"End of Wall Street Boom" - Must-read history

[JackRiddler]

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doomandbloom has a case of Wikileaks derangement. Move Your Money, Kill the Banks, Iceland and the Greek riots are all sideshows. I'm sure Assange will soon be made responsible for the USA PATRIOT Act. Or 9/11.

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[vanlose kid]

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doomandbloom has a case of Wikileaks derangement. Move Your Money, Kill the Banks, Iceland and the Greek riots are all sideshows. I'm sure Assange will soon be made responsible for the USA PATRIOT Act. Or 9/11.

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it's odd that.

those who most loudly profess to be fighting the all-seeing-eye will be the ones who'll tell you that, yes, the all-seeing-eye is in fact all-seeing.

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[JackRiddler]

Agustino Fontevecchia
Moral Hazard

Double-Dip In Housing Almost Here, According To Case-Shiller Index
Dec. 28 2010 - 11:20 am | 18,232 views |


Home Prices Keep Falling

Housing markets have taken a turn for the worse, with the widely followed S&P/Case-Shiller index declining more than analysts had forecast in October, lending credence to the housing bears who have predicted a double dip.

The real-estate sector has been one of the sticking points in the Fed and the government’s attempts to revive the U.S. economy. The 20-city composite S&P/Case-Shiller Index, which measures the value of single homes in 20 metropolitan areas, declined 1% from September to October on a seasonally adjusted basis, S&P said Tuesday. That exceeded the 0.8% dip expected by Wall Street analysts. The index, which takes January 2000 as its base with a value of 100, hit 145.32, making October the fifth consecutive month where annual growth rates moderated from their prior month’s pace.

“The double dip is almost here,” said David Blitzer, chairman of S&P’s index committee.“There is no good news in October’s report.” Explaining that “the trends we have seen over the past few months have not changed,” Blitzer cited expired tax incentives and a “lackluster” national economy as some of the causes. “On a year-over-year basis, sales are down more than 25% and the month’s supply of unsold homes is about 50% above where it was during the same months of last year.”

Atlanta and Minneapolis suffered the steepest drops, with seasonally adjusted falls of 2.1% and 1.8% respectively. Denver and Washington were the only metropolitan regions to show sequential price gains on a seasonally adjusted basis, gaining 0.3% and 0.1% respectively. Excluding seasonal corrections, all 20 areas showed declines.

Stalled foreclosures waiting to hit the market will put additional downward pressure on prices, according to Westwood Capital. “The market has still not completed the price discovery necessary to determine the final value of housing – after all, easy money policy is still producing affordability that has masked the failure of prices to completely readjust to normalized levels,” Westwood said in a research note. “The most striking thing about [Tuesday’s] report is that we are seeing a repeat of the price decline patterns that appeared during the 2006-2009 downturn,” Westwood said, pointing to declines starting in “sand state” markets and gradually spreading to the balance of the remaining markets.

The 20-city index is still 4.4% above its April ’09 trough, but remains 29.6% down from its July 2006 peak. Ben Bernanke and the Federal Reserve have pledged to do whatever is in their power to help the economic recovery. In the FOMC’s last meeting of the year, held on December 14, the committee pledged to continue its policy of quantitative easing by purchasing long and medium-term Treasuries, in order to keep interest rates low and stimulate risk appetite. Housing bears abound, though, such as Nouriel Roubini, who predicted a double-dip in housing early in December, claiming problems could even spread to the “prime” market. (See Dr. Doom Bullish On Housing? Roubini Buys a $5.5 million Manhattan Condo).

http://blogs.forbes.com/afontevecchia/2 ... ler-index/

The 10-year Case-Shiller curve shows how the bubble more than doubled housing prices (!) and indicates there's a very long way to go down still:



There are more houses than ever (and more sitting empty, or being foreclosed upon) with demand much lower than when it was back at 100/120, and certain to go lower still with the end of homebuying tax incentives.

Keep in mind inflated housing is still the basis for trillions in bad paper at the banks that has yet to be declared worthless, but "marked-to-fantasy" since 2009. Which sets off derivative contracts...

And the government henceforth will be practicing deflationary policy.

I predicted many pages ago the crash will resume in early 2011, after the election, accompanied by rage for austerity and very likely a dollar crisis (in which deflation can transition into currency crash/hyperinflation).

Then there's this, now that we're done with the bogus celebrations of TARP as a success:

Bailed-Out Banks Slip Toward Failure

Via: Wall Street Journal:

Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing.

The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program.

Seems like a good place for this:
The Cryptogon link (http://cryptogon.com/?p=19507) leads to a Wall Street Journal link (http://online.wsj.com/article/SB1000142 ... lenews_wsj) which requires subscription.

And the wildcard is what Wikileaks may set off with the planned bank leak. Keeping in mind your domino/house of cards metaphors.

Interviewing Julian Assange, London, Nov. 11, 2010. Photo: Jillian Edelstein For Forbes

An Interview With WikiLeaks’ Julian Assange


Andy Greenberg: And this gap between your publishing resources and your submissions is why the site’s submission function has been down since October?

Julian Assange: We have too much.

AG: Before you turned off submissions, how many leaks were you getting a day?

JA: As I said, it was increasing exponentially. When we get lots of press, we can get a spike of hundreds or thousands. The quality is sometimes not as high. If the front page of the Pirate Bay links to us, as they have done on occasion, we can get a lot of submissions, but the quality is not as high.

AG: How much of this trove of documents that you’re sitting on is related to the private sector?

JA: About fifty percent.

AG: You’ve been focused on the U.S. military mostly in the last year. Does that mean you have private sector-focused leaks in the works?

JA: Yes. If you think about it, we have a publishing pipeline that’s increasing linearly, and an exponential number of leaks, so we’re in a position where we have to prioritize our resources so that the biggest impact stuff gets released first.

AG: So do you have very high impact corporate stuff to release then?

JA: Yes, but maybe not as high impact…

I mean, it could take down a bank or two.

AG: That sounds like high impact.

JA: But not as big an impact as the history of a whole war. But it depends on how you measure these things.


SNIP

AG: These megaleaks, as you call them, we haven’t seen any of those from the private sector.

JA: No, not at the same scale as for the military.

AG: Will we?

JA: Yes. We have one related to a bank coming up, that’s a megaleak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it.

AG: Is it a U.S. bank?

JA: Yes, it’s a U.S. bank.

AG: One that still exists?

JA: Yes, a big U.S. bank.

AG: The biggest U.S. bank?

JA: No comment.

AG: When will it happen?

JA: Early next year. I won’t say more.

AG: What do you want to be the result of this release?

JA: I’m not sure.

It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume.

Usually when you get leaks at this level, it’s about one particular case or one particular violation. For this, there’s only one similar example. It’s like the Enron emails. Why were these so valuable? When Enron collapsed, through court processes, thousands and thousands of emails came out that were internal, and it provided a window into how the whole company was managed. It was all the little decisions that supported the flagrant violations.

This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos that cames out, and that’s tremendously valuable. Like the Iraq War Logs, yes there were mass casualty incidents that were very newsworthy, but the great value is seeing the full spectrum of the war.

You could call it the ecosystem of corruption. But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest. The way they talk about it.

SNIP

From http://blogs.forbes.com/andygreenberg/2 ... n-assange/

Expect the anti-Wikileakers to switch from "Wikileaks is a false flag op to enable an Internet shut-down" to "Wikileaks is a psyop to blame the new economic crash on Assange."

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[Laodicean]

from Washington's Blog published 12/29/10

Way too long to C&P, so click the link below to read it. It was picked up by Naked Capitalism today, as well.

Underneath the Happy Talk, Is This As Bad as the Great Depression?

[Wombaticus Rex]

Home Prices Are Still Too High
They would have to decline another 20% just to get back to the historical trend line.
By Peter Schiff

Most economists concede that a lasting general recovery is unlikely without a recovery in the housing market. A marked increase in defaults and foreclosures from today's already elevated levels could produce losses that overwhelm banks and trigger another, deeper financial crisis. Study after study has shown that defaults go up when falling prices put mortgage holders "underwater." As a result, the trajectory of home prices has tremendous economic significance.

Earlier this year market observers breathed easier when national prices stabilized. But the "robo-signing"-induced slowdown in the foreclosure market, the recent upward spike in home mortgage rates, and third quarter 2010 declines in the Standard & Poor's Case–Shiller home-price index—including very bad October numbers reported this week—have sparked concerns that a "double dip" in home prices is probable. A longer-term view of home price trends should sharply magnify this fear.

Even those economists worried about renewed price dips would be unlikely to believe that the vicious contractions of 2007 and 2008 (where prices fell about 30% nationally in just two years) could return. But they underestimate how distorted the market had become and how little it has since normalized.

By all accounts, the home price boom that began in January 1998, when the previous 1989 peak was finally surpassed, and topped out in June 2006 was extraordinary. The 173% gain in the Case-Shiller 10-City Index (the only monthly data metric that predates the year 2000) in those nine years averaged an eye-popping 19.2% per year. As we know now, those gains had very little to do with market fundamentals, and everything to do with distortionary government policies that set off a national mania for real-estate wealth and a torrent of temporarily easy credit.



If we assume the bubble was artificial, we can instead imagine that home prices should have followed a more traditional path during that time. In stock-market terms, prices should have followed a trend line. When you do these extrapolations (see lower line in the nearby chart), a sobering picture emerges. In his book "Irrational Exuberance," Yale economist Robert Shiller (co-creator of the Case-Shiller indices along with economists Karl Case and Allan Weiss), determined that in the 100 years between 1900 and 2000, home prices in the U.S. increased an average 3.35% per year, just a tad above the average rate of inflation. This period includes the Great Depression when home prices sank significantly, but it also includes the frothy postwar years of the 1950s and '60s, as well as the strong market of the early-to-mid 1980s, and the surge in the late '90s.

In January 1998 the 10-City Index was at 82.7. If home prices had followed the 3.35% annual 100 year trend line, then the index would have arrived at 126.7 in October 2010. This week, Case-Shiller announced that figure to be 159.0. This would suggest that the index would need to decline an additional 20.3% from current levels just to get back to the trend line.

How has the market found the strength to stop its descent? No one is making the case that fundamentals have improved. Instead, there is widespread agreement that government intervention stopped the free fall. The home buyer's tax credit, record low interest rates, government mortgage-assistance programs, and the increased presence of Fannie Mae, Freddie Mac and the Federal Housing Administration in the mortgage-buying business have, for now, put something of a floor under house prices. Without these artificial props, prices would have likely continued to fall.

Where would prices go if these props were removed? Given the current conditions in the real-estate market, with bloated inventories, 9.8% unemployment, a dysfunctional mortgage industry and shattered illusions of real-estate riches, does it makes sense that prices should simply fall back to the trend line? I would argue that they should overshoot on the downside.

With a bleak economic prospect stretching far out into the future, I feel that a 10% dip below the 100-year trend line is a reasonable expectation within the next five years, particularly if mortgage rates rise to more typical levels of 6%. That would put the index at 114.02, or prices 28.3% below where we are now. Even a 5% dip would put us at 120.36, or 24.32% below current prices. If rates stay low, price dips may be less severe, but inflation will be higher.

From my perspective, homes are still overvalued not just because of these long-term price trends, but from a sober analysis of the current economy. The country is overly indebted, savings-depleted and underemployed. Without government guarantees no private lenders would be active in the mortgage market, and without ridiculously low interest rates from the Federal Reserve any available credit would cost home buyers much more. These are not conditions that inspire confidence for a recovery in prices.

In trying to maintain artificial prices, government policies are keeping new buyers from entering the market, exposing taxpayers to untold trillions in liabilities and delaying a real recovery. We should recognize this reality and not pin our hopes on a return to price normalcy that never was that normal to begin with.

[Nordic]

The Pentagon is "war gaming" large-scale economic collapse in the United States.

http://www.cnbc.com/id/15840232?video=1653093678&play=1

[JackRiddler]

Adding here to remind myself:

Highly, highly recommend both of Eric J. Weiner's books. The Shadow Market is his most recent, and as someone who reads economics books pretty much constantly (it is my job and all) I was supremely impressed with what a face-melter it was. Not only did he do a great job painting the big picture, but he's got a ton of information and connected dots I'd actually never seen anywhere else. It came out Sept. 2010 and actually includes the Pentagon exercises Nordic posted a link to...weird, huh?

His earlier book was even better. When people ask me what The Book on Wall Street is, I'm tempted to say Doug Henwood. Or to recommend some nice, palatable and clean Michael Lewis. I don't, though...instead I recommend What Goes Up, which is an "oral history" of Wall Street. He collected thousands of hours of interviews and then scoured books, papers and magazine to fill in all the gaps. The result is fucking amazing. The glee and ease with which these old white dudes discuss their criminal history is jaw-dropping, and the book moves faster than Harry Potter. It's really great stuff and I've heard nary a negative word from anyone I've recommended it to this year.

[Nordic]

http://www.washingtonsblog.com/2011/01/ ... d-for.html

Michael Hudson: Average Stock Held for 22 Seconds and Average Foreign Currency Investment Held for 30 Seconds

Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.

Yesterday, Hudson said:

Take any stock in the United States. The average time in which you hold a stock is--it's gone up from 20 seconds to 22 seconds in the last year. Most trades are computerized. Most trades are short-term. The average foreign currency investment lasts--it's up now to 30 seconds, up from 28 seconds last month.

See also this and this.

[vanlose kid]

that was a big mistake, sorry.

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[JackRiddler]

that was a big mistake, sorry.

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Whatever it was, I never saw it.

SJC ruling may void thousands of foreclosures
January 7, 2011 01:08 PM

By Jenifer B. McKim, Globe Staff

The Massachusetts Supreme Judicial Court today upheld a contentious land court ruling that puts in question the ownership of hundreds, possibly thousands, of foreclosed properties in the state.

The ruling challenges the way lenders have traditionally foreclosed on properties -- without having all the paperwork in place at the time a home is seized. It affirms a 2009 lower court decision that invalidated foreclosures on two Springfield homes because the lenders did not hold clear titles to the properties.

Cambridge attorney Paul Collier, who represented one of the homeowners in the case, said the supreme court ruling invalidates thousands of foreclosures, reverting ownership back to the homeowners who lost the homes, at least temporarily. In most cases, those property takings will have to be redone, further clogging an already bogged down foreclosure process that many real estate specialists say has contributed to the stagnant housing market.

"The banks and the investors are going to have to deal with those homeowners as to what happens to those properties," Collier said.

During the housing boom, millions of mortgages were packaged into bonds and sold to investors, a process that resulted in lengthy and tangled paper trails that can obscure ownership. Many lenders believed they could complete foreclosure transactions and later produce formal proof they held a mortgage. Today's ruling makes it clear that the practice will not be allowed in Massachusetts.

"We agree with the [land court] judge that the plaintiffs who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,'' the justices said in their opinion.

The decision will also have national implications at a time when lenders' foreclosure practices are being scrutinized by federal regulators and state attorneys general.

http://www.boston.com/business/ticker/2 ... News_links

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January 7, 2011
Massachusetts Ruling on Foreclosures Is a Warning to Banks
By GRETCHEN MORGENSON

The highest court in Massachusetts ruled Friday that U.S. Bancorp and Wells Fargo erred when they seized two troubled borrowers’ properties in 2007, putting the nation’s banks on notice that foreclosures cannot be based on improper or incomplete paperwork.

Concluding that neither institution had proved it had the right to evict the borrowers, the Supreme Judicial Court voided the foreclosures, returning ownership of the properties to the borrowers and opening the door to other foreclosure do-overs in the state.

Legal experts said that while this ruling did not set a precedent for other states, the outcome will be closely watched across the country because it is the first such ruling from a state’s highest court. Investors viewed the ruling as negative for banks; an index of financial company shares fell almost 1 percent on the day.

“The broad implication is you’ve got to dot your i’s and cross your t’s,” said Kathleen G. Cully, an expert in bankruptcy and lender regulatory law in New York. “You need a proper chain of title, and in both of these cases there was a gap in the chain.”

The case dates to 2007, when Wells Fargo and U.S. Bancorp began foreclosure proceedings against delinquent borrowers on two separate properties. Neither borrower fought the proceedings — the courts in Massachusetts are not obligated to oversee foreclosures — and both banks quickly seized the properties.

The banks’ problems began in the fall of 2008, when Wells Fargo and U.S. Bancorp sought judgments from the Massachusetts Land Court that would have given them clear title to the properties. In 2009, the court rejected the banks’ arguments, ruling that the banks had not been assigned the mortgages before they foreclosed, as is required. Instead, the banks had acquired the mortgages after they had begun foreclosure proceedings.

The ruling on Friday upheld that decision.

Foreclosures are supposed to occur only when lenders can prove they own the note underlying the property.

While it is common now for borrowers to question whether banks moving to seize their properties have the right to do so, in 2007, most borrowers assumed that the institutions foreclosing on them were acting properly.

Since then, lenders’ foreclosure practices have come under intense scrutiny. Borrowers’ advocates have argued that lenders flouted private property rights in their rush to foreclose on troubled borrowers. As lenders and Wall Street firms bundled thousands of mortgage loans into securities, banks often failed to record each link in the chain of documents demonstrating ownership of a note and a property.

Attorneys general in all 50 states are investigating foreclosure improprieties, which include forged signatures on legal documents and other dubious practices meant to patch up holes in loan documentation.

Both mortgages in the Massachusetts case had been bundled into securities and sold to investors. The banks that foreclosed on the borrowers were acting as trustees, bringing the actions on behalf of investors in the trusts, which held the properties at the time of the ruling.

In a statement, Steve Dale, a U.S. Bancorp spokesman, said: “Our role in this case is solely as trustee concerning a mortgage owned by a securitization trust. This judgment has no financial impact on U.S. Bancorp. The issues addressed by the court revolved around the process of the servicing of the loan on behalf of the securitization trust, which was preformed in this case by the servicer, American Home Mortgage Servicing.”

Vickee J. Adams, a Wells Fargo spokeswoman, said: “The loans at issue in the court’s ruling were not originated, owned, serviced or foreclosed upon by Wells Fargo. As trustee of a securitized pool of loans, Wells Fargo expects the entities who service these loans to abide by all applicable state laws, including those laws that govern foreclosure sales.”

Paul R. Collier III, a lawyer in Cambridge, Mass., represented Antonio Ibanez, one borrower in the case. “It’s been pretty clear and becoming ever more clear that the securitization industry has behaved as though it were immune from consumer protection laws, state homeowner protection laws and real estate regulations in its underwriting, securitization and foreclosure practices,” Mr. Collier said. “I am quite confident that this is merely the first petal off the rose with regard to predatory foreclosure practices.”

A special education teacher in Brookline, Mr. Ibanez and his wife moved out of the house and are now living in a rental condominium, his lawyer said. U.S. Bancorp, as trustee, will either have to pay Mr. Ibanez to buy a deed from him, Mr. Collier said, or walk away from the property, leaving it to Mr. Ibanez.

The loss on the property will be taken by investors in the trust that had claimed ownership of the mortgage.

The other borrowers whose foreclosure was overturned — Mark and Tammy LaRace — are still living in the home. They could not be reached.

The banks involved in the matter had asked the Massachusetts court to make its ruling prospective, meaning that it would affect only new foreclosures. The court declined to do so, allowing foreclosure cases that have been completed to be reopened and brought under scrutiny.

Mr. Collier said he had a dozen similar cases. In a legal brief presented to the Massachusetts court, representatives of the real estate industry said there were thousands of foreclosure cases in the state with facts like those in the Ibanez matter.

http://www.nytimes.com/2011/01/08/busin ... nted=print

[JackRiddler]

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States going bankrupt, and like Ireland tax cuts and capital-friendly policy makes no necessary difference.

January 6, 2011
The Texas Omen
By PAUL KRUGMAN

These are tough times for state governments. Huge deficits loom almost everywhere, from California to New York, from New Jersey to Texas.

Wait — Texas? Wasn’t Texas supposed to be thriving even as the rest of America suffered? Didn’t its governor declare, during his re-election campaign, that “we have billions in surplus”? Yes, it was, and yes, he did. But reality has now intruded, in the form of a deficit expected to run as high as $25 billion over the next two years.

And that reality has implications for the nation as a whole. For Texas is where the modern conservative theory of budgeting — the belief that you should never raise taxes under any circumstances, that you can always balance the budget by cutting wasteful spending — has been implemented most completely. If the theory can’t make it there, it can’t make it anywhere.

How bad is the Texas deficit? Comparing budget crises among states is tricky, for technical reasons. Still, data from the Center on Budget and Policy Priorities suggest that the Texas budget gap is worse than New York’s, about as bad as California’s, but not quite up to New Jersey levels.

The point, however, is that just the other day Texas was being touted as a role model (and still is by commentators who haven’t been keeping up with the news). It was the state the recession supposedly passed by, thanks to its low taxes and business-friendly policies. Its governor boasted that its budget was in good shape thanks to his “tough conservative decisions.”

Oh, and at a time when there’s a full-court press on to demonize public-sector unions as the source of all our woes, Texas is nearly demon-free: less than 20 percent of public-sector workers there are covered by union contracts, compared with almost 75 percent in New York.

So what happened to the “Texas miracle” many people were talking about even a few months ago?

Part of the answer is that reports of a recession-proof state were greatly exaggerated. It’s true that Texas job losses haven’t been as severe as those in the nation as a whole since the recession began in 2007. But Texas has a rapidly growing population — largely, suggests Harvard’s Edward Glaeser, because its liberal land-use and zoning policies have kept housing cheap. There’s nothing wrong with that; but given that rising population, Texas needs to create jobs more rapidly than the rest of the country just to keep up with a growing work force.

And when you look at unemployment, Texas doesn’t seem particularly special: its unemployment rate is below the national average, thanks in part to high oil prices, but it’s about the same as the unemployment rate in New York or Massachusetts.

What about the budget? The truth is that the Texas state government has relied for years on smoke and mirrors to create the illusion of sound finances in the face of a serious “structural” budget deficit — that is, a deficit that persists even when the economy is doing well. When the recession struck, hitting revenue in Texas just as it did everywhere else, that illusion was bound to collapse.

The only thing that let Gov. Rick Perry get away, temporarily, with claims of a surplus was the fact that Texas enacts budgets only once every two years, and the last budget was put in place before the depth of the economic downturn was clear. Now the next budget must be passed — and Texas may have a $25 billion hole to fill. Now what?

Given the complete dominance of conservative ideology in Texas politics, tax increases are out of the question. So it has to be spending cuts.

Yet Mr. Perry wasn’t lying about those “tough conservative decisions”: Texas has indeed taken a hard, you might say brutal, line toward its most vulnerable citizens. Among the states, Texas ranks near the bottom in education spending per pupil, while leading the nation in the percentage of residents without health insurance. It’s hard to imagine what will happen if the state tries to eliminate its huge deficit purely through further cuts.

I don’t know how the mess in Texas will end up being resolved. But the signs don’t look good, either for the state or for the nation.

Right now, triumphant conservatives in Washington are declaring that they can cut taxes and still balance the budget by slashing spending. Yet they haven’t been able to do that even in Texas, which is willing both to impose great pain (by its stinginess on health care) and to shortchange the future (by neglecting education). How are they supposed to pull it off nationally, especially when the incoming Republicans have declared Medicare, Social Security and defense off limits?

People used to say that the future happens first in California, but these days what happens in Texas is probably a better omen. And what we’re seeing right now is a future that doesn’t work.

http://www.nytimes.com/2011/01/07/opini ... nted=print

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[anothershamus]

Just a question, If we hit hyperinflation will that make real estate inflate as well? Bringing back the higher, yet diluted, housing prices.

[JackRiddler]

Just a question, If we hit hyperinflation will that make real estate inflate as well? Bringing back the higher, yet diluted, housing prices.

Too many scenarios to tell. Here's how I define them:

Deflation: What we have, & likely to get worse. I would argue that this, historically, is what the rich like.

Inflation due to demand, i.e., recovery: Not happening. You'd expect housing prices to rise.

Inflation due to supply, i.e., spikes in fuel or food: Housing prices could decline.

Collapse of dollar due to loss of faith on international markets, a.k.a. hyperinflation: Impossible to tell how this plays out. I'd expect there'd be very little property selling in such a period, except such as is forced (and therefore at relatively low price).

[Nordic]

Jack, how can you POSSIBLY say we have deflation right now?

Tell me, what exactly is dropping in price?

Everything is sky-high, record highs, and going upwards.

Oh, except for housing prices. But that was in a bubble, so who the fuck cares about that?

[JackRiddler]

Jack, how can you POSSIBLY say we have deflation right now?

Tell me, what exactly is dropping in price?

Everything is sky-high, record highs, and going upwards.

Oh, except for housing prices. But that was in a bubble, so who the fuck cares about that?

Take it up with them:
http://www.bls.gov/cpi/

The key is that demand is depressed. Prices don't necessarily drop by much. Food and fuel can simultaneously rise. The cost of living especially in the lower classes can get worse, even as the costs of all things that are sold decline. What are your indicators?