San Diego Housing Bubble News and Analysis

The only guy at this level of govt with enough balls to say what they all know. I guess that's one of the good things about getting elderly.

Uh, how does 'faster' equal 'worse'?

I would assume if we deteriorate faster we can recover faster, correct?

Home prices and the stock market can only go to zero, I assume?

I don't know if it is worse than the Great Depression, but it would definitely be worse if there was not FDIC. FDIC prevented a panic. Everything that is happening now is totally rational.

A bank loses money for the quarter and the forecast is loses for rest of the year if not more, so its stock goes down. Don't have the money for loan payment, so the loan is denied. Nobody can buy an over priced mcmansion, so the price goes down.

Agreed: 'faster' does not necessarily mean 'worse'. The world moves faster in general today.

But can we recover faster also? Careful what you wish for. If we recover too quickly, we will probably be primed to do it all again...

One of my hobbies is volatility arbitrage so that is fine by me!

I think he may be meaning a soft versus hard landing. As in this drop is so fast that the landings gonna hurt or maybe blow the plane apart.

It doesn't, nor is your take representative of what the article implies. The quote was
Taken in context he's saying two things are working together to make things worse: the rapid speed and scope of our current circumstances is worse than what happened during the Great Depression.

Sometimes I think he's the only guy even close to power who actually knows what's really happening, and what needs doing. Maybe a few others know too, but they are too selfish or too cowardly to say it.

And again I have to disagree. *In my opinion*, the faster the collapse the faster the recovery. The economy is bigger and more efficient than it was 70 years ago so its not surprising the speed/scope are bigger as well.

And come on now, really. The stock market can only decline so much and unemployment can peak at what, maybe 30% before the rich people realize they are going to have to start growing their own food if they don't spend money?

the stock market can decline a long time. it's not an annual cumulative numeric decline, but a percentage decline. it could keep going down 10% mcuh more than 10 years, right? i dont think people will startspending money just cause some particular number of people become unemployed. im calling dow 4000 by 2011.

I have said for awhile now (a few months anyway) that just like the bubble was unsustainable the current downturn is unsustainable , we are wearing out cars computers etc.. much faster than we are buying them now , also home production in socal is now far below long term new family formation rates as well ( I know I know we were overbuilding etc… but you have to remember as well that during the 90’s we were under building for a long time as well).

Just remember everyone will twist the stats in the direction they feel will help them (even if they are only fooling themselves).

Beware the snap back .

What would cause a snap back? There has to be a trigger. After the dotcom bust, the housing market got manipulated w/the capital gains tax break and lowered interest rates, then lowered rates again and again and then the NINA and liar loans and subprime and Alt-A and option ARMS, etc. etc.

This real estate bubble happened and it had multiple explanations.

What would be the impetus that will improve the economy? Will all the stimulus/bailouts/rescue do the trick?

After watching "House of Cards" I'm of the thought that anything the government can do at this point is slow things down from getting worse, not do what it takes to suddenly overnight improve it.

So many of our jobs have been outsourced, manufacturing, etc. In fact, real estate bubble saved us from a severe recession after 9/11 and the dotcom bust b/c it created jobs and money out of thin air.

What magical thing will be the upturn? Genuine. Collective Pigg minds. What will turn this around?

The only thing I can thing of at the moment is some type of Instant credit repair for FHB..

But mostly just NEED !!

I have asked this question before and I don't remember any answers. I don't know what it would take to turn it around. Throwing money at it is -- well, there's just not enough money. We just experienced a mega-bubble. The best the government can do is let the air out gently, i.e. slow the train down from 1000 miles an hour to 200 miles an hour. It's still going to hurt, just take longer to feel the pain.

The only long-term cure will be when the government adopts policies that create and maintain middle-class (production) jobs. This means that,as a nation, we must produce goods and services that the US and the remainder of the world will need. The economy cannot fully recover until consumers (~70% of our GDP) have gainful, productive employment.

Short term stimulus' and tax breaks will not move the economy ahead in the long run, and may have deleterious consequences down the road.

Stock markets previously priced in cheaper, outsourced labor for many industries. The market, if not already pricing in the increased cost of domestic labor, may yet have more adjustment to come.

If we continue to send jobs overseas, we will end up with a "second world" economy, with a diminishing middle class.

denverite - that's it exactly, as I commented on the "House of Cards" thread. We lost a lot of jobs and outsourced many. The real estate bubble created jobs: contruction, realtors, appraisers, etc. etc. and we played w/monopoly money and insurance on home loans was exported.

Take all that away and you end up where you started. No jobs. The real estate industry cannot be propped up forever. New and lasting jobs need to be created - and not just a job at McDonalds. That means education, too. People need to be skilled at something.

All that requires work. There won't be any easy money as in the dotcom era or the real estate era. Personally, I like to work. But many Americans are lazy (I think that's why many Mexicans are opportunistic and take the jobs the lazy Americans won't do - I digress)

So creating jobs and getting an education takes time. There is no overnight fix here. Many people have acquired the easy money lifestyle and it will be a foreign concept for them to actually work to make money.

On "House of Cards" they said pizza delivery guys were making 20k a month doing loans and on This American Life's Giant Pool of Money, it was bartenders doing loans.

The reality is that only in some kind of mega-bubble can a bartender or pizza delivery guy go out and get a job w/their limited education and make 20k a month. I mean, I don't know. I'm thinking attorney or doctors make 20k a month, engineers. I'm thinking you better have a nice piece of paper from some school when you make that kind of dough. 20k a month is reserved for someone well-educated.

Economic Downturn

Art Bell was joined by Wall St. insider Michael J. Panzner, who discussed the dire economic circumstances in America and around the globe. According to Panzner, the U.S. is not in a typical recession. Instead, he believes the crisis more closely resembles a depression, in which we can expect an extended period of economic contraction accompanied by deflation.

Panzner said the largest players in our banking system are insolvent. He explained their current situation was brought on by a combination of factors, including exposure to trillions of dollars of mortgage backed securities, derivatives and default swaps, and suggested that bailouts and stimulus packages will only postpone the inevitable, not resolve the nation's financial troubles. "What got us here, decades of excesses, decades of imbalances, you can't just stop them by saying, 'OK, we're determined and we're going to think positive,'" Panzner remarked.

What does Panzner see on the horizon then? Our currency will continue to be devalued by the ongoing "printing press" policies of our government, he said, and we can expect an inflationary environment. Real estate prices will fall even further, perhaps not reaching final lows until 2012 at the earliest. There will be multiple "lurches down" in the stock market, Panzner continued, noting the Dow might fall by as much as 75% from its current level. The retail sector could be wiped out as the "religion of consumerism seems to be dying," he said. At the extreme, Panzner foresees the U.S. breaking apart, conflict with Mexico, and perhaps another world war.

Parts of the country will become "suburban wastelands" due to water and energy issues, Panzner further speculated. He exhorted listeners to adjust their attitudes and lifestyles accordingly, and to accept the reality that the current economic downturn is not short term -- it's the new norm. He recommended people pay down debt and live within their means, and advised investors to look at precious metals like gold, silver, and platinum.

Agreed: Green Tech, Stem Cells, Doritos.