Greenspan: Home prices haven't bottomed

reply to post by Realtruth


I see your points but still think the housing 'industry' post S11 reached awful proportions and he made the worst decisions in bottoming out interest rates, among decisions over the years, many of which, in the automotive & IT sector don't have jobs because of 'derviratives' replacing a physical economy -- a junk, speculatory scene not based on true wealth or value.

The IT 'revolution' of the early 90s came and went since people got so hyped about the 'net at large, jobs weren't created, he's more at fault, overall, then you think.

Back to the OP, I hear you about the people's choice to get involved w/ that kind of debt, but they were led into/by deregulation/skewed mainstream media who preach a 'good economy' until 'black' Mondays have arrived.

Originally posted by Realtruth

Originally posted by anhinga


Well, here's Mr. Bubbles Greenspin kicking the U.S. citizen while they're already down; plus, this is the guy who put the U.S. in this dangerous position from over a decade of his so-called leading the fed reserve.

The rest of the article, he's doing his word game in trying to divert real issues and more of his "predicting" is mentioned... one of the worst paradoxes ever:

I have to disagree with your statements. Mr.Greenspan didn't force anyone to get mortgages they couldn't afford.

People only looked at monthly payments instead of worst case scenario's. Instead of being starry-eyed about a monthly payment they could afford, they should have thought about, what ifs.

I am all about people getting a home, but most people over extended themselves and did not exercise personal responsibility.

Although I agree most people are led in mortgages they can't afford, they have the ultimate choice, to buy something that if the $hit hits the fan they can survive the downward dip or to not buy at all.

No, Greenspan just set up a perfect storm.
Interest rates so low, credit so easy that middle America is able to finally get a piece of the pie.
Sellers and buyers alike get manipulated by crooked originators, lenders and appraisers, home prices get jacked up so high that only a true millionaire should be able to buy but interest rates are low so the school teachers, restaurant managers, secretarys, nurses etc. go for it. These people are not real estate professionals, they do not know the ends and outs of mortgages and slick talking originators can twist everything. I am in real estate and I even got screwed on one of my refi's, I corrected the situation but if I can get screwed the average American most assuredly was taken for a ride. "they should have reseached before buying" Yeah, yeah, yeah doesnt matter how much you research when you have a bunch of crooked "professionals" telling you everything you researched is wrong.
This is not a SUBPRIME problem, this is a MIDDLE AMERICA problem calling it subprime is just a way to allow blame to be placed on those horrible bad credit, low income "sub" crowd.
Nope, builders are going bankrupt, investors are foreclosing, the "prime" market is losing its pants right along with the subprime. In most of the country nothing is selling unless it is at a HUGE loss to the seller.
Millions of Americans are losing their perfect credits and their homes, millions of Americans of all walks of life will be "subprime" when this is all said and done. Middle America is on it's last leg and I have a feeling we are all going down without a fight.

I beilieve if they havnt tanked they are pretty darn close I live in Mo. and all around where I live I see foreclosured houses....And they have been empty for a very long time....Kinda scary.

Originally posted by NWRHINO

The only way out of the quagmire is a complete overhaul of the value units( US dollars) which will mean some kind of deflationary period of no money to buy goods and services.

The FED keeps dumping money into the monetary system to delay the inevitable deflation of the monetary system and probable end of the dollar

Hello Amero !!!

the fed is dumping money (actually lending it ) to stem the financial credit crunch which is indirectly related to the dollar loss of confidence. because the rate cuts and economic outlook look bleak and cause others to lose confidence in $ assets.

a asset price deflation from a deflation of the monetary system would first hurt stock's. dollars would actually be more attractive (because people would use $ to buy assets at a cheap price, what would end the dollar is the following.

first the fed takes drastic measures (other than intrest rate decreases) to stop or reverse the fall in asset prices from credit crunch and to further boost GDP , i.e spending.... there should be a long line of people trying to get loans and money (so there will be demand) in the above scario, especially with bernanke at the helm.

If this should happen the public would get the message and take their money out of their IRA accounts because it will be worth less in the future (with the devaluation) , plus they will need the money then and now. I see this credit crunch being a global problem as a lot of global growth has been directly linked to credit(debt) especially in the "west" i.e u.s , europe, canada. europe will cut their intrest rates and the euro will fall as well in value. i think most countrys will have to start cutting as the credit crunch stops growth dead in it's tracks, this will cause all currency's to be devalued compared to gold, just at varying rates when measured against themselves (with the yuan likely growing the most from it's current point IMO)

the credit crunch should be growing by the month, stocks falling, and the fed seeing that in a deflationary situation debts become unservicable as now they are relatively alot larger. they will probably begin to buy back assets owned by the gov't , i.e bridges, gov't building anything they like for some value to be paid toward debt.

in a deflationary credit scenario the USA faces serious risk to default on debt because they won't be able to service their intrest payment on the debt they owe, as foreign sources of credit dry up, especially as the u.s consumer spending gets worse. (at least in my understanding)

so what we will have is first asset deflation and cash being more valuable.

then after people buy up the cheap assets with their waiting cash ( think "carlye group and those that have the extra money, and jobs still) the fed will actively inflate the money supply to drastically increase GDP as well as spending. this is what will hurt the dollar's value, and other fiat's (especially in the "west" decreasing from their current value.

gold and oil would go down in the asset deflation part of this scenario as well, and back up severely in the money "reflatiion" part.

Thinking about this, and going back to the OP, I was looking at this article about the last quarter. The numbers are staggering, over a million people, the money isn't 'counted' until the house re-sells, this is bigger then most think; and last time I check the 'value' of the U.S. housing 'market' was about $45 trillion.

"Foreclosures jump 30% in 3rd quarter - 1 in 196 Homes"

[edit on 25-11-2007 by anhinga]

Originally posted by cpdaman

Originally posted by NWRHINO


The FED keeps dumping money into the monetary system to delay the inevitable deflation of the monetary system and probable end of the dollar

Hello Amero !!!

the fed is dumping money (actually lending it ) to stem the financial credit crunch which is indirectly related to the dollar loss of confidence. because the rate cuts and economic outlook look bleak and cause others to lose confidence in $ assets.

a asset price deflation from a deflation of the monetary system would first hurt stock's. dollars would actually be more attractive

(because people would use $ to buy assets at a cheap price, what would end the dollar is the following.

The key to this scenario is to convince someone to actually take dollars in trade. If the dollar value is below stock equity, you will have stagnation.

The inverse scenario actually buying dollars to drive the price up, with all value assumed by the purchaser will deflate or correct stock values.

This is when they will tell you the market is letting off steam.

What it really is is the institutional bankers peeling the value out of the system. that value is the future "lower value" paid labor of the production workers.

The $47 billion recently dumped into the market will be worked off in the future.

When the FED dumps money it lowers the future value of the market by the
same 47 billion x inflation and interest

I was just reading this clip about state to state budget problems, combine this w/ the mortgage problem -- unlikely, quick recovery:

The Maryland legislature continues its special session as of Nov. 15, in an attempt to plug a $1.7 billion budget hole, which grows wider daily. The current plan is to cobble together a bailout scheme which includes tax increases, $500,000 in cuts, and several accounting gimmicks. The housing foreclosure debacle will increase the need and demand for public services, just as the legislature and Gov. Martin O'Malley move to impose cuts. The urgent need to expand the resources of the public health sector, for example, is shown by the soaring rate of AIDS in Baltimore, which has developed as economic conditions of life devolved with the "post-industrial society" obliteration of the steel and manufacturing sector there. (See EIR, Nov. 16, 2007.)

As the Wall Street fantasy world of paper hyper-profits vanishes, the New York City and State governments are projecting burgeoning budget gaps for the next several fiscal years, revising upward the gap projections made only three months earlier.

New York State's Budget Division projects a $4.3 billion budget gap for FY 2009, a $0.7 billion revision upward from its projection of the gap during July, as well as $6.2 billion in 2010 and $7.9 billion in 2011.

On Oct. 30, mad-dog New York City Mayor Michael Bloomberg ordered budget cuts of 2.5% this fiscal year (2008), and 5% for FY 2009. He also ordered a hiring freeze for "jobs with an immediate impact upon health and safety," according to Bloomberg News on Oct. 31.

Yet, New York City and State might be accused of using "too cheerful" projections. The housing collapse and banking credit crisis is now gathering force, and the fall in Wall Street's revenues has a long, long way to go.

"States' Budgets Blow as Housing And Credit Markets Crash"

Originally posted by SEEWHATUDO
No, Greenspan just set up a perfect storm.
Interest rates so low, credit so easy that middle America is able to finally get a piece of the pie.
Sellers and buyers alike get manipulated by crooked originators, lenders and appraisers, home prices get jacked up so high that only a true millionaire should be able to buy but interest rates are low so the school teachers, restaurant managers, secretarys, nurses etc. go for it. These people are not real estate professionals, they do not know the ends and outs of mortgages and slick talking originators can twist everything. I am in real estate and I even got screwed on one of my refi's, I corrected the situation but if I can get screwed the average American most assuredly was taken for a ride. "they should have reseached before buying" Yeah, yeah, yeah doesnt matter how much you research when you have a bunch of crooked "professionals" telling you everything you researched is wrong.
This is not a SUBPRIME problem, this is a MIDDLE AMERICA problem calling it subprime is just a way to allow blame to be placed on those horrible bad credit, low income "sub" crowd.
Nope, builders are going bankrupt, investors are foreclosing, the "prime" market is losing its pants right along with the subprime. In most of the country nothing is selling unless it is at a HUGE loss to the seller.
Millions of Americans are losing their perfect credits and their homes, millions of Americans of all walks of life will be "subprime" when this is all said and done. Middle America is on it's last leg and I have a feeling we are all going down without a fight.

I will agree with you in part about the perfect situation or storm, but don't you think that individuals that sign the papers are partly responsible? Would you sign a document that you don't completely understand the long term implications. I know I wouldn't.

I think middle america is very important in the USA and is dwindling, but many people bit off more than they could chew.

Why didn't these people buy something they could have afforded, even if times got difficult?

But also I do agree with you in that there needs to be some reforms made. I think everyone involved needs to take some responsibility here.


[edit on 25-11-2007 by Realtruth]

Sorry if this post is a little off topic, but I wanted to add my 2 (rapidly fluctuating) Canadian cents.

I like to invest my money... and well lately I have put everything into cash. I simply cannot trust this... state that our markets / economies are in.

My main problem is that the financial problems are spilling over into what seems like all aspects of the markets. Nothing is safe.

Even my online broker went through trouble. Imagine having a large sum of money with a company facing bankruptcy rumors. The stock (ETFC) lost a huge amount of its worth overnight (59 percent , or 2.2 billion ) on speculation of its finances.

After the massacre, I check on my account and find a nice little "greeting" message posted before I can access my account, basically telling me everything will be ok and my money is safe.

Yeah, comforting.

What can you trust these days?

The story reminds me of Jetsgo who were still processing orders and taking payments for the very night before they claimed bankruptcy.

My point is that this is going to go on for a very long time and more than the obvious will be effected by this.

Is anyone else worried about various currencies fluctuating RAPIDLY? The Canadian dollar is just insane in its fluctuations.

With this outlook, I am into full on financial protection mode.

reply to post by Dulcimer


....currencies are in upheaval, from what I've been reading the U.S. dollar is in free-fall mode, I started a thread the other day about a report of it potentially dropping 90% from where it is, so the math is pretty clear on where it is and maybe going... I've had the same thoughts about investments and from the sound of it, aside from 'sure shot' stocks, heads have been suggesting I invest in commodities -- ie: gold, older (pure) silver, etc. I haven't made a 'move' yet but I plan on it for next year as sort of a resolution.

When the 4th quarter U.S. mortgage numbers come out, there's only loss being predicted, so there isn't much as per trusting U.S. assets IMHO.

Originally posted by anhinga


Well, here's Mr. Bubbles Greenspin kicking the U.S. citizen while they're already down; plus, this is the guy who put the U.S. in this dangerous position from over a decade of his so-called leading the fed reserve.

The rest of the article, he's doing his word game in trying to divert real issues and more of his "predicting" is mentioned... one of the worst paradoxes ever:

“It turns out that sometimes it is not important, sometimes it is very important,” Greenspan said.

www.msnbc.msn.com
(visit the link for the full news article)

Thank anhinga!

Well said! Greenspan is a complete and utter liar. This real estate market this bogus claim as foreclosures reach record highs... like the 1930's!!!!!!

The con is on.....


Ooops forgot to post this link:

www.centralvalleybusinesstimes.com...

[edit on 26-11-2007 by dk3000]

i will re-iterate people should get OUT of stock's .

the reason why is simple the risk to reward for staying in the market when there is a credit crunch the likes we haven't seen on THIS planet ever.

515 trillion derivatives market is having seizures, the potentail fallout will likely shake inflated asset prices DOWNWARD.

Hold cash, yes cold hard cash. The dollar has already fallen down the steepest slope it is going to fall, yes it will go lower, but it is not in a hurry to go to the bottom of the ocean, at least not yet.

People have been baited to go into the markets now to outpace inflation.
The smart money is in cash ( or better yet was converted to Euro's) as well as (Yuan). The big money is waiting for asset deflation. They will use this cash to buy up assets at penny's on the dollar. The public and gov't will demand a solution! (after millions lose ton's in the markets).

Then we shall learn what inflation means. The Fed and bernanke and the gang will man their "helicopters" and begin to severely devalue the currency as well as inflate, inflate,inflate using any and all measures.

When the fed starts printing out of control (they aren't yet, although some are being *baited* into believing so) People will soon after become hip that their dollars are going to be worth a lot less tommorrow than today. they will raid their 401k (if they hadn't already for food, and necessity's) and this money will PILE into the very investments that the RICH had bought dirt cheap.

House prices will fall much further in 2008, when they reach bottom (late 2008), they may become a good investment again

[edit on 26-11-2007 by cpdaman]

I think in the near future the big thing is going to be volatility, and a false sense of hope that it will bring on "good" days.

In the coming month I can see the markets having big up days and then erasing those gains in the next day and half or two. There will be days when people think the markets look good and they will tank again, mainly because investors will not be able to decide what the markets are doing. I think there will be overselling and overbuying blowouts. It has happened with big tech names ( Google, Apple ) in the past little while.

I had a funny little thought on oil today. Its like when people see something priced at 9.99 versus an even 10 dollars or more, (99.99 vs 100 etc) they think its cheaper.

When oil hits 100 I think people will snap to and say, "whoa, this is getting crazy" more so than they are now.

And its funny how nobody learns from others mistakes. Here is a region of the world that is going to bomb eventually....

Boom. Bust. Bubble !

Scary stuff. And of course the realtor's say its only going up...

reply to post by cpdaman


You say that people should get out of stocks, which I agree with. However, most people's 401k's are primarily in stock. What do you suggest people do about their 401k? Should they divert most of the investment into foreign markets? Are bonds stronger in a recession? Large Cap's would probably be a safer bet, but the market as a whole is going to plummet, then even those aren't safe right?

This whole thing freaks me out. Thankfully, I work in a company that is still making hefty profits and mainly is selling to foreign markets... so hopefully I am fairly safe for now....

You really, really have a perfect storm going in the markets.

I consider nothing "safe" in the coming months (I do want to get back into the markets sometime).

Even blue chip stocks can die (Enron, Worldcom) *shudder*.

Even everyday stuff that people need is not safe. I do remember Coke saying that they have their costs down, but others are struggling with costs. You have to remember that agriculture is in a mini boom and prices for the commodities are pretty high. It does effect even the "safe" stuff.


I think with all the financial problems, and people losing money on their homes and bad investments, maybe the "safe" areas will be in the companies that offer products and services similar to other products and services only cheaper.

Heck, maybe people will even buy up more no name knock offs of Coke and Pepsi !

Warren Buffets small stake in Carmax (KMX) is a pretty good example of what I am trying to say....

Safest bet right now? Sit on the sidelines and wait for better days.

Well....remembering back to the Carter years -- when inflation was high and CD's would pay 16% to 18% per year -- the people with fixed rate mortgages did very well. The reason is that when inflation goes up, salaries follow -- because workers WILL vote with their feet and move. This puts pressure on employers to match "the other guy" who is paying more. So salaries do go up.

Result? Someone who was making $50K ends up after 5 years making $100K. But the mortgage monthly payment REMAINS THE SAME!!!! So if the monthly payment before was 20% of salary -- now it is only 10%. That's what happened 25 to 30 years ago. That's what will happen now. So -- inflation bails out the homeowners. And -- will eventually drive up house prices again.

Lot's of retirees today benefited from their home values doubling in 7 years -- due to inflation followed by salary increase followed by more dollars to spend on assets.

Originally posted by Realtruth
Why didn't these people buy something they could have afforded, even if times got difficult?

I can answer this question. The reason that people HAD to buy homes that were out of their range is because the overpriced home values forced them to.
When you think of someone moving into lets say Phoenix where in 12 months the "average house value" rose from $150k to $250k this made the typical middle income house value soar so where a middle income family used to could afford a 150k house now had to purchase a 250k house or live in a lower income housing (read, ghetto)

...who wants to have their children grow up in a lower income neighborhood? ..exactly so you bite the bullet and take on the high mortgage and cross your fingers and hope it all works out.

the real culprit is the real estate industry that over-inflated the home prices to make a quick buck.

reply to post by anhinga


Here is a recent update to further show how big a liar Greenspan truly is:

money.cnn.com...

What an idiotic tool Greeny is- he's a total joke.

I was looking to purchase a house a couple of years ago and had banks tell me all sorts of things to convince me I could afford what I knew I obviously could not. I don't feel bad at all for the borrowers who obviously took more than they could afford to pay back and I don't feel bad for the banks for losing the money they lent to the people who couldn't pay them back.

Frankly it's all looking up for me. I've been saving and the costs of homes is going down more and more. When I feel they wont go any lower I may just purchase a home with a nice down payment and a mortgage I can afford.

The thing I'm worried about is all this government interference in free market affairs. There are politicians trying to write laws dictating lending policies such as federally mandated minimum down payments and limitations on lending based on salary and using our tax dollars to pay out the parade of buffoons whether they be the genius that thought a 30yr on an ARM was a good deal because he only had to pay 4% for the first 6 months and the predatory/moronic lenders who figured it was good idea to give a part-time employee with no credit/savings history a $350,000 loan.

The free market is supposed to allow bad decisions to be punished. What do people learn anymore? Run your business into the ground get a bail out, buy a house you can't afford get a bail out.

It's just sad and it's going to end up costing everyone everything.

Fun Fact:

Back when you could starve to death for being an idiot there were fewer idiots.

*Edit- meant ARM but used APR instead, oops.



[edit on 29-11-2007 by thisguyrighthere]

Originally posted by SunSword
Well....remembering back to the Carter years -- when inflation was high and CD's would pay 16% to 18% per year -- the people with fixed rate mortgages did very well. The reason is that when inflation goes up, salaries follow -- because workers WILL vote with their feet and move. This puts pressure on employers to match "the other guy" who is paying more. So salaries do go up.

Result? Someone who was making $50K ends up after 5 years making $100K. But the mortgage monthly payment REMAINS THE SAME!!!! So if the monthly payment before was 20% of salary -- now it is only 10%. That's what happened 25 to 30 years ago. That's what will happen now. So -- inflation bails out the homeowners. And -- will eventually drive up house prices again.

Lot's of retirees today benefited from their home values doubling in 7 years -- due to inflation followed by salary increase followed by more dollars to spend on assets.

This is the scenario I am hoping for But maybe thats just because I am a glass is half full kind of guy.

Nice post OP very infomative info and great replies so far. Wish my 401k had some more options such as 0% risk invest here etc.