Summary from John Williams:
– Weakest Since 2008 Economic Collapse, Plummeting Holiday Retail Sales Reflected Liquidity-Restrained Consumers
– December Sales Plunged by a Statistically-Significant 0.9% (-0.9%), Down by 1.4% (-1.4%) before Prior-Period Downside Revisions
– Monthly Sales Contraction Will Hold in Real Terms, Net of Inflation, Despite Falling Gasoline Prices
– Annual Growth Again at Traditional Recession Level
Once again, John Williams with shadowstats.com gives us the real stats. Here is his free summary:
No. 646: Second-Quarter 2014 GDP, GDP Benchmark Revisions, Household Income
• Second-Quarter GDP Surge Not Credible, Significant Downside Revisions Remain in Offing
• Actual Economic Activity Remains in Serious Trouble
• Historical GDP Revised Lower Where Better Data Were Available and Revised Higher Where Better Numbers Were Not
I am sure we will have a “revision” after the November elections for 2nd and 3rd quarter GDP.
Groovygirl has been searching for the loophole. The loophole that will keep the real estate market going (in the face of the complete fall off of mortgage apps in the last six months along with higher rates) through 2015, Martin Armstrong’s date; and the loophole that will trigger the next, and according to Martin, extended decline in the US real estate market thru 2032.
Click here for Martin’s paper and chart on the US real estate 78-yr cycle.
gg thinks she found the loophole.
Here is an article that groovygirl disagrees with, but it has some interesting information about the new Qualified Lending rules. From the linked article:
With the dislocations in mortgage lending since the housing bubble popped, Fannie Mae and Freddie Mac have increased their share of the mortgage market significantly. When combined with lending from the Federal Housing Administration and the Veteran’s Administration, the government or government-sponsored share of mortgage lending has climbed to more than 90 percent in recent years. That is an untenable situation in the long run, but is unlikely to change much this year.
The good news is that new Qualified Mortgage lending rules from the Consumer Financial Protection Bureau exempt home mortgages that qualify for purchase or securitization from Fannie and Freddie. As a result, mortgage lenders won’t have to tighten their mortgage-underwriting requirements in response to QM as long as they sell their loans to the GSEs.
Side musing: groovygirl is feeling the same way she felt in 2005 and 2006: who in the world is left to get a mortgage? Haven’t we maxed out all plausable applicants? , no, some deceased people were left to carry on the housing market boom until 2007. Groovygirl just did not think dead people could get a loan and did not factor that in. Again, gg is thinking, with unemployment at a real rate of 23%, who else can possibly qualify for a mortgage, especially with all these new rules? Aren’t we maxed out. Apparently, it’s the GSEs to the rescue to help this thing along for another year or so.
Click here, looks like even the corporate buyers are slowing. But, they are saving their capital for the big transfer from Freddie and Fannie? Read on.
And here is the loophole for the next trigger….
Replacing Fannie and Freddie with private insurance (but with government bailout, if necessary). Be careful, groovygirl actually threw up when she read this. Click here. A quote from the link at Forbes:
Our political leadership is proposing that we abolish Fannie and Freddie for the sins of the banks and the mortgage lenders, and then hand over the keys to these same architects of the mortgage disaster that brought us to the brink of financial collapse. We are still healing and these are serious people proposing that we again legislate our way to mortgage prosperity, using no more common sense than that which got us into this mess. What could go wrong?
gg says: yes, what could go wrong? It looks like on the surface that getting rid of GSEs and “selling” them to private underwriting companies is a good thing. It will get the government off the hook for future collapses, right? Wrong!
But, the real reason for this extremely unwise decision. The transfer of wealth.
Here is a little tidbit from Catherine Austin-Fitts. She clearly knows the possibilities. It is a repeat of the same game as 1980’s.
Click here.
gg says: But this time is totally different, we are in a global debt deflation, global currency crisis (Japanese currency trades can’t get us out of this one), and an aging population and debt-ridden younger population.
From Catherine’s link above. You pay for the detail. Bold is gg’s.
The current proposal to phase out Fannie Mae and Freddie Mac has the potential for ever greater back door shenanigans. Lot’s of money that can go out through the back door when the federal government turns huge amounts of federal credit over to private insurance companies. For example, when FHA engaged in coinsurance with private mortgage insurance providers in the 1980’s, the FHA General Fund lost 50% of the $9 billion underwritten in 3 1/2 years. They were paid a mortgage insurance premium of .50%
Given AIG’s traditional role in these and related areas, and Berkshire Hathaway’s relatively new activities in municipal bonds and local realtors, is this part of the work up to the ultimate in reengineering the federal budget and housing finance system by place? I want to see the players behind the scenes.
gg says: looks like we are right on schedule for the next mortgage/insurance/housing/banking/hedge fund crisis. The good news: fire sale housing prices for those with cash!
Here is the free summary from John Williams:
– Strongest Recession Signal Since Eve of the Economic Collapse
– Real Retail Sales on Track for 4% Annualized Plunge in First-Quarter 2014
– Housing Starts on Track for 34% Annualized Plunge in First-Quarter 2014
– For Second Month, Unadjusted Monthly 0.4% CPI Inflation Was Squashed to 0.1% by Seasonal Adjustments
– February Annual Inflation: 1.1% (CPI-U), 1.0% (CPI-W), 8.8% (ShadowStats)
– Real Earnings Down 0.2% in February
Here is the free summary from John Williams with shadowstats.com:
– Payroll Jobs Increased by 175,000, but the Number Employed Rose by 42,000; Neither February 2014 Statistic Was Meaningful
– Deliberate Misreporting Showed December Payrolls up by 84,000, Where 67,000 Was the Consistent Number
– February Unemployment: 6.7% (U.3), 12.6% (U.6), 23.2% (ShadowStats)
– January Trade Data Hint at Troubled First-Quarter GDP
Year-to-Year M3 Growth Rose to 3.5% in February
John Williams has his latest real stats out. You pay for the detail, well worth the money, but here is the punch line:
– Strongest Signal for a Recession Since September 2007
– January Real Retail Sales Activity Plunged by 0.6% for the Month
– Unadjusted Monthly January 0.4% CPI Inflation Squashed to 0.1% by Seasonal Adjustments
– January Annual Inflation: 1.6% (CPI-U), 1.7% (CPI-W), 9.2% (ShadowStats)
John uses the original inflation index formula, before gov started jacking with it. Did your wages/income go up by 9% to meet the real inflation index? groovygirl’s didn’t. Who needs hyperinflation when wages are down or flat or zero because you are unemployed coupled with a 9% real inflation rate and climbing? In the main street household, that can feel like hyperinflation pretty quick. At the very least, it means less consumer spending, saving, and debt for big purchases like houses, cars, and student loans.
John Williams has released a few new updates. Here are the free summaries.
– As With December, January’s Small Headline Jobs Gain Was Statistically Insignificant
– Annual Upside Bias in the Birth-Death Model Increased by 140,000, Despite Last Year’s 119,000 Overstatement of Jobs Growth
-Spurious Revisions Used to Spike Payroll Employment Levels Renewed
Concurrent Seasonal Adjustments and New Population Controls Make
Comparisons of Monthly Unemployment Detail Meaningless
– January Unemployment: 6.6% (U.3), 12.7% (U.6), 23.2% (ShadowStats)– Retail Sales Plunge Reflected Consumer Liquidity Issues More than Bad Weather
– Pattern of Collapsing Economic Activity Seen in Revisions
– Concurrent Seasonal Adjustments Already Skewing Jobs Revisions– Downside Restatement of Recent Economic Activity Continues
– January Production Drop Was More than Bad-Weather Effects
– First-Quarter 2014 GDP Contraction and Downside Revision to Third-Quarter GDP Growth Increasingly Are Likely
Latest free summary from John Williams with the real stats.
– Particularly Unreliable Economic Data
– 2013 Annual GDP Growth Slowed to 1.9% from 2.8% in 2012
– Growth Bloated by Continuing Excess-Inventory Build-Up
gg says: it’s that annual growth number, 1.9%, that is the reason all the talking heads are promoting the 4th quarter numbers. And speaking of those fourth quarter numbers, 3.2% GDP. That’s the official number, not John’s. But if you just look at the components of that number, energy exports, and exports in general, had a huge impact. The components of the US growth are slowly changing. Consumption, the main driver of our GDP for the last 20 years is changing to exports. That is why China’s GDP is down. Their main driver was exports, which has dropped. It is important to look at the components. Because an economy with a GDP that is driven by exports (especially one heavy in energy) is very different from one driven by consumption. It affects everything from wages to prices to investment to business.
muses of the moment 