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John Williams of Shadowstats.com Interview: The Next Crash Will Be A Lot Worse!

By HousingBoom   Follow   Mon, 28 Jan 2013, 3:31pm   8,475 views   245 comments
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Anyone who thinks the U.S. is in recovery should stop listening to the mainstream media and listen to John Williams. He heads up Shadowstats.com, and is one of the few economists who crunches the numbers to give unvarnished true statistics. Adjusted for real inflation of about 7%, Williams says, "GDP has plunged, and we have been bottom bouncing" ever since the financial crisis started. Williams says, "The next crash will be a lot worse (than 2008) because it will push us into the early stages of hyperinflation." He predicts this will happen "by the end of 2014" at the latest....

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1. The Professor Follow Befriend (5) 25 threads 1,324 comments Premium

   126   3:34pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected   HousingBoom says tatupu70 says HousingBoom says Wages are falling so any price increase is not sustainable IMO http://news.yahoo.com/personal-income-posts-biggest-gain-eight-years-133706758--business.html Nice find. We'll see how this plays out in the next few months. Very short article. I am sure that income is up, way up for some people who are landlording at double the PITI. Housing (renting or mortgage) seems to be going up which means that there is less disposable income for our consumer economy. When If the crash happens those with property and precious metals will be ok, not great, ok. Those in paper (401k, stocks, bonds, etc.) are screwed.

2. CDon Follow Befriend (1) 240 comments

   127   3:35pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   HousingBoom says Yup, that's a possibility. The fact that central banks are trying to hoard as much gold as possible tells me that they are losing faith in the system. The system does not have to fail for home prices to fall another 20%+. That is all I am expecting at best. I fully expect you see your 20% - however, as has been the case for the last 3 years, I fully expect you see it in the form of nominal stagnation while inflation slowly works its magic and the remaining slack in the system is removed. You have very little upside risk in waiting IMO.

3. yup1 Follow Befriend 10 threads 379 comments

   128   3:38pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   The Professor says If the crash happens those with property and precious metals will be ok, not great, ok. Those in paper (401k, stocks, bonds, etc.) are screwed. If the crash happens all asset prices will get crushed. Cash is king when credit is collapsing.

4. tatupu70 Follow Befriend (3) 15 threads 5,718 comments

   129   3:41pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says That is graphing business cycles it is not even showing the 2008 crash, HAHA Did you look at the x-axis? The chart is a little dated, I'll grant, but it clearly shows underwater was very, very wrong.

5. HousingBoom Follow Befriend (1) 48 threads 172 comments

   130   3:42pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says The Professor says If the crash happens those with property and precious metals will be ok, not great, ok. Those in paper (401k, stocks, bonds, etc.) are screwed. If the crash happens all asset prices will get crushed. Cash is king when credit is collapsing. It's going to be a crash but we don't know if it's a deflationary one (stock market collapse) or inflationary (bond market and/or dollar collapse). The job market is the biggest factor for home prices. All I know is that the job market will be in a world of hurt when this occurs. This will not be a soft landing like most bulls are predicting. The longer it doesn't happen, the bigger the bubble and the bigger the collapse will be

6. yup1 Follow Befriend 10 threads 379 comments

   131   3:56pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says HousingBoom says Wages are falling so any price increase is not sustainable IMO http://news.yahoo.com/personal-income-posts-biggest-gain-eight-years-133706758--business.html That is from early dividend payouts for tax purposes. It will not continue.

7. The Professor Follow Befriend (5) 25 threads 1,324 comments Premium

   132   3:57pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   Protected   tatupu70 says The Professor says It does not look like the Federal Reserve (established December 23, 1913) helped with smoothing out the business cycle; quite the contrary. I also noticed that our economy booms with war. Are you looking at the same chart as I am? Certainly, the Federal Reserve didn't instantaneously change things, but clearly the business cycle has been smoother after WWII. To what do you attribute that change? Not counting the great depression and the dip after ww2 you are correct; the business cycle is smoother. The 19th century swings were caused by an expanding country. I do not believe the creation of the Fed was a good thing. I definitely don't think going off the gold standard in 1971 was good. It freed the Fed, a supragovernmental authority, in collusion with our corrupt government, to create as much money as they want. I am not sure why the business cycle is petering out. Maybe because we are running out of room to grow? Perhaps Govt intervention? Soon we'll flatline.

8. tatupu70 Follow Befriend (3) 15 threads 5,718 comments

   133   3:58pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says That is from early dividend payouts for tax purposes. It will not continue. Maybe, maybe not. But to say that incomes are falling is not right.

9. HousingBoom Follow Befriend (1) 48 threads 172 comments

   134   4:01pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says Maybe, maybe not. But to say that incomes are falling is not right. That payroll tax just killed any hopes of an increase in wages. lol

10. robertoaribas Follow Befriend (23) 56 threads 4,081 comments Scottsdale, AZ robertoaribas's website

    135   4:01pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   The Professor says I do not believe the creation of the Fed was a good thing. I definitely don't think going off the gold standard in 1971 was good. you and zero economists agree...

11. yup1 Follow Befriend 10 threads 379 comments

    136   4:05pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says Maybe, maybe not. But to say that incomes are falling is not right. Sorry on that point you are incorrect. http://beschloss.blogs.mydesert.com/2013/01/07/flat-per-capita-incomes-weigh-on-us-employment-sector/

12. yup1 Follow Befriend 10 threads 379 comments

    137   4:09pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   HousingBoom says That payroll tax just killed any hopes of an increase in wages. lol You got that right!

13. tatupu70 Follow Befriend (3) 15 threads 5,718 comments

    138   4:13pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says Sorry on that point you are incorrect. I didn't know your timeframe was a decade. I figured you were referring to present time

14. robertoaribas Follow Befriend (23) 56 threads 4,081 comments Scottsdale, AZ robertoaribas's website

    139   4:19pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says http://beschloss.blogs.mydesert.com/2013/01/07/flat-per-capita-incomes-weigh-on-us-employment-sector/ you've really got to do better research than just some random douche bags blog... While he has the income correct, 54k down to 50K sounds about right for the crisis, it is a freaking seriously bad period we are moving through here. First, unemployment will go down, THEN, incomes will rise. I would expect, at some point 5 to 10 years from now, incomes will rise much faster than inflation in desirable fields... (if you don't know anything and everything you can do can be replaced by automation you are probably screwed forever) Second, not that it matters ,but his claim that Obama will 'continue adding tons of government employees' is historically and completely false.

15. yup1 Follow Befriend 10 threads 379 comments

    140   4:26pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   robertoaribas says 54k down to 50K sounds about right for the crisis I was only linking to show the income drop I did not read his crappy blog :D

16. yup1 Follow Befriend 10 threads 379 comments

    141   4:29pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says I didn't know your timeframe was a decade. I figured you were referring to present time Oh yes more long term, short term gains are too volatile. And that is the average which is dragged higher by the high end. A better statisic would be median incomes which are hopelessly low, 26k is the median single wage in the US, DOH!

17. CDon Follow Befriend (1) 240 comments

    142   4:32pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   HousingBoom says This will not be a soft landing like most bulls are predicting. While written today - this could have just have easily been written 3 years ago. For the last 3 years, despite you continuing to call for a "collapse", it has been the soft landing as each crisis turns into nothingburger after nothingburger. So again, is there any point in the next 0-50 where you decide to re-evaluate your conclusion? Is there any point in the next 0-50 years when you say, "gee, I guess there is not going to be a second collapse after all"? And if not a date, how bout an event? If the DJIA hits say XYZ then you will change your tune. Or perhaps if unemployment hits ABC then you will reconsider... BTW - if the answer for you is "I dont know" so be it. It just seems to me that anyone this "certain" of something, despite the some or even any evidence to the contrary, is setting themselves up for a lifetime of disappointment.

18. yup1 Follow Befriend 10 threads 379 comments

    143   4:36pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   CDon says For the last 3 years, despite you continuing to call for a "collapse", it has been the soft landing as each crisis turns into nothingburger after nothingburger. So again, is there any point in the next 0-50 where you decide to re-evaluate your conclusion? Is there any point in the next 0-50 years when you say, "gee, I guess there is not going to be a second collapse after all"? I guess I would ask why do you believe that 2008 cannot be repeated? What has changed to stop that from happening? Nothing. Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion?

19. HousingBoom Follow Befriend (1) 48 threads 172 comments

    144   4:41pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   yup1 says I guess I would ask why do you believe that 2008 cannot be repeated? Because he's a mental midget!

20. The Professor Follow Befriend (5) 25 threads 1,324 comments Premium

    145   4:47pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected   robertoaribas says The Professor says I do not believe the creation of the Fed was a good thing. I definitely don't think going off the gold standard in 1971 was good. you and zero economists agree... Zero? Oh, you mean Zerohedge economists agree. http://www.zerohedge.com/contributed/economists-end-or-drastically-downsize-fed

21. Raw Follow Befriend 10 threads 694 comments

    146   4:53pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike (1)   yup1 says I guess I would ask why do you believe that 2008 cannot be repeated? What has changed to stop that from happening? Nothing. Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion? Lots of reasons why 2008 can't be repeated anytime soon: Home prices are not overpriced anymore. They are under priced. Recent home purchases are not leveraged with zero downs. Many were all cash. Interest rates are a lot lower. Economy is not sinking anymore, but making a slow come back. The worst is over, the future is bright.

22. yup1 Follow Befriend 10 threads 379 comments

    147   5:00pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike   Raw says Recent home purchases are not leveraged with zero downs. So 3% FHA loans do not happen?

23. yup1 Follow Befriend 10 threads 379 comments

    148   5:03pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike   Raw says Home prices are not overpriced anymore. So says those that own, those that rent believe the opposite, some of those that own (me) still believe the opposite. Home prices are being supported by low interest rates. What happens if rates rise?

24. yup1 Follow Befriend 10 threads 379 comments

    149   5:07pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike   Raw says Lots of reasons why 2008 can't be repeated anytime soon: You saying it can't be repeated shows your ignorance. Lehman, Bear, Wachovia, WAMU, Countrywide, Merril, have been absorbed by the remaining big 5 banks. They are now much bigger than before the last crisis when Lehman ALONE destroyed the credit markets. You keep smoking that it can't happen again crack pipe.

25. tatupu70 Follow Befriend (3) 15 threads 5,718 comments

    150   5:08pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says Raw says Home prices are not overpriced anymore. So says those that own, those that rent believe the opposite, some of those that own (me) still believe the opposite. Home prices are being supported by low interest rates. What happens if rates rise? If rates rise, that means unemployment will certainly have fallen and incomes will be up. So house prices will probably be rising as well.

26. yup1 Follow Befriend 10 threads 379 comments

    151   5:14pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says If rates rise, that means unemployment will certainly have fallen and incomes will be up. So house prices will probably be rising as well. The last housing bubble was caused by what? Artificially low payments with crazy subprime loans. Interest only, pick a pay, you name it. Rising rates do not lead to higher home prices.

27. Call it Crazy Follow Befriend 249 threads 2,915 comments

    152   5:25pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says If rates rise, that means unemployment will certainly have fallen and incomes will be up. So house prices will probably be rising as well.

28. CDon Follow Befriend (1) 240 comments

    153   5:31pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says CDon says For the last 3 years, despite you continuing to call for a "collapse", it has been the soft landing as each crisis turns into nothingburger after nothingburger. So again, is there any point in the next 0-50 where you decide to re-evaluate your conclusion? Is there any point in the next 0-50 years when you say, "gee, I guess there is not going to be a second collapse after all"? I guess I would ask why do you believe that 2008 cannot be repeated? No absolutely, it can be repeated. I continue to look for risk pricing in the bond market, or in the a1/p2. As they both sit there, while we print with wild abandon, I dont think twice about it. If they start to rise, like we saw in 2007 - absolutely I will be changing my tune - and fast. Yup1 says..."Do you think that the Fed can bailout everything if everyone decides to sell? When will you get concerned with the Fed balance sheet 5 Trillion, 10 Trillion, 50 Trillion?" Yes. Unequivocably. Again, I am operating on the assumption that they realize how serious this is - and if push comes to shove, they would much rather risk a global conflict with our creditors than they would see rioting, tanks in the streets, and the risk they could be dragged thru the streets, mogadishu style. And therein lies the risk with changing course. There is so so so much debt out there - if called simultaneously, like we almost had in 2008, some very very very powerful players on the worlds stage will be very very screwed. And everyone knows this. Hence, no one is willing to pull the trigger - instead they wail, and shout, and then readily gobble down more of our debt. So in that regard, honestly, there is no notational limit that we cannot exceed. Its kinda like the 500 billion dollar bill (zimbabwe dollars) I got as a gift. The guy got it for $4USD on ebay. Mugabe would rather destroy his country's ability to be a member of the worlds stage than risk dying at the hands of his countrymen. When push comes to shove, I am pretty sure which way our PTB will decide too.

29. tatupu70 Follow Befriend (3) 15 threads 5,718 comments

    154   5:57pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says Rising rates do not lead to higher home prices. Of course not. It's not cause and effect. But rates also don't rise and fall randomly. They rise when there is an expectation of inflation and fall when there is an expectation of deflation. So, if you are saying that rates are rising, that means there is an expectation of inflation, which implies higher incomes and lower unemployment.

30. yup1 Follow Befriend 10 threads 379 comments

    155   6:00pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   CDon says Its kinda like the 500 billion dollar bill (zimbabwe dollars) I got as a gift. The guy got it for $4USD on ebay. Dude whoever bought that got robbed my buddy got me a 100 Trillion dollar one for 4 bucks, ROFLMFAO!

31. yup1 Follow Befriend 10 threads 379 comments

    156   6:07pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   CDon says Hence, no one is willing to pull the trigger - instead they wail, and shout, and then readily gobble down more of our debt. So in that regard, honestly, there is no notational limit that we cannot exceed. At some point mathematics takes over and the amounts of debt cannot even be serviced, then what? If you are just printing money to make fake reserves you are doing nothing. If that money does not get into the real economy the increased debts will eventually default. I guess you could go with a 0 interest rate, all of that money is fake anyway. I guess that is the point, do we all not understand at this point that it is all fake. A large group of people being "poor" while an individual person is "rich" when ALL of the credit money ever created is fake is pretty rediculous. If the population in general ever comes to truely understand the nature of credit money, no one will ever pay back another debt again, EVER!

32. yup1 Follow Befriend 10 threads 379 comments

    157   6:09pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says But rates also don't rise and fall randomly. They rise when there is an expectation of inflation and fall when there is an expectation of deflation. That is what they used to mean, I agree. If you think that is what rates mean in todays ZIRP environment I believe you are wrong.

33. yup1 Follow Befriend 10 threads 379 comments

    158   6:30pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   tatupu70 says Of course not. It's not cause and effect. But rates also don't rise and fall randomly. They rise when there is an expectation of inflation and fall when there is an expectation of deflation. So, if you are saying that rates are rising, that means there is an expectation of inflation, which implies higher incomes and lower unemployment. Bill Gross from PIMCO said in 2010 that without Uncle Sam backing mortgages rates would climb by 3 to 4 %. I wonder what home prices would be with 7-9% mortgages?

34. Kevin Follow Befriend 40 threads 2,652 comments

    159   6:31pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   You guys understand that Zimbabwe was never a stable global superpower with reserve currency status right?

35. CDon Follow Befriend (1) 240 comments

    160   6:39pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says Dude whoever bought that got robbed my buddy got me a 100 Trillion dollar one for 4 bucks, ROFLMFAO! LOL - I stand corrected it was actually a 500 trillion note. Is yours the one with the 2010 redemption date? yup1 says I guess that is the point, do we all not understand at this point that it is all fake. Yeah , pretty much. If there was any doubt, the world realizes it is all a big ponzi scheme right now. But like all ponzis, once you recognze its a ponzi and all of you will lose, it behooves you to pawn it off on someone else - in this case the next generation (who will then have their own 2008 minute whereupon [unless someone calls their bluff] they will pawn that ponzi on to the next generation. yup1 says A large group of people being "poor" while an individual person is "rich" when ALL of the credit money ever created is fake is pretty rediculous. At the end of the day, money is just a representation of resources, (be them natural, political, or otherwise). In 2008, the worlds pool of bullshit was drained, and we were all exposed as swimming naked. Still, we, here in the US were still recognized as being the biggest, strongest, pack of grenades across its chest... So when we said "why dont we re-fill this pool, and lets all pretend it didnt happen" everyone else, recognized how powerless they were they nodded in agreement. It wont always be this way. Eventually China or someone else will be big enough to call the shots. Im just not so sure that is going to happen while I happen to be on this planet.

36. Call it Crazy Follow Befriend 249 threads 2,915 comments

    161   6:42pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   yup1 says Bill Gross from PIMCO said in 2010 that without Uncle Sam backing mortgages rates would climb by 3 to 4 %. I wonder what home prices would be with 7-9% mortgages? According to Tat's theory, if rates were 7% or higher, house prices would be double what they are now and we would all be making a lot more in wages!

37. Call it Crazy Follow Befriend 249 threads 2,915 comments

    162   6:45pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike (1)   yup1 says CDon says Its kinda like the 500 billion dollar bill (zimbabwe dollars) I got as a gift. The guy got it for $4USD on ebay. Dude whoever bought that got robbed my buddy got me a 100 Trillion dollar one for 4 bucks, ROFLMFAO! Here, I have one I'll sell you real cheap!! *

38. CDon Follow Befriend (1) 240 comments

    163   6:47pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   yup1 says Rising rates do not lead to higher home prices. Real or nominal? In nominal terms, the record is not as clear as you think it is. I dont have a graph for the US, but I do have tabular data, if you want to confirm it for the whole US. Either way, Im sure the people back in the 80s who decided to wait as interest rates hit 14-15-16 percent, watched in horror as nominal prices continued to slowly lurch upward.

39. robertoaribas Follow Befriend (23) 56 threads 4,081 comments Scottsdale, AZ robertoaribas's website

    164   7:10pm Thu 31 Jan 2013   Share   Quote   Permalink   Like   Dislike   Call it Crazy says According to Tat's theory, if rates were 7% or higher, house prices would be double what they are now and we would all be making a lot more in wages! ceteris paribus, higher rates would cause lower prices... but rates aren't going higher, without any other changes. 1. we've already been told the FED will keep them low till 2015 2. additionally, they've stated they will keep them low till unemployment drops below 6.5%. As unemployment drops, alot more people are likely to move back into the labor pool, so it might take something like a 10% increase employment to get us there, counting in population growth. So while obviously, rates back to 7% would be bad for housing, since that is unlikely to happen without serious job growth, which might also start causing wage and rent increases, it isn't as simple as busting out your finance calculator, keeping the payment the same, changing the interest rate and seeing the equivalent home price.

40. Call it Crazy Follow Befriend 249 threads 2,915 comments

    165   7:34pm Thu 31 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike (1)   robertoaribas says it isn't as simple as busting out your finance calculator, keeping the payment the same, changing the interest rate and seeing the equivalent home price. I believe it IS that simple, for one main reason.... The majority of people buy "payments", they don't buy "houses". The "sheep" listen to their realtor to see what maximum payment they qualify for, then they go shopping for houses that fit that "payment". It's tough for house prices to rise as interest rates rise, as it puts them out of range of certain buyer pools.... The only way house prices can rise with rising interest rates is if wages rise accordingly.... and we know where wages have been all these past years.

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