Blast from the past: This is now 2 years old:  The Ongoing Impact of the Housing Sector

“The economic weakness has shown up first in retail spending figures. Especially hard hit have been the number one and two retailers in the U.S., Wal-Mart and Home Depot. But its not just those two retailers. As the chart below shows, the U.S. consumer appears to be getting tired. Housing is already in a recession, and Automobile Sales are on the verge of one, if not already there. Not just GM and Ford, but Toyota and Honda have seen year over year sales drops in the U.S.

Slowing economic activity here has been offset by strength abroad. Robust growth in Asia, Europe and Latin America, along with a weak U.S. dollar, has been a huge boon to American exporters. U.S. corporate profits are actually quite strong, albeit at a cyclical high. The corporate sector has not been hit by Housing – yet.

More recently, banking and finance companies have felt the sting of the housing slowdown. Indeed, it is not just the retailers and auto dealers who have been affected by Real Estate – the entire financial system is being impacted. Let’s look at how that came to be.”

Whenever people tell me no one saw it coming, this is one of the many links I send to them . .  .

>

Source:
The Ongoing Impact of the Housing Sector
Barry Ritholtz
August 24, 2007

http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2007/08/27/the-ongoing-impact-of-the-housing-sector.aspx

Category: Psychology, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

24 Responses to “Revisiting “The Ongoing Impact of the Housing Sector””

  1. flipspiceland says:

    Please keep this reminder on one week loop. As well as Goldman Sucks’ control of our Treasury.

    These two gems need to be treated like the Holocaust: “Never Again”.

  2. Marcus Aurelius says:

    Apparently, no one sees what’s coming next, either (more of the same, only everything is now infected, and the patient has been inoculated with the living virus that made it sick in the first place).

  3. Pat G. says:

    “the U.S. consumer appears to be getting tired.”

    Not tired. Just more realistic, cautious and anxious about their future fate therefore; more responsible and frugal. That’s to be expected, given the economy. I don’t think that’s going to change tomorrow so get used to it. The USG could stand to learn from this not continue to promote frivolous spending which is what got us where we are today to begin with. I for one am tired of seeing the U.S. consumer strapped like a horse to a plow of spending & credit therfore; enslaved for the prosperity of not only this country but the rest of the world.

  4. alfred e says:

    All true statements.

    The next step is for state and local governments to weather the increasing revenue crisis. And adjusting if they can. They can’t print money.

    The stimulus was as much to get them through as anything.

    They have not adjusted.

    That will be painful.

    And their pension funds that WS gambled with. (Jefferson County and others)

    I still continue to marvel at how San Diego and some other cities continue to limp along.

    So what if they’re still dumping raw sewage on their beaches.

  5. Mannwich says:

    @alfred e: State and local gov’ts don’t need to print money. BananaBen and the feds will do it for them.

  6. Mannwich says:

    @alfred e: And a little “raw sewage” never hurt anyone, right? It’s a character-builder.

  7. hammerandtong2001 says:

    Agreed: US consumer is far from tired, but instead filled with a full dose of skepticism.

    The avg “Joe” has probably lost faith in Wall Street as a mechanism for future value building. That view compounded by the perplexing reality which presents those as the authors of financial calamity and equity market collpase, as the contuniung beneficiaries of largesse, in today’s situation provided by the Fed and the Treasury.

    It’s quite astonishing that a small sector of the behemoth US economy — the financial sector — could make $trillion dollar bets and lose, and still find ways to pay eachother seven digit salaries. Law or not, “Joe” thinks that stinks, and when Goldman’s annual bonus report comes out showing that the AVERAGE EMPLOYEE earned $700K in salary and bonus, that’s only gonna make it worse.

    .

  8. teraflop says:

    Excellent, Barry. I was listening to your comments back in 2004/2005 when I first discovered TBP.

    One salient alarm was also rung in 2007: http://www.reuters.com/article/businessNews/idUSL1761914020070817 Simple fundamentals-based market-timing would have saved many from later hand-wringing.

    I recently spent some time with an advisor marketing funds to me – I won’t waste time detailing the scheme – but I asked the advisor, “what were these smart asset managers doing the past 2 years? how come I never heard of them?” These people are like almost-reformed alcoholics, “this time it’s different, I’m cured.” Yeah, like dessicated beef.

  9. Eclectic says:

    Barringo,

    I’m listening to “Black Swan.”

    It was big, big, big. WTF didn’t anybody listen to it?

    BTW, you should re-read all “Eclectic” with the previous two years history as a reference .

    How’s your 10-year hangin’?

    Wanna play the Bondy roulette wheel with Eclectic?

  10. cvienne says:

    @hammerandtong2001Says

    “It’s quite astonishing that a small sector of the behemoth US economy — the financial sector — could make $trillion dollar bets and lose, and still find ways to pay eachother seven digit salaries. Law or not, “Joe” thinks that stinks, and when Goldman’s annual bonus report comes out showing that the AVERAGE EMPLOYEE earned $700K in salary and bonus, that’s only gonna make it worse.”

    I’m glad u said it my man…

    If one of the regular posters here said the same thing, it might have gone in one ear and out the other… (or in one EYE and out the other as the case may be)…

  11. beaufou says:

    @hammerandtong2001
    “Agreed: US consumer is far from tired, but instead filled with a full dose of skepticism.”

    No, US consumer is filled with a full dose of unrealistic BS he has believed for years and now he realizes he may actually have to become a citizen of his own country.

    But that’s what the media refer to as socialism.

  12. WaveCatcher says:

    Yes, I remember reading this post and several others that helped to keep my portfolio out of harms way in ’07-08.

    THANK YOU for having the courage to go against the grain when it counted most. Best finance – investing blog in the entire WORLD!

  13. VennData says:

    What’s so upsetting to them is that people told them that there was a housing bubble. They simply don’t remember.

    Only the most secure people even discuss housing with me today – and I’m sure the same is for other BP lurkers.

    I entertained many heated arguments with the “housing always goes up” people, smart people, who let the emotion of this easy money making turn off their normal skepticism. The same thing happened during the dot com, people day-trading in their offices refused to countenance that it was a bubble.

    The modern version is the “Obama is Socialist that will ruin America.” C’mon, that’s nonsense, demonstrated by the rally. The GOP screamed that the stimulus would ruin the economy, it hasn’t, they were wrong. Again. Just like they were wrong about Clinton’s first budget. …and the “Ownership Society” nonsense.

    Don’t get drawn into the emotional zeitgeist. “Common knowledge” isn’t knowledge at all, it’s just common.

  14. danm says:

    “It’s quite astonishing that a small sector of the behemoth US economy — the financial sector — could make $trillion dollar bets and lose, and still find ways to pay eachother seven digit salaries. Law or not, “Joe” thinks that stinks, and when Goldman’s annual bonus report comes out showing that the AVERAGE EMPLOYEE earned $700K in salary and bonus, that’s only gonna make it worse.”
    ———
    I am not surprised but then I’m an oddball who has been avidly reading the stories of countries whose financial system imploded. 2003 is the year I thought we had gone beyond swift growth into bubble mode and started preparing mysefl for the bust.

    The constant in every story is that all focus, government and corporate, goes into money/cash management. Thus the financial industry sufficates the real economy at an accelerating rate. And the desirable jobs increasingly are in this domain.

    These bonuses are a sign that things are going into this direction and will surely get uglier.

  15. Bruce in Tn says:

    It appears to me that before long only those people with government jobs will be able to afford a house.

    http://4.bp.blogspot.com/_cvdgPlEKW9k/Spds6FTmnzI/AAAAAAAAAp8/odYKwuanBgg/s1600-h/TDOF.jpg

    ….just wondering….

  16. danm says:

    FYI:

    I stepped back during the bubble mode and now my phone is ringing off the hook…. everyone out there is looking for compliance and risk managers and not a lot of investment pros meet the image criteria they are looking for!

    The focus for the next few years will be on image, risk and cash or capital management. None of this will good for productivity in the short term. This among many other indicators is why I believe inflation is coming.

  17. Bruce in Tn says:

    http://seekingalpha.com/article/158926-pace-of-insider-sales-continues-to-escalate

    “We have noted the fact that insiders have become increasingly bearish over the last few months, and each time the extent to which the sellers have outnumbered the buyers continues to rise. Today, a press release from TrimTabs Investment Research shows that insiders are selling at a pace not yet seen; insider selling is 30.6x greater than insider buying! This is the highest ratio on record since TrimTabs began tracking this data in 2004. Furthermore, their data reveals that insiders have sold a record $105.2 billion worth of stock in just the last four months.”

    The housing thread looks about done so this is a little OT….but from what I’m reading, unless the Fed is willing to finance another huge stimulus through congress, that we should be at the top of this market…and I see where ECRI and others say there is not a chance of a double dip….OK…

    just wondering….

  18. torrie-amos says:

    Aug/Sept is big boy corp “Budgeting” phase. U know simple stuff like sales, costs, wages, where you put them all down on a spread sheet and feel proud you have a plan for the upcoming year. Then the CEO goes too department heads and says this is how you will get it done, and thus they prepare for the coming year in terms of what they will need to buy to git er done, invest capital for x return. Obviously capital budgets are saying things will be great so they anticipate large earnings, and they are buying stock. Or just maybe the spread sheets are just a tad messy, and they are leaving on a jet plane……..they would seriously hate to wake anybody up just too say goodbye, why impose on a restfull sleep, could be the last one………….

  19. BR,

    these “Flashback” articles, of your own Quill, are a, very, useful service.

    as you know, you attract new Readers everyday. with that, the, occasional, “from whence We came”-reminder helps those, who do not archive dig, get a short-hand Insight into the deeper Value of the current Stream..
    ~~
    t-a,

    “Or just maybe the spread sheets are just a tad messy, and they are leaving on a jet plane…”

    yes, and/or, maybe, “The Last Train for the Coast..”
    http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=American+Pie+Don+McLean
    ~~
    and, as a +tangent–

    “…What do you think has been happening over the last 20 years?

    Robert Chandler has written a book titled Shadow World: Resurgent Russia, the Global New Left, and Radical Islam. What is valuable in Chandler’s work relates to his firsthand interactions with Leftist organizers in the United States. According to Chandler, there is a vast network in America that aims to bring down the capitalist system, destroy the U.S. Constitution, and break up the federal system by getting control of the government.

    “The driving forces in this top network,” wrote Chandler, “are the ‘thought leaders’ and other individuals in non-governmental organizations (NGOs), including anarcho-communists and anarcho-syndacalists.” He noted that “leadingmembers are the Washington, D.C.-based revolutionary centers — the institute for Policy Studies … as well as the coopted mainstream media and politicians making up the Congressional Progressive Caucus and the ‘Shadow Party’ hiding inside the Democratic Party….”

    According to Chandler, “The radical Left” is engaging in a new form of political warfare in which the Left targeted “open spaces” in the American social structure; namely, schools and universities, government, churches and community organizations. The idea was, wrote Chandler, “to transform society and replace traditional American values and institutions with neo-Marxist values.” At a Marxist conference that Chandler attended, one of the agenda items was openly listed as, “The Strange Pleasures of Destruction in Capitalist America.” He relates that most of the participants “were university professors.” In the course of this conference, purely by accident, he ran into Zapatista Subcommandante Marcos in an underground parking garage. According to Chandler, “Orthodox communsits warned conference participants about the dangers of wandering away from the basics of Marx and Lenin….” He further explained that everyone present at the conference agreed it was necessary to “destroy the state as a part of the coming socialist revolution. There simply was no other way to achieve socialist governance in the United States than to crush the existing capitalist system.”

    Now the sequence should be clear. If the United States is bankrupt, politically divided and internally sabotaged by the radicals of the Left who have everywhere infiltrated the system, will there be a logistical support network for maintaining our tanks, bombers and ICBMS?

    What seems fantastic on first-hearing is actually everyday life for those who are paying attention. Look at the world around you. There are those who have been enriching themselves as they sabotage the economy and poison the culture. They pretend to care about the poor and downtrodden. But they live in mansions, collect enormous sums from government and business, advancing the foreign policy goals of enemy dictators. The organized Left is a business with access to billions of dollars. Its tendency is to serve as a fifth column…”
    http://www.financialsense.com/stormwatch/geo/pastanalysis/2009/0828.html

  20. Seattle Chill says:

    That’s fabulous, Mark, it’s the Big Lie all over again. When in doubt, pin your financial crisis on the machinations of imaginary leftist infiltrators.

  21. Greg0658 says:

    MEH that was an interesting concept at FS Storm Watch .. I couldn’t help during the teasers you highlighted if you were speaking of me (maybe) .. the idea of infiltrators infecting our minds from birth .. with cartoon art, music, magazines, school educators, church educators, political leaders and now bloggers (like me)

    Its true I’m pushing the anti-cash concept as an inducement to discuss possibilities to fix things if it all falls apart. But from my education here at TBP I have come to the conclussion that capitalism is meant to fall apart occassionally. Its the herd thinning and repossession mechanism that it thrives on.

    In these past few years events have given me more time to study our social sciences in America. I term myself as an independent Think Tank and with that spare time (not allotted to many in our society, especially now with working mothers for family survival (pc- 2 income households)) imo I am a full blooded American boy who deduced without a website what Don McLeans American Pie meant (but probably with the help of friends) and if I think our system is teetering on disaster, and I have a megaphone, I would be derelict in not saying something.

    The article brings up drug induced reprogramming. I’ve admitted to used pot but never coke, so that puts me at a stage. Some coke users will say it gives them the edge to drive a hard bargain maybe think cleverly, can’t agree with that stage for sure, never been there.

    The article also left me considering that the US Constitution designed a Republic (fact) and created mechanisms to guide the country via elected leaders (with their staff) to decide whats best for our country and us. Peanut gallary stay out of matters. MSM informs us on characters, we decide, they rule. Chain of Command Rules (fact). Then the article seems to warn of high dollar lobbies. Who’s left after everyday people and the status quo constitution followers are suspect.

    Interesting dropdown plot lines in the article. I’m wondering where exactly the author stood .. except strength for the system and beware of false flag operations .. thats cool.

  22. Greg0658 says:

    ps – “… guide the country via elected leader S (with their staff) to decide whats best for our country and us. Peanut gallary stay out of matters. MSM informs us on character S …”

    Came back to make sure I pluralled the elected .. the Constitution made sure no one person could take over operations. But sure seems when a President is elected that a group dislikes .. one person makes all the difference .. and I agree, it helps, to a degree. Rally cryout to the D’s & R’s and the S’s & F’s and the C’s & M’s and the poor & rich.

  23. danm says:

    But from my education here at TBP I have come to the conclussion that capitalism is meant to fall apart occassionally
    —————-
    I’d say that the occasiional shock is due more to our monetary system than capitalism per say.

    Money is supposed to be created when a transaction occurs. With central banks creating money without being privy to these transactions, we are sure to find a demand/supply imbalance. And with our central banks creating money irrespective of current transactions, I can only see disaster.

    Because our central banks money creation system is imperfect, a shock every now and then is to be expected. Since money is created with debt, new money must be injected just for the interest payment on this debt. And considering that debt ballooned in the last 2 decades, it is clear that the amount required for interest payment was huge and a shock was to be expected. We got the first one with the credit crisis.

    Now that government is spending is reaching epic proportions, we know there will be another shock. When? My guess is when interest payments on this debt takes a good chunk out of GDP. Right now rates are close to 0% but if it moves up, interest payment could quickly jump up.

  24. danm says:

    per say
    —–
    per se.