Wall Street engineering is back in the housing market. Its newest product is one heck of a contraption, a synthetic structured security of the type that helped blow up the financial system back in 2008. It’s like those triple-A rated mortgage-backed securities that became toxic waste in your “money-market-equivalent” bond fund – only worse.
Housing
Mother Of All Bubbles Pops, Mess Ensues
by Wolf Richter • • Comments Off on Mother Of All Bubbles Pops, Mess Ensues
The asset bubbles the Fed’s money-printing and bond-buying binge has created are spectacular, the risk-taking on Wall Street with other people’s money a sight to behold. Big winners were mortgage Real Estate Investment Trusts – and those who got fat on extracting fees. But now the pendulum is swinging back, and the bloodletting has started.
US Housing Bubble II: Euphoria And Other Shenanigans
by Wolf Richter • • Comments Off on US Housing Bubble II: Euphoria And Other Shenanigans
Japan’s Vacant Houses: Visions of Detroit
by Wolf Richter • • Comments Off on Japan’s Vacant Houses: Visions of Detroit
Unlike Detroit, which will run out of cash next month, Japan prints its own money, so bankruptcy in the Detroit sense is not in the cards. But they do have two things in common: depopulation and a ballooning stock of abandoned houses. For Japan, it’s an issue that even the most prodigious money-printing binge cannot resolve.
Housing Bubble 2 Forms: But This Time It’s Different
by Wolf Richter • • Comments Off on Housing Bubble 2 Forms: But This Time It’s Different
We have seen it for several years now: foreclosure sales—there were 5 million since the peak of the housing bubble—have become the hunting grounds for investors with two goals: hanging on to these homes until the Fed’s flood of money drives up their value; and defraying the expenses of ownership by renting them out. And…
Bullish Hoopla in Housing Is Driven by Bogus Inventory Reports
by Wolf Richter • • Comments Off on Bullish Hoopla in Housing Is Driven by Bogus Inventory Reports
I have written about the housing quagmire from different angles, and there hasn’t been a heck of a lot of good news. However, there have been spurts in home prices propagated by the media with enormous hoopla that later turned out to have been sucker rallies, with prices hitting new multi-year lows after each one. And now there is another wave of media hoopla about housing, but once again, something is off key.
The Worldwide QE Quagmire
by Wolf Richter • • Comments Off on The Worldwide QE Quagmire
Certain central bankers are coming out of the closet admitting that their favorite shenanigans—ultralow interest rates and printing money with utter abandon—can’t solve the very problems they were designed to solve, which has been obvious for a long time. What they’re not yet admitting massively, though some are starting to hand out hints, is just how much havoc these policies are wreaking.
The Big Lie
by Wolf Richter • • Comments Off on The Big Lie
Since the lousy jobs report, there has been a veritable orgy of Fed Speak with juicy morsels and contradictions, interspersed with leaks and rumors, that climaxed today with Chairman Ben Bernanke’s words of wisdom. It whipped markets into a frenzy, drove the Dow up 500 points, knocked yields to historic lows, and caused gold, the safe-haven, to bounce up and down like a rubber ball. And everyone was eagerly waiting for the big lie.
Immigration and the Housing Quagmire
by Wolf Richter • • Comments Off on Immigration and the Housing Quagmire
Pundits who have been announcing the imminent turnaround in housing for the last few years were disappointed once again by the Case-Shiller composite, which declined 0.8% for the month and 3.5% for the year. It has fallen to a level last seen in October 2002. Since that time, inflation has eaten up another 27%, which would take the composite back to the 1990s. And now, even a trend that supported housing for decades has reversed.
Now A Housing Bubble In Germany
by Wolf Richter • • Comments Off on Now A Housing Bubble In Germany
Germans are euphoric these days—compared to the dour mood that prevailed for nearly two decades when real wages declined in a stagnating economy with high unemployment. This new optimism is joyriding the powerful German export machine and appears to be impervious to the nightmarish scenarios playing out at the periphery of the Eurozone. And now, Germans have something else to be euphoric about: a housing bubble.