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Shiller draws attention to the risk of financial innovation gone bad. Draws attention to a pervasive world-wide real estate bubble. Draws attention to a downward trend.

Mortgage fraud uncovered - 120 counts - what a surprise! Reporters did an investigation and fraud charges were laid. Says one of those involved during the original interviews: "I got prison hanging over me, I got the FBI hanging over me. Was it worth it? No." To get an $80,000 payday.

So this is what happens when the media turns on the hand that was feeding it. If I was involved in this type of activity, I would be pretty concerned about the DA's commet that "we are coming after you."

Some concerns are voiced about the falling dollar ie US economic weakness hurting eurozone exports to the US - the fall-out from the sub-prime crisis.  However, the likelhood of immediate european rate cuts is not on the radar - instead, policy is likely to follow a wait and see tack until next year.

Joanna Partridge reports for Reuters.

Note: back off front page as of January 28, 2008.

Nostalgia: here's a post I thought might appeal to those interested in Marina Prime. JMK = Marina Prime or maybe not, you decide, if you have an opinion on whether JMK moved from the marina in 2005, all theories on that count are welcome. Or something like that, so, without further ado, back to the front page for a limited time only!

Greenspan continues his media tour, dropping pithy sound bites like "We tried, but we couldn't beat global forces at work here."

If they have no control, then what is the point and why do they do anything?

Spin, baby, spin.

Greenspan says he didn't know what was happening.

Really, when the only reason it was happening was the easy credit. Why wouldn't he know about that?

Oh yeah, and the billions floating around in the spending on a "war on terror"? All those billions spent had to go somewhere.

Higher real estate didn't seem like a likely outcome at the time, did it? Even though prices were going up, affordability was dropping and financial oversight was vanishing? A trend that continued for around 5-6 years before the fed started to raise rates.

Forget the official stats saying that US prices are down nationally 3%, or 5% or even 10%.  Condos in Miami are selling at auction at 50% off the asking prices of a year ago- and with thousands of more units under construction in dozens of buildings, the imagined gold mine has turned into a black hole of debt developers will be lucky to escape with their reputations, if not their fortunes.

But this is cheaper realty, and that's more of what the world needs right now. 

Well, here is another graph showing the total MLS listings for today in the VREB area. It would be interesting to see what would happen to this chart if all the private MLS listings were added to the mix, but at this point we are seeing equilibrium. Total units in some segments have gone down a bit, while in others they are unchanged or have gone up. This leads me to believe there is either a high rate of churn this month - ie sellers are buying at the time they sell, or else maybe not

What worries me is in some cases it takes a year for people to drop their asking prices $50,000 - or around 10%. Yet none of these places in the video had sold yet. The crisis of confidence can't be far off for some of these people, but will the big price drops follow?  Where will the buyers be, are they waiting at the bottom?

Or are they now completely priced out of the market as lending standards have tightened?

I guess its nothing like this in Victoria yet - but if we start to see piles of signs, at least we know what comes next.

Real estate scenes from west Houston - update shows the market still flooded with properties, and the neighbourhood is empty.

Update on the green pool from a few months back - property still unsold, pool still full of algae.

57% of subprime borrowers trying to refinance lst month couldn't do it...

....Does not sound contained to me.

Everything happening in financial markets is solely directed toward a Wall Street bail out.

The current problems are not going to be solved by inflation going up. As the dollar goes down the cost of everyday items is going up, this is an onerous tax on those least able to pay it. What is the moral consequence of a system set up to bail out fat cats who mal-invested and lost billions, when the creation of more and more money is going to devastate the bulk of the population financially?

Look at Ben's eyes as he answers Ron's questions, the very real fear there is the fear of a man who has just been asked a question about WHAT IS ACTUALLY HAPPENING! Not some spin. Not some Wall Street hyperbole.

1 in 10 houses in Cleveland is vacant or in foreclosure?  Crazy.

To paraphrase  Cleveland's County Treasurer, Jim Rokakis: "Fraud by sellers, fraud by appraisers, mortgage brokers, wall street...

..if they didn't know about it, they should all be fired, if they did, they were committing corrupt acts." 

There are now more foreclosures in Cleveland than any time since the Great Depression. 

Potential housing losses are estimated in the trillions according to Shiller. Sound quality on the link is not great, but the testimony is worth hearing.

Shiller calls for new federal regulations for some kind of consumer financial protection agency, to review and approve the financial products offered in the mortgage market, to essentially ensure disclosure and truth in advertising, and also for other reforms in the appraisal business.

As far as the impact of sub-prime, Shiller emphasizes the risk is not just a short term recession, but a longer term drag on the economy.

This video testimony was posted to Youtube by the Speaker of the House of Representatives, Nancy Pelosi.  Thanks for sharing this info Nancy! 

Sorry for the time away, the site was hacked and the decision was made to switch hosting companies, after a report of hacking was basically ignored. Anyway, took awhile for domain to be transferred and propagated to the new nameservers, but all is well now and the site was reinstalled much faster this time.

So welcome back to anyone who wondered where cheaprealty went. Rumours of our acquisition and merger into a large Victoria condo marketer's web 2.0 strategy are of course greatly exaggerated.

Longer but interesting piece on some of the challenges and problems facing the US economy in the near term.

"The economy of the US is a house of cards" - Peter Schiff.

Ouch.

The presenter refers to the rate cut as the cavalry arriving for the markets. Not sure why this should be viewed as a good thing as much as an admission of unfolding disaster - a rate cut is not going to turn a bunch of non-performing loans into wonder debt. But let's all feel good about this until next week. Thank you Ben Bernanke.

What do you think will happen to house prices when people can't get mortgages?

-from maddohartlepool.

This is another video ride through a new California ghost town, cue the tumbleweeds.  For some reason, you still see the occasional Tundra or Ford Expedition parked in front of these foreclosures in waiting...

"It's going to take time for americans to realize their houses are worth half what they paid for them." - Peter Schiff. 

From john67elco.

This is just a simple total: how many properties are available and in which price ranges, on a particular day, in the Victoria Real Estate Board area. I was thinking over time it might show where inventory is piling up or decreasing, or for that matter holding steady. So far I have done this a few times, this time the graph is starting to show some increases in certain price ranges.

There is some movement in the inventories; they are creeping upwards again. After a summer of brisk activity, it will be interesting to note if economic conditions encourage or discourage the usual bump in fall listings, or if the higher volume of sales so far this year has already taken care of some of those people who would otherwise have their houses sitting on the market in the fall.

Ozzie makes the bold statement that Canadian housing is decoupled from the US debacle.  Well, is it decoupled or delayed Ozzie?  What was the old saying, the elephant sneezes and we catch cold?  Can't see how housing can survive a recession, and if there is a bad recession down south, the timing is ripe now to lead some pigs to the slaughter.

You know,  “Bulls make money, bears make money, pigs get slaughtered.”  Wouldn't want unaware Canadians to keep buying right into a recession and market reversal.  I mean, who benefits from that?

Feel free to leave comments reminding me of my long-standing bearish views not coming true.  Got to be wrong about being right until I'm right... 

Oklahoma is steering clear of growing problems in the mortgage industry - because prices didn't skyrocket, there is less of a problem.  Go figure.

Tagged on is a little moral advice for those wrapped up with material concerns: Jesus is an investment that never loses interest, indeed. 

The ARMs race continues...