Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Beware the Mass Media, A Pack of Lying Morons

Economics / Mainstream Media Aug 28, 2009 - 05:00 AM GMT

By: LewRockwell


Jack D. Douglas writes: The Mass Media reports on almost all economic issues more complex than buying a hamburger are very misleading at all times and are catastrophically misleading in this Great Crisis in which almost everything is distorted in Rube Goldberg ways by the Fed, FDIC, and scores of other agencies and giveaway, subsidy programs.

The Media-ballyhooed housing data for the past two months – the "Great Recovery" – are the obvious result of the huge "First Time Home Buyers" giveaway program set to expire in November, of the vast Fed mortgage market subsidies keeping rates down far below their "natural" rates, the catastrophic distress sales at the higher end of the housing market which shift median sale prices upward even though the owners are taking huge losses, and the speculative buying by bottom fishers hoping to make a killing and probably being funded in some ways by money coming originally from the Fed to the Big Banks at subzero real rates.

I expect the "first time buyers" are often young people fronting for bottom-feeding speculators who can get into such deals for almost no money and the young people who get a cut and will only lose credit for a few years if it all falls through eventually. One third of total home sales in both of the past two months are First Time Buyer sales in which the Federal government is paying almost all the down payment and the mortgage rates are highly subsidized by the government pouring money into the mortgage market. Even when the first time buyers are really "vetted," my bet is that many frontmen and ladies are sneaking by the vetting process. A high percentage of these are really sub-prime mortgages, but not adjustables. Since the program right now is set to end in two months, we are seeing soaring buying to get the subsidies, just as we saw with Cash for Clunkers cars.

The most remarkable thing is that almost all the Media flaks pretend they know nothing about this. I even saw Robert Schiller, the now celebrity economist who studies house prices, talking a half hour this morning on the financial news about the stats and housing and never mentioned it once. It was mentioned by an uncelebrated young woman in real estate on a different financial news program hours later, a woman who knows what is really going on and says so honestly. She does not share Schiller's vapid, sanguine view. Actually, he does not either if you listen to his "ifs ands and buts."

Even when on rare occasions the flaks allude to this vast government money pouring into home purchases to get people to buy who would not otherwise be able to do so or would not choose to do so at this time, the flaks ASSUME that this "Keynesian Pump Priming" will work to produce a continual recovery in home buying. That's absurd. The evidence is that it leads to "Hurry Up" buying and then when it ends to sudden drops in buying.

People at the high end of housing markets are feeling more and more desperate to sell in spite of the collapsing prices at that end. Arrears and defaults are soaring in the Adjustable Rate Primes, as we knew from the beginning they would later in the Crisis, and are now soaring – doubling this year over last year – in the prime, nonadjustable markets. Even when total sales remain low because most people can still hang on, the prices in the very highest-priced markets have sometimes fallen drastically over last year [down 45% on Coronado, the very high end in San Diego]. These are still not a big part of total housing sales, but they are soaring fast and will become so. The arrears and defaults are becoming more and more a matter of primes going underwater and then being sold or abandoned. The median prices will move upstream, even as those losses soar.

The rate of successful workouts of mortgages in arrears and refinanced in government programs is falling drastically. A few years ago 40% of mortgages in arrears were worked out and did not go on to default. Now the rate even of successful prime workouts is down to about 4 or 5%. Catastrophe.

Corporate problems are growing rapidly. Unemployment is growing and is probably about 20% now when all the uncounted people, furloughs, pay cuts, etc., are counted. That's why primes are falling into arrears and defaults and prices are plunging fast.

Markets go up and down in the usual, natural oscillations in depressions. We have something of a "Relief Recovery" from the catastrophic falls over the past several quarters. But our trend is down. Our short run, natural oscillations will trend down as long as the fundamentals of employment, etc., are trending down. Government distortions will wane and produce sudden drops at times and sudden jumps at times.

Don't be deceived by the frauds or the ignorant Media flaks. The ignorant are always wrong when anything is complex and distorted and when we are at turning points in markets. Right now they are all at sea for all reasons. We always have frauds and right now they are getting a huge, free ride on the Media.

August 28, 2009

Jack D. Douglas [send him mail] is a retired professor of sociology from the University of California at San Diego. He has published widely on all major aspects of human beings, most notably The Myth of the Welfare State.

    © 2009 Copyright - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in