Posts filed under “Really, really bad calls”

Letting the Housing Market Fall

I have been arguing for the government to step away from propping up the housing market for several years now.

It seems that economists are finally catching up with the idea. Today’s NYT has an article, titled Housing Woes Bring New Cry: Let Market Fall. Only I would argue its not new at all, and some os have been saying this for (literally) years.

Excerpt:

“Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.”

Its not a crash that is needed — it is merely allowing prices to revert to their historic levels.

>

Source:
Housing Woes Bring New Cry: Let Market Fall
DAVID STREITFELD
NYT, September 5, 2010
http://www.nytimes.com/2010/09/06/business/economy/06housing.html

Previously:
Housing Bottoming ? (No) (December 29th, 2006)

Real Estate and the Post-Crash Economy (December 29, 2006) requires free reg.

Propping Up Home Prices, Stopping Foreclosures (November 3rd, 2008)

More Foreclosures, Please . . . (March 25th, 2010)

Why Barron’s Housing Cover Is So Terribly Wrong (July 12th, 2008)

Homes: Still Too Pricey to Stabilize (February 18th, 2009)

No Housing Recovery Before Further Price Declines (February 21st, 2009)

Intelligent Loan Mods & Foreclosure Abatement (February 18th, 2009)

$15,000 Home Buyers Credit Costs $292,000/home (October 22nd, 2009)

Stopping Counter-Productive Mortgage Mods and Foreclosure Abatements (January 5th, 2010)

A Closer Look at the Second Leg Down in Housing (June 24th, 2010)

The $4 Trillion Dollar Question (July 15th, 2010)

Category: Bailouts, Politics, Real Estate, Really, really bad calls

Regulation AB: Downgrading the Ratings Agencies

We know the major ratings agencies suck. We know their business model was payola. We know they sold ratings for cash, committed fraud on structured product investors. We know they hid significant modeling errors, and then hid these problems from the public and regulators. Might their free ride be coming to an end? The SEC…Read More

Category: Analysts, Bailouts, Credit, Legal, Really, really bad calls

Dick Fuld’s Fantastic Revisionism !

“Lehman was forced into bankruptcy not because it neglected to act responsibly or seek solutions to the crisis, but because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors and other nonfinancial firms in the ensuing days.” -Richard S. Fuld Jr., Lehman Brothers former…Read More

Category: Bailout Nation, Bailouts, Credit, Real Estate, Really, really bad calls

Attention RE Agents: NAR Spin is Counter-Productive !

We have had a god-awful run of Housing data. New and Existing Home Sales, Defaults and Foreclosure data, even the Case Shiller report — all have been utterly horrific. In light of this, I want to make the following announcement: Attention RE Agents! The National Association of Realtors are doing you a terrible disservice. Consider…Read More

Category: Real Estate, Really, really bad calls, Television

What Makes America Great: Layoffs!

I am watching Squawk Box around 6:30am as I get dressed this morning. The conversation turns to various incentives in Germany, where firms are actually paid not to lay people off in a downturn. (Firms cut hours, but keep most of their staff). The lower German unemployment rate of 7% has less people with financial…Read More

Category: Employment, Really, really bad calls, Taxes and Policy

Mortgage Defaults Driving Retail

What ever happened to the theme that Mortgage Defaults were driving consumer spending? Forget the anecdotes, I am compelled to point out that defaults, foreclosures and walkaways are at record levels, and retail sales have fallen dramatically. I am just asking . . .

Category: Consumer Spending, Credit, Really, really bad calls

Exisiting Home Sales Plummet 27.2%

Everyone knew that Existing Home Sales were going to stink the joint up today — but I just had to laugh when I read the NAR commentary; The headline along was priceless: July Existing-Home Sales Fall as Expected but Prices Rise. Too bad they don’t cover other events: “Lincoln attends theater opening; leaves early with…Read More

Category: Real Estate, Really, really bad calls

Celebs’ & Billionaires’ Economic Warnings ?

One of the things we have harped on around here is the tendency for humans to be backwards looking in their sentiment. The Recency Effect means we monkeys place disproportionate emphasis on recent stimuli or observations, regardless of worth or significance. Indeed, investors become bullish after they buy stocks, bearish after they sell them, as…Read More

Category: Contrary Indicators, Markets, Psychology, Really, really bad calls, Trading

Luxury Condos Get FHA Backing

“Something has to happen for this product to be marketable. I just find the whole thing ironic that FHA is providing financing for luxury housing.” -Jonathan Miller, Miller Samuel Inc. > That’s my pal JM discussing condos in today’s WTF?! article. Via Bloomberg, we learn: “The Federal Housing Administration agreed in March to insure mortgages…Read More

Category: Credit, Real Estate, Really, really bad calls

Fannie Freddie NYT OpEds

There are two OpEds in today’s New York Times regarding the GSEs. One of them is full of insight and intelligence and rationality. The other is by John Carney. The insightful column, Say Goodbye to Fannie and Freddie, was written by former St. Louis Fed president Bill Poole. During the credit bubble and housing boom,…Read More

Category: Bailout Nation, Credit, Federal Reserve, Real Estate, Really, really bad calls