Timing is everything
'Pride goeth before destruction, and an haughty spirit before a fall.' - probably Solomon
“As with every financial crisis, the central bank sets the stage for a collapse by creating untenable economic conditions in the form of an artificial boom fueled by a drastic increase in the money supply.”
(author requested anonymity)
Typical example of media financial gaslighting, from 2017:
Consumers Are Always Wrong About Inflation. But They’re Worth Listening To
Who you gonna believe - their models or your lying eyes?
Between 2004 and and mid-2015, the mean perceived inflation rate in the euro area was 9.5 percent, which was “considerably above” the actual average inflation rate of 1.8 percent, the research shows. For the European Union, perceived inflation was 9.8 percent versus an actual figure of 2 percent.
It never, ever occurs to people like the author, Alessandro Speciale, that maybe their “actual” inflation rate - a model calculated by people with too much college and not enough fresh air - might not mesh with experience in the real world.
"People that say that there was no inflation [pre-2021] - that's totally bogus. There's been huge inflation." - Harley Bassman
I’m told by someone who shops at grocery stores a lot, and knows prices, that “everything is up a few dollars” over last year. “Except milk.”
I’m also told (not that I needed to be) that inflation is much higher than the 5% or whatever Jerome’s team lately pulled out of their…models. (The Fed’s legal mandate is “stable” prices, not “2%”.) Then again, even when official CPI was 2% I thought the cost of living was going up three or four times that, but I have no econ PhD.
Anyway, a little 4-pack of Lemon poppy muffins (special occasion item) went from $3.99 ($1.99 if day-old) to $6.99, a 75% pop. They wanted $7 for a jar of peanuts. Good thing that wave of deflation is coming, any day now, right Dave Rosenberg?
Another I noticed last year was the $5.99 burger, fries, & soda combo at a local dive that suddenly popped to $10.99 (before they closed.) Little placards saying “4% will be added to all bills to cover something the owners should be paying for” seem to be popping up at many restaurants.
This is all anecdotal of course, but I think far more reliable than the models of some math PhD’s hiding in the bowels of wherever the BLS lives.
“The reigning economic sentiments in media are so far off base that it makes me wonder if they just sit around making things up”
...to understand our media class: the number one priority in their entire lives, above and beyond literally any other, is to earn insider status with other people in media. That’s it. That is their lodestar, their true north.
Less than 35% of the $800 billion in PPP loans actually went to workers, say economists I am shocked!
Looks like (official) real hourly earnings have been negative for going on two years now.
The CalHFA Dream For All Shared Appreciation Loan Program
“This program is saying here comes credit for the down to buy a house. Don’t worry about paying it back because inflation will pay it for you. And people say 2008 mortgages were crazy.”
“A Surprising Sign That Home Prices May Finally Take a Plunge This Summer” From realtor.com, so there. The comments on articles like this often interest me more than the articles:
In Phoenix, 70% of for-sale homes had a price drop in February, compared with 21% a year earlier—the second-biggest uptick in the U.S. It’s followed closely by Denver, where 37% of homes had a price drop in February, compared with 13% a year earlier.
Las Vegas and Phoenix are also among the places that have seen the biggest upticks in sellers offering concessions to woo buyers over the last year.
Another typically goofy MSM article: We're paying $1 million to live on a cruise ship and sail around the world while we keep managing our property empire
Again, some interesting comments. e.g.,:
The key to this story is.....they started at virtually the bottom of the worst housing crash in history. That's kind of how the bigger pockets episodes go too, where they bring on people to share their stories of how they are "crushing it". Then you come to find out they aren't doing much anymore, b/c the numbers don't work, and they are living the high life b/c they struck timing gold at the bottom and rode it up. I remember this one guy they had on who bought a 4-unit in denver in 2010 for $220,000 and did 5% down and got all of his closing costs covered by the seller. Apparently it was listed for $300,000 was was sitting on MLS for months, and he negotiated it down and got concessions. Then did a cash out refi 2 years later after increasing rents etc, and went out and bought several more. The episode was from 2018 I believe and he said at the time it appraised for over $600,000. Today, it's probably $1.2M. He was a bartender or a waiter before all of this, having graduated college with a worthless degree and student loan debt, renting a room from his buddy. I forget what he said exactly. He said he saw his friend buying real estate, so he gave it a shot too.
These are the types of stories which show that it was really all about timing, more than anything else.
I use myself as an example as well. I had 0 experience in real estate, my background is solely in engineering, and bought my first duplex in 2011 simply b/c I could put 5% down as an owner occupant, and get almost the entire mortgage paid for by the tenant who lived in the other half. It was all I could afford. Lived there for 2 years, then cash out refi'd and bought another, did it again, and again, then I stepped up to 4-units, did it again, and again, and again. This was only possible b/c MLS inventory was plentiful, I didn't have much competition so I could negotiate concessions and price reductions, rates were in the mid 3% range, and my W2 job was stable and I was receiving promotions. Most of my success in real estate was solely timing, it wasn't until later on where acquired experience came in handy when buying more properties and seeking off market deals, and handling contractors and tenants. But the springboard was nothing except timing and out of necessity....I knew I wanted to buy, I couldn't afford a single family house, so a family member suggested I try to buy a duplex. The rest is history
Timing is everything.
The spring housing market could bring a reckoning for realtors in Canada
“Some realtors are definitely taking a pause or leaving the industry because there’s just not enough cake for everyone.”
Corporate Profits After Tax/Gross Domestic Product
“It’s very clear that Binance launders money for the worst human beings and entities on Earth.” - Not Tiger Global (Spaces link here.)
Commodity Futures Trading Commission, Plaintiff, v. Changpeng Zhao, Binance Holdings Limited, Binance Holdings (IE) Limited, Binance (Services) Holdings Limited, and Samuel Lim, Defendants
Internally, Binance officers, employees, and agents have acknowledged that the Binance platform has facilitated potentially illegal activities. For example, in February 2019, after receiving information “regarding HAMAS transactions” on Binance, Lim explained to a colleague that terrorists usually send “small sums” as “large sums constitute money laundering.” Lim’s colleague replied: “can barely buy an AK47 with 600 bucks.” And with regard to certain Binance customers, including customers from Russia, Lim acknowledged in a February 2020 chat: “Like come on. They are here for crime.” Binance’s MLRO agreed that “we see the bad, but we close 2 eyes.”
Commercial Real Estate Is In Serious Trouble | Nick Halaris Halaris is actually sanguine on single-family housing but very bearish on office (like most.) Poor Barry Sternlicht.
The Fitch Ratings agency says the biggest banks only have about 6% of their assets in CRE compared to around 33% for many smaller banks. Fitch’s Julie Solar says “commercial real estate has always been the domain of small banks, and it’s why small banks fail.”
Uptown Houston office tower sells for $83M A landmark Uptown-Houston office tower just sold for much less than its last appraised value of $219 million.
Ouch.
“We have had almost unlimited credit for 10 years,” reinforces Jim Baer, president of CMBG Advisors in Los Angeles. “Quantitative easing has flooded the economy with low interest rates. In 1998, we had cumulative deficits of $6 trillion, in 20 years we have added $25 trillion. That’s not sustainable, the party is over.”
Hugh Hendry ‘rematch’ with Richard Werner Werner is an atypical economist who’s not insane. At least Hendry didn’t call him a conspiracy theorist like last time.
“The reason why you’re not seeing any of these assets change hands is because, in a bank merger, you’re required to mark the assets to market, and you can’t, in a lot of cases, without getting to negative book value.” - Future
Defaults on Commercial Real Estate Loans Surge to 14-Year High Considering that we were in the most insane period of monetary policy in history over the past 14 years, not sure this is saying much, yet.
It’s pretty simple, really.
“The industry got spoiled with a decade of ridiculously low interest rates, leading to high valuations," commercial real estate lawyer Joshua Stein said in an e-mail. "When rates rise, valuations drop."
Richard Branson’s Virgin Orbit is laying off about 675 employees, or 85% of its workforce, as the air-launched rocket company failed to find funding to sustain its operations.
Great post about the real pain of inflation for regular people - The Forgotten Man (Schlaes). I think you should put together some playlists for us for each mood we are likely to have over the next year! Would be awesome so I can play when I’m not reading, etc. :)
From your link on the state of media
‘Just an absolute shriek of anger from the privileged, overeducated Brooklynites (in spirit if not in geography) who have put our intellectual culture in such a stranglehold.’ What a quote. I literally just got home from dinner with a couple who are exactly this - visiting from Brooklyn! Not to mislead - they are friends - but the atmosphere cooled when I expressed some agreement with points of view from ‘the other side’ - like it was a betrayal.