Retail sales post strongest gains since late 2007

[Zebo]

You seem to think this is the usual sort of boom/bust. it's not-

http://www.ritholtz.com/blog/wp-content/uploads/2009/06/case-shiller-updated-1024x804.png

We've had a nice little suckers' rally, that's all... recovery from speculative market peaks doesn't occur from the top down, but rather from the bottom of the corresponding trough afterwards, and we're not there yet. American real estate will likely follow the same path of Japanese real estate in the 90's- slow decline and stagnation. It avoids the trough, keeps the banks in business, even if they are zombies...

Government actions are preventing RE from hitting that projected bottom in chart.

There is a lot of cash out there (mainly top 10% but also those that have jobs still) however people are just afraid to spend it.

Here are the government actions since this went down which is preventing a recovery..



Residential RE
- The government brought down mortgage interest rates to all time lows to encourage buying.
-The government offered large tax credit incentives to buy homes and this expires in April
- The government is giving publicaly traded builders close to 2 billion in NOL carry back tax refunds to prevent their needed collapse and sell offs.
- The government is doing mortgage buy downs and reworks for folks who can't afford their payments

Commercial RE

- The government is allowing the "too big to fail" banks to extend and pretend or hide their toxic assets for multiple years
- The government took toxic RE assets onto their books and off banks books
- The government injected liquidity into the banks

Sounds like Japan eh? Singularly these are not a biggie, but taken as a whole, it's created a false floor in RE prices and no one with a lick on sense is gonna build, buy, improve so economy is frozen on this front by not allowing it to hit bottom..

The government cannot afford to keep this scam going on forever. More banks must implode for RE to reset and we start again.

I don't understand the stock market but I do RE and I believe RE is the key in our non-producing economy.

Only thing I'd say about stock is when Government stops interfering and we get done with our W (in more ways than one) depression buy the Public Builders that survived.

 

[Zebo]

Just because I post something doesn't mean I buy it. But the market did go up, my friend and I heard it was tied to that reason, so somebody bought something.

My real point was that a decline is not a decline when the decline is less than expected, except for those with a mechanical view of things and no depth of understanding. The bad news is you have a cyst. The good news is it's not cancer.

Real estate is the largest input in our economy and it's supported by debt and equity. The market may have rebounded because of feeling RE stabilized (it hasnt) but I'm not sure even with hindsight. Or, maybe banks don't have much else to invest in with all that liquidity they were given.

 

[ebaycj]

I wonder how the unemployed are contributing to this number.

By spending their unemployment funds, of course ! It's like a second stimulus !