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The Cycle Of Wishful Thinking, Forbearance And Occasional Panic

A weekend topic starting with Arizona Family. “The Phoenix area housing market has presented a number of challenges for people looking to buy a home. Guardian Mortgage loan officer Dean Wegner said he’s starting to see more banks and credit unions tighten their lending standards, which means home buyers will have to provide more documentation to get their loans approved. ‘You might see, instead of a program asking say 20% down, it might be 25% down,’ said Wegner. ‘Adjustable rate mortgages are almost non existent right now because of what we are seeing in lending. You’ll see instead of 1 year tax returns, 2 year tax returns. Instead of 30 day scrutiny, you’ll see 60 day scrutiny. If you are starting a job they want first paycheck, where before, they would actually take an offer letter.'”

The Payson Roundup in Arizona. “The crazy rise in home prices has leveled off -but the surge has left Rim Country with a crisis in affordable housing. The median sales price for a single family home in Payson was $455,000 in the past year – basically unchanged from a year ago when interest rates started rising, according to Rocket Homes. Compare that to the results of the 2020 census. At that time, the median price of a single family home stood at $272,000 in Payson. The census reports that the median household income in Payson comes to $58,000. So even before the big surge in prices, you couldn’t buy the average Payson house on the average Payson household income.”

“Let’s say you bought that $455,000, average-priced Payson home in the last year. And let’s say you had a $15,000 down payment, an interest rate of 5% and wanted to stay under 30% of your income. Now you need an income of $95,000. That’s a little less than double the average Payson household income. Of course, it isn’t just Payson. In fast-growing markets like Flagstaff, only 16% of people could afford the average house.”

Flagstaff Business News in Arizona. “Thus far in 2023, there have been 50% fewer homes sold versus 2022. Furthermore, in the history of the Flagstaff MLS dating back to 2000, there has only been only one year with a more anemic absorption rate, and that was 2009 with 129 single-family homes sold between January and April 2009. In April 2023, the average price of a single-family home in Flagstaff was $848,223. Last year, the historical high for an average single-family home peaked just shy of a million dollars at $982,134 in February 2022. There is still a lot of movement in the vacation home market; however, with Airbnb and VRBO beginning to reach the over-saturation point, we could potentially see a few more of those investment properties come on the market this year, which might have a positive impact on overall number of homes sold.”

From Business Insider. “2023 is the year for homebuyers with millions to act, according to the ‘Million Dollar Listing Los Angeles‘ star Tracy Tudor. Luxury-home sales — those in the top 5% of their area based on market value — declined by a record 44.6% year-over-year to the second-lowest level on record during a three-month period that ended on January 31, according to Redfin. Tutor said the current market may be tough for sellers to wrap their heads around because they may not get what they want for their homes. ‘What their homes might’ve been worth last year might be down anywhere from 10% to 20%. That’s scary for sellers out there,’ Tutor said.”

“Tutor said she’s seen ‘quite a few deals where people were promised potentially 20% down on a pre-qualification letter.’ However, things would shift, and ‘about 10 days into the escrow, that 20% went to 30% or 35%. That really shifts a buyer’s perspective on what they can afford,’ she said.”

The Globe and Mail in Canada. “I remember exactly what I told my wife after the offer we made on our first house was accepted in 1992. ‘I feel like someone is standing on my chest,’ I said. All generations have their obstacles when it comes to buying a first home. But I have no trouble saying that for my wife and I, affording a house in Toronto was easy compared with what young people today experience. As first-time homeowners, we carried two car loans, started a family, saved for retirement and quickly added central air and a bunch of IKEA furniture to our house. All without undue financial stress.”

“As a young journalist with The Canadian Press back in the early 1990s, I made roughly the median income for my age group. My wife was in that zone as well with her communications job at an insurance company. I’d estimate our household income back then at around $70,000. Toronto in the early 1990s was a buyer’s market, with lots of properties for sale and prices meandering through a down period. We took our time, looked at dozens of houses in our price range and finally picked one that suited us. The cost was slightly less than $200,000, or roughly three times our combined income.”

“The Toronto market has been in a slump in the past 12 months, so there is some similarity to our situation as buyers. But overall affordability is shockingly bad. The average home price in Toronto last month was $1.1-million, or 8.5 times the $130,000 our 1992 salaries would be worth today if adjusted for inflation. Also, with an average price above $1-million, buyers must come up with a down payment of 20 per cent at least. That’s $220,000 for the average home in Toronto, compared with the $20,000 we needed for our 10-per-cent down payment.”

“I can’t remember the mortgage rate we had on our first house, but five-year fixed rates were in the 8 to 9 per cent range around the time we bought. We did get a small discount by getting our mortgage from my wife’s employer, so let’s use 7.5 per cent as our rate. I’d estimate our mortgage payments at roughly $1,300 back in 1992, which was a handful but manageable.”

“Today, young buyers face higher prices, lower mortgage rates and staggering levels of unaffordability. The monthly mortgage cost on the average-priced Toronto home bought with a 20-per-cent down payment and a 4.6-per-cent five-year fixed rate mortgage would be around $4,900. That’s more than double the $2,400 cost of our mortgage payments adjusted for inflation since 1992.”

From Philip Pilkington. “Every three months, the Federal Reserve issues the Senior Loan Officer Opinion Survey on Bank Lending Practices, known in markets as the SLOOS report. Most of the time, the survey does not get much attention, but the most recent edition caught headlines—it showed credit standards tightening, a trend very reminiscent of what happened just prior to the 2008 financial crisis. With banks blowing up left and right this has many worried that we might be in for another credit crunch.”

“Credit crunches are the terminal phase of the credit cycle. While not popular topics in the teaching of mainstream economists, most practical financial analysts know that credit cycles exist and are important. The credit cycle is an approximately 10-to-15-year life cycle that the credit markets go through. In the initial phase banks are flush with cash and interest rates are low, so lending starts kicking into gear. Small businesses pop up like mushrooms after rain, larger corporations invest, and housing markets start to rise.”

“In the next phase, excesses start to creep in. Borrowers that banks were previously wary of start to get access to credit and companies with little prospects of success get access to debt and equity financing. The third phase is when interest rates start tightening and banks pull back on lending. The financial system starts to sway and creak—maybe a few banks fail. In the final phase—the crunch—the whole thing falls apart. Lending dries up, companies fail, investment retreats and, as the economy sinks into a recession, defaults rise and the financial system goes into meltdown.”

“The most recent SLOOS survey suggests that we are currently deep into the third phase and about to tip into the fourth. The survey data show credit standards tightening dramatically on everything from mortgage loans to consumer credit to loans to small firms to commercial property loans. The demand for credit is contracting too. With high interest rates and anxieties over future economic prospects, borrowers are pulling back. A perfect storm is developing, and a credit crunch looks like it’s almost certainly on the horizon.”

“This raises questions about Federal Reserve policy more generally. Fed economists make out like they use monetary policy to calibrate the economy much in the same way we use a thermostat to calibrate the temperature in our homes. If the economy is running a little too hot, the Fed economists tell us, they dial up interest rates a little and cool it off. If it is running too cold, they lower rates and the economy warms up.”

“Will these economists be able to maintain this fiction after yet another credit crunch? It seems unlikely. The reality is that Fed policy is not like a thermostat at all. It is much more aggressive than that, especially in its more experimental methods, like quantitative easing, that have come into fashion since the 2008-09 crisis. What the Fed actually does is stuff the banking system full of newly printed cash when the economy is sluggish and raise interest rates to punishing levels when the economy is overheated.”

“The fact of the matter is that the Fed steers the credit cycle. In doing so it exacerbates the credit cycle. In its attempts to steer the economy it makes the economy much more volatile and prone to credit cycles. Its loose money policies pump up asset markets—from equity markets to housing markets to debt markets—and then when it pulls back some of that loose money these asset markets collapse. Doing this has ramifications for both economic and financial stability; ironic, since central banks’ primary function is to stabilize the banking system. Today the Fed’s actions seem to completely destabilize the banking system.”

“Hopefully, after the smoke clears on the coming credit crunch we can raise questions about how the Fed and other central banks behave. Are their experimental monetary policies actually helpful? Or do they just encourage wasteful capital allocation and economic instability? Should the Fed even be attempting to steer the economy at all? Or should it just concern itself with the stability of the banking system and providing the economy with a fair rate of interest? It is time people started asking these questions. The Fed has very little oversight and has become increasingly a playground for pie-in-the-sky abstract academic theories. Someone needs to bring the institution back down to earth.”

From Bloomberg. “A recurring pattern in financial crises: Regulators hesitate to act pre-emptively to deal with stresses before they become dangerous, because identifying an issue and acting early to address it risks causing the very alarm they hope to prevent. So signs of trouble ahead are quietly set aside. Complacency is institutionalized. And, most strikingly, banks are spared the embarrassment of conforming to accounting principles such as marking assets to market — in part because such candor might scare people.”

“Silicon Valley Bank and First Republic were special cases, but not as special as one might wish. Both were brought down by a combination of surprisingly runnable deposits and unrealized losses on long-term assets. There was nothing mysterious about either vulnerability. Managers and regulators had the data. But believing that banks are stable induces one to think deposits are sticky and that falling asset values due to higher interest rates cause ‘paper losses,’ not real losses. This is reassuring until, at a certain point, such beliefs become not just false but untenable. Then the system is suddenly not so stable.”

“It’s all but impossible to break the cycle of wishful thinking, forbearance and occasional panic. The best approach, no doubt, would be to accept that banking is unavoidably risky and learn to live with it. In that world, nobody would be unduly alarmed by the asset-value volatility laid bare by mark-to-market accounting, or by prudent early action to reduce leverage — such as selling equity in what might be a falling market or deploying bond-conversion triggers that draw attention when they replenish diminishing capital.”

“Yet the need to see banking as fundamentally stable is hard to dislodge. Regulators are again insisting that small tweaks to the rules will make banking safe, finally, without eliminating it entirely. At the simplest level, this ignores the trade-off between risk and return: A bank with more capital, say, or assets and liabilities with more closely matched maturities, is indeed safer — but also less profitable, and to some degree impaired in its purpose of allocating resources.”

“Worst of all, many ideas for making banks safer really do the opposite. Insuring all deposits, as in the response to the SVB collapse, is the perfect example: It makes runs less likely but encourages banks to take bigger risks. ‘Too big to fail’ — the JPMorgan remedy for First Republic — creates essentially the same moral hazard. As long as there are banks, there’ll be banking crises. The slower we are to see the risks, the bigger the eventual damage.”

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This Post Has 93 Comments

  1. ‘The median sales price for a single family home in Payson was $455,000 in the past year – basically unchanged from a year ago when interest rates started rising, according to Rocket Homes. Compare that to the results of the 2020 census. At that time, the median price of a single family home stood at $272,000 in Payson. The census reports that the median household income in Payson comes to $58,000. So even before the big surge in prices, you couldn’t buy the average Payson house on the average Payson household income’

    Now that’s some sound lending right there. Someone said the other day they still see shack loans being made, the ‘money is still there’ or something. Let me go through a shack loan I was recently able to observe. Shack sells, goes into escrow, and the lender Rocket comes though with the appraisal right on the number. Joy!

    Rocket uses lines of credit. So they float this loan for what, a few weeks or months? After that the guberment/REIC rubber stamps it and viola! the money has been created out of thin air. That’s where the ‘money’ actually comes from. Rocket goes on their merry way until the value of their coffee machines and ficus trees no long adds up and they fold. They wait a few months, start another subprime racket, (call it Bottle-Rocket?) and get some more leased desks and plastic trees. That’s exactly what the Countrywide people did. Heard of Pennymac? They are hiring for foreclosure positions BTW.

    1. As long as they can and do sell their toxic loan assets to some bagholder pension funds, they’ll be okay. Countrywide drank their own kool-aid.

  2. “You might see, instead of a program asking say 20% down, it might be 25% down,” said Wegner. “Adjustable rate mortgages are almost non existent right now because of what we are seeing in lending. You’ll see instead of 1 year tax returns, 2 year tax returns. Instead of 30 day scrutiny, you’ll see 60 day scrutiny. If you are starting a job they want first paycheck, where before, they would actually take an offer letter.”

    Don’t forget that looming student loan payment restarting!

    1. Don’t forget that looming student loan payment restarting!

      I’ll believe it when I see it. Those debt junkies went out and loaded up on new cars and other things to saddle themselves with more monthly payments.

  3. ‘Today, young buyers face higher prices, lower mortgage rates and staggering levels of unaffordability. The monthly mortgage cost on the average-priced Toronto home bought with a 20-per-cent down payment and a 4.6-per-cent five-year fixed rate mortgage would be around $4,900. That’s more than double the $2,400 cost of our mortgage payments adjusted for inflation since 1992’

    Toronto shacks have lost more money in the past year than they paid for their shack in 1992. Wa a great system! Usually K-dn articles like this would exclaim, brilliant! They made a million pesos. The thing is some poor bashtards have to take out a whopping loan to finance the bonanza. This whole sh$tcart is just as flimsy as it seems.

  4. ‘It’s all but impossible to break the cycle of wishful thinking, forbearance and occasional panic. The best approach, no doubt, would be to accept that banking is unavoidably risky and learn to live with it. In that world, nobody would be unduly alarmed by the asset-value volatility laid bare by mark-to-market accounting, or by prudent early action to reduce leverage’

    It wasn’t that long ago forbearance wasn’t a thing. Sure we had HAMP but that was ‘special’ cuz crater. Also not long ago QE wasn’t a thing. We’re now many years into ‘unprecedented’ central bank shenanigans that never seem to go away.

    1. We’re now many years into ‘unprecedented’ central bank shenanigans that never seem to go away.

      Not only do they never go away, they’re creating even more bizarre policies to keep the scam going. If you follow the money, the fortunes of the billionaire class have gone parabolic in lockstep with said policies.

    2. Understanding that the credit cycle exists is one of the best ways to get yourself into position to buy at the right time in the cycle. These cycles go back thousands of years! It is driven by an underlying population growth dynamic and the banks just ride it and try to amplify it for their own greedy intentions. The further you can focus OUT on the timeline the more you can see the reality of the cycles and get calibrated. Yes it sucks when you are ready to move on and you’re in the wrong part of the phase but buying wrong is very expensive and can ruin many many years. Buying at the right time in the cycle can be the difference between freedom and slavery.

      1. Money printing completely destroys the entire economic model.

        Think of the economy and free market capitalism like a new engine which runs well. Then think of crony capitalists like dirty oil in the engine. Then think of the FED like nitrous oxide.

        As the oil deteriorates, the engine starts running poorly because it is losing compression. To hide this, along comes the FED with its nitrous oxide. They inject nitrous oxide into the engine and it takes off like a rocketship, in spite of the dirty oil and poor compression.

        Suddenly, the performance of the engine is better than it was new. It is shockingly fast. But it is short lived. The nitrous wears off quickly and you’re left with an even worse engine. So then the FED injects more nitrous and the engine roars again, but not quite as fast as the first injection. Each subsequent injection has diminished results, until suddenly BANG!, the engine blows up. Because that’s what nitrous does.

        The FED and its nitrous are destroying the engine.

        1. Money printing completely destroys the entire economic model.

          It’s kinda like taking drugs.

  5. “As a young journalist with The Canadian Press back in the early 1990s, I made roughly the median income for my age group. My wife was in that zone as well with her communications job at an insurance company. I’d estimate our household income back then at around $70,000. Toronto in the early 1990s was a buyer’s market, with lots of properties for sale and prices meandering through a down period. We took our time, looked at dozens of houses in our price range and finally picked one that suited us. The cost was slightly less than $200,000, or roughly three times our combined income.”

    Better get to work on that time travel machine because it’ll take an extinction level event before prices return 3x income.

    1. People often think this near the top but prices have a habit of realigning to the average at the bottom. Plywood boxes with windows in them aren’t really a magical economic miracle. Reality will catch up and then the cycle will roll over and run back up again. Expect it to be compressed a bit this time as millions of new buyers are flooding in right now. Will you be ready when the cycle bottoms?

      1. Will you be ready when the cycle bottoms?

        Somehow I’ve always managed to do what I want to do counter cycle, by thinking of ways around. I’m not much of a speculator.

  6. Do you find yourself worrying about falling US consumer spending, thanks to a toxic combination of persistent inflation supporting high interest rates, along with rising credit card debt to pay for consumption spending?

    Perhaps this is no big deal so long as unemployment remains near record low levels indefinitely.

    1. The Financial Times
      Markets Briefing Markets
      US stocks fall as consumers worry over economic outlook
      Report on long-term inflation expectations adds to concerns about persistence of higher prices
      A montage of a globe and a chart
      Traders are looking for signs the Federal Reserve has made progress in cooling the US economy
      Jaren Kerr in New York and Daria Mosolova in London yesterday

      US stocks and bonds fell on Friday as investors assessed fresh data that showed that consumers’ concerns about long-term inflation rose.

      Wall Street’s benchmark S&P 500 reversed earlier gains to trade 0.2 per cent lower, ending the week down 0.3 per cent. The tech-heavy Nasdaq Composite was down 0.4 per cent, but advanced 0.4 per cent over the week.

      The yield on interest rate-sensitive two-year Treasury notes rose 0.08 percentage points to 3.99 per cent, while the yield on the 10-year note was up 0.06 percentage points at 3.46 per cent. Bond yields rise when prices fall.

      The moves followed the preliminary reading of the University of Michigan’s consumer sentiment index, which fell more than expected and which showed respondents’ expectations for long-run inflation escalated to a 12-year high, as consumers worried that higher prices could persist for a while.

      “Inflationary expectations are tantamount to actual inflation as far as the [Federal Reserve] is concerned,” said Dana Grigg, president of Camelotta Advisors. “It would indicate that the Fed would have to maintain rates at higher levels for longer than the market expected, which would dry up liquidity.”

      Investors also considered a report from the US Congressional Budget Office, which warned that if the debt ceiling is not raised, the government could default in the first two weeks of June.

      “Background jitters are beginning to emerge around the upcoming debt ceiling deadline,” said Karl Schamotta, chief market strategist at Corpay. “No one has a technical default as a base case, but prudent market participants are going to avoid taking big directional positions just in case.”
      …

      1. U.S. credit-card debt jumps nearly 20% in the first quarter, TransUnion says
        Published: May 11, 2023 at 1:47 p.m. ET
        By Emma Ockerman
        Balances for unsecured personal loans were also up over 26% in the first quarter compared to a year ago, TransUnion reported Thursday
        Credit-card balances hit $917 billion in the first quarter of 2023, slightly down from the fourth quarter but still near record highs, TransUnion said.
        Getty Images

        U.S. credit-card debt rose by nearly 20% in the first quarter when compared to a year earlier, hitting $917 billion as consumers tried to cope with higher prices, first-quarter data from TransUnion released Thursday shows.

        Balances for unsecured personal loans also smashed records at $225 billion, rising about 26% in the first quarter from a year ago.

        Average credit-card debt per borrower hit $5,733 in the first quarter, while the average personal-loan balance per borrower reached $11,281 — or nearly 16% of the U.S. median household income of $70,784.

        Though consumer-price increases are cooling off from last year’s spike, certain big expenses like rent and car prices are still far above pre-pandemic levels, potentially putting some families in a bind.

        Credit-card originations, meanwhile, continued to remain elevated at the beginning of this year at 20.64 million, even as companies appeared to pull back from opening new subprime accounts amid higher delinquencies, TransUnion said. The share of subprime consumers carrying card balances also dropped to 10.2% in the first quarter from 10.9% at the end of 2022, “ending a trend of seven consecutive quarters of growth for the subprime segment,” according to TransUnion.

        “We have continued to see increases in both the balances as well as originations,” Michele Raneri, vice president of U.S. research and consulting at TransUnion TRU, +0.42%, told MarketWatch. “Originations have also exceeded 20 million in five of the past six quarters. Consumers are continuing to use credit as they figure out this post-pandemic economy and figure out how they’re going to grow during this inflationary time period.”
        …
        https://www.marketwatch.com/story/u-s-credit-card-debt-jumps-nearly-20-in-the-first-quarter-transunion-says-d251af13

        1. US consumer so strong, so big…. he he he

          Probably the last hurrah before bankruptcy.

      2. expectations for long-run inflation escalated to a 12-year high, as consumers worried that higher prices could persist for a while

        They are going to persist forever. The FED is simply not going to allow deflation, which is what is actually needed. They only want to slow the rate of inflation – disinflation.

        2. In a fiat debt based monetary system you must have inflation in order for the system to continue. It is simply not possible to pay off all the debt plus interest and still have any money circulating. It has been calculated that we need a baseline of around 2 trillion in fresh debt per year to keep the game going. If the public cant or wont do it then the government steps in. Above that you get inflation and below that you see some deflation. It’s all a charade.

          While we can’t fix where we were born on the timeline of monetary shenanigans we CAN get in tune with it.

    2. Your credit card debt is probably about to get more expensive—here’s why
      Published Thu, May 11 2023 8:45 AM EDT
      Cheyenne DeVon

      The Federal Reserve’s latest interest rate hike means your credit card debt will likely get more expensive to pay off if you carry a balance month to month.

      Last Wednesday, the Fed increased interest rates for the 10th straight time, but signaled it may be the last one of the year. The central bank increased its benchmark rate by 25 basis points, bringing the federal funds rate — the interest rate banks charge each other when lending money — to a range of 5% to 5.25%.

      The Fed has continually raised rates since March 2022 in an effort to combat inflation, since raising rates makes it more expensive for consumers to borrow money.

      “The theory is that businesses and consumers will spend less when interest rates are higher and debt becomes costlier, thereby constricting economic activity and slowing the rate of price increases,” Ted Rossman, senior industry analyst at Bankrate.com, tells CNBC Make It.

      Although inflation cooled slightly this March, April prices remain 4.9% higher than they were a year ago, according to the U.S. Bureau of Labor Statistics’ latest available data.
      How Fed interest rate hikes impact credit card debt

      Banks use the federal funds rate as a starting point when determining the prime rate, which is the interest rate that’s passed onto consumers. It’s usually about 3% higher than the federal funds rate. Currently, it’s 8.25%, according to J.P. Morgan Chase.

      However, it’s rare that you’ll receive a credit card with that interest rate. Typically, credit card interest rates are much higher to account for the costs incurred by the card issuer and the risk of some cardholders not paying back their debt, Rossman says.

      Currently, the average credit card annual percentage rate (APR) is about 22% for new offers and 20% for existing accounts, according to WalletHub’s “Credit Card Landscape Report.”

      Since most credit cards have variable APRs, they can increase or decrease in response to changes in the federal funds rate. The Fed’s latest 0.25 percentage point increase is likely to cause your credit card APR to increase as well by about the same amount. For example, if your credit card APR is 20%, it may increase to 20.25%.

      After the Fed changes rates, you should see the change within a month or two, Rossman says.
      …
      https://www.cnbc.com/2023/05/11/why-credit-card-debt-gets-more-expensive-after-fed-interest-rate-hikes.html

      1. “The Federal Reserve’s latest interest rate hike means your credit card debt will likely get more expensive to pay off if you carry a balance month to month.“

        Haven’t carried a CC balance since the early 2000’s.

    3. Why current US recession warnings are unlike all the others
      Analysis by Nicole Goodkind, CNN
      Published 7:44 AM EDT, Fri May 12, 2023
      Why the threat of recession is rising

      New York CNN —

      Economic experts are once again ringing the alarm bells over an imminent downturn. A US recession is coming, they say, in the second half of 2023. That time frame begins less than three weeks from now.

      JPMorgan CEO Jamie Dimon warned on Thursday of great economic danger lurking just over the horizon. Given the risks that lie ahead, he told Bloomberg news, “I would take a mild recession happily.”

      Billionaire investor Stan Druckenmiller didn’t mince his words this week at the Sohn Investment Conference. A hard landing is coming, he cautioned, and “it’s just naive not to be open-minded to something really, really bad happening.”

      For more than a year CEOs, economists, analysts and their kind have been warning of an imminent economic downturn, The economy, meanwhile, has remained relatively resilient through it all.

      Things weren’t great last year: Inflation hit a 40-year peak, gas prices were elevated, consumer sentiment plunged and markets fell by 20%. Still, the United States managed to avoid a recession.

      “This has been the most predicted potential recession in memory,” said Federal Reserve Bank of Richmond President Tom Barkin way back in January.

      So why should we listen now?

      There are two reasons, noted Paul Christopher, head of investment strategy at Wells Fargo: Higher interest rates and tightening credit.
      …
      https://www.cnn.com/2023/05/12/investing/premarket-stocks-trading/index.html

      1. “So why should we listen now?”

        That sounds like a line straight out of ‘The Boy Who Cried Wolf.’ When the next recession hits, many will be surprised and woefully unprepared.

      2. “This has been the most predicted potential recession in memory,” said Federal Reserve Bank of Richmond President Tom Barkin way back in January.

        Exactly. The speculator scvm have been screaming recession since their free money was taken away and the FED started hiking.

      3. “A US recession is coming, they say, in the second half of 2023. That time frame begins less than three weeks from now.”

        It does not surprise me in the least that CNN cannot do basic math.

  7. I’m in Ohio now and it’s really depressing thinking about housing prices in Denver and other western cities.

    Millions of young people will NEVER be able to afford a single family home, because reasons.

    This is the future you created.

    This is your legacy, I hope you’re proud of yourself.

    1. That is the wrong perspective. While your overall assessment is understandable it is still incorrect. Housing is not a magic economic entity. At the top it always seems hopeless and then the bottom falls out. This county is enormous and there is no shortage of space to be had. Take the road less travelled and you will find what you are seeking.

    1. In 2022, each one of China’s 31 provinces and municipalities, except for Shanghai, reported fiscal deficits, according to the National Bureau of Statistics.

      ‘Excessive spending on “zero-Covid”-related policies and the downturn in the real estate market have contributed significantly to local governments’ financial woes, according to analysts.’

      “The government was relying on rapid GDP growth and soaring land prices to service its debt,” Cheng Juelu, a Shanghai-based economist and expert on China’s local government debt, told Al Jazeera. “However, the pandemic and the real estate market situation have turned those assumptions on their head.”

      I’ve been following some Chinese video channels. Nobody shot themselves in the fook more than Xi. There’s no telling at this point how much of their economy is dead for good. Just as the demographic problems are front and center.

      1. Recession and Backlog: Houses, Cars, Phones & Liquor No Buyer Left; High IQ Crime Rate Skyrockets
        China Observer
        Premiered 61 minutes ago
        Numerous Taiwanese businesses have departed from Kunshan, Suzhou, a top-100 county in China, resulting in economic downturn and a housing market collapse. On May 7th, the Kunshan government issued a notice condemning two real estate projects, Dream Moon Garden and Upper Garden, for unauthorized substantial price reductions of 30% for 30 units during the May 1st sales event. Upon further examination, it emerged that the renowned property firm Vanke was behind the price cuts, suggesting that even Vanke’s properties are struggling to sell, and the entire Kunshan housing market is in distress.
        China is currently grappling with not only a stagnant real estate market but also a myriad of products that are facing considerable difficulties in sales, resulting in severe inventory backlogs. One such example is the Honor Huawei smartphones, with a staggering 10 million units remaining unsold and languishing in warehouses. Even BYD cars have been found stored on the second floor of unfinished buildings, unable to find buyers for extended periods.
        China’s economy is grappling with formidable challenges. Previously, the government had placed great hope in the technological transformation, but now, with that avenue no longer feasible, the focus has shifted back to the real economy, including low-end industries such as catering and street vending. During the first meeting of the 20th Central Finance and Economics Committee on May 6th, President Xi Jinping called for an acceleration of efforts to create a modern industrial system buttressed by the real economy. The renewed emphasis on the importance of the real economy after decades of reform and opening up in China signals that it is confronting grave difficulties.

        https://www.youtube.com/watch?v=JT8SPhu0J8U

        10 minutes.

        1. industries such as catering and street vending

          Back to the third world.

          They’ll still claim their GPD is breaking records.

      2. “The government was relying on rapid GDP growth and soaring land prices to service its debt,” Cheng Juelu, a Shanghai-based economist and expert on China’s local government debt, told Al Jazeera.”

        Sounds familiar, e.g., we’ll pacify the middle-east, hobble their natural development with sanctions, prevent them from creating nuclear weapons, Jesus will return and we will pay for it all with million dollar 3/2 spec houses.

  9. Do you worry about being too invested in stocks to take advantage of the best dips buying opportunities when they arise?

    1. Markets
      A 31-year market vet who called the current bear market warns an impending credit crunch and recession will sink stocks by 45% as valuations remain higher than dot-com bubble levels
      William Edwards
      May 13, 2023, 2:00 AM PDT
      A trader rubs his eyes as he works on the floor of the New York Stock Exchange September 29, 2008. Brendan McDermid/Reuters
      This story is available exclusively to Insider subscribers. Become an Insider and start reading now.

      For Jon Wolfenbarger, the bearish signals for stocks continue to pile up.

      Inflation remains relatively elevated, especially when looking at median CPI numbers, which the Cleveland Fed calls a “better signal” of the trend. Median CPI, which looks at the median component in the CPI, now sits around 7%. This means the Federal Reserve is likely to remain hawkish and keep interest rates high, according to Wolfenbarger, the the founder of investment research firm Bull And Bear Profits who has been warning of a significant stock market decline since late 2021.
      …
      https://www.businessinsider.com/stock-market-crash-recession-credit-crunch-debt-ceiling-sp500-wolfenbarger-2023-5

  11. Anyone want to catch a knife? The delusion continues in Sedona…seller wants gross profit of $800k after two years. A million dollars perceived appreciation in 19 years.

    5/5/2023 Listed for sale
    $1,399,000
    $471/sqft
    Source: SVVAR #532683
    4/5/2023 Contingent
    $1,399,000
    $471/sqft
    Source: SVVAR #532683
    3/31/2023 Listed for sale
    $1,399,000
    +133.2%
    $471/sqft
    Source: SVVAR #532683
    10/20/2021 Sold
    $600,000
    +62.9%
    $202/sqft
    Source: Public Record
    6/2/2016 Sold
    $368,250
    -12.3%
    $124/sqft
    Source: SVVAR #509517
    6/17/2004 Sold
    $419,900
    $141/sqft

    https://www.zillow.com/homedetails/350-Panorama-Blvd-Sedona-AZ-86336/216929758_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare

    1. Tonight out side on my patio by the fire pit I saw an opossum walk by and get spooked when he saw me notice him. Preferable to rattlesnakes and scorpions slithering and creeping through that yard.

      1. Earlier this evening, I had a hummingbird hover roughly 3 feet in front of me checking me out. I hope it and its buddy resting on the tomato cage are enjoying the feeder and fungus gnats.

    1. Yet, it will be the taxpayer who could foot the bill under the special deal ministers agreed to during the darkest days of the pandemic, amid a worldwide scramble to find a jab and release the country from a never-ending cycle of lockdowns.

      John Campbell was discussing the rise of excess deaths in the UK. Jeepers, I wonder what could be the cause.

      1. I’ve also noticed that the insurance industry has been very quiet lately regarding excess deaths.

    1. There’s talk in Dumver about converting now excess office space into (homeless) housing. What could possibly go wrong?

      2. Chicago wants to make its now mostly vacant financial district on lasalle st into affordable section 8 housing. How the mighty have fallen.

  15. Doctors and Public Health Officials call for a halt to AI,saying it need regulation.

    If AI takes 40% of the jobs by 2035, as some of the predictions are saying, than that would be a disruption that would be epic.
    40% not paying taxes because nothing about AI workforce paying taxes, or industry paying social security , pensions or wages to the AI replacement work force.And AI can work three times longer than a human…
    So you .have 40% of human workers rendered wards of the welfare state, with Government not collecting taxes on the new slave labor replacement.
    So, a decided advantage to Industry or as Klaus Schwab expresses that technology will allow his group to control the world.

    So, Industry/Corporations wants to just roll this replacement work force out with no accountability on how many systems it would collaspe..
    Stakeholder Capitalism the new buzz word for big Private Party Corps forming partnership with hijacked Governments for a One World dictorship where people get no say so in their fate…
    Isn’t it a form of thief to take all human knowledge and progress than program it into artificial Intelligence and than dismiss Humans?

    They would say at you that you can’t hold back progress, which means you own nothing, eat the bugs, , enslaved in 15 minute prisons..
    The BAD GUYS are in charge of these weapons, and they do not plan for humans to benefit, and mass genocide is part of .the plan……
    . with Government in collusion

    1. AI’s are not without costs. First of all, don’t expect an AI to run on your laptop, as even a top of the line desktop computer has only a tiny fraction of the processing power needed. It takes a server farm.

      And a single server farm wouldn’t be enough to replace all those jobs. It could takes tens of thousands of server farms, and the power costs alone could be prohibitive. Think about how much power it takes to “mine” a buttcoin. AI will need much more power, not to mention hardware and networking that would have to be made.

      1. They have already overcome the AI cost limitations according to the AI Experts on the subject.

          1. Seriously, that what they say. Thats why they think they can make this 40% replacement within 10 years.
            They actually say they are going to replace models, because they have robots that can walk the cat walk.

          2. robots that can walk the cat walk

            I have actually walked scaffolding without computer aid. Put that right up there with flying cars.

          3. Thats why they think they can make this 40% replacement within 10 years.

            Consider that the PTB want to shut down half of the powerplants by then. Server farms require huge amounts of power. And their numbers would have to grow immensely if they are going to replace that many people.

            Anyway, I’m still waiting for my flying car.

          1. Let me just sum it up. The Master of Industry want to use AI for a objective of a One World Order Dictorship , where the intent for mankind isn’t very good. So, the use of AI will be used for the objectives of that group and their agenda.
            Control of humans makes them gleeful, and using technology for their purpose will be the self seeing application of AI.

          2. If you’re saying they are creating fake AI’s (chatbots) to bamboozle the masses into obedience, then I fully agree.

          3. Let me just sum it up.

            Housing Wizard makes me sad. However, they may be onto something.

    2. You have to laugh at that particular group being scared. They are scared that AI will deliver the truth and a rapid diagnosis that will leave them completely out of the picture. How will they spread their lies for payoffs if people go to AI first? I would much sooner trust an AI rendered medical opinion than a current medical professional one. (not that I would fully trust that either, especially once pharma starts buying in)

      I have used GPT extensively for many specific technical queries and it is generally excellent and it shows how much potential it has for fact based data crunching. Nothing else we have comes close to it. Bard is still a sad joke in comparison.

      1. The AI health provider can easily be programmed into not doing what is best for you. Of course, flesh and blood doctors are no better. Just saying don’t trust the AI.

        1. While its no doubt AI is faster, doesn’t it come down to how its programmed?They have a bunch of AI pilot programs launched all over the place.This goes beyond regular automation because AI will exceed humans intelligence.
          They have launched 15 minute city pilot programs also.
          Also, what kind of legal liability does AI have if it makes mistakes that create a disaster. They have already found some advance AI just making shit up.. It all about who programs the objectives of the AI and will it go rogue like Hal n Space Odessey..
          creators of AI are acting like just throw it out and and we will see what happens .. ..Thats as reckless as throw out fake vaccines and see what happens.
          No regulations or rules

          1. My guess would be that we will come to trust certain AI brands. There is no reason we can’t have decent people programming use-specific AI. For instance, if the Kelley Blue Book brand launched an AI for vehicle appraisals, chances are you could depend on it to be accurate to a reasonable extent. It is unlikely to go rogue when it is handling a specific realm. Of course money corrupts and greedy people corrupt so as always caution will be warranted for all of these advances.

          2. This goes beyond regular automation because AI will exceed humans intelligence.

            I would be skeptical of that claim. Of course, they want you to believe that, so they can oppress you, saying “the super intelligent AI says …”

          3. The human soul, character, intuition, and emotions cannot be replicated with bits and bytes

          4. The human soul, character, intuition, and emotions cannot be replicated with bits and bytes

            Some people actually believe that the human brain is a digital computer. I even saw a talking head on TV say that.

    3. “…AI takes 40% of the jobs by 2035…”

      Would like to know which jobs.

      Despite the growth of WFH, many jobs have a physical component, which implies robotics (probably specialized). ie. is an AI enabled robot *really* going to drive over to your house and mow your lawn?

      An as In Colorado noted, current incarnations of AI are incredibly compute intensive, which translate [as In Colorado noted] to large server farms and vast power requirements. [In competition with all those EV charging stations, no doubt]

      Me thinks the near future applications of AI will manifest as vastly improved medical diagnostics, aids to engineering large, complex systems, and large scale data analysis, (AKA ‘Big data’).

      We shall see.

      1. otcal77,
        AI has all the signs of being used by the Monopolies under the WEF, the Military & Police, all industries really ,with no concern for humans. Its mostly about the labor cost savings for industry .
        I made my points in above posts, why the negative is popping out at me, so as you say, “We shall see.” But, I already see the intent and the purpose, and its not to benefit the human species, just like Covid Covid response was not to benefit humans.

        1. I am highly suspicious of the sudden AI hype, especially the whole “it will be so much smarter than we are” narrative. I see this as a con to get people to surrender their freedoms because a “10,000 IQ AI” says that the only way to save the world is to have no offspring and eat the bugs.

          And as the scamdemic has shown us, the masses are easily conned.

          1. Trust the experts. In this case, the experts will be supercomputers that can’t be wrong. The majority of sheeple will go along with the scam

      2. vastly improved medical diagnostics

        I could see AI’s interpreting MRI’s and other scans. And maybe screening patients before their appointments.

        1. “…I could see AI’s interpreting MRI’s and other scans…”

          AI is the perfect application to screen the literally hundreds of specialized medical journals and compare with a patients medical profile with such thoroughness at a level that any medical doctor couldn’t possibly achieve. Preventive medicine will achieve levels of accuracy not thought possible.

          Yet another application is to screen seismic studies in search for new sources of hydrocarbons.

          Yet another application is to test large, complex mechanical systems (ie. a large suspension bridge) under worst case failure modes reaching far beyond present simulation capabilities.

          And another (my favorite) is powering special robots to search for, analyze and pick up and prepare for re-cycle trash on roads, in waterways, etc. (I call them trash bots). They could also be used to ‘de-construct’ and re-cycle materials from all the junk buildings in major cities such as Detroit, the rust belt, etc.

          The underlying technology for all these ideas currently exist. The big problem at the moment is economics to implement such aids. These problems will be solved.

    1. the landlord will eventually win, if she had declared herself as a lesbian and didn’t move the husband in she might have won succession rights

    1. Nothing like taxpayer funds used to undermine taxpayers. .
      Hate to mention it but the Nazis took Jewish property and the gold right out of their teeth to fund the Nazi evil …

  19. Driving and walking around downtown Cleveland, West 25th Street, I have seen ZERO tents.

    Zero. None. If this was Denver, I would have seen dozens, possibly over a hundred tents in the same time.

    Denver is a dump. Cleveland is economically stagnant. But it’s more aesthetic than Denver.

    I would feel ashamed to show visitors around downtown Denver, that’s how nasty that place is.

        1. Thank you. I am starting to consider new options myself. The filth and decay of the western US is horrific.

      2. “Have you considered relocating back to Cleveland?”

        I wouldn’t.

        Oh, somewhere in this favoured land the sun is shining bright,
        The band is playing somewhere, and somewhere hearts are light;
        And somewhere men are laughing, and somewhere children shout,
        But there is no joy in Cleveland—since they threw the Indians out.

        Cleveland’s MLB Team Changes Its Name To Guardians After Years Of Backlash

        Updated July 23, 20216:53 PM ET
        By Sharon Pruitt-Young

        Cleveland’s Major League Baseball team has changed its name to the Guardians, ridding itself of a previous name that many found highly offensive.

        https://www.npr.org/2021/07/23/1019720103/cleveland-indians-guardians-name-change-mlb

        1. Native ancestor offspring (Indians) generally did not give a d*** about this issue; just white virtue signalling liberals using a few proxies.

          1. People with too much time on their hands thinking they’re making the world a better place by erasing Native Americans

    2. I would feel ashamed to show visitors around downtown Denver, that’s how nasty that place is.

      What is breathtaking is how quickly it has transformed into a dump. I went to see a Sunday early afternoon show at the Buell and after the show was done we walked around for a bit. We stayed away from the 16th street mall and still saw the decay.

      1. Correction: the show (a concert) was at Boettcher hall, which is next door to the Buell.

    1. The Financial Times
      US equities
      Algorithms prop up the market as fretful humans sit out the uncertainty
      Quant funds have been piling into US equities in response to falling volatility
      An electronic stock data board
      The trend among quant funds helps to explain why the US stock market has proven surprisingly resilient this year
      Nicholas Megaw in New York
      3 hours ago

      While human portfolio managers fret over economic uncertainty and the health of the US banking system, some algorithmically driven hedge funds have been buying stocks at one of the fastest rates in a decade, according to bank trading desks.

      Quant funds have been piling into US stock markets in response to falling volatility, helping to prop up the market as active managers sit on the sidelines.

      “Systematic reallocation has really been the [main] source of demand outside of corporate buybacks” this year, said Charlie McElligott, an equity derivatives strategist at Nomura.
      …

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