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“Purchases of new homes in the U.S. climbed 11% in the month of June”, trumpeted Bloomberg. Sounds good, doesn't it? “Sales increased to a 384,000 annual pace, higher than the forecast of any economist surveyed...” Oooh! Even better. I guess this means that the U.S. housing sector has hit a bottom!

Here's the problem. Exactly ten days ago, this is what Bloomberg (and the other propagandists) reported on U.S. new home starts: “The 3.6% increase brought starts to an annual rate of 582,000, the highest level since November...”

Since none of the media propagandists, none of the economic “experts”, and certainly none of the market sheep can manage to combine these two numbers together, let me do so.

In June, U.S. home-builders started construction on homes at an annual rate of 582,000, while selling homes at an annual rate of only 384,000. That's right, they are building more than 50% more units than they are selling...and this has been happening every month for nearly two years. In fact, for many months, U.S. home-builders were building twice as many units as they were selling (see “A Revealing Look at U.S. Housing Propaganda”).

Here's an arithmetic question. What happens if U.S. home-builders build 50% more units than they sell every month? That's right, they all go bankrupt.

In fact, the more interesting question is this, with U.S. home-builders having built 50% more units than they have sold every month for two years, why aren't inventories showing these sky-high vacancy rates?

Part of the answer comes from an earlier commentary I wrote, “U.S. banks bulldozing NEW homes”. With more vacant homes in the U.S. than anywhere else in the world in history (on a per capita basis), there are millions of homes which could never possibly be occupied – as even if Americans had the money to buy, there simply isn't a large enough population to support all these homes.

The reason for this is that during the U.S. housing bubble (and Wall Street Ponzi-scheme), millions of homes were built purely for real estate speculation. With most of the “speculators” wiped out, this means that all that these millions of excess homes can do is continue to drag prices lower month after month after month.

As I have said for well over a year, the only possible response to this problem is to bulldoze millions of U.S. homes. Clearly, that process has begun. Thus, the apparent discrepancy between the sales/construction numbers and the inventory numbers can partially be explained through simply bulldozing some of these new units – either before or after they are completed.

However, that alone cannot explain the huge discrepancy. Therefore, either the inventory numbers are fraudulent, or the number of “housing starts” reported by U.S. home-builders is totally fraudulent (or both). This begs yet another question. With U.S. home-builders losing vast amounts of money every month, and totally unable to sell as many units as they are building, why haven't most of them gone bankrupt, already?

The answer to that question would appear to be “private prisons”. We have received anecdotal reports from the media for several years now about the explosion in the number of private prisons across America – as well as the human rights abuses connected to them. Thus, the billions of dollars which the federal government is forking-out for construction of private prisons is likely the only thing keeping U.S. “home” builders from mass-bankruptcy.

As I have stated previously, private prisons are the “solution” to a lot of U.S. problems (at least, in the minds of the U.S. government, and the banksters who rule them). As poverty and homelessness in the U.S. soar, crime inevitably climbs with it. Thus, private prisons are a great place to warehouse the poor, because not only does this “keep them out of trouble”, but it also makes them a great source of slave labour for the unregulated sadists who run these institutions.

If any doubt my characterization of U.S. private prisons, I should remind people that the media has already reported that private prisons are the new, favorite investment for both Dick Cheney and Alberto Gonzales.

The bottom-line is that the “residential construction” industry in the U.S. is nothing less than a construction sham. No company could possibly be turning a profit with these fundamentals. Many of the numbers are obviously fraudulent, and with U.S. propagandists refusing to ever post sales and construction numbers side-by-side, it is obvious that the the corporate propaganda-machine is engaged in deliberate deception.

The real “construction industry” in the U.S. is building private prisons, the new “low-cost housing” option for Americans.

Disclosure: I would never hold a position in any U.S. home-builder.

Source: The Truth About U.S. Housing Numbers