Housing Boom & Bust: Random Views On 2008 Bust

Boom and Bust Cycle

Updated Aug 2020 

Housing Boom & Bust

Another ominous warning sign that the housing meltdown has only begun and not ended is the massive drop in the practice of taking home equity loans. This is how most of the masses have been leading their lofty lifestyles and buying stuff with money they don’t have. Now that house prices are falling, they are running scared, and the worst part is that their bill has increased significantly. To put things into perspective, there was a 52% drop in home equity loans in the 3rd quarter; total withdrawals slid from 235.9 billion in the 3rd quarter of 2005 to 113.5 billion in the 3rd quarter of 2006.  Expect this to drop even more by the end of this quarter. Things are not improving as the press, and top economists would have you believe they are worsening.

Housing Boom & Bust; Late Mortgage Payments

According to the Mortgage Bankers Association (MBA), late payments and foreclosures rose in the 3rd quarter, and this trend is expected to continue as a huge number of adjustable mortgages reset in the next couple of months. When these mortgages reset, the monthly payments will go up significantly; to make matters worse, those who have fallen behind will pay even higher rates because their credit rating has already failed.

Expect the number of foreclosures to increase substantially next year; foreclosure rates could hit new 3-6 year highs. The most significant increases will be in the formerly red-hot markets of Florida, New York, Arizona, California, etc. Our advice for over two years for those with more than one home was to sell one or more; risk-takers were advised to sell their existing homes and rent. The MBA predicts that a whopping 1.1 to 1.5 trillion worth of loans will reset next year; 700 million will be refinanced, and up to 800 million will adjust at less affordable rates. The fireworks are going to begin sometime next year.

March 2020-Housing Boom and Market Update

The Coronavirus issue will be blown out of proportion and made to look like the mother of all pandemics. We feel this is a test by the big players that control most of the media outlets to see how far the truth can be stretched, and so far, it’s working marvellously. It is estimated that eight corporations control the bulk of the media in the US.

Now people are being checked with thermometers to see if their temp is above average, and an above-normal temperature has become the litmus test for the Coronavirus; voodoo science at its best.

Incompetence is the more significant issue.

One cannot lay the blame solely on Trump or the Republicans; both parties have exhibited gross levels of ineptitude bordering on the insane.  But there is always a silver lining, even though it’s difficult to see. There are some parallels to what took place in 2008. However, the crash in 2008 began on a note of euphoria. However, the Fed purposely made that crash worse by refusing to bail out Leman brothers. Ironically, the $700 billion bailout package they approved after the carnage would have been enough to bail Lehman out.

This hysteria-based sell-off is producing one of the most immense buying opportunities in decades; more on that later.

Short Technical outlook is Hazy

The short-term technical analysis cannot identify support levels because we are dealing with madness, so we added the new level to the anxiety index.  What exacerbates the situation is that there is very little liquidity; look at the bid and ask price on some options. They are unreal, for example, an offer of 1.40 and an ask of 5.00.  This allows a few big players to move the markets in whatever direction.

On the same token, one could state that the government could have come out and told the masses the worst, and the markets would have pulled back, but not as dramatically as they have now. The data was released in pieces, creating more havoc than the preceding piece because hysteria took over.

Article of Interest: Dogs Of The Dow: what is this all about?

Statistics from the CDC

According to the CDC, the 2018-2019 season witnessed a significant burden of illness due to influenza. It is estimated that approximately 35.5 million individuals fell ill with influenza, with 16.5 million seeking medical care for their illness. Moreover, there were 490,600 hospitalizations and tragically, 34,200 deaths attributed to influenza (as shown in Table 1). Remarkably, the number of influenza-related illnesses during the previous season closely paralleled the estimated figure from the 2012-2013 influenza season, during which approximately 34 million people experienced symptomatic influenza illness. http://bit.ly/2UMJjMG

In comparison to the flu virus, the Coronavirus has caused a minimal amount of damage, yet it has received 100X more coverage than the flu virus, which resulted in 34.200 deaths (and only US data is being used); the current death toll of the Coronavirus stands at 1113 (based on the latest data).  It’s no laughing matter, but it still pales in comparison to those caused by the flu. Even more sinister is the Worldwide death toll from smoking:

Stock Market Outlook

There is a 75% chance that the markets will experience at least one strong pullback this year; it would be foolhardy to attempt to predict the exact date though it would be ideal if this event took place during the  1st quarter.  Market Update Feb 20, 2020

This correction is taking place in the ideal timeline, so it when it ends, it will lead to a spectacular rally; those waiting for the crosswinds to subside will (as always) be left holding a can with rotting worms.

The following will be the only thing that can help stabilize the situation immediately.

The press starts to report the news accurately; all they have to do is go to worldmeters.info to get a better view of what is happening. For example, this Nobel Laureate (a biophysicist) predicted how things would unfold in China. They grew precisely as he claimed, and he is now making similar proclamations for the rest of the world. So if the Press reported facts instead of fiction, the situation would be much better.

A new rapid detection test has been announced. This will be good news as it will allow a massive number of individuals to be tested, proving to the masses beyond any doubt that the mortality rate, while higher than the flu, is not as dire as the fearmongers are claiming.

The US has come up with concrete measures to test many individuals rapidly. This would be seen as good news because the average death rate is 1.28%, considering all groups. This is significantly lower than in China and many other nations.

A vaccine works in clinical trials. The FDA is going to approve the usage of this vaccine extremely fast. However, data has to show that it works even with little problems.

A treatment that has a 90% cure rate.,

The Rollercoaster of Market Hysteria: Unveiling the Buying Opportunities Amidst Madness

 The masses beg for an opportunity to buy stocks at a lower price; when that opportunity arises, the groups panic, stating that they need to wait for things to get better before jumping in again. And so they wait, and when things finally get better, they notice that the price of everything they want to buy is higher than before, and so starts the next stage of sorrow.

This hysteria-based sell-off is producing one of the most significant buying opportunities in decades; more on that later.

The short-term technical analysis cannot identify support levels because we are dealing with madness, so we added the new standard to the anxiety index.  Very little liquidity exacerbates the situation; look at the bid and ask price on some unreal options, for example, an Bid of 1.40 and an ask of 5.00.  This allows a few big players to move the markets in whatever direction they see fit.

Published on Dec 30, 2006, this article has been regularly updated and was last edited in Aug 2020

Other Articles of Interest:

Stock Trends & The Corona Virus Factor  (March 14)

Misdirection And Upcoming Trends For 2020 And Beyond   (March 13)

Trading The Markets & Investor Sentiment  (March 3)

Brain Control: Absolute Control Via Pleasure     (Jan 20)

Indoctrination: The Good, The Bad and the Ugly    (Jan 15)

Dow Transports Validating Higher Stock Market Prices  (Dec 30)

Dogs Of The Dow Jones Industrial Average  (Dec 10)

Trump Stock Market: Will Impeachment Hearings Derail This Bull   (Nov 21)

Negative Thinking: How It Influences The Masses  (Nov 15)

Leading Economic Indicators: Finally in Syn With The Stock Market?   (Oct 28)