patrick.net

Logan Mohtashami says

without the Fed being so involved?

What? Here's a little primer on those 1945 to 1960 years. http://economics.about.com/od/useconomichistory/a/post_war.htm

Sure we can hit GDP, and employment goals, there is nothing stopping that. People have always manufactured around the globe. We just started buying from Japan, then China, but they don't have anything that we need.

We don't need anything from anywhere any more. We don't even need to procalim protectionism, we have the goods they need globally.

We exported our financial markets business model, which they have used to bankrupt most other countries, including China, and Europe. We can comfortably sit back and pick up the pieces.

We have bankruptcy, it's in the Constitution.

We got the game rigged, and to our benefit.

David Losh says

We don't need anything from anywhere any more. We don't even need to procalim protectionism, we have the goods they need globally.

That is just complete nonsense.

David Losh says

There is tons of inventory for sale around the country

robertoaribas says

Well, I'm a mathematical economist. That is how I see it, now let's see how someone that mommy and poppy gave a job filing out loan docs see it...

Like I said, they poured in 8 Trillion dollars ( 8T numbers included everything not just QE and operation twist) to reflate the economy and they got what they paid.

Fed is doing exactly what congress has mandated it to do with the 2 mandates that it has

Commodity prices looked ugly back in October 2008, deflation was everywhere.

Velocity of QE hasn't been great but the 4 big of the economy have gotten better from the bottom of 2009

- Industrial production
- Job creation
- real retail sales
- real income

However, what metrics would you use to qualify enough GDP growth and avg monthly job creation to say enough of QE.

I project 2nd Quarter of next year because the Fed is showing some concerns of their balance sheet size.

Now for their metric on raising short term rates. I still believe they will revise their 6.5% unemployment rate metric to reflect the participation factor. That again is a 2015 or beyond story

Bigsby says

That is just complete nonsense.

How so? The big thing we needed was oil, and we have that beat.

What else to we need. The operative word there is need.

We are still the single most desirable consumer economy, and much more so now than before, but what do we need.

Those manufacturers need us.

Now if you have an argument, you can make it with me, but random comments aren't productive.

Logan Mohtashami says

David Losh says

There is tons of inventory for sale around the country

Your chart is showing a new normal in inventory by going back to 2001.

In 2003 we saw the greatest housing unit construction boom I have ever seen. Millions of single family housing units were constructed, and sold with some very creative financing options.

Those millions of housing units are still being bought, sold, and traded outside of the Multiple Listing Services. Some are investors, but people have also found that there are still some creative ways to buy property.

We have two attorneys here in Seattle that have a discount Brokerage. They have found a larger niche of people doing direct contract transactions without the use of the Multiple.

All anyone has to do is put a for sale sign in front of the house, or mention at a cocktail party they are thinking of selling.

What you may be responding to is that the Real Estate Brokers have become a joke.

No one wants to listen to a Real Estate Broker. This market place has more hype, and BS than I have ever seen in my life.

Even Brokers I've know for forty years are just talking smack.

David Losh says

Your chart is showing a new normal in inventory by going back to 2001.

So, even with household formation and population growth, you believe the natural flow of inventory on sale is going to under 5 month supply from now on.

What about the 5.1 million homes that are either in delinquency or in foreclosure process

Isn't that inventory that needs to come to market

Also, the 10 million plus homes that are underwater, isn't some of those homes not being put to market because the owner can't sell

I agree we had a major excess in housing but I can't agree that the new normal of on sale homes will be under 5 month supply. That would assume that none of the zombie homes will ever come to market and traditional homeowners won't sell their home.

Call it Crazy says

Total house sales have been bouncing around at the lowest they have been in decades??

Your chart only goes back to 2004.

We built millions of housing units that were for sale at crazy financing options. Those are the sales you are seeing.

Those millions of housing unit sales between 2003 to 2008 are like comparing the prices paid then to what we pay today. Every one of the millions of housing units that get above water, adds to available inventory, because those people will sell. They just may not be able to pay a Real Estate commission, or want to.

David Losh says

Your chart is showing a new normal in inventory by going back to 2001.

Clearly you can see we had a excess bubble in housing as shown in the sales numbers. We just still have the massive overhang from the housing bubble in regard to delinquent, foreclosed and underwater homes.

Logan Mohtashami says

I agree we had a major excess in housing but I can't agree that the new normal of on sale homes will be under 5 month supply.

Your making a leap by comparing sales to supply listed on the Multiple. We still have sales here in Seattle that do pace listed properties. We also have home buyers at the auctions, and dealing with the investor groups we have here.

Supply makes for good pricing hype, but it isn't the market place we have today.

Real Estate Brokerage gets to be more, and more of a joke every day. I think you are seeing a shift in the way properties are marketed.

Not every one is as thrilled with Real Estate Brokers as you might think. Real Estate Brokers burned a lot of bridges with consumers, and are continueing to do so.

David Losh says

I think you are seeing a shift in the way properties are marketed.

So what you're saying that there are more than 5 month supply of homes on sale nation wide, it's just not being represented in the numbers

David Losh says

Bigsby says

That is just complete nonsense.

How so? The big thing we needed was oil, and we have that beat.

What else to we need. The operative word there is need.

We are still the single most desirable consumer economy, and much more so now than before, but what do we need.

Those manufacturers need us.

Now if you have an argument, you can make it with me, but random comments aren't productive.

You've got to be joking. Yours is a mindless comment. Every economy in this day and age is reliant on other economies to survive and to say otherwise is just utter stupidity. There is no argument to make with you. You are just flat wrong. And by the way, you said that 'we have the goods they need globally.' Well yes and no, but you should also understand that the rest of the world supplies many of the goods you need.

Logan Mohtashami says

USA IS JAPAN! 20 years ago

I was responding to this.

Bigsby says

Every economy in this day and age is reliant on other economies to survive and to say otherwise is just utter stupidity

I have been saying for the past ten years that the United States is in no way like Japan, because Japan is a rock, surroundded by water, and they do NEED to import everyhting.

Japan is dependent on trade.

We are a consumer economy. We will continue to trade, especially with Asia. We are now exporting technology, the same as we exported our financial markets business model. We will dominate the global economy.

So, in my opinion we will have a period of deflation, but it will be much different than Japan. I call it an equalization, an equilibrium, but once we hit a stride our economy will see GDP growth.

robertoaribas says

In fact, only a blind idiot can't see that inventory is tight, cue David...

In our market place everything is selling.

The inventory comes, and goes, but our sales are robust.

This is the site you visited before, but this shows are sales are strong: http://seattlebubble.com/blog/2013/04/04/nwmls-sales-unfazed-by-still-scarce-inventory/

This is good news for you. It isn't just multiple offer stuff, it's everything.

This is the sopping up period of that shadow inventory the doom, and gloomers are screaming about.

We are rapidly coming to a point where everything is above water. As more places get bought, sold, and traded the market place will relax.

But me, I'm scambling to get a house on the market this month, because I don't know that this will last.

David Losh says

We will dominate the global economy.

So we will dominate the world economy but isn't our economy still based on a 70% consumption model and with anemic wage growth isn't that going to be problem to promote very strong GDP growth

Let me shorten the time line and just provide a few cities

http://www.movoto.com/blog/market-trends/prices-are-up-april-2013/

robertoaribas says

you just 100% contradicted yourself from dozens of your earlier posts, claiming there is plenty of inventory....

God you are dense.

Everything is selling, the good, the bad,and the ugly. There are plenty of sales, the Multiples don't reflect all of it.

Inventory is low, because things are selling.

Logan Mohtashami says

So we will dominate the world economy but isn't our economy still based on a 70% consumption model and with anemic wage growth isn't that going to be problem to promote very strong GDP growth

We have bankruptcy which clears people's debt. Our consumers just went through a phaze of bankruptcy in 2007, 2008, and are now again qualified buyers.

We lowered debt load for a lot of consumers, but not enough.

I persoanlly think there is a lot of work available, but for me, as an employer, I am choosey, and really concerned about these new taxes.

I was looking at the pay checks I was signing yesterday, and can see the differences.

We would need to raise our pricing again to pay our employees more. Our other choice is to continue to expand, but that means another layer of management, higher insurance, and more taxes.

Hiring is a mine feild that needs to be cleared. We'll get there, but it will take time.

The rules of Bankruptcies have changed and Chapter 7 is much different than Chapter 13 these days.

Majority of the de leveraging done on the household side has come through foreclosures, short sales and bankruptcies but the capacity on consumption for those who filed Chapter 7 is limited to a degree.

Not to mention the massive rise of student loan debt that taken place here in the US. Unless we get income growth in a big fashion the after tax/expense incomes of Americans for the bottom 90% isn't that great. The top 10% will be ok

This is only on the federal loan side of the equation. However, the massive debt taken on by students will limit consumption going forward.

You can't file for BK on Student loans

Do you have a point in here professor? because what I'm saying is one hundred per cent correct. We over built housing units. They are still there.

Those units are being bought, sold, and traded, some with, and some without benefit of the Multiples.

That low inventory you are looking at is Multiple Listings, the same as you only look at sales data from the same sources.

David Losh says

I have been saying for the past ten years that the United States is in no way like Japan, because Japan is a rock, surroundded by water, and they do NEED to import everyhting.

Japan is dependent on trade.

We are a consumer economy. We will continue to trade, especially with Asia. We are now exporting technology, the same as we exported our financial markets business model. We will dominate the global economy.

So, in my opinion we will have a period of deflation, but it will be much different than Japan. I call it an equalization, an equilibrium, but once we hit a stride our economy will see GDP growth.

Your posts do amuse me. You were just blathering on that the country should close its borders as it doesn't need to import and then here you are saying that the US is a consumer economy (and therefore needs to import). And the US is still the major economic power, but its position is diminishing, so why on earth anyone would talk about '...will dominate the global economy' at this point in history is beyond me.

Bigsby says

You were just blathering on that the country should close its borders

David Losh says

We don't need anything from anywhere any more. We don't even need to procalim protectionism, we have the goods they need globally.

You don't read my comments.

We are a trading partner, and great consumer economy. We have bankruptcy which has freed up a lot of people from debt. We can continue to buy when some countries, like the Euro zone, are still mired in debt.

We exported our financial systems without the benefit of that carrot, which is bankruptcy.

Now this is where it gets muddled. Russia, China, India, and South America are still awash in cash. They are still creating loans on assets, like Real Estate, then buying, selling, and trading those Notes for cash, the same as we did.

Where would you want to put your cash? Where would you call a safe haven?

You'd have to show me how the position of the United States is diminishing. The way I see it we are ahead of the curve.

Logan Mohtashami says

You can't file for BK on Student loans

I'm sorry to have highjacked your thread. You make excellent discussion.

The way I see it the student loan debt is another problem that will need to be resolved to get more people educated in today's trades.

Education keeps people out of the work force so unemployment looks better the more students we have in school. The second thing is that, in theory more students will bring a better set of skills to the market place.

The changes in bankruptcy didn't go far enough, that's for sure. Isn't it an odd coincidence that the government tightened the bankruptcy laws just before a major global economic collapse?

Chapter 13 should have allowed for principal reduction, but it does have some latitude in loan restructuring. It's unfortunate that student loans aren't a part of the process, but they aren't.

All of this debt will need to be resolved. People will need to pay. People need to pay less for goods, and services while the economy still needs more jobs.

I see a deflating of pricing.

People can still take on good debt if it makes sense. Housing can be good debt if you aren't over paying for it. If people make smart choices, if they substitute, and if they produce more, to get more cash, people can pay debt.

The bubble just created unreal expectations that we will all get rich quick. We're just feeding that dream right now, but it's coming to an end.

If people want a house (or a home as Realtor's like to call them), put down 20%, have decent credit, and have a bank carry the loan. The government needs to get out of the housing business.

David Losh says

Bigsby says

You were just blathering on that the country should close its borders

David Losh says

We don't need anything from anywhere any more. We don't even need to procalim protectionism, we have the goods they need globally.

You don't read my comments.

Yeah right, 'we don't need anything from anywhere any more.' What is that supposed to mean then?

David Losh says

We can continue to buy when some countries, like the Euro zone, are still mired in debt.

a. The eurozone is not a country.
b. Yes, the US can continue to import despite it and other countries being in debt, just as EU nations can continue to import despite it being in debt along with the US.
c. What is your point?

David Losh says

You'd have to show me how the position of the United States is diminishing. The way I see it we are ahead of the curve.

Of course the position of the US is diminishing. What do you want me to show you? How about its share of the global economy? Would that suffice? And for a nation ahead of the curve, there certainly seems to be a lot of hand-wringing going on.

Bigsby says

What is that supposed to mean then?

Bigsby says

c. What is your point?

I would ask you the same questions, because you aren't saying anything.

We are a great economy that is being mismanaged by our governments continued intereference. While I applaud what Obama has done, I think Bernanke needs to reign in the Fed so we can move on to resolving our debt crisis.

What this thread should be about is the Debt Crisis, because I sure don't see a shortage of housing.

Bigsby says

How about its share of the global economy?

That would be a start.

robertoaribas says

FED has nothing to do with the debt crisis,

Like I said, you aren't worth engaing.

Lower interest is creating higher debt.

robertoaribas says

FED has nothing to do with the debt crisis,

Here is a valid point. On the fiscal side the Federal Reserve doesn't add anything to the national debt on the budget side of the equation. The fed's balance sheet has expanded greatly but it has nothing to do with our budget.

When you read the budgets the top 4 items always are going to be

1. Medicare
2. Social Security
3. Defense
4. Net interest payments

( Not counting the unfunded liabilities here)

Obviously the recession took a bite out of revenue, but that is slowly coming back. YOY % declines on the actual deficit is happening. However the nominal number keeps growing

The longer term problem we have is that starting years 2022 and out our expansion on mandatory payouts are going to blow through potential GDP growth.

Still at current pace without any tax/spending reform in 13-18 years mandatory payouts will exceed government revenue. Every single cent will go to Medicare, S.S. and net interest payments. That is a payout problem especially when you have long term potential growth running at 2.5%. We are simply getting old and older Americans cost a lot money.

Without Fed, the interest rate on US bonds will skyrocket.

A few years later, with high interest rate, you will see that Fed is LOSING money.

robertoaribas says

David Losh says

We are a great economy that is being mismanaged by our governments continued intereference. While I applaud what Obama has done, I think Bernanke needs to reign in the Fed so we can move on to resolving our debt crisis.

FED has nothing to do with the debt crisis, that is congress, president... but hey, don't let complete and utter ignorance stop you from posting your opinions! It certainly hasn't stopped you in the past!

You are mistaken here, the FED has its place in the debt crisis. It buys treasury bonds which yield interest and issues fiat money AKA federal reserve notes in return.

Here is a look at the Fed's balance before the financial crisis and just a few years after. We had deficits in the budget in 2003.
Right now the Fed's balance sheet is a bit over 3 trillion dollars and looking be north of 4 trillion next year after all the MBS purchases

The two are completely separate items.

David Losh says

We are a great economy that is being mismanaged by our governments continued intereference. While I applaud what Obama has done, I think Bernanke needs to reign in the Fed so we can move on to resolving our debt crisis.

What this thread should be about is the Debt Crisis, because I sure don't see a shortage of housing.

I never said it wasn't. The point was that you said the country doesn't need anything from anywhere else, which is complete bullshit. Mind, and as is your way, you then proceeded to say something that was basically contradictory. A bit of clarity in your argument would help.

The Professor says

Has The Fed's holdings ever spiked like this before?

David Losh says

We have two attorneys here in Seattle that have a discount Brokerage. They
have found a larger niche of people doing direct contract transactions without
the use of the Multiple.

All anyone has to do is put a for sale sign in front of the house, or mention
at a cocktail party they are thinking of selling.

Tried the FSBO sign. Did not work too well for me. Maybe you should tell me where the cocktail parties are.

But you do have a point. When people cannot afford the commission, they are forced to be creative.

robertoaribas says

The Professor says

mell says

You are mistaken here, the FED has its place in the debt crisis. It buys treasury bonds which yield interest and issues fiat money AKA federal reserve notes in return.

Yep.

Colloquially known as "Print money".

you are equating the money supply to the deficit, when in truth they have nothing to do with each other.

The FED could do what they are doing today, even if we had a balanced budget or a surplus.

Likewise, they could NOT have any Q.E, with our deficits, in fact, until 4 years ago, we had deficits with zero action by the Fed.

FED needs collateral to "print money" and government bond/note is an important class of collateral. But it is more of the government uses FED to eat up the bond/note supply and surpress the rate.

Mobi says

Tried the FSBO sign. Did not work too well for me.

There are two sales on my street without the benefit of the Multiple.

It is tough to get a deal, and have it work out when you don't have the broader exposure of the internet, which is somehting Brokerages bring.

There is however a niche of people who are teetering on the underwater mortgage marks who can afford to bring some money to the table to get out, but not the commission.

Some other people just don't want to deal with Real Estate Brokers. The information about pricing is there on the internet through sites like redfin, and Zillow, and other than that there is the mechanics of the transaction.

What I also think is getting some sellers down is the amount of work it takes to get you in that position to get multiple offers. Real Estate Brokers are telling people the house needs to look really good in order to compete. Some people don't want to spend that kind of money. The way they look at it is that they can sell direct, save the money for fixing up the house, and save the commission.