Posts filed under “Really, really bad calls”

Cramer Calls A Housing Bottom (Yet Again)

“The end to House price depreciation in the vast majority of areas in this country has at last arrived.” -James Cramer

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Do we even need to mention the absurdity of this?

James Cramer, who has called an inordinate number of Housing Bottoms since the market topped in 2005, now declares that “Housing Has Officially Bottomed.”

What does a bottom look like to Cramer? “Ramping sales, and sales in certain areas are up ten times those of last year, and an end to falling prices. That’s exactly what we’ve seen for the past three months.”

We have seen the housing collapse decelerate, but not stop falling. Price reductions have not ended.

No, we have not seen an explosion in new Housing Starts — rather, this is a noisy volatile series that frequently shows a monthly gain, but continue to show annual falls.

Oh, and that big jump in May housing starts? It is due to a 62% surge in multi-family homes — apartments, high rises, etc. — and not houses. If you want to read anything into it, the Home Builders are showing LESS CONFIDENCE in the Housing market, not more, as Jim asserts in the video.  Rather than building to sell, they are building to rent. Hardly a broad endorsement.

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And relying on a single month pop in this series is sheer foolishness: Each circled monthly number below shows a gain over the prior month — none of which resulted in a housing bottom:>

may-09-starts-2
Chart via Barron’s Econoday

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Previously:
Worst Predictions for 2008 (December 31st, 2008)
http://www.ritholtz.com/blog/2008/12/worst-predictions-for-2008/

Yet Another Greenspan Housing Bottom Call (May 13th, 2009)
http://www.ritholtz.com/blog/2009/05/yet-another-greenspan-housing-bottom-call/

Sources:
Cramer: Housing Has Officially Bottomed
Tom Brennan
CNBC, June 16, 2009
http://www.cnbc.com/id/31388528

Video
http://www.cnbc.com/id/15840232?play=1&video=1155057267

Category: Real Estate, Really, really bad calls

Was the TARP a Ruse?

The rush to repay TARP monies gives us another opportunity to consider why the hell this absurd financial giveaway ever happened in the first place. A close inspection suggests some dishonesty on the part of the prior Treasury Secretary. From its inception, the TARP never made much sense. Forcing banks that did not need money…Read More

Category: Bailout Nation, Bailouts, Corporate Management, Credit, Really, really bad calls

The Myth of the Rational Market

In this morning’s NYT, Joe Nocera takes on one of my favorite subjects: Why the market is neither rational nor efficient. He does a nice job, interviewing both Jeremy Grantham and Burton Malkiel. Along the way, he mentions Justin Fox’s new book, The Myth of the Rational Market: A History of Risk, Reward, and Delusion…Read More

Category: Markets, Psychology, Really, really bad calls

Why Are We Bailing Out Insurers?

Will someone please explain to me why we are giving $22 Billion to Insurers? “The Treasury Department will make federal bailout funds available to a number of U.S. life insurers, acting on the embattled sector’s long-running effort to get government help. The Treasury is prepared to inject up to $22 billion into the insurers under…Read More

Category: Bailouts, Corporate Management, Markets, Really, really bad calls, Regulation, Taxes and Policy

Yet Another Greenspan Housing Bottom Call

“We are finally beginning to see the seeds of a bottoming [in the housing industry. The U.S. is] at the edge of a major liquidation [in the stock of unsold properties, which may help to stabilize prices].
—Alan Greenspan, May 12 2009

“I don’t know, but I think the worst of this may well be over.”
—Alan Greenspan, October 2006

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Why does the public — and the Press — constantly seek out reassurances from the same people who misled them time and again in the past?

That was the question on my mind as I pondered yet another declaration from Alan Greenspan that the Housing Market has bottomed. That he has consistently made similar such statements before is cause for doubting him here. That these prior bottom calls were as far back as 2006 is cause for ridicule.

Few people have been worse than Greenspan in analyzing the Housing market. In fact, the only person / group I can think of with a consistently worse track record than Greenspan’s of analyzing the housing market was the group he spun his foolishness to yesterday: The National Association of Realtors.

Indeed, consider this golden oldie from David Lereah, the NAR’s chief economist, circa December 2005:

Home sales are coming down from the mountain peak, but they will level out at a high plateau, a plateau that is higher than previous peaks in the housing cycle.

That 2005 declaration, made 5 months after Hosuign prices had topped out, was typical of the reality denial we saw from the NAR over the entire housing cycle. They continuously got it wrong, spinning all data, good or bad, in a shamelessly self-promotional manner.

That this group of blind flacks paid Greenspan $100,000 plus to spin them lies is somewhere between ironic and pathetic. At least it wasn’t taxpayer monies . . .

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NOTE:  These older Greenspan/Lereah quotes were were pulled from Chapter 21, The Virtues of Foreclosure, Bailout Nation.

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Category: Real Estate, Really, really bad calls

McCain & Shelby: “Let Insolvent Banks Fail”

“Close them down, get them out of business. If they’re dead, they ought to be buried.” -Richard C. Shelby, the senior Republican on the Banking Committee, on ABC’s “This Week” > Thus, the strangely inverted world of bank bailouts continues. Republicans who started the entire lurch towards Socialism under George W. Bush at least understand…Read More

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

iBanks Grabbed $50 Billion in AIG Bailout Cash

Yesterday, in Backdoor Bailouts for Goldman Sachs?, we noted that GS, as well as Morgan Stanley, Merrill Lynch, and Deutsche Bank, were all made whole on their bad bets with AIG. That’s right, what was misleadingly described as systemic risk turned out to be in large part little more than a counter-party bailout — money…Read More

Category: Bailouts, Corporate Management, Finance, Legal, Markets, Politics, Really, really bad calls

Was the ’00-03 Crash Bush’s Fault? ’09 Obama’s?

The incessant parade of bad advice, partisan quackery and general ignorance about the way markets work is fascinating to watch. I used to find it annoying, but now I simply use it as a way to make money. Just find the dumbest of the group, and take the other side of their trades. The latest…Read More

Category: Bailouts, Economy, Financial Press, Markets, Psychology, Really, really bad calls

Good Money After Bad: U.S. to Up Citi Stake

Here we go again: It looks like you and me and that guy behind the tree are going to be on the hook for a few billion more dollars: “Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people…Read More

Category: Bailouts, Corporate Management, Credit, Politics, Really, really bad calls

Experts, Crashes, Media, Skepticism

There is a surprisingly interesting article at Money Magazine on why so many so-called experts utterly missed the market crash, credit crisis, and housing collapse. Its an interview with Philip Tetlock who is (with no small amount of irony), an expert on experts. He is a professor of organizational behavior at the University of California-Berkeley’s…Read More

Category: Economy, Financial Press, Markets, Psychology, Really, really bad calls