Should The Stock and Real Estate Markets Drive The Economy?

Should Real Estate Drive the Economy?

JM Bullion
Buy Physical Silver Online

Real Estate News

Podcast Summary:

0:00-4:40 Introduction

Real Estate News

Should the Stock and Real Estate Market Drive The Economy or Should it Be the Other Way Around?

4:40-6:00 The purposes of quantitative easing (QE) – to raise the stock and real estate markets to create a wealth effect to “fix” the economy – are discussed. Both markets are at or near their pre recession highs, yet the economy has stagnated. Louis notes that the Fed has it backwards that the stock and real estate markets should not drive the economy, but rather be reflective of the health of the economy. Janet Yellen is saying against this backdrop that the economy will be fully recovered in a couple of years (after eight years of recession and $4 trillion of QE money printing).

Quittin’s Easy- I’ve Done it Dozens of Times

6:00-7:17 Louis predicts that the Fed will quit QE and then restart it again. If QE hasn’t worked after several iterations and $4 trillion, we have to conclude that it’s a failure. Discussion of the weather and how it is used as an excuse. To be consistent, now that the weather is warmer the media is claiming the economy is improving.

Is the Initial Jobless Claims Report a Leading Indicator of Job Growth?

7:17-8:10 Initial jobless claims last week were the lowest since 2007 because fewer people got hired over the past five years and many got fired so there are fewer left to fire. There has not been a corresponding increases in non farm payroll which is no where near its pre recession high of 2007.

The Housing Inventory Shortage Myth

8:10-10:41 If the stock and real estate markets are at peaks, but the economy is not fully recovered what happens when they go down? Home prices are still rising even though home sales are rising and inventory is rising. Low inventory supposedly was holding back home sales. This appears not to be true and indeed if inventory continues to increase and home sale demand remains low, prices will fall. If home prices fall one pillar of the economic recovery will have been removed and a stock market collapse could finish off the recovery. Louis predicts when either market crashes the Fed will intervened. Discussion of the high valuation of social media and tech stocks with no earnings and high home prices with little demand.

10:41:15:50 Discussion of what the Fed will do if the markets crash. Discussion of how the Fed and the government define “recovery” and “inflation”. Discussion how the media calls lack of initial jobless claims, “job gains”.
Discussion of retail sales and consumer debt.

How Many Home Owners Have Under Water Mortgages?

15:50-17:50 Discussion of how underwater, break even and barely above water homeowners are in no position to sell their homes.

The Bubble Economy and How To Make Money During it

17:50-21:20 Discussion of how money can be made during bubbles. How the Fed and Fed watches are oblivious to financial bubbles. How the media plays along with the bubble economy.

Who Will Buy the Homes to Support the Housing Recovery?

21:20-29:36 discussion of the potential home buyers that might fill the void left by cash buyer investors. Two opposing views are presented-the KCM blog (predicting a robust spring housing market) and (predicting a declining one).

The Issues Underwater Home Owners Face

Housing Comparables and Pricing Issues

32:00-49:55 discussion of how to differentiate between comparable homes and prices. Discussion of how investors drive up prices and comparables. Why baby boomers and millenials are not willing or able to buy homes. The difference between car financing and home financing is discussed.

Why is Belgium Buying Massive Amounts of U.S. Treasuries?

49:55 discussion of the massive increase of treasury buying by Belgium coinciding with the Fed’s taper. Discussion of record low loan mortgages and new home sales. Discussion of the persistence of the “recovery” story. Discussion of the Bush/Clinton dynasties.

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Further Reading:

The Housing Recovery That Never Was is Over

Initial Jobless Claims

Who Will Buy the Homes to Sustain the Housing Recovery?

How a Stock Market Crash Will End the Economic Recovery

Why the Housing Recovery is a Farce -Illustrated in Two Charts

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