May 14, 2009

It's been awhile. A lot of sh*t has gone down. So, where are we now?

I'll call it, and most of you will still disagree.

Remember, I have an optimism problem.


We're without question in Hope. May not last, but that's what I sense. And if we are indeed in Hope, then Despondency was definitely in Feb/Mar, when it looked hopeless. And this whole damn thing hath been foretold by that one damn chart that we've been posting since 2005.

(Hey, does anyone know if you can fall backward on this thing?)


bank dick said...

Denial Keith, full denial. There are signs of fraying around the edges like business closures and an unusual spike in the demand for U-Haul trucks as people leave town. The housing market here in 81503 is dead (no jumbo loans) and hundreds of unsold spec houses and over-priced resales dot the landscape. According to the local RE guru we have a 24 month inventory. Oh, and commercial RE is looking ugly too.

So do tell us about hope Keith. We'll let you know what we think about it right after the fear, desperation, and despondency phases have run their course.

SeattleMoose said...

Seattle = Some denial but mostly fear now.

jwne said...

Remember, there are cycles within cycles. Hope? Maybe in the short term. In the bigger picture of this economic event... I believe we're still at fear.

Anonymous said...

the young asian woman i spoke to in the elevator 2 minutes ago didn't sound to hopeful...she had just been let go by my company...along with 149 others.

Anonymous said...

Hope? bwahahahahaha...

keith said...

I admit, on this graph I'm always early.

People losing their homes, losing their jobs, or even the really tragic ones killing themselves and their families, are DEFINITELY not in Hope.

We're in a Depression/Recession after all.

But in general, now that we know the banks won't fail, and home prices have fallen 50%, I believe we hit bottom in Feb/Mar. It'll be choppy and scary on the way back.

But we are in Hope.

Way past Denial - that's so 2008.

When or if the market crashes tomorrow, it won't matter. And I almost expect it.

But overall, the seeds of hope have been planted. Swanndive's foreclosure and Mozilo's SEC charges just show we're at the end of this cycle, not the middle.

Buckle up. And prepare for Hope.

Anonymous said...

keith is like a sports caster that predicts the detroit lions will be superbowl champs at the beginning of the season.

if he is right he looks like a genius and gets to post numerous "i am awesome...i told you so threads".

if he is wrong...nothing happens.

Anonymous said...

omg we are a gluttonouse bunch.

Supernintendo Chalmers said...

Mozila's charges tell you we're at the end?! Mozila's a chimp.

when Paulson, Dodd, Corzine, et al are brought up on charges, THEN we'll be near the end. when the food riots begin, THEN we'll be near the end.

until then, we've only just begun.

keith said...

Hey, I freely admit I could be wrong.

I'm just telling you what I see today.

I see hope. It's everywhere. Even if it's later crushed.

And seriously, anyone know if we can go backwards on that chart?

One big bitch-slap (an invasion, an assassination, a big bank bankruptcy, another big ponzi scheme) and it feels like we can go right back to despondency.

But today, we are in hope.

jwne said...

Keith, I think you're looking at the "6-month chart" so-to-speak. The rest of us are looking at the 10-year.

Anonymous said...

Gee, I must be living in a Twilight Zone episode then.

My spouse, an executive who happens to work for a major American corporation, just got another 15% pay cut this week, on top of the previous 10% cut from last quarter. All benefits were taken away. ALL OF THEM!

You guys must be rich, BO trolls, or retarded when you claim that we're at HOPE. Yeah,'s not even funny.

jwne said...

No. You don't go backwards. As I said in my first comment... cycles within cycles.

Tray Deee said...

Given the last caveat, I agree with Keith. Here in NC, we've just become accustomed to job losses and everyone is cutting back (sales tax receipts down 21%). But the DOW isn't on the front page, the editorials are about politics, and people are going to bars, despite not having $, because we gotta do something. Maybe that's despondency, but once enough people start living again, it turns to hope.

Just like Keith, though, I think an wild card event could be like pulling a "Go back 3 spaces" card in Monopoly.

Nimesh said...

Keith, for the love of God, we are still in denial. Why would I say that? Well I have friends, co-workers, relatives, etc... And the value of their house has gone down 30% to 50% but they won't stare reality in the face. All they have to do is go online to,, or ask a realtor for local listings and they will see that a similar home to theirs is in short sale for 25% to 35% off or a foreclosed home is 40% to 50% off what they paid for it.

I even tell some of them, go ahead and walk away. It is your best option. Remember, it is a purely business decision!

So what do they say? "are you kidding me? I love that house, the hardwood floors are to die for", "no way man, property values go down, but they will come right back up", etc....

We are in denial. People still believe that "it's a great time to buy a house" and "you gotta buy now because prices are going to go up soon".

Keith, you have drunk too much Obama Kool Aid.

Randy said...

Hope = Denial

It took years to go thru the left part of the graph and it will take more then a few months to get back to real Hope

Nimesh said...

Anonymous Anonymous said...

keith is like a sports caster that predicts the detroit lions will be superbowl champs at the beginning of the season.

if he is right he looks like a genius and gets to post numerous "i am awesome...i told you so threads".

if he is wrong...nothing happens.

May 14, 2009 8:40 PM

Or better yet, since I live in Chicago, a Chicago Cubs fan! Every freaking year, "oh I tell ya, this is it, we will win the World Series in October".

Anonymous said...

Uh-oh, I got it. "Green Shots" really means that green stuff rushing out of Linda Blair's mouth.

keith said...

Remember, I put up the "Green Shoots" post at the very very very bottom.

But also remember I'm a huge Chicago Cubs fan, and THIS year is THE year.

Hudson Valley NY said...

Mid Hudson Valley NY

Complete denial here

keith said...


Seriously, after the biggest crash of anyone's lifetime, "denial" would equal "insane"

jwne said...

Keith, when BO secured the oval office and you abandoned HP for S&A you illustrated denial.

Now you should be fearful like the rest of us.

We'll know we're at desparation when you kill S&A create your next blog... Rainbows and Unicorns.

Anonymous said...

we're in desperation .. i haven't seen anyone get assassinated yet, so we're not in panic ..

Hudson Valley NY said...

Keith said:
‘Seriously, after the biggest crash of anyone's lifetime, "denial" would equal "insane"’

Seriously, House prices in this area are pretending its 2005.
Local Newspapers still report only what the Realtors tell them.
Prices have not budged yet; affordability is at the same level as it was during the peak.

Anonymous said...


what crash?

we're experiencing a soft landing.

JaneZ said...

keith said...


Seriously, after the biggest crash of anyone's lifetime, "denial" would equal "insane"

Yes, mass insanity. I think you are on to something there. Given that the entire country is borderline hysterical from shopping deprivation, waiting for the Debt Mobile to arrive again, it really doesn't matter if we are at Hope 1, Hope 2, or full blown Delirium 3.

During the Great Depression that lasted for oh, 10 years or so, every winter people would get hope. Come Spring it is all going to be okay they said. Every damn year they said that. Spring came and went and so did the Hope.

Here is hoping we don't have to wait for Hope 10.

Randy said...

Just what the doctor ordered.

More cheese ->

Anonymous said...

people in CA and AZ may be in Hope but in the DC metro area i think it is Fear.

Duarte said...

Denial. And that includes your "hope". The springtime sucker's rally is almost over, the failure of FDR is yet to be realized, and the post election euphoria is wearing off. The irony is, Obama is going to need a war to get out of the hole he's digging.

keith said...

You asked for it, you got it

I'll keep this up for a few days

RICO said...

There is no trendable methodology to this madness.

When the house of Carlyle Group has a gangster-style shootout with the house of Goldman Sachs Group, the bottom will be reached.

Until then, the economy is an orgy of financial fraud.

A sickening clusterf*ck of Group sex.

With the Justice Dept timidly averting its eyes from the outrageous perversity of the spectacle.

Anonymous said...

Denial. The future holds either hyper-inflation or default, neither one pretty. And people in the U.S. still think the stock market is an authentic mirror of the economy.

i've had it said...

I'm going to offer this:

I think we going through a two-phased Fear thru Capitulation cycle. We went through it once when the SP hit 666. The Feds and big guns came in and pumped the market up to where it is today through printing money and well-orchestrated and planned positive spin/commentary from many quarters of the economy.

Things will putter along for a while until the next wave of resets hits and millions of more homes go under. I even know someone who told me that he has to sell his house within a year because the option arm he got is going to reset and he can't afford the payments.

This will happen all over the place soon enough. And when it does, we will go right back up to fear and start all over again, this time hitting 666 again or lower and then flat-lining for years.

jwne said...

HaHaaa! Love it! You the man Keith!

Markus Arelius said...

In California, people might be weary, but I'm convinced that the majority remain in utter denial about what's going on around them.
We have a massive budget problem here that this time cannot be taxed away. There is a magnificient number of foreclosures just budding this summer in the Alt-A/Option ARM variety that will continue on for 3years at least. Good schools and businesses in OC California are closing. Unemployment is 10.3% (to match our state income tax rate!) and 8.5% in OC, so I have to pinch myself every morning just to make sure I'm not really waking up in France or Germany.

And to add insult to injury, California has quite possibly the dumbest group of elected officials to ever run the state government. Lastly, illegal immigration continues completely unchecked.

I love graphs and hyberbolic curves about emotions and recovery. But my sense is that few feel the hope you're describing.
Maybe our perspective doesn't allow us to see that hope just yet.

jwne said...

The funniest part is that was already taken... hence the "yippee".

keith said...

I'm digging my new blog

Goes with legalized drugs don't ya think?

keith said...

I know. At first I was bummed, but then I really started liking the "Yippee" part.

Like chocolate sauce on ice cream.

bottom feeder in philly said...

I think we are in the fear stage. The foreclosures are going to increase as alt a paper resets and unemployment catches up with people not being able to keep current on their mortgages. I think we have a ways to go before we hit the bottom of the curve. I know I am in the fear stage right now. I saw the real estate market correction coming, but I didn't see the whole bank failure thing happening so early in the game. The whole stress thing is a crock of shit. I don't think the banking system is going to survive the next wave of defaults since it will more likely be bigger than what has hit so far. It's going to be UGLY. My prediction is we hit bottom summer/ fall of 2011, and prices stay flat for 5 years. If interest rates go to 7-8% all bets are off and there will be blood in the streets.

Anonymous said...

The greatest stock market rally since the Great Depression means hope or a sick joke

Anonymous said...


Now I know you voted for Kris Allen.

Anonymous said...

False hope maybe.

Anonymous said...

"Rainbows and Unicorns."


Anonymous said...

Most people are like reptiles: clueless and only responsive to stimuli. They won't clue up until they can't eat, or the lights go out, or there is no water in the tap. Otherwise, they will happily eat ever-worse quality food. As for illegal immigration, same story: scare the living crap out of them because that really would be the only way to get the message across.

I think we are in media-generated hope; a sucker's rally. And like Barnum Baily said, there's one born every minute.

Anonymous said...

As has been reiterated many times on here, the whole country doesn't reach the same point on the chart at the same time - like real estate, it's local.

I think the idea of going back a few steps, or cycles within cycles is totally correct too - a few months ago it felt like we were on the precipice looking down. The last few weeks it feels like we've moved back form the edge a little.

However, the wheel turns slowly, and the fallout has only just begun - take the auto industry as an example - Chrysler closing half their dealerships today. How many jobs does that impact in each local area? How many parts makers getting a lot less orders next week? And that's just one example of a snowball that's getting bigger and bigger as more people lose their jobs.

We aren't going to even get past fear on the chart until unemployment is pushing for 15-20% - then we can start talking about the shit really hitting the fan.

Ron Paul is right! said...

As far as homes are concerned, nearing capitulation IMHO. Overall economy, I say fear and uncertainty.

And for those inflation believers, supply and demand are universal market laws. Income is a real limiting factor on a consumer's ability to "demand" a damn thing. People can't afford shit as its priced right now. And the few who can afford aren't spending it.

There may very well be a treasuries bubble or inflation. Gold, who knows. But ain't shit else going up in price for a LONG, LONG, LONG time to come.

When the employment starts to reverse and wages start to increase instead of decrease, then we will see hope. Dude, we are losing 650,000 jobs a month. 15%+ of the nation is unemployed or underemployed. Ask them about hope.

genius said...

Yes, let's all make sure to think inside the box and assume things will progress in a linear fashion and as illustrated on that chart.

What a stupid argument.

If we have to use that chart, the public is in denial. Either that or they skipped right into hope. With all of the fed/bank bs going on right now we'll be to depression soon enough.

FWIW I'm still in the "I don't give a fuck" phase. Other than eventually being able to pay a fair price for a house, driving on shitty roads and having to send my kids to private school I don't think I will be effected much. If computers figure out how to program themselves, however, I'm fucked.

Anonymous said...

It's a "soft landing" to stoneage.

Anonymous said...

Keith, you are getting swayed by the stock pumpers and the perma bulls.

We still have 2 more wave of the giant tsunami to go.

No way have we already hit bottom.

Go get more popcorn and enjoy the show.

The fireworks haven't even started.

Banana Republicrat said...

I'm still firmly in the desperation camp, Helicopter Ben, TurboTax Timmy, BHO and friends are throwing the kitchen sink at this, wait until they are out of bullets (& more importantly, political capital!)

yoski said...

Most skipped from fear dirctly to hope.

Anonymous said...

I think we are in the calm before the real storm. I think there is a wall of water seething behind the straw fence of quick fixes that will not hold for much longer.

It's like that scene in Indiana Jones when he sighs with relief at having grabbed the statue, and then looks up to see that BIG ROCK rolling right at him. Is "sweet ignorance" on that graph?

Anonymous said...

Media's well past denial; only because others are reporting it, they know they are in serious decline and don't want to appear as obvious candidates while the herd is being culled.

Those not yet on the rocks financially are oscillating between fear and denial.

Lost jobbers/foreclosures somewhere around panic.

Capitulation? HAH! That would require a heapin' helpin' of honesty. Like that accurately describes America; now or ever.

Despondency; the absolute bottom?

We ain't seen NUTHIN' yet.

" orgy of financial fraud...the Justice Dept timidly averting its eyes..."GawdDAMMIT! if that ain't the truth...

California sales tax receipts down 50%.

Anonymous said...


Anonymous said...

you need to start a "obama, give me cheese!" blog to track the BO spread the wealth effort.

Out at the peak said...

We haven't hit bottom yet and that's a fundamental fact of the large amount of outstanding Option-ARM and Alt-A paper that's due to reset now and through 2011 and is several times bigger than Alt-A.

At the same time we have more unemployment which is preventing some people from catching the falling knife.

The sensation that things are better now is a sucker's rally/bear rally/false hope. This happened 6 times during the 1929-1932 crash (30-40% recoveries). One guy said mini-cycles in the big cycle. That might be the easiest way to describe it. We are only experiencing the first bear rally (and it might continue for weeks or months). There will be more bear rallies after the next drop off.

I believe the same is reflected in the housing market. Right now we are seeing some bidding wars, but that's going to stop when the foreclosures will out number the buyers.

Anonymous said...

Some might hope that we are at hope. False hope.
But truly? Desparation and panic has not set in to the majority of the population. We must let them catch up so we can all be despondent together. Misery loves company. In time, we might hope again. I hope.

Anonymous said...


Southern Calif,

Hard to believe but lots of Denial

and some fear.


Idiot said...

From where I sit in Seattle, we are still solidly in the Fear and Denial stages. Coworkers buying homes thinking it is a great buying opportunity (denial). Fear from people that are a few years away from retirement age or are more tuned into what is really happening.

I agree with the "Cycles Within Cycles" commentors. Some people have some small seeds of hope that will be easily crushed when we hit then next major newsmaking event.

Bukko_in_Australia said...

I was watching an episode of "Oprah" yesterday (it comes on here, right after "Dr. Phil" and 90 minutes before "Judge Judy". The things Aussies see about the U.S.!) I generally avoid Opey, but I was trying to see how our new PAL/NTSC dual-format capable VCR would record.

This episode was about the tent city outside Sacramento, and a company that cleans out walked-away-from houses, finishing with a middle-aged couple who lost their home and now lives surreptitiously in their office. A couple of these homeless people said "The thing I miss most is being able to take a shower. I hate feeling dirty." No hope there.

I Skype my mom, the rusted-on Republican who still loves Nixon and won't sell her bank stocks. She used to say "They'll come back" but now she realises they won't recover within her lifetime. But she's OK with that, since her Christianity is getting more twisted as she grows older. She's convinced herself that since Jeebus said "It is easier for a camel to pass through the eye of a needle than it is for a rich man to get into heaven" then it's a GOOD thing for her to lose all her money. I use my mom as a barometer for what the Insane Right Wing Posse is thinking. I reckon there are lots of impoverished Christopaths who feel the same way. I call that resignation and delusion.

(Note to any sane Christians reading this blog: I know that the historical figure named Yeshua did not go around wanting people to suffer and condemning sinners to Hell. It's a shame that many in your faith get that message from him. I hope that you are more a New Testament type than an Old...)When I read about how Obama is doing everything he can to protect the Bush Torture Team, and following along with most of what the Cheney Administration did, I'm depressed. When I see that the allegedly Democratic U.S. Senate can only muster 33 votes for Socialist Sen. Bernie Sanders' provision to cap credit card interest rates at 15% (on money the Fed gives them for FREE!) I'm sickened.

Be careful about generalising your mood to the entire world, Keith. Maybe you're in a good patch in your personal life. It's spring in the Northern Hemisphere, so new greenery and longer days makes life seem happier. Tain't so for plenty of people.

G Spot1 said...

Can we fall backward on this? How about a dead cat bounce?

Watching CNBC the last few weeks, I think we've zipped through hope, relief, optimism, excitement, thrill and euphoria in record time.

It seems to me we stepped off the curve somewhere around fear and desperation and are cycling back through. There's just way to much bad stuff out there (continuing unemployment, prime mortgage meltdown, CRE meltdown, stress test and accounting smoke and mirrors) that I just don't think we can call this hope. I don't believe we ever hit panic, capitulation or despondency.

Afterthought said...


keith said...

You guys are confusing "Hope" with "whew, we're out of the woods", or "hey, everything's fine and back to normal"

We're not. It's not.

Hope means it's stopped getting worse. And I believe it's stopped getting worse.

The question is, how long will the recession last?

How many more millions will lose their jobs?

How many more companies will close down?

How much farther will home prices fall?

How many more trillions will be lost?

The speed of the crash has declined. The major damage has been done. And that's when you first start seeing Hope. Hope doesn't signal the end of the crash. It signals it's stopped getting worse.

yoski said...

Hope means it's stopped getting worse. And I believe it's stopped getting worse.
It stopped getting worse? Tell that to the 600000 that lost their job last week.
The question is, how long will the recession last?
Things will eventually adjust at a much lower standard of living. That's a very long painful process. Maybe 10 years or so.
How many more millions will lose their jobs?
They will all eventually find another job. Just not one that pays as much.
How many more companies will close down?
Some will close down, some will move to Asia and some will hire the unemployd for half what they used to make.
How much farther will home prices fall?
Until they are in line with rents and income, maybe another 20% on average. New construction will be low for decades since fewer people will be able to afford a new house.
The living density will increase, maybe 2 families per McMansion.
How many more trillions will be lost?
So many that it really doesn't matter anymore at this point. As far as ever repaying the debt we're beyond the point of no return. Geithner & Co might still be able to keep the game going for 10 years maybe longer. Those things usually don't happen overnight but there's no way we can ever repay the debt given the current course of action. The US is like GM, just bigger and moving at a slower pace, but just as incapable to change course.
I hope that things will get bad enough soon enough that the collective we wakes up and turns things around. It is possible, just not with the current government, the current congress, the current economic system, the current bought politicians and the prevailing attitude among the population.
The guilty must be punished, the incompetent must fail (including banks), new technologies and innovation must thrive, alternative energy, mass transit, "green" technology, hard work, less financial shenanigans, less MBAs, more FREE education in science & engineering for the competent and willing, no more lobbyists, laws on Wall Street actually get enforced, etc.
All this is possible, just very unlikely. We will most likely continue business as usual, a quick fix here and a quick fix there, another stimulus program over there and a bailout here. All with printed & borrowed money. There's no other way for this but to have a very unhappy ending.

i've had it said...

Hunker down Sashers...hunker down...

NEW YORK (Reuters) - Longtime technical analyst Robert Prechter, who forecast the 1987 stock market crash, predicted this week that U.S. equities may plunge to half their lows hit in March as a deflationary depression bites.

Oil and U.S. Treasury bonds are also locked in long term bear markets, while corporate bond prices will plunge precipitously by next year as broad economy, banking system and company earnings sustain more damage from a financial crisis that's akin to the Great Depression, he said.

The U.S. S&P 500 stock index's rebound by nearly 40 percent since it sagged to a 12-year closing low of 676 points on March 9 is not sustainable, Prechter said in an interview with Reuters.

"It's not the start of a new bull market," said Prechter, chief executive at research company Elliott Wave International in Gainesville, Georgia. "Our models are (showing) right now that it is a much bigger bear market than most people realize, something along the lines of 1929-1932," he told Reuters in a wide ranging interview. "It's a very rare event," he added.

"I think the next leg down will be at least as severe if not more severe than what we just experienced. So you want to stay on the side of safety," he said.

As in his 2002 book "Conquer the Crash," which warned of the dangers of a U.S. debt bubble and deflationary depression, Prechter continues to advocate safer cash proxies such as Treasury bills.


Riskier assets such as commodities, corporate bonds, and stocks which are currently anticipating that the severe global economic downturn may be bottoming, are likely to have short lived intense rallies, but within an inexorable long-term decline that may last another seven years, he said.

As banks continue to accumulate losses and corporate earnings fall, "the difficulties will probably last through about 2016," he said. "There will be plenty of rallies along the way."

"Deflation is coming, it's going to lead to a depression. We're not at the bottom yet," Prechter said. "I think we are going to have bouts of deflation separated by recoveries."

"The Treasury (Department) has taken on so much bad debt" at a time tax receipts are falling, that "there will be a slow, but very steady change in the way people will view the U.S. government," said Prechter. As a result, investors in Treasury notes and bonds will ultimately demand higher yields, he said.

The U.S. central bank will not be able to control the government bond market and prevent yields from rising, regardless of how much money the Fed uses to buy Treasuries, he added.

"Corporates in terms of price have the big wave down coming. This has been a prequel," Prechter said.

"Many corporations who (now) say we can borrow more money and take more risks: those are the ones who will get in trouble," he said. "Many municipalities will default," he added.

JC said...

Those that have been following this for awhile may feel hopeful because they've come to expect and are not surprised by the bad news.

The fact of the matter is that here in Southern California, the 1.5+ million dollar homes are still way overpriced with sellers not willing to budge on their prices. The 700k and under bank sales are actually being bid up because of the FHA 3% down program and investors coming in to buy houses to rent out.

The high end has had a fall but not as bad of a fall as the low end and until that happens, the housing collapse isn't over.

There is certainly hope but it seems to be more of a temporary upward swing on the way down than it is a sign of good things to come.

al said...

3 years and first time posted here. Thanks for all your info Keith. I go to your website everyday and really enjoy your blog. You have been dead on all the way and I hope you never stop. Thanks, Al.

Anonymous said...

The execs are getting off at Willoughby Keith!
Rod Serling was right.

Anonymous said...

Fear...pure and simple fear with a little denial. Hope is about 7 years away. Sorry Keith but the recovery is a political illusion. You are blinded by your faith and hope in Obama. Heck he is about to throw Pelosi under the bus....none may share the light with the anointed one. She is out! Get ready for the crash. Today the economist revealed that USA represents only 5% of Chinas GDP. They have stopped buying treasuries and have doubled their gold reserves in the last 3 months. They are buying up Africa like crazy. Fear and denial Keith Fear and denial.

Stuck in So Pa said...

Total denial. Lot of residents have government jobs, more than I realized. For them there is no recession. No bubble here, so prices never ran wild. Lots of people STILL moving up from Maryland. Most of those didn't do their homework, and will be screaming when they get the teacher's union dues (school property tax) bill on their housing "bargain."

Oh well, life goes on!

Anonymous said...

3 years and first time posted here.Gotta pop that cherry sometime.

Anonymous said...

I've been checking-out the realestate market in Santa Fe and Taos for awhile and now I'm here actually looking around and comparing things that looked "good" and what it really is.

One thing I find astonishing is the high pricing of property where most of the neighbors don't give a sh*t. I mean, just down the street of these costly properties is a damned junkyard in front of the house or just some crap stuff in the general area.

So, it seems, some people just don't follow emotional and economic curves, they "war" against progress and high prices and maybe thats a good thing? And the diametric opposition of that is the eternal wishes of the terminally optimistic up-up-up RE sales-people.

Everywhere I look in this world, there are zillions of square miles of building sites, and it just seems wonderously baffeling to me why one pile of dirt that looks like some other pile of dirt is worthy of such enormous breadth of difference in cost.

I say it's possible that it has to do with perception of what is "normal", and why some people want to live next-door to the guy that probably hates your ass, or has a short drive to your so-called paradise that you way over-paid for has a different view-point of your wishes could just some day remind you that reality is different for others.

What I see in Santa Fe and Taos is just that, the poor are focused on the total loss of any hope and theirfor, trash their houses, park the cars and junk everywhere, they don't give a sh*t, they know they aren't included in the big fakery of wealth.

Actually, there are lots of mountain homes around the area and every square inch of level land near a stream is used-up and those cabins must be worth a fortune. But they're all located near towns full-of desperately poor people, so what is the real value of these things? What happens when the desperate want what they think is theirs and have enough of a majority to go for-it?

I wonder.......

RJK said...


You can go backwards. We made it desperation, maybe panic, but backtracked to denial.

Anonymous said...

I'm squarely in the denial camp. Remember folks that we just came off of a 20 plus year period of spectacular growth in this country. There's a whole generation of people who think we're going right back to good times again (the hope camp) because that's the only life they've known so far. I hate to be the ball breaker but that's just not going to happen. Not for a long time and maybe not even in my lifetime (I'm 48). It would seem that this latest idea of "hope" has become nothing more than denial in disguise.

I live in Florida and things are getting so much worse here. First time home buyers are buying a few houses right now but those buyers will likely be under water by late summer. April's record foreclosures are coming to market and they will hit the housing market (once again) like a never ending tsunami. There cannot be relief to falling home prices or any type of a bottoming under these conditions, contrary to what we're being brainwashed to believe by some economists and government officials.

As others have alluded to, there are so many people now HOPING that their 401ks will continue to go straight up, HOPING that the housing market will "V" shape and return to 2006 prices, HOPING that they won't lose their jobs, HOPING that Obama is the savior, HOPING, HOPING, HOPING. But shouldn't all that HOPING be called what it really is - denial???

Anonymous said...

Here's Roubini:

United States

Some green shoots emerged in the U.S. starting in January and February 2009, providing relief to rest of the world that the global engine of growth, the U.S. economy, might be on the path to recovery.

Anonymous said...

House seller in good location are still in Denial.

People losing their jobs are in desperation.

Saying the billions in spending cuts and tax increases imposed earlier this year were not enough, Schwarzenegger ordered his administration to send layoff notices to 5,000 state employees tomorrow.

Anonymous said...

If you understand that jobless claim normally spike during the month February and March due to retailers letting go of holiday workers, then you should be in a state of fear to see April and May jobless claim number continue to raise.

Anonymous said...


FEAR...People in my area Monterey can feel something that they can't describe but know it's coming...I'm stocked up like some Idaho survivalist with silver, guns, ammo and food...It's kinda funny...Hunkering down and no longer warning people.

They never listened and they never will...Like lil animals that only care when the food bowl and water bowl aren't filled up is basically the dogma of just about everyone I know.

All I know is pasta, rice, dry milk and beans are disappearing...Most cities only have enough supplies for 3 days...It will get very interesting soon.

By the way FEMA made us prison cops secondary domestic responders in case of "Disturbances or natrual catastrophies"

Cool right? Then why do they want us prepped for crowd control?...Someone call Alex Jones! :P

Xrayeyes said...

The way I see it, each point on the curve lasts about one year. Let's go back a few years:

2001--Depression. (9/11, recession)
2002--Hope. (Kicked Taliban ass) "USA!, USA!"
2003--Relief. (Iraq ground war "over")--"Mission Accomplished"
2004--Optimism. (Stocks rebound) "Lets go buy a house"
2005--Excitement. "Now let's buy a new car....and a boat"
2006--Thrill. "Now I want a bigger house, with granite countertops and a swimming pool"
2007--Euphoria. "How bout a vacation house at the beach!!!!!" (Stock Market Peak)
2008--Anxiety "The shits going to hit the fan"
2009--Denial "Green shoots" "Housing bottom near"

2010--Fear. "You mean printing money didn't save us?" Stock market moves sideways.
2011--Desperation/Panic. "No more bullets in the chamber" Stock market free fall. Interest rates soar.
2012--Capitulation. "Obama didn't save us after all"

Xrayeyes said...

So Keith, you're "hope" is about 6 years premature.
False hope = denial (which is where we are now).

Stu said...


We are not even remotely close to hope. I sense full and utter fear by the majority now, and desperation starting to set in rather abrubtly now. I would guesstimate we are in full panic by the end of this year.

The majority of people are in total Fear of losing their jobs and homes now. They are in fear of what direction our country is heading in and how we will pay for all of the reckless spending coming out of Washington. People are in fear of their children's ability to get a loan to go to college. People are in fear of borrowing money, buying a new car or going on vacation. Most are pulling back (look at the data Keith) spending out of fear and fear alone.

The desperate people are the ones that have lost their jobs and homes. The desperate ones have had their CC's cut off and wonder how they are going to pay their way through life. You know for the basics like food for example.

You will know when we reach panic because the data will tell us so. Like an uptick in violence, increased reporting of theft, gang memberships increasing, homelessness increasing etc. We have seen some of this on a small scale in the major cities, but nothing nationally. When we see tent cities popping up in suburbs all around the country then we are in full panic. Every single state will have huge increases in homeless people and not just hundreds, but rather thousands upon thousands.

We have a loooong way to go here Keith...

Stu said...

Keith, will all due respect the word you are tallking about is not hope, but rather numbness.

We are just so used to the bad stuff that new news of bad stuff doesn't faze us anymore on the surface. In your home and behind closed doors people are in total fear. Put on a happy face in public and cry yourself to sleep at night.

I would not be surprised at all if the stock market fell 1,000 point in a day. I am in fear that will happen but would not be surprised in the least. If I lose my job it would not surprise me either, but I am in fear still of that happening.

The reason I think that you sense hope is because people want things to change, but behind closed doors they are sacerd to death IMHO.

Hope for this to turn around and quickly before it hits them square between the eyes is not the same as hoping that we have reached the bottom and things are turning around. I don't see anything of the sort in my travels personally. I have hope that things get better myself and quickly but I am in total fear they will not and that things will get much worse before they get better.

Anonymous said...

Hard one to call. We are making great money right now and see no change in that money coming in. We bought a house that was within our means and have no other debt. The problem we are having is where to put the extra dollars to help them grow over time, and there does not seem to be anywhere to go. Family in california are all making it, but they bought house 20 years ago and never took a dime out of them and paid them off, so they can weather a downturn with little trouble. Hope for some, pain for others. Best of luck for all the new rich jerks that kept taking money out of your house to live a higher lifestyle then you should be living.

Anonymous said...

All, read; the truth is in the amount of people with no jobs.

We are far from hope, still in fear and as far as the homeowner still selling at 2002 prices, denial!

Wind Farmer said...

I don't know Keith...but I'm not looking at that chart anymore...I know that for you, hope springs eternal. Good luck with that. I feel more like William Shatner in this Twilight Zone Episode. I can tell that alot of HPers and Sashers are on the same plane and see the same things.


Anonymous said...

You are way to optimistic Keith;we are not even close to Panic/Despondency yet, we haven't seen blood in the streets nor any sort of violence yet. The current rally/bottom has been way too active to be a reversal in trend.

The markets are heading lower, much lower. I expect that there will be widespread panic when the Dow hits 4300 - 4400 points.

Steve said...

We never got past "fear", Keith. You'll recognize despondency when you see it. Nobody will talk about stocks or real estate. They won't check their statements, CNBC or news tickers. They'll just tune it out. And despondency lasts a while.

Anonymous said...

Hope that the trillions and trillions the Mulatto Messiah is borrowing, a worse borrower than Shrub, Jr. Bush, will never come due. That you can keep the Boomers Gone Wild borrowing party alive is the Hope that most of them have. Xers are prepared. Yers have no idea why things are so bad. Keith, you were right about Bush, but Obama is no better and spending money the USA does not have 3 times faster than the Dry Drunk Bush. Without its military power, and reserve currency as a result, the USA is a Latin American, half breed, broke, bananna republic, with a Mulatto as its representative. Hope will give way to reality that you cannot borrow your way to permanent prosperity. The USA is doomed with debt.

Daphne64 said...

Everything I wrote on your "green shoots" blurb a few weeks ago still goes.

I'll just repeat on the obvious train wreck coming:

A $1.8 trillion US Budget deficit for fiscal 2009. No one has that much money to loan. The federal reserve has already started to monetize. Within a year imports will be shut off unless paid for in better currencies than the USDollar.

That'll mean a 10fold leap in prices of everything that comes from China currently. The monetization will bring pretty heavy inflation of it's own.

I honestly don't understand the deflation camp. They say prices can't rise if wages aren't rising to match. Have they never looked at all the countries in hyper or high inflation where people can't afford stuff like fruit?

The prices go up to the costs of the product. If no one can afford it, then some stock will sell at a loss, but it's not replenished. This can and does continue all the way to the point where the majority of people starve.

I don't think the US and other first world countries will get to that point in the next 10 years, but inflation may take us to the point where food is ALL that most people will get, and that will be government provided.

From there we get war and/or revolution. What does that chart of yours look like for the fall of the Roman Empire?

gutless and lazy said...


But we have a BIGGER problem here. The cyclical model Keith keeps refering to is for the OLD USA 'national' economy. We no longer live in that national economy. That's when we were, more or less, self sufficient. (Our parents and grand parents economy). That's GONE.

We are now in a fully globalized economy where BILLIONS of people in 3rd world sh1t holes are getting, gov't paid, college degrees. That means the USA is in for a secular, long term, economic downturn. We may exerience some short term upturns for a bit, as the USA govt BECOMES the economy, printing overtime lots of new dollars and issuing TRILLIONS of new debt, but the overall path for the next 20 - 30s is down. Not straight down, but down.

Do you really think Americans own creativity? Do you really think 310 million Americans can out-compete against 1.1 billion in India and 1.2 billion in China alone? There are a few more billion in Asia alone. And billions more people all around the world coming on line for "American" jobs. Get real. If you're an American (or European for that matter) reading this post, you're in the 'economic killing fields' for the rest of your earning life. Have no dilusions about it.

It won't stay that way forever. As soon as Americans become dirt poor, and USA wages hit rock bottom, the jobs will come back. But it will probably be from rich Chineses, who's firms looking for cheap labor in the USA.

And the cycle starts all over again. But none of us will be around for it.

Stu said...

Daphne64, deflation is not about prices, but rather the contraction of credit and money. We are in a total deflationary period and it will probably last 2-3 years would be my guess. Trillions of wealth evaporating before our eyes and credit drying up as fast as the lenders can cut it.

Wages will not go up for the same reason house prices will continue to slide... Inventory. In this case obviously the inventory is human in nature.

Prices won't rise for most things due to demand. With lot's of inventory and very little demand prices always fall, which is why wages and prices will not rise anytime soon IMO.

This is in fact why I believe that we have not reached panic and are still at the fear stage. People have not had to realize this on a wide scale as of yet. They hear about it but most have not felt it. This is why they are in fear of it. Once it happens to you then you get desperate. After a while if you can't right the ship, panic begins to set in.

Guberville Smack said...

Keith said:
Hope means it's stopped getting worse. And I believe it's stopped getting worse.
The question is, how long will the recession last?
How many more millions will lose their jobs?
How many more companies will close down?
How much farther will home prices fall?
How many more trillions will be lost?


If you don't know the answer to any of these, how can you believe it's stopped getting worse?

keith said...

I misspoke. It's not stopping getting worse, nor will it. Millions more will lose their jobs before this is done. Home prices will fall even farther. There will be tons of personal and business bankruptcies. More big companies will fail.

So yes, it will get worse.

But it's the pace I'm looking at. The freefall is over. Now we start to level off - maybe over 6 months or so. And then the negative numbers will flatten, and then they'll turn positive.

It's just another cycle. A big one, a deep one, but just another cycle.

And then things will be noticeably better. And people will come out of their caves, they'll buy cars, they'll buy houses, they'll go back to the malls.

Companies will start hiring, people will go back to work.

But yet it will never be the same.

And then one day, not too long from now, we'll start the cycle again. And we'll crash. Maybe even harder than this time.

We'll see.

Stu said...

Keith, I am afraid you are describing a W recession of which this is not shaping up to be (you are an optimist). This is going to be an L recession that last for a long time (lost decade come to mind), but again that is in my opinion.

Many prominent economist believe this as well and due to the wasteful spending coming out of Washington it will only serve to make matters worse and prolong the inevitable.

All signs currently point to a very prolonged slump with flat lines across the board for years to come. Where is your optimism coming from? Certainly not from the last 6 months jobs reports. Certainly not from the latest news on the auto manufacturers. Certainly not the housing data and do I need to go on here? I could list many more data points that are pointing negative or flat long term. We have broken record after record dating back to the 1950's and 60's. This is not turning around anytime remotely soon.

At least give me a basis for your optimism...

Stu said...

In fairness Keith it is in reference to this 6 month comment of yours that things will be over... or at least that is how it reads.

You said:

"But it's the pace I'm looking at. The freefall is over. Now we start to level off - maybe over 6 months or so. And then the negative numbers will flatten, and then they'll turn positive.

It's just another cycle. A big one, a deep one, but just another cycle.

And then things will be noticeably better. And people will come out of their caves, they'll buy cars, they'll buy houses, they'll go back to the malls"

So you honestly believe within 6 months things will be starting to turn a tad? No wonder why you like your new blog... In 6 months things will be far worse than they are today. We have not even begun to feel the wrath of this downturn as people have been able to hold on with credit still. The jigs up now however and slowly but surely that ability will disappear and once in full swing defaults in residential and especially CRE will explode.

We have a loooong way to go Keith...

keith said...

Yes, I believe in six months it'll be obvious that we've made the turn.

Check back in November.

You'll see.

0% interest rates and trillions in government spending may create a bubble even bigger than the last one.

But then 2015, oh, man, you want to get ready for that one...

Challenge your beliefs. Don't be a perma anything. And if you want a groupthink blog, this obviously ain't it. I think I'm nearly on my own on this one.


Stu said...

Fair enough Keith I will trust that you will post the results of your feelings to reality in 6months seeing as how you have the blog and hence control here, but I honestly feel that this will not be a "fortold" post as you so often have because you have been right on many, many issues. You are flat out wrong on this one I think, but I love your candor and optimism and also honestly, I wish you were right, but your not...

You can include these numbers then as well and not from me but for comparison purposes only.

05/09 10/09
Unemployment rate May to Oct
Housing sales YOY and May to Oct
Housing prices YOY and May to Oct
Federal Budget Deficit May to Oct
Foreclosures May to Oct
Housing Inventory May to Oct
Retail Sales YOY and May to Oct

That should be easily enough to show you were very, very wrong on this one.

We shall see... (I hope).

Anonymous said...

Complete denial in Boston! Housing prices have barely eased, restaurants are packed, and the parking lots at malls are full.

Mike Hunt said...


The 0% loans only apply to the favored banks. Try getting that loan yourself. Oh but thanks very much for only taking 0.5% interest in your savings account.

Trillions of gov't spending- again, most of this is going to prop up failed institutions and is an inefficient way to plug holes. Maybe some will stimulate but it's not causing a leveraging based bubble. It's not even containment.

Let's see. I think October will be ugly again- maybe November will rebound a bit and that will be the turning the corner in which you speak of.

Last thing, I sold my SKF y'day at 47.50... thanks for the earlier post, cleared $12.5k thanks to you. Luckiest week I've had in more than a year. From someone who really appreciates the value of money.


Anonymous said...

Yes, I believe in six months it'll be obvious that we've made the turn.

Check back in November.

You'll see.
Buh buh you're all hysterical that bogeyman swine flu was going to kill us all, not long ago. What happened?

Anonymous said...

Well, it must be me then. I'm not planning to buy a car, a house, take lavish vacations, go back to the mall to blow money on Chinese crap, buying $400 suits, or $1,300 LCDs, in the next 12 months or more. And I don't know anyone who's planning that either. Are you guys doing that?

Anonymous said...

"Complete denial in Boston! Housing prices have barely eased, restaurants are packed, and the parking lots at malls are full."

Really? Our company in Boston is f*cked. It laid off half of the people and the ones holding on had a 25% pay cut and benefits taken away. Those people in bars and malls should tell me the secret.

Anonymous said...

You guys keep the hope and the unicorns while I transfer all my money overseas. I've been doing it for 6 years now. Most of the leftover money I get is invested overseas. I'm already self-sufficient there, no need to work, including a productive organic farm with plenty of food and water.

This sucka's gonna blow, sooner or later. C'mon, can't you guys see that?

i've had it said...


go back to the Depression era and you'll see the market rally a number of times, only to go lower. It took something like four years (or was it three) from the day of the 29 crash for the Dow to reach its low...which was 10% of its market high! That's right, the market lost 90% of its value over that period. I'm not saying the same will happen here (I don't think so at all), but my point is that market rallies can turn into market routs, and even with market rallies, the underlying foundation of an economy can decline big during the Depression, and like now (550k job losses in April is unheard of in any just doesn't happen. And by the way, that number will be revised up to over 600k in two's a silly game the Dept. of Labor plays with us).

Anyway, I don't see how printing money is going to solve anything...which is what BO and Tiny Tim's plan is. That's all they've got now. It never has worked in the past and it won't this time around. If printing money were the panacea, all our problems would have been solved shortly after the printing press was invented centuries ago.

More pain to come; yes, upticks and upturns here and there; but definitely more pain for the foreseeable future.

I feel for so many people out there. With 2,000 car dealerships going the way of the Dodo, we are talking probably somewhere around 75k jobs right there, not to mention all of the other jobs connected to the dealers. Chrysler will go under completely too soon...and more job losses. GM will be reduced to a former shell of what it was once the Union/Govt control ruins what's left of it...and more job losses. Since there's going to be a permanent reduction in American auto output going forward, we will lose tens of thousands of more jobs when the suppliers go under.

I had entertained buying a car from GM when I next need one but not anymore. There's no way I'll by a car from a company run by the govt. and unions.

Housing is not coming back. Everything you read in the papers about a glimmer of hope for housing is a lie. Funny how the liberal press picked up BO's "glimmer of hope" statement and turned it into a religious tract. Also, the banks are holding back hundreds of thousands of foreclosed properties in order to reduce the supply. But they can't do that forever. And when the option arms and alt a's start resetting in the fall and go thru 2012, well...more pain. Industry restructuring is happening everywhere...from autos to technology to pharma to law, etc....more job losses on a massive scale because of mergers and acquisition...and a lot more pain.

Hope? I don't think so right now. I'm not a "perma" anything. I agree with you that folks should not hold onto a position and never budge. But if you look at the facts out there, there really is no basis for optimism at this point. The only ones I still see being like that are the new administration, the talking heads on cnbc, and the liberal press. other than this small, but very influential group of people, no one's talking hope right now.

Anonymous said...

Saying the billions in spending cuts and tax increases imposed earlier this year were not enough, Schwarzenegger ordered his administration to send layoff notices to 5,000 state employees tomorrow.

How ironic, 5,000 state employees having their jobs "terminated" by Arnie.

Jennifer said...

I live in the deep south. It's not just the big cities that are going bust.

Yesterday, we took a drive to a small, proud, beautiful old town an hour's drive away. It used to have a population of 4,000, but was a bustling little town set in the hills.

Today, there are houses upon houses for sale in this town. Beautiful old two and three story houses among them. All the factories and many businesses have closed. I have never seen it this bad.

Where do the people go? What are they going to do? I wonder.