patrick.net

underwaterman says

First of all you have to differentiate between a true 100% gold standard,
bimetallic standard (based either on gold or silver), a quasi-gold standard,
and
then a pure fiat standard to even talk about the specific time periods
and the root causes.

No I don't. You said this:

underwaterman says

Each financial crises gets bigger and worse with monetary manipulation after
going off the gold standard in 1971 by nixon.

And the chart I posted shows definitively that you are full of crap. All the other BS you spouted is completely irrelevant. Try to stay on topic. Did booms/busts get worse under fiat money.

underwaterman says

The 99% are broke. They keep the economy on life support by injecting fake
money into it to keep the 99% going. The economy and the 99% are saturated with
debt. Take it away and the economy collapses.

You are right about that. The 99% are broke because the 1% has everything. If you REDISTRIBUTE-take money away from the 1% and give it to the 99%, people aren't broke anymore.

underwaterman says

Even producing a chart, you produce an unreadable one from a no-name
person.
What the hell is even on the Y-axis?

I told you what the chart was. If you think it's incorrect, how about you provide a GDP chart showing that booms and busts got worse after 1971. That's your position, right?

We don't have to worry about the housing market bringing down the economy. It will be the other way around. The economy is contracting even with all this money printing. Sorry but the bulls will be wrong. They have no clue how messed up this economy is right now. We are headed for a "great depression" like scenario.

HousingBoom says

Sorry but the bulls will be wrong. They have no clue how messed up this economy
is right now. We are headed for a "great depression" like scenario.

Imminently?

If it hasnt happened by 2 years from now (i.e. 2015) will you change your tune? Or will you (in early 2015) look around you, see the massive debt (which will still exist), and then extend the timeline for another 2 years (at which time you likely repeat the same conclusion yet again).

CDon says

Imminently?

If it hasnt happened by 2 years from now (i.e. 2015) will you change your tune? Or will you (in early 2015) look around you, see the massive debt (which will still exist), and then extend the timeline for another 2 years (at which time you likely repeat the same conclusion yet again).

The economy is already contracting LOL

CDon - If you think printing trillions of dollars out of thin air to boost the economy (which is not working) will fix things then I think you should hold your dollars and keep your houses and see what happens in 2-4 years.

HousingBoom says

We don't have to worry about the housing market bringing down the economy. It will be the other way around. The economy is contracting even with all this money printing. Sorry but the bulls will be wrong. They have no clue how messed up this economy is right now. We are headed for a "great depression" like scenario.

Then why are you living here?

NO country, at any point in history, has been a nice place to live during a financial collapse.

Please gtfo if you think its all going down.

HousingBoom says

CDon says

Imminently?

If it hasnt happened by 2 years from now (i.e. 2015) will you change your tune? Or will you (in early 2015) look around you, see the massive debt (which will still exist), and then extend the timeline for another 2 years (at which time you likely repeat the same conclusion yet again).

The economy is already contracting LOL

Very true. And it is something I will certainly take note of, if the trend continues and deepens.

That said - if the economy quits contracting and goes back to stagnaton type growth say Q1 2014, will you change your tune? Or will you then pick yet another of the multiple potential calamaties (which will still exist) and say this is the reason to wait further?

Kevin says

Then why are you living here?

NO country, at any point in history, has been a nice place to live during a financial collapse.

Please gtfo if you think its all going down.

You sound like a moronic 12 year old.

CDon says

That said - if the economy quits contracting and goes back to stagnaton type growth say Q1 2014, will you change your tune? Or will you then pick yet another of the multiple potential calamaties (which will still exist) and say this is the reason to wait further?

I already answered your question on when I will admit I was wrong. Go back and find the thread

bgamall4 says

Wouldn't Wall Street have to fall on its sword and stop speculation if wages were to at least show more purchasing power?

I have heard that if inflation gets bad enough then wages will eventually rise to the point where cash buyers will lift home prices. I am still on the fence with this scenario but I would imagine there would be much more downside to home prices before this took place.

HousingBoom says

CDon says

That said - if the economy quits contracting and goes back to stagnaton type growth say Q1 2014, will you change your tune? Or will you then pick yet another of the multiple potential calamaties (which will still exist) and say this is the reason to wait further?

I already answered your question on when I will admit I was wrong. Go back and find the thread

What you said was:

If the Fed stops printing trillions and raises rates and the economy does NOT collapse then I would admit I was wrong.

Do you understand the antecedent of that statement (i.e. printing trillions) is likely to continue so long as the fed exists? Are you willing to spend, potentially your full lifetime, "waiting out" the fed?

CDon says

Do you understand the antecedent of that statement (i.e. printing trillions) is likely to continue so long as the fed exists? Are you willing to spend, potentially your full lifetime, "waiting out" the fed?

IMO, the Fed won't be able to print like this and keep rates down for very long. It will eventually destroy the currency. If rates go up to over 5%, then that itself will crush housing and the economy.

HousingBoom says

Then why are you living here?

NO country, at any point in history, has been a nice place to live during a financial collapse.

Please gtfo if you think its all going down.

You're going back on my ignore list. good bye =)

HousingBoom says

CDon says

Do you understand the antecedent of that statement (i.e. printing trillions) is likely to continue so long as the fed exists? Are you willing to spend, potentially your full lifetime, "waiting out" the fed?

IMO, the Fed won't be able to print like this and keep rates down for very long. It will eventually destroy the currency. If rates go up to over 5%, then that itself will crush housing and the economy.

So that puts us back at square 1 (read my response upthread & the bond market's insatiable appetite for our debt & their inability to completely topple the first domino {greece}) yet.

Again, no offense here, but I am just trying to get you to sharpen your thinking. Your writing style is one of extreme hyperbole and hysterics - and it doesnt seem to have moderated at all in the past 2+ years as the economy has turned each of your calamaties into nothingburgers.

Further, your statements here "not very long", "eventually" are pretty much verbatim what you said 2+ years ago and my acquaintance said 20+ years ago who is still renting today. Is there any reall difference between you and him other than the date you became aware of TPTB perpetual game of kick the can?

Again, I dont mean to pick on you, but I just cant help but notice the similarities here. Even now, in his 24th 25th year of renting, he is waiting because he is SURE that the collapse is imminent. Thus, if I may, you might want to pick a "hard and fast" date (and again, a calendar date, not an approximation like "2 years" which people slide forward for years on end) where you say "if it hasnt happened by then, then maybe I am just wrong".

Maybe you dont want to do that today. It really should be an end all be all date that you should think long and hard about committing to. Still, if you do, it would be interesting to see how that changes your outlook. Cheers.

If you're friend has been waiting for 25 years then that is a little extreme. We just had the biggest housing bubble in history. I think it has a good amount of downside before we stabilize. When home prices falls to line 110 or 100 then that would be a good time for me to buy. I think we'll see prices at these levels within 3-4 yrs. I think the upcoming recession will bring home prices down much faster than anything expects.

This chart proves that housing is still in a bubble. I remember in 2006, I showed people this chart and they argued that prices will stay stagnate at worst. Prices are trying to get to line 110 but the Fed is trying to prop up prices. Fundamentally, home prices need to fall further.

Keeping rates down artificially comes at a price. We now have a bubble in the bond market and WHEN that implodes, we should see rates move up very quickly. ALL economic bubbles burst so it is probably safe to say that the bond bubble will burst.

HousingBoom says

This chart proves that housing is still in a bubble

No--that chart provides some evidence that housing might still have been in a bubble in 2010. Last I checked, it's now 2013.

And that chart has been discredited by several sources. It's not the true Case Shiller.

HousingBoom says

ALL economic bubbles burst so it is probably safe to say that the bond bubble
will burst.

If the bond bubble bursts the financial system will collapse, rates moving up will basically bankrupt EVERYONE.

Will the Fed let that happen? Does the bond bubble burst if the Fed can expand its balance sheet to infinity?

HousingBoom says

This chart proves that housing is still in a bubble.

As Tatupu notes, that chart has been discredited

http://blog.jparsons.net/2011/04/housing-bubble-graph-fail.html

Note in particular, the conversation this bubble blogger had with Mr. Ritholz:

Update #2: I contacted Barry Ritholtz about the issues with the graph. He then contacted Steve Barry. It has been confirmed straight from the horse's mouth, from 2006 onward the disputed graph uses the S&P/Case-Shiller 20-city index, rather than the national index that Robert Shiller used, and it does not adjust for inflation. This graph is really making its way around the web, which is unfortunate because it is worthless.

Hence, the reason Mr. Ritholz has distanced himself from that chart, and it has not been updated since 2010.

In any event, if you actually took the time to update that chart and correct it, you would not like what it said - it would completely undermine what you want to believe is going to happen.

Mean Reversion Bitches.......

yup1 says

Will the Fed let that happen? Does the bond bubble burst if the Fed can expand its balance sheet to infinity?

Would the Fed allow the housing bubble to burst in 2006? It would devastate the economy and cause millions of homeowners to default.

yup1 says

Mean Reversion Bitches.......

Thanks. That shows that prices only moved sideways and needs to fall further. lol

HousingBoom says

Would the Fed allow the housing bubble to burst in 2006? It would devastate
the economy and cause millions of homeowners to default.

If you look at Fed meeting notes from 2007 the had no clue. Now they think they have a clue. I do not believe they can let interest rates skyrocket. They can't, they will have massive losses and the economy will collapse. The rich get richer the poor poorer. Same old same old.

CDon says

Update #2: I contacted Barry Ritholtz about the issues with the graph. He then contacted Steve Barry. It has been confirmed straight from the horse's mouth, from 2006 onward the disputed graph uses the S&P/Case-Shiller 20-city index, rather than the national index that Robert Shiller used, and it does not adjust for inflation. This graph is really making its way around the web, which is unfortunate because it is worthless.

Good work

Actually, Shiller keeps the data updated, so I just looked it up (see the 2nd excel chart here)

http://www.irrationalexuberance.com/

It looks like in early 2012, the real (i.e. adjusted for inflation - not the nominal like the one yup posted above) rate dropped all the way down to 113 (i.e. 1998 prices).

HousingBoom says

Thanks. That shows that prices only moved sideways and needs to fall further.
lol

Yeah that is why I posted it. Prices need to drop 50% MORE to revert to Mean.

yup1 says

If you look at Fed meeting notes from 2007 the had no clue. Now they think they have a clue. I do not believe they can let interest rates skyrocket. They can't, they will have massive losses and the economy will collapse. The rich get richer the poor poorer. Same old same old.

I agree with that statement. But what IF we have a currency crisis (runaway inflation)? They will need interest rates well above the rate of inflation to slow it down. Rates in 1981 went above 18%!

yup1 says

Yeah that is why I posted it. Prices need to drop 50% MORE to revert to Mean.

Exactly! Thanks for posting.

HousingBoom says

yup1 says

Yeah that is why I posted it. Prices need to drop 50% MORE to revert to Mean.

Exactly! Thanks for posting.

Again, if you notice, that chart Yup put up is nominal (i.e. it does not adjust for inflation). Here is the real (i.e. inflation adjusted) one:

http://www.irrationalexuberance.com/

If you believe in inflation as Mr. Shiller does, it looks like we are at 1998 prices.

CDon says

Actually, Shiller keeps the data updated, so I just looked it up (see the 2nd excel chart here)

http://www.irrationalexuberance.com/

It looks like in early 2012, the real (i.e. adjusted for inflation - not the nominal like the one yup posted above) rate dropped all the way down to 113 (i.e. 1998 prices).

Wages and home prices are still way out of wack where I live. household income to home price ratio is 7 and the national average is currently 3.5

HousingBoom says

CDon says

Actually, Shiller keeps the data updated, so I just looked it up (see the 2nd excel chart here)

http://www.irrationalexuberance.com/

It looks like in early 2012, the real (i.e. adjusted for inflation - not the nominal like the one yup posted above) rate dropped all the way down to 113 (i.e. 1998 prices).

Wages and home prices are still way out of wack where I live.

So noted. You might want to take that up with Mr. Shiller if you disagree with his data.

Shiller thinks it will take a generation for housing to recovery. I believe him.

HousingBoom says

But what IF we have a currency crisis (runaway inflation)? They will need
interest rates well above the rate of inflation to slow it down. Rates in 1981
went above 18%!

I do not believe that we can have inflation due to there being no wage inflation. All price inflation must eventually be supported by wage inflation or credit expansion. I believe that most people do not have the capacity to take on more credit. I also believe that most people are not getting raises that cover anything but there increased costs for healthcare. I believe that without wage inflation will we see price deflation and low interest rates for decades. In other words we are Japan. Lowering prices, lowering wages, lowering asset values. I doubt the average Japanese investor in 1990 though the market and houses would be lower in 2012 than in 1990 but in fact they are, MUCH lower.

HousingBoom says

Shiller thinks it will take a generation for housing to recovery. I believe him.

So is your "end all be all" date a generation? Assuming a generation is 20 years, maybe that was my acquaintances benchmark too.

yup1 says

I do not believe that we can have inflation due to there being no wage inflation. All price inflation must eventually be supported by wage inflation or credit expansion. I believe that most people do not have the capacity to take on more credit. I also believe that most people are not getting raises that cover anything but there increased costs for healthcare. I believe that without wage inflation will we see price deflation and low interest rates for decades. In other words we are Japan. Lowering prices, lowering wages, lowering asset values. I doubt the average Japanese investor in 1990 though the market and houses would be lower in 2012 than in 1990 but in fact they are, MUCH lower.

I agree that is definitely a possibility. The money velocity is at a historic low. It can go either way but I'm leaning towards inflation as the end result. The only thing the Fed is good at is creating inflation. I think they will eventually make it happen but you have a valid point.

CDon says

So is your "end all be all" date a generation? Assuming a generation is 20 years, maybe that was my acquaintances benchmark too.

Personally, I'm going to wait 2-4 yrs to buy a home. We should see some fireworks by then.

HousingBoom says

CDon says

So is your "end all be all" date a generation? Assuming a generation is 20 years, maybe that was my acquaintances benchmark too.

Personally, I'm going to wait 2-4 yrs to buy a home. We should see some fireworks by then.

And if by 2014-2016 we dont see any "fireworks", will you then jump in, ignoring the massive debt overhang? Or will you just wait say another 2-4 years, thinking "we should see some fireworks by then"?

Again, sorry to be a dick about this. Its an intellectual exercise and Im just curious if you have thought this out, or if this too, is just a sliding date.

CDon says

And if by 2014-2016 we dont see any "fireworks", will you then jump in, ignoring the massive debt overhang? Or will you just wait say another 2-4 years, thinking "we should see some fireworks by then"?

I'll have to reevaluate then.