This page has been archived and commenting is disabled.
Something Smells Fishy
Submitted by Jim Quinn of The Burning Platform

Something Smells Fishy
It’s always interesting to see a long term chart that reflects your real life experiences. I bought my first home in 1990. It was a small townhouse and I paid $100k, put 10% down, and obtained a 9.875% mortgage. I was thrilled to get under 10%. Those were different times, when you bought a home as a place to live. We had our first kid in 1993 and started looking for a single family home. We stopped because our townhouse had declined in value to $85k, so I couldn’t afford to sell. In 1995 I convinced my employer to rent my townhouse, as they were already renting multiple townhouses for all the foreigners doing short term assignments in the U.S. We bought a single family home in 1995 with the sole purpose of having a decent place to raise a family that was within 20 minutes of my job.
Considering home prices on an inflation adjusted basis were lower than they were in 1980, I was certainly not looking at it as some sort of investment vehicle. But, as you can see from the chart, nationally prices soared by about 55% between 1995 and 2005. My home supposedly doubled in value over 10 years. I was ecstatic when I was eventually able to sell my townhouse in 2004 for $134k. I felt so smart, until I saw a notice in the paper one year later showing my old townhouse had been sold again for $176k. Who knew there were so many greater fools.
This was utterly ridiculous, as home prices over the last 100 years have gone up at the rate of inflation. Robert Shiller and a few other rational thinking people called it a bubble. They were scorned and ridiculed by the whores at the NAR and the bimbo cheerleaders on CNBC. Something smelled rotten in the state of housing. We now know who was responsible. Greenspan and Bernanke were at least 75% responsible for the housing bubble and its eventual implosion, which essentially destroyed our economic system. They purposely kept interest rates at obscenely low levels, encouraging every Tom, Dick and Julio to buy a home with a negative amortization, no doc, nothing down, adjustable rate mortgage, so they could live the American dream of being in debt up to their eyeballs.
Greenspan and Bernanke were also responsible for regulating the Wall Street banks. They allowed them to leverage themselves 30 to 1. They allowed them to create fraudulent high risk mortgage products. They looked the other way as Wall Street sliced and diced these guaranteed to default mortgages into AAA rated derivatives that were then spread throughout the global financial system like ticking time bombs. As home prices rose three standard deviations above the long term average, these Ivy League educated geniuses cheered it all on. Bernanke saw no bubble, just as it was bursting. He saw no mal-investment or systematic risk from this orgy of greed and fraud. And then it all blew up in our faces, while the perpetrators walked away unscathed to pillage and rape once more.

And now we come to present day and something really smells fishy again. Home prices crashed by 40% between 2005 and 2012, putting prices back to 1978 on an inflation adjusted basis. All of the bubble gains were wiped out in the blink of an eye. Bernanke and his Wall Street owners had a real problem with this development. Wall Street banks had/have billions in toxic mortgages on their books and only accounting fraud by not having to mark them to market has kept these banks from having to declare bankruptcy. Bernanke, Geithner, and the Wall Street banks hatched their master plan to save themselves at the expense of young people in 2011/2012.
We know for a fact that real median household income is still 7% below 2007 levels and sits at the same level as 1989. We know for a fact that wages have been stagnant since 2007. We know for a fact GDP has barely broken 2% since 2009. We know for a fact the price of healthcare, food, energy, tuition, rent, and a myriad of other daily living expenses are dramatically higher since 2009. We know mortgage originations are at 1997 levels. We know housing starts are 60% below the 2005 highs and at levels seen during the 1991 and 1981 recessions. Existing home sales are 30% below the 2005 high, only up 10% from 2012 levels, and sitting at levels reached in 1999 before the boom.
A critical thinking person might wonder how median single family home prices could possibly skyrocket by 37% in the last three years when household incomes are falling, living expenses rising, and the number of houses being sold are at recessionary levels. The stinking rotting fish again sits in the hallways of the Eccles Building in Washington D.C. Janet “Yellowfish” Yellen has inherited the bubble blowing machine from Ben “Blowfish” Bernanke and has continued to inflate a new housing bubble, because one housing bubble just isn’t enough.


There is nothing free market about the 37% increase in home prices. It has absolutely nothing to do with supply and demand. It has nothing to do with normal families looking for a home. It has everything to do with the Federal Reserve’s 0% interest rates, the $3.5 trillion of QE injected into the economic gambling system, Wall Street banks withholding foreclosures from the market, hedge funds buying up tens of thousands of foreclosed homes and renting them out to the former middle class, Fannie and Freddie guaranteeing 70% of all sales, the government encouraging 3.5% subprime loans again, Chinese and Russian billionaires parking their ill gotten wealth in US real estate, and flippers reappearing in the same old places (Las Vegas, Phoenix, Florida, California).
The Federal Reserve created the last housing bubble and they’ve created the new housing bubble, along with stock and bond bubbles, with their easy money policies designed to enrich their Wall Street owners and the parasites who feed off the financial industry. Their entire plan smells to high heaven. They have thrown young people and most of the middle class overboard, while the bankers, billionaires, politicians, and connected cronies party like it was 2005 on their $250 million yachts.

Now what? The Fed says they are going to raise rates. The QE spigot has been turned off. The hedge funds are selling their buy and rent hovel investments, cash buyers are dwindling, the flippers who appeared in 2005 are back, Boomers are looking to sell and downsize, young people are already in debt up to their eyeballs thanks to the government doling out student loans like candy, the number of full-time good paying jobs continue to dwindle, and the rigged 37% price increase has priced millions of people out of the market.
The good news is the Wall Street banks have inflated their balance sheets and celebrated by giving themselves $20 billion in bonuses for a job well done. If mortgage rates rise to 4% or God forbid 5%, the entire housing complex would implode faster than a blowfish out of water. If you’ve bought in the last two years you will be underwater sleeping with the fishes like Luca Brasi in the not too distant future.

- 77086 reads
- Printer-friendly version
- Send to friend
- advertisements -


Yellen smells like tuna
The smell is gone, along with the flies. All that is left are the bones. That too will be crushed.
What did the blind man say on his way by the fish market?
Good morning Mr. Yellen!
The FED works for the banks.
The FED will always take actions that are in the best interest of the banks.
Any benefits to the american public is unintended happenstance.
Any negative impacts on the american public is blamed on the policies of the political party not currently in power.
Wash. Rinse. Repeat.
Whats that you smell? Well if it isn't her feet, it has to be her pussy. Fuckin phewwww Yellen
Oh yeah, let's go double digit interest rates on trillion of dollars of debt.
Really screw ourselves.
Yeah, that's the ticket.
We're already royally screwed, we'd just speed up the process. Personally, I want to get it over with......
Yeah you are right they are not going to screw themselves. Which is why imho all that this article do is provide evidence to the theory that they will not raise interest rates by any significant amount any time soon....and not in an election year either.
bdc:
Actually The FED IS da banks.
- Ned
Looks like Yeelen gave you, your first -1
Looks like Yeelen gave you, your first -1
Everything is ready to implode, except the World Trade Center buildings, which the Saudis and their USA "slaves" rubblelized in 2001. The earthquake today east of Tokyo was first classified as 8.5, now it is a magnitude 7.8. Yesterday, California got wrecked in the movie "San Andreas." Monday should be a peak day for bad news if the past week is any indication. 400 point drop in the Dow, maybe? Anything is possible in the twilight zone world we live in now.
---
The US Geological Survey said the 7.8-magnitude earthquake was centred 874km (543 miles) from the Japanese capital, at a depth of almost 700km.
It struck at 18:30 local time (11:30 GMT). Buildings in the capital swayed for almost a minute as the quake built in intensity, AFP news agency says.
All kinds of good times ahead. How they can downgrade it thar much just leaves me scratching my head. There is going to be another corresponding release soon with that kind of depth.
i think the first readings were manually calculated by humans-the revised number was computer driven.
700km depth? That is about 420 miles. Very deep - as those things go.
Is there anything solid enough to generate a quake at that depth? The Russian borehole was only like 7 1/2 miles and it became too elastic to even drill further because of the heat. How could something fluid enough to seal a borehole as fast as it is drilled, build up enough rigid friction to transfer to the surface like that in a small area? Especially from 420 friggin' miles...
Anyone with knowledge of geology want to chime in here, surely there is some aspect that I am not aware of right?
plastic
became plastic
It's amazing what a missing decimal point will cause people to do, to say.
Local, state and Fed.gov have trashed American business so badly that since 1995, the only remaining collateral underpinning the mountain of debt is real estate. The title-trashing that occurred in the mid-2000's as part of the securitization process instigated by WallSt to pump the balloon higher, has in reality trashed many property's for decades until their title provenance gets sorted out again at a local level.
The debt balloon breaks when finally real estate has to be "priced to reality'
It wil be a double-whammy then, because the international derivative house of cards will detonate simultaneously with the domestic muni-bond market as property tax revenues will disappear.
depending upon how Fed.gov decides it will respond will then determine whether a modern multi-generational "dark-ages" can be avoided.
Most cities can maintain their property tax revenues by upping the rates. It would be sold as fair, taking from the rich etc. It is a nasty way to go because it all immediately gets capitalized into home values, leaving the owners no easy escape.
You can't get blood from a stone. Maybe some lead.
"... as property tax revenues will disappear."
this, This, THIS, a thousand times this... politics are local and that statement is the greatest fear the local bureaucrats have... it's also why home values have to be jacked to the moon in spite of any market forces indicating the contrary, because if valuations fall the property tax revenues fall with them... now, we can't have that can we? that means the feather bed that "education administrators" etc. have set up for themselves will disappear, and then what will happen? who will think of the children? how will police and fire dept. employees retire at 55 with full income pensions? oh, the humanity!
the problem is taxes are too high to allow recovery to happen, but they're not high enough to meet all the obligations that have been made... well, we get to see which force wins out it would seem... it's not pretty no matter which way you look at it...
Yes, another sad thing is that the federal government taxes and spends more than the state and the state more than local governments. This should be inverted with local government at the top and the federal government at the bottom of the tax/spend scheme.
In a civilized world the individual is the sole arbiter of his own actions and he allies himself with others according to his own needs.
That's the way things are right now - for the oligarchs.
someone recently posted an excellent observation regarding voting with your feet... I'm betting info like this will help people know where to point their toes...
http://taxfoundation.org/article/annual-state-local-tax-burden-ranking-f...
In Seattle we have a system where if the value of the property goes down the tax % goes up.
yep... see, incoming revenue can never go down, it must always be maintained or preferably increased... those pension funds always have to make 8% YoY too, for that matter... can never have a loss...
"fuck you, pay me"... sounds familiar...
Local governments will start cutting costs by turning off ALL of the street lights and cutting funding/hours for local libraries. Pensions as well as DHS grants for local police to purchase/train on military style hardware will be the LAST things to be cut.
DHS budget was something like 56 billion dollars a year back in 2010. You could cut $11,000 checks to 5 million people with that and still have money left over. Too bad the "terrorists" hate us for our freedom. (Sarc)
http://www.trulia.com/real_estate/Lake_Las_Vegas-Henderson/4890/
...and that's when we see politicians and Wall St. bankers hanging from lampposts at every intersection across the country! What a movie that will be!
I love that smell.
Now let me get some bread to go along with it...
Ooooh that smell
Can't ya smell that smell
Ooooh that smell
The smell of death that surrounds you.
"Yellen smells like tuna"
Yellen-Fin tuna?
My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... http://tinyurl.com/kmwz6ln
Live in a Yurt.
Or a dome.
At least round out your home.
Make some walls soft like a moroccan tent...
Play...solid homes LOCK us.
Guitar UNLOCKED ;-) In a over-tonic, harmonic creating dome of rock....
https://www.youtube.com/watch?v=zYhFoIWaR4k
I have thought about yurts, simple and effective. The only problem is security although I suppose one could get some guard dogs or trained cobras.
Americans would also need a few storage yurts for their collections of Beanie Babies and pink flamingos.
I think they'll be called Garage Yurts or Expansion Yurts...that is a funny visual :-)
When the dot was CONNING at it's peak and I was wealthy-ish by my own standards, I went to look at yurt on the wind-blown plains of New Mexico. Right off the Rio Grande...frigging breathtaking and scary all at once.
They lady selling had three huge dogs (a couple of Great Danes and a Rottie)...
$25,000, 30 foot, double wall, fully functioning. I was so tempted. My friends raised and trained Spanish Mustangs nearby.
Interesting turn that I looked at seriously and went back to the valley of Con, not -ready or not called, not sure!
Sounds like that country out around Taos. A bit haywire out there, but beautiful scenery when one looks away from the Yurts and makeshift dugouts. https://m.youtube.com/watch?v=H8j8C9zrA_I
Yup, that is right wehre it was, near Taos. ANd staggering views. The Rio Grande Gorge was a mile east of the Yurt....
And apologies for broken youtube link above...
Fresh link:
Guitar, differently...
https://youtu.be/lk1TSBW_368
Hey ORI, off topic but I have a friend near Bangalore that you might be interested in befriending. He has a master's in EE and is working at a renewable energy startup, common pursuits and he put in his time at the US salt mines as well.
I will email his details if you're interested.
Sure thing 813, sounds interesting. I'll take that introduction gladly. Appreciate the offer.
I'm sure you'll give him due warning of what to expect? ;-)
Details sent to email in your profile.
Thanks mate. Will respond there...Cheers...
NP, ;-)
A yurt is a consideration for my wife and I. Placing a shipping container on the property for security would be an option too.
Both excellent considerations.
In case anyone is interested clif high at halfpasthuman.com is selling two brand new Pacific Yurts.....
Hurry Spring!
The Fed says they are going to raise rates.
Not one in a billion chance. The Fed routinely lies to keep dollar strong and to attack gold and silver.
US debt and unfunded liabilities are $1,400,000 per taxpayer and rising at $70,000 per year. When you have a 1 cent aspirin costing $20 and $1 bag of saline water billed at $800 in your hospitals, your Medicare unfunded liabilities are sky-high.
There is no chance that Fed will ever increase rates. Look for NIRP in the land of the free even as inflation accelerates especially in food.
December 1, 2012
Economist Laurence Kotlikoff: U.S. $222 Trillion in Debthttp://www.realclearpolicy.com/blog/2012/12/01/economist_laurence_kotlik...
That $222 trillion in 2012 is now over $250 trillion - that works out to be over $2,000,000 each over the 122 million taxpayers in USA.
I think its about time to start building the gallows for all those learned Keynesian economists who screamed "Just print! We can just inflate the debt away!!!"
Don't you? ;-)
its about time to start building the gallows
10 years too late.
By contrast, Greece has debt of $352 billion over 5.5 million taxpayers - $64,000 per taxpayer.
it is absolutely clear these debts will never be paid.
Also clear that, as in Ukraine and Greece, and as happened in Russia under Yeltsin, there will be a firesale of real assets 'owned' by the federal government - all those millions upon millions of acres the federal government "owns" even though the Enclave Clause, Congressional findings and case law notwithstanding, seems to directly prohibit .gov from owning most of what it claims to own {it belongs to the states}.
I haven't kept track [anyone?] but believe there are some cases about that very issue in court in Arizona and/or Nevada, Colorado - I think.
If so, I wouldn't hold out much hope for the courts upholding the Constitution since years of bad caselaw and statutes are so entrenched they simply will be unwilling and by stare decisis ostensibly unable to do what should be done, under the plain language of the Constitution, which would prevent the US from selling out public land to {large} holders of Federal Debt.
Correct.
"The state" (which, lest we forget, the Supreme Court is a part of) will compound bad precedent to sell that which is not theirs (or any governments) under the presumptive authority of law.
Which leaves no other option than to shoot the trespassers and the ones who created the fraudulent contract to begin with.
Let the games begin ;-)
No one is going to start the real shooting until hunger sets in or the elite think it is time to thin the masses. "Bundy" type stuff won't get the masses excited.
That's why TPTP will make sure people are not starving, but instead slaving away in piss poor conditions all day for the crumbs that they get.
Correct. But hunger will be too late of a trigger. People have given up thier collective will to the state already so the fight is already lost. Isolated blowhards do not scare the state even if the whole public consisted of them as long as no unity exists to bring them toward any real resistance. The community that was on Silk Road is a recent example that scares the state. That unity of a self governance amongst the public without the state is the devil seed in the eyes of the state and gets stamped out once it takes root.
Not by bread alone.
"courts upholding the Constitution" The court system in this country is a privately owned for profit corporation and has no interest in the constitution.Also it has no interest in justice , only making money.
There is no question there are natural deflationary tendencies, the economy wants to deleverage. The current bubbles in stocks, bonds, and real-estate are clearly showing cracks, and they have run out of effective policy tools. Sure they could continue with QE but it seems like the public is catching on to the inequality that is fueling and thus is hitting its political limits. It seems as if the central banks are itching to get some new tools for their tool box. The question is how will they get them.
The only tool left in the CB's toolbox is a nailgun
What strong dollar? Inflation is built into the structure of the offer, there isn't strength in managing interest rates at this point anyways. If they raise rates by two points they'll bust themselves the same week. Just look at it, at sub 1% (with paybacks and subsidies), they can't make payments anymore. If they were ever serious, the window to adjust rates to cool the market was in 2002 after dot.com. But they were too busy blowing credit bubbles to care.
They lost "the game" a decade ago and they are going to have to start over from nothing because that's how the entire fiat central bank system is built to collapse on itself. They will lose it all, along with anyone using the jew bucks. Then the witch hunt starts the next week and more than likely what happened in Europe after the collapse of Rome. The jews were run out of Europe everywhere, this time that sphere expands to anywhere a central bank is located. It will be merciless and certainity like last time it will run for hundreds if not thousands of years. In this case, there are large well funded army bases surrounding Israel, put there on request by Israel. When the cheques bounce on the men and women guarding their wall.
Don't be in Israel.
Three options available:
1) Jubilee of all public and private debt, everyone goes to 0.
2) Migrate to BitCoin and everyone stops fucking around under a single currency that's built to be methadone for fiat users.
3) It just gets really ugly after september.
Something like #1 with a few stipulations.
First, a group consisting of a bunch of Jane and Joe Sixpack takes the reins of authority.
Audit, then close fed reserve banks. Immediately imprison chaipersons past and present pending trial, again presided over by JSP.
NAFTA gets thrown in reverse. Big companies that made the giant sucking sound to increase profit now pays the piper. You're getting tarriffed to sell your junk back here or keep your crappy products somewhere else.
Term Limits - if you're in office now your term is up. Clean your desk and report for your piss test. Your lifetime pensions are getting means tested at the very least You have no excemptions from ACA because that is banned effective immediately.
TBTF TARP recipients - senior management arrested immediately, assets seized, liquidated. Once again, JSP empaneled for your trial. Financial double-talk doesn't cut it anymore.
Military get's slashed by 75%. Not some 20 year draw down. 1 year, protect borders is your only function. Means test for all MIC pension porkers.
NSA, TSA, banned immediately. CIA, FBI, BATF, etc. are run by JSP and will be reeled in fast.
Secret 9/11 documents seized and made public. Criminal investigation run by JSP.
CDC, FDA, EPA, and all the other departments of bullshit employees, report for you piss test and prepare to be wound down. Welcome to the real world.
JSP panel will convene to establish equivalent to SARBOX with sharp teeth. No punishment is off the table.
Dual Citizens of any type will be banned from the new gov established by JSP. That means you too Israel.
Military weapons for local LEO is also seized/banned.
TPP? Get fucking lost, that's history.
That would be a good start. edit forgot war on drugs, that's over too. Anyone engaged in that racket is finished. Report for your piss test, your last official duty.
We also better findout who the chairpersons worked for before trial. It would actually be quite a travesty if federal reserve enployees were tried and executed before finding out who the real power brokers are. Their positions are delegated power, not power itself.
Keep 'em locked up at GITMO with bread and water until they come clean. It's gonna take strong medicine to turn this thing around.
LOL, option 4 is kicking the can for another 30 years. After that maybe the PUBLIC DEBT is wiped out and we get a new currency. This is what happened in 1913. The fed was born with it's green backs in exchange for the debt.
Who knows what the banks will get as a concession this time. What does it matter to them? They printed the money from nothing. All that will matter to them is they get to keep doing it until next time.
There is your future. A whimper, not a bang.
everyone says nyet.. no rate increase..
but isnt the histroy.. inflate inflate inflate.. then contract?
thats the real history. they are way over due to contract much much harder.
so.. ya, I think they will raise rates. fuckers. ( not that rates shouldnt be raised.. but fuck these people for all the manipulation they do )
There ain't gonna be no rate increase, but there will be more QE.
NAR: "Its a great time to buy, hurry before rates go up"
" Don't be priced out of the market ... Buy Now! "
Jeeeeeez, how many times have I heard that?! If bankers actually started foreclosing on the underwater and delinquent house owners, there's be riots in the streets. I can count at least 8 people who have not paid their mortgage for over 6 months now. None of them would buy again if they could 'do it over.'
Hard lesson to learn but for some reason so many people ignore the true state of this economy.
Set up like a bowling pin.
Knocked down, it gets to wearin' thin.
I gotta stop picking up these loose women.
Introduce them to your cats, they're pros at sniffing out suspect hygiene.
I wonder if that is urban legend or troof!
The Fed did precisely what its owners wanted - set it up so real assets would be bought for pennies on the dollar by the .01% and banks.
It's worth reminding ourselves: even in 'normal' circumstances, if you take out a 30 year mortgage, ultimately you are paying around 3x the face value because of interest.
And where did the loan money come from? 10% or so, in theory, was actually a loan of deposits made in exchange for a promise of interest and a return of principal + interest on demand - emphasis on "promise" {newer case law seems to be even denigrating that in favor of an "investment in the bank" notion, which is not what anybody depositing money thinks they are doing, hence how that could be the contract is a mystery}
But, 10% extant money on deposit belonging, at least in equity, to other people.
The other 90% is of course created out of thin air.
So in essence, you pay 3X of money you have from working, remaining after taxes, to pay back a loan made out of money that wasn't the bank's money, plus money the bank created by the bare act of loaning the full amount.
Cute.
Sucker Punch: 10% interest is "Jusury" .... 80% confiscatory tax rate is "Social Justice" economics !
I'd say both are theft, and theft no matter 'who' is doing it.
Another anti-Semite exposed.
Another anti-Semite exposed.
Just convert TBTJ mark to unicorn "equity" and nearly infinite duration cash (created from nothing) from financing consumption ponzi Protection Rackets (NFLX, AMZN, etc) to gold each and domestic producers each and every day (the will be the secular winners when the day of reckoning comes).
If the flippers are paying cash, what do I care. The popping bubble will only affect the kind of person who has 300k to buy a house outright. Really rich people.
Boo hoo if they overextend themselves.
Please trust that the people with the kind of money to buy a $300K house outright are ready to rock on a bubble pop. Underwater mortgages screw the mortgagees, not the mortgagers (consider what happened in the aftermath of the last pop). Guys, look at the Fed rate history. What happened in 2005-2006? What did that lead to? That was a completely intentional market crash.
QE turned off...oueeehahaha. Just exported along with everything else my friends as Belgium, Luxemburg, Ireland, Cayman Islands (as representative for the whole Carribean) and Switzerland buy up bond issues after receiving accounts by the Fed to do so....everything the Fed or Fed government says is guaranteed to be falsified to some degree or an out right lie.
This is about the one millionth time the problem has been identified. Not that Quinn is incorrect. He in fact is damn right but people are just maxed out, over burdened by financial, psychological probkems in addition to the heavy losd of every day routine. The result is that they are too tired to think, fight or plan. Net result? There is more pain in store for us plebs.
Quinn could use some more facts, that's for sure. He blames Greenspan and Bernanke for the entire mess when it was the Gramm-Leach-Bliley Act under Clinton that gave the banks the ability to go hogwild as parts of the Glass Steagall Act were ditched. The US gov't is clearly responsible for creating the environment for the banks that has led to much of this ongoing disaster.
http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act
"while the perpetrators walked away unscathed to pillage and rape once more"
"perpetrators" includes the proletariat vermin who lied about their incomes on their zero-down mortgage applications - which is criminal fraud - then defaulted on their mortgages en masse, destroying the equity of their neighbors and entire communities
NONE of these perpetrators has been prosecuted and jailed
EVEN WORSE they go on to collect ever more freebies, eg writing off their mortgage debt, and entitlement programs from the corrupt politiicians in return for VOTES !
it is all about VOTE-BUYING - the proletariat are THE ENEMY, because without them, the corrupt politiicians cannot get into office and power.
Your words Prober-
"NONE of these perpetrators has been prosecuted and jailed"
Couldn't this be said about the bankers as well. It was they who allowed the zero down, no proof of income etc. Aren't the bankers interested in making good loans or are the bankers interested in fees, which they collected after purposely bundling them into crap investments? If you were honest with yourself you should be able to admit that these "proletariats," which by the way means workers, would not have been able to buy these homes without the bankers enabling them to do so.
Are the proletariats responsible for the safety of the money system or the bankers?
When bankers go to jail I will reconsider your argument.
You've got hold of the wrong end of the stick. Who made the loans based on this fraudulent paperwork, and why would they do that? There are so many cases where the lenders themselves encouraged, suborned, and even committed themselves the kind of fraud you are describing. Why would they do that? Even without fraud, I know of numerous situations where borrowers accurately showed their financial situation, and still got loans at least twice as large as they should have gotten approved for. All the information was right there on the page, and it was obvious they had no chance in hell of making the payments. I knew it when they told me. I asked them why on Earth they would accept a loan they couldn't possibly repay. They repeated back to me what the loan officers had told them; if they got into trouble, they could just refinance. It didn't make any difference to the lenders.
Now, how in the hell is that possible?
I don't know; they don't tell the likes of me. But I can hypothesize (not the same thing as "guessing") based on other things I know, which are common knowlege.
Sure, borrowers committed fraud. When I got my first mortgage, in 1996, lenders were sniffing that sort of thing out. Within a couple years, though, they completely stopped. Why would they do that? Because they knew they would make money anyway. They knew the game was rigged. They would re-sell the loans to somebody who would slice and dice them and re-sell them hundreds of times over. They simply could not lose. It didn't matter to them at all if the original loans were ever repaid; not even if a single payment were made.
Why did the lenders not just allow, but actively seek out loans that would never be repaid? Because the secondary market in debt was insatiable; they had discovered the Philosopher's Stone of how to make infinite money out of nothing at all. The only limit on how much money they could make was the supply of mortgage loans they could make, so they did as much as they could do to eliminate that limitation by making loans to absolutely anybody.
Our corrupted system is a real-life illustration of what happened to people in the "reality" of The Matrix movies. Except we're not hooked up to machines to extract our life-energy. We're being used to extract our nearly-infinite capacity to carry debt. Once the debt is resold the first time, it doesn't matter if we pay it off, or even service it.
Your argument is a classic example of blaming the victim. I admit; it's a lot easier than holding the true villains accountable.
"Scrub like Hell .... but, you can't get rid of that codfish smell !" Girl talk in the Massachussets colony 1600's
Of course. Your typical bankster is always the sell-side of real estate. No major bank where I live (Canada) still owns its own headquarters.
Banksters prefer more liquid investments:
60 per cent stocks (inflation hedge)
35 per cent theft bonds (deflation/depression hedge)
and maybe 5 per cent real estate offshore (hedge against revolution or Russian liberation).
Will this somehow help BB secure a mortgage? Dudes in a bad place. Lifes hard with only $250,000 per speaking engagement
Maybe Krugman can help him out?
"The Federal Reserve created the last housing bubble and they’ve created the new housing bubble, along with stock and bond bubbles, with their easy money policies designed to enrich their Wall Street owners and the parasites who feed off the financial industry."
The policies of the FED, the congress and the obomination are ALL designed to create jobs and provide freebies to the massively overbred and over-imported proletariat vermin hordes -
NOT for people who already have earned money, but just happen to be smart enough and with the financial resources to benefit from the proletariat-subsidizing programs of the socialist government.
Here is one self-sufficient proof: the FED is the *ONLY* central bank in the world that has a 2nd mandate of suppressing interest rates and creating money to PROMOTE FULL EMPLOYMENT - that is a provision targeted directly at soliciting the votes of the proletariat vermin hordes, NOT the successful people.
Prober- I don't believe the mandate is to suppress interest rates. The mandate is to manage interest rates, which they clearly have not done. Cui bono- who has benefitted to the greatest extent- the asset holding class, the corporations, not the poor. The poor pay loan shark interest rates to entities often tied to banks. Who made money off those homes that were bought by the poor. They lost them and the foreclosed homes were snatched up by hedgefunds at fire sale prices with nearly zero interest rates.
As for your working comment- how is it work to watch your assets climb in value?
To Jim Quinn
See my feedback - you are a simple-minded incompetent at best, a socialist propagandist at worst.
Quinn is one of the smartest people I read.
Whether Quinn is the "smartest" is less significant than that he is "authentic", or honest in his thoughts.
I'll take Jim's analysis over some dogmatic turd's, anyday.
Prober, you may think Quinn is a prick, but everyone who has ever came in any form of contact with you or your ideas knows for a fact that you're a first rate asshole.
I am a 15 year top 1% nationally ranked originator of mortgages. I can tell you now we are for sure in a bubble. Folks if you are holding onto a piece of real estate that you've been on the fence to sell. SELL IT NOW. Consider this my big fucking foot for pushing you off the fence. 18 months from now and we are going to be in world of shit and there is not a silver bullet to control the collapse.
Have you seen the Australian RE market?
http://news.domain.com.au/domain/real-estate-news/reserves-smashed-as-me...
$1.3 million over reserve for Toorak homeA tired riverfront house in Toorak sold for $4.81 million.
40 Balmerino Avenue, Toorak
Sold $4.81 million
Agent Kay & Burton
Price range $3 million-plus
Paying almost $5 million – some $1.3 million over reserve – for a fixer-up might seem insane, but securing elevated, riverfront land in one of Australia's finest suburbs commands such a level of investment. Built in the 1920s, the humble family home sits on 700 square metres. Auctioneer Michael Armstrong opened with a vendor bid of $3 million, and in total, five contenders threw their hands up. Two fought until the hammer fell, with the winning bidder offering increments of $10,000, proving slow and steady wins, versus whacks of $40,000 from her competition.
And there is this canary in the coal mine
GE announced plans last month to exit $200 billion worth of finance assets as it focuses on manufacturing of industrial products. Last week, GE CEO Jeff Immelt said he expected to sign $20 billion to $30 billion worth of deals by the end of June, as he gave a faster timeline for the overall exit.
http://www.reuters.com/article/2015/05/27/general-electric-finance-idUSL...
Serious question... Supposed you buy a house now, at 4.25% interest rates, then rent it out to someone with good credit (a simple credit check will determine that) and generate positive cashflow of between $300 - $500 per month. If the house 'suddenly' drops in value to where it is worth less than what you bought it for, does it still make for a good investment? Hint: The answer is yes.
Serious answer... your answer appears to be based on the assumption that the value of the house might suddenly drop in value while everything else remains unchanged. This may not be a good assumption if the next financial crisis cannot be "solved" by the Fed's usual tricks. In fact, having a large mortgage on a rental during the next economic downturn (i.e., the "big one" ?) might be the worst thing you could do. Aside from issues related to civic unrest, I don't think you can assume that you'll be able to pay off the mortgage (which probably will be held by the Fed) using grossly depreciated dollars. There are ample precedents in other countries for resetting mortgages after a crisis in the interest of "fairness". The rules can and will change as the gov't passes new laws to prevent the masses from benefiting from the chaos.
Wrong Jack. It makes good cash flow. Until the renter defaults or you have a vacant month or two. But a good investment? Please.
Look up the definition of investment and get back to us.
The word you are searching for is lemming. It's a lemming investment.
It's like any thing else you have to do it the smart way. The rental I built in 1995 has only had 4 renters and 1 month of vacancy. It's been free and clear for years. Current tenants, a dentist and a social worker have been there 5 years, it rents well under market for $1200/month but I would never raise the rent unless it turned over. The "value" of the house has gone up and down over the years but what do I care?
Your case is totally different. You own it free and clear (no leverage), probably sit on a nice unrealized gain from 1995 and have the ability to raise rents. You don't have to sell in a downturn because you have no mortgage. Sounds like you have made a very nice return on your investment.
Yes. That is the way to do it. No leverage on rentals. Leverage + depending on renters = big gamble.
Imagine you bought a stock for $100 a share cash with a 5% yield. The stock immediately drops to $25, but the yield is still paid. Was that a good investment? You lost 75% of capital, offset by a 5% dividend and are still down 70% no matter how much you wish and hope.
Your example is even worse than mine because you are LEVERAGED to a falling asset price. The equity you put into the house 5%, 10%, 20%...whatever is potentially completely wiped out by a small decline in the home price just like happened in 2008. If your rents drop you could go cash flow negative in addition to the leveraged capital loss. That ain't good. You could end up losing 100% of your investment and throwing your keyes back at the bank.
Hint: The answer is NO.
"KeynesianISM creates unexpected opportunities .... the rich know how to access them !" The unexpected "Kaleidoscope of Keynesian Konsequences" (KKK) !
If whats going down in the Scottsdale and Seattle area are any indication we may have a hard time geting a shot at a cheap purchase down the road, that may be reserved for the banks and the Chinese. Berkshire is popping up everywhere.
I know and despise a certain real estate broker in Las Vegas. I warned him in 06 or 07 (when he was an agent) that the market was certain to implode, he laughed, called me chicken little, proclaimed that property never loses value and then proceeded to lose his ass. Now he is back to making 30,000 a month and is buying properties in California.
One would think that with all of the bubbles we have seen over recent decades that they would learn but they don't, it's amazing.
Most people from LV have a gambler's mentality and ones from CA grew up with bubbles, those are their norms.
"The QE spigot has been turned off"
The QE Spigot is still on in a system wide context, which is all that matters since BOJ/ECB can buy US bonds to float the boat.
The Fed's QE is still underway - it's become self-funding. They printed their balance sheet up to $4T; all they have to do now is keep rolling it over, buying new Treasuries and MBSs as the current ones mature.
Early on in the stimulus game Bernanke chided Congress for running up debt and not having a prudent exit plan like the Fed did. Back then he insisted the Fed's unorthodox stimulus measures would be targeted, limited, and brief. The Fed would have its position unwound within a couple years at most. He also insisted the Fed would never monetize Federal debt. He lied.
The smell of venality and grift. Reeking and wafting like a rotting rat carcass inside a wall. Beyond one's site and reach, but its dead and foul presence nonetheless being revealed.
Liberty is a demand. Tyranny is submission..
Guillotine the Fed. Audit the heads.
Hubba Bubba
hey....pull my finger...
I did, but nothing happened.
It's ok to dream and wish, but you would be wasting them on the belief that the un-fed will raise rates and pull back on printing.
Not going to happen, Capt Jack Yellen is not going to blow up the system on his watch.
They have fucked everything up so badly there is no easy way out!
FUBAR!
so if we are all so smart, why are people still overbidding on houses and there isn't a fucking house to be found in some hot markets?
Fishy indeed! Prepsite.org: USA and the slide into totalitarianism http://www.prepsite.org/2014/11/usa-and-slide-into-totalitarianism.html?...
What are you babbling about? Your own example of 55% in ten years is just 5% inflation, compounded. Even the 37% over the last three years is mostly a statistical artifact, the averages were dragged down by a ton of foreclosures on the market, and the foreclosure flow has been managed for the last seven years so it doesn't hit like that now. The bottom of the market was too low, is what it comes to. Hey, feel my pain, I ended up selling a house right at the bottom, I even knew it was the bottom but what with carrying costs yada yada I didn't want to wait.
So are all the powers that be conspiring to create a new bubble? Well, ... maybe. The prices are back up to right around their peaks before the crash, but it is also seven years later, and seven more years at a real 5% or so annual inflation (government figures being about half of that), is still an adjustment to consider. Does the Fed want this reinflation? Of course, it monetizes away part of the 2008 crash, that they are still holding as stinky instruments they bought as part of QE as well as it affects the economy.
Is it a bubble that will burst again soon same as before? Probably not. There was a lot of special circumstance around the 2008 collapse. Things will have to find a *new* way to collapse, if they're going to collapse again. Eventually that will happen. But I don't think it will be anytime soon.
And you just know all the loans are rock solid, premium grade!
They can't be much worse than 2007, literally they can't, half the loans made in the last six months never had the first payment made, never intended to. For that matter most were speculators, but even so.
Yep, adjusted for the increase in the supply of money, pretty much every USD denominated asset is very artificially suppressed.
Yellen jumped in the ocean as a kid. Now they will never get the smell off the fish...
Is housing overpriced because WE cannot buy it, or is it overpriced because NO ONE ought to be buying it? The fact we are being made poor by our masters does not mean our homes are too costly for others. OK, so if rates are forced up, then easing from everywhere will cause others to buy. Just like it has always been. Thing is, we do not see clearly how our masters are rigging this one for their uninterrupted profit.
owner of my company...rich asshole...he had great last 2 years...he is buying properties right and left...renovating some, rebuilding others and renting them...Southern California...( There must be a law in place against people who rent properties to other people...it creates disbalance in a society)...people must have a place to live without worrying of paying property taxes, rents to some retard who got luckier and so on...
"Chinese and Russian billionaires parking their ill gotten wealth in US real estate..."
Interesting. I wonder the veracity of such a statement - in real, hard terms, not just some repeated slogan that is automatically taken as gospel because Russia & China are now considered to be the new 'axis of evil'...?
Come to Los Angeles, especially San Marino and it will be clearer to you.
Agreed. Be sure to add:
Pasadena
Arcadia
San Gabriel
Temple City
Alhambra
Monterey Park
Rowland Heights
Walnut
Irvine
What I really want to know is what happens to all of new arrivals from Shanghai/Guangzhou/Shenzhen/wherever if China and the U.S. have a shootout in the South China Sea...
Nm
No secret here, the only thing remaining is the shit house door off a tuna boat.
Luca 'Brazzi'. 'Brasi' was the video game character. This is no game, though it is high crime like, uh, Hollywood.
"I was ecstatic when I was eventually able to sell my townhouse in 2004 for $134k. I felt so smart, until I saw a notice in the paper one year later showing my old townhouse had been sold again for $176k. Who knew there were so many greater fools."
This sort of market action is pure bubble! I saw so many cases of greater fools not wanting to be left behind. It was a mania! When 2007-2008 burst onto the housing market, the last ones IN were the first ones screwed! Massive mortgages on hugely overpriced houses and deeply underwater, many people with exotic mortgages that allowed them to go way up market. It was so classic, yet I sense people are ready to go right into another similar bubble without batting an eye!
I saw two friends last weekend who were starting to test the water and buy a place. They are early-30's and have finally saved up enough for a down payment. They both admit the market has run a long ways, but they are nervous about missing out on more upside.
They know how I feel, so they didn't want to hear my 30 minute tirade. I will buy them a consolation beer when they are underwater in a year or so.
How many who bought property in 2008, would have, if they had known a recession had begun in December 2007?
The Fed tried to conceal the subprime bubble burst from the people until the presidential election in November 2008.
To put what is going on today in its proper perspective and to learn the history of how fortunes were made and political corruption was the basis of the U.S. (a sub-corporation of the Virginia Company) and why we are in the situation we find ourselves in today…You MUST read these books. Links below:
Books 1-3 - The History of Great American Fortunes
Or you can find a good audiobook reading of the History of Great American Fortunes on Youtube. There are other readings, but this is very good one. The link is:
https://youtu.be/uk7l2EZBD6s (Part 1)
Book 4 - Richard F. Pettigrew Triumphant Plutocracy
You cannot navigate the future if you do not understand the past!
Looks like good links - thanks
"...the rigged 37% price increase has priced millions of people out of the market"
No problem - Thee are plenty of Wall Street Tribesman who have looted trillions from average Americans, as well as China, Asians and rich A-rabs who will buy all the inflated homes and rent them back to us -at a high premium of course. After all they do have to be compensated for their risk. You know there's always a chance-however so slight -that the free money spiggot will be turned off, and next time these heavily margined goons blow up the market by their greed-there may not be any money left to bail them out.
I think they have a contingent plan for this however--bring back the Bolshevik Stalinist gulags and force millions of idle, unemployed Americans to work as slave labor. Maybe we can jack up health insurance more and make it a felony to not participate in Obamacare. Also, criminalize non-payment of credit card debt. People who are dumb enough to rack of thousands of dollars of credit card debt at 30% interest ought to go to jail for just plain stupidity. After all, there irresposibility places all of us at risk -especially the Banksters who so kindly and generously loaned them the money in the first place. That will legalize the incaceration of millions of workers for public service projects and the repayment of bankster debts. I believe these solutions will once again save the planet from blowing up.
When the bond market crashes, more money will flow into physical assets like real estate. As long as you get a 30yr fixed rate mortgage and can afford the cost, you would be smart to park your money in real estate.
With governments around the world especially Europe talking about cashless society, Europeans will be moving there money into physical assets like real estate in the US to protect themselves from government.
" the number of full-time good paying jobs continue to dwindle, and the rigged 37% price increase has priced millions of people out of the market."
Just looking around where I live, I know that full-time good paying jobs are down, but only in the private sector. In the public sector, cities, school districts, counties, states and the Feds are filling the gap in high paying unlimited benefit jobs. Sure, many people may not be able to afford to buy a home. But that doesn't stop teachers, city hall secretaries, sheriff deputies, city cops, the town administrator, the plow driver, the street manger, the teachers assistant, the court house register of deeds, the Department of Natural resources fishery manager, the county clerks, you name it, they have been feeding the new house construction market where I live. They buy rural lots and build brand new McMansions, no problems! I see it as a reflection of the great divide. Public Employees, earning taxpayer funded paychecks, are living in boom times. 2001-2007 is alive and well, in fact Public employees never missed a beat, they sailed through the financial crisis with rising wages, increased benefits, full health care, early retirements, the lot, all in tact. Right now, the local contractors still build new houses, for public employees. Those around here in the private sector, as really hurting. Housing stock looks like slums, yet the public workers are still planning their dream homes. The great divide is worse than ever when I look around. Tell your kids, get a public sector job!
I upvoted you because it's the same here, exactly the same.
Only difference is that our real estate boom is being fueled by hundreds of thousands of mainland Chinese coming here to A) launder/hide their illicitly obtained fortunes, and B) pop out a few anchor babies.
I keep asking ZH what will happen to these folks if China and the US ever go to war, but no one can tell me...
Any guesses?
Tyler, you want the world to end and have at your disposal a ready supply of smart men at your side to rebuild it.
Yet we all suck.
Is this the story we are to glean from your farticle?
personally I prefer anarky
Something smells fishy? Could have been what I ate for dessert last night....
Greenspan and Bernanke: They're on the list...
So impossible to predict the future, based on my life experience, financial and investing background, and degree in Economics, I was sure we would see rampant inflation to solve our debt problem. That was 7 years ago! There are an equal number of arguments for inflation/deflation, and in the long run, Tyler says we are all dead, yeah?
Earlier this month, I enrolled in an online real estate school. I played chapters of classes while sleeping at night to meet the hours of class time requirement. Sat down yesterday and passed the state test!
Adding it to my resume, and may have found the new perfect job at the same time, while living in paradise. It's been many years of struggling, I hope Yellen doesn't fuck this up for me.
Wish I had a degree in Economics, truly I do. Mine is in History.
How I envy you...
the smelly fishy isn't the fish, as the smell
of the sea is not the sea. it is the smell of
the gaseous bacterial excretion that digests
the organic matter of the fish, the land or
the biology decomposing, naturally. Melville
made that point a century ago. fishy how
these things take so long to penetrate the
minds of men.
About 7 years ago, a large Dutch housing corporation in the Netherlands, Vestia, went under by 'miscalculations' in interest rate derivatives, sold to them by GS. Soon after, a smart couple of politicians, economists and specialists shifted the rental houses from Vestia to a housing foundation; off the Vestia books.
According to one of the people involved, a female politician, and there you have it bitchez: "Goldman employees left the building with angry faces" is what she said on TV, because they got paper for paper; hard assets, the rentals, were out of reach
I kid you not
Way to go commenters! Many here notice that the FED is not the sole entity responsible for the Bubble.
The FED is a CENTRAL bank, not a national bank. Central Banks are agents for their debt spreading private banks. A debt spreading private bank system needs a central bank to create reserves when the system goes into instability (unwanted positive feedback). A debt spreading private bank system needs a payer of last resort, and they need their double entry ledgers to come into balance. Central Banks came into being as agents for large debt creating banks, especially commercial Wall Street banks.
The FED finds reserves for any of its banks that demand them. The FED finances loans AFTER THE FACT. The FED is a dog that responds when its tail is wagged. The FED is owned by its “system,” and stockholders are its members. Owners of Fed Corporate stock are now hard to follow due to cross-directorates and shell companies, but original FED owners were money power agents like the Rothschild’s. Eustace Mullins traced out the original owners. See Mullins Book, “Secrets of the Federal Reserve.” Griffin’s book is a rip off of Mullins, and Griffin is a shill for Gold – meaning he is probably a usury funded money power disinfo agent. Gold was the original money power device, as Mullins describes.
The bubble has/had many sources: GLB, which broke Glass Steagall. Red lining provisions in Community Reinvestment act. Legislation that allows Special Purpose Vehicles to reside at big TBTF banks; These TBTF banks are usually primary dealer market makers for FED’s open market operations. SPV’s allowed mortgages to be on-sold, to then be tranched, to then be magikally transformed into mutant MBS’s. Insurance jumped in on the game, especially AIG who co-signed loans. Co-signing loans makes “loans” appear more credit worthy, and hence capital positon of bank improves.
BIS was in on the game as mortgage reserve ratio was dropped by Basel Rules. Regulatory agencies are captured by bankers and said regulators looked the other way. Anybody that figured things out got fired or got shouted down by Neocons like Rubin, Greenspan and other cronies.
Clinton should take a lot of the blame, especially as he was, and is a shill for bankers. Any Rhodes Scholar like Clinton should be viewed with suspect, as Rhodes Chatham House is a sister agency of CFR, both of which are illuminist organizations. All of these organizations require usury from banker credit money to fund their operations.
The bubble is what bankers do; they create credit to then put populations in debt. Real-Estate works with Insurance and Finance. Credit money systems want and need fungible real estate on their double entry ledgers in order to create new credit money. This is why 70% of U.S. money supply correlates to debt instruments which then relate to real estate. The value of real estate in New York alone is worth more than all U.S. industry. The bankers want and need new debt victims to hypothecate themselves and also pledge their fungible assets. Question: Is it proper that money supply matches debt instruments, which then relate to real estate? A proper money supply would relate to goods and services, what the people need to survive and thrive.
Industry seldom goes to a bank to take out loans, to then increase production – this notion is myth. Credit money most often comes into being against real estate, which bids up price. New credit money is also used to Greenmail industry, where vulture investors take pension funds as basis for new loan. Lately credit money is used to bid up stock price for stock owners through new loans funding stock purchase. (Same as 1920’s bubble.)
The bankers want and need government via FDIC to back up new mortgages, to then bail them out when the system goes into depression (depression is due to too much debt overhang). GLB allowed Wall Street banks to have access to main street FDIC banks as this insurance was desirable.
There is no honest economist on this earth that can look me in the eye, and tell me I’m wrong.
Man is shackled to a slavery credit system; it stinks and needs to go. It was born of fraud, and still is fraud.
www.sovereignmoney.eu
Kudos on a good post.