Beware the False Idol

‘The housing market is improving…the housing market is improving’

Sadly, this is the banshee wail of the undereducated. Sadly, we have heard this non-fact based mantra going back to early 2009. Though accurately, on a broad-based view of the housing market, it remains mostly false. (this is not to say that there are some, but few pockets and areas of localized markets that are active with legitimate owner-occupied buying)

In what appears to be signs of improvement are in reality, just propped up indexes and figures. The Fed has financed nearly 3 trillion in bad loans and they continue to absorb the cost of defaults in nearly all of the FHA approved mortgages made today. (Read: Tax Payer money) Also, residential delinquencies are on the rise again, up 10.2% in Q4.

Approximately 80% of current delinquent residential loans were originated before 2008. In fact,
pre 2008 loans account for about 53% of all mortgage loans.

Then, there is the GSE’s one of the greatest scams are federal government had enacted- (guaranteeing private loans with public money) continues to dig a deeper and massive hole of debt- read: tax payer money to the tune of 190 Billion and counting.

A bit of historical data reveals that starts of multifamily housing stands at 15% below mean trends. Construction of single family residences is approximately 45%  below the long-term trend and demand for new homes is at 46% below the norm.

Additionally, there are approximately 14 million mortgages underwater. Mortgage net-equity has decreased in 4 1/2 years by a staggering 3.7 Trillion dollars.

There is a  massive amount of non-performing inventory sitting on the balance sheets of banks (in which the government and the Fed have ‘requested’ the banks not to release…) AKA, Mortgage-Stuffing, which has been ramping up in the past two years. There may be upwards of 5 to 7 million distressed assets not being disclosed by the banks. (part of the fraud-closure debacle)

Not too mention, the one trillion dollars of student debt, 16.7 trillion in national debt, 22% total under/unemployment, while the mean duration of unemployment is at 35.3 Weeks. (down slightly from a peak of 40.2, but up from last years average of 33 weeks)

The U.S. now has 48 million households on SNAP (UP by 17 million since 2008) all while housing subsidies have increased by a whopping 48%. Then there are salary and wages- (when adjusted for Real Inflation, are actually negative compared to the core rate) PCE, is flat and personal income is down -3.4%, the most in 20 years.

BUT! The big but…somehow, the average tax paying American has suddenly come up with new found disposal income to buy houses across the nation…amazing! Sadly, it is simply untrue. While there has been some activity in buying, it is mostly in the form of the governments ‘Central-Planning’ Reo-to-Rent programs, a flood of foreign buyers and phantom new start contracts.

And those “SA” Seasonally Adjusted prices you see? Fabricated. When all is said and done and you parse out the ‘noise’ prices are not truly appreciating and in fact in many states are declining once again.

“But the nar said so” Sadly, the nar (one of the largest lobbying groups in Washington) are nothing more than enablers of burden and debt to the tax payers. The nar are simply a fraud.

Question:
What is the primary job of a real estate person? If you think, buy and sell houses, sadly, you would be mistaken. The main function of any real estate firm and agent, is to act as a buffer between a buyer/seller and factual, relevant information. The industry itself is nothing more than a marketing-ministry of propaganda.

The agent acts completely in his or her own self-interest, despite the rhetoric they continually churn out. Upton Sinclair had a great quote- which explains the conflict that a real estate person inherently creates.  “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Housing Snapshot

By DataAnalytics

Admits the arm-waving and ramped up rhetoric being shouted by the msm/real estate/banking and finance industry, we would like to remind the stuffed-suits that housing is not improving, not recovering and will remain depressed for a long time to come.

Out of approximately 45 Million residential mortgage holders in the U.S. there are roughly 18 Million outstanding mortgages that are in negative equity territory. Previously, it was thought and published that there were 12 Million underwater mortgages, but as it happens, the two main firms who collect that data were incorrect. Turns out, that nearly 40% of all outstanding residential mortgages are actually  ‘underwater’

Counting all housing inventory; existing, new and both disclosed and undisclosed shadow assets (to the best of independent analysis), there is approximately 7.5-/+ Million homes available. That equates to a total absorption rate of approximately 24 months and that figure could be as high as
60 months

Housing is still unaffordable, despite the fact that overall, prices have fallen about 35%. In order for median prices to be on par with median incomes in the U.S. the median house price needs to be at approximately $144,000. Currently, the median price is about $164,000, which is +12% or +$20,000
too high. Forget affordability, forget the ‘talking-points’ that the real estate and banking industry perpetrate, they are grossly incorrect and deceptive.

The FACT is, that there is little to no borrowing and purchasing power.
One of the main causes is due to the extremely high unemployment rate of approximately 12% (U3). While the total underemployment/unemployment (U6) is about 23%. Wages are flat, credit risk remains elevated and household debt is increasing. The debt-to-income ratios for the majority of would-be buyers is above 35%- which places many potential mortgage borrowers at a high risk of defaulting.

The facts are indisputable, even though the real estate and banking muppets claim otherwise. Of course, all of their arm-chair analysis is predicated upon a paper foundation that crumbles under the weight of truth. Truth will always trump lies and deception, eventually the truth gets out. The truth triumphs.

The main take-aways here to remember: Diminished Borrowing/Purchasing Power AND Years worth of Inventory. An equation that nets very little market absorption. Plus, a myriad of ancillary factors; Including, but not limited to massive unemployment, elevated levels of household debt and
an eroding economy.

Forward

By DataAnalytics

“Forward”
Merriam-Webster’s Definition of FORWARD:

1a : near, being at, or belonging to the forepart b : situated in advance

2a : strongly inclined : ready b : lacking modesty or reserve : brash

3: notably advanced or developed : precocious

4: moving, tending, or leading toward a position in front; also : moving toward an opponent’s goal

5a : advocating an advanced policy in the direction of what is considered progress b : extreme, radical

6: of, relating to, or getting ready for the future <forward buying of produce>
— for·ward·ly adverb
— for·ward·ness noun

Looking closely at definition number 5a, its meaning becomes particular interesting in certain contexts and uses of the word- Forward.

For example one could easily sight the apparent radical financial actions of the U.S. government
and its agencies over the past 12 to 13 years that had been steadily gaining momentum and now, rapidly accelerating during this particular administration.

As well as the extreme ideologies of both the republican and democratic parties, which has manifested itself in the form of massive and unchecked corporate pandering and financial welfare being handed out to large investment banks, large corporations, along with the continuing erosion of personal freedoms of the American citizen. As they had (the U.S. government) stated, their goal was to “fundamentally transform America” and indeed, seem to have succeeded.

Definition 6, states; -get ready for the future, and in the case of the U.S. economy and the
immediate and mid-term future, it speaks more to the ‘get ready’ verbiage described. What it
does imply, is that the majority of United States citizens should be ‘getting ready’ for a future of a depressed economy, enormous fiscal/capital debt and monetary inflation, that well may last for a decade or possibly longer.

Now that we have established the various definitions of Forward, let’s examine the roots of the slogan “Forward” as a bureaucratic advertising catch-phrase.

The use of the word in the political realm is nothing new. In fact it dates back to the late 1800′s in the former Social Democratic Party of Germany. (which was an early Marxist-Based party platform)

Forward, or the German version, Vorwärts! Was a  daily newspaper published originally in Leipzig from 1876 to 1878 and then again in Berlin from 1891 to 1933. Vorwärts! was the voice of the European Marxist-Socialist movement and ideology, before being outlawed and crushed by the so-called Fascists of the Nazi Party (also a Socialist ideology itself, just that it was a Right-Wing movement rather than a Left-Wing movement)

Subsequently, during the reign of Nazi totalitarianism, Vorwärts! Vorwärts! (Forward! Forward!) was the Hitler-Youth marching song designed to rally and unite the German people with national fervor from the emerging youth.


Forward, was also utilized by the Soviet’s in the early 1900′s.  Translated from its Russian Marxist-Socialist political use, the term Vperedwas the first Bolshevik weekly newspaper, published in Geneva from Dec. 22, 1904 to May 5, 1905.

The name of the newspaper was suggested by then future Soviet leader, Vladimir Lenin.
Vpered was also a radical and extreme Marxist organization within the Russian Social Democratic Party, from 1909 – 1912. The slogan and context of Forward in political propaganda terms was also heavily touted and used in the Post WWII GDR/DDR and Soviet Union.

In more modern times, the European and North American Socialists define Forward
as “The way forward for anti-capitalism.” The caveat though, is that the U.S. government is not outwardly anti-capitalist, but they are without question, pro-corporatist. On the surface it would
seem that they are champions of free-markets, but when you dig deep enough below that surface
the evidence reveals a completely different and alarming truth.

In essence, a Corporatist platform of capitalism, is really nothing more than a form of Market-Socialism. When one considers what the government has done with tax-payer money or ‘printed’ currency, to “Bail-Out” dozens upon dozens of supposedly free-market owned companies.

The list is lengthy to print, but anyone who is able to search the internet thoroughly, can find the long list of companies and corporations the U.S. government has ‘loaned’ tax-payer money to. Although these so-called loans were nothing more than ownership stakes in said entities.  Thereby creating partially and loosely owned/controlled economies- which is one of the tenets of Market Socialism.

We will continue our look and discussion of Forward in Part II

Soaring Fuel Prices Hit Americans Hard

Guest Post:
By Nick Barile

If you’ve glanced at the big numbers on top of the gasoline pump recently, you’ve undoubtedly noticed the slow, dreadful escalation of fuel prices.  The majority of Americans are now paying close to $4.00 per gallon of gasoline, which has threatened the economic recovery and pushed many families closer to the brink. Why? Because, like it or not, our world runs on sweet crude oil.

Everything you buy, eat, or interact with is in existence because of oil. Your groceries, your school commute, your laptop- even this article that you’re reading right now- all have a relationship with oil that’s not going to end well. It’s important to understand why fuel prices are so high, and what you- and our country- should do to combat them.

Oil, natural gas, and other commodities’ prices reflect the speculation of investors based on the current environment. Almost all consumables are based on the centuries-old theory of supply and demand. If America is on the road-trip to recovery, then she’s going to have to fill the tank more than sitting idly in the depths of the Recession.

It seems that along with our own economic expansion, we have witnessed a dramatic uptick in the world’s consumption of oil. China and India have been rapidly expanding economically, and population growth has resulted in more vehicles being on the road than ever before.

The instability of the Middle East has also been the culprit for the theft of more American dollars. Revolutions of the Arab Spring have caused fear of a supply disruption, which would bring back the gas shortages of the 1970’s. Even more so, the United States’ increasingly hawkish foreign policy with Iran has led investors to become wary of yet another war fought within sight of oil wells, further causing fear of a drop in supply.

But our government isn’t doing that well in easing tensions. Our continued presence in the Middle East has led to many outbreaks of violence, stressing any political stability to be had. And the Obama Administration’s belligerence towards Iran has caused many near-panics for speculators, as Iran has retaliated with threats to stem the flow of oil out of the Middle East.

Our current policy is the equivalent of throwing water on a grease fire. It may seem the correct thing to do, but in reality, all it does is further spread the flames and result in more problems. If the United States wants to truly prevent political instability, then the government needs to dramatically re-think the interventionist foreign policy it has maintained for the past decade.

Even so, there are countless things to be done at home in order to hopefully quell gas prices’ jumpiness.  The first is a relatively obvious answer: more domestic production. Few will deny the risks of oil exploration. There have been catastrophes, no doubt, but we are on the verge of an economic one if Americans see gas prices upwards of $5 a gallon (not a far-fetched thought at all, as gas prices in Europe hover around $9 per gallon).

Although many advocate higher efficiency standards, it’s important to consider the feasibility of such requirements. The Chevrolet Volt, for instance, a poster-boy for President’s push for alternative energy, has been a spectacular marketing failure because of its price and ROI factor.

Consumers will simply not pay ridiculous sums of money for a car just to lower annual gasoline bills- that would take 27 years to recoup the investment. Even though Europe is a horrible example to follow in terms of production, they have been able to raise their efficiency by using two things: diesel fuel and small scooters/”Vespas”.

Diesel provides for much better fuel economy than its counterpart (capable of hitting near 50 MPG on the highway), and most gas-powered mopeds/scooters can achieve near 100 miles to the gallon. If America were to adapt itself to these things, gas consumption would fall dramatically than our current plans of driving 8 cylinder SUVs to work.

 


While we generally agree with Nick’s pov, we here at DataAnalytics

disagree with a few key points the author made.

Demand for gasoline the U.S. is at a 17 year low, while Europe is at a
decade low. Which more than off-sets the increases in China and India.

Also, the False Inflection points that are utilized by the traders are convenient ‘triggers’ that enable them to raise the prices without any accountability or real proof. The Iranian ‘issues’ were all media and government created, in order to allow the street to drive the prices up during that supposed ‘tense’ period.

Middle-East tensions with regard to oil supply has been something the
market has had to deal with for about 40 years, this is not something new.
But because the media and the government made so much noise about it,
it in turn gave the green-light to speculators, to panic investors and drive
up the Nymex/Cushing contract prices under false pretenses.

DataAnalytics findings reveal that Speculation accounts for approximately (+/-)28% of the price of a barrel of Brent Crude. NOT the 15% the St. Louis Fed came up with. Kevin G. Hall, of McClatchy states, “Oil and gas prices were soaring thanks again in no small part to rampant financial speculation on top of (exaggerated) fears of supply disruptions.”

Hall’s March report highlights the fact that despite rising prices at U.S. gas pumps, demand in the U.S. was so low it has “become a net exporter of gasoline, unable to consume all that it generates.”

We also believe that Europe is not a ‘horrible’ example of production, as
Europe’s GDP is not much different than the U.S.’s over the past4 years.
We also would really like to see the U.S. government and State governments seriously adapt alternative transportation methods, such as bicycles and scooters much more widely than it is. Our roads and highways are in general, not bicycle/scooter friendly at all. Especially on the east and west metro coast areas.

The (In) Complete Postal Package

By DataAnalytics
Updated 4/26

“The Senate offered a lifeline to the nearly bankrupt U.S. Postal Service
on Wednesday, voting to give the struggling agency an $11 billion cash
infusion while delaying controversial decisions on closing post offices
and ending Saturday delivery.”

Now, you can add another dead-beat, inefficient entity to the ledger of
irresponsible, incompetent organizations surviving on the government’s
(READ: Tax Payer) dole. In fact, ELEVEN BILLION DOLLARS WORTH…
Latest figures show the post office is 12 BILLION dollars in debt with a now
projected debt of 21 BILLION- not 18 Billion by 2016.

__________________________________________________________

Neither snow, sleet or rain can usually stop postal carriers from
delivering the U.S. mail, but critical financial difficulties certainly could.

Now staring straight down the barrel of a projected 18.2 BILLION
dollar loss, the United States Postal Service is seeking approval
to increase the price of a first-class stamp to $0.50 cents, up from
the current $0.45, to try and stave off the inevitable bail out.

Suffering from internal inorganization and fairly inefficient operational
methods with some very antiquated and restrictive governmental
regulations, first-class mail volume has fallen 20% since its peak in
2006 along with a 22% decline in overall mail handling volume since 2007.

usps financial chart

usps financial chart

A key measure shown in the chart above, is the total expense column.
As revenues fell expenses significantly increased, which only serves
to highlight the ongoing inefficiencies within the postal service.
Particularly alarming are the large jumps in the expenses to revenues
from 2009 to 2011.

E-R Spread

E-R Spread

Revenue to Expense mean loss 2006-2011:

  • -$4.28 billion

Aggregate revenue loss 2006-2011:

  • -$5.1 billion

Year-over-Year mean debt 2006-2011:

  • -$2.42 billion

Increase of debt 2006-2011:

  • 83%

While these deficiencies certainly contribute to the continual losses,
it is also partly due from not adapting very well to the more recent
electronic and techno media revolution. The resulting drop off in usage
from 2009-2008 had netted a minus $7 billion dollar drop in revenue.

bill-payment graph

bill-payment graph

Couple these inefficiencies with over paid management, often
problematic unions and so forth and one can see why the post office
is one of the more mismanaged quasi-governmental agencies in the U.S.
It is public knowledge that the postal service has been running huge
deficits for many years now and its viability is in serious question.

In addition to the stamp rate hike, the USPS will be taking further steps
to reduce the massive short-fall of income. This would include cutting
approximately 150k jobs, ending Saturday service and closing up
to 3,500 facilities.

The suggestion of a fully privatized postal system has been brought up
more than ever over the past few years and now in more recent months
and rightly so. But question remains, will the price hikes and cuts be
effective enough to ensure the longevity and sustainability of the postal
service as it exists, without tax-payer intervention…

Well, when I originally published this back in February, I was thinking
that perhaps the debacle that the USPS is, would be able to hold off on
bleeding the tax payer for money.

But two months later, the said  Tax-Payer intervention comes to fruition.
My question is; when will the next bail-out occur and how much more tax payer
money will the postal service steal from the tax paying public?

15 BILLION? 20 BILLION? Does it even matter anymore?

After all, B-B-B- Benny and the Fed will just “Print” up some more of our
Fiat currency to sustain any and all that the government deems necessary.
Never mind that your grandchildren will be on the hook for the insurmountable
debt obligations, for generations to come…

Foreclosures, Delinquencies and the Illusion of a Housing Recovery

DataAnalytics

While mortgage delinquency rates are showing signs of easing, residential foreclosures
are once again, on the rise. A  data-point worth noting, is that delinquencies did inch upward
from 7.2% in January to 7.3% in February. That key metric is certainly something to keep an eye on.

According to LPS and RealtyTrac, approximately 2.7+ million residential properties are
in some form of loan delinquency and as of February, approximately 800+ thousand
homes have been repossessed.  RealtyTrac CEO Brandon Moore said the “numbers point
to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.”

So while defaults do seem to be declining, 1-4 family forfeitures are now increasing and
according to leading broker-dealer Amherst Securities, “some 9.5 million homes are
still at risk of default.” much to the chagrin of the real estate industry.

 

 

  • 2.7 Million mortgage delinquencies (30/60/90-day)
  • 1.41 Million distressed assets (approx. 34% of all inventory)
  • 1.6 Million Shadow assets (possibly 3+m in total)
  • 26% +/- of mortgage holders currently ‘underwater’ (negative equity)
  • 5.4+ Million total housing assets (includes claimed shadow assets)
  • 13 -/+ Month Supply of total Housing Inventory

Overall “printed” housing inventory stands at approximately 4+/- million units in the U.S.
(as the industry and its contingent of boosters do not account for or care to acknowledge the
millions in shadow inventory) with 2.43m existing homes, 1.41m distressed assets, approximately 151k new homes and at least 1.6 million of shadow inventory, that is publicly disclosed.

(estimates for total inventory are as high 7+ million units, due to the very real possibility
that
many banks – at the urging of the FHA and the Fed are not disclosing all of their distressed/shadow inventory)

Another data-point in decline, is sales of foreclosed homes, which has fallen approximately 24.3%
in the first two months of 2012 from December 2011 according to LPS. This drop off is more rough news for the already over-supplied inventory of the U.S. housing market.

So while there is a glimmer of positive data with regards to mortgage loan defaults, the pace of  forfeitures are accruing and sales of all homes, existing, new and distressed has been slowing. Unfortunately, this trend will place even further downward pressure on already overall weakened home prices.

Which in turn, has the affect of creating additional negative equity for a portion of existing mortgage holders who are not yet ‘underwater’ but are barley maintaining current mortgage payments.

Thus, increasing the likelihood of additional loan defaults as well as strategic-defaults.
Negating any exaggerated  and so-called “housing recovery.”

Analysis from all of these key metrics and data points, reveal a sobering picture for the residential real estate market. Housing, may in fact not recover for another 5 to possibly 10 years.

Distorted Perceptions (of Fact)

By DataAnalytics

Data and Information in the last decade has become so
prevalent and available to almost anyone with an internet
connection, that it might lead one to believe we have become
a fact-based culture. Indeed, just the opposite has been occurring.

Which is not to say there are not good, reliable sources of  data
and information available. But the ability to parse out the noise,
irrelevancy and falsities are becoming more and more difficult as
the content of electronic text and information rapidly expands.

Consequently, Data and Information does not necessarily correlate
into Fact and Knowledge. This trend has become widely evident
over the last 4 plus years of the financial and economic crisis.

Daily, weekly, monthly and yearly reports published by financiers,
banks and government agencies; such as the BLS (labor data),
Census (CP Surveys) and FHA/GSE entities (housing/mortgage data)
have been proven to be doctored and overall manipulated data-sets
that have been and currently are being passed off as so-called fact
and subsequently, knowledge.

Data Information Knowledge

What is knowledge? Knowledge is the direct relationship of thorough
investigation, in-depth study and thoughtful analysis. In essence,
it is the ‘science’ of information- indeed, it is not an idea or perception,
but rather Fact, which is the foundation of all knowledge.

What knowledge is not though, is a perception of facts. Sadly
though, that (perception) is what most of the main stream financial
and economic news, findings and figures have become. A perception,
or rather a Distorted Perception.

Among the many benefits of knowledge, is knowledge that leads
to improved and more efficient decision making. Applicable content
and data which can be filtered down to being relevant and practical
information,is one of the keys to obtaining fact-based knowledge.

But in recent years more-so than ever, authority, to a certain
extent, has taken information and data and turned into a ‘concept’
of a perceived fact rather than absolute fact, to suit their
particular needs; economically, politically and financially.

Which of course, then places ‘Fact’ under scrutiny. In addition to
these entities of authority, are ‘Social’ media and business platforms,
where there are significant gaps in credible data. As well as in the
delivery of credible content and data, which is typically unstructured,
unverified, and often results in unreliable content and information.

The verification of data and then, how data gets expressed is mission
critical to the competence of any informative data-set and ultimately
the Foundation of Fact-Based Knowledge.

nucleus
So while the flow of data, information and knowledge cannot, nor
should not be limited, there needs to be more of an emphasis placed
upon the reliability and verification of data, information with relation
to the knowledge attained from absolute Fact. Credibility and reliability
are indeed the core pillars to achieving a true fact-based culture.