HOME IS WHERE THE HEART IS. A Market Watch article on September 29 titled Doubled-up homes aren’t just for couch-surfing adult kids (and reluctant parents) anymore, described the new trend of households doubling up and/or adding in-law or nonrelatives. The research by housing economist Thomas Lawler found that, “there was a substantial increase in the ‘doubling-up’ (or more) of households not attributable to ‘young adults’ moving back to their parents’ home.”
He blames part of this trend on tight lending standards that make it difficult to obtain a home loan. He is still not sure “what’s behind the increase in doubling up, and said he’ll present those findings soon. It’s a trend that could get in the way of the housing market’s recovery. More doubled-up homes means fewer households are being formed and that home sales may not see a substantial jump higher anytime soon.”
Once again we’re at the mercy of demographics. This lack of household formation cannot be blamed on lending standards as much as it can on the economy: weak job formation and consumer debt (especially student loans).
JUST SOME LIGHTER THOUGHTS AND OBSERVATIONS. The meek shall inherit the earth, or so says the Bible. But we’re afraid that they will have to wrest it away from the stupid.
On September 25 the Dow dropped 264 points. That was the day Attorney General Holder announced that he was retiring. Could it be that Wall Street Banksters are worried that a new AG will go after them finally?
When should we start to worry? According to the Bank for International Settlements, today the total notional value of derivatives contracts around the world has ballooned to a staggering 710 trillion dollars ($710,000,000,000,000). http://themostimportantnews.com
A long time ago we latched onto the old saying that “you can’t stop stupidity.” After years of observation, we have come to the conclusion that you not only can’t stop it, you can’t even slow it down.
It was reported that California is going to put 27 driverless test cars on the freeway. What could possibly go wrong? If ignition switches can fail, what about computers? And with no one with hands on a wheel or foot near a brake, what happens when a drunk driver comes flying through a stop sign? Perhaps this whole idea should be filed under “stupidity.” Remember Ralph Nader’s book Unsafe at Any Speed? Was he referring to the average car or the average driver?
Forbes reported that the first quarter of 2014, “saw the lowest mortgage origination volumes since Q3 1997.”
Congress took another seven weeks off. Most pundits criticize them for not getting anything done. But look at it this way: As long as they are not in DC, they can’t screw up anything. Come to think of it, why not simply pay them to stay home?
“Jobs gained during the economic recovery from the Great Recession pay an average 23 percent less than the jobs lost during the recession,” according to a new report released by The U.S. Conference of Mayors.
SO MAYBE IT’S NOT JUST BECAUSE OF HALLOWEEN. Here is an insightful quote from John Williams ( on September 25: “Back in the late-1980s, I retained a mass-psychologist in an effort to explain why stock market crashes tended to take place in October and November. His answer was that humans had a vestigial squirreling instinct. As the squirrels suddenly start gathering acorns for the winter, so too do humans, or at least their investment strategies suddenly can shift enough towards safety to burst an extreme stock-market bubble.”
In terms of the fourth turning, fall is the season that corresponds to the unraveling, the period before the crisis hits. Perhaps it makes sense that human nature is such that it also follows the seasons in terms of psychological make-up? In the winter, everyone seems to be down, always dreary of the cold and snow and looking forward to spring. In spring, everyone’s spirit rises as they shed the doldrums of winter and look forward to the warmth of summer. In fall, everyone realizes that summer is over and that it’s time to prepare for the harshness of winter. So if people do tend to hunker down in anticipation of the cold weather setting in, it might make sense that such an attitude would carry over to their perception of their financial status. The harvesting and storing instinct also includes money. Maybe that is the reason that we seem to have such a volatile stock market in October. It’s a seasonal thing.
BE CAREFUL WHAT YOU WISH FOR. Bond guru Bill Gross left Pimco. Reports have it that some in top management wanted him to leave. But the law of unintended consequences has surfaced again. Supposedly, the SEC and FED are worried about the run on the bond fund now that Gross no longer manages it. In fact, there was a movement afoot not long ago for regulators to consider asset management firms in the “too big to fail” category. However, that idea was defeated by lobbyists.
THE ECONOMY may look good on paper–especially GDP–but John Williams disagrees. Here is what he said: “the GDP simply remains the most-worthless and the most-heavily modeled, massaged and politically-manipulated of government economic series. It does not reflect properly or accurately the changes to the underlying fundamentals that drive the economy. Underlying real-world economic activity suggests that the broad economy began to turn down in 2006 and 2007, plunged into 2009, entered a protracted period of stagnation thereafter—never recovering—and then began to turn down anew in recent quarters.”
Durable goods orders got whipsawed by aircraft orders as August saw an 18.2 percent decline following a 22.5 percent gain the month before. Existing home sales slipped 1.8 percent in August, while housing starts fell 14.4 percent. The CPI posted a rare negative reading of minus 0.2 percent thanks to falling energy prices. The job picture for August was not so bright as only 142,000 new jobs were created.
Philip Hamilton, is a long time writer and currently a mortgage underwriter analysis, he can be reached at phamiltonfinancial@gmail.com or 541-480-7580
