Housing bubble bloodbath

[donsu]

http://onlinejournal.com/artman/publish/article_1635.shtml




"The crash of the housing bubble will not be pretty. Millions of people stand to lose their homes and life savings. However, it was inevitable. The bubble created a fantasy world that could not continue. At the peak of the bubble, 160,000 people a week were buying a home, most at bubble inflated prices. The longer the bubble persists, the larger the group of people who paid way too much for their home. While it is not good that so many dreams had to be ruined, the number will be even larger if the bubble deflates slowly. So I make no apologies about hoping for the hasty demise of the bubble." Dean Baker, "Slow Motion Train Wreck" --The American Prospect, Aug 2, 2006

"No question about it, the housing downturn is here now, and it’s big." --Jim Hamilton "New Home Sales continue to Fall", Econbrowser Aug 25, 2006

I wonder if Alan Greenspan takes a copy of the business page along with him on the chairlift at Aspen, so he can read about the plummeting housing market before swooshing down the well-groomed bunny-slopes at his favorite ski resort. After all, no one played a larger role in inflating what the "Economist" called the "biggest equity bubble in history" than the retired Fed-master. His low interest-rate bonanza triggered a stampede of speculation in the real estate market sending prices through the stratosphere and setting the stage for the biggest economic bust in American history.

The whole catastrophe was cooked up Sir Alan and his coterie of brandy-drooling elites at the Federal Reserve.

Thanks, guys.

-snip-

The housing bubble is actually an extension of the stock market bubble; Greenspan’s earlier swindle which cost American investors $7 trillion in retirement and life-savings. Both equity balloons can be attributed to the shabby and exploitative monetary policies of the Federal Reserve. By expanding credit and money supply via low interest rates, the Fed has kept the economy whirring along, creating the impression of prosperity when it’s all just smoke and mirrors. America’s opulence is built on a mountain of debt that’s piled a mile high. Regrettably, that mountain is about to cascade on the American people sometime in 2007-2008. There’ll be no escaping the fallout from the $4.5 trillion dollars of new mortgage debt that’s built up in the last seven years. By the end of 2007, we should be able to identify many of the painful trends that accompany a deep recession; prices of homes will steeply decline, GDP (gross domestic product) will fall, and Greenspan’s mighty Temple of Debt will crash to earth.

-long snip that is "all bleak, bleak, bleak" as the author of the article says-

---------------------------


snookered and scammed - that's us.

[leftofthedial]

1. everything a repuke touches turns to shit

except his own bank account

[liberal N proud]

2. All part of the ever widening war on the middle class

Creating a two class society.

[charlie]

3. Put a Randroid in charge of the bank

and you takes what you get.

Thank god we avoided "paying down the debt too quickly" and the balanced-book horrorshow it would've entailed. Way to go, Big Al :crazy:

[formercia]

4. We are a cash crop

they let us save up equity then pull the rug out from under us and buy properties up when they bottom out.

They turn worthless paper, backed by nothing but promises and turn it into hard assets.

[MADem]

5. Good grief....the only people who aren't hosed are those who got out

before the crash or those who never got in.....

[Warpy]

6. Yes and no

I still think we're in for a slide, rather than a crash, and that some areas will do fairly well in retaining value.

Those McMansions in the exurbs, financed to the rafters by ARMs taken on to repay credit card debt, far away from work and difficult to heat and cool, will be worth little as the slide continues. People who were that desperate for the good life do stand to lose just about everything.

People who were more sensible and bought small houses in the inner burbs 10 or more years ago (or 5 years ago in some areas) will probably be able to stay put, as they may lose their equity without losing the house. The fixed rate mortgages at low rates on modest housing will probably not get foreclosed.

Don't forget, also, that there are a lot of old boomers out there living in houses they bought in the 70s and have paid off. That will contribute to some stability once the housing speculators and creative financing suckers have been weeded out.

I watch the local real estate shows here in Central NM, and added to the "Three years young! Never lived in!" housing available are now tons of those McMansions "Reduced twice! Motivated seller!" Yeah, I'll bet.

It's not over yet, but it's still a slide rather than a plunge.

[Norquist Nemesis]

7. Well, my hardcore RepubliCon SIL is a realtor

She's married to my hubby's brother and he's firmly a Democrat (which drives her apeshit, I'm sure! LOL) Everyone in the family has to consciously bite our tongues when she's around at family gatherings, although the longer Bush is around the quieter she gets.

It seems that this year, they decided to "skip" Christmas because they're saving their money. I certainly don't condemn them for doing what they need to do, but I'll be damned if I'm going to listen to her bash Democrats and her favorite Clenis fury. She'll never in a million years make a connection that Con policy has largely created the situation she's facing. She probably thinks another taxcut is the solution. :eyes:

[donkeyotay]

8. Eggs in a nest can be replaced with stones and many birds will still sit them

And that's what's been happening to the citizens of this country. It's an unparalleled transfer of wealth. And people forget that before the GOP became about homeland security and terra, they were all about privatizing and the corporate takeover. Heckuva job. Today, we wouldn't have the S&L scandal; they'd just repackage the paper and pass on the debts. This part sums it up nicely:

The housing bubble is actually an extension of the stock market bubble; Greenspan’s earlier swindle which cost American investors $7 trillion in retirement and life-savings. Both equity balloons can be attributed to the shabby and exploitative monetary policies of the Federal Reserve. By expanding credit and money supply via low interest rates, the Fed has kept the economy whirring along, creating the impression of prosperity when it’s all just smoke and mirrors. America’s opulence is built on a mountain of debt that’s piled a mile high.

[lonestarnot]

10. Or start throwing them. Heh

[nada republic-cons]

9. Just one of many off-shoots

Judge tells con man to return millions
Swindle - Judicial order or not, it's unlikely Russell Cline's hundreds of victims will get their cash back
Friday, January 12, 2007
JEFF MANNING

Russell Cline, the Portland-based mastermind of a huge foreign currency trading scam, must pay restitution of $33 million, according to a federal ruling Thursday.

(snip)


"There were hundreds of people who made claims and a very large number of people who gave him their entire retirement accounts," said Julie Vacura, the Portland attorney appointed as receiver of Orion. "There were people who mortgaged their home to give him money."

(snip)

Investigators believe most of Orion's money was stashed overseas. "One of the big hurdles we faced was that a great deal of the money was sent to offshore banks, which are extremely hard to track," said Richard Foelber, deputy chief of the U.S. Commodities Futures Trading Commission, one of several federal agencies that investigated Orion.

When asked whether untold millions of dollars are awaiting Cline when he gets out of prison, Foelber declined to comment.

Judge King's order permanently bans Cline from engaging in foreign currency trading or other commodity trading.

http://www.oregonlive.com/search/index.ssf?/base/business/1168574151261460.xml?oregonian?fng&coll=7

[One_Life_To_Give]

11. Thats a stretch

Greenspan was charged with keeping inflation under control. Not in keeping housing markets or S&L's under control.

The S&L crisis was a direct result of actions by the FSLIC to loosen regulations about reserves and allow the S&L's to engage in speculative investments.

The housing bubble was maintained and the bloodbath is a result of poor regulation in the home mortgage market. The low Fed rate may not have inhibited the housing bubble, but that is not the same as saying it is a significant causative factor.

[paulk]

12. well, the housing market is certainly taking a dive

and in a lot of places it's going to be a pretty hard landing.

But, really - I've been reading these "economic end of the world" tracts for the last thirty years.

ho - hum...

[JCMach1]

13. It took Japan almost a decade to recover from their housing bubble

:(

Can the US survive a decade long recession?