It’s a given that increases in household wealth support higher consumer spending. For one, when people see their share portfolios or housing investments go up, they are, in fact, richer on paper. This may give them more disposable income to actually spend. Or maybe they just feel richer and spend more freely (the wealth effect).But one thing we recall seeing at the peak of the U.S. housing bubble is a massive increase in borrowing against home equity.
August 5th, 2010 | Dan Denning | 10 comments | ContinuedAll Posts Tagged With: "housing"
Son of Subprime
In 2007, the writing was on the wall. The famous “perfect storm” had gathered above the US housing market, its eye hovering over subprime loans. As you know, the storm came…and it rained, and rained, and rained… Ultimately, it washed away trillions of dollars in investor wealth.
August 4th, 2010 | Addison Wiggin | 0 comments | Continued
Housing Market Sinks Beneath the Waves
Already, millions of people are underwater. As housing prices fall, millions more will slip beneath the waves. Some will go down with the ship. But many will take to the lifeboats – sending back the keys instead. This will add to the number of foreclosures and to the inventory of unsold and vacant houses.
August 2nd, 2010 | Bill Bonner | 40 comments | Continued
The Day the Oil Stopped Flowing
BP would have to be viewed as short-term speculation right now. For one, it’s not certain the leaking oil has actually been stopped. It’s just been stopped from the top of the well. If the well is ruptured in other places, more leaks will emerge. This could be just the end of the beginning (rather than the end of the end). The larger question, in our mind, is how long it might take be BP to be litigated out of existence.
July 16th, 2010 | Dan Denning | 46 comments | Continued
Shouldn’t Do It; Couldn’t Do It Anyway
The US government disappeared almost a million jobseekers from the unemployment lists in the last two months to try to make the numbers look better. Still, fewer people have jobs now than when the stimulus began. Those workers with jobs earn less than they did then. And those who lose their jobs wait longer than ever to find a new one. Housing is sinking again, too.
July 12th, 2010 | Bill Bonner | 10 comments | Continued
You’re the Voice, But Don’t Understand It
Daily Reckoning editors have written endlessly about how such stimulus will merely “pull forward demand”, causing a slump once the stimulus is withdrawn. They have been proven right in textbook fashion. But Schiff points out a further crucial consequence of this economic mismanagement. In addition to pulling forward demand, there is the interest on the debt used to pull this demand forward.
July 10th, 2010 | Nickolai Hubble | 1 comment | Continued
The Austerity Contagion
The correction is doing its work. The feds tried to stop it with trillions in loans, guarantees, and ‘stimulus’ spending. They failed. Over the last three weeks we have had confirmation after confirmation – the recovery ain’t happening. Unemployment is getting worse. Prices are falling – even the price of labor. The banks don’t lend and the people don’t spend.
July 8th, 2010 | Bill Bonner | 0 comments | Continued
The Platypus Exception
What we both agree on is that no one knows what will happen. Your editor believes that the Austrian theory of the business cycle has both explanatory and predictive power when it comes to figuring out what has to happen at the end of a leveraged asset boom. But it is true – from meat pies to the platypus (both reptile AND mammal!) and in many other ways-Australia is exceptional.
July 7th, 2010 | Dan Denning | 87 comments | Continued
A Rhyme of the Times
Perhaps we are just overly curmudgeonly about the whole idea of spreading the wealth around. Still, it seems like a fraud has been foisted upon the Australian public…that everyone is entitled to benefit from the risk-taking of others without taking any risk at all…because the resources “belong” to all Australians.
July 2nd, 2010 | Dan Denning | 14 comments | Continued
Even Taxes are Pretty in Pink
Forcing the more productive, intelligent and resourceful people in the economy to bear the weight of those who should be going out of business is just stupid. That hasn’t stopped countries from trying it. But the IMF points out that most countries abandon it. And what would happen to government revenue when the economy slows?
June 26th, 2010 | Nickolai Hubble | 11 comments | Continued
The Business of Home-owning
Sales collapsed an unprecedented 33 percent from April to an annual pace of 300,000, less than the median estimate of economists surveyed by Bloomberg News and the fewest in data going back to 1963, figures from the Commerce Department showed today in Washington. Demand in prior months was revised down.
June 25th, 2010 | Bill Bonner | 0 comments | Continued
Buckle Up
He goes on to explain the relationship between the level of housing finance available in Australia and the mining industry. With 270 pre-RSPT projects queued up valued at $300 billion, foreign lenders had plenty of confidence in Australia as an attractive economy to lend into. This despite the fact that total debt in the economy (public, corporate, AND private) is the neighbourhood of Italian and Greek levels, according to Gottliebsen.
June 23rd, 2010 | Dan Denning | 5 comments | Continued
Flip Flopping in the Housing Market
The theories about economics and markets developed in the last 100 years are almost all nonsense. Markets are not perfect. They do not reflect the actual value of things. There’s no way of knowing what the actual value is. Instead, markets are always discovering value – in fits and starts – imperfectly. They reflect reality and fantasy…the future and the past…math and muddle.
June 16th, 2010 | Bill Bonner | 33 comments | Continued
The Housing Non-Recovery
But we announced that the data led us to believe the contrary and we delivered our analysis in a presentation entitled, “Why We’re Still in the Early Innings of the Bursting Housing and Credit Bubbles.” We concluded that things were terrible and that there was no sign of a bottom. Obviously, that forecast was on target.
June 10th, 2010 | Whitney Tilson | 6 comments | Continued
Poor Ol’ Goldman
Poor Ol’ Goldman … Just trying to do ‘God’s work’ … And everybody treats it like the devil.
April 27th, 2010 | Bill Bonner | 6 comments | Continued
