Predictions for 2015 – Real Estate and the Economy

Real Estate Predictions for 2015.

Economic Predictions for 2015.

Gold and Silver Predictions for 2015.

The economy will not boost home sales, rather government stimulus and programs may do the trick.

Interest rates will remain low as the Fed engages in “Quantitative Patience” and talks about raising rates only.

Gold and silver demand will out pace supply but their prices may not reflect that dynamic.

Declining oil prices may derail the entire financial system.

A substantial minority of people will realize the rosy economic headlines don’t match reality.

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Podcast Summary

Intro: 0:00-3:41

The False Housing Recovery of 2014

3:41 – 9:04 The false housing recoveries of 2013 and 2014 are discussed. The housing recovery has been in prices only as home sales have stagnated. Home sales in 2014 were actually lower than 2013 despite supposed “solid” job growth and accelerating economic growth. Interest rates are also lower now than in 2013.

The housing recovery has been a media event rather than an economic reality.

Job growth has been in part time work with the bulk of the jobs going to those fifty-five years and older. Millennial job growth is tepid and as a group they are burdened by massive student loan debt preventing them from participating in the housing market.

Review of the media predictions for the housing market in 2015. (linked to here)

Real Estate Preditions for 2015

9:04-11:20 Louis: Low wage and job growth and affordability will remain an issue that restricts home sales and price increases, but there will be government programs to try and push homeownership with lower mortgage downpayment requirements and lower FHA insurance. These programs will have little impact as $4 trillion in quantitative easing didn’t boost home sales in any significant manner. New home sales are at multi-decade lows.

new home sales chart from 1960-2014

New home sales remain mired at multi-decade lows despite the housing and economic recoveries.

11:20-18:20 Ryan: Interest rates will decline further in 2015 but prices will not increase much. Lower lending standards and lower insurance rates will boost home sales artificially, despite a lack of job or wage growth.

Boosting the Stock Market is Much More Difficult than Boosting the Housing Market

18:20 -22:56 discussion of the impact of QE on the stock market vs. the impact on the housing market. If the programs to boost housing sales are effective another foreclosure wave in a couple of years will follow.

The Fed

22:56-24:10 Discussion of when/if the Fed might raise rates. The potential of QE4 is discussed.

The Price of Oil and its Impact on the Economy

24:10-26:55 the price of oil is discussed and its potential impact on the economy,job market, the shale industry and the derivative markets. Discussion of the too big too fail banks oil derivatives exposure and the recent spending bill passed by congress that allows banks to have this exposure in their FDIC covered subsidiaries.

Bank Bail-ins/Shale Oil Company Bail Outs

26:55 – 31:10 Bank Bail-ins are discussed.

Predictions: Quantitative Patience for a Considerable Period of Time will be the policy of the Fed in 2015 as the Fed postpones interest rate hikes.

2015 will also be the year that a substantial minority of people realize that the economic propaganda doesn’t match the economic reality.

The characterization of lower gas prices as a “tax cut” is simple minded. Even if lower gas prices occurred naturally Congress would tax gasoline and eliminate any tax cut benefit. Lower gas prices means someone ( a country, a bank or a corporation) loses in a big way. When that happens there is a ripple impact throughout the financial system and economy.

Simple minded to call it a tax cut- If gas prices remain low, Congress will raise gas taxes

Should be obvious to anyone other than the most die hard CNBC economic cheerleader that a drop in oil price of 60% in 6 months is a bad sign

— Smaulgld (@Smaulgld) January 6, 2015

If shale oil companies are properly hedged they can continue to produce oil at a loss and rely on their hedge or if they are not they will go out of business. If the banks take the loss on the shale oil hedges they lose. If either the banks or the shale oil companies lose, they can always be bailed out in the “national interest”!

Russian Rouble

31:10-34:00 Comparision of Russia’s monetary policy that involved raising rates to 17% to protect the rouble to the U.S. (they didn’t sell their gold) zero interest rate policy.

How Consumers View Dropping Oil Prices

34:00 -39:36 discussion of the simplistic way consumers and main stream media views the drop in the price of oil. When oil prices go down there is a decrease in the demand for dollars as countries don’t need as many dollars in reserve to buy oil. The rapid drop in the price of oil is an ominous sign.

gold crude oil ratio chart

The gold crude oil ratio is at 25 to 1, a level last seen in 2008 prior to the financial crisis.

Discussion of state controlled capitalism vs. free market communism. Discussion of regulatory fines on the too big too fail banks. For the banks if they win they win, if they lose they still win. The shareholders pay the fine and the government and regulators get the money not the people. Regulators are the protection racket for the too big too fail banks. Crime pays.

The Fed, Housing and Oil

39:36-43:32 Fed policy re housing is discussed. If the oil dynamic causes a financial crisis it will be “unexpected” and give the Fed cover to intervene on a massive scale (QE4/negative interest rates). The Fed likes to use an event to justify what they were going to do anyway, like a chain smoker who quits and then starts again because “I lost my job.”

Gold and Silver Oil and the Banking Economy

43:32 – 50:20 Comex trading curbs are discussed. If the oil deriviative/shale industry situation blows up people will rush into the “safety” of the dollar gold and silver. The tiny size of the silver market is discussed. Saudi Arabia is on record saying they dont care if oil goes to $20 a barrel, they won’t cut production, and many U.S. shale oil companies will continue to produce as they need the cash flow to pay their bond interest. Discussion of the definition of capitalism and the appropriate of tax on earnings vs. theft.

Lower Oil Prices are Planned

50:20-51:50 discussion of the President’s interview with NPR where he stated lower oil prices are part of a strategy to harm Russia.

Gold and Silver Price Predictions

51:50 – 54:36 Review of last year’s gold and silver predictions which were incorrect with respect to the price targets. The predictions were made on the basis of the gold and silver supply demand dynamics. Precious metals manipulation is also discussed. Demand for gold and silver is predicted to increase and out strip supply but that may not be enough to boost the price as it hasn’t the passed couple of years.

2015 The Year of RIC (Russia India and China)

Russian, Chinese and Indian gold demand are discussed. Review of gold vs. major currencies in 2014.

Final Review of 2015 Predictions

54:36 Bail-ins and QE are now part of standard practice for central bank planning.

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Predictions for 2015 – Real Estate and the Economy

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Further Reading:

Predictions for 2014

The False Housing Recovery of 2014

The False Housing Recovery of 2013

Bank Bail ins in the United States

A Black Swan Emerges Covered in Cheap Oil

Silver Supply and Demand

Gold Supply and Demand

Gold and Silver Manipulation – Actual

Gold and Silver Manipulation – Suspected

Russia and Gold

China and Gold

India and Gold

Gold and silver predictions 2014

Student Loans and Millennials

Royal Canadian Mint

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