A Big Disconnect?

This morning, the Mortgage Bankers Association reported its latest weekly data on mortgage applications. Although the headline composite index continued its steady creep higher, applications for the purchase of a home fell sharply, hitting their lowest level since April 1997.

In fact, the persistent decline in the MBA's purchase index has brought it to the point where it paints a picture that is clearly at odds with what other housing-related data shows. As the accompanying chart suggests, there is a big disconnect between the seasonally-adjusted annual rate of existing home sales, up 27% since November 2008, and purchase-related mortgage applications, down 51% over the span.

Reasons for the divergence might include the fact that fewer home buyers than before are submitting multiple applications (not likely, in my opinion); a greater share of the sales taking place involve cash or investment-type buyers (who normally wouldn't apply for a residential mortgage); or, many of the reported sales transactions are "nontraditional" -- that is, they include foreclosures, short sales, etc.

Whatever the case, the fact that these two trends have gotten so far out of whack after years of moving in synch suggests that conditions in the housing market are anything but normal, and that the outlook for the residential real estate market is more negative than some data would lead us to bellieve.

Comments

[kevinearick]

left this for the agency crowd over at new deal, in response to

Meeting the Climate Change Challenge: Forging a New International Financial Architecture

Disconnect

Unprotected Labor: AGENCY GETS PAID TO DO NOTHING

What we want to see is an analog wave of surpluses and deficits, increasingly crowding the line toward 0, no voltage in the neutral circuit, government as the fulcrum mechanism itself, providing a balance between unprotected labor and corporation. It’s up to us to decide how much voltage the corporations see across the isolated circuits, by adjusting the firing angle and circuit proximity. That is we are capable of injecting ideas to grow the real economy, relative to planetary evolution, at will. We reduce the firing angle when growth in government per capita increases, and increase the firing angle when growth per capita decreases. We are willing to pay agency to balance the interests of unprotected labor and corporation at less cost over time, to the end of a self-governing economy.

We do not need agency; we are self-governing, that is we prosper to the extent we give the planet what it needs. For us, the corporation is a source of gravity, which involves all kinds of unseen investments across the looking glass, which cannot be measured by money. We are willing to pay fewer agents more money over time, through higher real economic growth, paying them not to take sides with corporation, to balance agencies, with the net effect of nothing, resulting in a larger tax base at lower rates, in a growing real economy.

The corporation is willing to pay agency in both relative agency growth and unit pay increases to the extent it can deliver our ideas to corporation at a discount, that is to liquidate unprotected labor’s position and share the short-term profit in doing so. Based on the voltage in the neutral circuit, what part of agency is driving and amplifying that deficit, we will feed it with ideas, just to get the rotor accelerating in that direction, and past locked rotor amperage, which locks government and corporation into a symbiotic relationship. In no time at all, they are addicted to passive investment, at which point we begin to withdraw again, reducing the firing angle, resulting in a lower tax base, at higher rates, in a contracting real economy.

That’s when the corporate accrual and government cash accounting systems lock, and the accounting shenanigans take off, because the parties have no psychological choice but to chase debt with money, through artificial demographic acceleration, the creation of slave economies to feed nexus growth, causing the rotor to turn faster and faster, sucking everyone with a something-for-nothing, passive investment mentality into the ponzi black hole. Each set of leaders is left with a larger deficit than the last set, so it can only increase the speed, the efficiency, of the false economy, so they are not on top when it all crashes, creating the gravitational field, which gets deeper and stronger as the labor pole gets smaller and smaller, migrating away on the fulcrum, with gravity chasing it.

This show has been going on since the first chief recognized the advantage of asymmetric information, leveraged by an agency class, and some of the Indians were intelligent enough to balance the fulcrum. In this iteration, computers and the Internet leveraged the process again, locking in viral human population growth, which has now reached the upper planetary limit in its current form. It’s just a little more sophisticated these days, in the form of the family law, banking and credit, human resource information system.

In chasing labor with the law, uncontrolled multi-national growth has migrated right over the top of a very large government fulcrum mechanism, short-circuiting into cancerous nexus growth, and the momentum of the multi-nationals is taking them right over the cliff. From the relative perspective of unprotected labor, the nexus has already passed the cliff edge, and as it slows down, its weight of inertia will collapse the bridge false-work underneath it. It cannot make it across, and it cannot go back.

So, the question is, what does everyone want to do with all that potential energy, before it slows enough to crash the bridge? Family Law is locking the nexus together. You might begin there, but you are welcome to prove me wrong, for just as long as you like. The BRICs can’t create sustainable artificial demand and supply for themselves, never mind the entire global economy. I would suggest that you disassemble the system and worry about how you are going to re-assemble it when you get to the other side. No empire has ever made that decision, but no empire has ever faced planetary saturation in the midst of viral reproduction either. The next step is space, not another unknown continent.

You are pushing yourselves into a war with the “axis of evil”, which is nothing more than a programmed response to stimulus, a looking glass created by the artificial scarcity economy you have propagated. Those poor critters just aren’t quite as well positioned, being subjected to the rules instead of making them, but they make excellent straw-men.

There is no textbook for confidence in the unknowable. You may only gain it through experience. When you run out of best business practices on your individual event horizon, and see the bridge collapsing, you might try it. The law follows behavior, informally at first, and then formally. The “founding fathers” didn’t come to “America” with a constitution in hand.

You might look at it this way, Family Law gave a lot of people opportunities that they would not have otherwise had, primarily to gain a transparent view of the economy, but it has run its course. Agency and corporation are now locked in a runaway motor, rapidly losing its load, which can have only one outcome.

Governments come and go. Labor endures them. Unlike corporation, government, or protected labor, unprotected labor needs no artificial barrier to entry. Skill promotion within unprotected labor depends upon direct adaptation to planetary evolution, and the ability to carry the psychological dissonance between it and corporation, the ability to tap and deliver current. We must carry both planetary and empire pressure. You will not find those skills in a textbook.

I don’t need your numbers. All I have to do is look at the neutral circuit, and the neutral circuit is everywhere. You are going to create $3T in debt this year, inside a motor of your own design, and you will not put a dent in the problem, with the entire world watching.

[Sam]

Thanks for this post.