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The Biggest Obstacle: Record Shadow Housing Inventory, And How Obama May Have Just Popped The Consumer Spending Bubble

Tyler Durden's picture


While today's foreclosure settlement deal is by some accounts expected to help the housing market, as the foreclosure pipeline is once again unclogged, it is unclear what this will actually do for price discovery and clearing levels when one considers the already untenable shadow housing inventory, which can be summarized simply as follows - excess supply. It is this overhang that has to clear before there is any hope for incremental demand interest. And since mortgage rates are already at record low levels, and only an MBS QE could do much to stimulate even lower rates (which has its own set of adverse consequences), it is now obvious that from a purely psychological standpoint as long as people expect rates to decline in the future, they will not commit to a new home loan today. What makes it even worse is that the excess inventory has to be literally burned to the ground for regular market clearing to resume. Unfortunately, as the following chart from JPM shows very vividly, the burning will have a long way to go: the most recent shadow housing inventory is now at an all time high. Think today's action will do anything to help the housing market? Think again - if anything it will simply see the number of foreclosed properties explode. Rather, what it will do, is finally redirect discretionary spending from all the squatters who have lived mortgage free in their houses for years back into mandatory spending such as rent and mortgage bills. For those unclear, recall this post quantifying the benefit of the squatter economy (i.e., non paid rental/mortgage payments going into discretionary spending) - kiss that $50 billion inflow into GDP goodbye. Paradoxically, by trying to fix housing, Obama may have just popped the consumer discretionary bubble, of which the biggest beneficiary is that one certain fruit-shaped company...


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Thu, 02/09/2012 - 13:53 | 2142622 nope-1004
nope-1004's picture

Obama nothing but a liar.  From Dave in Denver:

It turns out that Wall Street is attacking the new CFTC limits on speculative positions - and thereby fighting limits on their ability to manipulate the gold and silver markets - using none other than Eugene Scalia as their lead attorney.  For those of you don't recognize that last name, Eugene is the son of Supreme Court judge Anthonin "I hunt with Dick Cheney for favors" Scalia  LINK.    Now,  of whom in hell do you think the justice system is going to rule in favor?  Quite frankly, on Federal litigation matters there should be absolutely no connection between any of the legal representation and the judicial system.  This particular connection is absurd.  How many of you actually would believe that there won't be influence pedalled here?  Then again, I guess mob organizations like Wall Street are best served by hiring mob attorneys like Scalia...

And then again,  it turns out that the facts belie the rhetorical garbage spewing from Obama's mouth:  Obama Prosecuting Fewer Financial Crimes Than Under Reagan or Either Bush  LINK
Thu, 02/09/2012 - 13:58 | 2142662 LawsofPhysics
LawsofPhysics's picture

Prosecutions is one thing, what do the conviction numbers look like?  That is all that matters.  my guess is worse, but it would be great if someone had the data.

Thu, 02/09/2012 - 14:23 | 2142792 Troll Magnet
Troll Magnet's picture

in order to get convictions, obamarama would have to actually prosecute somebody.  other than whistleblowers, of course.  and PM owners.

Thu, 02/09/2012 - 14:38 | 2142849 swani
swani's picture

Nothing will change unless the people change it and the first step towards that is turning off the corporate media.

Thu, 02/09/2012 - 19:19 | 2143944 mendolover
mendolover's picture

Well said.  Ding ding!

Fri, 02/10/2012 - 06:54 | 2145052 jeff montanye
jeff montanye's picture

however obama is not just a liar: he is a thief (of hopes and dreams, of a nation of laws not men, of tax revenues and bond payments for the crony capitalist too big to fail) and a murderer as well (of first responders and funeral attendees, among many, many others).

Thu, 02/09/2012 - 14:56 | 2142949 LawsofPhysics
LawsofPhysics's picture

Wrong.  During the 70's they prosecuted all kinds of people and got few convictions.  During the 80's S&L crisis, regulators actually did their homework, focused on a the important cases and had a very high conviction rate with the net result of putting many banksters in jail. 

Thu, 02/09/2012 - 15:34 | 2143111 Thomas
Thomas's picture

I have slowly come to the conclusion that the landscape is so totally littered with miscreants and criminals that there is no mechanism by which authorities could sort through the debris to get convictions. Nuremberg defenses would proliferate. All we would get would be the pawns thrown into the court system. I see only one solution:collapse. The good news is that this solution looks fairly probable.

Thu, 02/09/2012 - 18:11 | 2143732 Diogenes
Diogenes's picture

Throw 3 big names in prison each year and everyone else will behave themselves.

Fri, 02/10/2012 - 00:05 | 2144695 sun tzu
sun tzu's picture

Nuremburg defense didn't work then and under a fair system, it would not work now. The problem is that the regulators refuse to prosecute anyone. 

Thu, 02/09/2012 - 15:41 | 2143137 macholatte
macholatte's picture


clone this guy, give him a few mil budget, some authority and step aside....... but that won't happen.

William K. Black


The Best Way to Rob a Bank is to Own One


Thu, 02/09/2012 - 14:00 | 2142675 Ned Zeppelin
Ned Zeppelin's picture

Anyone with even a marginally functionally temporal lobe has to understand that Obama is the best friend Wall Street ever had.

Thu, 02/09/2012 - 14:14 | 2142748 john39
john39's picture

best friend?  i was thinking more like a pimp/whore relationship. 

Thu, 02/09/2012 - 14:26 | 2142800 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Banking Houses:  You're my #1 Obama.

Obama:  I love you Banking Houses!

Banking Houses:  Shut up and get back to work!


Thu, 02/09/2012 - 14:30 | 2142815 Troll Magnet
Troll Magnet's picture

if i were unlawfully foreclosed upon and obama cuts me a check for $2,000, i'd put that cash all into PMs, hold on to it for a couple of years and then buy back the house with it.  

Thu, 02/09/2012 - 14:51 | 2142920 Silverdes
Silverdes's picture

Hell, at the rate we're going, you might be able to just buy the bank that foreclosed on you...

Thu, 02/09/2012 - 14:35 | 2142837 bigdumbnugly
bigdumbnugly's picture

banker booty calls to the white house?


i don't even wanna know...

Thu, 02/09/2012 - 17:07 | 2143507 Spastica Rex
Spastica Rex's picture

I don't care for your analogy; kind of makes him look like a victim.

Thu, 02/09/2012 - 14:16 | 2142757 Dick Gazinia
Dick Gazinia's picture

That rules out 80% of America.

Thu, 02/09/2012 - 14:45 | 2142884 PulpCutter
PulpCutter's picture

Hate to bust up the 24/7 Obama hate-a-thon here, but you're way off the facts.

It's the GOP who led the charge to get this done.  Obama originally vetoed the bill (HR 3808), which had passed both House and Senate, and made it stick.  The House GOP voted 169 for, 5 against, in unsucessfully trying to force the bill past the veto.  You're blaming the wrong branch of govt.

I'm not saying the Democrats aren't corrupt as well, but the GOP is clearly worse.  If you ACTUALLY care about this stuff, want to change it, and live in reality rather than FoxTV-land, you will vote Democrat in 2012 (unless you're lucky enough to live in the district of someone like Ron Paul).


The Democratic party absolutely has plenty of corruption - no argument there.  But there is an obvious difference between the two parties.  The GOP is way out front, in handing over control of America to the financial 'services' industry.  Look at the vote totals, below, then explain to us how "there's no difference between the parties".

We can fix this problem in three years.  Vote out the clowns who supported the takeover.  If your two candidates were both involved, vote out the one who was the dirtiest of the two.  Politicians are nothing if not good at scenting a shift in the wind.  Do this for the 2012 and 2014 elections, and we'd have substantially different Congress.

The bankers have more lobbyists in DC than everyone else, combined.  The GOP votes virtually in a block for every bill giving the bankers more control of DC.

E.g. Senate vote tallys:

Gramm-Leech-Bliley (repealed Glass-Steagall): 54 'yes' - 53 Republicans, 1 Democrat; 44 'no' - all Democrats

Dodd-Frank (weak piece of crap, but best Americans could do - Republicans fillibustered anything stronger): 60 'yes' - 57 Democrats, 3 Republicans; 39 'no - all Republicans.

House vote tally on Gramm-Leech-Bliley: 243 yes, 57 no.  The 57 'no' votes were 50 Democrat, 7 Republican

The financial 'services' industry is donating to the Romney campaign at 5X the rate they're donating to Obama.  Guess which one they think is better for their interests? The average donation to Romney's SuperPac is $103 thousand dollars, the average to Omaba's is 55 bucks.

Thu, 02/09/2012 - 14:50 | 2142918 Chump
Chump's picture

You just used an awful lot of words to say, "my team is less shitty than yours."  Even if true, you're still voting for shit.  So by all means, enjoy your shit; you deserve it.

Thu, 02/09/2012 - 14:59 | 2142946 PulpCutter
PulpCutter's picture

Booyah! Grunt! Belch!

Yes, I can see you're the ideal slave material that the GOP's 1-world order is looking for.  Dumber than a post.

Point is, Chump, it actually does make a difference who you vote for - and that you vote.   Politics is a messy business, like most mass human activities other than watching TV, and you are often presented with a choice of two shits.  Pick the lesser shit, and eventually your choices will improve. 

Thu, 02/09/2012 - 15:09 | 2142968 Chump
Chump's picture

Way to confirm the accuracy of my comment.  I disagree with you, therefore I support the GOP.  Go blue team, rah rah rah, etc. etc.

ETA: I can't believe you topped yourself with your edit.

Pick the lesser shit, and eventually your choices will improve.

Are you 11?  Where have you been for the past 4 decades?  What part of history are you using to arrive at this conclusion?  When you pick shit, you get shit.  And as we've all seen since forever, shit does not turn into non-shit.  In fact, politicians obviously have learned that we will pick ever shittier options, so long as they can convince us that "the other guy" is shittier.  All thanks to good little cheerleaders like yourself.

Thu, 02/09/2012 - 15:20 | 2143028 PulpCutter
PulpCutter's picture

You evidently believe that if you choose no one, things will improve?

In fact, the last decade has marked the lowest rate of violent death, per capita, worldwide, and the highest % of people leaving severe poverty.  Hate to say it, but the world is actually getting to be a better place.

But, sorry to inject anything positive into your funk.

Thu, 02/09/2012 - 15:27 | 2143065 Chump
Chump's picture

You are officially an idiot.  "Look over here, something shiny," is not a legitimate argument.  We're talking about shitty US politicians and now you want to talk about worldwide violent death per capita over the last decade?  LOL GTFO.

ETA:  Your edit, yet again, makes your comment even dumber.

You evidently believe that if you choose no one, things will improve?

If it's so evident, quote my statement that even remotely gives that impression.

What I clearly said is that if you vote for shit, you will get shit.  That should be pretty self-evident, even for you, since this all started with you admitting that both teams are shit.  It's just that yours is less shitty, so vote Democratic in 2012!  How utterly convincing...

Thu, 02/09/2012 - 17:10 | 2143528 Spastica Rex
Spastica Rex's picture

I would love to see references for your "statistics."

Here's option 3: rebellion.

Don't get caught in the guillotine, K?

I'm personally a passivist, just sayin'.

Sat, 02/11/2012 - 10:27 | 2149041 Death and Gravity
Death and Gravity's picture

I'm curious how many of the keyboard warriors here are doing much to rebel against the system.


Throwing insults on a message board only does so much to topple the empire, y'know?

Thu, 02/09/2012 - 17:48 | 2143654 smb12321
smb12321's picture

Get with it! This is NOT the place to report positive news.  Things must be dreary, evil and on the brink of collapse 24/7. Unless you hate every public official, financial insittution and all media (except FOX) then don't bother posting.  I keep waiting for any constructive alternative but have yet to hear a thing - simply guys reinforcing each others beliefs.

If we get rid of banks, Wall Street and all politicians, how will one get loans or invest in a business or repeal unnecessary legislation? Don't bother trying to discuss.  All you'll hear is, "You got shit for brains" or "Shut up, sheeple" along with semi-intelligent strings of obscenities.  Obviously, the products of American public education.

Thu, 02/09/2012 - 18:07 | 2143717 Spastica Rex
Spastica Rex's picture

I don't think you had any effect. Maybe try again?

Fri, 02/10/2012 - 00:33 | 2144751 sun tzu
sun tzu's picture

Obviously, the products of American public education.


The public education system that your beloved politicians created. Sorry that we didn't attend the private school that the elites like you and Malia got to attend. 

It's green shoots and the economy is booming. That's why the Fed needs QE3, the banks need to be bailed out, and we need more stimulus and deficit spending. Woohoo! Clear skies ahead.

Thu, 02/09/2012 - 15:21 | 2142975 aheady
aheady's picture

Wrong, Pulpcutter. Wrongggg.
And why did you repost this tripe further down the thread?

Fri, 02/10/2012 - 00:35 | 2144756 sun tzu
sun tzu's picture

Because he's a troll that is benefitting from the corrupt DC cesspool. Even in North Korea or Zimbabwe, there are those who defend the corrupt system because they are part of it. Destroying the status quo would mean that they will no longer be able to loot the public treasury.

Thu, 02/09/2012 - 15:20 | 2143051 RSloane
RSloane's picture

Thank you PulpCutter for today's liberal talking points edition. You're the knuckle-dragging slave.

Thu, 02/09/2012 - 15:25 | 2143081 PulpCutter
PulpCutter's picture

The GOP is led the charge for the mortgage fraud settlement - see the vote totals above.

Please be my guest, and try to defend the overwhelming GOP vote for the settlement.  Obama initially vetoed the HR3808, and made it stick.  As "Chump" might say, 'the shit's on YOUR shoes".

Thu, 02/09/2012 - 15:33 | 2143102 aheady
aheady's picture

I can clearly picture you holding said shit and uttering, "Look what I almost stepped in."

Thu, 02/09/2012 - 15:40 | 2143120 PulpCutter
PulpCutter's picture

Can't summon even the beginnings of some logic or facts to present, can you?

Let me guess: Fox News viewer?

NY Daily News:

Fox News viewers less informed than those who don’t watch news at all: study

Thu, 02/09/2012 - 15:43 | 2143146 aheady
aheady's picture

There are no facts or logic in any of this, knucklehead. Wake up.

Thu, 02/09/2012 - 15:55 | 2143204 PulpCutter
PulpCutter's picture

The enviroment seems featureless to you, does it?  Perhaps you should check to see if your head is up your ass?

Fri, 02/10/2012 - 00:37 | 2144758 sun tzu
sun tzu's picture

We all know your head is so deep up 0bozo's ass that we can see your inbred face everytime 0bozo is reading from his teleprompter

Thu, 02/09/2012 - 21:57 | 2144387 NumNutt
NumNutt's picture

Hmmm, you are claiming to back up your argument with facts...sorry but on your link I have to call bullshit. This was a poll conducted by a liberal arts college (Fairleigh Dickinson University ) out of New Jersey. Now that would be an unbiased poll wouldn't it? (sarc). Your attempt at protecting the current asshole in the white house and his den of thieves is a failure for the simple reason that people can walk out their front door, look up and down their street, and determine for themselves that things are worse now then they were 3 years ago. Obama will be tossed to the scrap heap of history on November 6, 2012.

Fri, 02/10/2012 - 00:41 | 2144766 sun tzu
sun tzu's picture

Not only that, but it's the typical brainless leftist attacks on Foxnews, which has no following here. There are no Hannity or O'Reilly fans here. If someone doesn't agree with you, attack the strawman Foxnews. 

They two are part of the corrupt establishment media just like MSNBC and CNN.

Fri, 02/10/2012 - 02:09 | 2144889 StychoKiller
StychoKiller's picture

Hmm, it's so obvious, even a headless, nearly naked guy can figger it out! :>D

Sun, 02/12/2012 - 15:46 | 2151194 Roger O. Thornhill
Roger O. Thornhill's picture

I don't think he understands that most of the people here aren't on the red or blue team. And can see clearly the BS and bias of the outlets.

Disclosure: I work in media (i.e. brainwashing/propaganda generation). Trust me, the powers that be in media think their viewers are idiots (and in most cases they are idiots like pulp mongler). Also stories are controlled from corporate - they do this by sending directives to editors, and if editors don't tow the line, they fire that editor and find a like minded one who will do as they're told.

The right left paradigm is a joke - read up on a thing called "wedge" issues and you will see how you are manipulated.

Meanwhile the biggest robbery in world history proceeds...

Thu, 02/09/2012 - 20:25 | 2144129 rosiescenario
rosiescenario's picture

.how about Obama's latest appointment of the Monsanto lacky to the FDA? Even MoveOn is opposing it....get real Obama is worse than Bush.

Fri, 02/10/2012 - 00:41 | 2144767 sun tzu
sun tzu's picture

but but but...what about Foxnews?

Thu, 02/09/2012 - 23:41 | 2144636 widget
widget's picture

Final vote on Gramm-Leach-Bliley:

Ron Paul 2012 (Voted No)

Thu, 02/09/2012 - 14:53 | 2142937 PulpCutter
PulpCutter's picture

BTW, you may want to review what the temporal lobe does.  Try learning what the big words mean, before you use them.  May make you seem a bit less of a moron.

Thu, 02/09/2012 - 15:09 | 2143010 Watauga
Watauga's picture

Sorry pulpy, but you should cut your losses here.  Shrill is not an attractive trait.

Thu, 02/09/2012 - 15:12 | 2143020 PulpCutter
PulpCutter's picture

Watauga, you present one of the standard chatboard responses, when you have no facts to back your position.

Thu, 02/09/2012 - 15:22 | 2143064 RSloane
RSloane's picture

Its fun when the Democrats send in a dogma-drenched clown.

Thu, 02/09/2012 - 15:33 | 2143097 PulpCutter
PulpCutter's picture

Another tactic, when you have no facts to base your view of an issue on, is to switch to personal attacks.

Care to justify the GOP's overwhelming votes in favor of the settlement?  For example, the GOP voted 169 for the settlement, 5 against.


Thu, 02/09/2012 - 15:44 | 2143148 Chump
Chump's picture

Well damn dude, you could've just admitted you were lost and looking for some GOP supporters to argue with.

Try here:

Best of luck!

Thu, 02/09/2012 - 16:03 | 2143215 PulpCutter
PulpCutter's picture

As I said initially, sorry to intrude on this 24/7 Obama hate-a-thon, but I thought it would be useful if I pointed out that he did veto the original bill, and make it stick.  The push to the mortgage fraud settlement was overwhelming led by the GOP - see vote totals above.

But I guess it's easier for you to just whine incoherently, rather than analyze your situation objectively and try to do something about it.  Might explain why you feel your life continues to go downhill, though.

Thu, 02/09/2012 - 16:22 | 2143343 chunga
chunga's picture

It's like a swiss watch.

Both parties take turns trying to avoid a mandate. (I'm playing fast and loose with the term "both")

The only mandate they've achieved is...everyone agrees they all suck.

Fri, 02/10/2012 - 00:44 | 2144770 sun tzu
sun tzu's picture

You forgot who controls the Senate and who signed the bill and who controls the DOJ. Of course we all know it's not their fault at all. It never is in your little world

sorry to interrupt your 24/7 GOP hate-a-thon and 24/7 0bozo love-a-thon with the facts. Make sure your Messiah gives you a reacharound on Valentines Day.

Fri, 02/10/2012 - 02:14 | 2144892 StychoKiller
StychoKiller's picture

Sorry, but most folks here are no fans of EITHER the Republicons or Decepticrats.  So, in a way, we do agree that the GOP is part of the problem, but we part ways in agreeing that the Decepticrats are better for us.  Come back once you have an argument that does NOT rely on the false dichotomy of Decepticrats vs Republicons.

Fri, 02/10/2012 - 01:19 | 2144841 widget
widget's picture

Yeah - watch "The Obama Deception" on youtube. You'll find the answer.

Regarding "facts", there's just too much on Obama for anyone to even know where to begin, and so many facts that for anyone who haven't realized yet that Obama is the purest shit there is, not much will help the addict in question to withdraw from Hopium successfully.


Anyways... watch the movie and then come back to reply.

Thu, 02/09/2012 - 15:30 | 2143101 ElvisDog
ElvisDog's picture

Anyone with even a marginally functionally temporal lobe has to understand that Obama is the best friend Wall Street ever had.

He is, because he can say he's being tough on the bankers while at the same time giving them everything they want AND the 45% of this country who are liberals believe that he is being tough on the bankers and looking out for the "little guy"

Thu, 02/09/2012 - 14:05 | 2142699 VanillAnalyst
VanillAnalyst's picture

I don't understand what all the fuss is about. This shadow inventory has Greek internment camp written all over it. Gyros for everyyyyyybodyyyyyyyyy!

Thu, 02/09/2012 - 14:22 | 2142784 resurger
resurger's picture

Nice link 1004


Shall we trust PAGE (Pan Asian Stock Exchange)

10.3 Traders may declare to the Pan Asia Gold Exchange delivery and receipt of physical gold after traders pay in full at strike prices in accordance with directions of delivery and receipt.


Article 11  Delivery

11.1  Delivery points for physical gold are warehouses designated by the Exchange and warehouses designated by banks of the Pan Asia Gold Exchange Purchase and Sale Alliance.

11.2  Traders holding contracts of buying physical gold may apply to the Pan Asia Gold Exchange to file applications for physical gold delivery after they complete the remaining payment for the gold; those possessing physical gold of the Exchange may submit buy-back applications to the Exchange based upon proofs of purchases. The application time is from 09:00 AM to 3:30 PM during trading days. Withdrawal or buy-back of physical gold bullions may require withdrawal fees or buy-back fees.

11.3 The number of gold bullion that a trader withdraws shall be multiple integrals of 10 ounces; the minimum number is 10 ounces. Specific numbers and time limits for delivery are as follows (temporary):

Thu, 02/09/2012 - 13:54 | 2142624 Tyler Durden
Tyler Durden's picture

Just consolidated effort to get retail out of bonds and into stocks. Considering there was another $1.8 billion outflow from US equity domestic mutual funds in the past week, and about 40 outflows in a row with two micro inflows, it is not working.

Thu, 02/09/2012 - 13:56 | 2142643 LawsofPhysics
LawsofPhysics's picture

Yes, I would also add that there a number of examples of when Mr. Buffet has confused "money" and "value".  It must be nice to have a government friends who can back you up while everyone else is performing without a net.

Thu, 02/09/2012 - 15:00 | 2142960 Bay of Pigs
Bay of Pigs's picture

Flying Wellendas bitchez...

Thu, 02/09/2012 - 13:58 | 2142656 GeneMarchbanks
GeneMarchbanks's picture

'Just consolidated effort to get retail out of bonds and into stocks.'

An attempt to have a controlled demolition of the Bondzilla. Let the subliminal messaging begin!

Thu, 02/09/2012 - 14:00 | 2142668 Manthong
Manthong's picture

Can squatter population discretionary spending (splurging, wasting) really skew the whole economy that much?

Thu, 02/09/2012 - 14:56 | 2142947 tarsubil
tarsubil's picture

Yeah. He probably thinks the added savings from refis makes it a wash. Don't worry. They can paper over every problem and they will.

Thu, 02/09/2012 - 14:05 | 2142696 American34
American34's picture

Im not sure I understand how this is going to make those who are currently squatting and not paying their mortgages to start paying them again? Why not just continue squatting?

Thu, 02/09/2012 - 14:25 | 2142798 Troll Magnet
Troll Magnet's picture

squatters to be deemed terrorists by our government in 3...2...

Thu, 02/09/2012 - 14:55 | 2142940 SomethingWicked
SomethingWicked's picture

people current on their mortgage to be deemed terrorists by our government in 3...2...


Fixed it for ya.

Thu, 02/09/2012 - 14:58 | 2142956 Totentänzerlied
Totentänzerlied's picture

Short answer: because they can now be foreclosed upon and evicted.

Sorry for posting something from that guy, but his early missives on fraudclosure were pretty good. If only he'd cut the pie-in-the-sky legalist crap, and stop being a tyrant.

Thu, 02/09/2012 - 15:05 | 2142989 American34
American34's picture

Thank you for answering my question. However, is there a time frame for this to actually happen or can they basically get away with squatting for another several months or years while the paperwork is being pushed through the system?

Thu, 02/09/2012 - 16:06 | 2143259 Manthong
Manthong's picture

Probably months rather than years..

The wise guy squatters won't be able to wave their Mers documents around and link their bad decisions and/or fraud to the banks fraud.

At least a bunch of attorneys will lose one of their business lines.

Thu, 02/09/2012 - 14:05 | 2142698 YesWeKahn
YesWeKahn's picture

Largest inflow to ETFs. This is why high flyers (outperform) fly even higher.

Thu, 02/09/2012 - 14:19 | 2142775 X. Kurt OSis
X. Kurt OSis's picture

These shills have been saying the same thing for over a year.  The total return on the Lehman Agg was 784 basis points last year.  Anyone who followed this advice got screwed.  So much dumb money....

Thu, 02/09/2012 - 14:02 | 2142687 sabra1
sabra1's picture
sophist - definition of sophist

a. One skilled in elaborate and devious argumentation.

Thu, 02/09/2012 - 14:22 | 2142788 dracos_ghost
dracos_ghost's picture

Admittedly, when people a century from now are fearful, it's likely many will still rush to gold. I'm confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.


Unless the capital basis for pile A ( physical reality) survives an extinction event(aka global fiat currency collapse) of pile B and hence pile B would have to be reevaluated in terms of Pile A. I hate Piles.


You can fondle the cube, but it will not respond.

That's what she said.

Thu, 02/09/2012 - 14:44 | 2142876 MarcusLCrassus
MarcusLCrassus's picture

Buffett sounds concerned. 

Thu, 02/09/2012 - 16:13 | 2143302 JW n FL
JW n FL's picture




 Tyler's head to explode..
I think Warren has not fully disclosed his holdings in this letter! Warren Buffett: The name stands for unshakeable investment principles and long-term success. The head of the Berkshire Hathaway holding company now strikes again: He wants to buy two major American gold jewellery manufacturers and forge the biggest provider in the US from them. This is not a small deal, and it must be asked what the strange old gentlemen from sleepy Omaha in the State of Nebraska finds so exciting about it.
Thu, 02/09/2012 - 13:53 | 2142616 LawsofPhysics
LawsofPhysics's picture

Better add a "wedge" to that chart of future homeowners who will stop paying their mortage or realize the benefit of walking away.

Thu, 02/09/2012 - 13:56 | 2142634 maxmad
maxmad's picture

Anyone who owes anything, will use this ruling to just walk away!!!

Thu, 02/09/2012 - 14:27 | 2142805 earleflorida
earleflorida's picture

the big cash buyers will swoop in and buy up total blocks - gladly taking them off the banks books - it's happening now

the poor bastards that walk away haven't a prayer finding shelter once the banks change the housing-bankruptcy laws

chris dodd to the rescue


Thu, 02/09/2012 - 16:10 | 2143282 ceilidh_trail
ceilidh_trail's picture

They'll go live in their parents basement. My neighbors daughter and family left in the middle of the night and walked from their bill. They get season tickets to the Reds, take vacations, keep memberships in healthclub, play on their Facebook/electrogadgets, drive a new vehicle, and, let their undisceplined kids run all over the neighborhood. Another guy further down the street- same thing. Teaching the next generation it's better to be a weasel. Teaches me I'm a chump for driving the older car and paying my bills.

Thu, 02/09/2012 - 22:38 | 2144459 earleflorida
earleflorida's picture

think of water as a medium ,... now - "water always finds its own level"

some might discount this saying as hogwash,... but, what goes around comes around - there are no exceptions to the rule 


Thu, 02/09/2012 - 13:55 | 2142637 GeneMarchbanks
GeneMarchbanks's picture

Calvin ball game continues with no end in sight.

Thu, 02/09/2012 - 16:51 | 2143437 Sokhmate
Sokhmate's picture

Green arrow. 'Calvinball' though.

Thu, 02/09/2012 - 13:53 | 2142617 Westcoastliberal
Westcoastliberal's picture

Yes we are now officially the United States of Chiquita!

No Hope-

No Change-

No Bama

Thu, 02/09/2012 - 14:29 | 2142813 earleflorida
earleflorida's picture

i wish there was 'no-bama',... that's change i can believe in

Thu, 02/09/2012 - 14:38 | 2142848 dontgoforit
dontgoforit's picture

Ole' huevos grande!

Thu, 02/09/2012 - 15:24 | 2143080 RSloane
RSloane's picture

We should replace the torch in the hand of the Statue of Liberty with a banana.

Thu, 02/09/2012 - 13:53 | 2142621 non_anon
non_anon's picture

twist this knob, turn that knob, then see the unintended consequences take shape

Thu, 02/09/2012 - 14:02 | 2142686 Jendrzejczyk
Jendrzejczyk's picture

With all the new foreclosures that are about to hit the market, who the hell are the banks going to sell to? THE BANKS WON'T LEND ANYBODY MONEY to buy those houses.

Unintended consequences indeed!

Thu, 02/09/2012 - 14:18 | 2142769 Ripped Chunk
Ripped Chunk's picture

Exactly, a combination of a new MBS QE AND relaxation of lending standards are the only thing that is going to move this market an inch.

Was it made clear at all that people that walked away and were foreclosed on either legally or illegally are going to get "assistance" ????

Thu, 02/09/2012 - 14:39 | 2142843 earleflorida
earleflorida's picture

tons of cash buyers out there picking up the mid/high $million - couple $millions - just cherry picking up the eastern seashore

bottom feeders moving into 30% +/- underwater territory like a shark smelling blood in the water

won't take long to clear 3ml homes - the cash is there and the buyers know  the bottom is almost in regarding housing [the smart money has been nibbling for the last six months]


Thu, 02/09/2012 - 14:40 | 2142855 dontgoforit
dontgoforit's picture

They just don't get it.....or is there a larger conspiracy at work....hmmm.  Over 9 millions new ones about to come all over us.

Thu, 02/09/2012 - 16:28 | 2143368 catacl1sm
catacl1sm's picture

Banks don't have to sell the houses, so long as they can mark them to fantasy and use it as collateral on their balance sheet.

Thu, 02/09/2012 - 22:46 | 2144480 earleflorida
earleflorida's picture

think? no offense, but BAC came within a penny from breaking the 5 Buck a couple of times - `6 weeks and its up 60%

it bottomed at $5

the fix is in --- go with the flow, and make some money, at least til may/june


Thu, 02/09/2012 - 13:54 | 2142623 farmerjohn2112
farmerjohn2112's picture

Pretty chart porn

Thu, 02/09/2012 - 14:05 | 2142697 LouisDega
LouisDega's picture

Did you try looking at it after a couple of glasses of Merlot? It makes me feel all fuzzy inside.

Thu, 02/09/2012 - 13:54 | 2142627 kralizec
kralizec's picture

Fut Bucked

Thu, 02/09/2012 - 13:55 | 2142633 vote_libertaria...
vote_libertarian_party's picture

yepper...magically fixed

buy buy buy

No body takes a loss...everybody has gains!!!

Thu, 02/09/2012 - 14:00 | 2142673 maxmad
maxmad's picture

apparanty you aren't a tax payer

Thu, 02/09/2012 - 13:58 | 2142635 SeverinSlade
SeverinSlade's picture

Tyler, didn't you hear?  Apple has infinite upside since it only has 10% of the PC market, will soon roll out the iTV (since TVs currently have such an incredible profit margin), iPad3, iPhone5, etc (spend the same amount of $ on an item you purchased less than a year ago; rejoice as you get a slightly faster, slightly thinner, slightly newer version of the thing you can't live without).  Also the already broke cities/states are going to buy iPads for their students too.

AAPL to $1,000 per share.

Thu, 02/09/2012 - 14:03 | 2142664 LouisDega
LouisDega's picture

Best damn company on the planet. My Mac pro is bullet proof. I fucking love that thing. May Apple go to $2,000. 

Thu, 02/09/2012 - 14:54 | 2142891 LouisDega
LouisDega's picture

Oh shite. What did i do? I hope i didnt hit the ass button. 

Thu, 02/09/2012 - 14:49 | 2142917 trav7777
trav7777's picture

crackbooks suck

Thu, 02/09/2012 - 14:55 | 2142927 earleflorida
earleflorida's picture

who gives a shit - they're all made in china [everything] - so, i'll just wait a year or so and buy a 'made-n-china' apple version [re-engineered with state-of-the-art-stolen-Intellectual-Property]  for 25% the cost of an Apple, selling at a ridiculous $1k

the U.S might even make some money on it with import tariffs from china - cause, they ain't makin it on Apple 

Thu, 02/09/2012 - 16:17 | 2143319 viahj
viahj's picture

act now and as a bonus at no charge to you, we will include genuine Chinese Spyware!

Thu, 02/09/2012 - 17:18 | 2143562 LouisDega
LouisDega's picture

I know, But its a damn sexy tower. 12 cores of ridiculous power.

Thu, 02/09/2012 - 14:38 | 2142847 caerus
caerus's picture

an ipad in every pot!

Thu, 02/09/2012 - 15:07 | 2142999 hidingfromhelis
hidingfromhelis's picture

How about some pot for every Ipad owner?

Thu, 02/09/2012 - 15:33 | 2143114 caerus
caerus's picture

iPot! Sold!

Thu, 02/09/2012 - 16:30 | 2143373 catacl1sm
catacl1sm's picture

An iPad in every garage, and 2 iPhones in every pot!

Thu, 02/09/2012 - 13:58 | 2142654 BobPaulson
BobPaulson's picture

I like the burning to the ground idea. Have you checked out listings in Detroit? I saw some houses for 4 digit numbers the other day. I don't know why the military doesn't just buy these areas up and use them for ordinance training. Heck, I bet you could make money opening up the world's biggest paintball ground with a pretty modest capital investment.

Thu, 02/09/2012 - 14:08 | 2142711 dwdollar
dwdollar's picture

"Heck, I bet you could make money opening up the world's biggest paintball ground with a pretty modest capital investment."

That would be offset by the full-time security force required to keep the area safe for kids.

Thu, 02/09/2012 - 14:19 | 2142774 scatterbrains
scatterbrains's picture

Market it just right and kids will tell their parents, fuck disneyland I want to go to detriot combat zone. 

Thu, 02/09/2012 - 16:22 | 2143346 Bicycle Repairman
Bicycle Repairman's picture

Get them schooled for their future careers.

Fri, 02/10/2012 - 00:48 | 2144778 sun tzu
sun tzu's picture

It's already the world's biggest paintball ground except they use real bullets

Thu, 02/09/2012 - 14:04 | 2142658 Ned Zeppelin
Ned Zeppelin's picture

Supply is not the problem, at all, no way. It's price.  And the problems created by marking to market.

There are a few problems:  the asking price per "over supply home" (which for argument's sake we'll say are the ones in foreclosure or 90 days late), and the indebtedness to the point of being underwater of those who bought during the bubble.  The former is easy to fix - drop the price and sell they will.  The second cannot be easily fixed - only foreclosures and writedowns over time, unless the Fed is somehow successful in reigniting inflation of real estate assets.  Seems to me that will be the last asset to experience inflation.     

Another still lethal problem that is still not fixed by this bogus robosigning settlement, which merely provides amnesty for criminal behavior writ large among the banks, servicers and foreclosure shops - the still unfixed problem relating to incomplete, sloppy, bogus etc. documentation of the debt secured by home mortgages during the bubble and particuarly that highly visible in the private securitizations that provided the overwhelming bulk of financing during the boom. 

Thu, 02/09/2012 - 13:59 | 2142666 Internet Tough Guy
Internet Tough Guy's picture

Housing price discovery is occurring in even the most depressed locales. Sales are up.


Thu, 02/09/2012 - 14:04 | 2142694 Tyler Durden
Tyler Durden's picture

Thu, 02/09/2012 - 14:22 | 2142790 scatterbrains
scatterbrains's picture

Tyler, that was rude

Thu, 02/09/2012 - 14:27 | 2142803 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And necessary.

Thu, 02/09/2012 - 14:27 | 2142806 Troll Magnet
Troll Magnet's picture

flip that chart and all of our problems solved, bitchez!

Thu, 02/09/2012 - 14:40 | 2142856 nope-1004
nope-1004's picture

No thanks.  My kids, and their kids, will need to buy a house one day on a pittance of an income.  Flipping that graph will just send us back to a banker wet dream.


Thu, 02/09/2012 - 14:43 | 2142872 dontgoforit
dontgoforit's picture

Truth hurts like a MF'er

Thu, 02/09/2012 - 15:30 | 2143071 riphowardkatz
riphowardkatz's picture

There is a lot of overbuilding and crap out there which could heavily skew the above chart. I do not see the value in talking about real estate in the aggregate. 

What I am seeing in parts of AZ is a bottom forming. 

I know no one has jobs and no one has money. But that just isnt true. Even at 10% or 12% unemployment that is only a few million more that are unemployed. Many of whom couldn't afford a house in the first place.

I know no one is lending. Many deals in AZ are cash deals. People still are borrowing. Freddie and Fannie are still lending and working hard to lower the hurdles every day(for better or worse)

Rates can go lower and they most likely will. I can see 2% being realistic. This is the best way people have to short the dollar. Dont think we are on Weimer path (Hope we are not) but houses were paid off with 1 months rent.

Houses have never been cheaper in gold terms. 

And I will appeal to authority by saying Marc Faber has commented multiple times now that he is seeing value in certain markets, specifically he just commented on seeing value in AZ.


Thu, 02/09/2012 - 15:43 | 2143147 ghostfaceinvestah
ghostfaceinvestah's picture

You, and a lot of other people, are confused in that the robosigning scandal has kept a lot of potential inventory off the market.  So a lot of small-time "investors" are seeing tight supply, are falling over each other to buy the limited supply, and so believe the "bottom is in".

But like any market, the law of supply and demand is going to slap them in the face.  This deal will ensure supply increases, and quickly.

I would say AZ isn't the worst - Florida is by far the worst due to the enormous backlog in that state.  Any stability in FL house prices will prove to be transitory.

Thu, 02/09/2012 - 14:14 | 2142747 LawsofPhysics
LawsofPhysics's picture

WARNING, realitor troll detected, oh nevermind.  Tyler has the appropriate chart.

Thu, 02/09/2012 - 14:31 | 2142797 thedrickster
thedrickster's picture

Actually Tyler's chart could be consistent with his point. IF home sales are actually ticking up AND C-S decline is accelerating, then price discovery may actually be occuring at increasingly lower levels.....

The bids are down there somewhere. Now should the Bernank have to step out, bitch goes bidless.

Uh oh.

Thu, 02/09/2012 - 14:47 | 2142901 Dapper Dan
Dapper Dan's picture

FWIW:  Impernat Gough Tuy 

The stats on housing come from this

GLVAR January 2012 Housing Statistics
By: GLVAR, 2/8/2012

 Greater Las Vegas Association of REALTORS® (GLVAR)

I'm sure you trust them, me, not so much.


Thu, 02/09/2012 - 16:22 | 2143340 viahj
viahj's picture

just as in cars, when is the best time to buy a house?

NOW!  says the salesman.

Thu, 02/09/2012 - 21:38 | 2144332 geekgrrl
geekgrrl's picture

Yea. And if you actually follow the link, at the end it states that "73.6% of the sales were distressed, and over half were purchased with cash."

This uptick represents buyers with hundreds of thousands in cash just lying around, i.e. the 1%'ers.

Fri, 02/10/2012 - 00:52 | 2144789 sun tzu
sun tzu's picture

As the National Ass of Realtors always says "There's never been a better time to buy a house"

They've seen more bottoms the past 4 years than Magic Johnson and Wilt Chamberlain combined

Thu, 02/09/2012 - 14:18 | 2142672 Mercury
Mercury's picture

What makes it even worse is that the excess inventory has to be literally burned to the ground for regular market clearing to resume.

Well not quite, prices could be allowed to  [*gasp*] fall....

Rather, what it will do, is finally redirect discretionary spending from all the squatters who have lived mortgage free in their houses for years back into mandatory spending such as rent and mortgage bills.

Indeed.  Hard to believe that a mass foreclosure wave will be allowed to actually happen though....not that such cause-->effect wouldn't take central planners by surprise.

Thu, 02/09/2012 - 14:03 | 2142690 YesWeKahn
YesWeKahn's picture

Obama will tell you that under his leadership, the stock market doubled. Under Bush, the stock market was cut in half.

Thu, 02/09/2012 - 14:08 | 2142716 SeverinSlade
SeverinSlade's picture

What he won't tell you is that he expanded the national debt by almost 50% in 3 years.  And that the Fed chairman he reappointed has bailed out US and European financial institutions to the tune of well over $16 trillion.

Thu, 02/09/2012 - 17:30 | 2143601 grid-b-gone
grid-b-gone's picture

The only way the dollar could continue to fall against the toppling euro over the past few months was to go joint and several, so we did.

Thu, 02/09/2012 - 14:08 | 2142709 Widowmaker
Widowmaker's picture

Fuck the housing market, save justice itself!

Thu, 02/09/2012 - 14:08 | 2142717 Seasmoke
Seasmoke's picture

thats the part of the equation i cant understand......if i were Obama, God forbid, i would have pushed for rent free housing for 10 more months until i was crowned king in November........$2000 will be gone in a week for most people, but saving on that fraudulent mortgage payment was worth so much more to both the homeowner AND the economy......i think Obama got sold down the river on this

Thu, 02/09/2012 - 14:20 | 2142781 Omen IV
Omen IV's picture

The deal is not about the borrower relief or a housing market solution - its all about a disguise (a beard) to give the banks waivers for fraudulent criminal practices in foreclosure  - nothing else is going on - the release will cost the banks less than $1 billion at the end of the day since they can manipulate the interest rate to cover the bank payment

Thu, 02/09/2012 - 15:16 | 2143035 aheady
aheady's picture

cha ching

Thu, 02/09/2012 - 14:12 | 2142730 resurger
resurger's picture


My mother told me: Son, dont worry the Economy is improving this year!!!!!!!!!!

I agreed. /sarc

How can you explain to the old folk's, no matter how much you grow they still see you as a kid...

God Bless our parents


Thu, 02/09/2012 - 14:17 | 2142760 dwdollar
dwdollar's picture

I don't know how old your mother is, but it's easy to be positive when you have a guaranteed check in the mail every month. I largely ignore the optimism of old folks.

Thu, 02/09/2012 - 14:34 | 2142830 ThisIsBob
ThisIsBob's picture

Old folks are "optimistic" because they have probably heard all this TEOTWAWKI stuff many times before.

Thu, 02/09/2012 - 15:04 | 2142982 CPL
CPL's picture

Name a single outlet of the 90's MSM that would even offer the possibility of a collapse?


Name one today?


Only people talking about collapse are the hedge traders like ourselves watch the market shit the bed THREE times: 2007 in Aug/Sept, 2008 in Nov and 2009 in March.  Not much was even said then. 


Most people enjoy being stupid, so let them, just remember you are not your brother's keeper if the worst does come.  Obviously invite your Mum over for some tea and cookies, but fuck the rest.

Thu, 02/09/2012 - 14:51 | 2142923 resurger
resurger's picture

no Dollar! They are exposed to too much MSM! They dont have time to dig like us ...

You know in the previous bubble my father hes 64 "Told me that he is a long term investor"

I dont think he agrees with this statement since 2008 lol


Thu, 02/09/2012 - 14:52 | 2142924 roadhazard
roadhazard's picture

I just hit the big 65 and I can now tell you that "old folks" are just glad to be here. I have outlived five of my best friends and the other guy has a stint. They worked all those years and will not get a penny from SS. Yep, them old people are the ones sucking the system dry. I know I am kicking your ass with my $900. I am not optimistic about the future.

Thu, 02/09/2012 - 17:33 | 2143611 IrritableBowels
IrritableBowels's picture

I agree. My neighbor is very much looking forward to his 'retirement' (SS) in three years and will get spitting fucking mad at the most subtle mention of the program's lack of funds/US debt/Obama sucks. He'd much rather talk about his future days of fishing (for leisure) and renovating his home (for luxury). He has actually refuted arguements regarding the above issues and more with 'the Internet is full of lies!'

I find the extent of his denial both fascinating and FRIGHTENING..

Thu, 02/09/2012 - 14:10 | 2142732 William113
William113's picture

Does the chart above add in the extra 50% of the houses that the NAR forgot tell everybody about?

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