As Barbara Tuchman has said so wisely, we always have the government Blockheads with us who insist on repeating the same catastrophic mistakes over and over again. BO – Blockhead Obama – has shown us this truth with remarkable regularity. When he came into office he promised to end all of those insane, blockhead programs of Bush II, then immediately went along with them, repeated them and increased them. He even repeated the JFK “new guy stupidity” of believing his top generals and Gates when they promised him that “one more for the road” in Afghanistan would turn back the tide of rage caused by the daily U.S. slaughters of women and children. He quickly sent in 20,000 more troops and a secret number of secret police and “contract military workers” to gain a “Great Victory.” Now the Blockheads with all the childish salad of Gedunk [Phony] Medals on their chests tell him “one more for the road” will do it – maybe. Like JFK, he is not totally stupid and is beginning to wonder if he’s the Big Dupe of the salad boys who are only interested in their own phony medals for vanity and their careers.
The Wall St. Journal finally has a good article about the coming tsunami of finalized home foreclosures. A vast, unknown number, maybe a few million, have been caught in the vastly complex, variable moratoria, slowdowns, and dodges on legal foreclosure procedures. Some homes have been in this “suspended animation” for almost two years, sometimes with occupants not even paying but living in the homes like squatters month after month because of the official and unofficial slowdowns. The Fed and many government agencies have also been pouring trillions into mortgage markets to get rates down, down, down, so people have vast incentives to wait, wait, wait and hope for deliverance or at least a better deal when the hammer falls. Real estate analysts already think there are about four million more to come and many more if we don’t go into the Promised Land of a V-Recovery.
I suspect, as I have been arguing for the last several years, that it will be much worse than four million even if the Fed levitates the paper markets much higher than their current Bubbles with more trillions in hidden government money, subsidies, tax cuts, rate cuts, guarantees and all forms of “welfare state” mana from on high. As I argued at the beginning of this Great Housing Crash several years ago, on the basis of facts provided by real estate analysts which were open to all who looked, the sub-prime ARM’s [Adjustable Rate Mortgages] would go first, then the non-sub-prime ARM’s, then the vast prime market with no rate adjustments. We are already seeing soaring prime arrears and plunging rates of successful “workouts” of arrears problems after negotiations with banks, etc. As these homeowners exhaust their savings waiting and praying for Godot in D.C. to save them with more trillions, and as they are hit by soaring unemployment, furloughs, job hour rate cuts, declines in real income and assets, and so on, they are finally giving up and trying to sell, walk away or go into foreclosure proceedings to hold on for more months while they hassle with banks. As unemployment, furloughs, hourly rate cuts, and all the rest bite harder and harder, more and more will throw in the towel and go with the tsunami flow. House prices will go down, down…More and more desperate people will try to sell faster and faster, so prices will go down….
The Blockhead Keynesian Ideologists in their sacred temples in D.C. thought they could reverse the great tsunami of Reality by Playing Let’s Pretend Green Shoots Are Breaking Out All Over. So they poured trillions down the Financial Black Hole to create some teeny green shoots, but mostly to distort markets so the Media hacks would think there was real light at the end of the tunnel and people would run out and buy, buy, buy, sending prices higher. Some Big Speculators getting nearly free short-term money from the Big Banks getting all the free money they want from the Fed did buy and buy. But when the prices turn down, down, they will sell, sell and send prices down, down.
Oh, what a vastly tangled web of Lies and Illusions the officials do weave when first they seek to deceive on a monumental scale. It can sometimes work briefly, but Reality will out in the end. Markets must clear and vast markets like the U.S. housing market are like the Indonesian Tsunamis several years ago – you can’t stop these vast forces of nature with papier-mch walls of illusions.
As all of this new tsunami of suffering crashes ashore, people will be shocked and probably terrified again. That may be more dangerous than last fall, especially if the commodity, stock and bond bubbles created by the Fed in the same ways crash at the same time. My guesstimate is that will be the time of Maximum Danger Of Implosion in the short and medium terms. The system will Implode because its foundations have been destroyed, but it could take many years of lurching up and down and sideways. The vast Lies and Illusions of the Blockheads might cause a far worse Crash and Terror much sooner, thus an Implosion much sooner.
Vast webs of Lies and Illusions have vast costs that must be paid eventually when reality bites back hard, as it will do. There is still a Real World out there, regardless of what BO says and does.
September 25, 2009