Free Republic

There is evidently no idea bad enough and no failure severe enough to stop the government from trying it once again. In myopia remarkable even by abysmal government standards, the White House is pushing for policies that fueled the housing bubble, which burst a mere five years ago. Reintroducing those policies at this stage of a nascent recovery in the housing market will set the stage for repeating history, and very likely leave taxpayers on the hook once again for another bailout. Last week, the administration began exerting pressure on banks to lend to people with lower credit scores, arguing...

The most devastating market events are those that no one sees coming. Take what happened to Lehman Brothers in 2008, for example. Up until the last minute, virtually no one could have imagined one of the country's leading investment banks would file for bankruptcy. The housing market crash was the same way. The Street believed housing prices would never go down. With the market totally blind to the growing risk in each investment, anyone who had investments in housing or with Lehman Brothers suffered huge losses. Despite these tough lessons, there is now another epic bubble developing and the market...

Nick Timiraos at the Wall Street Journal wrote in interesting piece yesterday called “Home Prices Seen Making Stronger Gains in 2013.” Numerous analysts have upgraded their forecast for house price growth for 2013, primarily based on limited inventory and growing demand. And then Fed of Minneapolis President Narayan Kocherlakota reinforced the notion that The Fed will keep the pedal to the metal (MORE asset purchases) even if unemployment falls below 6.5%. Bloomberg News reports that Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, in a speech he gave on Wednesday, said the Fed’s Open Market Committee “may choose not to...

Cullen Roche is worried that the trajectory of housing prices might deviate from what practical assumptions would predict. "Real estate returns are not rocket science. Because they’re such a huge portion of the consumer balance sheet they tend to be tied very closely to wage growth. Wage growth, by definition, is very closely tied to the rate of inflation. That explains why the long-term historical return of real estate is roughly in-line with rate of inflation. But this survey from Zillow shows that real estate “investors” are probably still too optimistic." I can see why these assumptions are attractive, but...

Last November, in an act of sheer monetary desperation, the ECB issued an exhaustive, and quite ridiculous, pamphlet titled "Virtual Currency Schemes" in which it mocked and warned about the "ponziness" of such electronic currencies as BitCoin. Why a central bank would stoop so "low" to even acknowledge what no "self-respecting" (sic) PhD-clad economist would even discuss, drunk and slurring, at cocktail parties, remains a mystery to this day. However, that it did so over fears the official artificial currency of the insolvent continent, the EUR, may be becoming even more "ponzi" than the BitCoins the ECB was warning about,...

U.S. House Prices About To Soar... Don't Wait A Moment Longer! Housing-Market / US HousingMarch 21, 2013 - 09:56 AM GMT By: DailyWealth Steve Sjuggerud writes: "We're only one year into this recovery..." Doug Yearley said on Bloomberg TV yesterday morning. "Remember, we had seven of the worst years in housing that this country has ever seen. This recovery, we believe, should be a lot longer than just one or two years." Yearley is the CEO of Toll Brothers, a nationwide homebuilder. When asked if he thought the strength in housing could continue, he didn't mince words... "We feel really...

Reckless money printing by Federal Reserve Chairman Ben Bernanke has pumped up the Dow to a brand new all-time high. So what comes next? Will the Dow go even higher? Hopefully it will. In fact, it would be great if the Dow was able to hit 15,000 before it finally came crashing down. That would give all of us some more time to prepare for the nightmarish economic crisis that is rapidly approaching. As you will see below, the U.S. economy is in far, far worse shape than it was the last time the Dow reached a record high back...

We are at another high for the S&P 500 index, thanks mostly to the Federal Reserve’s zero interest rate policy. The last peak of the S&P 500 was on October 9, 2007 when it closed at 1565.15. The U6 unemployment rate was 8.4%. Today it is 14.4%. Q3 2007 Real GDP growth had risen 3.0%. Q4 Real GDP growth is at an anemic 0.126%. People on food stamps (SNAP) has grown from 26.9 million in October 2007 to 47.69 million at the latest reading. Gasoline prices? $2.75 in October 2007, but now they are $3.73 per gallon for regular. Fed’s...

Even as the gargantuan $1+ trillion student debt load has been the bubbly elephant in the room that few are still willing to talk about (as the ease of obtaining very fungible loans, with ultra-low interest rates, have become the primary source of lifestyle funding for a wide swath of Americans who are rotating out of high yielding credit cards into this latest Uncle Sam subsidy, and is thus just one more aspect of the status quo perpetuation), there have been until now zero opportunities for a the proverbial highly convex "ABX" short in the student debt space. This of...

Two days of weakness in stocks after the Fed hinted it might “vary the pace of asset purchases” has some folks ready to declare the bull market over and done. “Exit any and all bullish constructed positions and rush to the sidelines," declares veteran trader and newsletter writer Dennis Gartman. Others, including Pimco’s Mohammed El-Arian, “Gloom Boom and Doom” author Marc Faber and hedge fund manager Doug Kass have made similar comments in recent days, albeit sans Gartman’s dramatics. Related: PIMCO's El-Erian: Maintaining High Equity Prices Will Be Hard Given this backdrop and with the economy facing myriad headwinds from...

I always enjoy reading Forbes’ list of best and worst, particularly when it comes to cities. For 2013, Forbes ranks Detroit and Flint as the most miserable cities in the US. Most of the cities on Forbes top 20 list are in the northeast US and in the Inland Empire of California. Here is a chart comparing Detroit, Chicago and, for comparison sake, Washington DC in terms of house prices. Since 2000, Detroit is actually worse off, Chicago is just above 2000 levels and Washington DC remains elevated. So, Detroit is indeed miserable in terms of housing. If we compare...

While the student debt bubble has yet to pop like housing, more cracks are appearing. New research shows that college loan debt is dramatically rising and becoming riskier than in past years.FICO (NYSE:FICO), a company that provides analytics including credit scores, recently conducted a study to examine changes in student loans since 2005. To little surprise, the results were quite sobering. The sky-rocketing costs of college have been outpacing inflation for years. As a result, more consumers are taking out student loans to pay for their education. FICO finds that approximately 12 million Americans had two or more open student...

We just started to recovery from the government-induced housing bubble (National Homeownership Strategy from HUD), we may be entering House Bubble: The Sequel! CoreLogic reports 8.3% rise in house prices during 2012. The western states and Florida are leading the charge in terms of house price growth. And we are seeing the return of 100% LTV financing! Combine the return of 100% LTV financing with the FHA’s propensity for insuring lower FICO, high LTV loans and we may be setting the table for another bubble and burst. Of course, The Federal Reserve is helping to inflate house prices with its...

The last of the college applications have been rewritten, tweaked and polished, and at last entrusted to the tender mercies of the U.S. Mail or the Internet. Fretting over deadlines morphs into waiting, and yearning, wishing and praying for coveted letters of acceptance. This is the annual crisis in thousands of homes with ambitious high school seniors -- the high school seniors and their parents who still believe that college is the route to the American Dream. But wait. While they play the conventional game of aspiration, certain scholars and economists, and hundreds of thousands of "concerned citizens" have initiated...

President Obama and members of Congress have spent so much that the federal debt is headed toward $16.4 trillion. Those lawmakers must be using budgetary skills they picked up in college, as undergrads around the nation are racking up red ink at a record pace. Student loan debt jumped $42 billion last quarter, the New York Federal Reserve reported last week, bringing the total owed to about $1 trillion. That’s more than Americans owe on automobile loans or credit cards, and school bills have become so large that many have found themselves unable to pay. The official student loan delinquency...

[Note: This editorial published on Nov 10, 2012] We are now rushing down a course that is going to create incredible economic hardships for millions of Americans. The increase in the amount of debt that has been added to our economy is astronomical. And there is no end in sight. We now have over $16 trillion of debt, and with Obama’s policies it will be almost impossible to reverse that course. Debt is the problem. Big debt is a big problem. There are only four ways to tackle it: increase taxes to bring in more dollars, reduce spending to save...

Is history about to repeat itself? There are some striking similarities between the private student loan market and subprime mortgage industry. A new report from the Consumer Financial Protection Bureau (CFPB), provides more evidence for the comparison.“Student loan borrower stories of detours and dead-ends with their servicers bear an uncanny resemblance to problematic practices uncovered in the mortgage servicing business,” said Rohit Chopra, student loan ombudsman for the CFPB who authored the report, in a prepared statement. “Consumers deserve clarity, not chaos and confusion.” RELATED: 11 Things You Didn’t Know About Student Loans The report analyzed roughly 2,900 complaints,...

College skeptics are whipping out the B-word. Many students are bulking up on loans and coming up empty on the job market while schools keep hiking tuition. Pretty soon, critics say, the bubble has to burst. My former colleague Megan McArdle lays out a thoughtful version of that argument in the most recent issue of Newsweek. She's correct that there are lots of people now who aren't benefiting much from their education. But in spite of the country's growing load of education debt and the rough job market for recent grads, most students who make it through with a diploma...

Paul Campos acknowledges a certain "tension" between his dual roles as law professor and author of the blog "Inside the Law School Scam." "Of course I feel conflicted," Campos told Business Insider. "I should emphasize that when I started as a law professor [in 1990] it cost literally $3,000 to go to law school." My, how things have changed. Tuition at University of Colorado where Campos teaches has climbed to $32,000 a year. Costs have risen even higher at elite universities, while the job outlook for most law school grads remains bleak. Campos – whose book "Don't Go To Law...

Some myths are harmless. The myth of President Barack Obama's Kenyan birthplace is annoying but harmless. Some myths are not harmless. The student debt "crisis," sometimes known as the "bubble" or "bomb," is a myth that is inflammatory, misdirected and mischievous. You might have seen dramatic stories in the media about students who borrow $200,000 and wonder how they are going to repay their loans. Fact: One-half of 1 percent of all students borrow that much, according to the College Board. Much less newsworthy are the 43 percent who borrow between $1,000 and $10,000 or the 30 percent who borrow...