Friday, September 30, 2016

Sucker Punch On Main Street - Disturbing Facts About The Fed's Phony Housing "Recovery"

Whether you think there has been a housing “recovery” or not is a matter of perspective. Sales are indeed up 117% since the 2010 low, but that low was literally the worst level in the history of this data (since 1963) as a percentage of population growth. It was the Great Depression of Housing, the only possible result of the greatest housing bubble since the 1920s, if not in history. While sales have rebounded since that low, the current sales rate has barely recovered to the levels seen at the recession lows of 1991 and 1982. This rebound is little more than a dead cat bounce after 6 years of recovery, and now it may be faltering.

Mainstream economists give the Fed credit for stimulating this “recovery.” But, in fact the Fed has created a Catch 22 with no way out. The only thing the Fed has stimulated is house price inflation while destroying interest income on savings for millions of ordinary Americans, especially former middle class retirees. With mortgage rates pushed down to all time lows, house prices have consequently inflated at a rate that offsets the buyer’s savings in the interest component of the mortgage. Meanwhile American savers have lost not only massive purchasing power, but also have been forced to consume principal. The Fed has not stimulated sales but it has succeeded in transferring wealth away from those who can least afford it to those who least deserve it.

Had mortgage rates stopped falling at higher levels, house price inflation would have been stunted. More of a buyer’s mortgage payment would have been apportioned toward the higher interest component of the payment and less toward inflating the purchase price.

But the Fed got the result it intended. It wanted to inflate prices to save the banks from their stupidity and criminality. Decisions were made at the highest levels of the Fed and the Federal Government to not only let the banks off the hook, but to rescue them. The only way to do that was to forego prosecution of massive criminal wrongdoing, and to engineer price inflation, so that the criminal perpetrators of the fraud that drove the Great Bubble would be free to re-offend.



Anonymous said...

Thank you for posting this article.

The POTUS election is a farce. The two candidates act like they are on a comedy skit for entertainment. I can't believe the lack of real discussion on important topics. The government does not serve the public. It is corrupt to the core. Nobody can fix it, including Mr. Trump.

It is hugely important for people to become educated about the Federal Reserve Bank. It is a for-profit criminal cabal of bankers.
These people stole the authority to print money in 1913 and have ruined this Nation since that date. They are presently engaged in market manipulation on all fronts: Housing, interest rates, LIBOR, COMEX, FOREX, so on.

Anonymous said...

My house doesn't seem to have appreciated in the year plus since I bought it. But comparable rents were higher, and I really doubt this tepid economy is going to reduce demand on the rental market long-term.

Is it a good appreciating asset? Maybe after I finish updating it. I'm using the cost savings on the mortgage and tax deduction vs. rent and compounding it with energy savings. No way I'm doubling my money in 6 years at the bank. Hopefully that will fund siding, roof, etc. once that needs to be replaced.

Is it a good hedge against rent? Definitely. No need to stress over greedy landlords every time the lease expires. I just gotta stress over old appliances for a few more years, and then I'll be in the clear for a while.

Anonymous said...

The article is spot on, and being a buyer has been an eye opening experience.

Between the sham contractors sucking up foreclosures, putting lipstick on that pig and trying to sell it for over 3x what they bought it for.

Or the home seller trying to dump his shambles of a treasure because they stupidly bought at an outrageous price and is now drowning, having never spent a dime up-keeping the dump.

Then you have those out of town slum lords trying to dump their rentals at inflated Western shore prices and you know these gems have never seen a red cent of upkeep.

Heck there is one guy from PA trying to dump his shoe box of a treasure not worth a stitch over 130K for 176K

Every word of the article is true, as these sleazy realtors figure, well heck you aren't paying it in interest, lets just suck that savings out of your pocket and give it to the home owner.

There is a bevy of these jewels that have been on the market for over a year, and the banks are still doing the trickle of foreclosures, while there is a flood of them still not for sale, just rotting and molding as they sit empty year after year.

You biggest life purchase is nothing more than buying an overpriced used car.

Anonymous said...

3:55 ah the clueless. love the clueless. Home-ownership USED to be an investment. Not anymore. Homes are now a consumable.

The vast majority, spend the very least possible in maintaining their properties. Either they DIY their repairs haphazardly or hire the cheapest jack leg around to glue back together their abode and then expect top dollar when selling

After paying MORE in interest than you did to purchase the house, thousands for repairs, like a new roof, etc. and taxes, once you go to sell it you will never recoup what you have spent.

Explain how that is a wise investment?

It is funny how you local yokels constantly criticize those that rent. But actually that is a good investment for a lot of people and a wonderful LIFE CHOICE for many. Not everyone is meant to be a home owner, and may make the choice not to be, for either physical, emotional, or financial reasons. Doesn't mean they are any lesser of a person

I am sorry you are still clinging to the ridiculous idea that home ownership is an investment. Ask anyone who purchased around 2005-2009 how that "investment" worked out for them, or ask someone who lost it all in foreclosure.

You are koolaid drinking sheeple.

Anonymous said...

You are right, but you don't have to say it like a jerk.
You hurt people's feelings

Anonymous said...

9:19 you may have to pick out the "jerk" part for me.
You really expect me to coddle 3:55?
Lets dissect what they said.

I bought a house that has not appreciated in years. But after I dump a bunch of money into upgrading it (that I admittedly do not have and will probably DIY it), maybe then it will be worth something, but we really do not know.

I am faking myself into thinking I am getting a big tax break on the thousands of dollars I am paying in interest.

Lets hope that nothing breaks for awhile, because I really can not afford to fix it even though I am saving money on my heat bill. (but that was because it was a mild winter).

I stupidly think that since I cant double my money at the bank in 6 years, that my house will do that for me.

Landlords are greedy.

And I will insult people who rent because I think I am smarter than they are because I bought into the bogus thought that homeownership was an investment. When in reality it is a way for our masters to keep us in chains and indebted to them.

Did I miss anything?