• Housing Market 2011: As Rough As 2010

    Housing Market 2011: As Rough As 2010

    Looking back on 2010, the year in real estate was, in a word, terrible. Property values continued to fall, foreclosures rose, and even the lowest interest rates in 50 years seemed to have little positive effect on the property market. For U. S. real estate, 2010 was the year of failed government intervention... Continue Reading

  • Greenspan's 'No Housing Bubble' Prediction, 5 Years Later

    Greenspan's 'No Housing Bubble' Prediction, 5 Years Later

    This week marks the fifth anniversary of then-Federal Reserve Chairman Alan Greenspan's observation that there was no housing bubble to worry about: "Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets... Continue Reading

  • Greenspan, You're No Bill Gates

    Greenspan, You're No Bill Gates

    Testifying yesterday before the Financial Crisis Inquiry Commission, former U.S. Federal Reserve chairman Alan Greenspan defended his 21-year tenure at the Central Bank, saying it wasn't he who inflated the housing bubble that caused the Great Recession. While mistakes were made, Greenspan admitted, he claimed... Continue Reading

  • Best Protection Against Another Housing Bubble May be a Generation's Painful Lessons

    Best Protection Against Another Housing Bubble May be a Generation's Painful Lessons

    The market value of your house is down 20 to 30 percent from its peak and could have further still to go. Jobs are scarce and the idea that home values will rise again seems remote. But this, too, shall pass (yes, your home value will eventually recover). And I can tell you exactly why -- psychology. The good... Continue Reading

  • How Bush's Secret Plan to Fool Saudis, Chinese With Loan Money Backfired

    How Bush's Secret Plan to Fool Saudis, Chinese With Loan Money Backfired

    Yesterday, I wrote a post titled "Who Killed M3?" that explored a Bush-era decision to stop tracking a key measure of money supply, and its link to the housing bubble. Today, I explore that further. What did George W. Bush have against M3 that made it important enough to risk the world economy to get rid of?... Continue Reading

  • Who Killed M3?

    Who Killed M3?

    Not long ago I wrote a post about a National Bureau of Economic Research study that blamed the Great Recession on a bank panic rather than that usual suspect, the sub-prime mortgage crisis. There was a sub-prime crisis, sure, but it was just the catalyst for the much more damaging bank panic that followed. All... Continue Reading

  • It Wasn't a Mortgage Recession After All: So Why Don't We Feel Better?

    It Wasn't a Mortgage Recession After All: So Why Don't We Feel Better?

    The Great Recession wasn't the result of subprime mortgage madness, according to a new report from the National Bureau of Economic Research. It was just a plain old bank panic. Yeah, but weren't bank panics supposed to be a thing of the past, thanks to the creation of the Federal Deposit Insurance Corporation in... Continue Reading

  • Housing Starts Are Up, but That Means Nothing

    Housing Starts Are Up, but That Means Nothing

    The U. S. Department of Commerce reported earlier this week that housing starts for January hit a six-month high, growing 2.8 percent to an annual adjusted rate of 591,000 new units. Therefore the housing crisis is ending, we're told: end of story, if we build it they will come. Not. Housing starts refer... Continue Reading

  • Housing Market Mess? Blame Mike Milken

    Housing Market Mess? Blame Mike Milken

    The founder of every new business hopes that what he or she creates will eventually become not just a business, but an industry. They want their business to scale -- to get as big as possible as fast as possible. But sometimes businesses are forced to scale when they really shouldn't. That's what I have come to... Continue Reading

  • Fan/Fred: Don't Ask, Don't Tell?

    Fan/Fred: Don't Ask, Don't Tell?

    A perfect storm is coming in the housing market. Millions of mortgages are in default or foreclosure, mortgage rates are firming and mortgage issuers are significantly raising both borrower requirements and fees. The Federal Reserve, which has been propping up the housing market by buying mortgage-backed... Continue Reading

  • Defaulting Our Way Back To Normal

    Defaulting Our Way Back To Normal

    Robert Shiller, he of the Case-Shiller Housing Index, wrote in the last Newsweek issue of 2009, "My data show that between 1890 and 1990 real home prices actually didn't increase. " Say what? It's true. If you look at U. S. home prices over an entire century, corrected for inflation, they don't change much, if... Continue Reading

  • A Mortgage Mod Happy Ending

    A Mortgage Mod Happy Ending

    Mortgage modifications were going to help up to four million Americans save their homes, remember? That was the claim of the Obama Administration when it announced its Making Home Affordable program in early 2009. Yet more than three million applications later, only about 100,000 mortgages have actually been... Continue Reading

  • For Bankers, Who's the Boss?

    For Bankers, Who's the Boss?

    Watching the CEOs of America's largest banks testifying this week to Congress about their roles in starting The Great Recession with varying levels of contrition and defiance raises the question: exactly who are banks really accountable to in these post-TARP days? Who's the boss? Shareholders? Taxpayers?... Continue Reading

  • Commercial Real Estate Still a Drag on Economy

    Commercial Real Estate Still a Drag on Economy

    The second, third, or maybe Nth shoe to fall in the ongoing real estate crisis is commercial real estate -- offices, factories and to a certain extent rental apartments -- which tend to trail the owner-occupied housing market as leases end, jobs are lost, and businesses close (or recover). Alas, commercial real... Continue Reading

  • Spring Break: How Fannie & Freddie Will Bail Us Out

    Spring Break: How Fannie & Freddie Will Bail Us Out

    I recently detailed the trouble that's coming for American home owners with the end of the recession (except not for us), the recovery of the big banks (but not commercial lending), the rise of the stock markets (but not jobs), and the likely further declines for housing as what little stimulus was being applied... Continue Reading

  • Our Dystopian Future: The U.S. Economy Six Months from Now

    Our Dystopian Future: The U.S. Economy Six Months from Now

    The recession is over, we're told by Bernanke, Geithner, and Summers, it's time for an exit strategy, to wind down the economic stimulus before it turns inflationary. Big banks are booming, TARP funds are coming home to roost, the market's up, the Fed has stopped buying mortgaged-backed securities, and the... Continue Reading

  • Fannie-Freddie II: The Wrath of Obama

    Fannie-Freddie II: The Wrath of Obama

    So why did the Obama Administration last week increase the amount of Fannie Mae and Freddie Mac losses it would cover from the previous limit of $400 billion to the new limit of infinity? In the simplest terms, it was to reassure investors like China or Saudi Arabia who have bought or might buy in the future the... Continue Reading

  • Fannie & Freddie: More Than Politics As Usual

    Fannie & Freddie: More Than Politics As Usual

    Last week, just before Christmas, the Obama Administration quietly increased the amount of losses it would cover at Fannie Mae and Freddie Mac -- the two Federally-chartered (and now controlled) securitizers of home mortgages -- from a combined $400 billion to infinity. I'm going to look at this move in two... Continue Reading

  • So Is the Real Estate News Good or Bad?

    So Is the Real Estate News Good or Bad?

    Yesterday, trolling the web for real estate news, I had a hard time deciding whether the market was improving or deteriorating, whether the news was good or bad. It depended what I was reading and where it was published. There were stories of home sales soaring in various parts of the country, including some of... Continue Reading

  • Person of the Year? Not Bernanke. Try Grandma.

    Person of the Year? Not Bernanke. Try Grandma.

    Since AOL is no longer of the Time-Warner body, it's easy to say Time made a mistake when it announced this week that Federal Reserve chairman Ben Bernanke should be its Person of the Year. But if Bernanke was a mistake, who should be Person of the Year? I nominate Grandma -- your Grandma, my Grandma, every... Continue Reading