Getting that 2006 feeling again …….

[ltsddd]

[quote=ocrenter][quote=The-Shoveler]Meh,

Maybe closer to a 1989 feeling, we are no where near the situation of 2006.

You need crazy loan officers OKing every loan to anyone with a pulse, then you got to let that run a few years to get to 2006.[/quote]

what if the crazy loan officers are in China?[/quote]

…something like this?

Chinese investors lost $1.2 billion in the country’s wild west online lending industry

http://finance.yahoo.com/news/chinese-investors-lost-1-2-093727318.html

[no_such_reality]

[quote=Rich Toscano]Yeah, the dept of numbers thing looks like it’s using real rents, whereas Case Shiller is nominal, so you can’t compare them. For rents I use the BLS numbers, which you can find for SD by poking around here:

http://www.bls.gov/cpi/

(I use rent of primary residence). This isn’t completely up to date so I use Zillow stats to fill in the blank for the most recent period. But I use CPI rent as the main thing.[/quote]

Thanks that makes sense.

[sjk]

[quote=Rich Toscano]As I’ve grown fond of pointing out, the current situation in San Diego bears little resemblance to 2006:

However, I don’t know that the same can be said for Silicon Valley and its environs. A lot of the stuff going on up there seems blatantly unsustainable, and not just the housing market.

It seems to me that an awful lot of what’s going on in SV resembles a bubble, or at least (if a less controversial term is desired), is economically unsustainable. What’s going on in the venture capital space seems particularly wacky. Hell, there are not one, but TWO tv comedies about trying to get venture funding in/near SV! (Silicon Valley, which btw is comic genius, and Betas).

Of course that’s just anecdotal, but there is an awful lot of bubble-like behavior taking place as far as I can tell. I read an article recently about some startup shooting money onto the street at some conference. The shockingly high price of housing in the area also fits into the bubble narrative quite well.

I wouldn’t be surprised to see a serious retrenchment in many aspects of the SV economy in the years ahead.[/quote]

Oh how I appreciate technical analysis ……… Good data! Be that as it may, there still a bubble here, I can smell it!!!!

[ocrenter]

[quote=ltsdd][quote=ocrenter][quote=The-Shoveler]Meh,

Maybe closer to a 1989 feeling, we are no where near the situation of 2006.

You need crazy loan officers OKing every loan to anyone with a pulse, then you got to let that run a few years to get to 2006.[/quote]

what if the crazy loan officers are in China?[/quote]

…something like this?

Chinese investors lost $1.2 billion in the country’s wild west online lending industry

http://finance.yahoo.com/news/chinese-investors-lost-1-2-093727318.html%5B/quote%5D

how timely. Of course, the casino also known as the Shanghai Composite is made up by huge number of investors using borrowed money to play the market.

it is a house of cards pagoda style.

while we may not be looking at generalized housing bubble, if you target the bay area, Irvine and San Gabriel Valley, and Carmel Valley and the 56 corridor, I think we’ll see evidence of a Chinese driven bubble.

[kev374]

memories:

[FlyerInHi]

[quote=The-Shoveler]Here is what Americans DON’T get about China,

If a housing bubble gets inconveniently in there way,
They will just plow them under and start again.

(or just give them to the workers, start new loans and hide the inconvenient numbers)[/quote]

Good point. The dirigiste hand can be quite effective.

China just ended their 1 child policy. But they still have residency registration requirements that prevent people from pouring in to the large cities. If they experience a real estate crisis, they could increase population/demand by loosening registration.

[paramount]

OP: Good video showing different sociological/political perspectives.

On one side we have a lib progressive who feels entitled to own a house in SV because ‘they grew up in the area’.

On the other side, we have an arian-ish realtor stating his clients deserve to live in SV because they are superior to those being displaced or selling. After all, his clients on average have IQ’s 20-30 pts higher than the local natives.

[an]

Just watched the video. All I can say is, move.

[paramount]

Freddie Mac Reports Q3 Net Loss of Nearly Half a Billion Dollars

Freddie Mac reported a net loss of $475 million for Q3 2015 in its 10-Q filing with the Securities and Exchange Commission on Tuesday, the first time the GSE has reported a quarterly net loss in four years.

[spdrun]

Good!

[sjk]

http://www.bloomberg.com/news/videos/2015-11-05/grant-does-boe-know-if-it-ll-rain-week-from-thursday-

Nice interview with Jim Grant…..

“The Fed ought to get out of the business of masterminding ‘the American enterprise,’ what we call the U.S. economy.” Central bankers, Grant adds, by pressing rates to nothing, have given rise to this “very pleasant kind of inflation we call bull markets.” While bull markets are great insofar as they reflect what is actually going on, “they are very dangerous to the extent that they are the artificial creation of artificial interest rates.”

“We are in a regime of price administration. Price control is a policy that has failed for millenia. When prices are manipulated, manhandled, and otherwsise distorted, real decisions follow and the real decisions are distorted… there’s bricks, mortar, and human lives attached to these [interest rate decisions]… and that’s why they matter”

“How do they know the funds rate ought to be zero?”

“The world’s central bankers went to the same schools, talk the same language, have the same world view.

They have shared conditions. They believe, for example, that an average of prices, which they believe they can calculate, must rise at two percent a year unless the world fall into something they choose to call deflation.

They believe that they can see into the future. They believe that they have the knowledge and the dexterity to manipulate interest rates to the benefit of society.

The central banks no more than the rest of us can see into the future. They are managed by human beings who do their best but who cannot — underscore — cannot see into the future and improve it before it happens. That’s their conceit. But it is not given to mankind to do such things.

They try. They have every good intention. But they are appliers of an outdated scheme of command and control. They don’t know what they do.”
Bloomberg TV Interview…

Some further highlights…

On the consequences…

The anger in the political process right now across both parties is evident for example, in the otherwise seemingly baffling popularity in the polls of Donald Trump. He is the — to my mind, he is the candidate of the thwarted and frustrated people who don’t know exactly what is happening, but know full well that something is wrong, that something certainly is different.

Donald Trump speaks to them in a way that I think is very destructive. But that’s one consequence of the set of policies that have delivered us into this world of economic sleepwalking.
On repeating the same mistakes…

“the 2008 financial crisis didn’t come from nowhere. It came, in my opinion, from the socialization of credit risk and from the manipulation of prices.”

“We are under the governance of former tenured economics faculty who think they know more than they can possibly know,”

“Let us at least revert, if not to some perhaps Utopian dream of a perfect monetary standard, at least let us get out of the business of the suppression of interest rates, the administration of prices and the government sponsorship of asset bull markets.”
On the stock market…

“Now, there is inflation and inflation. There is an inflation that is registered at the supermarket and the cash register. And there is inflation that is registered on the stock markets and in the “real estate markets”.

And the central bankers, by pressing rates to nothing, have given rise to this very pleasant kind of inflation we call bull markets. Bull markets are great insofar as they reflect what is actually going on.

They are very dangerous to the extent that they are the artificial creation of artificial interest rates.”

http://www.zerohedge.com/news/2015-11-07/2008-crisis-didnt-come-nowhere-jim-grant-slams-feds-utopian-world-economic-sleepwalk

[CA renter]

Thank you for posting that, sjk.

It is strange how everyone seemed to agree that the credit/housing bubble that brought us to our knees in 2008 was the consequence of holding interest rates too low for too long…and then they tried to “fix” the problem by doubling down on the same policies that caused the problem to begin with.

The bursting of the current bubble (when it happens) has the potential to cause even more destruction than the 2008 bubble because governments and central banks around the world have used up most of their ammunition in an attempt to manipulate prices and grow this most recent asset bubble.

Too many people have no money left over every month because their #1 expense — housing — has skyrocketed over the past ~15 years, with only a few years of relief that came about as a result of the crash.

[XBoxBoy]

[quote=CA renter]It is strange how everyone seemed to agree that the credit/housing bubble that brought us to our knees in 2008 was the consequence of holding interest rates too low for too long.[/quote]

Don’t think that is true. Most people seem to agree that the 2008 housing bubble was caused by lax lending standards, not by holding interest rates too low for too long. There’s a big difference between those two things.

[The-Shoveler]

[quote=XBoxBoy][quote=CA renter]It is strange how everyone seemed to agree that the credit/housing bubble that brought us to our knees in 2008 was the consequence of holding interest rates too low for too long.[/quote]

Don’t think that is true. Most people seem to agree that the 2008 housing bubble was caused by lax lending standards, not by holding interest rates too low for too long. There’s a big difference between those two things.[/quote]

+1

[an]

[quote=The-Shoveler][quote=XBoxBoy][quote=CA renter]It is strange how everyone seemed to agree that the credit/housing bubble that brought us to our knees in 2008 was the consequence of holding interest rates too low for too long.[/quote]

Don’t think that is true. Most people seem to agree that the 2008 housing bubble was caused by lax lending standards, not by holding interest rates too low for too long. There’s a big difference between those two things.[/quote]

+1[/quote]
+1

[Author]

Posts