Tuesday, March 2, 2010

Get Ready for a Flurry of Real Estate Activity

The Fed has sold almost the entire Mortgage Backed Security market short. Now it is time to drop it.

Remember, the term "buy" to the Federal Reserve means "sell" to everyone else. They "bought up" the MBS market at prices no one else was willing to entertain (= WAAAAAAAAY too high) along with a scarcely noticed taxpayer guaranty of no losses.

That means when they "sell" the junk, we have to pay their loss. That's right, we have to "buy" it. That means they "sold" to us at WAAAAAAAAY too high a price. Out of the kindness of their hearts, they lent us the cash to buy it too, at interest.

Now, it's time to dump the junk. The lower they price it, the faster they get paid in full. And the faster they start accruing interest on our debt to them, as our cumulative national real estate losses get tacked on to the national debt.

Real estate is about to start flying out of inventory. The inept main stream media will think the Fed has dropped a gift from heaven. "RE Sales UP 200% YOY!!" they'll rejoice, ignoring prices that are deteriorating more than hard-line bears dared to dream.

I've dreamed it. It isn't pretty.


  1. I noticed that the second round of homeowner tax incentives had little effect in getting the crap of the books.

    Not looking good at all.

  2. Being we are on the cusp of spring I expect the residential for sale signs will soon be sprouting like mushrooms after a heavy rain, but for now, all I see are a growing number of commercial property vacancies and for lease signs.

    How to track truth (declines) in price with all of the clueless media obfuscation and cheer leading about to descend upon us? I think the equities markets should act as a fairly good barometer.

  3. FDRAoA, I have been watching your hit counter on an infrequent basis.

    I seems to have jumped dramatically. Can you show a graph of this since you added the counter?

    Thanks for thinking about it and congrats on your success (I think).

  4. FDR,

    When Congress extends jobless benefits again and again, isn't that a form of a bailout? This is just adding more and more debt. Will it ever end?

    Also, would it be a good idea to buy a first home in 2012 or would you try to put it off even longer? I'm in my 30s and it's getting tough to keep convincing the wife that we should wait for prices to fall further. Have any wise words to share? Thanks...

  5. Here's some wise words. I'm in the same boat here. She is insistent on buying into the collapse. Lord give me strength. fwiw


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On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

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