Mohave.net

This is all over the internet this morning. This is very scary stuff in my thinking, but what do I know. This is not from the Chinese government but the head of the economic research division of the Communist party.

It’s the second time the Chinese have insinuated they are not going to buy more of our debt. Our government’s fiscal policies are making them very nervous. If they stop buying our treasuries, it’s game over.

Our debt is increasing daily and selling the treasuries is the way the government pays for all the spending they are doing. The Fed is already buying a portion of the treasuries because there are not enough buyers apparently. Not sure how that works. It’s sort of like me writing myself a check.

China is our largest creditor, they are the “largest single holder of US Treasuries, with $763.5 billion at the end of April, according to US Treasury data.”

In looking around at the posting of this article, I noticed that the US print versions leave out the comments the economist gives for his thinking. Mainly the quote listed below the link.

LINK: Chinese Economist Urges Beijing to Buy More Gold

“Should we buy gold or US Treasuries?” Li asked. “The US is printing dollars on a massive scale, and in view of that trend, according to the laws of economics, there is no doubt that the dollar will fall. So gold should be a better choice.”

There is no suggestion that Li, even though he is a senior researcher, was enunciating an agreed party line.

However, a debate is swirling in China about how the country can reduce its exposure to the dollar and to US assets in case America’s ultra-loose fiscal and monetary policy rekindles inflation and erodes the value of the dollar and US Treasuries.

This is a MarketWatch version of the article with hundreds of comments:

LINK: MarketWatch

From Pinal County:

Home sales up, but prices down
More foreclosures expected to flood Pinal market

LINK: Home sales up, but prices down

Recent reports show that in Casa Grande and western Pinal County, as in much of the state and nation, home sales are rising, but prices continue to fall. The number of foreclosed properties on the market now, and expected on the market soon, seems to be the driving force.

“We’ve been told [by Fannie Mae and Freddie Mac] that there are thousands and thousands of foreclosures in the pipeline,” said Darrah Dremler, an agent with Coldwell Banker Excel Realty who specializes in foreclosure sales. “Banks are starting to price things a lot lower to clean out their inventory before this big rush hits.”

From the Las Vegas Review Journal:

Home sales up, prices down
Inventory on the market reflects drop of 9.3 percent from May 2008

LINK: Home sales up, prices down

Counting 737 condo and townhouse units sold in May, Las Vegas had nearly 4,000 total sales, one of the best months on record, said Sue Naumann, president of the Realtors association.

“So there’s plenty of activity in our local housing market,” she said. “We’re down in inventory so we’re starting to move things out of the market and I’m sure a great deal of it is REOs (real estate-owned).”

Any further price deterioration will be caused by foreclosure properties, which account for about 80 percent of Las Vegas home sales, Naumann said.

“We had a bank moratorium that expired June 1, but I still don’t think they’re going to flood the market,” she said. “It would be devastating if they did.”

This article addresses the shadow inventory supposedly being held back by lenders. I’ve seen several articles on this subject but this one has quotes specific to Arizona.

LINK: Yahoo – Arizona Foreclosures

Arizona is now in the news and not in a good way. The latest figures from RealtyTrac.com show that during the first quarter Arizona had the second highest rate of foreclosure actions in the nation, trailing only Nevada. One out of every 54 Arizona homeowners received a foreclosure notice during the first three months of the year………

Gloria Handley, a real estate agent in Chandler with RE/MAX Achievers, says that across the state there have been roughly 20,000 home sales so far this year. Of that number, she estimates that 75 percent were lender owned or short sales…….

What the numbers from Arizona and elsewhere generally don’t say is that while bank-owned properties make up a growing percentage of the homes available for sale, banks are actually keeping large numbers of properties off the market.

A study by RealtyTrac compared homes held by banks with homes actually listed on local MLS systems. The result? RealtyTrac’s senior vice president Rick Sharga estimates that only 30 percent of bank-owned properties are listed and that 600,000 to 700,000 foreclosed homes nationwide are being held off the market by lenders………

I’ve been having a lot of deja vu moments lately between Kingman realtor comments and Las Vegas and Phoenix realtor comments on forums. Hard to believe but this article points that out. The interesting thing about this article is that it appeared in the NY Times and was reprinted in the Seattle Times. Nothing in the Phoenix paper that I can see.

Here is the link with some snippets out of the article:

LINK: Phoenix Housing Bust – Bidding Wars

The New York Times
By DAVID STREITFELD
Published: May 23, 2009

PHOENIX — Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours……

Real estate got just about everyone into trouble in Phoenix, and the thinking seems to be that real estate is going to get everyone out.

The low end of the real-estate market here — and in some equally hard-hit places like inland California and coastal Florida — is becoming as wild as anything during the boom……

Absentee buyers, who can be either investors or individuals purchasing a vacation property, bought nearly four of every 10 homes sold in the Phoenix metropolitan area in April, according to the research firm MDA DataQuick. That is up 50 percent since late 2007, and is nearly the same ratio as at the 2005 peak.

Once again, just about everybody seems to be buying as many houses as they can, positive it will make them rich — or at least allow them to recoup some of their losses……

I’ve avoided posting for nearly a year because of nasty emails from Realtors in the area and because of some family issues. I have decided to ignore the psycho attackers and start posting some links again. There is so much going on in the country these days and sometimes ferreting out opposing viewpoints is difficult at best.

I knew the bubble prices wouldn’t last and would come crashing down, but even I didn’t expect the chaos that has come with the crashing home prices.  Having been through unsustainable housing bubbles before, I didn’t realize how the bubble money was holding up the rest of the economy this time.

No-doc loans.. speculators buying 5,10,20 houses with no money down.. housing atms used for toys, expensive cars, vacations, etc.. artificially low interest rates.. people being allowed to purchase homes at ten or more times their annual income.   Then the lenders turning around and selling those bogus loans as AAA to investors around the world and insurance companies insuring those loans.  Most of those things did not exist in previous bubbles.

In previous housing bubbles, prices increased to lofty heights and then crashed back to their fundamental values, without bringing down the entire worlds economy.  People kept saying “this time is different” but I don’t think they meant different in this way.  I don’t feel sorry for anyone who expected the prices to continue to skyrocket and never fall.  All anyone had to do was question the common sense of that happening.  You didn’t have to be a rocket scientist to realize that housing prices were thundering their way to a cliff.

I’m disgusted with the wealth redistribution that seems to be the current administrations idea of how to improve the economy. The new ideas of today are ridiculous in my opinion.  Now responsible people are going to have to pay for the irresponsible once again.  It seems the government will do anything it can to keep the party going. Destroying the dollar, keeping people in houses they could never afford by any means possible, letting people live in houses payment free for months and even years by preventing the lender from foreclosing, forcing lenders to write down mortgage balances so the irresponsible can afford the houses they had no business buying.

Nothing is off the table now it seems.  We must get people back to spending money they don’t have on things they don’t need.  Good plan…spend your way out of debt.

More people should have paid attention to this snl skit from years ago….