Skip to main content

From Bloomberg

Finance ministers and central bankers from the Group of Seven nations gathered in Singapore today with a U.S. housing slump clouding the outlook for world economic growth.


Sales of U.S. existing homes have declined every month since G-7 officials last met in April, and the National Association of Realtors predicts house prices may decline in the remaining months of 2006, which would be the first year-over-year drops since 1993. The International Monetary Fund yesterday branded the slowing U.S. housing market a ``key risk'' to expansion.


``With the world's most dominant consumer likely to retrench in the aftermath of a bursting of its housing bubble, the rest of the world can hardly be expected to sidestep this blow,'' said Stephen Roach, chief economist at Morgan Stanley in New York.

So - why are other countries so interested in the US housing market?

Andrew Cates of UBS AG calculates the U.S. generated 25 percent of global growth in the second quarter. The 12-nation euro economy accounted for 16 percent, China 13 percent and Japan 10 percent.

The US model of economic growth is based on consumption; Consumer spending is responsible for 70% of US growth.  In addition, the rest of the world has become addicted to the US model of growth.  Therefore, when the US model looks like it's in trouble, the world has problems.

G7 countries aren't the only ones worried about the US housing market.  Earlier this week, the IMF warned about the US housing market:

The slowdown in the U.S. housing market could be sharper than expected, which would hurt the U.S. economy, global growth and financial markets, an official from the International Monetary Fund said Tuesday.

While expectations are that the U.S. will follow the example of housing markets in Australia and the U.K., where a slowdown in housing was orderly, there is a risk that the U.S. slowdown could be more severe, said Hung Tran, deputy director of the IMF's international capital markets department.

The hope is that there will be a soft landing, but there are risks on the downside, which if occurred, would "produce weaker-than-expected U.S. growth with negative implications for global growth and financial markets," he told reporters.

Asked about the most vulnerable segment of the U.S. housing market, Tran singled out sub-prime mortgages -- which generally carry interest rates higher than 8 percent and are designed for people who can't qualify for traditional mortgages because of low income or poor credit.

"Indeed, we have seen that the delinquency rates among sub-prime borrowers have started to increase from a very low base and (are) still very low historically, but (they) have shown an increase in recent months and again that is the area of potential vulnerability," he said.

In addition, industry insiders expressed concern about the housing market in Senate testimony earlier this week:

``We certainly have not bottomed out yet,'' Tom Stevens, president of the National Association of Realtors, said during testimony before a Senate committee accessing the risks to the economy from a possible collapse in housing. ``Prices will continue to decline.''


The four-member industry panel testifying before a joint hearing of Senate banking subcommittees agreed that states with the biggest increases in prices over the last couple of years, such as Florida, California, and Nevada, were more at risk for declines. Still, the 56 percent surge in home values nationally over the last five years upped the odds that prices would drop overall, they said.


``The scope (of the gains) does cause some concern,'' Richard Brown, chief economist at the Federal Deposit Insurance Corporation, the government agency that administers the deposit insurance system, said. ``It's really unprecedented.''

Asked by Sen. Jack Reed, a Rhode Island Democrat, if he agreed with some forecasts that prices as measured by Ofheo would drop 3 percent in the next year, Lawler said it was ``certainly something that could happen, and is a matter of concern for us.''

Right now we have no idea how the housing market will shake out.  News this week (lower month over month inflation growth) may allow the Federal Reserve pause in their interest rate program at this week's meeting.  Oil prices have dropped as well.  If oil continues its recent trend or remains at current levels, consumer finances may get some breathing room from energy prices.  However, US consumers are already heavily in debt with no pay gains for the entire expansion.  That alone may hamper increases in consumer spending, which the US economy needs expand.

In short - we still have no idea how this will play out.  

Originally posted to bonddad on Sat Sep 16, 2006 at 05:49 AM PDT.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Hi Bonddad, I've miss you (16+ / 0-)

    I am glad to see another one of your useful diaries. I have learned a lot from you

  •  Your point about consumer spending is important (18+ / 0-)

    Most consumers are simply tapped out. Even if energy prices fall, we have been using our savings to finance current consumption. this is unsustainable.

  •  Housing (17+ / 0-)

    Housing seemed to go through a phase not unlike baseball cards and beanie babies, for a short while everyone was one board and prices skyrocketed for no good reason other than everyone agreed to have them skyrocket.  Well like all unrealistic phases, reality has shown it's face again and people have broken the trance and are beginning to ask the questions that need to be asked such as " you want how much for this dump?"

    Osama Bin Bathtub. Slip and Falls injuries kill many, many more americans each year than terrorism. Should we be afraid of the tub as well?

    by voter for sale on Sat Sep 16, 2006 at 05:41:03 AM PDT

    •  There's an inventory glut (16+ / 0-)

      and consumers are already heavily indebted.  That's not a good sign for the market.

      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

      by bonddad on Sat Sep 16, 2006 at 05:42:18 AM PDT

      [ Parent ]

    •  But unlike baseball cards and beanies, (6+ / 0-)

      folks borrowed against the supposed appreciation on their houses. I don't think that too many people went deeply in debt to buy beanies.

      •  I (11+ / 0-)

        I understand the consequences are much more dire in this situation, but I think the entire pyschological reasoning was the same.  There really was no reason for housing to go through the roof in most markets.  Housing wasn't "running" out.

        I agree, alot of people are going to be screwed badly. They are overpaying for a poorly constructed McMansion, and if just one of lifes curve balls come at em, they are going to lose everything.

        Osama Bin Bathtub. Slip and Falls injuries kill many, many more americans each year than terrorism. Should we be afraid of the tub as well?

        by voter for sale on Sat Sep 16, 2006 at 05:48:25 AM PDT

        [ Parent ]

        •  Lose everything? (11+ / 0-)

          That's the old model. It's worse now. After you lose everything now, you go forward still holding the debt unless your last name is inc.

          "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

          by java4every1 on Sat Sep 16, 2006 at 07:23:17 AM PDT

          [ Parent ]

          •  even if your last name is inc., unless (7+ / 0-)

            you are a large corp. it does not matter.  Small business falls under the same rules as people.  
            We own a small business and we have had to sign some personal papers to open accounts.
            Being an inc. is no longer enough.

            HATE is NOT a family value!

            by pinkhardhat on Sat Sep 16, 2006 at 08:06:17 AM PDT

            [ Parent ]

            •  Thanks, I wasn't aware of that.. (1+ / 0-)
              Recommended by:
              greenearth

              Considering it's usually mid to large corporations that stiff their vendors, file bankruptcy and put their employees in the street, it's the little businesses that really have the most to lose in this scenario.

              "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

              by java4every1 on Sat Sep 16, 2006 at 08:18:30 AM PDT

              [ Parent ]

            •  interesting detail (1+ / 0-)
              Recommended by:
              java4every1

              I discovered recently when doing research on a home that was in foreclosure, that property you own for investment is safer than property you own to live in.  Honest to god, that is unbelievable.  If you are at risk of foreclosure, and you can't sell your house for enough to cover the loan (the bank can block the sale) you can give the bank back the house, and your debt vanishes.  You can even claim a deduction for a losing investment.

              If you live in the house, and you give the bank back the house, the what ever the debt forgiveiness from the bank is, you immediately owe income tax on.

              Nice, huh?

              •  Depends on states (0+ / 0-)

                Mortgages may or may not be nonrecourse depending on the statutes of the state that the property is in and the quality of the loan (size of downpayment, etc.) and whether it is investment or not.

                If there is a non-recourse loan, the tax treatment is the same, except that you don't normally owe money on the capital gains on your primary residence. Whether you run afoul the IRS depends on the balance of the forgiveness and the capital gain or loss.

                Democrats: Giving you a government that works.

                by freelunch on Sat Sep 16, 2006 at 04:07:11 PM PDT

                [ Parent ]

                •  as it was explained to me... (1+ / 0-)
                  Recommended by:
                  java4every1

                  In this particular instance, the purchaser bought the property for 321,000.  18 months later, he refinanced for 486,000.  A year later he stopped paying the mortgage.  The bank started forclosure proceedings which he blocked by filing bankruptcy while he tried to sell the house.  The highest offer he got was 407,000 (he had tried to sell the house for a year, starting at 475,000 and continued dropping until offer at 407,000).  Bank blocked sale at this price.  He realized that because he had PMI insurance, he was better off giving the house back to the bank.  

                  The bank bought the house back at a forclosure aucton with no other bids at 541,000 (the amount they feel they are due after penalties and legal fees).  As has been explained to me, if this was a private person living in there own home, they would now have to pay capital gains on the difference between the forgiven debt and the purchase price, which in this case would have been 220,000.  Yet since this was owned as an investment property, it is more than likely that he can even take a loss.

                  I might have some of this slightly sideways, but the may point is that a private owner who has just lost everything is libel for taxes in a situation for which in investor may well be protected.

                  •  In Bankruptcy (0+ / 0-)

                    Income taxes are not normally assessed on debts discharged through any of the chapters in the bankruptcy statutes, but they are generally assessed on other debt forgiveness that is not associated with any of the bankruptcy options. If you are looking at a problem like this, it always makes sense to talk to a bankruptcy or tax attorney to shelter any foregiveness from taxation.

                    As you can see in your example, even though he really did get a lot of not-yet-taxed money out of the deal when he refinanced. Still, the bank bid $541,000, the amount due. There was no debt foregiveness. The entire amount was paid for by the bank and the PMI when their bid matched the amount due. That would work the same way for a home covered by PMI.

                    Democrats: Giving you a government that works.

                    by freelunch on Sat Sep 16, 2006 at 05:35:08 PM PDT

                    [ Parent ]

                    •  just to clarify (0+ / 0-)

                      I am not the person who is in bankruptcy, I was the person trying to purchase the house from the owner, but the bank blocked the sale.  

                      I found the entire experience mind boggling.  I understand that the Bank didn't want to loose money, but just because they are owed $541,000 doesn't make the asset worth that amount.

                      As of today, the house is still standing empty and the bank has is holding a delcining asset and the previous owner has gotten off scott free.

                      As it has been explained to me by my accountant and my real estate lawyer, if this was a non investment property the prior owner would have been hit with a large tax bill when the bank purchased it back.  They are the ones that told me that there is some very specific clause or other that exempts this for an investment property.  Perhaps my stating the bank forgave the debt is incorrect, but should be read as the bank bought the house for $541,000.  Shouldn't the difference be subject to capital gains?  For a private home it apparently would have been which would have put more pressure on the owner to fight foreclosre in bankruptcy court.  As it was, this was a single item bankruptcy, so once he figured he could walk away without penalty, the bankruptcy was disolved.  I found this astounding, and even worse that someone living in their home with kids wouldn't receive the same deal.

          •  We should encourage Dem leadership (7+ / 0-)

            to make a big deal about changing the law in this area. I was so pissed when they passed the bankruptcy reform bill and just screwed the people to unjustly benefit the credit card companies. It used to be that high credit card rates could be justified somewhat by the risk premium, bankruptcy and forgiveness of that debt. Now where is the risk and where are the rates? They have been underwritten via legislation, rates stay up, and profits go up more than they would normally.

            This issue would resonate with middle class swing voters if properly packaged. One small problem, the Democrats who voted for the bill have a hard time making the case.

            Our economy sucks up our environment, people, and government. Redesign it at Beyond Political Center

            by Bob Guyer on Sat Sep 16, 2006 at 08:36:59 AM PDT

            [ Parent ]

      •  But they did for Tulip Bulbs (17+ / 0-)

        Sometimes, just knowing how people act, even when those actions are very bad for them or their community, doesn't manage to stop them from acting that way. I cannot recommend Mackay's Extraordinary Popular Delusions and the Madness of Crowds highly enough. Even though he wrote that book more than 160 years ago, it still describes how people behave in these circumstances -- even though they have full warning about what will happen it doesn't stop them.

        Democrats: Giving you a government that works.

        by freelunch on Sat Sep 16, 2006 at 06:35:46 AM PDT

        [ Parent ]

    •  The problem where I am (18+ / 0-)

      The problem here is that developers are flooding us with houses.  Less than half a miles from where I live there's an area that has just been zoned to have 800 new houses built.  Eight Hundred.  Yes, I live in a very quickly growing town, county, and region (middle Tennessee).  But if you build eight hundred new houses, it gets hard for people to sell their old houses because they figure "Why should I pay $150k for a 15 year old house when I can get a bigger one for less half a mile away?"  So then people can't buy new houses because they can't sell their old houses, or they have to drop the price on their old house to a point where they don't make enough to put 20% down on a new house, etc.  The extra housing drops down the sellable price of houses all over town, but the developers don't care because even selling cheap they make their money and then some (thanks in part to Mexican laborers who work 12 hour days, 5 days a week, for $600 a week).

      "Do not go where the path may lead, go instead where there is no path and leave a trail."- Emerson

      by Sidof79 on Sat Sep 16, 2006 at 05:47:39 AM PDT

      [ Parent ]

      •  Developers (7+ / 0-)

        Yeah, in the exurbs, there's a lot of stock going unclaimed.  Interesting, here in Los Angeles, what I'm finding are the idiots who build "lofts" are trying to sell 750sf of crappy location for $1.25M, when if you drive 3 blocks away, you can get a 5bd/3bd house for the same price.  

        I feel sorry for those people who live in an area where people are all about new homes.  I have a friend who has a gorgeous house for sale in AZ.  She's been trying to sale it for almost 3 years now.  Her biggest problem is that 7 housing developments have been built or will be.  So, yeah people have the mindset you've mentioned.  I really love her house.  If I could, I'd cut it up and ship it here to me in Los Angeles.  

        Black by popular demand!

        by fabooj on Sat Sep 16, 2006 at 06:40:40 AM PDT

        [ Parent ]

        •  I remember less than two years ago (2+ / 0-)
          Recommended by:
          greenearth, alwaysquestion

          when realtors would OFTEN come by asking if I wanted to sell my place cuz they had buyers... but taxes kept me from doing so...it's 1.2 percent in CA (as you well know living in LA)and the new places I could buy were cost prohibitive because on top of mortgage, insurance, etc. - there was that 1.2 percent... so I'm still paying my low taxes and refi'd to a 15 year... if my place is still worth anything when it's paid off, I'll use it for my retirement...

          If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy. -James Madison, fourth US president (1751-1836)

          by crkrjx on Sat Sep 16, 2006 at 07:53:45 AM PDT

          [ Parent ]

      •  It's been that way in Central Texas, too (4+ / 0-)

        And now, with impeccable timing, the company that owns the townhouse complex has decided to take it condo. He's going to take a freakin' bath; they're asking 130-150K for two-bedroom townhouses in a working-class neighborhood in north Austin. Maybe the owners think if they do that they'll kick-start the gentrification of our neighborhood, but I just don't see that happening.

        And my wife and I are left debating whether or not to buy in. If we had decent credit and a down payment saved, we could almost certainly get a better deal. But we don't, so this may be our best chance to start building equity in the forseeable future. Add to that the appealing prospect of going month to month or finding a new place to live with my wife seven months pregnant and you will realize why I think I've picked the wrong week to stop sniffing glue.

        "Nothing worth having comes without some kind of fight. You've got to kick at the darkness until it bleeds daylight." --Bruce Cockburn, "Lovers In A Dangerous

        by AustinCynic on Sat Sep 16, 2006 at 08:41:02 AM PDT

        [ Parent ]

        •  That should be... (1+ / 0-)
          Recommended by:
          greenearth

          "the townhouse complex where I live." It's what I get for hitting the "post" button too fast.

          "Nothing worth having comes without some kind of fight. You've got to kick at the darkness until it bleeds daylight." --Bruce Cockburn, "Lovers In A Dangerous

          by AustinCynic on Sat Sep 16, 2006 at 08:44:39 AM PDT

          [ Parent ]

        •  I know a few people who had to leave Austin (0+ / 0-)

          because they couldnt find affordable housing.  The housing costs went way up but peoples salries didnt    

          •  Funny how that worked (0+ / 0-)

            The dotcom bubble burst, a lot of people lost everything...and they kept building like maniacs.

            "Nothing worth having comes without some kind of fight. You've got to kick at the darkness until it bleeds daylight." --Bruce Cockburn, "Lovers In A Dangerous

            by AustinCynic on Sat Sep 16, 2006 at 06:45:32 PM PDT

            [ Parent ]

      •  All the big new houses (1+ / 0-)
        Recommended by:
        lemming22

        are still driving up property taxes for the old houses too.  It'll take a while for some of these McMansions to fall into disrepair for lack of a buyer and start lowering appraisals for the old houses.  So even if you live in an older modest house you may take a huge hit with the imflux of developments-they lower the value of your house for sale but are still increasing the value for appraisals.  Really screwed are older folk who want to stay in their older homes.

        Democrats give you the Bill of Rights; Republicans sell you a bill of goods!

        by barbwires on Sat Sep 16, 2006 at 11:10:19 AM PDT

        [ Parent ]

      •  All Part of the "Sprawl Industry" (0+ / 0-)

        One of my favorite blogs (both superfunny and super-depressing) is Clusterfuck Nation. Kunstler does a great job of putting all this real estate "economic development" into perspective. Its another example of a misallocation of resources (investment dollars), just like the internet boom of the late 90s.

    •  Beanie Babies were safer (3+ / 0-)
      Recommended by:
      Sagittarius, greenearth, lemming22

      Beanies didn't incur mortgage payments, insurance and maintenance after the market collapsed.

    •  But it shouldn't go through "phases" like (0+ / 0-)

      Beanie Babies & baseball cards.  Spending 5 or 6 dollars here and there for some fad item that may appreciate in value is one thing, but Alan Greenspan's  Fed shouldn't have let this phase go on as long as it did.

  •  I watched this meeting on C-SPAN (12+ / 0-)

    As I commented elsewhere, the veiled fear and loathing in the voices, and carefully worded "concern" in the testimony of the panel members, was reason enough to run screaming from the room.

    I was clear that they see a serious correction ahead, and are very worried about how it will effect the economy.

  •  During (27+ / 0-)

    During this whole crazy house decade were you like me, confused as to where these people made all their money.  I mean, me and my wife make together close to 6 figures and we have no kids, cars are not fancy and not even close to new, we don't take many fancy trips, and yet even with only a 100k mortgage and the regular bills, we certainly don't have money to roll around in.

    We look at these people with kids, living in huge houses, with two new cars and think, wtf? are they in the same economy we are? is there a secret job market we are missing?  who the hell are these people and where are they getting the money to pay for all of this.

    Osama Bin Bathtub. Slip and Falls injuries kill many, many more americans each year than terrorism. Should we be afraid of the tub as well?

    by voter for sale on Sat Sep 16, 2006 at 05:57:38 AM PDT

    •  No secret (3+ / 0-)
      Recommended by:
      3goldens, greenearth, GodRifle

      is there a secret job market we are missing?  who the hell are these people and where are they getting the money to pay for all of this.

      No secret job market necessary.  As the appraised value of homes has increased, many people have taken that value out in re-fi.  We know that.  That's why the US has had a negative savings rate for the past year or so.  Where are they getting the money to pay for it?  They're borrowing it.

      Constitutional Checks and Balances: it's not just a good idea, it's the Law.

      by EeDan on Sat Sep 16, 2006 at 07:39:44 AM PDT

      [ Parent ]

  •  Once again (9+ / 0-)

    Colorado leads the nation in the foreclosure rate.  We're #1! -- for the last six months.

    Gonna be ugly.  Hope the new neighbors are planning to stick around because, if they try to sell for what they bought at, they ain't gonna get it.

    Leave the cat alone, for what has the cat done, that you should so afflict it with tape? - Ian Frazier, Lamentations of the Father

    by Frankenoid on Sat Sep 16, 2006 at 05:58:32 AM PDT

  •  Thanks for the information bonddad (3+ / 0-)
    Recommended by:
    raines, venatrix, greenearth

    You are always right on the money.

    "United we stand, divided we fall"

    by Cassandra77 on Sat Sep 16, 2006 at 06:01:12 AM PDT

  •  The pay day loans (5+ / 0-)

    Are probably not the biggest problem.
    It's the loan sharks like ditech, and quicken and their ilk that really have the power.
    Does anyone have a clue about how much property these guys will own if there is an even bigger jump in defaults?
    These people have ads that feature customers comparing PAST refinances with their new ones.
    How many loans are people taking on the same house?

    •  Credit card companies may be feeling it too. (1+ / 0-)
      Recommended by:
      FindingMyVoice

      Here's my anecdote of the day. I took a business trip last month and ran up a large credit card bill. Many of my expenses will be reimbursed by my employer. However, my cc company offered me a specially reduced payment rate of only $15 this month. Has anyone else had a similar experience?

      •  Special Exceptions (5+ / 0-)

        So, the credit card companies have gotten around the minimum payment rules that were part of the new bankruptcy law, quelle surprise.

        The one I saw in the litter that comes with one of my credit card bills is a list of events that allow you to defer payments (spend a lot of money elsewhere and we won't make you pay us for a while). Oy vey.

        Democrats: Giving you a government that works.

        by freelunch on Sat Sep 16, 2006 at 06:41:22 AM PDT

        [ Parent ]

    •  Don't consider Quicken Loans sharky (2+ / 0-)
      Recommended by:
      greenearth, LibChicAZ

      They were terrific when we purchased our home and the tools on their web site helped us see the wisdom of our decision to go with a 15 year mortgage on a house we could easily afford rather than stretch to buy a McMansion on a 3- year or worse, an ARM.

      They were also fabulous when we refinanced into a lower interest rate three years later that eliminated our PMI, still at a 15 year mortgage but now an even better rate since we had built up some equity.

      We never experienced any pressure to do anything that was not in alignment with our financial goals.

  •  Oi. (7+ / 0-)

    It's Mr. Contrarian here again.

    Once again, no one can predict with any certainty what will happen in a non-linear system such as the economy.  There's at least as much information in the material quoted to predict an optimistic scenario as a pessimistic one, it's just a matter of what you choose to boldface.

    But a few important points:

    1. A year over year reduction in housing sales does not mean a hard landing, at least not necessarily.  After the boom years of housing, a soft landing would be an orderly return pre-boom sales rates.  Therefore, a steady deflation of sales figures to historical levels is a good thing.  A hard landing would be signalled by a sudden collapse of sales and an extended period in which sales figures were below historical numbers.
    1. A reduction in prices is to be expected even in a soft landing.   The key figure is by how many months or years sales figures retreat.  A reduction of 20% in prices in an area that was increasing 20% a year is not a big problem except for a very limited number of real estate profiteers.  A retreat of five or ten years of prices is serious.  Furthermore you need to look at what happens to the rate of increase after the fall.  If it returns quickly to historical rates (4% or so), then we had a soft landing.
    1. Reduced property values do not mean that people are in danger of losing their houses.  That's an independent issue having to do with the employment situation and, to some extent, interest rate movement.  A simple lowering of value does not mean people can't pay their mortgages.  In addition, the sub-population of people who will be "in the hole" if they are forced to sell their houses in a down market is limited to those who bought recently.  It ties into the issue of how many months their property values retreat.

    Is America finally suffering from Idiot Fatigue?

    by LarryInNYC on Sat Sep 16, 2006 at 06:17:42 AM PDT

    •  You know. . . (2+ / 0-)
      Recommended by:
      FindingMyVoice, greenearth

      I don't like all the gloom and doom talk either, and it doesn't match my direct observations from my travels around the country for work.

      But i find myself leaving more comments on bonddad's diaries than anywhere else because we are having a good, healthy debate about this - and it is desperately needed no matter which forecasters see the future correctly.

    •  I think part of the difference now.... (9+ / 0-)

      if indeed there is one (and I believe there is) is that people are very leveraged...more so than at any time since such things have been measured.  For them, any price fall will be significant.  Also, people have been using their homes as ATMs and that is what has produced whatever growth there has been in our consumer economy. There's another diary on the jobs front that's at the top of the recommended list...that states that all job growth has been from health care.  Not a great thing, if so.

      I wouldn't believe Bush if his tongue became notarized (h/t to shanti2)

      by billlaurelMD on Sat Sep 16, 2006 at 06:42:14 AM PDT

      [ Parent ]

      •  Not so. (1+ / 0-)
        Recommended by:
        apocryphal rumor

        people are very leveraged...more so than at any time since such things have been measured.  For them, any price fall will be significant.

        A fall in the theoretical sales price of your home makes no immediate difference to you regardless of how leveraged you are unless you're forced to sell.  And even if you're forced to sell, it only makes a big difference if you bought recently and prices have dropped far enough so that you're profit on the house has been completely erased.

        That will happen to some people and it's a bad thing.  But it's not a national catastrophe.  

        Is America finally suffering from Idiot Fatigue?

        by LarryInNYC on Sat Sep 16, 2006 at 06:59:23 AM PDT

        [ Parent ]

        •  but (5+ / 0-)

          but billions , if not trillions of dollars will simply go poof.  That can't be good for any economy, especially one that has all it's people at the credit max.

          I am starting to worry about a perfect storm here, Bursting housing market, consumer economy with consumers out of money, Stagnant employment, Run away inflation with relations to the real money we pay out which DOES include food, energy and things like property taxes, and of course the catalyst, more war or interuption of oil in the mideast.

          We are playing with fire here.

          Osama Bin Bathtub. Slip and Falls injuries kill many, many more americans each year than terrorism. Should we be afraid of the tub as well?

          by voter for sale on Sat Sep 16, 2006 at 07:08:45 AM PDT

          [ Parent ]

        •  You are assuming that the lenders.... (0+ / 0-)

          are not going to go ape shit.  

    •  Problems, even with soft landing (2+ / 0-)
      Recommended by:
      greenearth, alwaysquestion

      People have been taking equity out of their homes during this entire boom. Current estimates are that 2006 will have even more equity taken out than 2005. If people are taking equity out and the market equity is shrinking, there is far less room to maneuver than there would be otherwise.

      The good/bad news is that the capital markets have such weak demand that 30-year mortgages have dropped from their summer highs as long-term money goes in search of anything at all. Of course this is happening while the treasury is borrowing great piles of money. In a reasonably strong, balanced economy, long-term rates should be going up, not down. So, as long as the demand remains weak for long-term loans, housing should be able to limp along for a while. Of course, that's not helping the auto industry.

      Democrats: Giving you a government that works.

      by freelunch on Sat Sep 16, 2006 at 06:49:27 AM PDT

      [ Parent ]

    •  heh (3+ / 0-)
      Recommended by:
      coral, crkrjx, alwaysquestion

      Hyperbole. Bubbles pop.

      There is no housing bubble. The housing market will disappear. It's not like there are tens of thousands of homes that will be standing vacant. People will still be living in them, and will still buy and sell when they move, their familes change in size, etc.

      Stocks, bonds, futures, these things can have bubbles, because they are not a basic human necessity.

      There are no food bubbles, there are no gasoline bubbles, just market corrections that are generally much more gradual than a bubble popping.

      by peacemonger on Mon Aug 08, 2005 at 02:51:40 PM EDT

      http://www.dailykos.com/...

      The Sacramento Bee. “Neither Ron Rael of Novato or Kirk McKinney of Pacifica nor any of their Bay Area investor colleagues much care now for Sacramento’s languid market. ‘You got more bang for your buck a couple of years ago than you do today,’ said Poppy Stercl, a mortgage broker who lives in Rocklin. ‘It’s dropped off a lot,’ said Stercl.”

      “Collectively, these sentiments have become key factors in Sacramento’s flat or falling prices and its record pileup of more than 15,000 homes for sale as summer’s big buying season comes to an end. The wave of investors and Bay Area arrivals who helped drive the region’s real estate market to what many believe were unreasonable heights has primed it now for an aftermath that no one can yet measure.”

      http://thehousingbubbleblog.com/...

      Sacramento is only one of many.

  •  Housing is showing signs of weakness (10+ / 0-)

    I occasionally check out the real estate section in my local newspaper and I am seeing something I haven't seen in a very long time - Ads with the words "Price Reduced!"

    I have a friend who is a realtor and he is saying that the market is heading down. It's something many of his collegues refuse to discuss, but the writing is on the wall. In a few years people who financed their houses using interest only loans with monthly payments they can barely afford now are going to have to start paying the principal and they simply won't be able to cover it.

    My new next door neighbors are another sign. They used to have a McMansion financed with an interest only loan. They decided to sell it while they could and move themselves (2 adults, one small child, and a dog) into a cheap rental (basically a one bedroom cottage) a  while the getting was good. He told me when they sold the house it was on the market longer than the previous house sold in their old neighborhood and that they barely got enough out of it to pay off the mortgage.

    Yet another indicator is news items are appearing in the local media saying renters may be the smart ones right now.

    The simple truth is we as a society have been living beyond our means encouraged to do so by the fiscal policy of our government with artificially cheap money courtesy of countries like China. I'm afraid our collective chickens are coming home to roost and we will be paying the price for years to come.

    History has shown no one runs up a deficit like a Republican. They love to spend money as long as it isn't their own.

    by Cali Techie on Sat Sep 16, 2006 at 06:18:45 AM PDT

    •  My neighbor had his place on the market (2+ / 0-)
      Recommended by:
      barbwires, greenearth

      for a year before taking it off and renting it... just three months before, homes were selling within a couple weeks...

      One thing I have noticed is that there are a lot more HUD homes than there were just three years ago...after the boom started, I couldn't find any in my area

      If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy. -James Madison, fourth US president (1751-1836)

      by crkrjx on Sat Sep 16, 2006 at 08:05:13 AM PDT

      [ Parent ]

  •  National Balloon Payment Due After Elections (7+ / 0-)

    The Republicans have set us up with unsustainable spending through debt to create short term economic benefits for the weathy class.  
    How can Dems make dimwitted voters aware of the situation?  Gore's "social security lock box" got laughed at, but he correctly anticipated the con game.
    Dems need to get the word out that Ballon Payment Republicans have set up the impending bad times that are certain to come to a neighborhood near you.  
    I hate to think of Repubs pinning this turkey on the Democrats.

  •  Is the lower inflation numbers this week... (2+ / 0-)
    Recommended by:
    3goldens, greenearth

    all about oil price declines?  Or is it a reflection of other causes.  In any event, we should have a pause of at least one more month, no?

    •  The core inflation rate EXCLUDES food and energy! (6+ / 0-)
      •  Never forget (3+ / 0-)
        Recommended by:
        3goldens, venatrix, greenearth

        Lower inflation can just be reflecting a contraction in consumer spending.

      •  Do you mean to say that inflation is down... (1+ / 0-)
        Recommended by:
        greenearth

        for reasons other than declining oil prices?

        •  I do not yet know what caused the lower (1+ / 0-)
          Recommended by:
          greenearth

          numbers.  I do know, however, that assuming that lower oil prices effect the inflation numbers overlooks the basis of computing inflation.

          •  Granny Doc, I'm no expert. I'd just like... (0+ / 0-)

            to know what people think is causing this drop in inflation numbers.  It's important for guessing which way interest rates go.  I think interest rates need to go down.  Seems that low inflation numbers will permit the Fed to follow that path.

            •  First, even though (4+ / 0-)

              the price of gas is not included in the computation, it indirectly affects almost everything else that is included.

              Second, I don't know that gas has been low for long enough to move the numbers.  Maybe over the next couple of months we could see some energy-related reductions.

              But I'm no expert either.

              Henry: "Give me liberty, or give me death!"
              Republicans: "Give me liberty, or ...not. Just don't let them hurt me."

              by Marc in KS on Sat Sep 16, 2006 at 07:21:24 AM PDT

              [ Parent ]

            •  My best guess is, (1+ / 0-)
              Recommended by:
              CAL11 voter

              that as disposable income is squeezed, demand for goods will be reduced.  As the demand goes down, raising prices will no longer be an optimal strategy for businesses.  Since the inflation index does not take food or energy prices into account, the reduced buying is being felt in both luxury and non-essential goods.

              Much of the consumer economy is based on the manufacture, import, or resale of non-essential products and services.  (Do you really use that Cuisanart, or will a sharp knife do just as well?)

              As prices remain stable or fall slightly, inflation index numbers will reflect this slow down.  There may also be a reduction in manufacturing costs as fuel prices drop slightly, just prior to the election.  That would keep the Fed from raising interest rates, as well.

              If the Feds do not raise interest rates it could be for one of several reasons.  The transfer of monies in the commercial economy may be slowing as buyers retrench, or the possibility of wiping out the housing industry is just to horrific to contemplate.

              Since the Feds rarely provide a coherent explaination for why they make the decisions they do, we will just have to wait and see how it shakes out.

      •  Isn't there another measure of inflation... (0+ / 0-)

        known as the headline inflation rate which does include food and energy.  Isn't it down to almost the same number as the core inflation rate?  Seems to me that energy prices will play a large role in expectations as to inflation going forward.  Oil at 60 is much different that oil at 80.

    •  Not enough to bother with (2+ / 0-)
      Recommended by:
      blue jersey mom, CAL11 voter

      The change in the core rate was very small. Part of the lower core rate came from a seasonal adjustment to imputed rents. There is no possible way to say anything  meaningful about inflation based on this single report.

      As today's Wall Street Journal article (page A2) explains it:

      The core-inflation figure cheered financial markets, because it suggested that a string of higher readings earlier this year may have come to an end. Before rounding, though, the core price index rose 0.242%, not far off a 0.3% rise that would have been more likely to stoke inflation worries.

      The main factor holding the core down: A seasonal adjustment that shaved one-tenth of a percentage point off the August increase in owners' equivalent rent, a proxy for the cost of housing that makes up almost a third of the index.

      Democrats: Giving you a government that works.

      by freelunch on Sat Sep 16, 2006 at 07:56:46 AM PDT

      [ Parent ]

  •  Crazy cautious (4+ / 0-)

    Everyone keeps telling us to wait 6 months, unless we find someplace is worth the money.  We just made an offer an a house, and I'm pretty confident considering the offer is only $25K more that what the house was priced at it at it's low end.  My real estate agent tells us stories of houses being slashed by $80K and still no one showing up to see the homes.  We live in Los Angeles and one of the things that keep us looking for a house right now is the fact that there are so many other people who are just waiting to buy at low prices.  When those people start flooding the market next spring, then the prices will go up again, like the did in some areas of Pasadena over the last 9 months.  

    The house we bid on, was orgininally listed at $525K (for what it is, that's insane). They lowered the price to $485K.  They bought the house in '02 for $445K.  That's pretty much indicative of what we're looking at.  We saw a house listed at $499K.  It was originally listed at $595K (once again, they were crazy for asking that much for what the house was and it's crappy location), they bought the house last year for $530K.  I would be shocked if that house sold for more than $425K.

    Black by popular demand!

    by fabooj on Sat Sep 16, 2006 at 06:28:14 AM PDT

    •  This dynamic will help soften the landing (1+ / 0-)
      Recommended by:
      greenearth

      With so many people priced out of the market in the last years of the boom, there is a lot of pent-up demand.  If you plan to stay in your home for more than a few years, there's not a lot of risk to buying as soon as the price drops to an affordable level for you and a lot of upside in terms of lifestyle.

      •  Risk (2+ / 0-)
        Recommended by:
        greenearth, old wobbly

        That's what I keep telling my husband.  The neighorhood the house is in, is still mostly working class, though more of the freelancer/artist-types are moving in. There's a school over there that will do great things and I can see myself living there for at least the next 10 years.  But my husband is unreasonable when it comes to his money, "But what if housing in the area drops down to $200K?"  I don't think it will ever get that low.  LA would have to be hit with a terrorist attack, riot and earthquake within 3 months in order for that to happen.

        Black by popular demand!

        by fabooj on Sat Sep 16, 2006 at 06:44:48 AM PDT

        [ Parent ]

    •  You obviously (1+ / 0-)
      Recommended by:
      greenearth

      have a pretty good understanding of what's going on -- that different neighborhoods are different, what actual values are in different markets, and so on.

      In New York, we've entered the "constipation" period of the market -- nothing's moving.  We haven't yet seen large drops in asking prices, and I think average selling prices are holding or even moving up (of course, the average is based on many fewer sales).

      At some point, pent up supply is going to trigger a downwards adjustment in asking prices -- when, how much, and for how long is anyone's guess.  If I were you, I'd be pretty firm in your offers.  The situation should only get better for you (the buyer) over the next year or so.

      I have to say, also, that those prices mentioned sound pretty low for Los Angeles. . .

      Is America finally suffering from Idiot Fatigue?

      by LarryInNYC on Sat Sep 16, 2006 at 08:22:52 AM PDT

      [ Parent ]

      •  LA Times helps (1+ / 0-)
        Recommended by:
        greenearth

        They run a feature on Sundays that show the median home price in a zip code.  I've been collecting and/or watching them since 2000, when we first started looking for a house.  So, I have 6 years of numbers behind me.  I also have a few contacts in the building dept. and public records offices who'll look up sales prices for me most of the time.

        Price-wise for LA, those prices aren't too low.  There are very few areas where the prices are ridiculous.  I mean, yeah housing here is overvalued, but as I've mentioned before, the median price in my neighborhood is up to $1.479M for a an average 1800sf house.  Meanwhile, if you go a few miles east or south, the same size house runs about $679K.

        Black by popular demand!

        by fabooj on Sat Sep 16, 2006 at 09:02:23 AM PDT

        [ Parent ]

      •  Residence prices are "sticky". (0+ / 0-)

        There certainly isn't quick movement, perhaps from lack of info, perhaps because most real estate is unique and the seller can't draw immediate conclusions from other people's homes not selling and he has to wait out his own year before realizing hey, it's not what I thought.

  •  Let it crash for G-d's sake! (3+ / 0-)

    Housing prices are down right REPRESSIVE!
    They must drop, tremendously.
    The system of cheap loans caused the price rise and too many deservant people are forced to move away from places they grew up in.
    CRASH AWAY, I'll be there to pick up a cheap place and maybe finally have a place to hang my hat!

    •  Paying Cash? (1+ / 0-)
      Recommended by:
      leftyguitarist

      Don't wish for that. If there is a serious housing crash, you will have to pay cash for your house. The generous lenders will be out of business and the banks, which had become mortgage lenders after the S&L disaster will leave again. You will have to get your mortgages from the people trying to sell their house and your friends with money to invest. It might take a decade to get a good mortgage market back in place if the crash is bad enough.

      Democrats: Giving you a government that works.

      by freelunch on Sat Sep 16, 2006 at 06:59:44 AM PDT

      [ Parent ]

      •  nah, HUD, FHA, Freddie mac, Fannie Mae (0+ / 0-)

        will add liquidity again.

        They will buy new mortgages provided they meet undrwriting
        and equity standards.

        Freddie,Fannie won't do badly, they have pretty tough standards,
        it's all those Mortgage backed securities that goldman sells
        that won't do well.

        It's why Henry Paulson signed upa s treasury secretary.
        He wants to help preserve his stock wealth in Goldman.

        If he's treasury secretary he can help bail out th eMBO market.

  •  I may be whistling in the dark but.... (1+ / 0-)
    Recommended by:
    greenearth

    everything that you listed and a lot of what you didn't mention has been thrown at the stock market. Yet it is climbing a wall of worry to recent multi- month highs. The Dow is within 2% of of it's all-time high. So what gives? I think that peace through stalemate in the Middle East is a very real possibility. One important indicator is the crude oil "fear factor premium" is melting away.And my possible Pollyanna predictions includes global warming as the prime issue for the 21st century. Which means a complete retooling of the worlds industrial base to mitigate the negative effects of the 19th century industrial revolution. This could be the kind of eco-sustainable business model that will have far-reaching and very postive results.

  •  An exception: here in the hurricane zone (1+ / 0-)
    Recommended by:
    matx

    Out of town, down in Galveston for the weekend, I notice that house prices are skyrocketing.  E.g., a lot has increased 75% in price over the last 5 years.  People are flocking to the coasts.

    •  Which makes amazing sense, (4+ / 0-)
      Recommended by:
      MTgirl, xanthe, JPete, Granny Doc

      right?  Ever-worse hurricanes, rising sea levels, tropical disease are all in store for the coast-dwellers.

      What they do have going for them is federally-subsidized flood insurance.

      Henry: "Give me liberty, or give me death!"
      Republicans: "Give me liberty, or ...not. Just don't let them hurt me."

      by Marc in KS on Sat Sep 16, 2006 at 07:23:16 AM PDT

      [ Parent ]

    •  This, I don't understand (1+ / 0-)
      Recommended by:
      JPete

      We considered buying there about 6 years ago for a weekend home. We actually looked at a beautiful Victorian house that survived the 1900 hurricane (my husband said it was across from the "projects" that's why it was so cheap) and 3 bedroom townhomes (all less than 100K).  Yet the massive, artistically vacuous vacation homes keep going up along the coast especially on the way to the state park beach.  Who can afford these, especially as second homes?

      •  I don't understand either. (0+ / 0-)

        There are million-plus houses that look as though they are begging to be blown down.  Even on the middle of the west side of the island, which is eroding an average of 12 feet a year.

  •  US Model of Economic Growth Based on Consumption (2+ / 0-)
    Recommended by:
    laurak, Granny Doc

    Could you please point me in the direction of a basic economic text that would (a) explain models of growth not based on consumption and (b) examine whether "growth" is really the goal we should be aiming for.  I would imagine there are other arguably desirable goals like stability, sustainability, rational distribution of scarce resources, etc. that may or may not be compatible with growth, however that's defined.  It's always been interesting to me that "growth" is assumed to be desirable and the goal to aim for.

    "The point is, every good candidate should have a positive agenda. But you also have to fight back." Al Franken, The Truth with Jokes, p. 104

    by Rona on Sat Sep 16, 2006 at 07:09:12 AM PDT

    •  Look At Asia (5+ / 0-)

      Where production of goods is just as important as consumption.  China has a 50%/GDP savings rate and over 9%/year in growth.  While this savinigs rate is too high (in my opinion), it gives you a flavor for what other countries do.

      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

      by bonddad on Sat Sep 16, 2006 at 07:20:20 AM PDT

      [ Parent ]

    •  Sounds like time to reread Adam Smith. (1+ / 0-)
      Recommended by:
      greenearth

      He actually talks quite a bit about the need to balance market forces with government spending.  

      From The End of Poverty, Sachs, on Wealth of Nations, Book V:  The state has powerful responsibilities regarding defense, justice, infrastructure, and education, areas in which collective action is required to complement or substitute for private-market forces.

      We aren't going to see this model playing out when our policy makers have been implementing their starve the beast thesis since Reagan.

  •  asdf (1+ / 0-)
    Recommended by:
    3goldens

    I have to admit that I "flipped" a new house two years ago.  I worked at a commercial real estate firm and my boss talked me into doing it.  I was shocked at how much I ended up making on the deal and can see how people can become addicted to doing it.  However, I am a conservative person when it comes to money and was terrified the entire time and even though I made money I didn't try to do it again.  I can't imagine if I had done it this year and not been able to sell the house.  I bet there are a lot of speculators that are in trouble right now and will have to start dumping houses that they bought and take a loss by selling for less than expected prices.  Prices will start declining in areas where this happens because assessments are made based on recent neighborhood sales.

    •  Sure (0+ / 0-)

      Flipping was very attractive to lots of people. They could make more on a moderately successful flip than they could earn in a year of working. Get rich quick schemes always have their attractions. I've met plenty of flippers, this area (SoFla)  was full of them.

      There was one story from a Boeing manager on the Housing Bubble Blog. He said that it was common to go onto the factory floor and find assembly line staff who “owned” three or four houses.

      Well, the party is over now and we’ll find out how much damage has been done over the next 12 months.

  •  I was paying 1000.00 in interest a month (21+ / 0-)

    And was very worried about the the ability to keep up with it all after the crash. So I sold my California 800 sq ft house on a lot you could spit across for 2000 sq ft. on 6.5 acers in Oregon. No banks I own it. I can't tell you in words how that feels. It did take guts to pack it all up, a wife and 2 kids  for a strange town after 14 years. It has been a long hard summer but now we are debt free for the first time since we were married.  

  •  I Enjoy Your Posts Bonddad! (11+ / 0-)

    I also enjoy reading the comments your posts elicit.  It is a good way to stay in touch with what is happening economically around the nation.

    I am located in Stark County, Ohio, which is often held up by political strategists and economists as representative of mainstream America.  Every time  Republicans occupy the White House (and this is all anecdotal,) I notice the same things about my county:

    1. There is a huge increase in people driving late-model cars which are still driveable but have been wrecked and not fixed.  Probably people stuck in leases or high insurance payments/deductibles they can no longer afford.
    1. The housing market initially surges briefly, but then it begins a decline or stalls, as it has now.
    1. Smaller businesses begin to fail and start layoffs, or they leave the area entirely and head south.
    1. Local taxes atually begin to increase for anyone still able to pay taxes because local governments try to make up for lost revenue.
    1. The number of foreclosures increases, which in turn affects the health of our public schools who rely on revenue from property taxes.
    1. The malls are empty or people are wandering or walking without purchasing.
    1. Crime increases dramatically, based on newspaper reports and not on the "official numbers" the local municipalities release.

    I have listed these items in random order.  I know there is a lot of cause and effect interaction between them.  But I am too weary from trying to survive to put them in a logical order.

    I must say that even after 12 years of Reagan and H.W. Bush, as bad as things were here then (and they were bad and thrust us into "rust belt" status), I believe from what I am seeing, hearing and experiencing that it is worse now.  And all in less than half the time under Bush, the sequel.  

    Stark County had enjoyed a lot of growth under Clinton.  Things were rebounding from the previous 12 years and going well.  Now, for both blue- and white-collar workers, again all progress has come to a screeching halt here.  Several real estate agent friends, who were making ends meet under Clinton, have had one sale each this year and had been struggling increasingly each year since 2001.

    Others are driving much farther to find gainful employment, I'm sure adding considerably to their already stretched living expenses.  Or they are abandoning property and just leaving the area entirely.  

    I am of middle age and it has become an accepted assumption in all circles of parents with grown children that those children will have to leave the area or the state to find living-wage work and make a life for themselves.

    The sale of the Hoover Company to Maytag and now to Whirlpool, who has its new acquisition quietly up for sale, should effectively devastate North Canton, a middle to upper-middle class town with traditionally stable property values and excellent city services.  Hopefully this will not lead to the rolling blight other commenters have mentioned, but it certainly is a possibility.  Previous moves by Maytag in laying off almost all of its workforce has already had the expected negative effect on other areas of the county where employees lived as well.

    It's all very frightening.  The only winners I see in all of this mess are those who qualify for those damnable top-tier tax cuts.  I guess they merrily can add to their spoils, and at fire-sale prices, the shattered dreams the rest of us were trying to achieve.

  •  Any Conflicts of Interest, Bonddad? (0+ / 0-)

    I'm just wondering.  While there is little doubt that the housing market has grinded to a halt, your posts, at times, are alarmist.  Do you have anything in your portfolio whereby you would stand to gain in the face of a housing market collapse?

    My sense is that the answer is no, but I just wonder.  Everything you higlight in your posts suggests that housing news is actually worse than most economists say it is.

    •  ...and why would any economist (4+ / 0-)

      with a microphone want to stand on the roof top and scream, "The sky is falling.  The sky is falling."  They make their money supporting the system they hype.

      You do realize that the entire market economy is based on promises?  There is no there, there, unless the promises keep being made.

    •  Most MSM reports (1+ / 0-)
      Recommended by:
      venatrix

      in the played along with the lie that Iraq had something to do with 9/11, and the herd of public opinion bought it. The lesson learned is that it is rarely wise to accept what most in the mainstream say without independent confirmation, because it is the mainstream media has major conflicts of interest.

      However, if you prefer to accept mainstream views, why visit DK? You aren’t going to find them here.

    •  Bonddad's posts. . . (0+ / 0-)

      your posts, at times, are alarmist.

      are always alarmist.  But so are plenty of other peoples who are not in economics.  No need to allege conflict of interest.  The "doom-junky" personality type does not require reward.

      I work with computers, and most of the people hunkering in bomb shelters on December 31st, 1999 were not computer professionals.  I'm glad to have benefitted by  the large amount of remediation work, but few people directly involved in the industry saw any real danger.

      Is America finally suffering from Idiot Fatigue?

      by LarryInNYC on Sat Sep 16, 2006 at 08:28:45 AM PDT

      [ Parent ]

      •  Of course (4+ / 0-)
        Recommended by:
        laurak, venatrix, Sagittarius, LibChicAZ

        One of the reasons that there were no problems on 1 January 2000 is that the real problems were taken care of before then. Sure, there was a lot of marketing hype associated with it, but if everyone had ignored that, we would have had serious problems.

        If you ignore the warnings, you will have disasters. If you listen to the warnings and solve the problem to avoid the disaster that does not mean the warnings were unnecessary.

        Democrats: Giving you a government that works.

        by freelunch on Sat Sep 16, 2006 at 08:33:45 AM PDT

        [ Parent ]

        •  I did have (0+ / 0-)

          a couple of relatives in the "world's gonna end" camp and believe me, the stuff they were worried about was never going to happen.  It wasn't stuff that got fixed, it was simply made up threats.  Complete fantasy.  But every time I'd try to explain it to them, they'd cite some "study" that had been forwarded to them via email by another doom junky.  One of their sources was, in fact, a computer programmer -- which just shows that even people who should know better are not necessarily immune.

          This economics stuff is just the same.  Doom junkies circulating and amplifying the same ideas around and around.  It's a little different from Y2k in the sense that no one really knows what's going to happen with the economy whereas the Y2K stuff was pretty easily debunked.  But the odds of a total economic collapse are pretty slim, and the "proof" contained in these kinds of postings neither strengthen nor weaken the liklihood of such a collapse.

          Bonddad himself is far from the worst of the doom junkies -- there's always an obligatory mention that "no one really knows what's going to happen" but these kinds of posts do feed the doom junky frenzy.

          Is America finally suffering from Idiot Fatigue?

          by LarryInNYC on Sat Sep 16, 2006 at 08:41:33 AM PDT

          [ Parent ]

    •  This isn't an advice column. (1+ / 0-)
      Recommended by:
      juliesie

      If you want a disclaimer, here's one: anybody who actually bases economic decisions on an anonymous poster is a fool, and anyone who is satisfied with the anonymous poster's supposed disclosures of conflicts is a fool twice over.

      •  I don't know. (0+ / 0-)

        Economic advice, perhaps, but there has definately been some advice on DKos that has saved a lot of people -- IIRC, someone awhile back cited Darksyde's pre-Katrina hurricane coverage as the major reason they left New Orleans prior to August 28, 2005.

    •  He is not saying ANYTHING I havent heard (0+ / 0-)

      for the past 4 years elsewhere.

      If anything, I think his posts are LESS alarmist than others.

      One guy predicts NO RECOVERY, EVER.  There will never be more jobs etc.  A sustained world wide depression.  

  •  NAFTA (0+ / 0-)

    Just wondering if the economic gurus here would recommend a tinkering with the free trade treaties.  It looks like they are working as expected by some, by that I mean the world's economies seem to be getting more parity.  Seems that the richest country would find this to be a bad thing--we're not only uplifting our trading partners, we're lowering our own std of living.

    This is a very complicated and volitile topic--especially during an election year when populism might obfuscate good policy--but not a topic that should be ignored.  

  •  Mortgages? (1+ / 0-)
    Recommended by:
    greenearth

    What kind of mortgage instruments were used to finance the last eight years of "home buying" and what instruments provide the greatest risk in a "down" market?

    What percentage of "home buying" occured with "no down payment" or with "down payments" representing more than 10% of the purchase price?

    •  also adjustable rates are a problem (0+ / 0-)

      In addition to the risky "100% financing"  schemes, adjustable rate mortgages are causing concern. Apparently almost a fourth of all mortgages are slated to "reset" (up) this year. See the link:

      http://www.thetrumpet.com/...

      When I refinanced a couple of years ago they really pushed us hard to do an adjustable. Being a pretty risk averse person, I didn't. My stubbordness has at last paid off.

  •  Good blog on this: www.patrick.net n/t (0+ / 0-)

    [RED/GLARE]

    For business reasons, I must preserve the outward sign of sanity.

    --Mark Twain

    by redglare on Sat Sep 16, 2006 at 10:10:11 AM PDT

  •  ok help me out here (0+ / 0-)

    Should I buy now or wait? 'cause I'm suspecting that many people around where I am are also waiting for prices to be slashed and like fabooj noted upthread(downthread), that will drive prices back up.

    plus we're getting two new courthouses in Harrisburg, one right in the neighbahood i'm looking at, so values would go up. Since I'm planning on buggin' outta this city within the next 2-4 years, could I potentially still get something out of my investment?

    BTW Harrisburg is not a bubble city. Both city and the sprawling suburbs are very affordible.

    When fascism comes to America, it will come draped in the flag and carrying a cross. And people like me will go to the camps to die.

    by terrypinder on Sat Sep 16, 2006 at 11:23:25 AM PDT

  •  Seems simple. Problem only exacerbates from here. (0+ / 0-)

    Now everybody's waiting for it to slump, hit bottom...

    waiting for the desperate.

    We are. Sucks but that's how it is...

    If we fry it, they will come.

    by Fried Freedom on Sat Sep 16, 2006 at 01:19:44 PM PDT

  •  Wanted to thank you, bonddad. (3+ / 0-)
    Recommended by:
    freelunch, joesig, cfk

    Sorry, it's not quite on topic here -- just a personal note.

    You wrote a diary last year that scared me.  The hubby and I owned property in Florida and had some pretty serious credit card debt.  I told him about the diary, and before I could suggest selling, he said, "How about we just get rid of that property and pay everything off?" :-)

    So we did.  We got the buyer, and the price we wanted, in September of last year.  

    I read an analysis the other day that said the housing market peaked in that town last September.  Another property nearby, very similar to the one we sold, just sold in that town last month, for half what we got for ours last year.

    We paid off all of the credit card debt, and were able to sock a good amount away.  We're able to save money now.

    So thank you for scaring us.  

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site