On the elusive housing recovery...

There are often enough times when I get bored reading business news and market news. You see, I do trading as a side interest, and I read a few newspapers from a few different countries to start my day. You can get an overall picture and a sense of where things are going. To me, it's a much better gauge than the mumble-jumble of those so-called market analysts who would try to find some reasoning - more like excuses - to justify the events of the day as the day wraps up. You see, that's not a very difficult thing to do, since there are always some news that are good, and some news that are bad. All they have to do is to pick and choose which ones fit in the pattern of what has already happened in the market movement during the day. I often find it laughable how business news would follow what has happened in other markets (Europe, Hong Kong and Japan), and say, our markets in US is going to up (or down) because of x-y-z happening in the other markets. So, they say, futures are going up (or down). And then, things in US would blow up in their face, shattering whatever predictions they have made at day start. By end of day, they would wrap up the day and say, no, the market today is actually focusing on something else than we have predicted. In short, they would always have a 50-50 chance to come up with something that can make them look smart ("see, that's what we have predicted!" or "markets look the other day because they are nervous!").

For all that, I prefer to look at the raw data, rather than the gummed-up analysis from these mediocre analysts.

Quite often, raw data are confusing on their own right, depending on what raw data the main media wants to report to the audience (ie. us).

Take the unemployment picture. There's the short term number in unemployment benefits claim (which doesn't look good). There's the longer term number (which looks very weak and wobbly). And then, there is the number of long-term unemployed (ie. those who have exhausted the unemployment benefits and are on their own; in short, they don't count anymore) which everyone seems to suddenly stop reporting on.

And then, there is the number of new jobs created, particularly by private sector. But no one dares to talk about the kind of shitty jobs being created now, in place of the relatively good paying jobs that were lost in this Great Recession. Politicians in Washington don't even want to talk about the number of shitty jobs created. Afterall, there is a natural limit in how much spin doctors can spin a story. So, instead of talking about bad things with no prospects of improving in sight, they would rather stop talking about it.

Barring the dismal employment picture, this recession is all about housing. No one has a freaking clue which industry would emerge from ashes and rise up to take the place of tech (in the go-go days of late 1990s) and housing (in the subsequent years after the tech bubble burst in 2000), and provide the kind of jobs and pay and prospects to the lower strata in society. Everyday, the business and market news cover the same-old, same-old on the foreclosure numbers, price trends of cities and nation wide, new housing starts, existing home sales, yada yada. The way it's going now, you can easily skip 3 months' worth of news, come back in the fall, and the news reports (on these very same topics) would still look the same. *yaaawn*

Don't get me wrong, those raw data have to be collected in order to study the longer term trends. But I don't see how talking repeatedly on the same subject matters and numbers are going to move the needle.

To me, it all comes down to simple math. If you have a property that, over a 10-year period has gone up by 300%, does a downturn of 50% from the peak mean it has come down far enough to become affordable again? This is not a number that I just threw out from a hat. This was how much I have bought (in late 1990s) and sold (in late 2007) my property for in the Northeast.

I like to look for patterns and trends. Nowhere have I seen such fantastic growth in prices (of properties), with little to no support from fundamentals (eg. rental growth) during that same period. The whole housing boom was based on one ponzi scheme, more akin to a big casino gamble.

I don't flip properties. In fact, I've kept property that I sold in 2007 for close than 7 years because I like it. I would still have held on to it, had it not been my husband who was getting tired to the monthly upkeep for a physical property. It doesn't really mean or change a thing for me, because there's no mortgage left on the property. Sure, if you ask me whether I'm glad that I've sold it, I'd tell you I'm glad to have made a 300% profit on that property. It doesn't negate the fact that I still miss the place due to sentimental value. I don't want to sound schmuck about it, for cashing out before the market crash, because I'm no genius. It's all pure chance. Bottomline to me is, while I'm better off now with the proceeds from the sale, I would have been no worse off if I had held on to it.

No one is going to argue against the sweetness of turning 300% yield on an investment. Truth be told, I don't think the place is suddenly worth 300% more than what I'd paid it for. Given the growth of economy over that same period, perhaps a price growth of 50% would have been considered fantastic already, so that a 20-30% downturn in the recession since then would have returned it back to equilibrium. But that would be blasphemous to alot of people who are used to outsized price growth. No one wants to lose the capability of turning their property into a piggybank and a ready ATM machine.

But...nothing of what I said is new. It's just that no one wants to admit to it. No one wants to say outright, that the property market, as depressed as it is now, should still fall another 20-30% or more in some places in order to go back to a more normal curve. Politicians can't tell the emperors (voters) that they have no clothes on. It's downright suicidal.

And so, what do we get? Let's switch off the discussions on unemployment (nothing new); let's not talk about housing (nothing new either); let's forget about market reforms (because no one can fight the lobby groups and big corporate money); don't worry about the wars (which are still raging on); public education does not matter for now. Suddenly all eyes are on deficit and spending.

I can only tell you, I'm very sick and tired of all these ping-pong games between Dem and GOP on the budget talks and possibility of a default. The whole Washington establishment - Congress and White House alike - is so inept to achieve anything remotely useful (except with the focus of scoring political points), it's so freaking disappointing. Such a shame.

But if you must ask me of an opinion, I'd say, spending and entitlement have to be scaled back. Taxes have to be raised somehow. I don't like the idea of the raising the debt ceiling without any serious talks of scaling back. To be sure, there are so many low-hanging fruits of corporate tax subsidy (ethanol, anyone?) that simply don't make sense and should have been rid of long long time ago. While I don't fancy Dem getting any moral high grounds, I simply don't see how GOP could keep singing the moral high tunes of cutting spending while defending their corporate backers of all the subsidy and loopholes. It's truly despicable.