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S&P Case-Shiller Rolling Over? 5 comments
In May the S&P Case-Shiller Index started to tick upwards, plenty of people thought that was not going to last (seekingalpha.com/article/152476-has-the-... ), yet it has edged upwards for three months now.
Looks as if it might be rolling over, comparing to the analysis I put out on 2nd August (seekingalpha.com/article/153182-u-s-hous... ).
Perhaps that might be dead cat bounce #1?
We will find out soon how much of that uptick was thanks to the $8,000 give-aways, which is going to stop soon, or if that was just King Canute holding back the tide for a moment.
Certainly the rate of final stage foreclosure isn’t slowing, averaging a pretty steady 75,000 a month, or so says Mark Hanson who is the most switched on analyst on the housing market in USA I have come across ( http://mhanson.com/archives/242 ), although the pipeline of Second Stage is still running at 140,000 a month, so water is building up behind the dam.
A key problem as was elegantly explained by Edward Harrison (seekingalpha.com/article/168418-why-mort... ) pointed out that because so many mortgages were securitized, and the servicers make more money (and have less headaches) if they foreclose than if they look for solutions, that’s not about to stop soon.
All in all everything looks pretty much on track for another drop soon.
And gimmicks like cash for clunkers or $8,000 handouts won’t stop the tide that by my reckoning is well on track for six million final state foreclosures by the time the whole thing is done (those are the ones when they kick you out on the street – there are three stages – it’s confusing).
There is an option which was laid out in Technicolor by Diane Thompson of The National Consumer Law Centre which looks the most coherent and sensible plan I’ve seen so far http://www.nclc.org/issues/mortgage_servicing/content/Servicer-Report1009.pdf ).
But well, why fix things when you can run up the National Debt, hand out cash to banks at 0% interest so they can make money speculating the oil price up, and think of gimmicks?
What’s next…free tents?
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This post has 5 comments:
I got distracted by my day job today and haven't gotten very far into my analysis yet, but what I have so far lines up with what you have proposed. If there is a roll over, it will be hinted at with the September data (November report) and confirmed by November (January report).
Can I make a suggestion about what would be a good wheeze?
When you buy a car under certain credit arrangements you end up borrowing a certain amount over a period of 3/4 years and then you pay off a balloon payment. This makes the monthly debt servicing costs more palatable for the typical budget constrained consumer.
Why not use similar logic and have the Treasury and/or Fed re-structure the public finances in a similar manner so that the annual debt service is reduced and that a large portion of the debt is re-classified as a balloon which doesn't get paid off until the end?
On Oct 31 02:20 PM morph366 wrote:
> What’s next…free tents?
>
> Can I make a suggestion about what would be a good wheeze?
>
> When you buy a car under certain credit arrangements you end up borrowing
> a certain amount over a period of 3/4 years and then you pay off
> a balloon payment. This makes the monthly debt servicing costs more
> palatable for the typical budget constrained consumer.
>
> Why not use similar logic and have the Treasury and/or Fed re-structure
> the public finances in a similar manner so that the annual debt service
> is reduced and that a large portion of the debt is re-classified
> as a balloon which doesn't get paid off until the end?
On Nov 01 11:50 AM Clive Corcoran wrote:
> Between free tents and 20% up on my house over the next two years
> I know who would get my vote.
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