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Thread: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    Okay, I'll play. Your claim is that F&F's expansion since 1991 was 100% responsible for the housing bubble. But from 1991 to 1998, the price of homes was actually FALLING. That's seven years. Then, for the next nine years housing prices started to take off. How does your theory explain the fact that for 44% of the expansion period, home prices fell and did not rise?



    Maybe I need to borrow a pair of wingnut goggles, because I've yet to see you post an explanation that goes beyond mere correlation ... and as noted above, even correlation doesn't line up.
    Where do you see it falling? If anything, it was growth in line with inflation, as evidenced by the red line staying relatively flat, but in nominal dollars it was increasing.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Samhain View Post
    Where do you see it falling? If anything, it was growth in line with inflation, as evidenced by the red line staying relatively flat, but in nominal dollars it was increasing.
    Clearly the inflation adusted price of homes fell between 1989 and 1997/8 when, according to duece's theory, the price should have been rising. It's a little easier to see on this chart: http://www.ritholtz.com/blog/wp-cont...er-updated.png

    Pretty good summary here: http://en.wikipedia.org/wiki/Causes_...housing_bubble
    Last edited by AdamT; 01-12-12 at 10:52 AM.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    Clearly the inflation adusted price of homes fell between 1989 and 1997/8 when, according to duece's theory, the price should have been rising. It's a little easier to see on this chart: http://www.ritholtz.com/blog/wp-cont...er-updated.png
    This chart only shows existing home prices, not new construction. It makes sense that existing home prices would be dropping, given that new home construction expanded rapidly ( see census.gov building permit index ) from 1991 through 2005. Demand for new homes increase, decreasing demand and prices for existing homes. Later in the bubble, as people "upgraded", those new homes built in the 1990s were now existing homes, thus you can see that priced in to the increase on your chart.
    Last edited by Samhain; 01-12-12 at 10:56 AM.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Samhain View Post
    This chart only shows existing home prices, not new construction. It makes sense that existing home prices would be dropping, given that new home construction expanded rapidly ( see census.gov building permit index ) from 1991 through 2005. Demand for new homes increase, decreasing demand and prices for existing homes. Later in the bubble, as people "upgraded", those new homes built in the 1990s were now existing homes, thus you can see that priced in to the increase on your chart.
    There's no logical basis to think that the rate of change for new home prices was any different than the rate of change for existing home prices. And in fact, the trend is almost identical. http://nomoneynoworries.files.wordpr...sted-price.jpg

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    Okay, I'll play. Your claim is that F&F's expansion since 1991 was 100% responsible for the housing bubble. But from 1991 to 1998, the price of homes was actually FALLING. That's seven years. Then, for the next nine years housing prices started to take off. How does your theory explain the fact that for 44% of the expansion period, home prices fell and did not rise?



    Maybe I need to borrow a pair of wingnut goggles, because I've yet to see you post an explanation that goes beyond mere correlation ... and as noted above, even correlation doesn't line up.
    Look, if you want a question answered, you are going to have to be more accurate in how you restate my position, or I assume, that of others. 1998 is when I target that home prices began to increase faster than the rate of inflation, and hence the beginning of the bubble. It is on the graph that I posted.

    The bubble required more than one factor to get started, and then once it got a head of steam, more accelerants were added. 1998 is when the stars started to align for this. All of that has been noted already.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    There's no logical basis to think that the rate of change for new home prices was any different than the rate of change for existing home prices. And in fact, the trend is almost identical. http://nomoneynoworries.files.wordpr...sted-price.jpg
    I would agree.

    To add further to my prior point, my position with regard to FF is not so much that they "caused" the bubble, but that it was their exponential expansion (to approximately 50% of all the market), combined with how they were used to bring new demand into the market (sub-prime underwriting to support the HUD mandates and lawsuit settlements .... see Cuomo video), combined with excessively low interest rates (the Fed at root of that), which created the perfect storm which produced this bubble. All of those were phenomenon that most of us had never seen even one of in our lifetimes. And none were caused by the private sector, or Wall Street.

    That the private sector took advantage of the profits to be had with this bubble should surprise no one. Folks building and/or buying and selling homes, whether it be someone down the street with one home, or Merrill Lynch with a bundle of 5000 homes, is what we do. Good deals, bad deals, the process is essentially nothing new. Mortgage backed securities are a fine investment in normal times. But when bought during a bubble, are no different than what folks who are currently underwater in their mortgage did on a local scale.

    Now, if you want to argue bail-outs, or "too big to fail", I submit that is a different debate.
    Last edited by Eighty Deuce; 01-12-12 at 11:37 AM.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Eighty Deuce View Post
    I would agree.

    To add further to my prior point, my position with regard to FF is not so much that they "cuased" the bubble, but that it was their exponential expansion (to approximately 50% of all the market), combined with how they were used to bring new demand into the market (sub-prime underwriting to support the HUD mandates and lawsuit settlements .... see Cuomo video), combined with excessively low interest rates (the Fed at root of that), which created the perfect storm which produced this bubble. All of those were phenomenon that most of us had never seen even one of in our lifetimes. And none were caused by the private sector, or Wall Street.

    That the private sector took advantage of the profits to be had with this bubble should surprise no one.
    This is what I find interesting. I doubt you'll find very many liberals on this board that in some way won't fault the Fed Reserve, Fannie and Freddie, government pushing home ownership etc for playing a part. You won't find many economists that wouldn't either. This completely absolving the private sector is ONLY found on the right wing. It's like the private sector is your mommy or daddy and you have to protect them no matter what....even when piles of evidence are contrary to that position.
    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Eighty Deuce View Post
    I would agree.

    To add further to my prior point, my position with regard to FF is not so much that they "caused" the bubble, but that it was their exponential expansion (to approximately 50% of all the market), combined with how they were used to bring new demand into the market (sub-prime underwriting to support the HUD mandates and lawsuit settlements .... see Cuomo video), combined with excessively low interest rates (the Fed at root of that), which created the perfect storm which produced this bubble. All of those were phenomenon that most of us had never seen even one of in our lifetimes. And none were caused by the private sector, or Wall Street.

    That the private sector took advantage of the profits to be had with this bubble should surprise no one. Folks building and/or buying and selling homes, whether it be someone down the street with one home, or Merrill Lynch with a bundle of 5000 homes, is what we do. Good deals, bad deals, the process is essentially nothing new. Mortgage backed securities are a fine investment in normal times. But when bought during a bubble, are no different than what folks who are currently underwater in their mortgage did on a local scale.

    Now, if you want to argue bail-outs, or "too big to fail", I submit that is a different debate.
    The problem with your theory is that it doesn't hold water. Fannie & Freddie were, in fact, dragged into the subprime market by the private lenders who were sucking up all the new loans. As far as I can tell you've provided no explanation for the mechanism by which an expanding F&F led to housing inflation. Are you suggesting that home sales were depressed before that because of insufficient liquidity? Before F&F grew, people just couldn't find a lender to help them purchase a home? I don't see any support for that, if that's what you're trying to say.

    Certainly you haven't addressed my point that housing prices actually fell for nearly have the period when F&F were growing so quickly.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    There's no logical basis to think that the rate of change for new home prices was any different than the rate of change for existing home prices. And in fact, the trend is almost identical. http://nomoneynoworries.files.wordpr...sted-price.jpg
    Except that your inital graph shows a slight decline in existing home prices, while this graph shows an increase in new home prices, over the same time period.

    How is that "identical"?

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by iliveonramen View Post
    This is what I find interesting. I doubt you'll find very many liberals on this board that in some way won't fault the Fed Reserve, Fannie and Freddie, government pushing home ownership etc for playing a part. You won't find many economists that wouldn't either. This completely absolving the private sector is ONLY found on the right wing. It's like the private sector is your mommy or daddy and you have to protect them no matter what....even when piles of evidence are contrary to that position.
    I got your "Mommy and Daddy" right here.

    The fact is that it is the Democrats and liberals who demonize the private sector, and will do all in their power to shift blame away from government, and onto the rich and Wall Street and Capitalism in general. It is a consistent theme with Obama and his class warfare reelection campaign, with moonbats like the Occutards in the Obamavilles nationwide, and with morons spokespeople for the liberals such as Wasserman Schultz.

    And with the utter failure of some posters here.

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