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The U.S. Housing Market. What an Imploding Ponzi Scheme Looks Like.

Poppin the House

               Poppin the House ~from Jeff Kubina~
                         (with thanks to Flickr)

From AmpedStatus this morning a must read article by David Degraw as he shares vitally important work done by Laurie Goodman, from Amherst Securities, presented by her at the American Enterprise Institute.

And it is a horrific forecast, to say the least. As she puts it, “10.81 million homes are at risk of default over the next 6 years. Even if we try to be extremely conservative we can’t get the number below 8.7 million units

  As this chart shows, the total has gone up from 2 million homes in 2009 to 3.35 million as of April, a 67.5% increase already.

Further David Tells us :

The Atlantic explains this shadow inventory chart: “What’s happening to the homes of all those defaulted borrowers that we hear about? Many of those properties are a part of so-called shadow inventory. This is the sort of limbo between when a home’s loan defaults and when the property is put on the market for purchase. The increase shown above is staggering. The shaded area shows mortgages more than 12 months delinquent or in foreclosure (darker blue) and those seized by the bank (lighter blue).”

Laurie Goodman’s full presentation is available in pdf format here. (Follow this link!)

Obviously this is going to significantly drive home prices further down, as I reported a few weeks ago, 28% of US homeowners already owe more on their mortgage than their homes are worth. A recent survey by Fannie Mae found that 27% of American homeowners are considering walking away from their mortgage. A perfect storm is brewing. As prices continue to drop, with 10 million now at risk of default, a strategic default movement could devastate the “too big to fail” banks that caused this mess in the first place.

Unlike most of the bat-shit crazy fear mongering that most of us have become inured to, these numbers should probably actually frighten most rational people. Or perhaps, like myself, you feel relief. No one has been open or honest about the breadth and depth of the crime that was perpetrated against all of us. That I have been screeching about like a crazy person since 2009 began. We don’t hear but a whisper here and there in the MSM regarding the “Toxic Assets”  that are still extant. Or about the fact that we have no way to know the  actual financial health of our systemically dangerous TBTF bank/casinos ever since our Congress decided it would be a good idea to shitcan the “Mark to Market Rules”. Little Timmy Geitners “Bank Stress Tests” notwithstanding.

This huge debacle could only have ever ended one way. The sooner we get there, and begin once again to behave rationally and responsibly; and by that I mean holding our elected leaders and our CEOs and our “corporation persons” ACCOUNTABLE for their actions; and by that I mean putting them in prison when necessary; and by that I mean Pelican Bay not some half-assed resort for “white collar” criminals.

Let’s make no mistake, these crimes have affected every single person in this country.  And people are dying. American citizens are dying by the thousands because of the far reaching effects of this plunder, and they did nothing, not one damn thing wrong.

And Lastly…….in case you’ve been wondering…….nothing has changed. Goldman Sachs, J.P. Morgan et. al……in other words……all the “usual suspects” are busily constructing and selling synthetic derivatives in relation to the Euro-zone bailouts, as fast as they can possibly do so. What could possibly go wrong?

*{all bold above added by me}*

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Robert Alexander Dumas

Robert Alexander Dumas