by
JW
Podcast
by
Adam Taggart
by
charleshughsmith
Executive Summary
- The Fed Won't Be Able To Soak Up Bad Mortgages Like It Once Did
- Chinese Capital Will Dry Up After Capital Controls Are Imposed
- The weakening petro-dollar will weaken demand for high-end housing
- The inevitable symmetry of bubbles will force a price mean-reversion
If you have not yet read Part 1: How Much Longer Can Our Unaffordable Housing Prices Last? available free to all readers, please click here to read it first.
In Part 1, we looked at factors that limit further home price appreciation—mortgage rates that can’t go much lower and stagnant household incomes—and factors that could continue to push prices higher in islands of strong job growth and global demand.
Here in Part II, we’ll look at several dynamics that could deflate the current Housing Bubble #2, even in areas currently experiencing high demand for housing such as New York City and San Francisco.
The Fed Will Encounter Political Headwinds in Pushing Money to the Wealthy
Setting aside cash buyers from overseas, a major factor in the inflation of Housing Bubble #2 was the Federal Reserve’s quantitative easing programs that expanded the pool of money available to the already-wealthy while prompting very little “trickling down” of this new money to the bottom 90% of households.
The one Fed policy that aided the bottom 90% was buying $1.75 trillion of home mortgages. This unprecedented buying spree helped push mortgage rates down to equally unprecedented lows.
But as this chart shows, the Fed is…
How A Major Housing Correction Can Happen Over The Next 1.5 Years
PREVIEW by charleshughsmithExecutive Summary
- The Fed Won't Be Able To Soak Up Bad Mortgages Like It Once Did
- Chinese Capital Will Dry Up After Capital Controls Are Imposed
- The weakening petro-dollar will weaken demand for high-end housing
- The inevitable symmetry of bubbles will force a price mean-reversion
If you have not yet read Part 1: How Much Longer Can Our Unaffordable Housing Prices Last? available free to all readers, please click here to read it first.
In Part 1, we looked at factors that limit further home price appreciation—mortgage rates that can’t go much lower and stagnant household incomes—and factors that could continue to push prices higher in islands of strong job growth and global demand.
Here in Part II, we’ll look at several dynamics that could deflate the current Housing Bubble #2, even in areas currently experiencing high demand for housing such as New York City and San Francisco.
The Fed Will Encounter Political Headwinds in Pushing Money to the Wealthy
Setting aside cash buyers from overseas, a major factor in the inflation of Housing Bubble #2 was the Federal Reserve’s quantitative easing programs that expanded the pool of money available to the already-wealthy while prompting very little “trickling down” of this new money to the bottom 90% of households.
The one Fed policy that aided the bottom 90% was buying $1.75 trillion of home mortgages. This unprecedented buying spree helped push mortgage rates down to equally unprecedented lows.
But as this chart shows, the Fed is…
by
JW
by
Chris Martenson
Executive Summary
- China is rolling over
- Contagion will eventually take down the core economies, including the US
- We are witnessing a full-blown collapse of the commodity complex
- Deflation will win the day over the next year, but then get ready for helicopter money hyperinflation
If you have not yet read Part 1: Deflation Warning: The Next Wave available free to all readers, please click here to read it first.
The Chinese GDP Lie
Right off the top, China is not growing anywhere near the 7% it claims. That’s just a politically useful lie that the Chinese tell to the world as much as they tell to themselves.
Fortunately, hardly anyone is falling for that particular fib any longer. Let’s start with the completely obvious manufacturing slump that has hit China:
Chinese Factory Gauge Slumps to Lowest Level Since March 2009
Sept 22, 2015
A private Chinese manufacturing gauge fell to the lowest in 6 1/2 years, underscoring challenges facing the economy as its old growth engines splutter.
A global sell off in riskier assets gained pace after the preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics dropped to 47.0 in September. That missed the median estimate of 47.5 in a Bloomberg survey and fell from the final reading of 47.3 in the previous month. Readings have remained below 50 since March, indicating contraction.
Premier Li Keqiang’s growth target of about 7 percent for this year is being challenged by a slowdown in manufacturing and exports even as services and consumption show resilience.
(Source)
The way a PMI reading works is anything over 50 indicates expansions and anything under 50 indicates contraction. Anybody care to explain to me how China can be sporting sub-50 readings every month since March — that’s five full months — and still be claiming to be aiming for a 7% annual growth target? You know, because China is…
From Deflation To Hyperinflation
PREVIEW by Chris MartensonExecutive Summary
- China is rolling over
- Contagion will eventually take down the core economies, including the US
- We are witnessing a full-blown collapse of the commodity complex
- Deflation will win the day over the next year, but then get ready for helicopter money hyperinflation
If you have not yet read Part 1: Deflation Warning: The Next Wave available free to all readers, please click here to read it first.
The Chinese GDP Lie
Right off the top, China is not growing anywhere near the 7% it claims. That’s just a politically useful lie that the Chinese tell to the world as much as they tell to themselves.
Fortunately, hardly anyone is falling for that particular fib any longer. Let’s start with the completely obvious manufacturing slump that has hit China:
Chinese Factory Gauge Slumps to Lowest Level Since March 2009
Sept 22, 2015
A private Chinese manufacturing gauge fell to the lowest in 6 1/2 years, underscoring challenges facing the economy as its old growth engines splutter.
A global sell off in riskier assets gained pace after the preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics dropped to 47.0 in September. That missed the median estimate of 47.5 in a Bloomberg survey and fell from the final reading of 47.3 in the previous month. Readings have remained below 50 since March, indicating contraction.
Premier Li Keqiang’s growth target of about 7 percent for this year is being challenged by a slowdown in manufacturing and exports even as services and consumption show resilience.
(Source)
The way a PMI reading works is anything over 50 indicates expansions and anything under 50 indicates contraction. Anybody care to explain to me how China can be sporting sub-50 readings every month since March — that’s five full months — and still be claiming to be aiming for a 7% annual growth target? You know, because China is…
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