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Anatomy of a Housing Crisis

By: Sol Palha “Freddie and Fannie certainly had a large role to play in the housing crisis and many may claim that they were the main contributors of the housing crisis which eventually resulted in a market meltdown.

Surge in Foreclosures is Predicted

By: Harold Bubil America’s real estate horror story is about to get worse; Realty Trac Senior Vice-President Rick Sharga says that another wave of toxic loan foreclosures is about to rock the market. It will be as bad as the peak of the subprime mortgage foreclosure spike in the winter of 2007-2008. By the fall of 2012, foreclosures will have returned to a normal level, making for six years of real estate hell in the US.

Ten Important Real Estate Charts

By: Dr. Housing Bubble The US housing market has been turned upside down thanks to unprecedented amounts of government intervention; there has been so much interference that even the seasonal pattern has changed.

Real Estate Will Lead Economy Into Depression

By: Simon Maiehofer Investors want to believe that the worst is over. Even though the data indicates a recession or depression, the general consensus is that ‘this time is different.’

Massive Supply, Faltering Demand

By: Charles Hugh Smith The fundamentals of the US housing market are simple: massive supply, falling demand. Pending home sales have dropped, hitting two records:

Real Estate Will Lead Economy Into Depression

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By: Simon Maiehofer

Investors want to believe that the worst is over. Even though the data indicates a recession or depression, the general consensus is that ‘this time is different.’

But in 2008, all asset classes – large cap, mid cap, small cap, real estate, commodities, oil, silver and gold – declined at once, something that hasn't been seen since the Great Depression. The current recession is worse than the 2000 tech collapse and the 2005 real estate bust because when the NASDAQ fell in 2000, real estate was there to fall back on, and when real estate collapsed in 2005, stocks were there to fall back on. In 2008, there was no safety net to be found. The media reports that the US, unlike Europe, is basically sound, and points to recent strong earnings reports numbers from the banks. Unfortunately, those numbers are misleading.

A recent accounting change (Rule 157) allows banks with impaired financial securities to move billions of dollars in losses off of their income statements, which will benefit their regulatory capital calculations and artificially increase profits. It allows banks to dump the noncredit loss into an account that is not recognized on the banks' income statements. As such, credit losses do not show up in the earnings numbers. Therefore, earnings are grossly overstated. Falling real estate prices intensify the already bad situation. The markets are caught in a negative feedback loop, with internal signals revealing months ago that the disconnection between rising stock prices, ailing financials, and the deteriorating economy was about to culminate in a concerted decline. Unlike Wall Street, the market does not lie: what you see is what you get. Rarely in history has there been such harmony between technical indicators, valuations, fundamental measures and sentiment readings. The message is clearly bearish.