Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

US House Prices Bottom As BubbleomiX Predicted

Housing-Market / US Housing Sep 20, 2012 - 04:09 AM GMT

By: Andrew_Butter

Housing-Market Best Financial Markets Analysis ArticleNow The 1% Can Screw The 99%...Yippee!!

It looks like US house prices have bottomed; this is the S&P Case-Shiller 20-City Index up to June 2012:


That’s pretty much how BubbleomiX predicted it would go, three years ago (dotted red line):

http://www.marketoracle.co.uk/Article12450.html

OK there was one sucker-rally and two dead-cat bounces and the bottom was at 134; BubbleomiX said there would be two sucker rallies and one dead cat bounce and the bottom would be 120.

Personally, I reckon that the difference between 134 and 120 is a measure of how successful the combined efforts of the Fed and the Federal Government were at turning back the tide of the inevitable.

Of course one has to question whether all the money that was printed to be thrown at the problem as a pain-relief, was what Hayek would call a mal-investment.

The danger now is that the Fed, egged on by the politicians, creates another bubble. It’s happened before:

For example, after the pop of the Dot.com bubble, Alan Greenspan eased to take away the pain and reward the speculators who had paid too much at the top of the bubble, or more precisely to give a Get-Out-Of-Jail card to the bankers who had extended credit to speculators doing that on margin.

Granted, Greenspan’s big mistake was to accelerate the easing after 9/11 as part of his personal contribution to winning The War on Terror (I’m not kidding; he says that’s why he did it in his book). That contributed to the housing bubble.

http://www.marketoracle.co.uk/Article22235.html

Not that I am convinced that was the prime driver of that bubble, in my opinion what drove the mal-investments in the housing bubble was securitization, which is where all the money for the flipper-speculators came from, although theoretically Greenspan was supposed to be keeping an eye on that, just he fell asleep at the wheel.

http://www.marketoracle.co.uk/Article16256.html

Here we are in the end of 2012, and it looks like Ben might actually break-even on the $1.5 trillion or so of toxic assets he bought as part of TALF to prop up the system, which goes to show, you should never fight the insider-trader of last resort, although it’s still not clear what he paid for that junk, certainly it was more than anyone else wanted to pay at the time.

http://www.marketoracle.co.uk/Article36528.html

So why on earth is Ben going back into the market to buy legacy RMBS which is what QE-3 is all about?

 There again at “only” $40 billion a month, he will need to keep going for about three years to print what he printed to fund TALF.

Anyway, without doubt we can say that’s Mission Accomplished one more time!!!

Starting 2005 all the poor and struggling middle-class people in USA were persuaded to buy houses on credit at silly prices…for the greater good of America.

Now a good number of them have been bankrupted and kicked out of the houses they bought, and so anyone with a good credit score can borrow money at the lowest interest rate possible, as engineered by the Fed, and can buy those houses at 20% to 30% less than they would be worth if the market was not in disequilibrium, and then rent the houses to the people who got kicked out, who can’t go back in because their credit scores are all shot to pieces.

Nice to see the policies of the Fed are rewarding the 1% and screwing the 99%, nothing changes.

Leaving aside how much money can be made by the 1% capitalizing on the misfortune of others the danger now, in a larger sense, is another Monetarism Fuelled Bubble

Ben says he’s staying the course with his “easing” (read printing), because he wants to create jobs in America. Forgive me for being a little slow here, but regardless of what Mitt Romney says, I never saw any evidence that handing out money to the 1% of the population that is super-rich, created jobs for the remaining 99%, or certainly not jobs that create sustainable economic growth.

I mean how many times does Mitt need to have his shoes polished every day?

Right now long-term interest rates in America are half what they should be for this stage of the business cycle, in other words US Treasuries are a mega-bubble, sustained by the actions of the Fed. That rewards the rich, who have got good credit scores and can borrow at super-low interest rates, and penalizes everyone else.

Whether TALF and her little-sister TARP did anything more than provide pain relief for the super-rich, is something that will be debated for years.

If America is to get back on track, Ben needs to start pulling back the election-candy, right now.

And the politicians need to start making the changes to…the tax code, the “rights” of public sector unionized workers to milk the system, the way it makes more sense to build things outside America than inside…thanks to the way taxes are calculated, the subsidies on gasoline that pump up the current account deficit, plus the really stupid subsidies on making ethanol from corn…there is more.

 If progress is made on those fronts, then America has a chance, the danger is that Ben will print money to give the politicians weapons of mass-pain-relief so they don’t have to push through unpopular medicine.

Then the bubble in US Treasuries which rewards the 1% and penalizes the 99% will keep inflated, and then one day that bubble will burst which will have consequences…for the 99%.

Just don’t say those consequences, when they happen, were, “Unintended”.

By Andrew Butter

Twenty years doing market analysis and valuations for investors in the Middle East, USA, and Europe. Ex-Toxic-Asset assembly-line worker; lives in Dubai.

© 2012 Copyright Andrew Butter- 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.

Andrew Butter Archive

© 2005-2019 http://www.MarketOracle.co.uk - 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

6 Critical Money Making Rules