Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

US Housing Bust Creating a NEW SuperBoom

Commodities / Resources Investing Mar 04, 2008 - 02:13 AM GMT

By: Money_and_Markets

Commodities

Best Financial Markets Analysis ArticleMartin Weiss writes: After last week's bombardment of news reports, anyone who still thinks the U.S. economy is not sinking rapidly into recession is either trying to push a biased agenda or living on another planet.

The dire reality:


This recession is undeniable, with a greater abundance of evidence at this early stage than any other economic downturn of modern times — plunging home sales and prices, falling consumer confidence and spending, surging unemployment and more.

This recession is unavoidable, with nothing the Federal Reserve, the Treasury, the White House or Congress can do quickly enough or forcefully enough to stop it.

Indeed, with inflation already surging and the dollar already plunging, it's now likely that their grab-bag of housing market bailouts, stimulus packages and interest-rate cuts are likely to accomplish little more than push the dollar over the brink, drive commodity prices through the roof, propel inflation beyond control and, ultimately, deepen the crisis.

This recession is incomparable, unlike anything you've seen in the past or are likely to see in the future.

For the first time since the early 1980s , we are witnessing the virtual shutdown of some of the nation's most important credit markets — for many kinds of mortgages, certain types of corporate bonds and, in the past few days, even municipal bonds.

For the first time since the Great Depression , the value of residential real estate is plunging nationwide.

For the first time in U.S. history , countless middle-class Americans — even many with good credit — are defaulting on their mortgages, abandoning their homes, sending a whole new set of shockwaves through the banking system.

And for the first time ever , trillions of dollars in derivatives — debts and bets that did not even exist in recessions or panics of yesteryear — are now blowing up.

Fortunately, however, thanks to a series of new revolutionary instruments now available to average investors ...

This recession is also eminently escapable! Unlike during any prior crisis, you now have multiple opportunities to protect your family from the declining value of your real estate ... create a solid defense against the falling dollar ... hedge your portfolio against a falling stock market ... and even turn each of these situations into life-changing profit opportunities.

Most stock investors, however, are frozen in limbo. They're continually waiting for the government to swoop down with the next big rescue. They don't yet recognize the severity of the storm. They don't yet understand how quickly it can destroy their portfolios.

If you — or someone you care for — is among them, join me now in a brief guided tour of last week's events. And at each stop along the way, let me share with you my thoughts regarding what I see coming next and what you can do right now to escape the dangers.

Worst Home Price Decline on Record

First, take a long, hard look at the home price decline.

The recession has barely begun — and the decline in residential real estate values is already the worst since modern records were kept.

The S&P/Schiller Home Price Index, which not long ago was soaring by more than 30%, just plunged 9.1% in December.

Worse, the median price of new homes sold has tanked 15.1% from January of last year, the biggest drop in any month since at least 1964, when they first began tracking this measure.

Is this decline as deep as what our parents or grandparents experienced in the Great Depression? Probably not. But ...

Arrow In the Depression, the cost of living was going down, helping to ease the burden for many homeowners. Today, it's going up.

Arrow In the Depression, a much smaller percentage of families borrowed money to buy a home. Today, it's the purchase of a home without debt that's the rarity.

Arrow If you walked into a bank in the 1930s, it's absolutely certain that the mere mention of mortgages with no down payments, no documented income or no principal payments would have been universally greeted with ridicule. Today, these wacky new loans have been created by over 10,000 banks, thrifts and mortgage lenders in 3,000 counties and 25,000 towns across the U.S.

Arrow From everything we know, it's quite certain that adjustable-rate mortgages (ARMs) did not exist. Today, so many ARMs are resetting at higher rates, they are threatening to help trigger up to two million foreclosures.

Arrow Back then, very few home owners were upside-down — with more debt than home value — and it was unheard of for Americans to abandon their homes for that reason alone. Today, this situation is so widespread, a half dozen government agencies and thousands of lending institutions are desperately scrambling to find ways to reverse the trend.

What's next:

The political forces for an unprecedented, national bailout are now mounting by the day. So expect massive government efforts to forestall an equally massive wave of foreclosures. But while the likely success of these efforts is doubtful, the unintended consequences are obvious ...

  • Bigger losses for lenders when they delay seizing homes and wind up selling them at lower prices.
  • A bigger burden on taxpayers as the government spends money it does not have.
  • A bust in commercial real estate sales and prices. This is beginning right now, following a pattern very similar to the bust in housing. It's still a few steps behind. But it's likely to catch up quickly.
  • Severe damage to the U.S. dollar and a superboom in commodities. (More on these in a moment.)

Your escape:

  • If you're selling your home, price it aggressively.
  • If you're pondering what to do with commercial properties, stop guessing and start acting: Sell!
  • If you're looking for a new place to live, don't buy. Rent.
  • If you're seeking bargains, don't rush. Wait. It's far too soon. And for the truly great bargains that will come later, be ready to pay cash or a very substantial down payment.
  • If you own real estate but can't sell, hedge with an inverse ETF like ProShares UltraShort Real Estate (SRS).
Consumer Confidence Plunges to Lowest Level Since 2003

Second, look how this situation is starting to impact consumers.

With home prices plunging and the cost of living soaring, consumer confidence is getting hit hard.

Just in the last few months, it has fallen from some of the highest levels on record to the lowest level in five years.

The best evidence: The Conference Board just reported that its confidence index fell to 75 in February. That's far below the 83 reading that analysts had forecast. And it's down to the lowest level since February 2003, a time when Americans were intensely fearful of a new war that was about to begin.

What's next:

  • Consumer spending, already slowing to a standstill, will shrink rapidly. With just a few exceptional items that they must buy no matter what, Americans will snap their wallets shut, slashing their purchase of high-priced luxuries and bargain-basement discounts, big-ticket items and everyday tidbits.
  • Corporate profits will plunge. In already-blighted industries, don't be surprised to see floods of red ink and a string of bankruptcies.
  • Layoffs and unemployment will surge.

Your escape:

Wholesale Prices Surge by 7.4%

Third, prices are surging.

The U.S. Labor Department has just announced that wholesale prices ...

• jumped by 1% last month, more than double what analysts expected, and ...

• surged by a whopping 7.4% in the last 12 months, the largest yearly gain since late 1981.

Moreover, these numbers do not yet include the new explosion in energy prices — crude's surge past $100 per barrel, natural gas' big double-digit gains, and gasoline's run toward the $4-per-gallon level.

Nor do they include the most recent parabolic surge in food prices.

And most important, they do not include the most recent downward spiral in the dollar, which inevitably drives up the prices Americans pay for massive quantities of imported goods.

What's next:

  • A continuing free-fall in the value of the U.S. dollar, despite surprise rallies.
  • A continuing, parabolic rise in commodity prices, despite sharp intermediate corrections.
  • A sudden and shocking jump in the government's Consumer Price Index, despite a deeply-ingrained institutional bias that chronically understates its severity.

Your escape:

  • Revolutionary new investments that give average investors immediate and easy access to the world's strongest foreign currencies: Currency ETFs and World Currency Options.
  • Commodity-ETFs — exchange-traded funds that invest in pure commodities such as gold, silver, oil and copper.

Bottom line: The great housing bust is creating a new superboom. So hold on to your hat. This journey is just beginning.

Good luck and God bless!

Martin

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets 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