see......a flat fee that has no bearing whatsoever on the price of the house.....


Paying 6% commission that entirely depends on the sale price of the house????

Mon, 06/23/2014 - 10:47 | 4885506 Top Gear
Top Gear's picture

Capitalism is designed to concentrate wealth and power into the hands of the competitive few. Even if competitiveness is inheritable. Problem?

Mon, 06/23/2014 - 10:49 | 4885508 pods
pods's picture

Wait, are you trying to imply that is what we practice here?



Mon, 06/23/2014 - 11:24 | 4885637 RevRex
RevRex's picture

Communism (The Democrap Party) is designed to reward failure, penalize success, and to make sure everyone is poor and dependent on gubmint handouts like lazy tick and leech Democrat voters....

Mon, 06/23/2014 - 11:26 | 4885642 pods
pods's picture

Well you can always vote for new masters, right?


Mon, 06/23/2014 - 20:55 | 4887743 Sedaeng
Sedaeng's picture

you guys are killing me with the idea of "voting" to make changes...I know you are joking pods ;) left/right - blue/red - dem/rep -it does not matter anymore; it has not matter for some time now...


weird that sides are even brought up on zh, like there's a difference eh?


Tue, 06/24/2014 - 06:46 | 4888565 Tall Tom
Tall Tom's picture

Unfortunately there are still some on ZH whom have not escaped the Matrix. We can only hope for the best. In that sense it is good that they are here because they sense that something is wrong but they have not grasped just what it is about just yet. Perhaps they will. Perhaps not.


We hope that they hear the message that they are born into bondage and their birthright has been sold to the state.


In Liberty and Freedom...


But I am not holding my breath.

Mon, 06/23/2014 - 10:58 | 4885543 Dr. Engali
Dr. Engali's picture

Fascism is designed to concentrate wealth and power into the hands of the competitive few. Even if competitiveness is inheritable. Problem?


 You seemed confused so I fixed that for you.

Mon, 06/23/2014 - 11:06 | 4885578 CerpherJoe
CerpherJoe's picture

Dr. Engali: Nice! So clean, so simple, so true.

Mon, 06/23/2014 - 11:27 | 4885645 Top Gear
Top Gear's picture

Not much difference, eh?

"I absolutely insist on protecting private property... we must encourage private initiative." ~Adolph Hitler, March 24, 1942

Besides, the United States has fasces everywhere, usually carved into stone, but they're even on your dime. Problem?


Mon, 06/23/2014 - 11:38 | 4885662 Ghordius
Ghordius's picture

the fasces used to be a symbol of republicanism. they should still be. they conveyed as symbol only two meanings:

1) the monopoly of violence of the state and 2) "Viribus Unitis", the state (the sovereign) is the citizens - bound together by laws

interestingly, sometimes they were claimed to have a third meaning: that as Citizen, punishment could only be by stick or axe. so no torture and no crucifiction for a Roman Citizen. See the execution of Saint Paul

Mon, 06/23/2014 - 12:08 | 4885814 ParkAveFlasher
ParkAveFlasher's picture

I would say that symbols require interpretations, and can easily be corrupted or co-opted by any regime who choses to tout them.

Mon, 06/23/2014 - 12:25 | 4885874 insanelysane
insanelysane's picture

As I've stated before; Capitalism and Communism only work with the right set of people and ironically it is the same set of people.  You need people that understand the value of goods and labor.  Unfortunately the human race is made up of other people, that believe they should get something for free or are entitled to do less than others.  That is when either system falls apart.

Mon, 06/23/2014 - 13:21 | 4886112 ParkAveFlasher
ParkAveFlasher's picture

You have a point.  What people may not realize is that excessive wealth and excessive poverty are both symptomatic of a similar extremism.

Mon, 06/23/2014 - 22:24 | 4888024 disabledvet
disabledvet's picture

We had huge differences between rich and poor in the 19th Century...but nowhere near the social unrest. "If you came to America and were able to get paid the money was sound."

That hasn't been true for quite some time now.

Is capital "aggregating" here...or is it Spontaneously Combusting like the various drummers of Spinal Tap?

I don't think the bulk of these "rich folks" have a clue what they're doing.
Hence "making public policy based on said fact is not making public policy."

This is not the 70's or 80's where there was no Army in the battlefield.

To simply distil this all down to "private interest" is really the height of insanity.

Democracy is not a suicide pact. No one will be a member of a Party that advocates anarchy.

Well...they won't be a member of said Party for very long.

One option could be to allow both aisles in the House to be fully armed whilst "under contract with the American people."

"Are you not entertained????"

Mon, 06/23/2014 - 23:46 | 4888206 cynicalskeptic
cynicalskeptic's picture

'nowhere near the social unrest....'   clearly you are ignorant of history.    The Colorado Labor Wars, Molly Maguires, Western Range Wars, The NY Draft riots during the Civil War (all about class and drafting those that could not afford to buy replacements)......  go up through the Bonus Marchers and all the clashes in Detroit and elsewhere    It's gotten downright boring in the last 75 years.

You see history as taught in schools avoids mention of such politically inconvenient incidents.   America of old was where people made fortunes, anyone could pull themselves up by their bootstraps and factory owners were the good guys that built America.

Mon, 06/23/2014 - 11:38 | 4885682 firstdivision
firstdivision's picture

Politics is designed to concentrate wealth and power into the hands of the competitive few. Even if competitiveness is inheritable. Problem?

Mon, 06/23/2014 - 22:04 | 4887974 Escrava Isaura
Escrava Isaura's picture

Dr. Engali....

Fascism is heavily on patriotism and nationalism. Nation and race above individuals. Suppression of opposition.  

“When the voice of the people is heard, government is in trouble”Noam Chomsky

Tue, 06/24/2014 - 01:44 | 4888382 sylviasays
sylviasays's picture

Escrava Isaura...

Socialism is heavily on authoritarianism and dictatorialism. Dictatorial class above individuals. Complete elimination of all opposition.  

"Ideas are more powerful than guns. We would not let our enemies have guns, why should we let them have ideas." - Joseph Stalin

Mon, 06/23/2014 - 11:48 | 4885731 Alex Kintner
Alex Kintner's picture

And of course, by "Designed" you mean "Rigged".

Mon, 06/23/2014 - 11:51 | 4885744 Blankenstein
Blankenstein's picture

Bank bailouts after the housing collapse in 2007-2008, the government taking over Fannie and Freddie, Fannie and Freddie backing 90% of new mortgages and now the government has become the subprime lender of last resort (FHA).  Capitalism?????


TG --> 1week/1day

Mon, 06/23/2014 - 12:03 | 4885792 Alex Kintner
Alex Kintner's picture

Socialism -- for the banks that gambled and lost. Then told their Govt puppets to make the taxpayers bail them out.

Mon, 06/23/2014 - 22:47 | 4888076 Escrava Isaura
Escrava Isaura's picture

Alex Kintner….


Socialism is where workers own their production/industry. They share the profits between them, after paying their investors/lenders. If they have bad products, they lose their business/jobs. And their investors lose their savings.


“America’s elites know that capitalism is totally unworkable. We try to impose it in the 3rd world so we can destroy them” —Noam Chomsky 


Mon, 06/23/2014 - 23:07 | 4888121 sylviasays
sylviasays's picture

Socialism is where corrupt dictators and their cronies have all the wealth and give the masses crumbs to survive on. 

Think Castro's Cuba. 


'The problem with socialism is that you eventually run out of other people's money.'Margaret Thatcher

Mon, 06/23/2014 - 23:30 | 4888173 Escrava Isaura
Escrava Isaura's picture



What you’re describing is Fascism/Communism.


'The problem with capitalism is that you eventually run out of money and people to exploit.'


“The problem with Margaret Thatcher is that she started run out of oil on the North Sea.”


Stop drinking the Kool-Aid sylvia…… Thus echoing meaningless slogans and clichés.

Tue, 06/24/2014 - 01:33 | 4888369 sylviasays
sylviasays's picture

Escrava Isaura….

What you’re describing is Fascism/Communism/Socialism/Progressivism. All the same thing where a corrupt authoritarian and dictatorial ruling class steals the wealth of a country for themselves and their cronies. 

'The problem with socialism is that dicators and their cronies eventually run out of money but they continue to exploit their people.'

 “The problem with Noam Chowsky is that he is a radical leftist who never ran a business and who has lived an entire life as a pampered academic elitist.”

Stop drinking the socialist Kool-Aid Escrava Isaura…… Thus echoing meaningless socialist slogans and clichés. 


Tue, 06/24/2014 - 07:23 | 4888606 Escrava Isaura
Escrava Isaura's picture



1st) You need to get a dictionary


2nd)Do you really believe killing people is the best way to go?


Sunnis and Shias, ‘Left’ and ‘Right’, divide we conquer.


Sylvia, read history. We have over 2 thousand years of references.


What we’re witnessing is the beginning of the Greatest Depression ever. Wonder why?


The private sector debt, in the US, is over $42 trillion dollars. That’s not including financials. The private sector debt and corruption is far worse than of the US government.


US lifestyle, exploiting the word through the Global Reserve Currency [dollar] is ending. So there’s less liquidity available to cover for us living beyond our means…. And comparing with how the rest of the world lives.


Mon, 06/23/2014 - 14:33 | 4886366 daveO
daveO's picture

Capitialism and 'central' banking are polar opposites.  

Tue, 06/24/2014 - 08:47 | 4888750 Apocalicious
Apocalicious's picture

No. Someone needs to learn.


Competitiveness is universal. It's simply survival and self-reliance. Travel, read. You'll find it. The government is killing competitiveness in an unholy alliance with monopolies and oligopolies, creating a bifurcated economy. The government has lost its way, and needs a reboot to enforce anti-trust laws. That its - break up trusts. 


Everything else falls into place.

Mon, 06/23/2014 - 21:55 | 4887954 Nassim
Nassim's picture


Mon, 06/23/2014 - 12:33 | 4885902 TheReplacement
TheReplacement's picture

They are just being fattened up for slaughter.  When the leftist revolution comes all of the rich will be executed for allowing their greed to destroy the good life for the workers.  Of course they will be replaced by party apparachuks but don't let that secret out just yet.

Of course if the rightist revolution happens first then I would guess the results won't be terribly different.

Tue, 06/24/2014 - 01:33 | 4888372 sylviasays
sylviasays's picture

"When the leftist revolution comes all of the rich will be executed for allowing their greed to destroy the good life for the workers."

Does that include the rich Hollywood leftist elite and the rich leftists in Silicon Valley? 


Tue, 06/24/2014 - 07:01 | 4888584 Tall Tom
Tall Tom's picture

Of course if the rightist revolution happens first then I would guess the results won't be terribly different.


I know. It just does not matter as there are NO POLITICAL SOLUTIONS. They have not escaped the Matrix. At times being a voice in the wilderness can be lonely.


IF the Revolution happens, leftist or rightist, it will be a bloodletting of epic proportion.


My bet is that there will be a Great War first which will wipe out most of us so any Revolution will be moot.

Mon, 06/23/2014 - 22:34 | 4888051 tempo
tempo's picture

Realtors/stock brokers say BTATFH. Yellen has spoken, there is no inflation, there are no bubbles, everything is perfect. The US economic growth is dependent on more illegals and more EBT cards.

Tue, 06/24/2014 - 10:53 | 4889276 AR
AR's picture

Good Morning CD:  We hope you and the family are well.  This is a good synopsis on the housing report for whoever put it together for everyone.  Thanks.  You take care CD. 

PS:  How's the new site doing for you?  Keep building it...  Good luck my friend.

Mon, 06/23/2014 - 10:29 | 4885439 fonzannoon
fonzannoon's picture

"Mafket" is not even a typo. It's actually how many people on Lawng Island pronounce market.

Mon, 06/23/2014 - 10:30 | 4885442 Zirpedge
Zirpedge's picture

Just smart money out ahead of the curve. Don't hate. 

Mon, 06/23/2014 - 10:38 | 4885475 JRobby
JRobby's picture

easy to be smart in a rigged game that fills your coffers.

Mon, 06/23/2014 - 11:06 | 4885571 Zirpedge
Zirpedge's picture

"Coffers"? What's your excuse for not being a smart investor?

Taking the high road?




Mon, 06/23/2014 - 11:08 | 4885585 Snoopy the Economist
Snoopy the Economist's picture

No inside info

Mon, 06/23/2014 - 11:16 | 4885613 Zirpedge
Zirpedge's picture

Maybe the chart topping out at $1M is a mistake, lets see how many $5M , $10M & $20M homes sold in the south or midwest. 

"No Inside Info"...Are the actions of the politicians and central banks not telegraphed to your liking? Maybe they should place a personal phone call to you and tell you what will appreciate in value for you? 

Mon, 06/23/2014 - 11:36 | 4885670 Top Gear
Top Gear's picture

>"No insider info."

"A major difference between the 'crime' of insider trading and the other crimes is that insider trading is a 'crime' with no victims. What is this dread inside trading? Very simply, it is using superior knowledge to make profits on stock (or other) markets. A terrible thing? But this, after all, is what entrepreneurship and the free-enterprise system is all about."

~Murray Rothbard


Insider trading among cronies, in other words, friends!, is what true capitalism is all about.

Mon, 06/23/2014 - 11:58 | 4885775 JRobby
JRobby's picture

Oh I get it. I am a bit slow on Mondays. You and Zirpedge are lovers. Can't believe I did not spot it sooner.

Mon, 06/23/2014 - 22:21 | 4888016 hobopants
hobopants's picture


Wow you bitch and moan alot but don't offer much, if capatilism "bad-bad no-good" then what's your Solution?

Or do you think ripping random quotes off the internet and making vague generalizations consitutes an actual argument?

Bitching about capitalism is like bitching about nature being unfair, the strong and adaptable make it and the weak don't, cry me a river.


Mon, 06/23/2014 - 11:49 | 4885634 JRobby
JRobby's picture

I would not classify what I currently do as "investing" in the traditional (your) definition.

But I have seen your posts around today and you are clearly here to pick a fight so.....

continue, please.



Mon, 06/23/2014 - 12:34 | 4885906 TheReplacement
TheReplacement's picture

Most of us are not married or related to a politician, banker, or C-level operative so we do not get ZIRP nor inside info. 

How do you define rigged?

Mon, 06/23/2014 - 10:30 | 4885444 LawsofPhysics
LawsofPhysics's picture

Yes, yes, the robber-barons and other corporate cronies are doing just fine, just fine indeed...

Mon, 06/23/2014 - 11:18 | 4885621 Top Gear
Top Gear's picture

The term "crony" capitalism is hilarious. A crony is merely a friend.  Should we trade only with enemies? Is "adversary" capitalism the answer?

Mon, 06/23/2014 - 12:35 | 4885900 Nigh Eve
Nigh Eve's picture

Yes, usually, it is the answer:

Adversary Capitalism = Free Market Competition => Innovation in technology + Innovation in customer service + Innovation in production efficiency.

Crony Capitalism = Collusion = Cheating + screw the consumer + screw the taxpayers

Mon, 06/23/2014 - 12:40 | 4885921 Meat Hammer
Meat Hammer's picture

That was akin to you deflecting a laser blast with your lightsaber and killing the stormtrooper with his own weapon.

Mon, 06/23/2014 - 17:31 | 4887100 CH1
CH1's picture


Tue, 06/24/2014 - 08:18 | 4888681 Nigh Eve
Nigh Eve's picture

Thanks, Meat Hammer!

Mon, 06/23/2014 - 10:31 | 4885450 NoDebt
NoDebt's picture

Good to see the Elysium Class is doing well.

Mon, 06/23/2014 - 10:32 | 4885453 eatthebanksters
eatthebanksters's picture

Of course home sales are going up!  Improving economy, more and better paying jobs and record low rates!  Sure thing...dream on...when 40% of all deals are all cash and when the number of first time buyers is half of historic norms you have a big fucking problem.

Mon, 06/23/2014 - 10:39 | 4885482 JRobby
JRobby's picture

In FL in 2013, over 60% were cash transactions.

It seems that the bigger the crash in values, the more cash follows in behind. Assume AZ and Vegas similar. CA not far behind.


Mon, 06/23/2014 - 10:50 | 4885509 Winston Churchill
Winston Churchill's picture

On my zillow emails they have stopped putting the amount of price reduction

from asking.

Lots of people put their houses on the market just priced to cover sales and

mortgage cost.The foreclosure pipeline is prolly about to start up again.

Mon, 06/23/2014 - 11:09 | 4885566 ParkAveFlasher
ParkAveFlasher's picture

I visited the Faerie Tale Forest aka Westchester County up the Hudson River Line, home-hunting some weekends ago.  What a shit show.  I asked the agent to show me a fixer-upper.  He showed me a 1400 sq ft. 120-year old hill-top Tudor stone keep - complete with moldy multi-chambered dungeon, and foundation-rotting moat caused by busted copper gutters that no one seems to have noticed or kept - for a cool half-million.  He was able to produce three more houses in a similar, sad state, utterly crippled properties.  If you want something that you may want to actually live in, prepare to pay +$600k.  Even then, you get high-maintenance houses with expensive masonry and carpentry in dire need of repair.  We drove through so many neighborhoods where it seemed people could neither afford nor manage a new dress of wood trim and fresh coat of paint.  The cars in the driveway were very nice.

I think this is appropriate to Tyler's article, because these guys in RE always hide the fine print, but they are getting past being able to maintain the details ... houses that haven't been lived in for years, complete with a door-key holder thingy for agents, high maintenance costs for 3-bedroom palaces, high transit costs (yeah, the train ride to midtown is only 45 minutes but you have to live 10 minutes by car from the train station, paying park-n-ride), high taxes, low services, and school systems filled with the type of people you would never want to actually be around, the kind that confuses the predation/parasitism of managerial promotion for wealth.

Mon, 06/23/2014 - 11:43 | 4885704 QQQBall
QQQBall's picture

door-key holder= that would be a lock box sir.

Mon, 06/23/2014 - 12:04 | 4885799 ParkAveFlasher
ParkAveFlasher's picture

Thanks - what a clumsy little thing it was.  I suppose the little code key doo-dads start to get a bit rusty or corroded or stiff after some time.  I guess, "leaving the key under the back doormat" no longer suffices in our day and age.

Mon, 06/23/2014 - 20:06 | 4887585 Cornfedbloodstool
Cornfedbloodstool's picture

What are the property taxes in Westchester County? 15k a year or so?

Mon, 06/23/2014 - 23:55 | 4888224 cynicalskeptic
cynicalskeptic's picture

Figure a minimum of $20,000 for any municipality worth living in (eg 'decent schools' and reasonable services) - you can pay a lot less but won't want to use the schools in those places.

Seems like a half million is holding as the 'buy-in' prioce for a 'starter' house anywhere that's consiudered worth living in lower Westchester.

It's nuts but the NYC burbs have been built for 50 years - limited supply and high demand.  Twenty-somethings may want to live in Manhattan before they have kids but once they start pricing private schools (after finding out how hard it is to get into 'good' schools in NYC) those taxes are cheap in comparison.

Tue, 06/24/2014 - 00:25 | 4888274 cynicalskeptic
cynicalskeptic's picture

Hudson Line?!?!


Yonkers and the river villages - most of which are not in very good shape financially..... alot of dead industrial towns trying to reinvent.....not the best places to look in Westchester (unless you're looking for river view estates costing millions and millions).

The high end in Westchester IS absurdly priced - think Bronxville, Scarsdale and Larchmont but there are alternatives.  Biggest problem is all the Manhattan yuppies coming up to avoid paying for private school in Manhattan.  They're here for the time their kids are in school and that's it.   Drives up school costs - and taxes.

Keep in mind that much of Westchester's housing stock was built between 1920 and 1950.   These were the first 'suburbs' - built after train and trolley access.   ANY house that's 75 years old will need to be rebuilt.   European's have been doing so for centuries - but then they build the basics to last.  A 1920's house will need complete rewiring if it hasn't been done already.  It will likely be needing its third plumbing system - first was galvanized, second was brass and new SHOULD be copper.  Odds are you'll be on your third roof - and need a complete tear off for the fourth.

Some of the older houses were well built - others were the pre 1929 crash version of quick and dirty builds.  You didn't see much built in the 30's and 40's - then had the post WWII boom with lots of crap thrown up.    After the early 70's the easily buildable lots were gone down county.

Nonetheless there ARE still good deals - you just have to spend the looking.  Best if you're already here and know the terrain.

But none of this seems to phase the Manhattan yuppie crowd.  They pay close to a million and then dump another $400,000 in on often mediocre remodeling (the long time locals know the good dealas and often do a good amount of the needed work themselves - or have family in trades).  Of course you also have the Manhattanites that do NOTHING for the 20 years they're here too....   Ironic because they both have to keep working to pay the cost of the buy-in - and farm out childrearing to the cheapest help they can find.  Makes for some really screwed up kids.

But a few stops out of Grand Central and a walk to the local station add considerable value.  I know I'll never lose money - compared to relatives in Ohio and the Carolinas that can't sell places in less than a year and have to take less than paid when they do.  Even upcounty is a hard sell for anything but the very cheap or huge and obscenely expensive.  Friends have needed YEARS to sell north of 287.

For the record - my family's been in the area for a few hundred years.  Grew up in a two family piece of crap.  Never planned on staying around but life had other plans...  Bought a wreck of a place and still not done renovating after 20 years but with hindsight it worked out far better than buying far upcounty or moving away entirely.  Live within or below your means - unlike way too many here - pay attention to your kids and it can work out well.  Family elsewhere ended up with kids dumb as rocks with horrid school systems.  The Carolinas should be embarassed at what they turn out.   First one in family to go to college - but still do much of the work myself.  Kids are in top tier colleges - more credit to them than the schools but I hate to think of how things would've turned out in most other public schools in the country.

Prefer living here over the boonies of Carolina other family moved to or the wastelands of Ohio.  Housing is cheap but the jobs (if you can find any) are abysmally compensated.   And frankly, my idea of culture is more than watching NASCAR.



Mon, 06/23/2014 - 11:04 | 4885565 plane jain
plane jain's picture

SE MI and local realtor here says 60% cash.  Not Detroit, BTW, nice suburban area with well rated schools.  Very few rentals available and at most 15% of homes under $200K.

Mon, 06/23/2014 - 11:30 | 4885655 Four chan
Four chan's picture

detroit here, no bid on houses over 10 grand and i stopped paying my mtg in december. fuck the fed and my lost 170k equity.


Tue, 06/24/2014 - 00:38 | 4888296 cynicalskeptic
cynicalskeptic's picture

The big question is what's available for jobs?   and what do they pay?

Had offers elsewhere a while back but turned them down - no other options if the company didn't last or the job didn't work out.   

Mon, 06/23/2014 - 10:33 | 4885457 orangegeek
orangegeek's picture

more wealth concentration brings bigger depressions


show make for some nice rioting in the not too distant future

Mon, 06/23/2014 - 10:33 | 4885459 Dr. Engali
Dr. Engali's picture

It's hard to buy a house when your primary source of income is SNAP and blow jobs for cigarettes.

Mon, 06/23/2014 - 10:42 | 4885490 Winston Churchill
Winston Churchill's picture

Business that bad Doc ?

Mon, 06/23/2014 - 10:42 | 4885494 SoilMyselfRotten
SoilMyselfRotten's picture

Lets leave the Poles outta this

Mon, 06/23/2014 - 11:03 | 4885563 Max Cynical
Max Cynical's picture

I'm waiting to see signs in the windows of realtors saying "we accept EBT here".

Mon, 06/23/2014 - 11:28 | 4885647 yogibear
yogibear's picture

Perhaps that's the Fed's next plan to keep expanding this bubble.

The PhDs at the fed have to be more and more  creative to blow larger and larger bubbles each time until the financial MOB explodes.

Mon, 06/23/2014 - 13:18 | 4886102 optimator
optimator's picture

And for Illegals, no money down, no payments for a year, and would you also like a car with that?

Mon, 06/23/2014 - 10:35 | 4885464 Seasmoke
Seasmoke's picture

When liars are in's very smart to start at the last page and work backwards

Mon, 06/23/2014 - 11:18 | 4885627 intric8
intric8's picture

All obfuscating data out of the NAR must be hedged

Mon, 06/23/2014 - 10:36 | 4885469 JRobby
JRobby's picture

This is the cycle they create. And they do it over and over.

Let the small palyers lever up with easy credit, pushing asset prices artificially higher.

Credit crash

Swoop in with cash when assets values bottom out.


Debt based monitary system.

Mon, 06/23/2014 - 11:21 | 4885610 Top Gear
Top Gear's picture

"Debt based monetary system" is redundant, as all monetary systems are debt based, including gold-based money.


"If money is a just a yardstick, what then does it measure? The answer was simple: debt. A coin is, effectively, an IOU. Whereas conventional wisdom holds that a banknote is, or should be, a promise to pay a certain amount of banknote is, or should be, a promise to pay a certain amount of “real money” (gold, silver, whatever that might be taken to mean), Credit Theorists argued that a banknote is simply the promise to pay something of the same value as an ounce of gold. But that’s all that money ever is. There’s no fundamental difference in this respect between a silver dollar, a Susan B. Anthony dollar coin made of a copper-nickel alloy designed to look vaguely like gold, a green piece of paper with a picture of George Washington on it, or a digital blip on some bank’s computer. Conceptually, the idea that a piece of gold is really just an IOU is always rather difficult to wrap one’s head around, but something like this must be true, because even when gold and silver coins were in use, they almost never circulated at their bullion value." 


~David Graeber (2011) Debt: The First 5,000 Years





Mon, 06/23/2014 - 11:27 | 4885641 Ghordius
Ghordius's picture

excellent book. yes, IOUs are way older then metal-pieces-as-money. which btw started as pieces of meteoritic iron. very valuable before the Iron Age, where the discovery of how to smelter iron caused... inflation. most notably in Sparta, where iron coins were kept as currency nevertheless

Mon, 06/23/2014 - 11:34 | 4885667 Four chan
Four chan's picture

the difference comes in the rate of which the medium of exchange can be devalued by the issuer. 

the earth in the case of pms, and jews in the current situation.

Mon, 06/23/2014 - 14:11 | 4886275 TrulyStupid
TrulyStupid's picture

The difference between fiat and PM money is that the PM has intrinsic value - an ounce of gold coin is an ounce of gold... a fiat piece of paper is a promise... a debt instrument backed by a counterparty like a central bank... and carries counterparty risk of default or devaluation.

The author of this piece is quite wrong in assertng that a gold coin is a debt carries no promise and has a constant value ... an ounce of gold is an ounce of gold yesterday, today and tommorow.

Tue, 06/24/2014 - 00:40 | 4888303 NickVegas
NickVegas's picture

Gold is a metric of labor and scarcity. It's takes a lot man hours to find, mine, and refine. It also has intrinsic value with it's unique properties. The IOU stuff is brain washing from the money changers (central banking complex) where they have been fractionally loaning out money and rehypothecating since recorded history. Of course they want you to think of it as an IOU from their "gold" stores. It is one of the oldest con games known to man.

Tue, 06/24/2014 - 07:16 | 4888598 Tall Tom
Tall Tom's picture

I am in total agreement with your first paragraph.


However consider this. Money (Gold IS MONEY) is used as an exchange for useful products (Goods and Services). By holding the Money (Gold) you become a Creditor because the Money is just representative of Goods and Services which are owed to you (Debt).

Mon, 06/23/2014 - 11:53 | 4885755 Chief Wonder Bread
Chief Wonder Bread's picture

Conceptually, the idea that a piece of gold is really just an IOU is always rather difficult to wrap one’s head around...


Whatever. The difference is that gold can't be issued at will. 

Except there is a process involving tungsten I think...

Mon, 06/23/2014 - 11:54 | 4885766 JRobby
JRobby's picture

My error. I should have qualified. Debt based in conditions where rapidly increasing debt level surpasses a safe, sustainable ratio vs undelying real GDP.

Mon, 06/23/2014 - 18:03 | 4887183 TeethVillage88s
TeethVillage88s's picture

Debt to GDP, Right

Let's look ($59.4 Trillion Debt), All Sectors; Credit Market Instruments; Liability, Level Gross Domestic Product 2014:Q1: 17.1 Trillions of Dollars

59.4/17.1 = 347% debt to GDP

Probably not that many Countries in the EU North of 300%.

But the official line is "well, we don't like to calculate it that way".

Mon, 06/23/2014 - 14:47 | 4886420 daveO
daveO's picture

Expectations of future repayment are the drivers of the price of money. Credit bubbles come and go, no matter the currency. Total debt is higher than ever and the FED's rigged market(expectations) are lower than ever.

Mon, 06/23/2014 - 22:44 | 4888072 Ban KKiller
Ban KKiller's picture

Playbook !

Mon, 06/23/2014 - 10:36 | 4885470 starman
starman's picture

The farce must go on but  the end is getting closer and closer. 

Mon, 06/23/2014 - 10:37 | 4885473 pods
pods's picture

Skimmers are killing it.  Socking ill gotten gains into tangible wealth. 

'Merca, fuck yeah!


Mon, 06/23/2014 - 18:08 | 4887200 TeethVillage88s
TeethVillage88s's picture

Wall Street Stamps on the cocaine of securities.

Then the Fed buys it up in its corrupted form.

Someday the Taxpayers get to buy it from the Fed and get killed off in the process of Wall Street "Exuberance". Everyone is getting rich, you have to buy into the strength of this Bull Market.

Mon, 06/23/2014 - 10:37 | 4885474 Dapper Dan
Mon, 06/23/2014 - 10:39 | 4885476 ENTP
ENTP's picture

Can't wait til the Summer of Recovery Part 6 when the Chinese invest to build a replica of Paris in Idaho. Talk about globalized, true organic growth!

Mon, 06/23/2014 - 10:50 | 4885511 homiegot
homiegot's picture

Gay Paris!

Mon, 06/23/2014 - 20:11 | 4887604 noob
Mon, 06/23/2014 - 23:40 | 4888194 Lin S
Lin S's picture

Something that vexes me and that I often think about, is how so much Chinese colonization of the US is going to end.  Everywhere I look it's wall to wall mainland Chinese flashing big rolls of cash everywhere, the young females all pregnant, buying everything.

 How is this going to play out?  I wish I could see the future...

Tue, 06/24/2014 - 00:29 | 4888284 are we there yet
are we there yet's picture

American taxes are designed for foreighners to hide or shift income, and for the american middle class to pay for ....well....everything. Until the middle calss is hollowed out, a work in progress.

Mon, 06/23/2014 - 10:54 | 4885517 QQQBall
QQQBall's picture


Mon, 06/23/2014 - 10:53 | 4885520 Kaiser Sousa
Kaiser Sousa's picture

Flip That House.

Mon, 06/23/2014 - 18:49 | 4887301 are we there yet
are we there yet's picture

Flip that

Mon, 06/23/2014 - 10:56 | 4885533 sheikurbootie
sheikurbootie's picture

I've been in the real estate industry for 20 years.   Our market's average sales price is $162,000.  My numbers are steady, nothing good though.  The first time Buyers are gone, mid-range homes are steady, $400,000-800,000 is dead and I just sold the most expensive house in town for $4 million.  Go figure.  The horizon is shaping up to be the worst market I've ever seen. 

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