Recovery? Housing says it’s a Hoax

By Greg Hunter’s USAWatchdog.com 

Watching the financial channels yesterday, I could not tell you how many times the word “recovery” was used.   Sure, the stock market is up, but that is compliments of the Federal Reserve.  Since the 2008 financial meltdown, we’ve had a money printing extravaganza.  There was QE1, QE2, Operation Twist, dollar swaps with Europe and 0% interest rates (on a key rate) through 2014.  Of course the stock market is up, it loves free money.  Wall Street may have recovered, but Main Street is still in the dumper.   (Actually, Wall Street has just broken even since the 57% plunge it took up to March of 2009.)  Professional commodities trader Dan Norcini said, this week, on his blog, “. . . the FED IS TERRIFIED OF RISING INTEREST RATES.”  Norcini explains, “. . . the US federal debt is at banana republic levels and any, I repeat, any rise in interest rates, will suck more of the incoming federal revenue into servicing the cost of this debt (paying the interest on it), leaving less for the spendthrift class to buy votes with.  Bernanke and company cannot afford to have a stock market that stops moving higher because if and when it did, the entire facade of an economy on the mend would come crashing down with it.”  (Click here to read the complete Trader Dan post.) 

The Fed may have juiced the stock market with cheap money and ultra-low interest rates, but the housing market is dead.  According to the latest Case-Shiller Home Index, prices are down—again.  The latest data, released yesterday, reveals prices in 17 of 20 cities surveyed were down.  Atlanta home prices plunged by a whopping 14.8% year-over-year.  The best year-over-year increase was turned in by Detroit, with a paltry 1.7% increase.  According to the Case-Shiller report, “As of January 2012, average home prices across the United States are back to the levels where they were nearly a decade ago – in early 2003. Measured from their June/July 2006 peaks through January 2012, the peak-to-current decline for both the 10-City Composite and 20-City Composite is 34.4%. January’s levels are new lows for both Composites in the current housing cycle.”  (Click here for the complete Case-Shiller press release.)     

I see no recovery for people on Main Street as far as housing is concerned, and neither does economist John Williams of Shadowstats.com.  His latest report, last week, focused solely on housing and construction.  The first line in his report says it all, “The construction industry remains distressed in the extreme, clobbered by collapsing broad economic activity from 2006 into 2009 and by three subsequent years (and counting) of no recovery—just economic stagnation.”  (Click here to go to the shadowstats.com home page.)  You want to see what construction spending on payrolls looks like on a chart?  Here’s the ugly picture, compliments of Shadowstats.com.  

Williams says construction payrolls haven’t been this depressed since “June of 1996.”  That’s nearly a 16 year low!  It’s not just construction jobs that have taken a hit, even Fed Chief Ben Bernanke admitted the job market in general is weak.  Monday, USA Today reported Bernanke said, “Despite the recent improvement, the job market remains far from normal,” Bernanke said.  “The number of people working and total hours worked are still significantly below pre-crisis peaks.” (Click here for more from USA Today.)  If unemployment were calculated the way Bureau of Labor Statistics did it in 1994 and earlier, the true unemployment/underemployment rate would top 22% according to Shadowstats.com. 

Bernanke said, last night, he’s now worried about fuel prices slowing the so-called recovery.  He told ABC News, “They’re obviously a hardship for lots of people. It must be awfully frustrating to get a small raise at work and then have it all eaten by a higher cost of commuting,” he said. Bernanke said higher gas prices may cause inflation to be “a little bit higher” in the next few months and take a bite out of consumer spending, leading to “a hit on growth.”  (Click here for the complete ABC story.)  

Bernanke thinks gas prices may fuel inflation?  Silly me, I thought it was all the money printing to prop up the banks and stock market that caused inflation.  At any rate, Dr. Bernanke better hope IMF Chief Christine Lagarde’s warning, last week, of a possible 30% spike in oil prices doesn’t come true.  Lagarde was lamenting the standoff with the West over Iran’s nuclear program when she said, “A sudden and brutal rise in the price of oil from Brent crude’s current levels of $125 a barrel would have serious consequences on the global economy until other oil-exporting nations were able to bridge the gap.”  (Click here for more from France24.com.)   

If gasoline prices did spike 30%, that would put the national average well above $5 for a gallon of gas.  Even if war with Iran is averted, many experts think gas prices will rise anyway, right along with the summer driving season.  But don’t worry, Bernanke doesn’t see “anything that’s going to stall the recovery,” even though housing says it’s a hoax.

Comments
  1. xxxxx

    Seattle has a need for Apartments and people have plans to build them. Rent in Seattle is at 1100 buck,I guess this is at the price the builders need.
    You get out of the city and the home price is still going down some.
    Seattle is building all kinds of stuff, they are talking about getting a hockey and basketball team. Everyone is moving to the city it’s a slow boom. PEACE

    • mile

      rumor has housing at 1000 bucks to own in Detroit a perfectly configured industrial city site..? upo 1.4 percent over the year…??..! maybe at those prices it could be worth the trouble..?

    • mile

      anyplace i have seen sports stadiums built it is crony capitalism mafioso ripping off the taxpayers big time, is that recovery..?

  2. MasterLuke

    As much as America needs to get off gas, higher gas prices could cripple our economy. We need for gas prices to decrease & some type of government programs put in place to replace gasoline cars with electric cars. Some type of Cash for Guzzlers type program. The point is we need drastic measure to help Americans.

    Also, I’d like to see some auto companies come out with a CHEAP electric car. If not it will be interesting to see the number of people driving mopeds & motorcycles increase.

    We do not need to invade another OIL producing nation to solve our gasoline problems. In the short-run we need to lower gas prices & create government programs to get consumers off gasoline.

    • 62vette

      “get off gas,govt.programs,electric cars,cash for guzzlers”,and,best of all “invade oil producing countries.” You’re joking,right? Or do you actually not have a clue?

      • MasterLuke

        You sir didn’t read my whole statement. I did not say invade oil producing countries. I said we do not need to invade oil producing countries. Read before you attack or you look like a fool.

    • Tom H

      “As much as America needs to get off gas, higher gas prices could cripple our economy. We need for gas prices to decrease & some type of government programs put in place to replace gasoline cars with electric cars. Some type of Cash for Guzzlers type program. The point is we need drastic measure to help Americans.” -MasterLuke

      This is a tragically flawed statement:
      1) Higher gas prices will further cripple our already criminally crippled economy. It is not “could” it is “will”.
      2) The only way to get gas prices to decrease is to stop printing money, which they won’t and can’t do. Bernanke’s only choice is to keep printing.
      3) It boggles my mind that with all of the evidence to the contrary, that you believe we need some sort of government program put in place to replace gasoline cars with electric. This is exactly what is failing right now. And you want…uhhhhmmmm…more government?
      4) If returning to Constitutional governance and the rule of law is considered drastic measures, then I will agree, this is exactly what we need. If drastic measures means turning to government so they can have still more control, I will respectfully disagree.

      • g. johnson

        hey you forgot one tom,

        5) yeah, let’s all get electric cars, plug em into the grid and then all set around wondering why it’s suddenly so dark and the microwave won’t work.

        falling housing prices bad for the economy? just who’s economy are we talking about here

        let me see if i got this right. people are not buying houses because they don’t cost enough? is that how it works? or, really, are we talking about the poor fools who invested in inflating home prices and are now losing their shorts? and why do i have so much trouble finding sympathy for them?

        we need higher gas prices too! ummmmm….yeah, well, gosh!

        the liberal tools of neocon reality benders. what an interesting world we live in hey?

      • jay

        Leagleize hemp,and Alcohol. Let me make my own gass/cloths..ect…

      • MasterLuke

        We need some government assistance or we will not be able to adapt fast enough to face a dwindling supply of oil. We are over Peak Oil. We don’t need BIG government printing money on bank bailouts, wars for OIL, supply fake healthcare etc.. Instead government should use that money to help promote real change in this country. So yes, my idea would promote a transformation to a more positive perspective.

        • Tom H

          wrong, government promoting anything with stolen money just misallocates capital causing bubbles and bursts. Government spending kills capital. The government should get out of the way, live within their constitutional frameworks, and the sovereign people should decide where to put their own money, helping to promote realistic markets in this country based on supply and demand rather than the whims of corrupt politicians.

        • Tom H

          Masterluke, your responses lead me to a couple of questions:
          1) What, specifically, is it that the US gov’t has accomplished in the recent past that gives this confidence of yours that they have the ability to do anything to promote your well being?
          2)What result of the cash for clunkers program the taxpayers already funded gives you hope that another one will be good for us?

          I am assuming, based on your responses, that you trust your government to promote your general well being. So, what I am driving at is that this trust must be based on a track record of the government performing this function successfully. What is it that the government does that makes you believe it is good for the people, and will allocate resources based on the well being of its people?

        • Raven Stole my Potato

          No we don’t need any government assistance with anything. Everything the government gets involved with it destroys. What we need is a less car dependant society. Also there is no having the government using any money to make any positive changes anywhere. They have a 100% fail record for that task. The American public has got to rethink its priorities and bring them down to become more local and they are going to have to do it on their own without any more government intervention. Whether they like that or not, that is being forced on them now. The age of driving 50 miles to and from work from your suburban bedroom community is over and can never return. Too many emerging and industrial countries vollying for the dwindling supply of the remaining cheap oil. There’s plenty of oil left in the world, just not obtainable at $100 a barrel which is now considered cheap.

          • MasterLuke

            Exactly,

            According to you, we don’t need the government to maintain a military through “spending” to protect our borders. The previous comment is ridiculous because it outlines a extreme. Extremes are what led us to where we are.

            If there is no action, continued job decline, currency collapse we will see a total collapse. We could see a smooth transition with the right government spending.

            To sum something up, nothing in the previous decade has shown that I should have any faith in my government. I’m just suggesting what would help. Alas, the tooth fairy does not exist so we should not believe in such dreams.

  3. John M.

    Now here’s something to feel good about.

    High gas prices are a blessing in disguise. Jobs are being created due to higher prices and best of all, lives are being saved…( at least that’s the latest spin ). Who would have ever thought?

    http://www.youtube.com/watch_popup?v=qKdScVerrBU&vg=medium

  4. Art Barnes

    Greg, by keeping the stock market artificially high the FED kills two birds with one stone. First, it gives free money to the, investor class (the elite) which is important or they will go to other markets with their money. Secondly, since the great depression main street people think of a depression as a stock market crash, remember “black Tuesday”, etc., well its still taught & perceived as a precursor to a crash or economic downturn. So, by printing more digital fiat dollars for the stock market elite the perception is a recovery, a solid rising economy, etc. That is why the FED will print, print, print, and will get away with the perception of a recovery which the MSM of course dummy downs to the people through their media outlets as truth. Its a solid “Pravda” system for the FED to use, killing both birds with one stone; keeping the investor class hooked on Wall Street and the average Joe being spoon fed misinformation by the media on main street.

    Finally, anyone who brings out real facts such as yourself Greg and John Williams as an example are labeled doomsayers. The good news is that more people each day are waking up because of your good work.
    Thanking you will never be enough but that is all I have to give.

    • Greg

      Good stuff Art. Thank you.
      Greg

  5. AndyB

    The universe of potential homebuyers is shrinking. None of the “pumpers” ever explore this reality. Eliminate at least 90% of the 50% households on the government teat; all college graduates with any debt; all homeowners who are currently underwater. Who’s left? Investors and foreigners. Hardly enough to make a difference.

  6. CalFarmer

    MasterLuke,
    I sure hope you don’t eat much. Electric cars won’t get me out where I need to be on my farm, but my ‘gas-guzzler’ sure does. Oh, and I suppose you want electric tractors too? You, like most people, only associate OIL with gasoline and cars. Do you folks not realize that the food you eat is planted, watered, cultivated, and hauled using diesel (oil product) fuel? I won’t even get into the fact that a lot of fertilizers and other materials we use on a daily basis are petroleum based. In order to cut down on costs on my property, we use as much solar and other alternatives as we can, in fact you could almost say we were a green industry since everything we GROW uses SOLAR energy. I have even gone as far as to start converting any green waste to alcohol run it in rebuilt 1930′s hit and miss engines to power some of my machinery, but with fuel costs on the rise you are still going to pay more for your food. Not to mention the fact that your dollar isn’t going as far as it used too.

    • jay

      Cal Farmer.
      Way to go..Well stated. The sooner we the people take care of ourselves the sooner all prices will drop.Low demand=Low prices.
      jay.

  7. mile

    SEEN THE HOTROD BICYCLES WITH MOTORS, 100 MILES PER GALLON, NO INSURANCE , LICENCING, REGISTRATION, MECHANICS INSPECTIONS, AND 100 OTHER BLOODSUCKERS WITH A DOUBLE IN PRICE OVER THE YEAR…ALL CUT..?

    • mile

      WOULDNT ONE WANT HYDROGEN CONBERSION GENERATORS FOR THE CARS GOOGLE IT, SEMS CHEAPLY BUILDABLE…400 A CAR..? DELUSIONARY..?

  8. M SMITH

    Look at what Obama has done with EPA & you have many reasons to dismantel them as fast as possible. As we close coal power plants China opens news ones daily & we send them our coal. The facts are just that, facts & if we continue on this path it will ensure $5 gas & then $10. China builds refiners & we are closing them, why, the EPA & the 1000 plus new regulations coming from this admin & congress that each week is killing any economic growth. I filled up yesterday where just a week ago gas was $3.50 a gallon, now it was $3.73 & close to home $3.86 for regular. It now cost me $25.00 plus to fill up my gas can for my lawn mower. I will have a much larger garden & less lawn to mow.

    This has become a new way to move goods from these large warehouses of building materials, small mom & pop retail building supplys businesses set up tractor trailers full of building supplies & all of this material is sold for pennies on the dollar, all brand name stuff, 1st come 1st served. I bought engough materials to build a 24 feet by 24 feet shop with a lean-to on one side & a chicken house on the other, all less than a 100.00 dollars, now I will pay a retired friend to build it all & it will be on the barter system! I have never in my life time seen these kind of deals, the metal & wood, screws, nails & tools alone to build my building 4 years ago would have set back me back 3 or 4 thousand dollars. The building business is in deep trouble, so many builders have gone out of business or moved to areas where the tornados have hit is the only way they stay in business.

    Greg I agree with you. I spent 2 hours watching the MSM last night & all this talk of recovery is no more than propaganda and expect more because the powers to be know nothing else! Have a good day!

  9. CLAU

    at masterluke i think is a bad idea about electric cars have you heard of the emp they can take down a car that is from 1984 on up so they have control of that i dont want anything that gives them a better chance of having control of me and my family

  10. Brian

    Home prices are a lagging indicator. Oftentimes it is from data that is six months old. But I agree prices will languish for years following a typical post bubble pattern. But the bulk of the declines is done. One area that looks positive for housing is a dramatic YoY reduction in inventory. The market needs to churn through a lot of inventory though so this is only a first step.

    And for those of you making blanket statements about “money printing”. This is an ideological talking point. Instead of regurgitating something someone told you, look up the actual mechanics of the our monetary system and QE. You will be surprised to see that QE is no more than a fancy term for further lowering interest rates. It isn’t injecting money into the financial markets.

    Also dare I ask how exactly the U.S., which issues its own currency, can go bankrupt? Because China won’t lend us our own money? See how absurd that sounds?

    • Greg

      Brian,
      I wish we were at a bottom but the fact is even with the Fed suppressing mortgage rates down to around 4% (near rrcord lows) we are still haveing year-over-year declines in prices. when interest rates go up (and they will) prices will take anther plunge. What happens to home prices when rates climb to 6 or 7%? Prices will go down so payments can fall so people can afford them. I am in total agreement with all your other points. Thank you for weighing in and for supporting this site with your comments.
      Greg

    • jay

      Brian.
      We will not go bankrupt unless the dollar is replaced by another currency.This is presently happening. So then all we can do is hyperinflate which is a form of bankruptcy. please forgive my spelling if i mispell some words.

  11. jay

    Greg.
    Great responses from your readers. Cheers to you all.
    Independence is a way of life we seem to have (let) be removed from us.

  12. yugosno

    well whats all the fuss about $5.00 gas and food price increase of 30%. we dont count those price increases as the are excluded from the inflation indexes,neither do we count off budget liabilitys we simply move them to the other side of the ledger. the only good news is home prices in detroit ar up 1.4%. detroit now boast an average home price of a wopping $6000.00. all hail the chief. We must re-elect the architec in chief so he can finish his work of burying The USofA.

  13. norcar survivor

    Could it be possible that home pricing and gas pricing is a tandem threat to force more of the community into the city to make control easier? Cut the commute and offer lower housing costa and you suddenly have the reason to coerce folks to do what (WE) know is the worst thing you can do. Don’t know if anyone else has thought of this yet but there’s my two cents worth.

    • Greg

      NC,
      In a word, YES. Thank you for your comment.
      Greg

  14. Ambrose

    Greg,

    I agree. The housing market may be not completely dead but it is barely alive. Today’s financial news is just like the propagandas from Wall Street and the Obama Administration – full of hot air.

    Two days ago, Dennis Cauchon at USA Today reported, “A historic drop in interest rates is helping U.S. households save more than $3,000 a year on average, allowing consumers to spend more even as their earnings fall, a USA TODAY analysis finds.” (http://www.usatoday.com/money/economy/story/2012-03-26/interest-rates-falling/53793162/1)

    Hurrah to Bernanke if that is true? I know that the big banks and big corporations at Wall Street are enjoying the “near zero” interest rate. But I am not sure if the average households really benefit from the “near zero” interest rate. May be the USA Today analysis got their numbers by averaging between the 1% Rich and the 99% American families? Could it be the 1% saved $300,000 on interest while nothing for the 99%?

    Apparently the current “near zero” interest rate is not low enough for Bernanke. Last month Bernanke told House Financial Services Committee “It is arguable that interest rates are too high, that they are being constrained by the fact that interest rates can’t go below zero. We have an economy where demand falls far short of the capacity of the economy to produce. We have an economy where the amount of investment in durable goods spending is far less than the capacity of the economy to produce. That suggests that interest rates in some sense should be lower rather than higher. We can’t make interest rates lower, of course. (They) only can go down to zero. And again I would argue that a healthy economy with good returns is the best way to get returns to savers.” (http://www.reuters.com/article/2012/02/29/us-usa-fed-bernanke-idUSTRE81S1DO20120229)

    Bernanke is wrong! Interest rate can go below zero. Many low-income retirees are paying their banks (bank fees) to keep their money while they earn “almost zero” interests from their accounts. When the bank fees exceed the earned interest rate, we are essentially getting “negative” interest rate.

    Obama said that a typical American family would save about $8,000 a year from the new standards for cars and trucks. But Glenn Beck (http://www.glennbeck.com/2012/03/14/obama-math-spend-3000-save-8000/) pointed out that average American family spends only $3,000 a year on gasoline, not $16,000 as Obama implied. Although one of Glenn’s readers reminded us that Obama’s numbers could be right if the gas price skyrockets to over $20 a gallon. It sounds impossible but it is still scary.

    According to a finance professor at Washington University, many cash-strapped American families are using their tax rebate to pay for the cost of filing for bankruptcy. (http://www.olin.wustl.edu/News/Pages/NewsItem.aspx?SID=637) That is one sad way to spend your tax refund.

    Ambrose

    • jay

      Ambrose. Thanks for the glen beck artical. I did the math for my current gass spending bills. In one year i spend roughly 1300.00 for gass. It would take me 12 years to equal the one year gass spending the president claims the average american spends for gass. A green car will not change my life..

  15. mile

    no rise in interest rates no normal business cycle recovery thats 3 years late now..? can not pay the interest on risen rates without bankrupting the country, rumor has it..?

  16. Hondo

    I’m in real estate. Historically, the single family home has always been the best investment a middle class person could make. You live in that product, use it and it rises in value over time. You can’t say that about a car. As you approach retirement you’ve got equity and a free place to live after you paid off the house. The single family home was the ballast in our economy, it kept the highs and lows from being too extreme.
    When, in the history of our country, did you see home prices drop so far for so long with no end in sight. That’s gigantic amounts of equity gone. I guess you could look at the great depression. But it took the worst war in the history of mankind to bring us back. The rest of the worlds economies were in rubble after the war. Our industrial capacity was the only one left standing. We couldn’t help but succeed and grow as an economy.
    Only long sustained economic growth will bring up house prices. I mean 5 to 10 years. But that means someone who bought a house in 2005 will have to wait till maybe 2020 to realize any equity. That’s a lousy investment by anyone’s standard. And a gigantic drag on the economy.
    Hondo

  17. Tom

    Saying gas prices may fuel inflation is akin to saying your fever may cause an infection. There is plenty of oil and gasoline. Unfortunately there is even more worthless paper dollars floating around the world looking for a place to roost.

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