Chris Martenson

I hope everybody in the US took advantage of the long weekend to get some R&R.  I certainly did, although it was extremely hot here in the northeast.

Last night, stock futures were sinking into the ooze, but then, right at the appointed hour (3 a.m., which is when these things happen) they took off like a rocket and now we are looking at a blast-off open.

For you veteran observers, I call this “Monday,” but here it is happening on a Tuesday.  Why?  Because the US markets were closed yesterday, so we get a Monday on a Tuesday.

One reason that I am unconvinced that we are in anything that can credibly be called “recovery” is that the US states have been turning in increasingly poor economic data throughout, especially in my favorite data series, ‘sales tax.’  It’s my favorite because sales tax receipts are not subject to statistical massaging or seasonal adjustments.  They are merely collected and reported.

I’ve never been able to satisfactorily resolve the gap between Federal Government reports of steadily increasing levels of consumer spending/income vs. declining sales tax receipts and stubbornly high unemployment.

Let’s begin with the federal data on spending and incomes:

Second Leg of the Housing Decline Set To Begin (or Why Economists Are Dangerous To Your Wealth)

Monday, June 28, 2010

Executive Summary

• Housing data is weak and just took a turn for the worse
• Stimulus efforts were essential to keep housing propped up
• The stimulus has ended
• QE and stock market prices are correlated
• What’s coming next
• What you should do

We bought our house in November of 2009.  This will turn out to have been a very bad financial decision.  We’ll be underwater on that purchase for a very long time; maybe forever (or until Bernanke’s great experiment takes the final turn towards massive currency destruction and inflation; whichever comes first).   

Of course, we bought it knowing that.  Our decision to buy centered on our valuing time more than money.  What I mean by this is that all of the changes that we are now fully engaged in around our house, ranging from insulating to installing solar panels to putting in a fruit orchard, all take time.  Time became more important to us than money, and so we bought.

But for every nation dealing with the after-effects of a housing bubble, what matters is that house prices start to climb again.  Of course, the housing bubble was just a symptom of the larger and far more damaging credit bubble, but housing is a useful indicator for where we are in the larger credit-bubble story.

Because of its importance to both the bubble’s bursting and its eventual repair, I track housing for signs of true recovery.