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Secretary of the Treasury for the .01%
Treasury Secretary Steven Mnuchin doesn’t exactly come across as the guy you’d want in your corner in a playground tussle. In the Trump administration, he’s been more like the kid trying to cop favor with the school bully. That, at least, is the role he seems to have taken in the Trump White House. When... Read More
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As published in Harper’s Magazine. Let’s start with your 2006 Harper’s article. What did you see happening at that point? It was very clear that more and more of everybody’s income had to go to buying a
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SHARMINI PERIES: Just prior to the economic collapse of 2007-2008 there were several economic indicators which could have given us a clue of the impending disaster. If we look at the economic situation today in the US, we find many of these very same indicators. Housing prices are getting very high. Credit card debt has... Read More
I noticed recently that the catastrophe area that was once the great city of Detroit -- bankruptcy, busted neighborhoods, acres of deserted houses, water shutdowns, and now, asTomDispatch regular Laura Gottesdiener reports, an almost biblical foreclosure crisis that could result in tens of thousands of people being thrown out of their homes -- regularly gets... Read More
The Continuing Depopulation of Detroit
Unlike so many industrial innovations, the revolving door was not developed in Detroit. It took its first spin in Philadelphia in 1888, the brainchild of Theophilus Van Kannel, the soon-to-be founder of the Van Kannel Revolving Door Company. Its purpose was twofold: to better insulate buildings from the cold and to allow greater numbers of... Read More
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"Easy Money" Mel Watt Loosens Lending on Mortgages
Here we go again. Last week, the country’s biggest mortgage lenders scored a couple of key victories that will allow them to ease lending standards, crank out more toxic assets, and inflate another housing bubble. Here’s what’s going on: On Monday, the head of the Federal Housing Finance Agency (FHFA), Mel Watt, announced that Fannie... Read More
A Private Equity Firm, a Missing Pool Fence, and the Price of a Child’s Death
Security is a slippery idea these days -- especially when it comes to homes and neighborhoods. Perhaps the most controversial development in America’s housing “recovery” is the role played by large private equity firms. In recent years, they have bought up more than 200,000 mostly foreclosed houses nationwide and turned them into rental empires. In... Read More
I live in Washington, D.C.'s Capitol Hill neighborhood. I can more or less roll out of bed into the House of Representatives or the Senate; the majestic Library of Congress doubles as my local branch. (If you visit, spend a sunset on the steps of the library's Jefferson Building. Trust me.) You can't miss my... Read More
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How Private Equity Came to New York’s Rental Market -- and What That Tells Us About the Future
Things are heating up inside Wall Street’s new rental empire. Over the last few years, giant private equity firms have bet big on the housing market, buying up more than 200,000 cheap homes across the country. Their plan is to rent the houses back to families -- sometimes the very same people who were displaced... Read More
One simple phrase electrified the financial world this past week: high-frequency trading. With the publication of his new book, Flash Boys, author Michael Lewis almost singlehandedly transformed the growing practice of high-frequency trading from an obscure form of financial wizardry cooked up in Wall Street's mad laboratories into a fledgling scandal. What's high-frequency trading? It's... Read More
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Government Backing for Toxic Mortgage Securities?
The leaders of the U.S. Senate Banking Committee, Sen. Tim Johnson (D., S.D.) and Sen. Mike Crapo (R., Idaho), released a draft bill on Sunday that would provide explicit government guarantees on mortgage-backed securities (MBS) generated by privately-owned banks and financial institutions. The gigantic giveaway to Wall Street would put US taxpayers on the hook... Read More
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Get a load of this chart from DataQuick’s National Home Sales Snapshot. It’ll tell you everything need to know about housing. (Note: MSA=metropolitan statistical area) As you can see, prices are flatlining or drifting lower while sales are sinking like a stone. That’s the whole ball of wax, isn’t it? Sure, sales will increase in... Read More
NY Fed's Dudley Warns that "Firesales" Could Trigger Another Financial Crisis
Ask your average guy-on-the-street ‘what caused the financial crisis’, and you’ll either get a blank stare followed by a shrug of the shoulders or a brusque, three-word answer: “The housing bubble”. Even people who follow the news closely are usually sketchy on the details. They might add something about subprime mortgages or Lehman Brothers, but... Read More
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Plunging Sales in SF, LA, Vegas and Phoenix cast doubt on Housing Recovery
Higher rates, higher prices and weak fundamentals have sent home sales crashing in last year’s hottest markets casting doubt on the sustainability of housing recovery. In the San Francisco Bay Area, home “sales plunged to a six-year low”…. while prices dropped 4.3 percent from a month earlier. (Los Angeles Times) Additionally, sales of new and... Read More
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The Tipping Point
-John Maynard Keynes, The General Theory of Employment, Interest and Money It’s too bad Keynes isn’t around today to see how the toxic combo of financial engineering, central bank liquidity and fraud have transformed the world’s biggest economy into a hobbled, crisis-prone invalid that’s unable to grow without giant doses of zero-rate heroin and mega-leverage... Read More
Every so often, the journalists who cover Washington, D.C., and its maze of federal departments and commissions and bureaus receive a strange sort of invitation. Calling you a "thought leader" or some similarly flattering form of corporate jargon, an agency urges you to attend a briefing about a particular issue -- healthcare, the bank bailout,... Read More
If You Want to Play Doctor, Don’t Hire an Insurance Company as Your Receptionist
Health care isn't the first boon that President Obama tried to give us through a public-private partnership. When he took office, more than 25% of U.S. home mortgages were underwater -- meaning that people owed more on their houses than they could get if they tried to sell them. The president offered those homeowners debt... Read More
When Americans travel abroad, the culture shocks tend to be unpleasant. Robert Locke’s experience was different. In buying a charming if rundown house in the picturesque German town of Goerlitz, he was surprised – very pleasantly – to find city officials second-guessing the deal. The price he had agreed was too high, they said, and... Read More
While Housing Sales Slow
10-year Treasuries veered into the danger zone on Friday as yields broke through the crucial 3 percent barrier signaling a slowdown in housing sales due to higher mortgage rates. Fixed rate mortgages are expected to edge higher even though the rate on the 30-year loan increased to 4.48 percent just days earlier. The Fed’s announcement... Read More
How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme -- Again
You can hardly turn on the television or open a newspaper without hearing about the nation’s impressive, much celebrated housing recovery. Home prices are rising! New construction has started! The crisis is over! Yet beneath the fanfare, a whole new get-rich-quick scheme is brewing. Over the last year and a half, Wall Street hedge funds... Read More
“One shitty deal.” “Shitty deal.” “Shitty.” The date was April 27, 2010, and Senator Carl Levin (D-Mich.) was pissed as he launched into a rant with those pungent quotes in it. As part of a Senate subcommittee investigation into the causes of the financial meltdown, Levin was grilling Goldman Sachs CEO Lloyd Blankfein and several... Read More
"4,594,000 Mortgages Going Unpaid in the United States."
Buying a house is a lot like buying a car. If you don’t look under the hood, you could wind up with a lemon. Only with housing, it’s not as simple as checking the dipstick or looking for oil under the rear axle. No, smart home buyers check the data to see what’s really going... Read More
Another Slump Ahead
“Slumping asset prices show a recession is probably on its way. … Stocks tend to fall more frequently and further than property values, so they are better recession-predictors.” - IMF research paper by economists John C. Bluedorn, Joerg Decressin and Marco E. Terrones.Bloomberg News The fact that stock prices have been drifting lower, doesn’t prove... Read More
Bernanke's Smoke and Mirrors
Mortgage rates are rising and the housing market is getting weaker. In May of 2013, the 30-year fixed rate mortgage was 3.59%. Today it is 4.71%, more than a full percentage point higher. That means that the payment on a $200,000 loan is 15 percent more than it would have been just two months ago.... Read More
A Giant Sucking Sound
According to a report by Goldman Sachs, approximately 57 percent of the homes that were purchased in the first quarter of 2013 were all-cash deals. In 2005, the peak of the bubble, all cash buyers represented a mere 19 percent of all transactions. The amount of investor capital pouring into housing is unprecedented. Moneybag speculators... Read More
Time to Run Up the Red Flags!
The mood on Wall Street has changed dramatically since the Fed announced it planned to scale-back QE by the end of 2013. Although the Central Bank continues to purchase $85 billion of US Treasuries (UST) and Mortgage-Backed Securities (MBS) per month (as it has since the program was launched nearly a year ago), the expectation... Read More
Because They Did Such a Good Job Last Time
The Obama administration is working on a plan to liquidate Fannie Mae and Freddie Mac so that future profits from housing sales and secondary market activity flow exclusively to privately-owned banks and financial institutions. President Obama made the announcement last week in a speech in Phoenix saying that he wanted to “wind down” the two... Read More
A Whirlpool of Speculation
Here are a few headlines you might want to mull-over before you plunk 20 percent down on that $500,000 Tudor in Rancho Mirage: “Mortgage Applications Drop for Seventh Straight Week”, “Homeownership slides to 18 year low”, “Investors start to move out of housing”, “Sellers Worry Rising Rates Will Lower Demand”, “PE Scrambles To Exit Housing... Read More
Spiking Rates Trigger Mortgage Apps Freefall
On Friday, the rate on the 30-year "fixed" mortgage soared to a two-year high of 4.51 percent. That's more than a full percentage point higher that 6 weeks earlier when rates touched bottom at 3.35 percent. The sudden spike in rates has triggered a bloodbath in mortgage applications which have dipped for 4 weeks straight... Read More
Soon the Foreclosure Floodgates Will Open and Prices Will Plunge
Anyone who buys a house in today's market should be aware of the risks. They should know that current prices are not supported by fundamentals, but by unprecedented manipulation by the Fed, the Obama administration, Wall Street Private Equity investors, and the nation's biggest banks. If any of these main-players withdraws or even reduces their... Read More
The NYT Finally Discovers Housing Boom is a Big Fat Fraud
Well, look who finally figured out that the "housing recovery" is a big, fat fraud? The New York Times, that's who. Check out this clip from the Times June 3 edition: Whoa! So investors are driving the market, you say? Who woulda' known? If Times reporters spend a little more time perusing the housing blogs... Read More
Pandering to the Bankers
What a load of malarkey. The truth is housing is in a shambles. Starts are down, inventory is tight, demand is weak, mortgage originations are flat, household formation has fallen off a cliff, (The homeownership rate is now at levels last seen in the mid-1990s), and the entire industry is precariously propped atop artificially-low interest... Read More
Wall Street Owns Obama
Why are housing prices rising when the homeownership rate has dropped to its lowest level in 18 years? Actually, it's not as confusing as it sounds. The Fed's low interest rates have triggered a flurry of homebuying by Private Equity firms and other speculators which has reduced already-tight supply and pushed up prices. Of course,... Read More
Reasons for Skepticism
Housing is back. Prices are rising, sales are strong, inventory is low, and according to a recent survey, 82 percent of real estate agents believe that it's "a good time to sell a house." Also, a new report prepared by the ULI Center for Capital Markets and Real Estate confirms "renewed optimism for growth in... Read More
Speculators Chasing Yield
There's no doubt that housing prices are going up. According to Corelogic, home prices have risen nearly 10 percent in the last year. And sales have been improving, too. In fact, in the last year alone, sales for new "single-family" homes are up 28.9 percent (437,000 homes) while sales for existing homes have increased by... Read More
As Many as 90% of Foreclosed Properties Held Off the Market
"I still worry about further price declines. There’s no really concrete reason for an upturn now. A recent survey of home buyers didn’t find any sudden change in optimism and there seems to be a souring on the idea of home ownership. That might reverse again as the crisis ends, but I suspect that it’s... Read More
Another Giveaway to the Banksters
For those who missed President Obama's latest giveaway to the Bank Mafia, we'll repeat what he said here. This is an excerpt from Tuesday's State of the Union Speech: First of all, whenever you hear a politician talk about "streamlining the process", run for cover. The term is a right-wing formulation that means "remove all... Read More
Rampant Speculation Drives Prices Higher
There's a lot confusion about the recent uptick in housing prices, which--according to CoreLogic-- have gone up 7.4 percent year-over-year. Many analysts think that that the "bottom is in" and the market is about to roar back to its bubble-era highs. Nothing could be further from the truth. Housing prices are likely to remain flat... Read More
Canadian Housing Edition
Canada's housing market is in the opening phase of a historic collapse. According to the Canadian Real Estate Association (CREA) sales of existing homes dropped 17.4 percent year-over-year in December, while sales in Vancouver plunged an eyewatering 31 percent in the same period. While prices have held firm so far, it's only a matter of... Read More
The "Qualified Mortgage" Rule
The US Consumer Financial Protection Bureau's rule defining a "qualified mortgage", which was announced on Thursday, creates vast new opportunities for the nation's biggest banks to engage in predatory lending practices with impunity. While the mainstream media describes the rule as an attempt to protect borrowers from the risky types of loans that caused the... Read More
Canada's Housing Bubble and the New Economic Order
Canada's housing bubble has burst and prices have started to fall. Sales have dipped for 8 straight months as buyer interest has begun to wane. Housing sales in November dropped 12 percent from the same month last year, while previously-hot markets of Vancouver and Toronto saw declines of 28.6% and 16% respectively. Despite the media's... Read More
In the Dumps
There's a terrific video at Bloomberg News that will tell you everything you want to know about housing in just under 3 minutes. Unfortunately, the video hasn't gotten much attention, probably because it veers from the MSMs fairytale about a housing recovery. Even so, I have transcribed the interview below so that readers can judge... Read More
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Housing Up, Home Ownership Down
The rebound in housing is now in full swing. Housing starts are up, existing home sales are gaining pace, inventory is down, and prices are on the rise. According to a recent report by Corelogic "House prices are up 6.3% year-over-year in October, the largest increase since 2006 and the eighth consecutive increase in home... Read More
What You Should Know About the FHA Bailout
The Federal Housing Administration (FHA) needs a bailout, but don't expect the media to tell you why. Instead, they'll give you some baloney about how the agency was used to "stabilize the housing market" following the government takeover of mortgage giants Fannie Mae and Freddie Mac in September of '08. While there's some truth to... Read More
Handouts for Honchos
Housing prices are rising fast. According to CoreLogic, home prices increased 5 percent nationwide on a year-over-year basis from September 2011 to September 2012. The new data is the strongest sign yet that the housing bust is over and a recovery is underway. The reason economists watch the housing market so closely is because housing... Read More
A Social Counter-Revolution
Sagging prices and droopy home sales in Vancouver have set off alarms across Canada. These are the first signs that the country's overheated real estate market has begun to cool. Homes sales have plunged 33 percent year-over-year, while prices have tagged close behind dropping 11 percent from their peak in April 2011. At the same... Read More
You Call It Recovery, I Call It Bollocks
Well, what do you know; mortgage applications have fallen off a cliff. According to the Mortgage Bankers Association (MBA) loan applications decreased by 12 percent on a seasonally adjusted basis from one week earlier "registering the biggest percentage decline in a year as demand for both purchase loans and refinancings tumbled." But how can that... Read More
Drag Them Off to the Hoosegow
So now we know why the banks fought tooth-and-nail to prevent Elizabeth Warren from heading the Consumer Financial Protection Bureau (CFPB). It's because they were already planning their next big coup and didn't want Warren in a position where she could make waves. Here's the story from the Wall Street Journal: Why is this an... Read More
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The Data Doesn't Lie
The housing market is getting better. It's getting better all the time. Foreclosure activity is down, sales are picking up, shadow inventory is shrinking, and prices are rising for the first time since President Obama launched his First-time Homebuyer Credit program in 2009 which juiced the market for a couple of months before demand fizzled... Read More
Bernanke's Monkeywrench
Now there's something you don't see every day. On Friday, the rate for a 30-year fixed mortgage plunged to an all-time low of 3.4 percent. At the same time, the rate on a 15-year fixed mortgage sank to an eye-watering 2.73 percent. The Fed's $40 billion per month QE3 is pushing mortgage rates to record-lows... Read More
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