Well....yeah. http://exiledonline.com/depression-porn-gaming-the-real-estate-market/
Yasha Levine tells it how it is, at least for the real estate market, and how the banks are profiting from this by manipulating supply and demand.
QuoteSean O'Toole, Founder and CEO of ForeclosureRadar.com, told me that out of the 9 million mortgages in California, 2 to 3 million are upside down, which means their houses are worth less than what they owe on the bank. On top of that, anywhere from 700,000 to 900,000 households have stopped making payments and somewhere around 250,000 are scheduled to be foreclosed.
This adds up to a staggering number: a total of 3 to 5 million homes, one quarter of the 12 million households in California, are going to flood the market very soon. Nationwide, there is a two-year supply of unsold homes, twice what official statistics estimate.
To put it simply: banks are limiting supply in order to keep inflating the bubble. Keeping properties off the market makes sense for two reasons: it allows banks to engage in another round of brazen ripoffs by selling at least some of their properties at artificially high prices to a new wave of sucker investors (many of which are first-time home buyers). But more importantly, it allows the banks to avoid recording a loss on their balance sheets, making them look more profitable then they really are
It looks like the banks are all in on this racket together. Earlier this year, the industry had accounting rules changed to make this kind of market manipulation possible (meaning, profitable.) That's what those new "mark-to-model" accounting rules back in April were all about. Instead of having the market determine prices, the changes allowed banks to value their assets based on a future projected worth to be determined by the banks themselves.
The change was pushed through with an aggressive lobbying campaign by the financial industry. For a measly $30 million in lobby fees, banks inflated their worth by tens of billions of dollars, instantly. Wells Fargo said the change boosted its capital by $4.4 billion in the fist quarter. In the second quarter, it is expected to increase banks' earnings by an average of 7%.
It might be legal now, but it's still fraud and flagrant market manipulation.
And while I'm here:
http://www.guardian.co.uk/business/feedarticle/8548935
http://agmetalminer.com/2009/06/10/new-china-export-rebate-sure-to-fuel-the-trade-wars/
http://www.creditwritedowns.com/2009/01/baltics-violence-from-an-argentina-style-collapse.html
http://www.marketwatch.com/story/japan-data-show-pressure-on-prices-investment
http://www.eurointelligence.com//article.581+M571e37c29a0.0.html
And probably the most important one
http://www.nakedcapitalism.com/2009/06/team-obama-con-game-gets-official.html
When someone whose intelligence I respect does something that makes no sense, I wait for the real gambit to appear.
I am a tragic optimist.
Is it just me or is depression porn sound like a title for FDR slash fan fiction.
:horrormirth:
Controlling supply to create demand is nothing new at all. What is disconcerting about this is the fact that it is starting to smell like back room dealings that violate several laws but in this instance appear to be sanctioned by the government. Specifically antitrust laws come to mind. If the banks have a central point of communication and are making under the table agreements then the law has been violated. If this is the case then it only a matter of time that it will come to light and when it does it will cause a great deal more harm than good.
All of this does not even mention that global unemployment is still soaring in reality and that 1 in 10 Americans have either lost work or have become under employed. No paycheck, no disposable income. No disposable then no spending. No spending then no economic recovery. This is like a puppy chasing it's tail.
Ho ho ha ha!
Also, it's probably work pointing out that many of the houses in my area, and possibly throughout CA, have failed to sell due to shitty economy, and are now rentals. Like...uh...2 down my street, 4 in the next neighborhood over (by a nice park too), uh...at least 3 of the recently built condo high rises....I could keep going really. Not to mention all the houses aren't for sale, but probably haven't been lived in for oh...5+ years?