Posted on 08/17/2013 4:38:02 PM PDT by Kaslin
Please allow me to share a little secret with the Harvard eggheads, ruling elite, and otherwise unfamiliar with the real world White House policy makers; the economy can’t recover until housing recovers, and neither can recover until the job market recovers.
This universal truth has been shared during the four and a half years of the Obama grand experiment to fundamentally transform America. Their notion is that bigger government, Keynesian spending, and the class warfare ‘fair share’ persecution of producers in the private sector to pay for it, would somehow generate a recovery. The warning signals were there because that’s what Obama said he would do in his campaigns.
Obama and his economic theoreticians placed their theory into action, because they obviously haven’t read the proper history books or any Milton Friedman. Their plan failed to no one’s surprise, excepting the eggheads who don’t live in reality. Although they do receive rather large real life checks for their destructive theories.
Exhibit number one Obamacare. Even NBC News the most active mainstream wing of the DNC admitted that there might be a correlation between the Obamacare mandates of fifty employees, and the thirty hour work week resulting in 77% of all jobs created this year being part time.
NBC must have missed Jimmy Hoffa’s letter to Obama, Reid, and Pelosi explaining Obamacare was destroying the forty hour work week that unions had spent decades fighting to establish. Who says Obamacare isn’t effective in at least one thing?
Who needs a forty hour work week? The middle class, the American worker, the economy, and especially the housing market. That is if you really want an economic recovery. The eggheads told us that Obamacare would help the economy because it would drive down the costs of health care which was the primary driver of the debt. World to eggheads, spending is the primary driver of the debt.
CNN Money reported this week that home ownership is becoming less affordable. Shazam! Rising interest rates, rising home prices mean fewer prospective buyers can afford to buy a home? A little clue for the CNN folks, mortgage applications have fallen ten of the past twelve weeks by 50% to April 2011 levels. Do you know what happened ten weeks ago CNN folk? Interest rates began to rise!
USA Today reports this week that the inventory of homes for sale has risen in many markets during this period of rising interest rates. The National Association of Realtors says there is a 5.2 month inventory of homes for sale. Allow me to clarify: of homes listed for sale.
The FHA reported earlier this year 789,000 mortgages were in default and either foreclosed or in foreclosure. There is a shadow inventory of untold numbers of foreclosed homes on bank books sitting vacant and withheld from the market. Wouldn’t want to dump too many homes on the market too fast and risk our Bernanke induced price bubble bursting now would we?
So here we are headed for the fall market and typically slow winter months for real estate sales and we have rising interest rates, rising inventories, not many full time jobs, plenty of part time jobs, and stagnate to declining incomes. Do you spot any potential trend for home sales?
Let us repeat for the eggheads cashing big checks for implementing flawed economic theories, and living large like their boss vacationing on Martha’s Vineyard, disposable income is important to consumer spending. Especially on big ticket items like homes.
That leads us to a warning delivered by Secretary of State John Kerry this week; if congress doesn’t act on climate change president Obama will.
I swear these eggheads sit around trying to develop the perfect plan to kill the middle class and whatever economic activity the private sector has been able to muster. We know Obama is part owned by the radical environmentalists, and we know the radicals manning the EPA have been chomping at the bit to release economically destructive rules on what you exhale.
You can say goodbye to more jobs, and worse; those that can keep their jobs will have less disposable income. That should help with consumer spending.
The warning signs were there in 2008 and the warnings just keep on coming from this administration. But seriously I’m glad they want to save us from global warming while I look for a jacket to wear to the Illinois State Fair. A record low 49 degrees yesterday and a high of 75. In August.
At least the administration knows its priorities. (That’s a warning).
What is the rational support for this argument?
The housing market is an extension of the economy, not a driving force behind it (i.e. people have jobs and make some money and then spend some of that money on housing...not the other way around).
Housing is certainly important...but it is not THE prime mover of an economy.
I say this as someone in the RE business.
Manufacturing.
The prices of housing is way out of wack with respect to wages. Businesses and individuals working are overtaxed. Gov’t needs high real estate prices to justify their overtaxation. The problem is too much gov’t at all levels. Gov’t size and tax rates needs to be scaled back to 1950’s rates. The housing market is dysfunctional because there is too much gov’t. All US markets are suffering the same fate. Too much gov’t. One big Ponzi scheme.
save
It's all tied together. Pretty simple really.
Their notion is that bigger government, Keynesian spending, and the class warfare ‘fair share’ persecution of producers in the private sector to pay for it, would somehow generate a recovery.
That's what the Marxists said, all right; all they've actually had in mind, however, was the Chicagoization and Detroitification of America. From the Marxist perspective, things are coming along just fine.
Absolutely...
Ya got half the adults in the U.S. underemployed and working part time...And now interest rates creeping up?
The few full time jobs available are not secure and the wages have been stagnant for years now.
The housing market will dive...Only a matter of time.
>>Manufacturing.
Locally grown and controlled food production.
http://www.foodpatriots.com/farmedhere-aquaponics-system/
http://foodmachine.org/how-it-works/
The rational support for this argument is the classic business cycle. In previous cycles the response to recession was the FED pushing interest rates down. This buoys bond prices and early cycle stocks like banks.
Lower rates encourage business investment in new technologies increasing productivity and individuals building and buying new homes, or businesses building new apartment complexes.
Recovery in building prompts purchase of furniture and appliances causing those industries to improve.
Eventually the FED senses the recovery is taking hold and begins to increase interest rates. This leads to investors selling off bonds and purchasing equities.
That is about where we are now. But, as posters are correctly pointing out, stronger recoveries in the past resulted from a much more stable job climate.
We are in the hole because of the cretans in DC PERIOD!
Ask the millions unemployed or underemployed...
And like others have pointed out here that housing is completely out of touch when compared with wages...It's a house of cards.
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