March Housing starts UP, but why and is that good?
This morning we were greeted with some news that housing starts are improving. A 7.5% increase from February! Housing starts are defined as: is the number of privately owned new houses (technically housing units). So is this good news or bad news? Think about it...think about it....not sure?
Ok, consider the following story. Foreclosures in March jumped as more and more people find it impossible to pay their overly inflated mortgages. Ironically, a 7% increase from previous quarter.
So we have two almost conflicting pieces of information. On one hand people cannot afford houses and are forced to give up their properties, on the other hand builders are creating more and more houses. What gives?
I will tell you what gives. Keynesian stupidity is what gives. Specifically the Obama administration and everything it is doing to artifically maintain housing prices. We know they are artifical, because otherwise there would not be so many foreclosures. Our economy is desperately trying to contract and puke out all the excess credit and debt that has been accumulated. Instead the clueless baboons in DC think that as long as house prices rebound unicorns will come out of hiding and leprechauns will sprinkle major metropolitian areas with gold coins. WRONG.
Do you recall a bill being pushed through Congress about 6 months ago that promised to extend unemployment benefits? There was a big deal about it, because the bill was being held up and the public made a stink about over some 2 billion dollars that was being held up for legislative reasons. What everyone forgot, was that the bill also included over 32 billion dollars in handouts to CONTRACTORS AND BUILDERS! The same people who got filthy rich during the housing bubble came groveling for taxpayer money. They got it too. Now they are doing what they do best, building houses no one can afford.
The only way housing will recover is in the following manner: It's actually quite simple, hard to believe our politicians do not get it. Prices for houses must drop to the levels that buyers are capable of paying. Done. Pretty good for a computer science major, eh? I must be a genius.
Instead they are purposely playing extend and pretend trying to convince Americans to pony up more cash they do not have, to take out loans they cannot pay back and further go into to debt in a desperate effort to maintain our economy, an economy that can no longer function without DEBT.
Sadly, all these excesses that are being generated today will have to be worked off in the future. So not only have we not paid the piper for all the Bush years of borrowing and spending, but now we have the added burden of digesting trillion dollars worth of stimulus junk being peddled by the Obama administration. Ugh, it will be a tough road ahead.
Exit note: I am watching the bond market with extreme interest now, as critical levels are being tested. If the interest on the 10 year note breaks through, then we will be in a world of hurt quicker than you can say "hopeNchange".
Ok, consider the following story. Foreclosures in March jumped as more and more people find it impossible to pay their overly inflated mortgages. Ironically, a 7% increase from previous quarter.
So we have two almost conflicting pieces of information. On one hand people cannot afford houses and are forced to give up their properties, on the other hand builders are creating more and more houses. What gives?
I will tell you what gives. Keynesian stupidity is what gives. Specifically the Obama administration and everything it is doing to artifically maintain housing prices. We know they are artifical, because otherwise there would not be so many foreclosures. Our economy is desperately trying to contract and puke out all the excess credit and debt that has been accumulated. Instead the clueless baboons in DC think that as long as house prices rebound unicorns will come out of hiding and leprechauns will sprinkle major metropolitian areas with gold coins. WRONG.
Do you recall a bill being pushed through Congress about 6 months ago that promised to extend unemployment benefits? There was a big deal about it, because the bill was being held up and the public made a stink about over some 2 billion dollars that was being held up for legislative reasons. What everyone forgot, was that the bill also included over 32 billion dollars in handouts to CONTRACTORS AND BUILDERS! The same people who got filthy rich during the housing bubble came groveling for taxpayer money. They got it too. Now they are doing what they do best, building houses no one can afford.
The only way housing will recover is in the following manner: It's actually quite simple, hard to believe our politicians do not get it. Prices for houses must drop to the levels that buyers are capable of paying. Done. Pretty good for a computer science major, eh? I must be a genius.
Instead they are purposely playing extend and pretend trying to convince Americans to pony up more cash they do not have, to take out loans they cannot pay back and further go into to debt in a desperate effort to maintain our economy, an economy that can no longer function without DEBT.
Sadly, all these excesses that are being generated today will have to be worked off in the future. So not only have we not paid the piper for all the Bush years of borrowing and spending, but now we have the added burden of digesting trillion dollars worth of stimulus junk being peddled by the Obama administration. Ugh, it will be a tough road ahead.
Exit note: I am watching the bond market with extreme interest now, as critical levels are being tested. If the interest on the 10 year note breaks through, then we will be in a world of hurt quicker than you can say "hopeNchange".
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