The Double Dip Hits the Housing Market

And will soon show up in the entire economy – from Zero Hedge:

…What is becoming clearer, especially after the latest reports on housing starts, permits, resales and builder sentiment surveys, is that housing is already double dipping in the U.S. The MBA statistics just came out for the week of June 18 and the new purchase index fell 1.2% – down 36.5% from year-ago levels and that year-ago level itself was down 22% from its year-ago level. Capish, paisan? So far, June is averaging 14.5% below May’s level and May was crushed 18% sequentially, so do not expect what is likely to be an ugly new home sales report for May today to be just a one-month wonder. Meanwhile, the widespread view out of the economics community is that we will see at least 3% growth in the second half of the year: fat chance of that…

As I’ve said before, I’ll bet that when all the data is fully available and we are able to look clearly at the big picture, we’ll see that no growth happened, at all, since the start of the recession in 2007.  What this means is that, strictly speaking, we won’t be heading in to a double-dip but merely seeing what was masked by the creation of massive, new government debt.

The wealth of the United States still exists.  It is in the materials we have available and the labor of our minds and hands – the trouble is that this wealth cannot be properly used because we have too much debt and have no real knowledge of the monetary value of our wealth.  We can’t plan because we don’t know what is happening, and even if we could plan our debt burden prevents us from freely exploiting our wealth.

The debt will have to be taken care of, as it were, by allowing the financial crash to reach its real bottom.  This will be painful – exceptionally so, in the short run – but it is necessary.  By doing this we will also then know the real value of what we have, and thus investments can be made rationally.  The way to bring it all together and get things running will then revolve around reforming our tax and regulatory programs to encourage the use, increase and storing up of wealth (and it is stored wealth – savings – which must be the only source of funds for investment).

The only thing for the average Joe to do now is prepare as best he can, and just wait for it to happen.  As inflation looks to be gone – and, indeed, we may get a severe round of deflation – holding on to as much cash as possible is the best option I can see.  This will be especially true for working people who may well lose their jobs and may also find that unemployment benefits are low, slow and, at times, nonexistent in the straightened finances we’re about to experience.  But, also, I am no financial expert and, indeed, hang on the knife’s edge, financially – I work for a major financial institution which is heavily invested in what I see as rather stupid and risky investments…if the world financial system falls apart, it may take my employer with it.

So be it – poverty isn’t the worst thing which can happen and, at any rate, we’ll all be poor together.

Read the original story at Noonan for Nevada