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If we're in a housing recovery WHY is Ink Jet Ben at it again ?


By Bubbabear   Follow   Wed, 12 Dec 2012, 2:36am PST   4,029 views   63 comments
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http://www.forbes.com/sites/afontevecchia/2012/12/12/qe4-is-here-bernanke-delivers-85b-a-month-until-unemployment-falls-below-6-5/

Federal Reserve.  On Wednesday, the FOMC announced more quantitative easing at a rate of $85 billion a month for an extended period of time.  The Bernanke Fed has also modified its guidance, noting its ultra-accommodative stance will remain in place until the unemployment rate falls below 6.5% and inflation projections remain no more than half a percentage point above 2% two years out. QE4 is here.  Only a few months after announcing what had been dubbed QE3, an open-ended $40 billion a month program to buy up mortgage backed securities (MBS), the FOMC decided to extend its asset purchases in...

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HEY YOU   Thu, 13 Dec 2012, 11:37am PST   Share   Quote   Permalink   Like   Dislike     Comment 24

Billybigrig says

David9 says

I guess the $40 Billion a month wasn't working well enough.

it's working the way they want it to.....ya better be ready!!!

http://www.zerohedge.com/news/2012-11-28/guest-post-madness-lost-society

I will watch all the videos.
Derivatives mentioned in video 3. I've been following these for some time & have always wondered what collateral backs the paper that backs the derivative bet? I wonder if the Bulls remember the S&L & Enron fiascoes & that little thing called the Great Depression.Of course situations like those could never happen again.

Call it Crazy   Thu, 13 Dec 2012, 11:42am PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 25

Here's another article to read:

Essays in Fragility: The Rise and Fall of Phantom Housing Collateral

...."How much phantom housing collateral is still on the books? Nobody knows, and that in itself renders the housing/mortgage sector fragile."

http://www.oftwominds.com/blogdec12/housing-collateral12-12.html

Philistine   Thu, 13 Dec 2012, 11:59am PST   Share   Quote   Permalink   Like   Dislike     Comment 26

Mark D says

"Individual shoppers shelled out more money -- spending $423 this weekend, up from $398 last year.

Most of the difference from $423 TY versus $398 LY was from inflation and gadget upgrade releases from Apple, etc. Also, the season so far is actually worse than last year, so Thanksgiving weekend just pulled sales forward but did not portend overall stronger spending so far.

Also don't forget that auto sales increased substantially this year as a result of durable goods purchases having gone beyond their typical lifespan in the most recent cycle (as a result of less disposable income and job insecurity). Auto sales are always included in retail numbers (as are gas prices), so it's all cooked just as much as CPI and BLS numbers are.

Call it Crazy   Thu, 13 Dec 2012, 12:15pm PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 27

Philistine says

Also don't forget that auto sales increased substantially this year as a result of durable goods purchases having gone beyond their typical lifespan in the most recent cycle (as a result of less disposable income and job insecurity). Auto sales are always included in retail numbers (as are gas prices), so it's all cooked just as much as CPI and BLS numbers are.

Auto sales have really increased in November for a few reasons:

1) A big push with sub-prime financing to get people to jump in.

2) In NJ and NY a ton of cars got trashed with Sandy and had to be replaced.

I have family in the car business and they said November and into December has seen really high levels of sales.

grendel   Thu, 13 Dec 2012, 12:42pm PST   Share   Quote   Permalink   Like (3)   Dislike (1)     Comment 28

Bernake fears deflation more than inflation. Pumping cash into the economy during ZIRP is a defensive maneuver to prevent deflation. Since effective bond interest rates are still approximately zero even with the repeated huge cash injections, there is some evidence that the interest rate without the cash injections would be lower (i.e. deflation).

In which case, he's doing his job to prevent us from following Japan into the deflationary trap.

He may be creating other hazards with these policies, but the devaluation of the dollar does not seem to be a risk right now.

David Losh   Thu, 13 Dec 2012, 1:19pm PST   Share   Quote   Permalink   Like   Dislike     Comment 29

grendel says

Bernake fears deflation more than inflation.

Exactly right, for all the money he has dumped into the economy we still don't have inflation.

He has created a sense of deflation which I've read is very real right now.

David Losh   Thu, 13 Dec 2012, 1:23pm PST   Share   Quote   Permalink   Like   Dislike     Comment 30

Mark D says

Individual shoppers shelled out more money

Apparently those shoppers used credit cards: http://www.huffingtonpost.com/2012/12/07/us-consumer-debt-record_n_2260457.html

Consumer debt hits another milestone even though consumers are cutting back on spending.

Bellingham Bill   Thu, 13 Dec 2012, 1:54pm PST   Share   Quote   Permalink   Like   Dislike     Comment 31

David Losh says

He has created a sense of deflation which I've read is very real right now.

No he hasn't. This has:

http://research.stlouisfed.org/fred2/series/GINIALLRH

as has this:

http://research.stlouisfed.org/fred2/series/CP

C Boy   Thu, 13 Dec 2012, 2:10pm PST   Share   Quote   Permalink   Like   Dislike     Comment 32

Sales on the day after Thanksgiving fell from those a year earlier, according to one major tracker, the first decline since the recession of 2008...

While store visits on the Friday after Thanksgiving rose 3.5 percent from last year, to more than 307 million visits, retail sales decreased 1.8 percent, according to the research firm ShopperTrak.

http://www.nytimes.com/2012/11/26/business/chasing-early-sales-retailers-undercut-black-friday.html

HousingBoom   Thu, 13 Dec 2012, 3:17pm PST   Share   Quote   Permalink   Like   Dislike     Comment 33

Bernanke f's up everything so we all know he will destroy the US dollar with all this money printing. Let's see how what home prices will be when rates are above 10%.

The bond market is now in a bubble and WILL burst in the near future. Housing is doomed!

reggie   Thu, 13 Dec 2012, 7:28pm PST   Share   Quote   Permalink   Like   Dislike     Comment 34

QE 1, 2, 3, 4 etc is credit in the form of spendable cash extended to the Chinese to satisfy America's debt.
The Fed doesn't give a shit about America. They sold the country to the Chinese years ago. Now, they are helping them buy American real estate cheap.

tatupu70   Thu, 13 Dec 2012, 8:27pm PST   Share   Quote   Permalink   Like   Dislike     Comment 35

C Boy says

Sales on the day after Thanksgiving fell from those a year earlier, according to one major tracker, the first decline since the recession of 2008...

Yes, but that's because Black Friday was moved to Thanksgiving this year, so you really have to look at the whole weekend to get a true apples to apples comparison. And you should include online sales as well.

Philistine   Fri, 14 Dec 2012, 12:55am PST   Share   Quote   Permalink   Like   Dislike     Comment 36

tatupu70 says

Black Friday was moved to Thanksgiving this year, so you really have to look at the whole weekend

100% correct. Friday was a dissapointment, but Thursday and Saturday were huge. Online sales were their largest in history:

http://www.reuters.com/article/2012/11/26/net-us-usa-retail-blackfriday-online-idUSBRE8AO08C20121126

Since it's all credit card (aka: DEBT) spending, this might be how we get into the next housing bubble in 2013--just put down that 3%/FHA, buy the shitshack of our dreams because we're tired of waiting and it's our birthright, and then squat for 3 years payment free when the next round of wage debasement comes since the banks are not in the mood to pursue foreclosures.

And I hear HELOC is back, and better than ever.

Bellingham Bill   Fri, 14 Dec 2012, 1:57am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 37

reggie says

They sold the country to the Chinese years ago. Now, they are helping them buy American real estate cheap.

we sold ourselves.

http://www.census.gov/foreign-trade/balance/c5700.html

Zakrajshek   Fri, 14 Dec 2012, 3:16am PST   Share   Quote   Permalink   Like   Dislike     Comment 38

Bernanke is only protecting his rich banking friends. We need deflation! Lower prices are what get me to buy things. How many big flat screen tvs did they sell at $8000 each? If prices are high as they are for now for gas, food, materials... people will buy only what is absolutely necessary or maybe not at all. (this is where we are right now) If prices are low, people buy more. This leads to more production and more jobs.

Bellingham Bill   Fri, 14 Dec 2012, 3:24am PST   Share   Quote   Permalink   Like   Dislike     Comment 39

Zakrajshek says

We need deflation!

http://research.stlouisfed.org/fred2/series/TCMDODNS

says otherwise

Bubbabear   Fri, 14 Dec 2012, 4:23am PST   Share   Quote   Permalink   Like   Dislike     Comment 40

wiseguysays says

The Fed

The only thing left out is the fed reserve is buying 70% of these bonds. So it is mostly monitized.
That means real customers for these bonds get drowned out and can't demand a higher interest rate. Market forces are suppressed because they only purchased 30% of the bonds.
The fed dictates and their policies force holders to eat inflation. Then these holders go to the stock market to get their gains and get wiped once it drops since it has way more risk than bonds.

This is my prediction. The fed will continue with 0%. Before they raise it around 2016, there will be capital controls. Businesses will not want to cooperate and pull stuff from shelves. We've seen this in the 70s with gas rationing. Then the blame goes onto businesses that they're too greedy than interest rate rise.
Once they do rise, government and anything with high debt gets corrected. If bernanke raises rates to a normal 5%, then the whole federal budget of this year goes just to pay interest.
The government is stuck but if they continue with these policies, then inflation will get out of control. The bank will turn on them as they did before.

David Losh   Fri, 14 Dec 2012, 4:28am PST   Share   Quote   Permalink   Like   Dislike     Comment 41

The consumer price index declined by 0.3%

http://www.bls.gov/news.release/cpi.nr0.htm

No big deal except gas prices fell a lot

http://www.businessinsider.com/gas-prices-fall-2012-11

Lower gas prices may lower the price on all goods.

However, none of that means anything to asset prices, like housing. It may even help that affodability index, and make housing look cheaper, in the short run.

Bellingham Bill   Fri, 14 Dec 2012, 4:37am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 42

yes, if gasoline were free, rents and home values would shoot up, LOL.

The household average is 1000 gallons a year, that's ~$300/mo.

(well, if gasoline were free it would also open up more land for housing, as people would be able to commute further, losing time but not money)

JohnLaw   Fri, 14 Dec 2012, 4:54am PST   Share   Quote   Permalink   Like   Dislike     Comment 43

Who else, besides the FED, will buy T-Bills at negative real rates ad infinitum? If rates rise by 1% then more money will be spend on servicing debt than the military. Face it, the USG is trapped and the FED is accommodating them. It is an act of desperation. It will solve nothing.

Bellingham Bill   Fri, 14 Dec 2012, 5:25am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 44

JohnLaw says

If rates rise by 1% then more money will be spend on servicing debt

So they won't. Part of the Fed's QE action is to pump up the money supply so it has to come back into bonds. Where else can it go?

JohnLaw says

the USG is trapped

Not really. We just have to raise taxes a lot. Our tax-to-GDP is about half what Germany, Denmark, Sweden, and Norway pay.

We can pay more, we just don't want to.

This isn't being "trapped", it's just being stupid.

C Boy   Fri, 14 Dec 2012, 6:08am PST   Share   Quote   Permalink   Like   Dislike     Comment 45

David Losh says

The consumer price index declined by 0.3%

http://www.bls.gov/news.release/cpi.nr0.htm

No big deal except gas prices fell a lot

http://www.businessinsider.com/gas-prices-fall-2012-11

Lower gas prices may lower the price on all goods.

However, none of that means anything to asset prices, like housing. It may even help that affodability index, and make housing look cheaper, in the short run.

Anything that lowers the cost of building a new home will lower the price of existing housing stock in many areas. Especially large developements where homeowners must compete with builders putting up new houses across the street.

David Losh   Fri, 14 Dec 2012, 6:18am PST   Share   Quote   Permalink   Like   Dislike     Comment 46

Bellingham Bill says

if gasoline were free,

The price of all goods, and services would drop. Oil drives the prices of almost everything, and gasoline is the transportation.

No one is talking about oil right now, because it's cheap, and getting cheaper. The talk is about refineries.

So today's report doesn't really mean anything other than a trend.

Bellingham Bill   Fri, 14 Dec 2012, 6:23am PST   Share   Quote   Permalink   Like   Dislike     Comment 47

David Losh says

Oil drives the prices of almost everything, and gasoline is the transportation.

there is no oil price component in existing housing.

we pay what we can afford.

if we can afford more, we pay more.

Bellingham Bill   Fri, 14 Dec 2012, 6:27am PST   Share   Quote   Permalink   Like   Dislike     Comment 48

C Boy says

Especially large developements where homeowners must compete with builders putting up new houses across the street.

This situation does not obtain in the high cost areas I'm familiar with.

Eg. the vast majority of houses near Apple were built before I was born.

It was big news when 53 homes were built.

http://losaltos.patch.com/articles/walls-go-up-at-old-pumpkin-patch-as-the-enclave-takes-shape

That was the last open land.

JohnLaw   Fri, 14 Dec 2012, 6:27am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 49

Billybigrig says

This is my prediction. The fed will continue with 0%. Before they raise it around 2016, there will be capital controls.

I think you are pretty close. One thing I would watch out for is a desperate USG stealing the savings from IRAs and 401(k)s. It will be done through legislation language like, "The Patriot Savings Act". Congress will "save" investors from evil market speculation by seizing 401K and IRA accounts and forcing the investments into US Treasuries. It happened in Argentina...

David9   Fri, 14 Dec 2012, 6:28am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 50

http://www.dailyfinance.com/2012/09/12/5-reasons-why-the-housing-market-recovery-wont-last/

http://finance.yahoo.com/news/door-slamming-shut-housing-market-191719721.html

http://www.smartmoney.com/spend/real-estate/why-us-house-prices-wont-recover-1335877657114/

http://www.huffingtonpost.com/2012/04/20/housing-market-recovery-gwinnett-county_n_1438687.html

Call it Crazy   Fri, 14 Dec 2012, 6:31am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 51

David9 says

http://www.dailyfinance.com/2012/09/12/5-reasons-why-the-housing-market-recovery-wont-last/

http://finance.yahoo.com/news/door-slamming-shut-housing-market-191719721.html

http://www.smartmoney.com/spend/real-estate/why-us-house-prices-wont-recover-1335877657114/

http://www.huffingtonpost.com/2012/04/20/housing-market-recovery-gwinnett-county_n_1438687.html

...and people say I'm bearish on the recovery!!

David9   Fri, 14 Dec 2012, 6:32am PST   Share   Quote   Permalink   Like   Dislike     Comment 52

Call it Crazy says

...and people say I'm bearish on the recovery!!

lol, just takes some creative keyword searching..and a dislike of loosing a lot of $cash$

Call it Crazy   Fri, 14 Dec 2012, 7:12am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 53

David9 says

Call it Crazy says

...and people say I'm bearish on the recovery!!

lol, just takes some creative keyword searching..and a dislike of loosing a lot of $cash$

Ha ha... I hear ya....

That's why I bailed on my last house... I'd rather have the cash in my pocket versus watching it "vaporize" on the equity side...

David9   Fri, 14 Dec 2012, 7:27am PST   Share   Quote   Permalink   Like   Dislike     Comment 54

Call it Crazy says

I'd rather have the cash in my pocket versus watching it "vaporize" on the equity side...

I'm not against market ups and downs, that's how people make money. In fact, my first California friend to me to watch for 'bubbles' in the Real Estate Market way before this site even existed. I didn't even read the articles I posted all the way through. I was surprised by the harsh words by Yahoo Finance "And now the economic trend points to another rare period of deflation that could match or even exceed the economic carnage of 1929-1932. " Not saying I hope for this, but a 3 month 'bottom' in 2009 is way out of 'whack', 'context', and proportion for this large of a financial bubble. Sure, all this money printing/pumping is having effects, of course it would. Good things happen to those who wait, worst case what? Prices are similiar or flat. No one is predicting a return to 2005 prices.

David Losh   Fri, 14 Dec 2012, 7:56am PST   Share   Quote   Permalink   Like   Dislike     Comment 55

Bellingham Bill says

we pay what we can afford.

The phrase is that a property is worth what some one will pay.

If we have deflation, if the price of things goes down, the price of housing will also go down.

If we think wages have stagnated now, they will be more likely to fall with deflation.

Companies will take in less. They may hire more, maybe, if they can pay less, but more likely is wages would fall, there may be lay offs, there may be less money floating around in the system.

It's not apocolyptic it's just a slow decline that may get us closer to a cash economy.

David Losh   Fri, 14 Dec 2012, 7:58am PST   Share   Quote   Permalink   Like   Dislike     Comment 56

David9 says

market ups and downs

Market ups, and downs are a sign of speculation, easy credit, low interest, low risk.

If there is deflation you will see a more conservative Real Estate market place.

David9   Fri, 14 Dec 2012, 8:01am PST   Share   Quote   Permalink   Like   Dislike     Comment 57

David Losh says

If there is deflation you will see a more conservative Real Estate market place.

Would that be so terrible? Again, going back to my first California friend who told me if I see an uptick, jump in and make 10k - 20k. Then do it again if you can. Whether Greed is good or not is a completely different topic I would think..

David Losh   Fri, 14 Dec 2012, 8:06am PST   Share   Quote   Permalink   Like   Dislike     Comment 58

David9 says

if I see an uptick, jump in and make 10k - 20k

That was some time in the past because today your cost to get in, and get out would eat any profit.

David9   Fri, 14 Dec 2012, 8:10am PST   Share   Quote   Permalink   Like   Dislike     Comment 59

Yes, it was. I think 7 or 8 years ago, most anyone could get in and out with 100k or more. But are we better off now? How about a compromise, get in and out for 40k to 50k?
A Real Estate market one can be reasonably confident in. Today, where one can easily go to Google and bring up 180 degree opposite articles that we are in a recovery and that we are not, does not arouse confidence in me.

taxee   Sat, 15 Dec 2012, 12:34am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 60

If we're in a housing recovery WHY is Ink Jet Ben at it again ? Because he can. TPTB have tested the waters and found that they can do as they please. Preemptive illegal war? Bring it on. Torture? Sure. Constitutional rights? Quaint idea. Bribery and corruption? Supreme court says fine. Print your friends trillions? Good to go.

David Losh   Sat, 15 Dec 2012, 3:26am PST   Share   Quote   Permalink   Like   Dislike     Comment 61

I don't think the Fed is thinking about a housing recovery. That may just be an incidental part of a plan to load the global economy with cash.

What if the Fed can convert short term debt, to long term, stabalize the economy so the consumer has the ability to pay, and deleverage, they could sell that debt for a profit.

If the value of the cash remains the same, then we have a lot of cash in the system.

P N Dr Lo R   Sun, 16 Dec 2012, 7:55am PST   Share   Quote   Permalink   Like   Dislike     Comment 62

wiseguysays says

QE’s sole mission is to artificially lower interest rate, but this is a job killer

I believe the very fact of what Bernanke is continuing to do is going to ensure that neither of his employment or inflation goals can be met, so he'll be able to continue the zero interest rate from here to eternity. And how long would unemployment have to be at the magic 6.5% before he would be satisfied? It's all so open-ended.

Bubbabear   Sat, 22 Dec 2012, 3:30am PST   Share   Quote   Permalink   Like   Dislike     Comment 63

P N Dr Lo R says

how long would unemployment have to be at the magic 6.5% before he would be satisfied?

As long as it takes for those looking for work to fall beneath the radar ...

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