WSJ reports housing wrong

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Thanks, the negatively biased reporting continues as the evidence grows that the Obamaboom is underway.

The driving force is clear- the federal deficit seems to have gotten large (albeit the ugly way- falling revenues and rising transfer payments as output falls and unemployment rises) to again support incomes and spending.

This is how it most often happens with leadership that doesn’t understand how the monetary system works.

And analysts who don’t understand how the monetary system works will be late to anticipate the recovery as well, just as they initially failed to recognize that ‘monetary policy’ would be ineffective.

But no doubt the will cast whatever happens in terms of the monetary policy actions taken by the Fed and Treasury, rather than a result of the fiscal forces from the ‘automatic stabilizers.’

>   
>   On Wed, Mar 25, wrote:
>   
>   See excerpt from todays WSJ. See they say that average prices declined
>   month over month. Then look at the actual data. The mean or average
>   price actually went UP from 239K to 251K but they say “and prices
>   month over month fell too.
>   
>   They don’t even read the release. These numbers are confirmed on BB.
>   

New-Home Sales Rise as Prices Fall

by Jeff Bater

Mar 25 (WSJ) — The median price of a new home tumbled 18.1% to $200,900 in February from $245,300 in February 2008. The average price decreased 16.7% to $251,000 from $301,200 a year earlier. And prices month over month fell, too; in January 2009, the median price was $206,800 and the average was $239,100.


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Obama on a new world currency

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This is what you get from a president who doesn’t understand the monetary system. The strength of the dollar is off point:

Obama Defends Spending Plan, Tempers Criticism of Wall Street

by Julianna Goldman and Kim Chipman

Mar 25 (Bloomberg) — “I don’t believe that there’s a need for a global currency,” Obama, 47, said. “As far as confidence in the U.S. economy or the dollar, I would just point out that the dollar is extraordinarily strong right now.”

The main difficulty with a world currency is how the budget deficit (the only source of net savings of financial assets for that new currency) in that currency is managed. And with a world of leaders who don’t understand how currencies work, the odds of getting that anywhere near right are very long.


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2009-03-25 USER

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MBA Mortgage Applications (Mar 20)

Survey n/a
Actual 32.2%
Prior 21.2%
Revised n/a

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MBA Purchasing Applications (Mar 20)

Survey n/a
Actual 267.80
Prior 257.10
Revised n/a

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MBA Refinancing Applications (Mar 20)

Survey n/a
Actual 6363.20
Prior 4497.60
Revised n/a

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Durable Goods Orders (Feb)

Survey -2.5%
Actual 3.4%
Prior -5.2%
Revised -7.3%

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Durable Goods Orders YoY (Feb)

Survey n/a
Actual -28.9%
Prior -27.9%
Revised n/a

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Durables Ex Defense MoM (Feb)

Survey n/a
Actual 1.7%
Prior -4.0%
Revised n/a

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Durables Ex Transportation MoM (Feb)

Survey -2.0%
Actual 3.9%
Prior -2.5%
Revised -5.9%

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Durable Goods ALLX (Feb)

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New Home Sales (Feb)

Survey 300K
Actual 337K
Prior 309K
Revised 322K

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New Home Sales Total for Sale (Feb)

Survey n/a
Actual 330.00
Prior 340.00
Revised n/a

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New Home Sales MoM (Feb)

Survey -2.9%
Actual 4.7%
Prior -10.2%
Revised -13.2%

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New Home Sales YoY (Feb)

Survey n/a
Actual -41.1%
Prior -46.1%
Revised n/a

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New Home Sales Median Price (Feb)

Survey n/a
Actual 200.90
Prior 206.80
Revised n/a

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New Home Sales TABLE 1 (Feb)

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New Home Sales TABLE 2 (Feb)


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A bottom in home prices?

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A bottom in home prices?

And with the low created by forced and massive foreclosure liquidation auction sales a V shaped bottom is to be expected.

House Price Index MoM (Jan)

Survey -0.9%
Actual 1.7%
Prior 0.1%
Revised -0.2%

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House Price Index YoY (Jan)

Survey n/a
Actual -6.3%
Prior -8.9%
Revised n/a

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House Price Index ALLX (Jan)

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Mosler to Obama- be careful what you wish for!

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The last thing we need to do is encourage policies that empower billions of foreign consumers to compete with us for scarce real resources and diminish our real terms of trade.

But that’s what happens with an administration that does not understand the monetary system.

Obama seeks ‘Sustained’ Fiscal Stimulus in G-20 Summit Appeal

by Tony Czuczka

Mar 24 (Bloomberg) — President Barack Obama urged fellow Group of 20 leaders to provide a “robust and sustained” fiscal stimulus, saying that “much more” action is needed to fight the global recession.

In an article published today in newspapers including Germany’s Die Welt and the Paris-based International Herald Tribune, Obama also urged increased funding for international lenders and a “common framework” of steps to restore the world economy’s flow of credit.

“Our efforts must begin with swift action to stimulate growth,” Obama said in the article laying out U.S. goals for the G-20 summit in London on April 2. “Other members of the G- 20 have pursued fiscal stimulus as well, and these efforts should be robust and sustained until demand is restored.”


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Geithner plan: Let them clip coupons

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The Geithner plan is the latest move in what is shaping up to be the largest upward distribution of real wealth in US history.

Its stated purpose is to provide high enough risk adjusted returns to attract ‘private capital’ at a time where risk perceptions are elevated.

This means ‘market forces’ will offer ultra high returns for the investor class and the financial sector in general to attract the desired private sector participation.

High unemployment will ensure real wages remain ‘well-anchored’.

This means that as productivity and output increases, those gains in real consumption necessarily flow upward.

As the populist administration ironically moves to support investors and the financial sector at the expense of those working productively for a living.


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UK inflation 3.2%

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Looks to me like the theory that a large output gap/high unemployment will control ‘inflation’ (for anything more than the very short term) is about to fall by the wayside, just like the theory that a small output gap would cause higher inflation fell by the wayside in the late ’90s.

UK Inflation Rate Unexpectedly Rose in February

by Svenja O’Donnell

Mar 24 (Bloomberg) — The U.K. inflation rate unexpectedly rose in February after higher food costs and the weakness of the pound sustained price pressures even as Britain’s recession deepened.

Consumer prices rose 3.2 percent from a year earlier, the Office for National Statistics said today in London. The median forecast of 28 economists was for 2.6 percent. Officials said that Bank of England Governor Mervyn King will explain the increase in a letter to the government today after the rate breached its 3 percent upper limit.

“We’ve got such huge spare capacity in the economy,” James Knightley, an economist at ING Financial Markets in London. “Inflation pressures are going to be very weak indeed in the months to come. The process will continue through this year and into the next.”

Maybe.


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Why it is likely the banks ARE solvent

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The FDIC has a legal responsibility to take over insolvent banks.

They have aggressively done that, including taking over WAMU for liquidity concerns when it was legally solvent.

I view that as overly aggressive, as the banking model includes FDIC insured deposits for the further purpose of not using the liability side of banking as the place for market discipline. And, in fact, legal action vs the FDIC’s response to WAMU’s liquidity issues is not in progress.

So what may have happened subsequently in the case of the major banks getting government capital may have been something like this:

Phone call:

Shiela: Hi Barry, just a head’s up. A couple of major banks are up for exam, and if they don’t pass I’m legally bound to shut them down.

President: We don’t want that to happen, is there anything we can do?

Shiela: Well, you could increase their capital to levels where you can be sure they are legally viable.

Presidents: Thanks!

Next phone call:

President: Hi Ken. We need to get you enough capital right away to make sure you are legally solvent for the coming FDIC exam.

Ken: We are solvent, Barry, we don’t need any capital, but thanks for your concern and the kind offer!

President: Sorry, but we can’t take the chance the FDIC might decide to mark something down, declare some asset impaired, or otherwise cause your capital to fall under the legal minimum and declare you insolvent.

Ken: Ok, whatever you say, but again, we don’t want it or need it. So let me ask one favor- make sure we are allowed to give it back as soon as you feel it’s no longer in the national interest for us to keep it.

President: Thanks!


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China negotiating on the dollar

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Ridiculous, of course, but they are playing the ignorance of our leadership for all its worth. They know we don’t know it’s a bluff, and they have us on the defensive.

That’s what happens with leadership that doesn’t understand its own monetary system, and that we don’t need them or anyone else as buyers of our securities to fund our expenditures.

China calls for new reserve currency

by Jamil Anderlini

Mar 23 (FT) — China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.


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CA Real Estate

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Thanks- more evidence it all could be turning the corner.

New Supply of ‘jumbo’ financing in pipeline

by Kenneth R. Harney

Mar 22 (LA Times) — LA Times says jumbo mortgage financing to increase – major banks are about to ramp up financing availability into the jumbo mortgage market, not to then securitize the loans but to keep on their own books. The market has been starved for financing since the onset of the credit crunch in ’07. BAC is one of the lenders rolling out a large financing program for jumbos.


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