Thread: US house price fall 'beats Great Depression slide'

The Independent
By Stephen Foley


US house price fall 'beats Great Depression slide'

The ailing US housing market passed a grim milestone in the first quarter of this year, posting a further deterioration that means the fall in house prices is now greater than that suffered during the Great Depression.

The brief recovery in prices in 2009, spurred by government aid to first-time buyers, has now been entirely snuffed out, and the average American home now costs 33 per cent less than it did at the peak of the housing bubble in 2007. The peak-to-trough fall in house prices in the 1930s Depression was 31 per cent – and prices took 19 years to recover after that downturn.

The latest Case-Shiller house price index was just one of a slew of disappointing economic data from the US yesterday, which suggested ebbing confidence in the recovery of the world's largest economy. The Chicago PMI manufacturing index showed a sharp slowdown in the pace of expansion in May, missing Wall Street forecasts and sending the index to its lowest since November 2009.

And in the latest Conference Board consumer confidence survey more people expressed uncertainty over their future economic prospects. The confidence index fell unexpectedly to 60.8 from a revised 66.0, when economists had expected it to rise to 67.0. Falling house prices and negative equity combined with high petrol and food prices and a still-weak jobs market to raise consumers' fears for the future.

Thomas Di Galoma, the managing director of government securities at Oppenheimer & Co, said: "Based on the weakness in housing prices, Chicago PMI and consumer confidence, it appears as though the economy could be headed for a double dip, especially as federal and state spending slows rapidly over the next six months."

Economists warned not to expect any immediate relief to the gloom from the housing market. Banks continue to demand high deposits from potential buyers and are pressing on with foreclosures against those who have fallen behind on mortgages, adding to the glut of unsold homes on the market.

Prices are back to their 2002 levels, according to the Case-Shiller National House Price Index out yesterday. "The national index fell 4.2 per cent over the first quarter alone, and is down 5.1 per cent compared to its year-ago level," David Blitzer, the chairman of the Index Committee at S&P Indices, said. "Home prices continue on their downward spiral with no relief in sight."

Source: http://www.independent.co.uk/news/busin ... 91491.html

'WE ARE ON THE VERGE OF A GREAT, GREAT DEPRESSION...'
http://www.cnbc.com/id/43236764

"Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything," Yastrow said. "We’re on the verge of a great, great depression. The [Federal Reserve] knows it.

VIDEO: http://www.youtube.com/watch?v=8Kt_dpUL ... r_embedded

In a serious sense, it is good news by delivering a slap in the face to the US Congress about increasing the US federal debt ceiling as the Chinese are showing a lack of faith in the value of these "debt" securities.

And it makes proper business sense, too. As Bernanke is spinning the printing presses at a HUGE rate creating inflation which simultaneously destroys any "future value" of the same securities irrespective of any interest received.

August 2, 2011 is right around the corner for re-authorization of the US federal debt ceiling.

And Congress can't seem to find a method to reduce federal spending; even Gates had proposed a 10% reduction of defense spending on new military contracts and was turned down. Man, if no one has seen how ludicrous this US war machine has been while it has not promoted any peace dividend around the world, they are absolutely insane. And I am not just describing all these unnecessary wars, either. The issue is even in the precursor involvement of the CIA by their dirty tricks played around the world, too.

The US federal debt must be reduced (even if it is a relatively small amount) to show the world that America is a responsible nation once again. To do otherwise shall place the nation into dire jeopardy.