Today is a bitter-sweet day for this blogger. As you may already know, David Lereah, chief "economist" for the National Association of Realtors (NAR), he who has frequently been a target of ridicule and an endless source of entertainment for me, has finally been booted from the NAR. First it was Greenspan and now it's David Lereah to jump ship before the shister hits the fan. Who's next? Leslie Appleton-Young of the California Association of Realtors?In any event, I should think the US real estate industry has breathed a collective sigh of relief as no single person has done more to discredit the REIC than David Lereah IMO.
And what are we now to do with this pic, created by "reskeptic" (aka "marin_explorer"), a devoted reader of this blog (the pic made its public internet debut in this post):
22 comments:
Goodbye and good riddance Lereah... perhaps you and Sir Al can write your memoirs together touting how you helped bankrupt the American consumer with your calculated lies, deceipt, incompetence and greed..
They both can rot in hell for all I care, and I'm certain history will have a field day with them both, especially Sir Al who's working overtime to cover his tracks. (Lereah was nothing more than a sham anyhow)..
Matt..
As I've read elsewhere, housing is a basic necessity of life and should never have been treated like a wall street commodity, which it has been through grossly irresponsible monetary policy (Sir Al) and a lack of regulation and oversight.
Couple that and the NAR's deceitful marketing and calculated spins (Lereah) and you have yourself the disaster we have today. It is a crying shame, and yes I’m pissed mostly for my kid’s sake, which is one of the main reasons I'm blogging on this issue..
The ponzi scheme and house of cards continues to unravel daily….
Thanks again Marinite for all your work.. it's important !!
Matt..
Greenspan served for just shy of 20 years as Fed Chairman. Steered us through the crash of '87 and numerous financial crises. Anyone remember a few minor currency blowups or a hedge fund called LTCM?
Judging a public servant with a wide range of issues to manage on solely one factor is weak. Monetary policy affects lots o' parts of the economy, not just housing.
The only person that you can blame for "bankrupting the American consumer" is the American consumer.
You know, Hitler did a lot of things that were good for the German economy too but that did not absolve him of later crimes.
Pothead..
I respectfully disagree.. Greenspans' primary job was to manage our country’s monetary policy. In that regard, he failed miserably. The Fed chose to ignore the long-term consequences of extremely cheap money in order to help their banking and wall street buddies (my opinion). Of course, there were politics and favors involved in his failed policies as everyone wanted to avoid a politically difficult but necessary recession.
The fact that they ignored a hyper inflated housing market (consumer's #1 expense) in their rationale for interest rates is almost criminal to me…. yes criminal…
His decision to stop publishing M3 money supply in 2006 is another sign he knew the ship was going to sink. Because of Sir Allen, America is awash in cheap dollars, which are being devalued by the day.
I also believe that Sir Allen was too caught up in his own celebrity status and was absent at the helm when this country needed him the most, but he didn’t have the guts to act appropriately. Like the shyster that he is (my opinion), he departed the scene shortly after the economy struck the iceberg in one of the first life boats. He’s now looking back at the wreckage he helped create while announcing through a hand speaker that “all is well”.
The Master of the Exxon Valdez safely navigated hundreds of times to and from Valdez before he went aground with a bottle of vodka in his hand. How has history remembered him ? No, in my opinion, there are some jobs where failure SHOULD NOT be an option, and being the Chairman of the Fed in the US is one of those jobs in my opinion. No excuses, especially with the history, information and resources he had at his disposal to see and know exactly what he was really doing.
Matt..
The Marin Heat Index is a whopping .64 as of today. So much for the "balanced" market by Spring crap.
Lereah's bailing in the first inning. Hmm....even he can't spin the trainwreck any more.
Thanks Lisa.. I recall reading that index a few years ago, so your post reminded me to take a peak..
I noted an interesting projection in their January 2006 market forecast (below)..
"Marin Market: 3 Month Projections
Our projections call for the Marin HEAT Index to warm up considerably and to be solidly in the balanced market range by April." Projected at the time to be 1.04 right now.... oops…
I noticed they have not made any new projections since January…. Perhaps the local RE machine has decided to lay low on the index for a while and not draw any attention hoping that “no news is good news”
I project we’ll break the all time low by Sept-Oct this year after the first wave of ARMs resets…
Remember my post a few days ago on the realities of this Mexican Standoff (from Mr. “Got Popcon” Neil). Ain’t that the truth !!!
Matt..
My mistake.. that was a Jan 2006 projection for April 2006... no projections made since Jan 2006.. I think we can take a wild guess as to why that is..
Matt
January, 2006?! That cannot be right. Isn't that a typo? It should be 2007, no? Someone should email him.
Anyway, I read the analysis a week or two ago also and figured it was for 2007 and I also noticed how off his prediction was. But as I like his site I didn't want to give him a hard time.
"The only person that you can blame for "bankrupting the American consumer" is the American consumer."
I tend to agree with that assessment. There has been quite a bit of blame placed on industry leaders for the rise in prices and their sustained time at those levels. At the end of the day, what it comes down to is using common sense and extremely simple math.
If a house costs 600k and your family makes 75-100k, then can you afford the payments on a 30 year fixed? If not, then what other loans are available? If you qualify for those loans, then what are the stipulations regarding those loans? If those terms do not work well with your financial situation, then should you take out one of these loans?
So here we are- in an area that has been deemed the seat of American ingenuity, forward-thinking, and intelligence. We have people living here who design computer programs, scientific theories, and ingenious business models. Yet somehow, LOTS of people here did not understand the simple cause and effect of taking out a loan that could easily topple them into foreclosure if market conditions changed?
No. They KNEW precisely what they were doing. Those consumers knew that by purchasing those homes with such reliance on appreciation to 'refi' themselves out of trouble that they could just as well lose it all. These were in most cases people who were smart enough to see what they had in way of finances. I'd say many ignored the little voice in the heads that perhaps it wasn't such a good idea. The fact is that margin for error was ignored, and now that the error is happening, many people will learn the importance of objective spending habits mean.
The argument I hear is that people like Mt Lereah, Leslie Appleton Young, and even Greenspan egged people on into buying homes. Hogwash. They are JUST SALESPEOPLE.
Look at it this way... Your old car just blew the transmission. You need a new car. Suppose you walk past 3 car dealerships. One sells used cars. One sells new Chevrolets. The third sells brand-new BMWs. Big difference between these cars. The only similarity is that ALL THREE salesmen at these dealerships are waving at you, trying to get you to see why their car is the BEST thing for you. You as a consumer have choices. Buy the used car and save a lot of money but have potential repairs, buy a new car but not have near the glamor of owning the 60k bimmer.Choices, Choices, Choices.
You as a consumer have the choice. Nobody is going to make you buy a car, house, or pile of Sh*t for that matter. The blame is purely on the consumer. If people are really so stupid as to not know what their finances are, then perhaps the blame would best be placed on our educational institutions over a failure to teach basic 3rd grade math.
The argument I hear is that people like Mt Lereah, Leslie Appleton Young, and even Greenspan egged people on into buying homes. Hogwash. They are JUST SALESPEOPLE.
Yes, they are just sales people. But given their high degree of exposure isn't it possible, or even probable, that their cheerleading was "cognitive fuel" for people to ignore that "little voice in their heads", not do or ignore the math, encourage putting their inherent greed ahead of prudence?
When such people have such a high degree of exposure, they automatically assume a high degree of responsibility. Simply saying they were just sales people does not excuse them IMO.
Having said that, I also think that the people who are ultimately responsible are the people who, like you said, decided to take out the crazy loans and agree to pay absurd prices for houses.
The sales people, lenders, and other "enablers" take second seat after the actual buyers. Again, IMO.
"The argument I hear is that people like Mt Lereah, Leslie Appleton Young, and even Greenspan egged people on into buying homes. Hogwash. They are JUST SALESPEOPLE."
Most of the guilty including defaulters, realtors, politicians, and the mainstream media already have chosen subprime lenders as the human sacrifice to cleanse the community and appease the angered housing god.
J at Not One Cent
January, 2006?! That cannot be right.
FYI - I emailed the owner of the Marin Heat Index and he changed the date to what it should be, 2007.
Marinite and others..
I also agree that the consumer is responsible for their own decisions... no question.. I like Marinite's "enabler" term for Sir Al and Lereah and a host of other bandits that milked this for all it was worth..
My disgust for the two leading bandits has to do with their role as two of the primary enablers who both knew full well what the outcome would eventually be. They abused their public trust IMO.
On the heat index, I guess I'm back to "oops" on .64 (actual) vs the 1.04 (predicted). Wonder what their Sept-Oct prediction is? I predict we'll .40..
Matt...
I also predict that the RE machine will look back at these years (fall 2005 - 2009+) as the best thing that has happened to their industry in a looooong time. It will reintroduce risk evaluation and good financial planning and management into their sorry business. It will also result in a good house cleaning and some needed regulation and tightening.
The established Realtors will be the winners in the long term if they can hold on (not that I'm necessarily pulling for any of them given their huge "enabler" role in this mess as well).
Matt
Okay, 3rd post tonight (note to self, need to get a life here).. However, this thought crossed my mind so I wanted to jot it down before I forgot..
I hear lots of discussion on the loss of the subprime buyer taking out about ~10-20% of the eligable buyers.. Well, I say the real loss of eligable buyers is much higher.
The primary reason people tied their financial future to buying a inflated house in the last 4-6 years was to get into the game and make a few bucks. The need for a home was a distant second. Take away that financial reward and replace it (now) with the huge financial risk that has been properly exposed with this ongoing crash and I say the market has lost 75% (or more) of it's eligable buyers.
Okay, back to whatever the hell I was or wasn't doing..
Matt..
"I hear lots of discussion on the loss of the subprime buyer taking out about ~10-20% of the eligable buyers.. Well, I say the real loss of eligable buyers is much higher."
I agree. From 2005-2006, more than 60% of all loans in the BA were IO and ARM loans. That alone tells you that prices jumped the track using" real money" probably in 2003-2004... about the time there was a slowdown and the industry saved the day bringing out these clever loans.
I've been wishfully putting prices at around 20-30% or more below what they are today simply because the SF area had an avg of 20-30% per year appreciation solidly in years based heavily in exotic lending.
The market was already slow prior to the general public accepting the fact that IO and ARM loans were bad. Now that this news is passe', the damage to buying mentality will be fairly severe.
Matt, email me. I have something to ask.
More rats are bailing the ship. This time the rats are jumping from Freddie Mac. The Housing Doom blog has the scoop:
http://tinyurl.com/yu3duf
Marinite..
I'll have to email you tomorrow as I don't have access to my email at the moment..
Matt
I think you meant chief eCONomist
Marinite..
Email sent.. (I think)
Matt..
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