Housing Bubble 2.0: U.S. Homeowners Made $2 Trillion On Their Houses In 2017

Americans who are lucky enough to own their own little slice of the ‘American Dream’ are about $2 trillion wealthier this year courtesy of Janet Yellen’s efforts to recreate all the same asset bubbles that Alan Greenspan first blew in the early 2000’s. After surging 6.5% in 2017, the highest pace in 4 years according to Zillow data, the total market value of homes in the United States reached a staggering all-time high of $31.8 trillion at the end of 2017…or roughly 1.5x the total GDP of the United States.
If you add the value of all the homes in the United States together, you get a sum that’s a lot to get your mind around: $31.8 trillion.
How big is that? It’s more than 1.5 times the Gross Domestic Product of the United States and approaching three times that of China.
Altogether, homes in the Los Angeles metro area are worth $2.7 trillion, more than the United Kingdom’s GDP. That’s before this luxury home on steroids hits the market.

This post was published at Zero Hedge on Fri, 12/29/2017 –.

The EU Bad Loan Crisis to Get Much Worse – The Solution = Financial Pandemic

The bad loan (‘non-performing loan’ (NPL)) crisis in Europe is well known and many have been calling for this issue to be addressed. In Italy, the bad loan crisis has reached 21% of GDP. While NPLs dropped to 4.8% of all loans in the EU as a whole during the first quarter of 2017, they remained well above 40% in Greece and Cyprus, at 18.5% in Portugal, and 14.8% in Italy according to the European Banking Authority.
Now comes the bureaucrats with zero experience to save the day – or is that to create a financial pandemic in the EU? The EU Commission (EUC) along with the European Central Bank (ECB), want to ensure that banks promptly sell real estate, stocks, bonds and other assets that serve to collateralize loans according to their Mid-term Review of the Capital Markets Union Action Plan. Member States are required to adopt laws that facilitate the central directive. At this time, any bank cannot just sell a property that secures a loan. The problem is, all loans, whether secured or not, are valued the same.

This post was published at Armstrong Economics on Dec 29, 2017.

The Wall Street Journal Does a Hit Piece on Trump’s Vacations

The Wall Street Journal is trying to match The Washington Post for anti-Trump investigative journalism.
Consider this article: President Trump Spent Nearly One-Third of First Year in Office at Trump-Owned Properties. It is a screed on Trump’s time spent vacationing.
It has a subhead: “Unlike his predecessors, president traveled frequently to places he owns but where others pay to stay.” That is because his predecessors did not own several billion dollars’ worth of prime vacation real estate.
Would you rather stay at a Motel 6 or Mir-a-Lago if someone else was picking up the tab? To ask the question is to answer it.
I, for one, applaud the time that he spends vacationing. Any time that a politician spends doing anything other than legislating is time well spent. When they are busy “making things better” by expanding the government, citizens are losers. They lose a little more of their liberty.
Earlier this year, The Washington Examiner reported this.

This post was published at Gary North on December 28, 2017.

NY Gov Rips Trump Tax Bill: “Let’s Pillage The Blue To Give To The Red”

It seems that Trump’s tax plan has officially turned New York Governor Andrew Cuomo into a “trickle down” economics guy.
Apparently unhappy that the new tax legislation will result in higher taxes for the “millionaire, billionaire, private jet owners” of his state who have mortgages over $750,000 and annual property taxes of over $10,000, Cuomo said that the White House’s efforts to “spread the wealth around” are nothing more than an effort to “pillage the blue to give to the red.”
“Look, there’s always politics in crafting of legislation. But, this was an egregious, obnoxious…what the Senate was saying is because we have no Senators from the ‘Blue States’ we don’t care. So let’s pillage the blue to give to the red.”
“That’s never been done in this nation before. That’s partisan politicking over any semblance of good government.”

This post was published at Zero Hedge on Thu, 12/28/2017 –.

How To Go Bankrupt: Slowly Then Suddenly

In Hemingway’s, ‘The Sun Also Rises,’ one of the characters, Bill, asks his friend, ‘Mike,’ how he went bankrupt. Mike replied, ‘I had a lot of friends. False friends. Then I had creditors…’ This passage from the novel comes to mind when I hear ads during the local sports radio programming from mortgage brokers urging listeners to use a cash-out refi or home equity loan to take care of credit card debt that piled up during the holidays. Beneath the surface is the message, ‘c’mon in, the water is fine, go ahead and take on even more debt.’
If in fact the retail sales turn out to be as strong as projected, it’s because the average household has tapped into its savings and used an unusually large amount of credit card debt to fund holiday spending this year:

This post was published at Investment Research Dynamics on December 28, 2017.

Do The Double-up! As Rents Rise, More Renters Turn to Doubling Up (L.A. The Worst!)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Zillow has a fascinating, yet troubling study. It says that rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices. An increasingly popular way to cut costs is by adding a roommate. Nationally, 30 percent of working-age adults – aged 23 to 65 – live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990.
Doubing up is a close relative of young adults continuing to live with their parents. Even though U-6 unemployment is at 8%, wage growth continues to be considerably lower than before the financial crisis. This offers a partial explanation for the doubling-up phenomenon.
Of course, doubling-up is typical is high cost of living areas like Los Angeles, San Francisco, New York City, Chicago and Washington DC. Not surprising is the doubling-up trend in Mexican border cities like El Centro California, Tucson and Yuma Arizona and El Paso and Laredo Texas.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ December 27, 2017.

Tax Plan Jitters Cause Sudden Collapse In Manhattan Apartment Prices In 4Q

Apparently the combination of a massive flood of excess supply in the form of new luxury developments and a Trump tax plan that penalizes people living in expensive cities by capping SALT, mortgage interest and property tax deductions was simply too much for the Manhattan real estate market to ignore in 4Q 2017. After reaching an all-time high of nearly $1.2 million in 2Q 2017 (chart per Douglas Elliman)…

…the Wall Street Journal this morning notes that median Manhattan apartment prices have dropped to $1.08 million in 4Q 2017, down 9.8% compared to the peak set earlier this year.
Not surprisingly, Pamela Liebman, the president of New York real estate broker The Corcoran Group, attributed the pause by Manhattan buyers to the tax bill and said that folks are increasingly convinced that prices peaked in 2017 and may continue to be under pressure.

This post was published at Zero Hedge on Dec 27, 2017.

The Great Recession 10 Years Later: Lessons We Still Have To Learn

Ten years ago this month, a recession began in the U. S. that would metastasize into a full-fledged financial crisis. A decade is plenty of time to reflect on what we have learned, what we have fixed, and what remains to be done. High on the agenda should be the utter unpreparedness for what came along.
The memoirs of key decision-makers convey sincere intentions and in some cases, very adroit maneuvering. But common to them all are apologies that today strike one as rather lame.
‘I was surprised by the sudden crisis,’ wrote George W. Bush, ‘My focus had been kitchen-table economic issues like jobs and inflation. I assumed any major credit troubles would have been flagged by the regulators or rating agencies. … We were blindsided by a financial crisis that had been more than a decade in the making.’
Ben Bernanke, chairman of the Fed wrote, ‘Clearly, many of us at the Fed, including me, underestimated the extent of the housing bubble and the risks it posed.’ He cited psychological factors rather than low interest rates, a ‘tidal wave of foreign money,’ and complacency among decision-makers.

This post was published at Zero Hedge on Dec 27, 2017.

2007 All Over Again, Part 7: Borrowers Start Scamming Desperate Lenders

One of the hallmarks of late-stage bubbles is a shift of power from lenders to borrowers. As asset prices soar and interest rates plunge it becomes harder to generate a decent yield on bonds and other fixed income securities, so people with money to lend (like pension funds and bond mutual funds) are forced to accept ever-less-favorable and therefore far-more-risky terms.
Recall the liar loans that were popular towards the end of the 2000s housing bubble and you get the idea. Lenders were so desperate for paper to feed the securitization machine that they literally stopped asking mortgage borrowers to prove that they could cover the interest.
Here we go again, but this time in the market for leveraged buyout loans:
Yield-Starved Investors Giving In to the Demands of Bond Sellers
(Wall Street Journal) – Demand for leveraged loans is allowing private-equity firms to water down legal safeguards for investors Hellman & Friedman LLC and other investors sought last month to borrow money in the bond market to finance a takeover.
The U. S. private-equity firm offered a yield of about 3%, but few of the protections once considered routine.
Still, the investors bought.

This post was published at DollarCollapse on DECEMBER 27, 2017.

$1.5 Trillion GOP Tax Bill Signed By Trump – Housing Largely Uneffected Thanks To Lower Marginal Tax Rates (Ham and Mayonnaise!)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
President Trump on Friday signed the Republican $1.5 trillion tax overhaul that is expected to trigger tax cuts for most Americans next year. The GOP/Trump bill undoes some of the damage caused by the tax increases put in place on January 1, 2015 by the Obamacare legislation such as increasing the top bracket from 35% to 39.6%.
Although this is not related to housing per se, the corporate tax rate has been cut to 21%, putting the US in the middle of the G-7 nations instead of being the most heavily tax major nation on earth.

This post was published at Wall Street Examiner on December 26, 2017.

The Ghost Of W.D.Gann: Another Crash Is Coming

Authored by Philip Soos & Lindsay David via RenegadeInc.com,
The original wizard of Wall Street, W. D Gann was a finance trader and wealthy speculator that spent decades investigating cyclical trends in equity market patterns and found that prices could be predicted long in advance. He successfully predicted the crashes in the 1929 and Dot-Com stock market bubbles. And according to his analysis, the US stock market is due for another crash in 2020.
***
Every movement in the market is the result of a natural law and of a Cause which exists long before the Effect takes place and can be determined years in advance. The future is but a repetition of the past, as the Bible plainly states…
After suffering through the worst economic and financial crisis since the 1930s depression when the real estate and stock markets crashed in 2007, the United States’ bubble economy is back into full swing. Residential and commercial real estate prices are growing strongly, along with equities.

This post was published at Zero Hedge on Dec 27, 2017.