thehousingbubble@gmail.com
Blog

What Would You Expect Us To Do, Just Let The Whole Thing Collapse?

A report from PB Monthly in California. “The median home price in San Diego County blew past the previous record to hit an all-time high of $634,000 in July. Rich Toscano, a partner at San Diego financial firm Pacific Capital Associates, said it’s hard to imagine a better scenario for rising home prices. He said the market now is not a bubble and, for the most part, buyers and sellers are acting rationally. However, he did say the factors pushing up prices are temporary and could change as the year goes on.”

The Los Angeles Times in California. “California’s economic recovery slowed markedly last month. California’s unemployment rate lowered to 13.3% last month, down from 14.9% in June. A year earlier, it stood at 4%. Los Angeles County’s economic picture was particularly dire, with a July jobless rate of 17.5%, down from 19.4% in June. A year earlier, it was 4.4%. ‘California’s local workforce boards and employment agencies are reporting an increase in job applicants,’ said Michael Bernick, a former Employment Development Department director. ‘But with the economic lockdowns, the jobs are not coming back in any significant numbers. In fact, the opposite is occurring. California businesses continue to announce that they are closing permanently. Any economic recovery we saw in June and early July has stalled, and a listlessness set in.'”

“Over the last three months, California has regained less than a third of the 2.6 million positions lost during March and April as the pandemic took hold. And the state’s jobless rate remains a percentage point higher than its 12.3% peak during the Great Recession.”

From Housing Wire. “The California housing market is making a slow recovery from the COVID-19 fallout as many are fleeing the state for more space inland.However, the number of homes sold in the Golden State reached its highest level in over two and a half years in July, according to the California Association of Realtors and the median home price set a new record.”

“CAR noted that the change in mix of home sales in California was a factor that made the median home price higher – sales of higher-priced properties continued to outpace sales of lower-priced homes.”

“‘Stronger sales of higher-priced properties continue to propel the statewide median home price, as those who tend to purchase more expensive homes are less impacted by the economic recession,’ said CAR Chief Economist Leslie Appleton-Young. ‘High demand in resort communities is another variable that’s fueling the increase in home prices, as a new wave of remote workers are leaving cities in search of more space and a healthier lifestyle in what used to be the second/vacation home market.'”

From KTVB in Idaho. “While many businesses and industries are struggling to stay afloat during the COVID-19 pandemic, the Treasure Valley housing market is not slowing down. In fact, new data from Boise Regional Realtors shows housing in Ada County broke several records during the month of July. Michelle Bailey, president of BRR, told KTVB the reason for the increase is simple: supply and demand.”

“‘The bottom line is, buyer demand continues to outpace the supply of homes for sale, driving up prices,’ she said. ‘It’s also the mix of sales. We have more new homes selling at higher price points and higher existing homes selling so that combination is driving prices up.'”

From Fox 10 Phoenix in Arizona. “The Phoenix area is making headlines again for a hot housing market, both in terms of home sales and home rentals. Home sales depend on the economy, which depends on the virus. ‘The biggest kind of unanswered question is what happens with all these homeowners who are in forbearance?’ said economist Jeff Tucker with Zillow. ‘It runs out the 12 months on the clock. Are they then going to be motivated sellers? Those would really throw some cold water on the housing market, possibly next summer.'”

The Real Estate News EXchange in Canada. “I’ve written before about my two neighbours who each recently sold their homes for $200,000 and $300,000 over asking after bidding wars erupted in my old Ottawa neighbourhood of Westboro. The middle-class home my wife and I purchased for what now seems a song in the mid-’80s is today a seven-figure property and its value continues to climb. Meanwhile, developers continue to break ground and file site plan applications for projects along the current and future route of Ottawa’s LRT system.”

“Take a drive 20 or 40 minutes past Ottawa’s suburbs and realtors in communities with 6,000 to 12,000 residents are talking about how an exodus of people from the city is driving up housing demand and selling prices like never before. Is some of the activity we are seeing in housing markets across the country pandemic-inspired panic buying? Undoubtedly.”

From The Record in Canada. “Canada’s housing market shattered records in July despite the economic uncertainty surrounding the COVID-19 pandemic — and with the usually busy fall real estate season drawing near, experts are divided about whether the boom will continue. Rachel Gagnon, an Ottawa-based real estate broker, said that she has seen the pressure placed on first-time homebuyers, who are trying to get into the market now while they can afford a mortgage, even if it maxes out their borrowing power.”

“And COVID-19 related travel restrictions have led to slowing immigration and less demand from property buyers seeking rental properties for tourists or students. The uncertainty means a fall slowdown is possible, said Bethany King, a team leader at Century 21 Millennium Inc. Brokerage in Brampton, Ont. While some lenders are offering cash back, lending expectations have also changed, said King. For example, some lenders consider essential workers to have better job security should a second COVID-19 wave come.”

“‘Those are the things that have investors who are regular people — not millionaires that have tons and tons of properties, and are cashing out — preparing for the worst,’ King said.”

“Kean Birch, an associate professor at York University, said he will be watching for the extension or end of mortgage payment deferrals. ‘I find it worrying that housing prices are continuing to rise. The reason being that we don’t know what’s going to happen once the mortgage payment deferral ends, and the consequences actually could be dramatic across the board. And it could be highly inequitable as well,’ said Birch.”

“Evan Siddall, chief executive of Canada Mortgage and Housing Corp., wrote a letter earlier this month that said he expects house prices to fall, ‘even in the face of recent activity, which appears to be the result of very low interest rates and a sharp reduction in new listings. Our projections always anticipated a delayed impact: weakening in late 2020 and 2021 once government income supports unwind,’ read the letter.”

The Shepherd of the Hills Gazette. “Much has been written about the economic consequences of covid-19, yet, just as in many of the analyses of the Great Depression and the 2008 crisis, the years of accumulating debt preceding the event do not attract the attention they deserve. Covid-19—or to be more precise, the lockdown—has initiated a cascading liquidation of the debt bubble that has been building for a generation.”

“When central banks set interest rates it fundamentally distorts the pricing mechanisms of credit markets, just like price setting in other parts of the economy. We are not surprised when the government setting the price of food in Venezuela leads to food shortages, so we should not be surprised that 0 percent interest rates leads to a shortage in yield for investors, leading to a $250 trillion global debt bubble.”

“With each wave of artificially low interest rates, generating ever more distortive monetary effects, bond quality has fallen concomitantly, as shown by Organisation for Economic Co-operation and Development research in 2019. We are now at the stage where low-quality debt, rather than being the exception, has metastasized through much of the economy.”

“While debt quality has fallen, we have seen a proliferation of so-called zombie companies. Research at the Bank for International Settlements showed a cyclical growth in zombie companies from 2 percent of companies in the late 1980s to 12 percent in 2016, corresponding empirically to the waves of artificially low interest rates. The ‘boost’ to the economy is the very same poison that makes it worse. Artificially low interest rates send false price signals to markets: debt goes up, savings go down, and resources are directed from productive uses to more interest rate-sensitive, debt-fueled sectors (including, of course, financial speculation).”

“When I give seminars at central banks, the OECD, and elsewhere I make the case that interest rates should be set by the market rather than central banks and that 0 percent interest rates have made things worse since 2008. One of the responses was interesting: ‘What would you expect us to do, just let the whole thing collapse?'”

From ABC News in Australia. “Top brass at Australia’s central bank have hit back at ABC reporting that exposed how the dire view of the housing market held by some Reserve Bank staff clashed with the rosy picture the bank’s representatives presented in public. Internal emails, obtained using the Freedom of Information (FOI) process, show how staff at the Reserve Bank of Australia tried to hide the names of staff in documents it had been forced to release.”

“Staff then sought ‘receptive’ journalists to tell their side of the story, using the offer of an on-the-record interview with a senior bank leader. In June, documents from inside Australia’s central bank, including many marked ‘highly restricted,’ showed Reserve Bank economists considered urging the Federal Government to shut down the real estate industry, ‘pausing’ sales of established homes to avoid perceptions of a coronavirus-inspired housing market crash.”

“‘The problem is that this will enter folklore and one day history will show we stopped publication of property prices for a while!’ wrote Reserve Bank of Australia secretary Anthony Dickman.”

“‘If you read the material, it is a discussion between economists about how to interpret housing price data. It wasn’t a policy recommendation,’ said Assistant governor (financial system) Michele Bullock. That ‘discussion between economists’ centred on fears of a crash in the price of housing so great — or the perceptions of one — an economist at the Reserve Bank considered asking private firms to stop telling Australians about slumping property prices.”

Related Posts
This Post Has 91 Comments

  1. ‘He said the market now is not a bubble and, for the most part, buyers and sellers are acting rationally’

    Click!

    ‘What would you expect us to do, just let the whole thing collapse?’

    I could say a lot about this post but I’ll let the content speak.

    Thu, 17 May 2007

    ‘Federal Reserve Chairman Ben Bernanke said Thursday that he didn’t believe the growing number of mortgage defaults would seriously harm the economy.’

    ‘Facing criticism from members of Congress about lax regulation, Bernanke also promised that the Fed would do everything possible to crack down on abuses that have put millions of homeowners in jeopardy of defaulting on their mortgages.’

    “We at the Federal Reserve will do all that we can to prevent fraud and abusive lending and to ensure that lenders employ sound underwriting practices and make effective disclosures to consumers,” Bernanke said.’

    ‘However, Bernanke in his remarks did not detail any specific tightening of regulations, saying only that the Fed would hold hearings in coming weeks on the matter.’

    ‘Bernanke said while it was likely that there would be further increases in mortgage delinquencies and foreclosures this year and in 2008, he did not believe this problem would be enough to derail the overall economy.’

    “We believe the effect of the troubles in the subprime sector on the broader housing market will be limited and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,” Bernanke said.’

    ‘In his speech, Bernanke said that the “vast majority of mortgages, including even subprime mortgages, continue to perform well.” He said that past gains in home prices have left most homeowners with significant amounts of equity in their houses and the growth in jobs and incomes should allow most households to keep their financial obligations in a manageable range.’

    https://www.cnbc.com/id/18718555

    1. Saturday, December 11, 2004

      ‘Pricing bubbles often end in a parabolic rise, which we probably saw last year. It is no surprise that what is holding up the market now is lending to so-called subprime borrowers. I view this as bad news for this market as these folks will be in financial trouble even faster. Consider that the risk to mortgage lenders increases, suggesting some desperation for borrowers. “Overall, new originations of subprime mortgages totaled an estimated $375 billion through the end of September, a figure that marked a 63 percent year-to-date rise. Putting that number into perspective, one out of every six new residential mortgages made this year has gone to a credit-impaired”..borrower.’

      http://thehousingbubble.blogspot.com/2004/12/subprime-lending-surges.html

    2. Tanks in the streets!!!!
      Not one banker left behind.

      “What would you expect us to do, just let the whole thing collapse?”

    3. Rich used to work at HP in Rancho Bernardo, and we got together to chat about the Housing Bubble back in the early days of Ben’s blog.

      Like Chris Thornberg, his perspective changed when he went over to the dark side of working for the REIC.

      1. Since finishing business school, I’ve had a problem with his housing valuation calculation. IIRC, he assumes rents and purchases are driven by the same factors. I know I commented on this quite some time ago.

        1. Seems like rents and purchases overlap at some margin, but certainly not over the entire spectrum of the market. For instance, cheapest tier of housing will tend to be nearly 100% rental and the highest price almost all owned. So to assume free substitution between rented and owned housing across all quality tiers seems wrong.

          1. To the extent purchases were/are driven by speculation and foreign money was/is my issue with his housing valuation calculation.

          2. Great point. I believe those two swaths of demand were at historically abnormally high levels up until just recently.

            What’s propping up demand at the moment is somewhat of a mystery!

      2. I wonder what it feels like to whore yourself out to the highest bidder, selling your moral compass and values for a buck?

          1. And by “hoe” he means the garden implement kind, not the Kamala Harris kind.

            Meanie Pol Pot….

    4. Thu, 17 May 2007
      ‘Federal Reserve Chairman Ben Bernanke said Thursday that he didn’t believe the growing number of mortgage defaults would seriously harm the economy.’

      “At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” – Fed chairman, Ben Bernanke, Congressional testimony, March, 2007

      https://www.cnbc.com/2017/06/27/yellen-banks-very-much-stronger-another-financial-crisis-not-likely-in-our-lifetime.html
      Federal Reserve
      Yellen: Banks ‘very much stronger’; another financial crisis not likely ‘in our lifetime’
      Published Tue, Jun 27 20171:51 PM EDT | Updated Tue, Jun 27 20175:43 PM EDT

      – 2020
      – Jerome Powell says… Hello? Jerome? Bueller? Anyone?
      (hint: BRRRRR!)

      1. Subprime certainly wasn’t contained back in 2007, when the entire subsector of the mortgage lending industry collapsed right under Bernochio’s ever-lengthening nose.

        Maybe this helps explain the extraordinary unlimited preemptive steps Powell has taken to contain everything financial in 2020?

        1. $eems that there might bee a difference between x2 Trillion$ in 2008 re$cue Federal.Re$erve.Fund$ … v$ … x10 Trillion$ + “UNLIMITED+!” 2020 failure$ in$urance monie$.

  2. Based on everything I lived, saw, and experience in my fairly long life, this is the biggest bubble I have ever experienced, and the most irrational behavior I have ever encountered. Prices are at least 170% over any sustainable value. Of course, the realtors are trying their best to manipulate it as good as they can, and thee is nobody contradicting them. It’s simply a coalition of investors, politicians, and speculators trying to keep the asset prices overinflated for their benefit and to help the government fund a huge black hole in the budget.
    Letting everything collapse? Well, you really don’t want to go there. It will end in massive social unrest, nothing like we have seen in our lifetime.
    The only solution is a moderately hard landing, and let the inflation catch up. It will be half/half, or else…

    1. “It will end in massive social unrest, nothing like we have seen in our lifetime.”

      Ahem…

      Top Story
      As crime surged, the hub of St. Louis, its downtown, seen as increasingly lawless
      Kim Bell 9 hrs ago

      ST. LOUIS — A new resident of One Cardinal Way, a luxury apartment complex near Busch Stadium, recently recorded a scene playing out in the streets below that appeared straight off a Hollywood movie set. Squealing cars performed a series of doughnuts before a barrage of gunfire was unleashed — nearly 30 shots during a 34-second recording — as other cars raced along South Broadway late at night.

      Two days later, a teenage girl from De Soto was in a pickup cruising with friends along Washington Avenue well after midnight. She died when a speeding car ran a red light and collided with the pickup near Washington and 10th Street. Hours later, Mayor Lyda Krewson, mentioning the girl’s death, vowed to change traffic patterns to curtail speeders whose actions “torment” residents.

      In recent days barricades were moved onto downtown streets to slow or redirect traffic, with mixed results. On Friday, the city blocked Eads Bridge, a major connector of Illinois to downtown, in an effort to halt street racing.

      The speeding cars and reckless behavior were part of an especially bad week for the city’s downtown — all part of a difficult summer for the area that saw crime surge to an alarming degree. Episodes of violent crime spiked in June and July, reaching record or near-record levels. In June alone, police logged 114 assaults downtown, higher than the last eight Junes combined for the neighborhood. And there were more robberies in June and July downtown than any year in the 16 years that St. Louis crime has been categorized by neighborhood. All of this comes as homicides citywide climb over the number this time last year.

      Downtown, three people were shot and wounded this summer while visiting Citygarden, a sculpture park on Market Street. A woman along Olive Street was carjacked at gunpoint by two boys, ages 12 and 13. Those crimes were among the robberies and aggravated assaults that multiplied in the neighborhood as the city struggled with the coronavirus pandemic and civil unrest following the death of a Black man in Minneapolis police custody.
      …

    2. “Letting everything collapse? Well, you really don’t want to go there.”

      – I don’t think there’s any “letting” involved here, except maybe the inevitable bloodletting… Asset bubbles always pop. This has been the case at least since tulipmania. Humpty Dumpty.

      “The four most dangerous words in investing are: ‘this time it’s different.'” – Sir John Templeton

      1. The mistake here seems to be encapsulated in the word “letting,” which suggests that the people pulling the puppet strings have full control.

        They don’t. Remember, we’re all in this together.

        1. The other thing is that for every central banker who says, ‘What would you expect us to do, just let the whole thing collapse?’, you can find another who will admit that the longer you kick a bubble down the road, the worse the fallout will be when it eventually collapses.

          1. “…the longer you kick a bubble down the road, the worse the fallout will be when it eventually collapses.”

            +1

            “There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises

          1. Savers are only brought under the banking industry’s umbrella when the risk asset HODLers are losing their shirts.

            When asset prices are bubbling up, “every man for himself ” is the driving principle.

    3. Strictly anecdotal observations.

      We live in far exurbs of Chicago, 40 miles out in Kane Co, Il. Wife and I both commented today on the frenzy of ground breaking and home building within a 5 mile radius of us. 3 different subdivisions going like gangbusters now. This stuff has sat for years under huge stockpiles of mounded up dirt, now ready to start building. Just struck me as very, very weird when other businesses are closing.

      2. We live in far exurbs of Chicago, 40 miles out in Kane Co, Il

        I grew up right in that area (address started with “40W”) ~30 years ago! It’s crazy how built up it’s become out there.

    1. Another reminder to never buy a used house in Denver.

      Elect Candi CdeBaca to City Council, and this is what you get.

      1. I wonder if Candi’s proposed police replacement “peace force” could have prevented the looting? Oh wait … the rioters and looters are her “peace force” … never mind.

    1. Airbnb
      Airbnb to ban house parties and limit guest numbers amid Covid-19 crisis
      New rules come after ‘lockdown parties’ blamed on platform by B&B operators in the UK
      Sarah Marsh
      Thu 20 Aug 2020 14.49 EDT
      Last modified on Thu 20 Aug 2020 23.37 EDT

      Airbnb will no longer allow house parties in its properties worldwide in a bid to comply with limits on gatherings that have been imposed due to the coronavirus outbreak.

      Those who want to book accommodation will now have to limit the number of occupants to 16 people, with a few exceptions for some venues.

      It comes after the company announced that as part of its crackdown on rowdy parties it would begin testing a ban on under-25s with less than three positive ratings from renting entire homes close to where they live.
      …

      1. How are they going to enforce this? Will they send inspectors to every rental? And if they find violators, what will they do? Call the police?

  8. the moral hazard created post 2008 mean no one cares if prices are going up in a pandemic, they know Uncle Sugar is going to bail them out. Housing prices are not allowed to fall so lesser, prudent folks can buy their first homes.

  10. Sandwich generation types who avoid mortgages and convince their kids to do the same can at least avoid the need to provide costly personal mortgage bailouts to their family members.

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      Personal Finance
      Will you pay my mortgage? Bank of mum and dad withdrawals squeeze sandwich generation
      Children and parents are turning to each other for financial rescue
      Advisers expect the trend to worsen as the pandemic progresses
      © FT montage, Bloomberg, Alamy
      Madison Darbyshire
      August 18, 2020

      Wealth managers on both sides of the Atlantic are reporting a surge in clients restructuring their retirement plans to bail out both elderly parents and adult children during the coronavirus pandemic.

      Older workers helping their adult children who have lost jobs, or parents who require assistance affording retirement — or, in some cases, both — are getting squeezed while also trying to protect their own retirement plans.

      “I can’t think of a client where this hasn’t been a part of the conversation,” said Adam Johnson, a wealth manager at St James’s Place in the UK. Although most clients planned to pass down wealth in the future, he said: “All of a sudden, someone’s flipped the switch.”

      According to a new study by Edward Jones, a financial advisory firm, 24m Americans have provided financial support to their adult children since the start of the pandemic. Seventy-one per cent of retirees said they would risk jeopardising their own financial futures to offer financial support to their families.

      “Clients have always worried about parent’s long-term care fees and helping kids with property deposits,” said Michael Martin, a client manager at UK wealth management firm Seven Investment Management. “What they’re talking about now is helping with rent or food bills or paying for everything because their kids have lost their jobs.”

      The so-called sandwich generation — those with both dependent children as well as elderly parents who may require assistance — are the most likely to find their finances stretched.

      In the US, 47 per cent of those aged 40 to 50 have a living parent older than 65, as well as financially dependent children, according to research from the Pew Center, a US think-tank. One in seven provide financial support to both.

      In the UK it is estimated that one-quarter of Britons have, or will at some point, carry the twin responsibility of supporting children and parents, according to a report by the Money Advice Service.

      Parents of millennial children, who are “newly on the property ladder, with less equity and less tenure in their jobs” are the most likely to be affected, said Christine Ross, a client director at Handelsbanken Wealth Management in the UK. “There’s no question, parents have been stepping in to help.”

      Advisers expect the trend to worsen as the pandemic progresses, especially in light of UK chancellor Rishi Sunak’s decision to wind down the furlough scheme. “When government support ends in the autumn, we will see the full scale of the job losses. That is when we will really see more parents step in,” said Ms Ross.

      Helping adult children to pay the mortgage is the most common concern from clients, said Mr Johnson, as well as paying for tutors for grandchildren to help working parents get to grips with homeschooling. Wealthier clients may want to help their children with fees for private schools. “The furlough scheme protects you at a fraction of your outgoings, if your salary was previously much higher,” said Mr Johnson.

      He said others were helping children in the middle of house purchases to complete. “They are trying to find ways to support their kids by carrying on those plans to move up the property ladder, which is now more difficult for families on furlough.”

      But paying for a child’s mortgage will have an impact on many people’s ability to themselves retire. “A lot of those parents could well be in their last couple of years of working, and for some, it means they will have to keep working,” Ms Ross said.

      At the other end of the age spectrum, the sandwich generation may also have to support parents with pension pots hit hard by the market downturn, who may no longer have adequate resources for retirement.

      “Most of my clients have at least one parent they’re going to have to take care of,” said Georgia Lee Hussey, chief executive of US wealth manager Modernist Financial. Housing is a primary concern, and many have purchased rental properties that they expect their elderly parents will move into. “It was more hypothetical before,” she said. “Now they’re realising it is real.”
      …

    3. provide costly personal mortgage bailouts to their family members My brother has gotten himself into something like that, due to a house fire October 2019. He failed to use his option to sell the destroyed house and lot for what it could bring, and use the insurance proceeds to either buy or rent something a whole lot cheaper in the Boston. He and his wife are eligible for subsidized elder housing in that area. Other family members (like me) failed to even think of that option.

  11. Time to give up on logic and regular market foundations ???

    Unemployment at highest rates, 20%+ of mortgages in some sort of forbearance. Yet housing and stock at all time highs.

    I should just sit in a bar and drink

    ———–
    From The Record in Canada. “Canada’s housing market shattered records in July despite the economic uncertainty surrounding the COVID-19 pandemic — and with the usually busy fall real estate season drawing near, experts are divided about whether the boom will continue. Rachel Gagnon, an Ottawa-based real estate broker, said that she has seen the pressure placed on first-time homebuyers, who are trying to get into the market now while they can afford a mortgage, even if it maxes out their borrowing power.”

      1. “according to the National Association of Realtors”

        Realtors have a long, rich and historic tradition….. of lying.

        It’s in their charter…. it’s in their blood.

          1. I remember my best friend’s (RIP) saying as a young man:

            “Eatin’ ain’t cheatin’.” LOLZ. He was a funny dude.

          2. I’ve always associated that saying with the Clintons for some reason. I can’t remember if there were eyewitnesses to him saying it in the past, or just lots of people who said it in 1998.

    2. People are hoarding nickle coins. There’s a lot of crazy stuff going on, has been for months. Keep a clear head. Recently the Vancouver UHS were shouting prices were up 20%. Turns out they were down, bigly. The entire industry lies like it’s drinking coffee. Then there’s the statistics trick. We can point to one sale or another. And we can understand the layoffs and millions of new delinquencies. There was a foreclosure wave picking up speed before the virus, and it hasn’t gone away. If prices are up so much, why all the price cuts, the losses?

      California’s looming ‘eviction cliff’ could lead to millions losing their homes

      https://www.latimes.com/homeless-housing/story/2020-08-19/gimme-shelter-california-eviction-cliff-renters

      1. “Los Angeles County’s economic picture was particularly dire, with a July jobless rate of 17.5%, down from 19.4% in June. A year earlier, it was 4.4%.”

        A huge share of LA County’s workforce were turned into “freelancers” so those at the top could provide tax-advantaged benefits to themselves, a massive subsidy for health care, but not for the serfs, and not pay into FICA or unemployment insurance.

        These serfs, after working their asses off for years and doing what they were told was their obligation to do, now face destitution, and the benefit briefly afforded to them expired. Should they be allowed to starve? Hard to apply for SNAP when you don’t have an address, and some want to slash that too.

        “Welfare” spending has plunged to zero. The poor are now workers and ex-workers, including the former middle class. Time to stop blaming them for their, or your, problems, regardless of skin color. Both parties are using tribalism to rally people behind their version of the status quo, while ignoring the enormity of what has happened — not due to the pandemic, but over the decades, with many of the consequences deferred only by rising debt and selling off more and more of the U.S. future to those at the top and those elsewhere.

        1. Our daughter is in the mix of the LA gig economy. Last week she even had an a couple of actual gigs!

          1. One thing that has happened is that the average annual income of the self-employed has plunged from 1980 to today. Why?

            In 1980, the self-employed were partners in law firms, securities firms, accounting firms, etc., and long with business owners. Today most of those people are on salary, with contractual guarantees to take money off the top even if their company goes into the ground. A deal their de facto union negotiated for them.

            And today’s self employed and temps? Assembly line workers, taxi drivers, food delivery workers, clerks and office managers, etc. Like the garment workers of 1900 on the Lower East Side.

          2. In 1980, the self-employed were partners in law firms, securities firms, accounting firms, etc., and long with business owners.

            While there was no “gig economy” as we would recognize it back then, there were plenty of small business owners, and they would have counted as self employed. Also, I knew a lot of tech folks back then, especially programmers, who were short term contractors.

            But you are right about the low end workers being forced into gigs. It used to be that they had to settle for “McJobs”, now for many it’s not even that.

        2. “These serfs, after working their asses off for years and doing what they were told was their obligation to do, now face destitution, and the benefit briefly afforded to them expired.”

          – “Know your place, peasant!” – Neofeudalism in the 21st century.

          https://www.youtube.com/watch?v=ZtYU87QNjPw
          Monty Python – Repressed Citizen
          1,680,489 views
          May 12, 2012

        3. “Welfare” spending has plunged to zero.

          Are you saying that SNAP, WIC, Section 8, Medicaid and other free cheese programs have been cancelled, or are you saying that due to technicalities the new poor don’t qualify for them?

        4. ignoring the enormity of what has happened is how most people get through from one day to the next. Consciously registering this “enormity” would put most into shock .

      2. ‘At 11.3%Florida’s unemployment rate is once again above national average. While the state added almost 78,000 jobs, 122,000 were added to the pool of unemployed. “This is an unprecedented level of joblessness,” said Adrienne Johnston, Chief Economist at the Florida Department of Economic Opportunity.’

        ‘And there seems to be little sign of slowing down. More than 212,000 new unemployment claims have been filed since the start of August. “Even when you go back and look during the last recession, we had a significant number of claims. It was at that time unprecedented, but it was over a much longer period of time,” said Johnston.’

        https://www.wcjb.com/2020/08/21/florida-sees-rise-in-unemployment-numbers/

      3. California’s looming ‘eviction cliff’ could lead to millions losing their homes

        Does this mean there will be a looming tent shortage?

      4. If prices are up so much, why all the price cuts, the losses?

        It’s that “mix” we talked about. All of the people who still have money and jobs don’t buy the cheap houses, they buy houses above the median price, so the median gets skewed higher and higher leading to a false representation of market health. You can actually have a rising median and falling prices, which is why stats like Case-Shiller’s index which tracks the sales of the exact same house over time are better indicators in a time like this.

        This says nothing of the fact that the NAR would completely lie and produce fictitious sales numbers.

        1. This wouldn’t be true in a normal recession like 2009. At that time, the cheap houses were being bought by Blackrock-to-rent, which I guess drove the median down.

          But I think you’re right for this situation. Unemployment may be 20%, but mean that 80% of the people still have jobs. They are the ones buying more expensive houses, while the cheap houses are in a limbo of moratoriums and pre-foreclosures.

  13. In a sometimes absurd universe, it makes perfect sense that California has a county called YOLO.

    1. Deadly California wildfires scorch more than 1 million acres with no end in sight
      By Amir Vera and Jamiel Lynch, CNN
      Updated 4:06 AM ET, Sun August 23, 2020
      Flames scorch roads in fires caused by lightning strikes

      (CNN) The deadly California wildfires have burned over 1 million acres — and there’s no end in sight as thousands of firefighters struggle to contain the blazes and more emerge.

      Hundreds of fires were started by lightning, Cal Fire spokesman Steve Kaufmann said. There were approximately 12,000 lightning strikes that started 585 fires in the state over the past week. A total of 1.1 million have burned in the state with more than 13,000 firefighters working the fires, he said.

      Firefighters have been struggling to contain the massive blazes that have killed at least four people. Two fires — the 325,128-acre LNU Lightning Complex Fire in the northern Bay Area and Central Valley, and the 339,926-acre SCU Lightning Complex Fire largely east of San Jose — are among the state’s three largest wildfires in recorded history.

      California Gov. Gavin Newsom announced Saturday the state has received a Presidential Major Disaster Declaration due to the fires burning in the Northern part of the state. This means President Donald Trump released federal aid to supplement recovery efforts in areas affected by the wildfires.

      Those areas include Lake, Napa, San Mateo, Santa Cruz, Solano, Sonoma, and Yolo counties, according to a White House statement. The SCU fire is now the 2nd biggest fire in state history while the LNU is the third.
      …

      1. California Gov. Gavin Newsom announced Saturday the state has received a Presidential Major Disaster Declaration due to the fires

        Several colleagues, including my boss, were getting ready to evacuate on this past week.

    2. “…California has a county called YOLO.”

      I had my first reserve parachute ride at the Yolo County Airport.

  14. Reserve Bank staff fume at ABC report exposing internal tensions over house price crash fears
    By Daniel Ziffer
    Posted 2days ago, updated 2days ago

    “Top brass at Australia’s central bank have hit back at ABC reporting that exposed how the dire view of the housing market held by some Reserve Bank staff clashed with the rosy picture the bank’s representatives presented in public.”

    “Internal emails, obtained using the Freedom of Information (FOI) process, show how staff at the Reserve Bank of Australia tried to hide the names of staff in documents it had been forced to release.”

    “Staff then sought “receptive” journalists to tell their side of the story, using the offer of an on-the-record interview with a senior bank leader.”

    – An analogy:
    – The emperor’s new clothes by Hans Christian Andersen

    “So now the Emperor walked under his high canopy in the midst of the procession, through the streets of his capital; and all the people standing by, and those at the windows, cried out, “Oh! How beautiful are our Emperor’s new clothes! What a magnificent train there is to the mantle; and how gracefully the scarf hangs!” in short, no one would allow that he could not see these much-admired clothes; because, in doing so, he would have declared himself either a simpleton or unfit for his office. Certainly, none of the Emperor’s various suits, had ever made so great an impression, as these invisible ones.”

    “But the Emperor has nothing at all on!” said a little child.

    “Listen to the voice of innocence!” exclaimed his father; and what the child had said was whispered from one to another.

    “But he has nothing at all on!” at last cried out all the people. The Emperor was vexed, for he knew that the people were right; but he thought the procession must go on now! And the lords of the bedchamber took greater pains than ever, to appear holding up a train, although, in reality, there was no train to hold.

    – The emperor’s new clothes is a Fairy tale, but is it, really?

    Mos Eisley Spaceport Central Banks: ”You will never find a more wretched hive of scum and villainy. We must be cautious.” – Obi-Wan Kenobi, Star Wars: Episode IV – A New Hope 

    1. Have central bankers always meddled in housing markets, or is this a fairly recent development?

      1. “Have central bankers always meddled in housing markets, or is this a fairly recent development?”

        – U.S. houses/shacks have only recently been financialized and commoditized. This is due to the creative geniuses at the Central Banks and Wall St. (i.e. capital) looking for a replacement for the manufacturing base, since it was offshored, leaving a vacuum of good jobs and wages (i.e. labor). Think scam or shell game and you won’t be far off. RE has replaced the manufacturing economy. This is true in many developed countries now, since their once solid manufacturing economies were sent to China, leaving a hollowed out shell. This has been good for capital, but bad for labor. We now sell shacks to one another as long as the bubble remains inflated. There be dragons when the bubble pops.

        – The Fed: “Doing the most harm since 1913.”

        Because the Bubble Slowly Pops, the Financial Chain Response Is Now in Progress
        By Admin / August 19, 2020

        “When central banks set interest rates it fundamentally distorts the pricing mechanisms of credit markets, just like price setting in other parts of the economy. Friedrich von Hayek won the Nobel Prize in 1974 for articulating that interest rates, like other prices, should be set by the market rather than central planning committees. We are not surprised when the government setting the price of food in Venezuela leads to food shortages, so we should not be surprised that 0 percent interest rates leads to a shortage in yield for investors, leading to a $250 trillion global debt bubble.“

        “Lower rates boost aggregate demand and raise employment and investment in the short run. But the higher prevalence of zombies they leave behind misallocate resources and weigh on productivity growth….”

        “The “boost” to the economy is the very same poison that makes it worse. Artificially low interest rates send false price signals to markets: debt goes up, savings go down, and resources are directed from productive uses to more interest rate-sensitive, debt-fueled sectors (including, of course, financial speculation).”

      2. Have central bankers always been lying shills for asset prices in general, misrepresenting economic realities?

        “Top brass at Australia’s central bank have hit back at ABC reporting that exposed how the dire view of the housing market held by some Reserve Bank staff clashed with the rosy picture the bank’s representatives presented in public.”

  15. However, he did say the factors pushing up prices are temporary and could change as the year goes on.

    There is only one factor pushing up prices, and that is the Fed and its deranged money-printing. As the bottom 95 percent fall further behind economically, thanks to the Fed’s destruction of their purchasing power coupled with COVID prevention measures, millions of former sheeple are going to have their eyes opened to the swindles being perpetrated against them by the Fed and its oligarch accomplices. So yes, the days when these counterfeiters and racketeers have free rein to concentrate all wealth and power in the hands of their .1% cronies could indeed change as time goes on and more former sheeple become red-pilled.

  16. ‘But with the economic lockdowns, the jobs are not coming back in any significant numbers. In fact, the opposite is occurring.

    And yet housing (along with the Fed’s other asset bubbles and Ponzi markets) is still rising thanks to the Fed’s gusher of stimulus and easy money policies. This is completely unsustainable.

  17. Much has been written about the economic consequences of covid-19, yet, just as in many of the analyses of the Great Depression and the 2008 crisis, the years of accumulating debt preceding the event do not attract the attention they deserve.

    Carlos Zapata, a veteran who owns a Karate studio, blasts the Shasta County Board of Supervisors for the COVID lockdowns that are bankrupting local businesses and costing breadwinners their livelihood. He warns of an impending, violent citizen revolt if current COVID restrictions are not lifted. His speech has since gone viral, suggesting a lot of Zapata’s fellow citizens are ready to get off their knees.

    https://www.youtube.com/watch?v=Wsi_8hmD9OY

      1. The Anarcho-tyrants are expecting that the “respectable” will remain on their knees and conform. Those who have something to lose are unlikely to rock the boat. They might complain, but that’s all they’ll do. But when doing nothing means you will lose everything you’ve worked for, then maybe more people like Mr. Zapata will do more than just complain.

        I did like the part where he called out the city councilor who was cat napping, not that the honorable councilor gave a rat’s patootie.

        1. he called out the city councilor who was cat napping Maybe his next step would be to throw a very loud street party next to that councilor’s home at 0330.

  18. Los Alamitos, CA Housing Prices Crater 10% YOY As Orange County Housing Market Turns Toxic On Skyrocketing Mortgage Defaults And Collapsing Demand

    https://www.zillow.com/los-alamitos-ca/home-values/

    *Select price from dropdown menu on first chart

    As an noted economist said, “With 25 million excess, empty and defaulted houses out there, there is no need to build more.”

  19. “Top brass at Australia’s central bank have hit back at ABC reporting that exposed how the dire view of the housing market held by some Reserve Bank staff clashed with the rosy picture the bank’s representatives presented in public.

    ABC is one of the most craven of the globalist propaganda mouthpieces. However, with globalist media outlets folding left and right as former subscribers see through their lies, distortions, and omissions, Real Journalists who don’t want to get pink slips might start putting pressure on their editors to allow them, within limits, to start reporting real news and real information so they can retain their dwindling readership. That might include tame exposes of malfeasance by their fellow globalist stooges at the central banks.

      1. Citizen journalists and bloggers have for years exposed the RBA’s collusion with the REIC and enabling of Australia’s dangerously unsustainable housing bubble. ABC is years late to the party.

    1. i cant even imagine What it’s like driving through a wildfire at night I once had a near-miss to a head on collision while driving on a narrow road along a cliff face. No possible escape for me than to continue. Somehow I escaped death. Something like that, I guess, to drive through a wildfire.

      1. “…had a near-miss to a head on collision while driving on a narrow road along a cliff face.”

        Avoid Mineral King road if you found that unpleasant.

          1. Wimpy.
            Mt Hamilton Road has 365 curves in 19 miles, shear drop offs, no guard rails, has two way traffic, and is pretty narrow (but at least isn’t one lane anywhere, unlike some roads around here) – and is currently closed due to the SCU Lightning Fire.

            I’ve driven Mt Hamilton a time or two; it’s two curvy to be fun (Niles Canyon is a better mix). I think I’ve been a passenger on Mineral King Road – the only time I’ve been car sick. But it can’t compare for views or scariness.

          2. The drive from Victor, Idaho to Jackson Hole, Wyoming is a steep and winding road with considerable elevation to render the car’s engine gutless. Reminded me of the Nevada access to Yosemite Park.

          3. Nobody got car sick, but the raging argument in the back seat threatened to send us over the edge.

          4. the raging argument in the back seat

            I have put passengers afoot a time or two to promote civility. Just temporarily mind you, and they were my children.

          5. We have a friend who is the daughter of a professor of veterinary medicine. She told me about her family vacation when she was a kid when her brother’s unruly behavior ended up with him getting literally hog tied by her dad.

            We’re way beyond that, as my sons are grown men. The only hopeful strategy is to educate them in the doctrine of mutually assured destruction.

Comments are closed.