San Diego Housing Bubble News and Analysis

Maybe this is the last bullet ? Let's see if it hits the target

Ted

I don't think this is the feds last bullet by any means. They can simply add bigger numbers in their ledger and buy as many bonds as they want. And that's what they are clearly saying they are going to do. Not their last bullet at all.

XBoxBoy

Oh I forgot to explain I was commenting in my new character. I just like saying bullet!

But seriously what makes you think the Treasury will not default on those bonds at some point soon? Maybe you think the AMERO will save us?

Tell me how this same type of plan "liquidity trap" help Japan from 1991 - 2004?

Thanks,

Ted Nugent

Explain to me how unemployed people will:

A. Pay rent.

B. Pay mortgages.

C. Get loans.

D. Buy houses.

There are plenty of employed people left, too. Just because the unemployment rate is up 2% (meaning that one in 50 people lost a job), does not mean that the world will stop functioning.

Explain to me how unemployed people will:

D. Buy houses.

Silly kewp, once home prices start going up again then everyone will be working full-time as a house flipper/real estate speculator! They can just buy homes using NINJA 120% loans and live off of MEW while waiting for the proceeds from their first flip to come in. Haven't you learned anything from the past 8 years?

Aren't they out of breath yet trying to pump air in this balloon w/a hole in it.

I see a big party coming in Dade County. We should all go. it will be good times again. Heck, I am going to invest in Napster too while I am at it.

E. Everyone is

F. F*****

Treasury Secretary Henry Paulson said Tuesday that he isn't contemplating a plan to set a 4.5%-target mortgage rate for new home loans, though he acknowledged that the agency is working to lower mortgage rates.
"We didn't float any plan," Paulson told the CNBC cable channel. "I am always looking at new ideas and I have said from day one that the key thing to get us through this period is getting housing prices down."

If it isn't 4.5% w/ 0 fee & 0 point, then it won't be anything special. Right now, you can get as low as 4.375% with less than 2 points.

All the kings horses and all the kings men can't put humpty dumpty back together again.

We are going to be losing jobs all next year. House prices are going nowhere buy down...

Treasury Secretary Henry Paulson said...(see post above)

Of course the Fed IS planning (or already implementing) actions to bring mortgage rates down to (or below) 4.5% on 30-year fixed.

Paulson isn't an idiot (although he acts like one); he understands that a promise to America for rates of 4.5% on 30-year fixed would bring the already slow-as-molasses home market to a standstill, as potential homebuyers stalled purchases and waited for the promised 4.5% loans.

So Paulson made the only statement that wouldn't get him fired. He lied and said they weren't targeting 4.5%

The ONLY thing that would stop prices from dropping is if we were to go back to loose lending standards, and that isn't going to happen, so keep dreaming. The prices you're seeing now are still artificially high, the downward pressure is enormous, and absolutely nothing (not low rates, not government bailouts) will stop them from going back to where they should be.

So why am I feeding the troll? I'll just bump this thread in August.

I have a quote for all of you thinking everything is now great and we have nowhere to go but up.

"You cannot solve problems with the same level of consciousness that created them."
-Albert Einstein

So we are going to solve too much credit expansion and easy money with even more credit expansion and easy money. We are making this problem even worse down the road. We may be able to put this off for a little longer but it will only make it much worse. Final quote.

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

So who is going to lend us all this money again?

My2Cents

We're turning Japanese. Just because the US$ is taking a powder does not mean there will be some kind of recovery. And the US$ will come back when the markets crater again and there's massive selling. Look at the volume, it's a classic bear market rally. The multiplier effect needs to be working for inflation. Who's going to borrow money right now? I sure dont see it. Make no mistake about it, this is a total desperation move by someone that has no other option available.

You guys don't get it do you? Its the age old wisdom "Don't Fight the Fed!" The Fed has determined that home prices must stop falling to save the economy from collapse. Today they signaled that they will keep firing until prices stop falling period. From today forward when you blather away about the sky continuing to fall from here you are a fool. The Fed printing press that prints dollars. If necessary they will print and loan at 0% until house prices stabilize. They will succeed and in Aug. 09 RE in SD will cost more "IN US DOLLARS . . . ." Now . . . if someone wants to argue that SD RE in Euro, Yen, or Gold will be worth less . . . . You may be right there. The dollar will weaken substantially from here on out. Sure the SD RE will be worth more in Aug. 09 but in real world global purchasing power terms it will be worth less. Read . . . if you have all your money in cash and are sitting in cash because the sky is continuing to fall you are in one of the worst most risky investments you can be in. Thats right . . . those that have their money in a bank so it is "safe" are going to get screwed. Buy RE, buy oil stocks, buy mining stocks, buy Chinese stocks, but gold, I don't care. Don't stay liquid in US dollars however. My original post stands . . . SD RE in US Dollars will cost more US Dollars in Aug. 09 . . . largely because the US dollar is going to hell in a hurry.

Basically if Paulson says "We are not planning for 4.5 % on 30 year" then he means "We are planning for 2.5% on 30 year"?

I'm not sure how someone who owns the printing press defaults on bonds denominated in dollars. The fed, can always add more dollars to their ledger and then spend them buying treasuries, which gives the treasury dept money to spend. I fail to see why or how they would default as long as they continued to do that. That's the beauty of a fiat currency. Those who control the printing presses can make as much of it as they want.

If by default, you mean to imply that at some point in time the fed will not be able to get anyone to take the dollars they drop out of the helicopter, then I suppose you could call that a default. But I don't see that happening anytime soon. China and lots of other foreigners are still buying up dollars to manipulate their currencies, and I don't think that game ends anytime soon.

Or maybe you mean by default that at some point deflation will cease to be a concern, and inflation will come back, and then the fed will have to face the music. I could easily see that happening, but just not any time soon.

If by default, you mean the traditional definition, ie. the treasury simply refuses to pay back the bonds they have issued, I don't see why they would do that. Care to explain what they would gain by doing that?

XBoxBoy

Good thing air is free, eh?

The Fed has determined that home prices must stop falling to save the economy from collapse. Today they signaled that they will keep firing until prices stop falling period. From today forward when you blather away about the sky continuing to fall from here you are a fool. The Fed printing press that prints dollars. If necessary they will print and loan at 0% until house prices stabilize

Yes, fire hosing pixel money at this will solve everything. The Fed will be looking like snake oil salesmen this coming summer and the peasants will be sharpening pitchforks.

OT: Any one who is interested check out Matt Simmons and Robert Hersh discuss what's going on in the oil world. Seems peak oil could be rearing its ugly head again sooner than most think. That $147 price per barrel could be just a warm up.

http://www.financialsense.com/Experts/ro...

I'm not sure how someone who owns the printing press defaults on bonds denominated in dollars. The fed, can always add more dollars to their ledger and then spend them buying treasuries, which gives the treasury dept money to spend. I fail to see why or how they would default as long as they continued to do that. That's the beauty of a fiat currency. Those who control the printing presses can make as much of it as they want.

The default comes when the creditors say "No, thanks keep your pixel money". After a while it just becomes silly.

A better slogan for Obama's campaign would have been *Change you can't believe*

I was concerned before about the treasury being able to sell bonds to the already over sold world. But I am more concerned as of late, referring to the debate concerning treasury bonds defaulting and legitimacy of UStreasury bonds. I have recently been reading about the failures to deliver UStreasurys to be a precursor to a actual default and that maybe we are seeing a redux of counterfeit issuance of USTBonds in order to satisfy unprecedented demand.

Could the failures to deliver USTreasurys, as shown in the alarming graphic below, be a precursor to actual default?

US treasury settlement failure

Schizo,

You are the one that doesn't understand it. What is the difference between 20% more decline in housing prices or 20% drop in housing value because you devalue the currency. The end result is still the same. The problem with this strategy is it makes everything we have to import more expensive.

Do you think wages are going to go up in this environment?

I don't know about you but I have the ability to hold any currency I want and physical gold in the bank I am in. So I can easily protect my wealth from a falling dollar.

The course we are on is not a good one and time will tell whether you are as excited about this choice several years from now.

Oh God I hope your right!! If not I'm going to start buying ITEX money (www.itex.com to learn more)

..

In most markets people are still lining up to buy REO's - things can't be that bad.

easy to get $$ + Overpopulation + extreme greed = high demand for housing

The bubble has not fully deflated.

XBoxBoy is correct.

What alternative does the world have? Go back to the gold standard?

The U.S. has more gold reserves than any other country! We would just become the reserve all over again.

I suppose they could switch to a new reserve currency; but why would they do that and devalue all the dollars they already have?

The more sinister problem is that even though we may have the printing press, it may turn out that the money it creates goes right into foreign hands. Whom then use it to buy up our assets/labor at their discretion.

Unemployment is the wild card. Will see how that goes over the next 2-3 years.

All the heat in the low end RE market will be the next wave of defaults after 2009, as the places that are rentals will no longer cash flow and the one that are owner occupied will be suffering from the unemployed leaving the state. Unemployment is far worse than most people calculate. Just wait until you feel you are in jeopardy and see how you feel about long term commitments on a depreciating assett.