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Monday, September 28, 2009
Executive Summary
- In the prior report, we covered housing supply and prices; in this one, we cover demand and liquidity.
- Housing demand is easy to measure, but hard to predict. The prime determinant of housing demand is jobs.
- We are not likely to recover from our current unemployment slump for 5-10 years.
- The "housing ATM" is not only broken, but operating in reverse, putting additional pressure on potential housing consumers.
- Artificially low interest rates give us some temporary stability in the housing market - in exchange for an increased risk of future losses.
- The Federal Reserve and federal government are the housing market.
- Our nation is suffering from "stimulus addiction," and the path of least resistance is to continue feeding the habit.
- For the housing market to recover, the job market has to recover first.
- These are all indications that our debt-based money system is seriously flawed.
We are covering housing at this time because it is one of the key determinants of whether or not our economy will enjoy a decent bounce or merely a false statistical recovery here. As goes housing, so goes the economy.
Here we will focus on the US (primarily because I have good data for it), but the lessons and implications are virtually identical for other areas of the world. Ireland, Spain, the UK and a number of other spots are in far worse shape by this measure than the US.
In the prior report, we covered housing supply and prices. Here we are going to cover demand and liquidity
Your faithful information scout,
Chris Martenson
Copyright 2009, Chris Martenson. All rights reserved.
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Comments
Chris really amazing how you put all this together.
If this strikes you to be a bit on the desperate side (as it does me), then you might also come to the conclusion that perhaps the monetary and fiscal authorities are really going about it all wrong...
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The Unemployment Rate graph hit me for a reason having nothing directly to do with topic of this post: the instability of the number. For the last quarter century at least, the rate has either been rising sharply or declining, somewhat less sharply...
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I would tend to agree that the housing tax credit will be extended, but I can't imagine that it would be extended just for 1st time buyers. I would imagine that most of those 1st time buyers, particularly those who sat patiently on the sidelines during the boom, used up the credit over the summer...
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What I've been wrestling with for quite awhile now, is this predicament of non-sustainability we know is leading to increased cycles of...
Bankruptcies Shortages Further contraction(s) Lower...more simplified standard of livingBesides fighting entrenched dogma and desire for the status quo, aren't we also dealing with and reaching a crisis of leadership and problem solving? We are still in the nascent stage of the ultimate paradigm shift...
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I get the same impression of increasing amplitude and frequency of the crises.
Rather than perform a stabilizing role, interventions only seem to store up more kinetic energy for future releases.
Here's my mental model for the markets remarkably captured in a short 64 second video:
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Nichoman wrote:
My extrapolation goes beyond CM's Crash Course of a decentralized...enhanced local community lifestyle. Do we have an organized process to get us there?
My past experiences (wars and disasters) are we vitally need to evolve toward a non-bureaucratic process at all levels...
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Oh, and by the by, this post is quoted at
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Chris,
Thanks for another excellent report! I wonder whether you have any thoughts on what all this will mean to foreign residential real estate markets? On one hard, many economies (particularly here in Asia) are doing much better than the U...
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In Part 1, Chris estimated further decline in housing prices to close the gap with income.
But here's an upbeat headline in today's mainstream media:
U.S. home prices up in July, beating forecasts"These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," David Blitzer, chairman of the index committee at S&P, said in a statement...
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I'm trying to piece this together...
Is the $624B in mortgaged back securities purchased by the Fed in 2009 the same flow as noted in the August 2, 2009 Shell Game Martenson Report. Is it still believed trued as described in that report the Fed is buying these assets from foreign central banks with money out of thin air, enabling the banks to buy Treasuries and support our national debt?
Is this cash flow in addition to the Currency Swaps described in CM's September 25 blog?