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More And More People Are Waiting To See If The Insanity Will End

A report from the Berkshire Eagle in Massachusetts. “Single- and multifamily home sales showed modest gains over the first half of the year, according to the Berkshire Realtors. South county has a glut of homes for sale in the $1 million-plus range — 19 percent of homes for sale in the southern part of the Berkshires are in that price range, but make up less than 5 percent of sales.”

The Bay Area Newsgroup in California. “The number of rabid bidding wars among Bay Area home buyers is sinking, with some of the steepest declines in the San Jose metro area, a new report says. The drop in bidding wars is a sign of just how far the housing market has cooled. The Bay Area declines mirror a national trend, in which the percentage of offers with bidding wars sunk to 11 percent last month, according to Redfin — the lowest level since 2011.”

“Sales of existing Bay Area homes already have swooned. In June,  sales fell 13 percent from the previous year, according to CoreLogic. That was the slowest June since 2008, when the real estate market tanked and the U.S. economy sank into a deep recession.”

“Even though prices have come down, they’re not falling far enough, says Matt Regan, a housing expert for the Bay Area Council. ‘A limited number of people can afford a million dollar mortgage. More and more people are waiting on the sidelines to see if the insanity will end.'”

“Alan Barbic, president of the Silicon Valley Association of Realtors, says  bidding wars still happen when a home has been realistically priced. ‘But it’s not as off-the-charts as it was last year,’ says Barbic. ‘A lot of sellers just don’t get it. You have to price it right. That’s critical. Otherwise you may have to do multiple open houses and price reductions.'”

The Orange County Register in California. “In Silicon Valley, prices took the nation’s second-biggest loss in the quarter: a 5.3% year-over-year decline. That’s quite the contrast from 2016-2018, when the San Jose-Santa Clara market’s prices averaged 15.7% annual gains — the No. 1 gain nationally.”

“Just to the north, San Francisco suffered the seventh-biggest U.S. decline of 1.9% in the year. Again, quite the flip-flop: In 2016-2018, San Francisco prices averaged 9.6% annual increases — the No. 19 gain. Looking at a broad spectrum of housing benchmarks, one thing’s clear: California’s big price gains are history.”

“Let’s have a chat about what’s a bubble and when is it bursting. Bubbles are unsustainable economic advances. Falling prices alone do not indicate a bubble or its imminent bust. But depreciation is certainly a negative trend worth serious attention. And this may be a case of ‘be careful what you wish for.’ You could dismiss these 2019 price dips as a predictable plateau after a long-running upswing. But painless plateaus are hard to accomplish.”

“That’s because depreciation hurts economically … and emotionally. Lots of people talk about wanting more ‘affordable’ housing in California, but the creation of relative bargains with price cuts on existing homes often scares off the same house hunters who claim they want to pay less. Why? These wannabe owners can get scared of overpaying as a price slide begins. Or they’ll wait to buy, hoping the discounts only get steeper. That wait-and-see mentality can amplify an already souring situation.”

From Showbiz Cheatsheet on New York. “This season of Million Dollar Listing New York started with a few shockers. In addition to learning that two new cast members became fathers and the return of Luis D. Ortiz, brokers shared that the New York luxury housing market is drying up.”

“For years the brokers scored multi-million dollar listings, breaking sales records while amassing quite a personal fortune. However, the days of making an easy sale are long gone. Cameras follow the cast’s struggle to sell even discounted properties.”

“During the season 8 premiere, broker Ryan Serhant explains how long a typical Manhattan luxury property remains on the market. ‘This is no joke,’ he revealed in a confessional interview. ‘Homes over $4 million have an average days-on-market of 450 days. It has never been that way.'”

“As properties become stale on the multiple listing service, sellers are in panic mode, slashing prices to unload properties. Heavy reports that ‘11% of sellers in the Manhattan real estate market cut their prices as homes on the market increased by 11.7%. In February 2019, the Street Easy Manhattan Price Index decreased to its lowest level since July 2015.”

From CNBC Make It. “Actor Nicholas Cage was once a top earner in Hollywood, worth around $150 million, but he didn’t hold onto the fortune for long. Cage squandered it on a string of expensive and often eccentric purchases, eventually facing foreclosure on several properties.”

“At one point, Cage owned 15 residences across the world, including homes in California and Las Vegas and a deserted island in the Bahamas. He also bought a series of more bizarre items. What really put Cage in the red financially weren’t the eccentric items, however, but his overstuffed real estate portfolio.”

“For Cage, part of the appeal of real estate also stemmed from his childhood. Growing up outside of Beverly Hills with his professor father, he lived modestly. ‘I would take the bus to school, and some of the older boys were going to school in Maseratis and Ferraris,’ he tells the Times.”

“Even at a young age, he longed for more. ‘My uncle [Francis Ford Coppola] was very generous. I would visit him for summers, and those summers — I wanted to be him,’ he explains. ‘I wanted to have the mansions. That was driving me.’

This Post Has 153 Comments
  1. ‘But it’s not as off-the-charts as it was last year…A lot of sellers just don’t get it. You have to price it right. That’s critical. Otherwise you may have to do multiple open houses and price reductions’

    Notice how these UHS turned expert economists don’t talk about supply and demand anymore.

      1. We’re to believe that illegal immigrants can afford houses that working Americans can’t? I’d like to see THAT math.

        1. Illegal aliens bought houses that working Americans could not afford the last time around. Of course, Americans bought houses they could not afford. Create loans with no down payments and low interest rates and buying becomes cheaper than renting. That is exactly what I heard during the Democrat debates. Also heard that the loans would be targeted at disadvantaged minorities. Did not hear that you had to claim you had to prove you were descendent from slaves or even people who had been in the country when discrimination was legally sanctioned.

          1. “Also heard that the loans would be targeted at disadvantaged minorities.”

            Is this the Community Reinvestment Act 2.0?

          2. “…disadvantaged minorities.”

            Like middle-aged white males?

            You reckon there is middle-aged white males that exceeded being di$advantaged? … Who’$ fault do you tag with that accomplishment?

          3. The laws are supposed to outlaw discrimination, but reverse discrimination contradicts the principle.

        2. If we are to believe that they will be given Medi-Cal that is not available to working Americans; it is not a much larger leap for me to believe that they will be provided subsidies that are not available to working Americans in order to buy homes.

          1. Before this is over I’m thinking at least some people will be offered negative interest rate mortgages. Each time we go around more impossible things become possible.

  2. ‘This season of Million Dollar Listing New York started with a few shockers. In addition to learning that two new cast members became fathers and the return of Luis D. Ortiz, brokers shared that the New York luxury housing market is drying up’

    Three years ago actually. Boy these TV reality shows are cutting edge.

  3. “Let’s have a chat about what’s a bubble and when is it bursting. Bubbles are unsustainable economic advances. Falling prices alone do not indicate a bubble or its imminent bust.

    Stop lying, REIC shill. A bubble is what you get when the Fed creates trillions of fake money out of thin air and gives it to its primary dealer banks so they can speculate with wild abandon and engage in ultra-loose lending to the reckless and greedy. Naturally, this flood of Yellen Bux creates asset inflation, which can only be sustained by QE-to-Infinity.

    Unfortunately, as the addict becomes more strung out on financial crack cocaine, the effect starts wearing off. That is where we are today. Meanwhile, as the financialization of everything pauperizes the former middle and working classes, the ability of the proles to take on unaffordable montage debt has diminished to the point they are finally refusing to play the game any more.

    So, where does that leave us? Comparisons to 2007/2008 are apt, since the bursting housing bubble (and despite REIC dissembling, that’s exactly what we’re dealing with) is going to morph into a general financial crisis that is going to dwarf the 2008 meltdown, since public and private debt has tripled since 2009, with much of the debt racked up due to malinvestment and speculation.

    But now it’s time to pay the paper. True price discovery is slouching closer like Prince Andrew pursuing an Epstein Lolita, notwithstanding the central bankers’ frantic, doomed efforts to hold the long-deferred financial reckoning day at bay by doubling down on their radical Keynesian monetary experiments. This, friends and neighbors, is going to be an epic destruction of fake “wealth” and speculative malinvestment that will be discussed in tones of awe and wonder by historians and economists for decades to come.

    There you have it. That’s the ugly truth you’re not going to get from the REIC FB whisperers or MSM Real Journalists. Prepare accordingly.

      1. Maybe too late for that, maybe they need to work in the sex industry. On air “talent” already seems to be working in that industry.

        1. It’s already pretty established that newscaster girls must have skinny legs that look good in a short skirt and high heels. So I want the newscaster bois to wear disco-style open shirts and codpieces, on air, with no desk to hide behind.

          Fair’s fair.

    1. This thread is why I appreciate the HBB community that Ben has created. Much carefully considered, thoughtful commentary here (that I have found hard to find anywhere else). Hat tip to you all…

    1. Just because their chart starts in 1900 does not make that the relevant year to begin counting. This is reminiscent of the used home seller’s “days on the market” statistic, where the clock resets every time a home that won’t sell for the seller’s wishing price is taken off the market and relisted.

      Bonds have existed back to 2400 B.C. So technically, these are the lowest yields in over 4400 years.

      1. To restate my point, the recent politically-motivated
        central banker money printing binge has rendered the fundamental relationships between interes rates, lending, and investing, utterly FUBAR. The global financial system is consequently in uncharted territory.

        1. the question is what do regular people (the few of us) who save.

          My wife was in Moscow (on business in the late 00’s) and nobody was saving. If they were saving it was buying jewels and furs. They had lost their savings twice – so they did not trust the bankers / govt.

          what the hell do we do

          1. I personally prefer musical instruments which retain their value, or even appreciate, and provide enjoyment dividends along the way. Violins over 250 years old can sell for millions of dollars. And high end musical instruments provide a natural inflation hedge. As soon as my kids are off my financial plate, I plan to start trading up for pricier instruments, as this is a useful savings strategy when risk-free rates are in the low-to-negative range.

            Musical instruments are not for everyone, I know, but the principle of investing in tangible assets which depreciate slowly and provide enjoyment value is not limited to musical instruments.

          2. I used to play in an ensemble with a Russian violinist who managed to get a good violin or two out of the old country…

          3. the question is what do regular people (the few of us) who save.

            Was having that question in another form just the other day.

            From my terribly limited point of view:

            Strike one: Traditional Savings as it was once know has been destroyed in order to support ZIRP and I doubt it’ll be coming back any time soon unless we have a serious day of reckoning first. Traditional safe instruments such as CDs, Treasuries, etc are going to pay so little in interest as to loose value relative to inflation.

            Strike 2: Upon seeing what happened in strike one, and in conjunction with the flood of cheap money created out of nothing that only our very elite and connected had access to, I think we’ve seen some of those connected people recognizing the risk, and then pumping their money into equities and anything else that resembled a ‘hard asset’ to the point that all of those items are now overpriced. (though no one wants to admit that). If you got in early, you enjoyed the run up. But right now with the recessionary storm clouds rumbling, it sure seems like buying RE in 06 or 07 – the likelihood of a correction and/or volatility in a given asset class is way higher than MSM or the financial sector will admit. The risk there is suffering losses like people saw in their 401Ks circa 2009.

            Strike three: since we’re about out of bubble to inflate, anything new that comes along – like bitcoin / cryptocurrency – is seeing money pour in stupidly because ‘why not?’ The stability and future of these is quite questionable, and that’s being charitable.

            I don’t have any answers, but everywhere I look I see risk is up and rewards are down compared to historical norms.

          4. This is the problem – there’s nowhere left to get any yield. Everything is so topped out that, in my opinion, cash is the place to be. Once things start falling apart, you’re going to see fire sales everywhere, on everything.

          5. As I explained to one of my musically gifted offspring last night, talent is a necessary but not a sufficient condition for musical success. It takes a sizable investment in lessons, practice time, equipment, performance experience, and a modicum of luck to realize one’s musical potential.

          6. @Professor Bear,

            Expensive musical instruments are also not very liquid — it’s hard to sell one in a hurry. Many (most?) will never be a good investment. And if you overpay for one with a good appreciation track record, it won’t be a good investment.

            Of course, if the instrument provides a lot of pleasure and helps the owner make money, that adds another dimension.

            Of course, most musicians make money by teaching lessons, not performing, and an expensive instrument isn’t needed for teaching.

      2. It is very similar to the AGW debate, where people say a day is the hottest ever. No, not even close, it has been far hotter in the past, the alarmist just want to use since the 1880s which is eye blink in the history of the earth. Using ice cores we know that most of the recent interglacial periods have been 2 degrees Celsius warmer than right now. Was far hotter than that it geological history, However, that is an inconvenient truth so the MSM ignores it.

      3. “these are the lowest yields in over 4400 years.”

        what’$ that “fact” bearing on yer per$onl longevity?

  4. +10
    Agree we are near a major inflection. I was chastened by the massive intervention after 2008, when the deflationary collapse was undeniably underway.
    When this next phase of the deflationary collapse hits, one has to consider what kind of measures the Fed might take. MMT, buying stocks/bonds or even RE. Soon, there will be stark choice between a deflationary collapse or an inflationary bout of new money printing.
    I try to imagine how that decision might be made but i can’t force my brain to get so immersed in confirmation bias that I ignore all data that does not conform.

    1. Governments will always try to print their way out of a problems. Dictators only lose power when the hyperinflation begins and even then it is hard to get rid of them.

    2. “…buying stocks/bonds or even RE”

      More political intervention by ‘politically independent’ central banks to reallocate wealth to the very special people they support is soon to come. And an even larger global share of negative yielding sovereign bonds than the current record $15 trillion 25% share of the total will result.

      1. But it will be under the guise of “helping people” when in reality they will, once again, be turned into runway foam. I anticipate more loan forgiveness programs, foreclosure moratoriums, credit card default forgiveness, etc., while they make all those banks whole at the expense of the US taxpayer and society as a whole. I hate what this country has become. It’s despicable, and entirely due to crony capitalism. Privatize the profits, socialize the losses.

        1. “I anticipate more loan forgiveness programs, foreclosure moratoriums, credit card default forgiveness, etc.,…”

          Punishing savers while bailing out debt donkeys is a prime example of political activism by the supposedly politically independent Fed.

  5. https://www.zerohedge.com/news/2019-08-10/denmarks-3rd-largest-bank-now-paying-people-take-out-mortgage

    Negative interest rate mortgages in Denmark.

    Will we go there? We may get a fleeting glimpse of “true price discovery” but at this point I would not be surprised if they find a way to paper it all over with another layer of fake money. MMT, universal basic income, negative interest rate no doc mortgages…
    Who knows. Looks like the market has topped but I wouldn’t be confident enough to open up short positions based on the hypothesis. Curious if anyone here is.

    1. Great article John, even talks about hyper inflation:

      And here we are, with banks now praising – and paying – debtors, whose loans are automatically repaid, while crushing savers who have to suffer negative interest rates on their deposits.
      As such, the next (il)logical step is to take upside down finance to its extreme, and unleash MMT – i.e., helicopter money – on the population, because with a record $246 trillion in global debt outstanding, the only way forward is through a grand reset, one which inevitably involves hyperinflating the debt away. And that – as Bernanke predicted when he explains how to avoid deflation in his famous 2002 speech – will require a literal “helicopter drop” of money. Luckily, with negative rates, money is now worthless so the final lap in the grand race to the bottom of currency devaluation should be relatively quick.

        1. We are dealing with people who live by the motto in the long run we are all dead. No seventh generation thinking going on.

          1. non-Keynesians will inherit the earth.

            Non-Keynesians will inherit the wreckage of Keynesian monetary policy for sure. They will also inherit the debt, deficit, and environmental disaster that is decades in the making. Whatever one’s political persuasion is, there is a lot of cleaning up to be done, both fiscally and environmentally.

          2. This rot has been going on for 20 years, and at this point I’m considering that I may die before I ever see cheap housing again. It was trending that way until they threw a wall of liquidity at it, and drove it right back up into the stratosphere.

          3. Yes. It will be interesting to see if the Trump Fed continues with real estate price support.

          4. “This rot has been going on for 20 years…”

            The western world experienced an economic “gestalt-shift” sometime during the early seventies. Just about any economic chart depicts the change. A layperson can see it without understanding what actually happened. Those who experienced it during their working years know what I’m talking about; it was the beginning of the end.

          5. The western world experienced an economic “gestalt-shift” sometime during the early seventies. Just about any economic chart depicts the change. A layperson can see it without understanding what actually happened. Those who experienced it during their working years know what I’m talking about; it was the beginning of the end.

            But we’re still being told to follow the patterns and plans from the era(s) before that. The old rules if you will. Better (for TPTB) I suppose than to tell everyone that it’s now a free-for-all race to concentrate all the wealth on once side and a race to the bottom for everyone else.

          6. “Yes. It will be interesting to see if the Trump Fed continues with real estate price support.”

            dtRump, Mnuchin, $helton, Navarro, Ha$$et, & Ro$$ LLC & Companie$ : plea$e plea$e, the eCONomy is hurtin’$ $ooooo bad!, Damn it, lower the FedFund$ date$ Now!!!

        2. “Hair-of-the-dog hangover cures only work for so long before the drunkard succumbs to cirrhosis of the liver.”

          eye think ye have a “chronological” view of “event$ “. … Life, is quite full of $urprise’$.

        3. “The western world experienced an economic “gestalt-shift” sometime during the early seventies. Just about any economic chart depicts the change. A layperson can see it without understanding what actually happened. Those who experienced it during their working years know what I’m talking about; it was the beginning of the end.”

          True to an extent. What you had in the 1970s was a crisis of supply, leading to inflation. That caused the whole New Deal economic arrangement to collapse.

          The solution to that led to soaring inequality, and now to a global crisis of demand.

          Demography is part of it. What happens when all those Baby Boomers in the U.S., Europe, Japan, China are still consuming, but not producing anymore. These are the most entitled generations in history here in the U.S.

          China no longer has a trade surplus overall. That means that country is no longer a net saver. That is potentially huge.

          1. What you had in the 1970s was a crisis of supply, leading to inflation.

            I wonder what leads you to say this Larry. It was not my experience at all. There was plenty of everything. When we had the famous gas rationing I was working at an oil refinery and there was at the time not enough storage for all the oil. Something else was going on, who knows what.

            What we did have at the end of the ’70s was the beginning of a massive explosion of debt.

          2. “Something else was going on, who knows what.”

            It was rising wages……. aka “inflation”.

            This little word game played by so many is a peculiar one.

        1. Obviously no one here believes wages are going to triple and obviously everyone here believes prices will revert. The question is when. In markets, most predictions will be proven correct…eventually. Being correct about an event is meaningless for all practical purposes if you are wrong about when it happens. I admit most of my predictions have been wrong. I never would have believed we could be where we are today so soon after the last bubble. Even the last bubble lasted much longer than I predicted. Therefore, I try to be objective about conditions under which this bubble might last longer and grow larger than I otherwise might have expected. I’d guess there are quite a few others here in the same boat.

          1. I never would have believed we could be where we are today so soon after the last bubble. Even the last bubble lasted much longer than I predicted.

            This is where Keynsian wisdom is useful: “The markets can remain irrational longer than you can remain solvent (or alive).” It is possible that the bubble will outlast many posting on this thread and will exceed the timeline of millennials who are want to have their piece of Americana (e.g. house, white-picket fence, 2 kids, and a dog).

    2. Have you noticed how all the financial media talking heads are trying to keep attention off bond yields – which are a flashing red light that we are entering a recession – and instead are trying to convince all and sundry that the stock market’s lofty valuations means Everything is Awesome?

      Remember: always watch the magician’s hands, not the female helper’s bodacious ta-tas.

    3. I used to be short and still have a small position in SDS (because I’m stubborn) but I wouldn’t add shorts here. Powell can just blow shorts out of the water

  6. “Who knows. Looks like the market has topped but I wouldn’t be confident enough to open up short positions based on the hypothesis.”

    What is the proper PE ratio for stocks if bond rates are negative? Who could not own a million dollar house if mortgage interest rates were negative?

    1. Even with negative mortgage rates, you still have to repay the monthly, and purchase prices would adjust even higher than current to reflet increased buyer purchasing power for the sane monthly payment.

      1. Yes, purchase prices would adjust higher that is why the first movers “win”, at least for awhile until the collapse occurs.

        1. That’s how negative bond yields work for those of us who bought bonds before the current yield suction vortex developed.

          1. Is the Bond Market Really Headed for Trouble?
            Ken Stephens
            11 August 2019

            The talk of the bond market being in trouble, or at the very least undesirable, has been going on for a while. Bonds have gotten even more bullish lately, which is scaring them more.

            Whenever we plan on not holding bonds until maturity no matter what, and actually consider the movement of our bonds over time, this is where we may start to understand that the bond market really isn’t about yields at all, it’s actually about how their prices move. This is why so many people buy negative yielding bonds, and we’re now up to $15 trillion worth of them out there right now worldwide.

            There are some out there these days who even think that treasury bills will go to zero yield or even below zero at some point in the foreseeable future. If we knew that this would happen, we should run, not walk, to buy more bonds, because this will drive their value up a lot and we can make quite a bit of money from this on top of the 1.7% that they now pay in reference to our purchase price.

            The best time to invest in bonds is when yields are falling because that means that the value of bonds are rising, and like with stocks, it’s just better to buy low and sell high. This will require us to do something that a lot of investors find scary, and that’s to look to time our investments, but the real rewards go to those who actually invest for the times and not just prefer a mindless approach that requires neither effort or thinking.

      2. Wow, these negative interest rates can turn everything upside down? What will happen to brokered CDs then? They should go up in value I guess? As an example, suppose 4 yr CD rates are 0.0% today, what would happen to a CD that can give 3.30% annual interest until mid 2023 for example? Does it automatically go up by about 3.30*4 i.e. 13.2% ?!

          1. Merrill Lynch offers brokered CDs:

            “If CDs must be sold before maturity, it may be possible to do so in the secondary market.

            Although not obligated to do so, Merrill Lynch maintains a secondary market in CDs.

            The price at which brokered CDs may be sold in the secondary market will depend on market conditions, and may be less than par.”

        1. I purchased a brokered CD at 3.65% for 10 years. It’s gone up in value rapidly and if I sold now I’d make a nice profit. Im not a trader and I need some kind of income stream so its increase in value doesn’t seem to do me any good.If I sell now what do I do for a secure income?

  7. In Boise and Grand Rapids, the Housing Market Looks Red Hot
    Wall Street Journal
    Laura Kusisto and
    Likhitha Butchireddygari
    11 August, 2019

    “During the crucial spring selling season, only 10 of 178 metropolitan areas had double-digit annual price increases, down from two dozen in the second quarter of 2018, according to the National Association of Realtors. Nearly all of those high-growth areas were in less-expensive, smaller markets, where home prices are now rising faster than incomes, inventory levels are shrinking, and bidding wars are breaking out, especially for starter homes.”

    ““Some of those [smaller] markets never saw a big boom coming out of the recession,” said Ralph McLaughlin, deputy chief economist at CoreLogic Inc. “This may be a rising tide finally reaching some of these secondary markets.” Danielle Parent, a Redfin agent in Cleveland, said she is seeing an influx of buyers from expensive coastal cities. Home prices in Cleveland rose nearly 12% in June compared with a year earlier, according to Redfin. That was driven by a shortage of inventory, as the number of homes for sale declined nearly 7%.”

    “A long rally in hot spots like the Bay Area and Seattle has run out of gas. These markets are experiencing their first price declines in years, as homes linger on the market for weeks and would-be buyers balk at the still-expensive price tags. It is unclear whether the sales growth in smaller U.S. cities will be enough to prop up the overall housing market, since slower growth or price declines in the biggest metro areas have weighed heavily on national home sales figures.”

      1. I don’t really know much about bankruptcy law. But isn’t one’s personal home protected in the event of bankruptcy? It would make sense then that these boomers would declare bankruptcy to write-off medical debt and consumer debt but still keep their most valuable asset.

        1. Frum da net …

          “So if you file a chapter 13 bankruptcy, you are much more likely to keep your house than if you file a chapter 7. … Whether you can afford your mortgage: Assuming you kept your house throughout the bankruptcy process, after the bankruptcy you are free to keep your home as long as you continue to pay the mortgage.”

      2. Could it just be the financial repression carried on during the Obama administration meant their savings were inadequate due to no fault of their own? Older baby boomers may have save a million and expected 4% return on their savings only to find out that interest rates only give them 1% so they either invested in a casino called the DJ or slowly or maybe not so slowly watched their nest eggs eaten up. Ironically, this is even more true if they were renters who saw soaring rents during the same time period. It has not been good for savers as opposed to investors or even speculators.

          1. We crossed the Rubicon when we started to monetize debt. As bad as the Bush family was and is, it did not take that step. It was the same type of move as Mugabe used. I said at the time it would concentrate wealth among the wealthy even more than W did. You laughed at my comment.

          2. You are trying to pin something Ben Bernanke, a Republican Fed chair, and Henry Paulson, a Republican Treasury secretary, did on Obama.

            That seems unfair.

          3. Also noteworthy: Though W tried to create the appearance that the Great Recession started on Obama’s watch, history shows it began in December 2007, over a year before Obama took office.

            Not that this is relevant. Recessions happen on their own time, and have little to do with the current occupant of the WH.

          4. I think of the recession as really beginning in August of 2007. That was when someone figured out that Alt-A mortgages (between prime and sub-prime) were not performing very well, and everyone tried to rush for the exits. 30-day credit was cut off, and the economy was only saved by a quick liquidity injection. It only held things together for a year.

          5. The eggheads who date recessions chose December 2007 as the start month. I agree the root causes predate this, such as the implosion of Subprime ABX index, which IIRC was underway already by December 2006.

        1. Older baby boomers may have save a million and expected 4% return on their savings only to find out that interest rates only give them 1% so they either invested in a casino called the DJ or slowly or maybe not so slowly watched their nest eggs eaten up.

          I think similar mistakes are being made in real estate now. Younger generations are investing with the expectation that the future will behave like the past and that housing appreciation will be their golden ticket and rescue them from stagnant wages, soaring cost of living, and crushing student loan debt. Just like the 4% returns that never materialized (well, I did get 4% in December of 2018 on over $200k of FDIC-insured 5-year CDs, but that only lasted 1 day before the offering closed), housing appreciation is not going to happen when we have the massive demographic issue looming in the next 10 years.

  8. “Home prices in Cleveland rose nearly 12% in June compared with a year earlier, according to Redfin. That was driven by a shortage of inventory, as the number of homes for sale declined nearly 7%.”’

    A bit of an oversimplification but it is blue states blue, red states red hot. Really is a breakdown on who is above the SALT limitations and who is below but that does breakdown largely on the blue/red divide and it is great for Trump.

    1. On this point I agree with you, though rising prices in red states is nothing to be happy about. It’s the equity locusts pushing up the prices.

      There is a maxim that I’ve always held close and which is this: What is good for one is not necessarily good for all. High housing prices obviously benefits some connected to the REIC, but it punishes others. Overall I believe society would benefit much more if there was affordable housing for every income level. But getting to that would involve some near-term pain and some big losers.

      I could say the same thing about energy. Now that the US is the leading oil producer, it is going to be painful as we shift towards renewables. There will be some big losers. But the US economy is diversified enough that we will be fine as a whole, even if certain segments go the way that coal has gone in the past 10-20 years. I can think of no better way to put the squeeze on Iran than moving away from oil.

      1. “Overall I believe society would benefit much more if there was affordable housing for every income level. But getting to that would involve some near-term pain and some big losers.”

        It’s hard to achieve this goal while also supporting a real estate investor class whoze members make millions of dollars annually on home price appreciation, and to enable a substantial share of the homeowner population to fund their vacations and luxury automobile purchases out of home equity cashout financing.

        1. Yes, this is why there will have to be losers. The enlightened are those who accept that their personal rent seeking might need to be extinguished for the greater good:

          “The true meaning of life is to plant trees, under whose shade you do not expect to sit.” – Nelson Henderson

    1. Not surprised but it is a humanitarian tragedy. Many of the people living there crossed the border to escape the tyranny of communism, now the border has crossed them. Xi is a latter day Mao. The first clue was his crackdown at Christianity in China when he first gained power. Interesting, how Christians are usually the first targets of evil people.

      1. Still unconfirmed.

        Stand tall against the ChiCom tyranny, Hong Kong brothers and sisters.

        Facebook is ratting you out.

        Google is working hand in glove with the Chinese to surveil and betray you.

        The MSM will practice their usual journalistic Omertà and deflection if the ChiCom government brutally suppresses the popular will.

        1. Yes, I am unable to find it. Still would not be surprised if it does happen. It may have been just a final warning to the protestors, if the form of misinformation.

      2. Interesting, how Christians are usually the first targets of evil people.

        Gun owners are ALWAYS the first targets of evil people. Everybody else is secondary.

          1. I would have voted for her in 2016. But I’m so p-o’d by illegal immigration and identity politics that I don’t think I can pull the lever for a Dem. And, it was the Dems who told me that if I didn’t vote for a women, then I either must be under the thumb of a husband, or I should question my womanhood. I have not forgotten that.

          2. And, it was the Dems who told me that if I didn’t vote for a women, then I either must be under the thumb of a husband, or I should question my womanhood. I have not forgotten that.

            +1

          3. Gun owners are ALWAYS the first targets of evil people. Everybody else is secondary.

            It’s not gun owners, it’s gun violence that I oppose. My city was where the guns were purchased for the most deadly shooting in US history.

            I watched DJT address the nation and renounce white supremacy following the Ohio and El Paso shooting. He blamed mental illness, the internet, and violent video games. Crickets when it come to gun regulation. Too bad because even strong GOP gun supporters are having a change of heart, as they should:

            https://medium.com/@RepAdamKinzinger/united-against-hate-how-we-can-sensibly-address-gun-violence-b99dc76d0238

          4. In addition to new regulations, Warren also proposed new research in her plan. As president, her budget would include an annual investment of $100 million for the Departments of Justice and Health and Human Services to research the “root causes of gun violence and the most effective ways to prevent it,” she wrote.

            Whoop, there it is. Fauxahontus’ plan to “combat gun violence,” like every Democrat-authored plan submitted in the last half-century, naturally includes huge taxpayer “investments” being funneled to leftist hacks in academia and the liberal-infested DoJ and HHS bureaucracies to conduct “research” that will exceed even Suzanne of Century 21 fame in its bias and support for pre-determined conclusions – namely, to impose draconian “gun control” laws and taxes to effectively negate the 2nd Amendment, without which the rest aren’t worth the paper they’re written on.

          5. “She already has my vote.”

            Tell Elizabeth to give me a call, although I have been sober for many years I could still show her how to drink beer from a bottle.

            Hell, I would have to borrow some stuff but while she’s here I could show her how to roll a joint and do a bong hit

            A Relatable New Year’s Beer with Elizabeth Warren (CRINGE)
            https://www.youtube.com/watch?v=tjDEPtS68CM

          6. “Research” means going to conferences, hobnobbing with pals, and filling up on hotel coffee and donuts. I’ve seen it.

        1. “And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family? Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, pokers, or whatever else was at hand?… The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin’s thirst, the cursed machine would have ground to a halt! If…if…We didn’t love freedom enough. And even more – we had no awareness of the real situation…. We purely and simply deserved everything that happened afterward.”

          ― Aleksandr I. Solzhenitsyn , The Gulag Archipelago 1918–1956

  9. California Fostered America’s Tech Industry. It Is Becoming a Great Adversary.

    Lawmakers seek to redress downside of Silicon Valley’s dominance

    ‘On Monday, the state legislature resumes and will consider a bill that, if passed, could classify drivers for ride-hailing companies like Uber Technologies Inc. and Lyft Inc. as employees, entitled to better wages and benefits.’

    ‘The bill, along with state laws pending or passed on issues ranging from privacy to net neutrality, could substantially reshape companies across the technology sector, many of which are based in the Silicon Valley area where local ordinances targeting tech are also taking hold. The push by policy makers against local companies is an unusual turn that is setting a precedent for greater tech governance throughout the country.’

    ‘The state is set to debut a law next year that will give privacy rights to consumers unprecedented in the U.S. Passed last year, the California Consumer Privacy Act broadens the definition of what constitutes as personal information and will give California residents the right to prohibit the sale of personal data to third parties and opt out of sharing it altogether. Corporate lobbyists are pushing several bills that would put in place certain exemptions.’

    ‘The legislation has reverberated throughout the country. New Jersey, Massachusetts, Hawaii, Rhode Island and a handful of other states introduced similar privacy bills after the CCPA passed. In April, Massachusetts Democratic Sen. Edward Markey introduced a bill in the U.S. Senate that borrows from both the CCPA and General Data Protection Regulation, or GDPR, passed three years ago in Europe, which has been Big Tech’s most aggressive international regulator.’

    ‘At a rally in early July outside of the California capitol, drivers for Uber and Lyft joined dozens of other independent contractors to cheer on the bill. At the center of the crowd stood a staunch supporter: Anthony Rendon, speaker of the California State Assembly.’

    “When you hear about folks talking about the new economy, the gig economy, the innovation economy,” Mr. Rendon said into a mic, waving his hands up and down, “it’s f—king feudalism all over again.”

    https://www.wsj.com/articles/california-fostered-americas-tech-industry-it-is-becoming-a-great-adversary-11565532002

    1. IIUC, Uber drivers can log on and log off at will and work whenever and how much they please. How many other jobs allow that? If the Uber drivers turn into regular employees, will they be required to work minimum hours, or be required to work during certain times? I hope so.

      Not that it matters. Isn’t Uber having a hard time making a profit anyway? If Uber has to pitch in even for basic health insurance, it might be enough to drive them out of business.

      1. Kalanick was pretty vocal about the path to Uber profitability being self-driving and cutting out the humans altogether. Doesn’t seem like they are close, but if they don’t get there it may be an existential threat.

        On the other hand, they can probably just raise their prices by a couple bucks per trip and get to profitability with as many rides as they are giving.

          1. Lyft is also running massive losses. Now that both are public, they will raise their prices in unison.

          2. It will be similar to what the airlines do. A sort of an insider cartel devoid of actual competition.

  10. QE began under Obama, he reappointed Ben and picked the members of the Fed. As pointed out on this blog, he bragged about inflating housing prices. There is nothing wrong about pointing out that MMT started under Obama under the name QE. We are still trying to undo the damage caused by it. Thus, there is nothing unfair of reminding people how we got here.

    1. You should be thankful for Obama. His presidency killed to birds with one stone. One, it bridged the racial divide and proved an African American can aspire to and obtain the highest office in the land. Second, it proved an African American president can be just as much of a sell out d bag as any lame a$$ white dude. So now it really is a level playing field and we can all move on.

  11. I noticed one thing when I was looking. No matter what crappy little town .. they all have $1M plus houses for sale. It beggars imagination that anyone would expect a buyer to pay $1M in San Marcos, TX or wherever ….. where there are no jobs to speak.

    1. That’s any town, these days. I can show you tiny towns in the northwest where unemployment is historically in the teens, with median household income in the $30k’s, where million dollar homes abound.

      1. I noticed this as well tracking my tiny hometown in the midwest.

        I don’t know what to make of it other than to ask “who?” wants to buy these, and if it will further erode the sense of community in small towns across the country.

      2. I posted about it before when I was visiting family on the east coast. There are 8-900k$ 2-3 bedroom luxury condos in downtown Portsmouth New Hampshire. It’s lunacy. I couldn’t believe it. The median household income is 67k$. And you’re iced in four months out of the year and devoured by mosquitoes and disease bearing ticks in the summer. And the largest employer in the town is the regional hospital. No matter how many ink cartridges I use, my pen can’t connect those dots.

    2. Yep, the nicest neighborhood in every little nothingburg across this country inevitably has homes for sale for ~1 million dollars (hold pinky to lips). In a lot of these burgs the weather is junk 6-8 months a year with little to occupy one’s time.

      That house posted yesterday from Encinitas where the ask was around 2.5M is a great example of the insanity. That house was maybe 1600sq. ft on a 8500 sq ft lot, just a whole lotta lipstick on a pig. No one will pony up that amount unless its a cash back on close fraud deal. When I sold my place near there in 2004 those were the majority of the transactions happening – the market had already topped there.

  12. Barron’s
    Emerging Markets
    China’s Bond Market Stares Down Panic
    By Craig Mellow
    Aug. 9, 2019 5:15 am ET
    the sun rising above the skyline of Shanghai Source Photograph by Johannes Eisele/AFP/Getty Images

    Chinese property developers are borrowing massively in dollar-denominated bond markets. What could go wrong?

    That’s a question that investors are asking with more urgency since Beijing let the yuan drift downward in response to promised new tariffs from President Donald Trump. All of the developers’ earnings come in local currency, so paying back dollar debt could become progressively harder.

  13. I have seen the little girl at 0 :13 of this video 4 times on local and national news this week.

    https://www.youtube.com/watch?v=dWLdHMbs3ng

    But for some reason I haven’t seen this guy’s kids on local or national news at all.

    Suspect in crash that killed father of five was facing deportation, driving without license

    COLORADO SPRINGS, Colo. – Eight months after he sought sanctuary from a Colorado Springs church to avoid deportation, Miguel Ramirez Valiente stands accused of careless driving with a revoked license in a crash that claimed the life of a father of five.

    Now, those who know Ramirez Valiente say he never should have been driving.

    “This family deserves to know who they’re dealing with,” said a close acquaintance of Ramirez Valiente. “He’s an alcoholic and an abuser.”

    His arrest record shows charges for reckless endangerment in 2011 in Douglas County and domestic violence in 2016 in El Paso County, but CBI records show both cases were dismissed by the District Attorneys Offices.

    In 2018, he plead guilty to a 2017 charge of driving under the influence and his license was revoked, according to court records and Colorado State Patrol.

    On Aug. 1, one day before the deadly crash, his probation for that DUI was extended because he had not completed alcohol therapy and community service.

    He was driving without a license when troopers said he over-corrected and swerved into Buchanan’s lane on Aug. 2.

    http://www.gopusa.com/immigrant-advocate-father-of-5-killed-in-crash-by-illegal-alien-facing-deportation/

    1. A staunch supporter of the rights of immigrants – and a married father of five – was killed last week when an illegal immigrant from El Salvador facing deportation crashed into his motorcycle in Colorado.

      Ironic, huh? Wonder if his widow will carry on his advocacy for illegal immigrants. The perp should’ve been deported after his arrests in 2011, but the DA, who is aligned with the party of corruption and open borders, declined to prosecute.

  14. Times are getting tougher at Megabank, Inc.

    The Financial Times
    Investment Banking
    Job cuts at investment banks near 30,000 as outlook deteriorates
    Deutsche Bank accounts for more than half the total as trading desks are hit hardest
    The radical overhaul at Deutsche Bank aims to eliminate 18,000 jobs
    © Reuters
    Robert Armstrong in New York 9 hours ago

    Global investment banks are shedding tens of thousands of jobs as falling interest rates, weak trading volumes and the march of automation create a brutal summer for the sector.

    Almost 30,000 lay-offs have been announced since April at banks including HSBC, Barclays, Société Générale, Citigroup and Deutsche Bank. Most of the cuts have come in Europe, with Deutsche accounting for more than half the total, while trading desks have been hit hardest.

    In New York City, jobs in commodity and securities trading fell by 2 per cent in June from the year before, a loss of about 2,800 positions, according to the New York Department of Labor.

    1. Don’t let the gloomsters scare you into dumping your risk asset HODLings!

      The Financial Times
      Opinion Global Economy
      Braced for the global downturn
      Rana Foroohar
      © Matt Kenyon
      Rana Foroohar yesterday

      It’s the calm before the storm. Last week’s market volatility was ostensibly triggered by the US-China trade conflict turning into a full-blown currency war. But at heart, it’s about the inability of the Federal Reserve to convince us that its July rate cut was merely “insurance” to protect against a future downturn. As any number of indicators now show — from weak purchasing managers’ indices in the US, Spain, Italy, France and Germany, to rising corporate bankruptcies and a spike in US lay-offs — the global downturn has already begun.

      Asset prices will undoubtedly begin to reflect this, and possibly quite soon. China may have temporarily calmed markets by stabilising the renminbi. But we are in for what Ulf Lindahl, chief executive of AG Bisset Associates currency research, calls “a summer of fear.” He expects the mean-reversion in the Dow that started in January 2018 to turn into a bear market that lasts a decade.

      It’s an opinion based on data, not on emotion. There have been only 20 months since 1906 when the Dow’s deviation from its trend line has been 130 per cent or more, as it is today. Those periods cluster rather frighteningly around the years 1929, 1999 and 2018. “US equities are at the second most expensive period in 150 years,” says Mr Lindahl. “Prices must fall.”

    2. Credit Markets
      The Turn in the Yield Curve
      What the upside-down gap between shorter- and longer-term bond yields is indicating about the markets and the economy
      By Daniel Kruger and
      Peter Santilli
      Aug. 11, 2019 8:00 am ET

      A key market barometer of the risk of future recessions is sounding its loudest warning since April 2007, months before the start of the last financial crisis.

      Shorter-term bond yields have climbed above longer-term ones, a phenomenon known as an inverted yield curve. That tends to happen ahead of recessions.

    3. Trade war is raising the risk of U.S. recession, Goldman Sachs warns
      By Mike Murphy
      Published: Aug 11, 2019 7:32 p.m. ET
      Tensions with China are weighing on the U.S. economy more than expected, analysts say
      MarketWatch photo illustration/Getty Images, Reuters

      The trade war with China is having a greater effect on the U.S. economy than expected, and the risk of recession is rising, Goldman Sachs Group Inc. said Sunday.

      In a note to clients, Goldman analysts led by chief U.S. economist Jan Hatzius said a trade deal between the U.S. and China is no longer expected before the 2020 presidential election.

      Goldman (GS, -2.01%) said it now expects a 0.6% drag on the U.S. economy due to trade-war developments, up from earlier estimates of 0.2%. “Fears that the trade war will trigger a recession are growing,” Hatzius said in the note.

      Goldman also lowered its fourth-quarter U.S. growth forecast by 20 basis points to 1.8%, saying the trade war is weighing down the economy.

      “Overall, we have increased our estimate of the growth impact of the trade war,” Hatzius wrote. “The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news.”

      Uncertainty caused by the trade war could cause businesses to lower spending until tensions are resolved, the report said. “Relatedly, the business sentiment effect of increased pessimism about the outlook from trade war news may lead firms to invest, hire, or produce less,” wrote Hatzius.

      The Goldman analysts said they expect President Donald Trump to carry out his threat to impose 10% tariffs on an additional $300 billion in Chinese exports starting Sept. 1.

    4. Another day, another slide in bond yields…

      The Wall Street Journal
      U.S. Markets
      U.S. Stocks Open Lower Amid Trade Woes
      A slide in bond yields pulls bank stocks lower
      By Avantika Chilkoti and
      Akane Otani
      Updated Aug. 12, 2019 9:38 am ET

      U.S. stocks fell Monday, following global markets lower, as a slide in bond yields pulled bank stocks lower.

      The Dow Jones Industrial Average lost 176 points, or 0.7%, to 26111 shortly after the opening bell. The S&P 500 declined 0.5% and the Nasdaq Composite fell 0.6%.

      Worries about the path of U.S.-China trade negotiations and the global…
      To Read the Full Story
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  15. What I found the most interesting is the Gap between Brent and WTI has just about totally closed from around $13 a barrel last year. Clearly it is at least partially reflective of which country is losing the trade war. China which had been using almost 48 percent of the world’s copper can totally explain any softness in that commodity too
    The commodity desks are saying China is going down. Will that slow the US economy? Sure but it is really up to the Fed whether it causes a recession here. I do not believe it wants to help Trump but I think it does want to save Europe which is already close or in a recession. Globalists have to save globalism reelecteting Trump might just have to be the price for saving the EU “experiment”.

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