Archive for July 2008
Vancouver Real Estate update:Others are now chiming in
Looks like it’s not just me that is talking about the Vancouver Real Estate market making turning the corner to now start making price declines.
U.S. home prices drop record 16%
Things will only continue to get worse from here, that much is certain.
U.S. home prices drop record 16%
The Associated Press
July 29, 2008 at 11:15 AM EDT
NEW YORK — Home prices tumbled by the steepest rate ever in May, according to a closely watched housing index released Tuesday, as the housing slump deepened nationwide.
The Standard & Poor’s/Case-Shiller 20-city index dropped by 15.8 per cent in May compared with a year ago, a record decline since its inception in 2000. The 10-city index plunged 16.9 per cent, its biggest decline in its 21-year history.
No city in the Case-Shiller 20-city index saw price gains in May, the second straight month that’s happened. The monthly indices have not recorded an overall home price increase in any month since August 2006.
Home values have fallen 18.4 per cent since the 20-city index’s peak in July 2006.
Internet Links
The Globe and Mail
Nine metropolitan cities — Las Vegas, Miami, Phoenix, Los Angeles, San Diego, San Francisco, Seattle, Wash., Portland, Ore., and Washington, D.C. — posted record declines in May. And the value of housing in Detroit is now lower than it was in 2000.
But a possible bright spot in an otherwise dismal report, seven metros — Tampa, Fla., Boston, Detroit, Minneapolis, New York, Dallas and Atlanta — showed smaller annual declines.
Las Vegas recorded the worst drop, with prices plunging 28.4 per cent in the month. Miami came in a close second, with prices down 28.3 per cent.
Charlotte, N.C., posted the smallest drop at 0.2 per cent. Until April, the North Carolina city had been the last metro still showing price gains.
Peter Schiff(hero) gets recognition from The Globe and Mail
This man has been the biggest inspiration to me over the last 2 years.
When Dr. Doom speaks, we should listen
This article will likely be largely ignored because of it’s negative stance that scares away people, putting up their defense mechanisms to the truth.
A wake up call for Canadian baby boomers
Don’t for a second think that this situation could not play out here, in the 51st state. Time to start thinking about alternate plans.
“Even as the market falls, future retirees are told not to panic, to keep their money where it is, because in the long run the value of their accounts will go up and they will have many a happy sunset year traveling the globe and showering their grandchildren with presents.”
Yes that is exactly the sales job many have taken line and sinker. They have done a fine job of selling this idea to the masses, I’ll give them that. I to believed this lie until I got inside the market and saw it for what it truly is.
“How Wall Street Wrecked your Retirement” The Nation Magazine July 23, 2008
Peter Schiff on Real Estate before the bubble burst
Check out Peter telling it the way it is as always. Peter Schiff knows the truth and has been very accurate over the last 5 years as this situation plays out in reckless gut-wrenching fashion.
Food for thought…..
“The global economy is at the point of maximum danger” Ambrose Evans- Pritchard July 21, 2008
Meh….
Remember the comments is where the REAL GOLD is, but they will likely also give you a headache.
You know the banking system is unsound when…
The MISH(Mike Shedlock) writes an excellent scathing post about the condition of the fraud factory which is the US Financial System(And to some extent the global financial system)
YOU KNOW THE BANKING SYSTEM IS UNSOUND WHEN…
1. Paulson appears on Face The Nation and says “Our banking system is a safe and a sound one.” If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.
2. Paulson says the list of troubled banks “is a very manageable situation”. The reality is there are 90 banks on the list of problem banks. Indymac was not one of them until a month before it collapsed. How many other banks will magically appear on the list a month before they collapse?
3. In a Northern Rock moment, depositors at Indymac pull out their cash. Police had to be called in to ensure order.
4. Washington Mutual (WM), another troubled bank, refused to honor Indymac cashier’s checks. The irony is it makes no sense for customers to pull insured deposits out of Indymac after it went into receivership. The second irony is the last place one would want to put those funds would be Washington Mutual. Eventually Washington Mutual decided it would take those checks but with an 8 week hold. Will Washington Mutual even be around 8 weeks from now?
5. Paulson asked for “Congressional authority to buy unlimited stakes in and lend to Fannie Mae (FNM) and Freddie Mac (FRE)” just days after he said “Financial Institutions Must Be Allowed To Fail”. Obviously Paulson is reporting from the 5th dimension. In some alternate universe, his statements just might make sense.
6. Former Fed Governor William Poole says “Fannie Mae, Freddie Losses Makes Them Insolvent”.
7. Paulson says Fannie Mae and Freddie Mac are “essential” because they represent the only “functioning” part of the home loan market. The firms own or guarantee about half of the $12 trillion in U.S. mortgages. Is it possible to have a sound banking system when the only “functioning” part of the mortgage market is insolvent?
8. Bernanke testified before Congress on monetary policy but did not comment on either money supply or interest rates. The word “money” did not appear at all in his testimony. The only time “interest rate” appeared in his testimony was in relation to consumer credit card rates. How can you have any reasonable economic policy when the Fed chairman is scared half to death to discuss interest rates and money supply?
9. The SEC issued a protective order to protect those most responsible for naked short selling. As long as the investment banks and brokers were making money engaging in naked shorting of stocks, there was no problem. However, when the bears began using the tactic against the big financials, it became time to selectively enforce the existing regulation.
10. The Fed takes emergency actions twice during options expirations week in regards to the discount window and rate cuts.
11. The SEC takes emergency action during options expirations week regarding short sales.
12. The Fed has implemented an alphabet soup of pawn shop lending facilities whereby the Fed accepts garbage as collateral in exchange for treasuries. Those new Fed lending facilities are called the Term Auction Facility (TAF), the Term Security Lending Facility (TSLF), and the Primary Dealer Credit Facility (PDCF).
13. Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as “marked to fantasy” assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.
14. Bernanke openly solicits private equity firms to invest in banks. Is this even close to a remotely normal action for Fed chairman to take?
15. Bear Stearns was taken over by JPMorgan (JPM) days after insuring investors it had plenty of capital. Fears are high that Lehman will suffer the same fate. Worse yet, the Fed had to guarantee the shotgun marriage between Bear Stearns and JP Morgan by providing as much as $30 billion in capital. JPMorgan is responsible for only the first 1/2 billion. Taxpayers are on the hook for all the rest. Was this a legal action for the Fed to take? Does the Fed care?
16. Citigroup needed a cash injection from Abu Dhabi and a second one elsewhere. Then after announcing it would not need more capital is raising still more. The latest news is Citigroup will sell $500 billion in assets. To who? At what price?
17. Merrill Lynch raised $6.6 billion in capital from Kuwait Mizuho, announced it did not need to raise more capital, then raised more capital a few week later.
18. Morgan Stanley sold a 9.9% equity stake to China International Corp. CEO John Mack compensated by not taking his bonus. How generous. Morgan Stanley fell from $72 to $37. Did CEO John Mack deserve a paycheck at all?
19. Bank of America (BAC) agreed to take over Countywide Financial (CFC) and twice announced Countrywide will add profits to B of A. Inquiring minds were asking “How the hell can Countrywide add to Bank of America earnings?” Here’s how. Bank of America just announced it will not guarantee $38.1 billion in Countrywide debt. Questions over “Fraudulent Conveyance” are now surfacing.
20. Washington Mutual agreed to a death spiral cash infusion of $7 billion accepting an offer at $8.75 when the stock was over $13 at the time. Washington Mutual has since fallen in waterfall fashion from $40 and is now trading near $5.00 after a huge rally.
21. Shares of Ambac (ABK) fell from $90 to $2.50. Shares of MBIA (MBI) fell from $70 to $5. Sadly, the top three rating agencies kept their rating on the pair at AAA nearly all the way down. No one can believe anything the government sponsored rating agencies say.
22. In a panic set of moves, the Fed slashed interest rates from 5.25% to 2%. This was the fastest, steepest drop on record. Ironically, the Fed chairman spoke of inflation concerns the entire drop down. Bernanke clearly cannot tell the truth. He does not have to. Actions speak louder than words.
23. FDIC Chairman Sheila Bair said the FDIC is looking for ways to shore up its depleted deposit fund, including charging higher premiums on riskier brokered deposits.
24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.
25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
I.O.U.S.A. Sundance Film Festival Selection
Hope this film wakes up a whole lot of sleeping people, maybe they will run it on CNN….;)
Paul Farrell is a wise man-America is the new top socialist economy
At last check there were over 600 comments on this article being just posted this morning.
Everyone needs to stand up(off their asses watching the idiot box) and take notice of what this man is brave enough to say.
“Eleven reasons why America is the new top socialist economy“
Don Harrold on home ownership
Don has been creating some great videos over on Youtube and generating a few thousand views per post.
Check out his view on owning a house. Has it been a slick sales job to a lot of people? Has the American Dream turned into the American nightmare?
One look at foreclosure numbers out of the US paints a very ugly picture of a tidal wave gaining size and speed, and it is just starting.
