Blogs For Victory

While Obama and Co talk about signs of recovery, the real signs of of disaster turning into catastrophe:

U.S. home prices continued their multiyear tumble in March, according to the S&P Case-Shiller home-price indexes, as the downdraft shows no near-term signs of abating.

Meanwhile, U.S. consumer confidence improved sharply in May, especially in expectations for the economy six months from now, a report released Tuesday said.

For the first quarter, the S&P/Case-Shiller U.S. National Home Price Index posted a 19.1% drop from a year earlier, the biggest quarterly decline for the reading’s 21-year history. S&P Case-Shiller releases 10-city and 20-city indexes every month, but also releases a broader national index every quarter.

The highlighted part is the MSMs “we can’t report the straight news” bit of Obama cheer leading – as if consumer confidence will fix the collapse of the housing market. Its a reverse on the way it was during the Bush Administration – you know, when the MSM was forced, kicking and screaming, to report some bit of good news about Bush, they always inserted a bit of negative to ensure there wasn’t a chance people would feel good about things. Be that as it may…

A friend of mine relates the story of a friend who thought he got a house at a bargain for $150,000…until someone bought the house across the street for $75,000. As of right now, there is no bottom to the housing market – it can keep going down because there are simply too many houses on the market, too few people in the market to buy and all indications are that buyers will become fewer as unemployment rises and houses more plentiful as the next round of foreclosures hits. And even those who can buy will likely hold off for lower prices, thus putting further downward pressure.

What does this mean? That the “troubled assets” are even more troubled – that we’ve spent hundreds of billions propping up a financial industry which is completely doomed. One of the world’s allegedly healthier banks – HSBC – had an interesting news release:

HSBC Holdings PLC’s (HBC) Asian unit said Wednesday it will cut the interest it pays on Hong Kong dollar savings deposits of HK$5,000 or above to 0.001% effective Thursday.

Hongkong & Shanghai Banking Corp. said the new rate will drop from the current 0.01%. It didn’t explain the reason for the rate cut. It said its zero interest rate will remain for account balances below HK$5,000.

Don’t get confused here – that isn’t “US dollars in Hong Kong”, its Hong Kong Dollars; the currency of Hong Kong. Given inflation, HSBC has essentially said that if you deposit money in their bank, you’ll lose money by the end of the year. The Chinese people – likely wiser than us by a wide margin – save a lot of money; they don’t go on spending sprees and don’t buy useless nonsense they don’t need. They save, save, save…for a rainy day. Like today. Except it isn’t rainy for the Joe Average in China who has a fat bank account…it is, however, raining cats and dogs for financial institutions who are heavily invested in real estate, like HSBC. A very large amount of the world’s wealth is tied up in real estate investments of various types…and prices have been falling, and not just in the United States. HSBC might be just trying to get the Chinese people to disgorge their savings in order to keep the economy moving along (the Chinese government? Already pi**ing through their foreign reserves at an alarming rate…not too much left there).

This is not to pick on HSBC – but to show that there is a lot of screwy things going on out there as everyone tries to dodge the massive avalanche of economic collapse. The only way out of this is for the world’s leading economy to reduce spending – by whatever means prove necessary – to less than revenues and to spend whatever we can on new farming, manufacturing and mining enterprises. We’re going to have to work our way out of this – we won’t be able to spend our way out.