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Price Signals Have Been Broken

A weekend topic starting with Real Clear Markets. “Arthur Burns, Chair of the Federal Reserve from 1970 to 1978, publicly regretted afterward that he had lacked the spine to do what was necessary to get the Great Inflation of the 1970s under control. When his predecessor William McChesney Martin’s term ended in 1970, he openly declared, ‘I’ve been a failure.’ What are the regrets, if any, that weigh on Ben Bernanke’s memory when he looks back on his time as Fed Chair from 2006 until 2014? After a reading of his latest book 21st Century Monetary Policy I would say that — at this time — his most notable regret, one made repeatedly, is that he hadn’t made his experimental monetary operations even larger.”

“It was Bernanke’s implementation of inflation targeting and the quantitative easing programs that have pivoted modern central banking to conducting monetary policy as a guessing game. This is what makes him exceptional. Throwing a monetary Hail Mary pass is most apparent in the practice of Bernanke’s quantitative easing (QE) programs, which feature the Fed buying trillions of Treasury and mortgage bonds from Wall Street, and of which we’ve seen four episodes since 2008. Bernanke writes, ‘we had a theory of how QE might work, but there was a lot we didn’t know’ but despite this ‘our main conclusion was that…our purchases would have to be big’ even though ‘uncertainty about the effectiveness of our purchases was matched by our uncertainty about possible side effects.'”

“And QE was executed despite Fed officials having ‘only general ideas about how they could be reversed when the time came,’ and such an operation would require trillions worth of securities now on the central bank’s balance sheet back into private hands. The Fed has tried and failed to reverse QE three times now. (It is currently giving it a fourth go.) The program has proven, like war, to be far easier to get into then out of.”

“Bernanke points to another central banking theorist remembered by history, Walter Bagehot (1826-1877), when he alludes to ‘Bagehot’s Dictum’ — that in times of financial crisis central banks should lend freely to solvent banks though only against solid collateral and at high rates of interest. Bernanke, though, inexplicably fails to mention that last part about high rates of interest. Considering that the Fed kept its target rate at zero percent for six years, maybe he had a moment’s pause when he realized just how far he’s swum, of just how distant the shore of traditional central banking now lay. Bernanke is well aware of this and relates that with the implementation of quantitative easing, ‘we were moving well beyond Bagehot’s dictum.'”

“We are living in an age of central bank experimentation, and to have the power to experiment with a people’s monetary system is to hold a sword always above their neck. Numerous historical episodes show it to be an awesome power fraught with immense danger to both individuals and society as a whole. So, the moral imperative to anyone who wields it is to do so using extreme caution and humility, not by using best guesses guided by ‘instant expertise.'”

“Only a mad man would believe there is such a thing as ‘instant expertise,’ or, maybe, a genius would believe it, too, because he’s experienced it. There is a fine line between genius and mad man. And because of the enhanced power the Federal Reserve now has, I’ve no choice but to pray that Bernanke, and all who follow him into that Chair, come down on the genius side of the ledger.”

The Guardian. “Across the world house prices are breaking records – but this time it is because of how fast they are falling. Houses in Stockholm are now selling for 20% less than their peak, Sydney prices are down by almost 14% over the year, while in San Francisco they are down by 15%, in Auckland by almost 22% and in Toronto by 16%. Germany has registered its biggest six-month price fall for two decades, while in France forecasters are expecting declines of 5% to 7% this year, and after a strong year in Spain, the first price declines are being reported in Mallorca and Ibiza.”

“Meanwhile, maybe spare a thought for some homeowners in the South Korean capital of Seoul, where apartment prices are reportedly down by 24% since October 2021. So what is behind the global mini crash, and are there lessons we can learn from what is happening in other countries? At its simplest, it’s about the cost of money. The long era of near-zero interest rates, which made borrowing to buy a home cheaper than at almost any time in history, is over, for now at least.”

“Australia: Among the big cities, Sydney has led the way down, with prices falling 13.8% over the year. Houses in Byron Bay have fallen 25%. New Zealand’s biggest city, Auckland, has taken a battering, too. In a classic boom and bust, Auckland prices soared by more than 40% between early 2020 and early 2022, boosted by interest rates at rock-bottom lows and government measures to protect the economy from Covid. Prices jumped to an average of NZ$1.3m (£675,000). But as interest rates rose, the bubble burst, and prices in the city have now fallen below NZ$1m.”

“A correction in US house prices was inevitable after the Federal Reserve began increasing its base rate, pushing up mortgage costs swiftly. The San Francisco Bay Area, suffering from a double whammy of big tech job losses on top of rising interest rates, price falls are accelerating. The January figures from CAR reveal that average prices in affluent Marin County plummeted by an astonishing $300,000, or 19.9%, in only one month. But the declines come after breathtaking rises in the Bay Area in recent years, and even after hefty falls, average prices are only back to where they were in 2019.”

From USA Today. “The latest Housing Market Index, which checks the pulse of the single-family housing market through a monthly survey of National Association of Home Builders, found that 57% of builders were using incentives to bolster sales, including providing mortgage rate buy-downs and offering price reductions. While new home sales edged higher in January, the recent uptick in mortgage rates would imply continued weakness in the coming months, said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. ‘In terms of affordability, the median price is down for the third straight month and is down compared to a year ago,’ she said.”

“The median new home sale price declined for the third straight month after peaking in October at $496,800. In January, the median price was $427,500, down 8% from December.”

The New York Post. “Recent findings show the amount of residential real estate supply being scooped up by corporations has dropped precipitously. Year-over-year, businesses bought 46% fewer homes in the fourth quarter of 2022 than they did in 2021, Redfin reported. The recent decline set a new record, putting the subprime mortgage crisis of 2008 — during which time investor purchases slumped 45% — in second place for the largest fall since 2000.”

“The shift was felt most significantly in pandemic boomtowns, with Las Vegas and Phoenix seeing the largest slip in investor investment — more than 60% — of any metro area. Single-family homes and high-priced properties, Redfin found, also saw much steeper declines in investor interest than condos, townhomes and low-priced properties. As for the cause of investors’ lost interest, Redfin blames the current high cost of borrowing money — as the Fed raised interest rates to combat ongoing inflation — and the looming prospect of home values going down appreciably.”

“‘A lot of investors are on hold because they still see home prices declining,’ said Florida-based Redfin agent Elena Fleck in the report. ‘The investors who are in the market are selective and aggressive. Many of them are only offering around [60%] of the asking price since it’s so difficult to make a profit when flipping homes right now.'”

The Union Tribune in California. “Developers told the Union-Tribune that less than 1,000 new single-family homes will be built in 2023. Guesses at the start of the year are typically much lower than what ends up being built because developers will increase their production based on how well sales are doing. San Diego County home prices have dropped seven months in a row as of December, so Nathan Moeder, San Diego real estate analyst, said builders — who prefer prices to be as stable as possible when they release new supply — aren’t willing to ramp up building until things calm down.”

“Sellers also might not be very eager to put their homes on the market as prices continue to drop. San Diego County’s resale single-family home price ended 2022 at $825,000 — down more than $100,000 from a peak reached in April.”

The Ventura County Star in California. “Ventura County doesn’t appear headed for a recession, but economic growth will be slow and inflation ‘stubbornly high’ for the next few years, according to the latest projections by economists at California Lutheran University. CLU CERF Executive Director Matthew Fienup said current CLU CERF report is ‘a low-confidence forecast’ compared to its past work, because this is ‘perhaps the most uncertain forecasting environment’ in recent history. As evidence, he pointed to days when the stock market soared on bad news about the economy, and other days when stocks crashed after a strong report on job growth.”

“‘Price signals have been broken,’ he said. ‘Things like stock prices, home prices, bitcoin and other assets, the prices seem to be disconnected from underlying fundamentals.'”

From the Pundit. “Speculative bubbles are common. The Global Financial Crisis of 2008 was an example, as was the New Zealand finance companies’ crash about the same time. The 1987 share market crash was another example, as was the 1929 Wall St Crash. There are at least two major bubbles going on at the moment – one in the crypto-currency market and one in the Chinese Financial System.”

“Hyman Minsky provided one of the best ways to analyse such bubbles: ‘the financial system swings between robustness and fragility and these swings are an integral part of the process that generates the business cycle’. He thought that such financial instability – and the booms and busts which accompanies it – was inevitable in a so-called ‘free’ market economy, unless government steps in to control through regulation, central bank action and other tools.”

“His key mechanism that pushes an economy towards a crisis is the accumulation of debt by the non-government sector. There are three types of borrowers that contribute to this debt: The hedge borrower can make debt payments which cover interest and principal from current cash flows from investments. For the speculative borrower, the cash flow from investments can cover the interest due, but the borrower must regularly roll over, or re-borrow, the principal.”

“The Ponzi borrower – named after Charles Ponzi who ran the famous ‘Ponzi scheme’ in 1920 – believes that the appreciation of the value of the asset will be sufficient to refinance the debt because insufficient cash flow from investments; only the appreciating asset value can keep the Ponzi borrower afloat. And so the bubble pops at the ‘Minsky Moment’ after which everyone tries to get out of their investment commitments, turning them back into cash. Ponzi borrowers are forced to, because they have no cash; speculative borrowers can no longer refinance the principal even if they are able to cover interest payments. The prices of assets fall, with innocent lenders suffering as well as guilty borrowers. New Zealand’s housing market fits Minsky’s model reasonably well. By the end of 2021 house prices were falling everywhere. How far they will fall one cannot tell, especially as the stock of housing is ramping up.”

From News.com.au. “It’s dramatic. It’s spectacular. But a viral social media video claiming to show the widespread demolition of failed Chinese building projects is more than what it seems. Chinese property developer Evergrande defaulted on repayments for its $455 billion debt in 2021, triggering fears of a new global financial crisis. But its woes also exposed a nation filled with unwanted, unapproved and substandard building projects.”

“In this context, Communist Party officials ordered the company to demolish 39 high-rise buildings early last year. Permits for that part of an $18 billion Ocean Flower Island resort project on Hainan Island had reportedly been ‘illegally obtained.’ It’s reckless waste on an enormous scale. But the viral video isn’t about Evergrande. Not all of the high-rise demolitions are unfinished. Nor are they all part of a sudden demolition spree. What the viral video exploits is the fallout from China’s explosive building boom over the past two decades. And the industry’s ongoing struggle with corruption and incompetence. And the Evergrande crisis isn’t over yet.”

“Another dramatic clip shows the destruction of 15 unfinished towers in Kunming, Yunnan Province, in 2021. The $1.3 billion development was part of the Liyang Star City Community development – one of many similar projects in the area that had failed to attract buyers for up to a decade. But China’s still struggling to come to grips with the fallout of the most dramatic building bust in history. And that means more demolitions are likely to come.”

“‘When property prices seem only to rise year after year, businesses that overinvest in real estate outperform and eventually displace those that don’t, while the banks that lend directly or indirectly against real estate tolerate excessively risky loans on the assumption that their risks will be mitigated by continually rising prices,’ warns Carnegie Endowment for International Peace analyst Michael Pettis. ‘This happened in China.'”

“In the 1970s, Beijing realised it desperately needed new infrastructure on a grand scale to house, feed and employ its rapidly growing population. Meeting this generated an economic boom on a historic scale. ‘This began to change ten to fifteen years ago, by which time China had largely closed the gap between the investment it had and the investment that the economy could productively absorb,’ Pettis adds. But the need to rebalance the economy away from investment (billionaires and institutions) and towards consumption (household incomes) proved unpopular in the halls of power.”

“So Beijing doubled down on driving investment by any means necessary. And the easiest option appeared to be real estate. ‘Like nearly every other country that has followed this model – China began to overinvest systematically in projects that contributed less to the economy than they cost,’ says Pettis. Beijing, he says, has reacted quickly to address liquidity problems. But it is yet to tackle ‘fundamental solvency concerns.’ ‘The various solutions and proposed solutions have merely transferred the problem from the local banks onto either local governments’ balance sheets or … onto the balance sheets of larger banks. But even if this works temporarily, it cannot go on forever.'”

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This Post Has 100 Comments

    1. Regarding the first article, the fed was trying to ameliorate the country’s spending on LBJ’s Great Society Program and the Vietnam War. Then in 1973, Israel’s Yom Kippur War and the resulting Arab OPEC Oil Embargo sent this country’s economy into a severe recession. It was a terrible time to be getting started in life.

  2. ‘Price signals have been broken,’ he said. ‘Things like stock prices, home prices, bitcoin and other assets, the prices seem to be disconnected from underlying fundamentals’

    Milton Friedman did a good job of describing the role price plays. Using the example of a pencil, he described how there was no central planning. Various producers of wood, lead, rubber followed the lead of prices in determining what to produce, how much etc. If price signals are broken as Matt says, the economy is fooked until it gets put right. Genius indeed.

      1. “None of the thousands of persons involved in producing the pencil performed his task because he wanted a pencil. Some among them never saw a pencil and would not know what it is for. Each saw his work as a way to get the goods and services he wanted—goods and services we produced in order to get the pencil we wanted. Every time we go to the store and buy a pencil, we are exchanging a little bit of our services for the infinitesimal amount of services that each of the thousands contributed toward producing the pencil.

        “It is even more astounding that the pencil was ever produced. No one sitting in a central office gave orders to these thousands of people. No military police enforced the orders that were not given. These people live in many lands, speak different languages, practice different religions, may even hate one another—yet none of these differences prevented them from cooperating to produce a pencil. How did it happen? Adam Smith gave us the answer two hundred years ago.”

  3. ‘There is a fine line between genius and mad man’

    Like the early morning tequila shooter at wework? They’re renting f@#$ing desks!

    1. Just look at Opendoor. Their entire business model makes no sense. They simply exist because of FED money printing and SillyCon Valley snake oil salesmen, just like WeWork. All of these companies need to die and never return, just like QE.

  4. ‘Another dramatic clip shows the destruction of 15 unfinished towers in Kunming, Yunnan Province, in 2021. The $1.3 billion development was part of the Liyang Star City Community development – one of many similar projects in the area that had failed to attract buyers for up to a decade’

    These bubbles have been in some stage of bursting repeatedly for over a decade. The globalist scum media just hides it. Oh, shack prices haven’t fallen in Australia fer 30 years! Sure, I can go back and find dozens and dozens of examples of shack gamblers getting hosed into the poor house. Same with the UK, New Zealand, K-da, Asia, Africa, Arabia, central and south America – pretty much everywhere.

    How about Brazil? We don’t hear all that big talk anymore do we? Right rio?

  6. TREASON.

    Washington Post — Mitch McConnell tells U.S. to ‘wake up’ to threat of Russia on Ukraine war anniversary (2/24/2023):

    “Senate Minority Leader Mitch McConnell (R-Ky.) on Friday urged the United States and its allies to renew their resolve to help Ukraine as it stands up to Russian “thuggery,” tacitly pushing back against members of his own party who have become loudly skeptical of Ukraine’s fight as the conflict passes the one-year mark.”

    Europe’s problems are not America’s problems.

    “The longtime Republican leader argued forcefully Friday that giving money to Ukraine “is not an act of charity” on America’s part, while also urging European countries to spend more of their own funds toward the effort.

    “If Putin were given a green light to destabilize Europe, invading and killing at will, the long-term cost to the United States in both dollars and security risks would be astronomically higher than the minuscule fraction of our GDP that we have invested in Ukraine’s defense thus far,” McConnell said in the statement.

    Recent polling has shown some erosion in public support for the assistance, driven by Republicans’ increasing skepticism. About a quarter of Americans said in a recent Pew poll that too much aid is flowing to Ukraine, up six percentage points since September and 19 percentage points since March, shortly after the war began. An Associated Press poll found that 48 percent of voters support continued assistance, down from 60 percent in May.”

    https://archive.is/Jz7Sv

    That last paragraph is a lie. Nobody outside the Beltway supports this.

    1. Remember, just because the New York Post broke the Hunter Biden story doesn’t make them a “conservative” publication. They are, just like the Daily Mail and Fox News, Murdoch owned.

      New York Post — GOP must hold firm and reject isolationism (2/24/2023):

      “Policy-wise, any presidential candidate needs to campaign as if he plans to win, and DeSantis might consider the world he’d inherit should Vladimir Putin prevail. A victorious Russia wouldn’t stop with Ukraine. China would delight in America’s retreat from the world stage and rush to fill the gap. Peace through weakness never works.

      Peace through strength does, and there’s a huge political opening for the candidate willing to take it. Criticize Biden for the foreign-policy weakness that emboldened Putin to invade in the first place, and for his dawdling on getting Ukraine real firepower. Criticize Trump for his retreatism and remind the country that a strong America is the best guard against global disorder and the basis of US safety.

      National security remains a top voter priority; primary-goers want to know presidential aspirants have a coherent foreign-policy vision. Trump’s position poses the GOP field’s first test. Let’s see who passes.”

      https://nypost.com/2023/02/24/gop-must-hold-firm-and-reject-isolationism/

      Top voter priority?

      Gas will be $7 a gallon in the U.S. this summer.

      1. The national debt is now over $31 trillion in case any of you forgot.

        Russia Today — Pentagon unveils new major Ukraine aid package (2/24/2023):

        “Washington is shelling out another $2 billion to shore up the Ukrainian military, the Pentagon has announced. The US Department of Defense stressed yet again that the White House, along with its Western allies, will continue to support Kiev “for as long as it takes.”

        As long as it takes — Translation: hundreds of billions or trillions of taxpayer dollars given to Lockheed, Raytheon, Northrup, Boeing, General Dynamics, who then churn that taxpayer money back into purchasing primary challengers for any member of Congress that dares to stand up to the war machine.

        AND… even more money for Blackstone to manage the “financing” of the reconstruction.

        “In a statement on Friday, the first anniversary of Russia’s offensive in Ukraine, the Pentagon said that its commitment to supporting Kiev had “only strengthened” over the past 12 months.

        The Pentagon said that unlike ‘Presidential Drawdown’, the weapons comprising the latest package will not be sourced from the US Army’s own stocks, but rather procured specifically from the manufacturers.”

        https://www.rt.com/news/572021-pentagon-ukraine-military-aid/

        American taxpayers, you’re being robbed.

        1. Propaganda and Lies.

          Russia Today — White House sees ‘no indication’ of Kiev misusing aid (2/24/2023):

          “Facing mounting pressure from Republicans to audit the billions of dollars’ worth of aid that the US is sending to Ukraine, President Joe Biden’s administration suggested on Friday that there’s no cause for concern that funds are being misappropriated.

          “We have seen no indication to date that any of the resources or weapons we’ve provided to Ukraine have been misused, misplaced, stolen, sold on the black market or captured by the Russians,” National Security Council spokesman John Kirby said in a press briefing. He made a similar claim in January, apparently ignoring reports suggesting otherwise.”

          Joe Biden the known pedophile, who did not win the 2020 election, just picked up a check for his 10% from Zelensky, who is addicted to cocaine, not a Christian, and not even ethnically Ukrainian.

          “CBS News reported in August that only about 30% of the Western weapons sent to Ukraine were making it to the front lines, saying the weaponry had to get through a complex network of “power lords, oligarchs [and] political players” to reach the troops. Ukrainian President Vladimir Zelensky last month fired several senior officials in his government for profiteering from Western aid. Ukraine consistently ranks among the most corrupt countries in Europe, according to Transparency International.

          With Republicans winning control of Congress in November’s midterm elections, the Biden administration has faced growing calls for accountability. The House Oversight Committee demanded on Wednesday that the administration turn over documents proving that the military and economic aid allocated to Ukraine isn’t being lost to “waste, fraud and abuse.”

          Representative Marjorie Taylor Greene, a Georgia Republican, said on Thursday that she will introduce a bill to force an audit of the Ukraine aid program. “That is exactly what the American people need, an audit of Ukraine, because we have no idea where all this money’s going,” she said in a Fox News interview.”

          https://www.rt.com/news/572040-white-house-dismisses-ukraine-aid-concerns/

          “Ever get the feeling you’ve been cheated?” — Johnny Rotten, the Sex Pistols

        2. “The national debt is now over $31 trillion…”

          For clarity, in 2000 the national debt was $5.8 trillion.

          1. For clarity, in 2000 the national debt was $5.8 trillion.
            Yep, Bush essentially doubled it in 8 years and then Obama essentially doubled it again in his 8 years.

          2. For clarity, in 2000 the national debt was $5.8 trillion.

            And then along came the money printers. Coincidence? I think not.

    2. “That last paragraph is a lie. Nobody outside the Beltway supports this.”

      It seems like a lot of Democrats, formerly the “no blood for oil” and “we’re not the world’s policemen” crowd, have suddenly turned into warmongers.

      1. “It seems like a lot of Democrats, formerly the “no blood for oil” and “we’re not the world’s policemen” crowd, have suddenly turned into warmongers.”

        You are correct.

        Ukraine isn’t a country, it’s a virtue signal.

  7. “And because of the enhanced power the Federal Reserve now has, I’ve no choice but to pray that Bernanke, and all who follow him into that Chair, come down on the genius side of the ledger.”

    If only there was some way to determine whether Helicopter Ben is a genius or not. How about his “subprime is contained” opinions?

  8. Because defending Ukraine’s border is more important than defending America’s border. 4.5 million is that a lot?

    Phoenix DEA, Tempe Police Seize OVER 4.5 Million Fentanyl Pills, 140lbs Fentanyl Powder 3,000 Lbs of Meth, 130kg cocaine in Joint Operation:

    “Last year nationwide, we lost 107,622 lives to drug poisonings with fentanyl being the primary drug,” said Phoenix DEA Special Agent in Charge Cheri Oz. “The drug cartels are putting fentanyl in all of their illicit drugs such as cocaine, methamphetamine, heroin, and fake pills, which they disguise to look legitimate, like pharmaceutical pills. It is trickery. It is deception. It is death.”

    https://www.thegatewaypundit.com/2023/02/just-in-over-30-million-lethal-doses-phoenix-dea-tempe-police-seize-over-4-5-million-fentanyl-pills-140lbs-fentanyl-powder-3000-lbs-of-meth-130kg-cocaine-in-joint-operation/

    If you voted for Pedo Joe, you voted to find your child dead in their bed from an overdose.

    Bonus link — about 136,000 results from a Bing search on the terms “teen fentanyl overdose”

    https://www.bing.com/search?form=MOZLBR&pc=MOZI&q=teen+fentanyl+overdose

    1. 4.5 Million Fentanyl Pills

      Someone wants millions of Americans to OD. I suspect there are a lot of OD deaths in homeless camps that are never reported in the media. Of course they want the ODs spread across other groups as well.

      1. “Someone wants millions of Americans to OD”

        Correction: wants millions of white Americans to OD.

        William Kristol agrees with this, he’s on the record in a tweet arguing for the great replacement.

          1. “New Americans” who come from cultures where corruption is endemic will have no problem with the globalists installing a Neo-Bolshevik totalitarian regime to facilitate the forced collectivization of property and assets currently held by 75 million Deplorables.

          2. The working class should toil under the yoke of slavery according to blue eyes like Bill Kristol so he and his cabal can have more without lifting a finger.

          3. “so he and his cabal can have more”

            The #Naming and the #Noticing will continue.

            Always be #Naming, and the #Noticing will follow…

  9. What are the alleged “values” that The West claims to support in the promotion of “liberal democracy?”

    Linked from NPR — Tennessee has passed a ban on gender-affirming health care for trans kids (2/23/2023):

    “Transgender youth may soon no longer be able to access gender-affirming health care. A ban on medical transitioning for minors has passed the Tennessee General Assembly and is on its way to the governor’s desk.

    The bill would mean no hormone therapy, no surgeries and no puberty blockers”

    It’s not “health care” it’s mutilation, and the people and organizations who support it are Marxists.

    “Vaniel Simmons of Out Memphis was able to keep taking hormones after Arkansas passed a similar measure. They say some of their friends weren’t so lucky.

    “In reality, when you’re talking about access and what health care people can actually get, if doctors are scared to perform things or are scared to help people. You’re not going to get the health care anymore,” Simmons says.

    https://wpln.org/post/tennessee-has-passed-a-ban-on-gender-affirming-healthcare-for-trans-kids-the-bills-exceptions-may-only-exist-on-paper/

    Housing? Why yes, housing, because when you buy a house, your property taxes are paying to support Marxist globalist pedophile grooming in the public schools.

    And if you dare object, Attorney General Merrick Garland (phony Anglicized name, not a Christian) will seize custody of your children and toss you in the January 6th gulag.

  10. The Atlantic — Zelensky Is Right to Demand That the U.S. ‘Do Even More and Do It Even Faster’ (2/24/2023):

    “Secretary of State Antony Blinken has been at the center of the U.S.’s involvement in the war, relaying intelligence to President Volodymyr Zelensky and working with allies to provide aid to the Ukrainian military. Today, Blinken spoke with The Atlantic’s editor in chief, Jeffrey Goldberg, about foreign policy in the post–Cold War era, deterring similar aggression from China across the Taiwan Strait, and what a Ukrainian victory might look like.”

    https://archive.is/IGrAo

    Zelensky
    Blinken
    Goldberg

    What do they have in common?

    Henry Ford was right about all of this a century ago.

    The #Noticing will continue, and a bonus link to Gab:

    https://gab.com/

  11. A reader sent these in:

    Inflation rages in services. On a year-over-year basis, the PCE Price Index for services spiked by 5.6%, the worst since 1984. And I bet it’s still underreported 🚨

    https://twitter.com/WallStreetSilv/status/1629231077792391171

    “Fed made a mistake. Now we must make opposite mistake!”
    *BULLARD: VIEWING PRICE SURGE AS TEMPORARY HURT FED CREDIBILITY
    *BULLARD REPEATS NEED TO MOVE QUICKLY TO SHIELD FED CREDIBILITY

    https://twitter.com/donnelly_brent/status/1629179397046403072

    CarDealershipGuy

    Ford prices declining fast

    https://twitter.com/GuyDealership/status/1629097300449538049

    1.4 BILLION. How much of this consists of starter homes that young families desperately tried to bid on during the pandemic, while $OPEN bought them and held them vacant for a year before selling at a loss? How much vacant inventory are they still sitting on?

    https://twitter.com/texasrunnerDFW/status/1629155432974499842

    *Bankruptcies accelerating sharply the last few months and this trend most likely to continue

    https://twitter.com/RadicalAdem/status/1629131158872285185

    Lance Lambert

    A sidelined move-up seller is also a sidelined move-up buyer 🏡

    https://twitter.com/NewsLambert/status/1628892825759760386

    Housing market in 2023

    https://twitter.com/NipseyHoussle/status/1629246198363070465

    New home inventory is up 115% as builders try to push Americans into buying a new house

    https://twitter.com/SwapnaVenugopal/status/1629228158267293696

    If inventory does recover this year, home prices could go down 30%. The entire thing is dangling on the edge held in place by low inventory

    https://twitter.com/NipseyHoussle/status/1629184583508930560

    Median price for new single-family home fell by 8.2% month/month in January … largest drop since September 2014

    https://twitter.com/LizAnnSonders/status/1629143039401656320

    Homebuilders aggressively paring inventory by buying down rates and offering discounts. Drove a big bounce in New home sales in Jan. Be careful extrapolating this strength…not supported by recent MBA mortgage app data.

    https://twitter.com/SerenityMDK/status/1629150757105860609

    The median sales price of new houses sold in Jan 2023 was $427,500, this is the lowest since Feb 2022. Median sale prices posted their first yearly decline since August 2020. Median sale price is down 0.7% compared to one year ago & down 8.2% compared to the previous month.(4/n)

    https://twitter.com/odetakushi/status/1629143609952899072

    And, don’t forget, it’s global…”Some investors in real estate funds have sought to redeem their cash before writedowns feed through.”

    https://twitter.com/m3_melody/status/1629091507788546048

    nzherald

    West Auckland residents are demanding the Govt buy them out of their homes

    https://twitter.com/nzherald/status/1629054547040653312

    Lance Lambert

    It’s mind-boggling how fast housing affordability deteriorated over the past 3 years.

    https://twitter.com/NewsLambert/status/1628971260741840896

    My uncle’s a property manager in Los Angeles. I wonder if he’s taken martial arts training.

    https://twitter.com/ShlomoChopp/status/1628968924187447298

    Lance Lambert

    The U.S. housing market is “recovering” so fast that it just hit the lowest purchase apps reading since 1995.

    https://twitter.com/NewsLambert/status/1628912821672050691

    “Pulte has offered 30-year fixed rates as low as 4.25% in recent weeks”

    https://twitter.com/LONGCONVEXITY/status/1628888000758272001

    I’ve seen enough of “the housing market turned a corner in January” takes (particularly ALL OVER LinkedIn). Always ask yourself why buyers are back and whether their motivation will continue, in this case, as rates start rising again.

    https://twitter.com/ALROnHousing/status/1628915461986611202

    The housing market is officially under the bus and the Fed doesn’t care. Where housing prices are now in this decline the Fed was already easing last cycle.

    And, when they started easing, home prices and stocks went down, not up. The entire bull case: Lower interest rates.

    https://twitter.com/SuburbanDrone/status/1629187375950700544

    Breaking News: Inflation is higher than expected. It was expected to be high, but it was not expected to be this high.

    https://twitter.com/SuburbanDrone/status/1629182755186638852

    CarDealershipGuy

    New cars prices are a disaster. 1 in 4 new cars sold in December had an MSRP over $60K. Five years ago, that number was 1 in 13.

    https://twitter.com/GuyDealership/status/1628903437592141829

    1. “Fed made a mistake. Now we must make opposite mistake!”

      Real estate investors are hoping and praying that the Fed won’t follow through on its repeatedly announced punchbowl removal operations.

      So far, it doesn’t seem like their prayers are working.

    2. “New cars prices are a disaster. 1 in 4 new cars sold in December had an MSRP over $60K. Five years ago, that number was 1 in 13.”

      There is another example of how Quantitative Easing run amok drove asset prices out of reach for the masses.

          1. Point taken, though it’s a distinction without a difference when their prices are going up as fast as cryptocurrencies.

        2. You make me realize that I have been treating my durable goods purchases like financial assets, with a tendancy to hord them. At a time of high inflation, this is a natural way to avoid getting wiped out by a tsunami wave of printing press money suddenly driving the prices of durable goods, like cars and houses, out of reach.

          1. You make me realize that I have been treating my durable goods purchases like financial assets, with a tendancy to hord them.”

            its not just you. We are all finding out replacing these goods down the road will be expensive and maybe impossible. Easy to print money not so easy to make things or more likely import them.

          2. We are all finding out replacing these goods down the road will be expensive and maybe impossible

            I’ve started wondering if I should stock up on basics for car maintenance: brake pads, filters, oil, coolant, spark plugs, etc.

      2. Some are saying that automakers are restricting production to keep prices high, but all it takes is for one to drop prices.

        Also seems like a great time for the ChiComs to enter the market, assuming they can make a car that isn’t a piece of junk.

    3. “…the PCE Price Index for services spiked by 5.6%, the worst since 1984. And I bet it’s still underreported ”

      The year-on-year number understates inflation when it is accelerating, much as year-on-year housing price decline figures understate an accelerating rate of price decline.

      This is where my annualized rate of change calculations come in handy.

      1. Economy
        Key Fed inflation measure rose 0.6% in January, more than expected
        Published Fri, Feb 24 2023 8:32 AM EST
        Updated Fri, Feb 24 2023 10:56 AM EST
        Jeff Cox

        Key Points
        – The core personal consumption expenditures price index increased 0.6% for the month, and was up 4.7% from a year ago.
        – Headline inflation increased 0.6% and 5.4% respectively. All the numbers were higher than estimates.
        – The numbers suggest inflation accelerated to start the new year, putting the Fed in a position where it likely will continue to raise interest rates.
        …
        https://www.cnbc.com/2023/02/24/key-fed-inflation-measure-rose-0point6percent-in-january-more-than-expected.html

          1. PCE inflation

            So now Expenditures is Inflation? Ship of Fools kind of thing. If, as noted the other day, prices are up more than expenditures, there’s a shrinking going on somewhere. Most likely a ballooning of credit card balances is in the works.

    4. 1 in 4 new cars sold in December had an MSRP over $60K.

      I’m going to assume that those “cars” are mostly pickups and larger or luxury SUVs. Note how Americans brands hardly sell “cars” anymore. If you want a car, you will need to shop at European or Asian brands.

      1. Among my “assets” (investments?) Is a fleet of three low maintenance, gasoline fueled Japanese automobiles. They all get good mileage and run great, and the entire fleet cost less than $60K. We own it free and clear of debt payments.

    5. It’s mind-boggling how fast housing affordability deteriorated over the past 3 years.

      It’s not mind-boggling to me. When you dump $10 trillion in printed money onto the US economy in a couple months, this is what you get. It was the most reckless move in the history of the USA.

  13. “The Fed has tried and failed to reverse QE three times now. (It is currently giving it a fourth go.) The program has proven, like war, to be far easier to get into then out of.”

    It is like war, on savers, small businesses and households, which get farther and farther behind as the entities whose assets were purchased by the Quantitative Easing program Hoover up real estate assets and drive rents out of reach for the little guy.

    1. “The Fed has tried and failed to reverse QE three times now.”

      What was that cliché regarding insanity and repeated failed attempts?

  14. Illegal Aliens don’t wait for driver’s licence to get drunk, jump behind the wheel of a vehicle with a bad tag and no insurance for a joyride to a weekend hit and run anyway.

    Happened to me twice.

    Minnesota Democrats Advance Giving Driver’s Licenses to 77K Illegal Aliens

    JOHN BINDER
    24 Feb 2023

    Democrats in Minnesota have advanced a plan to give driver’s licenses to potentially 77,000 eligible illegal aliens.

    This week, the Democrat-controlled Minnesota state senate passed a bill in a 34-31 vote that will eliminate the legal residency requirement for obtaining a driver’s license in the state. Instead, illegal aliens would be able to secure licenses to legally drive vehicles.

    https://www.breitbart.com/politics/2023/02/24/minnesota-democrats-advance-giving-drivers-licenses-77k-illegal-aliens/

      1. “As long as it takes” to defend Ukraine’s border.

        And don’t forget to pay your federal income taxes, uppity peasant, because you’ll never be seen as anything more than a cattle tax slave to these globalists.

  15. Houses in Stockholm are now selling for 20% less than their peak, Sydney prices are down by almost 14% over the year, while in San Francisco they are down by 15%, in Auckland by almost 22% and in Toronto by 16%.

    Is that a lot?

      1. They fell over 60% last time in many locations out west. They need to fall 75% in a lot of places this time, to get back to being even remotely affordable based upon wages.

  16. “And QE was executed despite Fed officials having ‘only general ideas about how they could be reversed when the time came,’ and such an operation would require trillions worth of securities now on the central bank’s balance sheet back into private hands.

    I hope I live to see the day when the gold collar criminals at the Fed are finally held accountable for their destruction of the middle class & debasement of the currency.

  17. “Across the world house prices are breaking records – but this time it is because of how fast they are falling.”

    Every massive asset price bubble in the history of mankind ended up popping and leaving behind a large number of broke investors who piled into it. It isn’t any different this time.

    ‘If something cannot go on forever, it will stop.’

    — Herbert Stein’s Law

  18. I wouldn’t have been able to not squeeze the trigger like the Cop in the video.

    “Police released bodycam video Thursday of Moses’ arrest, which, police say, shows Moses still had the gun used in those shootings when officers found him.”

    Bodycam video shows arrest of gunman after TV journalist, 2 others killed in Florida shooting spree

    By Amy Simonson and Nouran Salahieh, CNN, CNNWire
    Thursday, February 23, 2023 6:45PM

    ORLANDO, Fla. — A gunman in central Florida killed a woman Wednesday, returned to the scene and killed a TV journalist covering that death, and then fatally shot a 9-year-old girl nearby before he was arrested, authorities said.

    https://abc13.com/florida-shooting-reporter-killed-dylan-lyons-news-13-orlando/12864561/

    1. “I wouldn’t have been able to not squeeze the trigger like the Cop in the video.”

      You can listen to Jimi, but you can’t feel his pain!

    1. “Younger borrowers are falling behind on their car payments at higher rates than other age groups, according to the New York Fed. Auto delinquencies have been on the rise in part because car prices soared over the past few years.

      More millennials are behind on their credit cards compared with before the pandemic, according to the credit-reporting firm TransUnion. The percentage of most older borrowers in credit-card delinquency decreased over the same period.”

      Joe Biden’s America.

    2. From the article:

      and enjoyed a reprieve from monthly payments on their $160,000 in student loans

      who together with her husband has a household income of roughly $80,000 a year in Lincoln, Neb

      So they went to college, each racked up $80K in debt and only make $40K each? Burger flippers almost make that kind of money.

      They also took trips with their four children that they had put off because of Covid, including to Walt Disney World, local museums and the zoo. By 2022, their credit-card debt had doubled to nearly $40,000.

      Aaannd it was self inflicted.

        1. Heck, they aren’t paying anything right now, and the student loan payment holiday keeps getting extended.

          1. can’t wait till March 20th when there will be no $95 extra food stamps per person loaded on their ebt cards.

          1. The student loan forgiveness was going to be 10K per head. Now, with reparations, they were talking hundreds of thousands per vibrant. Though reparations seem to have already fallen from view. Now we are back to supporting Ukraine, no matter the cost.

        3. Yahoo
          If Biden’s Student Loan Forgiveness Plan Is Killed, What’s Next for Borrowers?
          Vance Cariaga
          Fri, February 24, 2023 at 10:00 AM PST·3 min read

          Federal student loan borrowers have been in a state of flux ever since last summer, when President Joe Biden first announced his intention to forgive up to $20,000 in debt per borrower through a massive loan forgiveness plan. Legal challenges to the plan have kept it from being implemented, prompting the administration to extend the federal student loan pause until a resolution is reached.

          A lot more should be known toward the end of February, when the U.S. Supreme Court finally hears arguments about the forgiveness plan. The hearing is scheduled for Feb. 28 and will focus on two lawsuits challenging the legality of Biden’s plan.
          …
          https://finance.yahoo.com/news/biden-student-loan-forgiveness-plan-180004682.html

  20. “But China’s still struggling to come to grips with the fallout of the most dramatic building bust in history. And that means more demolitions are likely to come.”

    Who knew Keynesian economics would have its grandest manifestation in the heart of a Communist economic superpower? And now we get to witness the magic of the Keynesian ditch digging metaphor on an Evergrand scale, as printing press money and natural resources are wasted on demolishing unneeded, unwanted, unused real estate structures.

    Heckuva a job, Winnie the Pooh…

  22. “Recent findings show the amount of residential real estate supply being scooped up by corporations has dropped precipitously. Year-over-year, businesses bought 46% fewer homes in the fourth quarter of 2022 than they did in 2021, Redfin reported. The recent decline set a new record, putting the subprime mortgage crisis of 2008 — during which time investor purchases slumped 45% — in second place for the largest fall since 2000.”

    Here is to hoping that lots of the corporate investors who used money borrowed at rock bottom rates to Hoover up residential housing soon go bankrupt, and the homes they overpaid for return to the market at deep discounts to give the next generation of US households access to affordanle shelter.

  26. 2.1k
    Dylan Croll
    Dylan Croll
    Wed, February 22, 2023 at 11:40 AM PST

    U.S. homeowners have lost $2.3 trillion since June, according to a new report from the real-estate brokerage Redfin. The total value of U.S. homes was $45.3 trillion at the end of 2022, down 4.9% from a record high of $47.7 trillion in June. That figure signifies the largest June-to-December percentage decline since 2008.

    1. “$2.3 trillion”

      Is that alot?

      “That figure signifies the largest June-to-December percentage decline since 2008.”

      Sadly, the Fed will not be available to ride in on white horses with bailouts this time. They are preoccupied with extinguishing an inflation conflagration, and realize that targeting more Quantitative Easing on housing would be tantamount to dousing a raging inferno with gasoline.

  27. Fortune
    FINANCE RECESSION
    Top Wall Street strategist David Rosenberg crushes rosy economic predictions and says ‘no landing’ talk is Wall Street’s ‘biggest hoax‘ in years
    Even if inflation fades, with interest rates staying higher for longer, the founder and president of Rosenberg Research fears a recession is on the way.
    BY WILL DANIEL
    February 24, 2023 12:14 PM EST
    David Rosenberg speaks at the Bloomberg Canadian Fixed Income Conference in New York, September 2017. Misha Friedman—Bloomberg/Getty Images

    David Rosenberg doesn’t buy the latest cheerful economic narrative on Wall Street. The veteran strategist and founder of Rosenberg Research argues a recession is inevitable as the Federal Reserve’s rapid interest rate hikes work to slow the economy.

    Recent robust labor market and consumer spending data have led some economists to believe in a “no landing” scenario—in which interest rate hikes don’t spark a recession, economic growth continues, and inflation remains stubborn. But Rosenberg says the Fed will continue to raise rates until inflation “melts,” no matter the consequences.

    “The ‘no landing’ narrative is the biggest hoax Wall Street economists have peddled since ‘global decoupling’ in 2008. Follow the leading indicators, not the Pied Pipers,” he tweeted Thursday.

    Rosenberg was referencing the “global decoupling” argument of the early Global Financial Crisis (GFC) in 2008. The idea was that emerging market nations’ business cycles were diverging from those of developed nations, meaning that the U.S. economy could fall into a recession without sparking a global crisis.

    “Greater economic integration among industrial countries and among emerging market economies has been associated with the emergence of group-specific cycles,” IMF economists wrote in a June 2008 research paper.
    …

  28. The Boston Globe
    ‘A housing market for almost no one’: Rising prices and interest rates have made home buying feel impossible
    Two-plus years of seismic shifts in Boston’s housing market knocked the prospect of buying out of reach for tens of thousands more families here.
    By Andrew Brinker Globe Correspondent,
    Updated February 25, 2023, 1 hour ago
    Cherise Kenner worked on her laptop at the dining room table in her two-bedroom apartment.
    John Tlumacki/Globe Staff

    A few months ago, Cherise Kenner got a raise. Another $10,000. The sort of money that just a couple of years ago would have meant the chance to finally buy a house.

    Not in this city, not now.

    Instead of picking up the keys to a place of her own, 41-year-old Kenner is sleeping on a futon. An investor last year purchased the building where she rented a three-bedroom with her two teenage children, and raised the rent by $700. Still determined to save for the home she someday hopes to buy, she rented a two-bedroom in West Roxbury, ceding the rooms to her kids.

    Opting for one less bedroom than her family needs is saving Kenner hundreds of dollars in rent each month, though it’ll be years before she can seriously think about buying — and sleeping in a room of her own again.

    “It’s what I have to do for now,” she said. “Obviously it’s not ideal. People should not have to be doing all of this to be able to afford a home.”
    …
    https://www.bostonglobe.com/2023/02/25/business/housing-market-almost-no-one-rising-prices-interest-rates-have-made-home-buying-feel-impossible/

  29. “The municipality of Frankfurt announced on Friday that it is canceling the upcoming show of former Pink Floyd singer Roger Waters, citing his alleged status as “one of the world’s most well-known antisemites” as the reason.”

    Y’all better learn to bend thy knee or else!

        1. “The 65-year-old went on to label black people a ‘hate group,’ citing a poll that found nearly half of black people are not ok with white people.”

          Whistle blowers must have the courage to stand alone because they will face an epidemic of cowardice from their peers rather than support.

    2. Kyrie Irving handed a check for $500,000 to the ADL.

      And then they all left him alone (for now).

      #Noticing

  31. “Extraction Migration”

    “The federal government has long operated an economic policy of “Extraction Migration.” The policy extracts vast amounts of human resources from needy countries and uses the imported workers, renters, and consumers to grow Wall Street and the economy.”

    “The migrant inflow has successfully forced down Americans’ wages and also boosted rents and housing prices. The inflow has also pushed many native-born Americans out of careers in a wide variety of business sectors, reduced native-born Americans’ political clout, and contributed to the rising death rate of poor Americans.”

    Finally: New York Times Admits Biden’s ‘Migrant Children Work Brutal Jobs’

    NEIL MUNRO
    25 Feb 2023

    Hundreds of thousands of migrant teenagers are working “brutal jobs” to pay off their smuggling debts amid President Joe Biden’s loose border rules, the New York Times admitted in a February 25 article.

    “Cristian works a construction job instead of going to school. He is 14 … Carolina packages Cheerios at night in a factory. She is 15 … Wander starts looking for day-labor jobs before sunrise. He is 13,” are the newspaper’s captions of photographs showing young teenagers admitted via the “Unaccompanied Alien Child” border loophole.

    https://www.breitbart.com/immigration/2023/02/25/finally-new-york-times-admits-bidens-migrant-children-work-brutal-jobs/

  32. The Financial Times
    Sovereign bonds
    Record-breaking global bond rally crumbles as fresh inflation fears grip investors
    Fixed income markets reverse gains since start of year in ‘reality check’ over path of interest rates
    Euro bills seen next to US dollar bills
    Better than expected economic data on both sides of the Atlantic has upended expectations that the Fed and the European Central Bank are close to winning their battle with inflation
    Kate Duguid and Harriet Clarfelt in New York and George Steer in London 2 hours ago

    The record-breaking global bond market rally since the start of this year has fizzled out as mounting signs of persistent inflation force investors to reverse their views on the likely future path of interest rate rises.

    Investors rushed into fixed income in the first few weeks of 2023 as they became increasingly expectant that the US Federal Reserve and other major central banks would soon end their aggressive campaign of monetary policy tightening.

    A Bloomberg index tracking high-grade government and corporate bonds rose as much as 4 per cent last month, its best ever start to the year.

    But that gain has now disappeared after a scorching US labour market report earlier this month kicked off a run of better than expected economic data on both sides of the Atlantic, upending expectations that the Fed and the European Central Bank were close to winning their battle with inflation.

    The resulting rise in bond yields has also upset a rally in the stock market, with the S&P 500 losing 2.7 per cent in the past week.

    “We’ve had a reality check,” said Michael Metcalfe, head of macro strategy at State Street, adding that the easing of monetary policy expected by markets a few weeks ago “looked a little fanciful”.
    …

    1. Sovereign bond selloff =>
      Higher Treasury bond yields =>
      Higher mortgage rates =>
      Mo’ housing price CR8R

  33. RE: Arthur Burns, Chair of the Federal Reserve from 1970 to 1978 . . . had lacked the spine to do what was necessary to get the Great Inflation of the 1970s under control.

    What he conveniently failed to mention that in 1971 he also presided over ending the gold standard which turned the USD (and all other currencies linked to it thanks to the Bretton Woods agreement) overnight into a worthless piece of paper with zero intrinsic value (like the stock certificate of a defunct company) which it has been relentlessly approaching since then and the price inflation is merely its visible manifestation . . .

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