Bearish News

Meltup: The beginning of a U.S. currency crisis and hyperinflation. Put together by the National Inflation Association.

The chart store gives us the gem of a chart below. At the 55 week mark, the current move ranks #27 out of 4,327 rallies since 1929.

Hat tip BR.

The latest Case-Shiller data is out. Home prices for the 12 months ending in January 2010 were near flat at -0.7%. Here’s a longer term view.

The trend does appear to be positive, but we’ll see what happens if/when the home buyer tax credits end in April. And what effect Bernanke pulling out of the MBS market has on rates. And how the Option-ARM peak plays out.

h/t Big Picture.

This chart from ContraryInvestor.com (subscription req’d) shows 40+ years of Fed Fund rates vs. full CPI (including food and energy prices, excluding shelter/housing costs).

The disconnect between interest rates and CPI from 2002-07 is especially noteworthy in light of Greenspan’s recent arguments that low interest rates weren’t responsible for the housing bubble. Apparently giving banks access to a spigot of cash does not encourage reckless lending. Here’s Greenspan rationalizing extended low interest rates during this period:

We had been lulled into a sense of complacency by the modestly negative economic aftermaths of the stock market crash of 1987 and the dotcom boom

Given history, we believed that any declines in home prices would be gradual. Destabilizing debt problems were not perceived to arise under those conditions

Given that we had never seen home price appreciations this rapid, might an objective observer have thought something off? Someone who’s full-time job it was to assess these things?

Vacancies

Here’s another great chart from Contrary Investor (again – CI is subscription only, but well worth it IMO. I have no stake in posting these links, but they offer some of the best charts and analysis I’ve found).

The chart below shows various home and rental market vacancy stats. Though things have improved, we still have to see what goes down when (and if) the Fed/Govt ends their massive support programs (currently scheduled to expire near the end of Q1 2010). Things may start deteriorating all over again, but we’ll have to see.

Haver Analytics gives us this chart/data:

Military should be the first in line for budget slashing, but the opposite is taking place. While “defense” spending  does boost GDP, and preserve (politically important) jobs, it’s still a huge drag on the real economy.

America’s military is bloated, and much like the FIRE sector, it needs shrinking. Both are incredibly inefficient ways to grow/stimulate an economy. In their current state, both are a drain on American resources. And with their armies of lobbyists, this isn’t likely to change soon.

America faces a funding crisis like we have never seen. The U.S. remains the world’s lone superpower. That would still be the case if we cut military spending 30%.  Reducing the budget and shifting those jobs to more productive areas, like energy and manufacturing, would have immensely positive effects on the economy.

The question is – do our political leaders have the courage to cut spending before things get out of control? Based on what we’ve seen so far – the answer is clearly no.

Home sales often dip in December, but 2009′s finish was especially nasty. The first-time homebuyer credit was scheduled to expire at the end of November (almost nobody believed that was gonna happen). That explains some of the drop — as demand was pulled forward — but 16% is ugly no matter how you spin it.

Here’s the NAR’s spin-job for any who are interested. I honestly feel for them, tasked with finding the silver lining in this dismal RE market.

Chart via Rolfe Winkler.