Stocks went up yesterday. They’ve gone up so far, for so long we almost wish we had bought some.
But wait… Look at the stock market in terms of gold. Stocks have lost more than 75% of their value over the last 10 years – and they’re still going down.
Yesterday, gold went up again. So did oil. The sell-off we’ve been expecting is still in the future. But a sell-off is coming. Because this economy is still in a Great Correction; much remains to be corrected.
Nothing we read about the economy is consistent with the feds’ description of it.
The way they tell it, the economy is now recovering from a recession – thanks to their decisive action. But the facts don’t support the recovery fantasy.
Homeowners, for example, are still getting killed. More than 28% of them are now underwater. Bloomberg is on the story:
More than 28 percent of US homeowners owed more than their properties were worth in the first quarter as values fell the most since 2008, Zillow Inc. said today.
Homeowners with negative equity increased from 22 percent a year earlier as home prices slumped 8.2 percent over the past 12 months, the Seattle-based company said. About 27 percent of homes with mortgages were “underwater” in the fourth quarter, according to Zillow, which runs a website with property-value estimates and real-estate listings.
Home prices fell 3 percent in the first quarter and will drop as much as 9 percent this year as foreclosures spread and unemployment remains high, Zillow Chief Economist Stan Humphries said. Prices won’t find a floor until 2012, he said.
The number of homes with negative equity rose to 16.2 million in the first quarter from 13.1 million a year earlier, Zillow said.
In Las Vegas, 85 percent of homes with mortgages were underwater, the most of any city tracked by Zillow. Other metropolitan areas in the top five were Reno, Nevada, at 73 percent; Phoenix at 68 percent; and Modesto, California, and Tampa, Florida, both at 60 percent. Zillow has tracked negative equity since the first quarter of 2009, when more than 22 percent of homes were underwater.
But getting a clear picture of the economy is hard.
Here’s another Bloomberg report that tells us something interesting. A good part of current consumer spending is not coming from an economic recovery; it’s a by-product of the fall in housing prices:
May 6 (Bloomberg) – Melissa White and her husband stopped paying their mortgage in May 2008 after it reset to $3,200 a month, more than double the original rate. That gave them extra cash to pay off debts and spend on staples until their Las Vegas home sold two years later for less than they owed.
“We didn’t pay it for about 24 months,” said White, who quit her job as a beautician during that period after becoming pregnant with her first child and experiencing medical complications. “What we had, we could put towards food and the truck payments and insurance and health things I was dealing with.”
Millions of Americans have more money to spend since they fell delinquent on their mortgages amid the worst housing collapse since the Great Depression. They are staying in their homes for free about a year and a half on average, buying time to restructure their finances and providing an unexpected support for consumer spending, which makes up about 70 percent of the economy.
So-called “squatter’s rent,” or the increase to income from withheld mortgage payments, will be an estimated $50 billion this year, according to Michael Feroli, chief US economist at JPMorgan Chase & Co. in New York.
Bill Bonnerfor The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.
I know someone who has not made a mortgage payment in 2 years and has rented the house to friends. So not only are they saving on the mortgage they are collecting rents.
Pingback: tree trimming atlanta
Pingback: tree service atlanta ga - more info
Pingback: tree service atlanta ga
Pingback: restaurants in downtown woodstock ga - more info
Pingback: home remodeling atlanta - more info
Pingback: marietta bathroom remodeling
Pingback: more info
Pingback: Empower Network ENV2
Pingback: Facebook Company Page
Pingback: google sniper x scam
Pingback: cellulitis inflammation
Pingback: review of LivePerson
Pingback: Agent Ibcbet
Pingback: Agent Sbobet
Pingback: Jasa SEO Termurah
Pingback: Pembesar Kemaluan
Pingback: Skype recorder
Pingback: Live Skor
Ben Bernanke introduced the world to the concept of "quantitative easing" back in 2002. It was an "unorthodox plan" to save the economy from the horrors of deflation. But the monstrous economy it has actually created is in some ways far worse. And as Richard Duncan explains, it's not going to end any time soon. Read on..
While the technical details of Bitcoin may intimidate the novice, they shouldn’t keep him from getting in on a digital currency revolution that -- while taking different forms -- isn’t going away. How do you get the simplest, easiest-to-act-on tips about how to invest, safeguard and grow your digital wealth? Dominic Frisby has more…
The duality is stark. In one hand, we have an energy renaissance underway, in the other, a virus is threatening to wreak havoc on the markets and, potentially, your life. Nothing we’re currently doing to fight the Ebola virus will work in 2014, say the researchers. Nothing we’re currently doing will beat it in 2015, either. We need a new game-plan. Read on…
Lose your shirt in 3D printing stocks this year? Don’t kick yourself. You’re not alone. (Okay, kick yourself a little if it’ll make you feel better.) You need to make sure you don’t lose your 3D-printed shirt in the next tech craze. Because there will be a next time. Look, it’s really not your fault if you got taken for a ride on 3D stocks. Greg Guenthner has more...
Our friend Richard Duncan believes the U.S. economy requires credit growth to survive. Here, you’ll see what he thinks will happen if the U.S. doesn’t continue expanding credit. You’ll also find exclusive footage we shot in the Daily Reckoning’s studio explaining how the U.S. could lose it’s global dominance… and how programs like Social Security or Medicare could go bust...