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U.S. new home sales plunge

JEANNINE AVERSA

Associated Press

Latest comment posted at 10:29 PM EST 01/01/08

Sales tumble to their lowest level in 12 years in November, more evidence that housing woes are far from over ...Read the full article

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  1. Beleaguered Middle-Class from Scenic Southern Ontario, Canada writes: Somehow, "I told you so" just doesn't begin to say it all.
  2. dennis Harris from United States writes: Was al qaeda in any way involved?
  3. J. Kenneth Yurchuk from Canada writes: You ain't seen nothing yet. Because the fed bailed out lenders instead of letting them take the hit they so richly deserved for their greed and Hubris, the crisis has been deferred for six months or so. But because of the trillion $$$ deficit and massive consumer and government debt, not to mention a looming adventure in Iran, when the chickens do come home to roost they will be UGLY suckers, looking more like vultures.

    Look for a deep long and painful US recession beginning in the first Q. of 2008 (if it hasn't already started) and look for it to spread to Canada by the 3rd Q or sooner. Short the market financial sector NOW, and buy bullion.
  4. Beleaguered Middle-Class from Canada writes: J. Kenneth Yurchuk from Canada writes: You ain't seen nothing yet. Because the fed bailed out lenders instead of letting them take the hit they so richly deserved for their greed and Hubris.....

    J.Kenneth: Are you always this depressed? Correct in your assertions mind you, but depressed I fear none-the-less. Breathe deeply and repeat the following: Bargains galore, bargains galore.....................
  5. Wade Tompkins from Edmonton, Canada writes: The bargains won't be great if you don't have a job.
  6. J. Kenneth Yurchuk from Canada writes: Hey beleaguered, I am not depressed at all. I took my own advice only last August, when this first really hit my radar. I'm doing quite nicely thanks.
  7. Yellow Submariner from Beneath the Waves of Green, Canada writes:

    Why is this so bad? If everybody in a given country has a roof over his head such that no new energy or materiel needs to go into further home building, then labour and capital that would otherwise go there is freed up for other uses. Wealth and quality of life increases as a consequence.

    All the hand-wringing about no need for new houses is silly. What if a new form of all-but-free energy was found, such that no one would be buying oil. Would that be so awful? Maybe for OPEC, but the rest of us could then use the $1800 we spend each year on gasoline to buy other stuff - nicer clothing, nice rakes and shovels and ladders for our homes, maybe a nice set of new dishes.

    I don't get it.
  8. Dr Demento from Canada writes: I'm not allowed to post on this thread because it reflects negatively about America, where according to some US patriots and their apologists, only great things happen.
  9. Beleaguered Middle-Class from Canada writes: Dr Demento from Canada writes: I'm not allowed to post on this thread because it reflects negatively about America, where according to some US patriots and their apologists, only great things happen.

    Coward.....

    LOL
  10. J. Kenneth Yurchuk from Canada writes: Yellow Submariner from Beneath the Waves of Green, Canada writes:

    Why is this so bad?
    ___________________________________________________________
    It's not that there are or aren't enough houses that is the problem. It is the fact that people bought them and now can't pay for them. This has resulted in a liquidity crisis in the American banking system which is literally teetering on the brink of collapse in many cases. The only Bank in North America that is not going to take a major hit to my knowledge is the TD which stayed completely away from "Asset Backed Credit" paper (ABCP). They are also the only bank in which i still hold shares, and I'll sell those in a second if they allow themselves to get pressured into signing on to the latest Ponzi bailout scheme. The whole thing really is like a game of Hot Potato.
  11. Beleaguered Middle-Class from Canada writes: J. Kenneth Yurchuk from Canada writes: Hey beleaguered, I am not depressed at all. I took my own advice only last August, when this first really hit my radar. I'm doing quite nicely thanks.

    Obviously sarcasm is lost on you J.K. But if it's any consolation, I am doing just fine as well, having arranged mortgage financing in September, and clearing high rate debts. Fine indeed!
  12. J. Kenneth Yurchuk from Canada writes: Beleaguered Middle-Class from Canada writes: Obviously sarcasm is lost on you J.K. But if it's any consolation, I am doing just fine as well,
    ___________________________________________________________
    Yeah, my financial glasses just don't seem to see humour. Oh well, what the hell.... Happy New Year, and I'm glad you're doing fine.
  13. bill k from Canada writes: US housing is in a depression and auto's have entered a recession. What exactly is holding the fake US economy up? As credit which is the only money Americans have left becomes tight or dry will we then see the current recession turn into a depression?
  14. Beleaguered Middle-Class from Canada writes: J. Kenneth Yurchuk from Canada writes: Beleaguered Middle-Class from Canada writes: Obviously sarcasm is lost on you J.K. But if it's any consolation, I am doing just fine as well,
    ___________________________________________________________
    Yeah, my financial glasses just don't seem to see humour. Oh well, what the hell.... Happy New Year, and I'm glad you're doing fine.

    Same to you! It's the others that don't believe in what's actually going on that scare the hell out of me. Oh well, you can only sayy I told you so, so many times.
  15. J. Kenneth Yurchuk from Canada writes: Hi Bill K; I'm not sure of the technical dividing line between a recession and a depression, other than that a Depression lasts for years and a recession is 2 or more consecutive quarters of negative growth. Our economy, when performing normally, tends to go into at least a mild recession every 7 to 10 years, so we are certainly due. A recession is usually a healthy phenomenon, during which success is consolidated and deadwood gets shaken out of the economy to allow new growth. Like leaving a field to lie fallow for a season.

    A true economic crisis on the other hand, such as we may be facing now, can ruin even a lot of otherwise healthy businesses, and is rare.
  16. Dave C from Edmonton, Canada writes: WOW, thanks goodness I live in Canada! Because of the fact that we as Canadians are special and "different" than all of the other housing Bubble countries imploding around us (US, UK, Spain, etc.), we can all sleep soundly knowing that the 700 square foot "crack house" in skid row Alberta that used to cost 95K but is now going for 450K, will not lose it's value........ or that is as long as we continue to have dumb Easterners and British Columbians who are willing to move here and pay that much.
  17. J. Kenneth Yurchuk from Canada writes: Dave C from Edmonton, Canada writes: we can all sleep soundly knowing that the 700 square foot "crack house" in skid row Alberta that used to cost 95K but is now going for 450K, will not lose it's value........ or that is as long as we continue to have dumb Easterners and British Columbians who are willing to move here and pay that much.
    ___________________________________________________________
    Or until the recession kills the demand for energy and the boom goes "poof"
  18. Dave C from Edmonton, Canada writes: " J. Kenneth Yurchuk from Canada writes: Dave C from Edmonton, Canada writes: we can all sleep soundly knowing that the 700 square foot "crack house" in skid row Alberta that used to cost 95K but is now going for 450K, will not lose it's value........ or that is as long as we continue to have dumb Easterners and British Columbians who are willing to move here and pay that much.
    ___________________________________________________________
    Or until the recession kills the demand for energy and the boom goes "poof""

    You got it, that's exactly what caused the last Alberta Bust. You could barely give Real Estate away when that happened. Alberta's economy tanked. That was a recession that hit the US at a time when people actually had savings and were not in debt. This time it could be severe because people have no savings and are ridiculously deep in debt. It's not just the new home buyers who are at risk of foreclosure in the US, it's millions of people who have also refinanced their houses multiple times through home equity loans as their house values soared for the full purpose of buying toys and trips. Now that their values are plunging, they are carrying VERY LARGE debt loads.
  19. A C from I Have A Solution To This Problem, Canada writes: My solution is to offer immigration amnesty for any of the 13 million or so estimated illegal aliens in the USA if they purchase a home.
    This will significantly drive up demand for housing, thus stop the free fall in the housing market - and offer a legitimate excuse for the aliens to stay - because they are going to stay regardless - imagine evicting 13 million people - it's not going to happen. As the saying goes, you might as well kill two birds with one stone.
  20. John McCaffery from Australia writes: Keep in mind that these economic cycles are necessary to protect us from ourselves. We might be able to avoid them if we were driven by common sense rather than this insatiable lust for more than we need. The worst part about all this is that much of the money spent on bigger homes, gadgets, travel, etc, will add little or no long-term value to the economy. Consider instead wealth invested in the community, infrastructure, educating and raising children, etc... We are sometimes our own worst enemy. The US is not alone in all of this; however, the US is like the big show in town, so stay tuned, the show is about to start!
  21. Marv M from Canada writes: " A C from I Have A Solution To This Problem, Canada writes: My solution is to offer immigration amnesty for any of the 13 million or so estimated illegal aliens in the USA if they purchase a home.
    This will significantly drive up demand for housing, thus stop the free fall in the housing market - and offer a legitimate excuse for the aliens to stay - because they are going to stay regardless - imagine evicting 13 million people - it's not going to happen. As the saying goes, you might as well kill two birds with one stone."

    Your solution wouldn't work. If there is a major recession or worse in the US you can expect to see unemployment go up. The last thing they need is 13 million more employees. Also, and probably a much larger issue is you can expect the banks to either greatly reduce their lending or at the least tighten the requirements substantially as their sub prime write downs continue. What kind of a loan do you think an uneducated immigrant with no savings or collateral and more than likely a low or minimum wage job? They would be lucky if they could qualify and if they did, it would be for a very small amount.
  22. A C from I Have A Solution To This Problem, Canada writes: Marv M: you are stereotyping. Thea are millions of illegal immigrants who are ALREADY in the USA whom are well educated, very literate and have substantial savings. You think what you see on Lou Dobbs the peasant Mexicans hanging out on the street corner is what all illegals are like? You are mistaken if you do.
  23. Gary Dare from Portland, Oregon, Canada, writes: A C writes, "My solution is to offer immigration amnesty for any of the 13 million or so estimated illegal aliens in the USA if they purchase a home." Actually, many subprime NINJA (no income, no job nor assets) loans are in the hands of illegal immigrants.
  24. Dave Herzog from Iowa, United States writes: The housing thing was all smoke and mirrors anyway. The subprime thing was driven by greed and unscrupulous lenders. They should not be bailed out by the honest taxpayer. The market is in for a correction but will bounce back. It always does.
  25. Gary Dare from Portland, Oregon, Canada, writes: Actually, there are three pieces to the housing puzzle, whichever country or region that you examine: new home sales, existing home sales, and pricing. Chicago has seen a slowing in sales for both new and existing homes but prices in the nine county Chicagoland region have been mostly steady. In dodgy areas with lots of subprimes and foreclosures, and the rest of Illinois outside of Chicago, prices are starting to slip.

    Another example of the story that sales volume tells, the Oregonian newspaper reports today that the rate of sales INCREASE is slowing in the Pacific NW, i.e., year to year jump in sales is shrinking.
  26. Marv M from Canada writes: " A C from I Have A Solution To This Problem, Canada writes: Marv M: you are stereotyping. Thea are millions of illegal immigrants who are ALREADY in the USA whom are well educated, very literate and have substantial savings. You think what you see on Lou Dobbs the peasant Mexicans hanging out on the street corner is what all illegals are like? You are mistaken if you do."

    Sorry, I'm not suggesting that there aren't well educated illegal immigrants in the country, but generally when you think of the large amount of illegals they tend to be migrant workers with few skills. I would assume that the well educated, skilled workers would go through the legal means of immigration as they would be applying for more skilled positions that would require the legal documentation. Sneaking in illegally would make it very hard to find a good professional job. Where as the illegal immigrants are more or less taking laborer, cash paying positions.
  27. Gary Dare from Portland, Oregon, Canada, writes: Marv M writes, "If there is a major recession or worse in the US you can expect to see unemployment go up. The last thing they need is 13 million more employees." But there is a question of fit ... even if all of the estimated 12-20 Million illegal immigrants vacated, incumbent US citizens and immigrants may not take the available jobs or last in them. One grower in Washington State took up the Lou Dobbs challenge of hiring legal workers for $1000 a week ... they get the same pay as the illegals but for each week completed, a bonus to top up to $1000. Two dozen Americans showed up, the last ones were gone by Wednesday.

    At least a third of the berry, cherry and apple crop in Washington and Oregon remained unpicked and rotted in the fields. The price of PNW jams and candied fruits that I bought for friends and family as gifts went up by 20-30%.
  28. Beleaguered Middle-Class from Canada writes: Dave Herzog from Iowa, United States writes: The housing thing was all smoke and mirrors anyway. The subprime thing was driven by greed and unscrupulous lenders. They should not be bailed out by the honest taxpayer. The market is in for a correction but will bounce back. It always does.

    Dave Herzog: You are correct in your assertion that the market is in for a correction, but will bounce back. It always does.

    But Bush and the Fed have put a mattress on the pavement under the bouncing rubber ball. EVERYONE knows that a ball bounces better if it hits something really hard, like pavement. Why dampen it with an unnecessary mattress??
  29. Tally Wacker from Canada writes: Marv M from Canada writes: "..... Sorry, I'm not suggesting that there aren't well educated illegal immigrants in the country, but generally when you think of the large amount of illegals they tend to be migrant workers with few skills. I would assume that the well educated, skilled workers would go through the legal means of immigration as they would be applying for more skilled positions that would require the legal documentation. Sneaking in illegally would make it very hard to find a good professional job. Where as the illegal immigrants are more or less taking laborer, cash paying positions. Why do you apologise for the truth Marv, the well educated Mexicans are not the illegal immigrants who are also Mexicans. The illegals do menial work, and live under the radar. They are likely not going to be able to afford a home, and they will not be able to save the US housing crisis. Affordability, the wrong people buying homes through sub-prime, and international competition are the factors that are killing housing. This situation will self correct if it is left alone. Homes will drop in value, America will innovate new products, and sub prime borrowers will find a new type of shelter(rent). Canada is not bullet proof, and we will feel the impact of this, but the reality is that the world economy is growing and they need our resources. Our economy exporting to other nations, and these nations are driving up commodity prices. Canada is not going to go for it, the same way as the United States.
  30. Gary Dare from Portland, Oregon, Canada, writes: Actually, Tally Wacker, there was a recent CNN Special Investigations Unit documentary profiling illegal immigrants and in Virginia, a Venezuelan family who overstayed their tourist visas settled in and the parents work at a private (non-chain) hotel, and worked their way up to the top of the hospitality and housekeeping staff. The hotel owners came on camera, as if to double dog dare Homeland Security, to say that they'll hire anybody who would work so hard and as reliably, regardless of status. So the couple pulls in a decent lower middle class income, are mortgage holders, and their chief worry is their son about to graduate high school without university or middle class career prospects due to their illegal status.
  31. MD Kachmar from Bubbleville, Canada writes: The Americans are a clever and resourceful people. Never underestimate their ability to extricate themselves out of a tight jam.
  32. Mary Smith from United States writes:

    Demento

    Wrong again (you can't seem to stop).

    It is not American's saying only great things about the US; it is you saying only negative things about the US.

    Oh, and one reason prices are coming down is they disproportionately skyrocketed and were too high.
  33. Mary Smith from United States writes:

    Illegal immigrants own homes. Illinois offers State (tax-payer) backed loans for the 'poor' that don't require a social security number, credit history, bank accounts or tax returns. Another idiotic Democrat sponsored program.
  34. Dr Demento from Canada writes: Mary Smith from United States writes:

    "It is not American's saying only great things about the US; it is you saying only negative things about the US."

    But I didn't say anything negative about the US!

    Do I have your permission to?
  35. Dr Demento from Canada writes: Mary Smith from United States writes:

    "Oh, and one reason prices are coming down is they disproportionately skyrocketed and were too high."

    And what was behind that Mary?

    Greedy unscrupulous lenders?
    Stupid uninformed borrowers?
    Lax financial regulations?
    Bad luck?
  36. Dave Herzog from Iowa, United States writes: Demented,

    The USA built the Panama Canal and let all of mankind use it and even gave it back to Panama in 1999. Billions of barrels of oil saved by the shorter route since it was built. USA did do this one good thing no?
  37. Gary Dare from Portland, Oregon, Canada, writes: Actually, Mary Smith, that's a proposal by Blago and given all the other things on the plate, with a Chicago Transit doomsday deadline looming for the third time on 1/21 plus ongoing RTA and tax issues, who knows if this idea will ever make the floor in Springfield.
  38. Tally Wacker from Canada writes: Gary Dare from Portland, Oregon, Canada, writes: Actually, Tally Wacker, there was a recent CNN Special Investigations Unit documentary profiling illegal immigrants and in Virginia, a Venezuelan family who overstayed their tourist visas settled in and the parents work at a private (non-chain) hotel, and worked their way up to the top of the hospitality and housekeeping staff. The hotel owners came on camera, as if to double dog dare Homeland Security, to say that they'll hire anybody who would work so hard and as reliably, regardless of status. So the couple pulls in a decent lower middle class income, are mortgage holders, and their chief worry is their son about to graduate high school without university or middle class career prospects due to their illegal status. ...... I am not suggesting that all illegal immigrants are migrant workers doing menial work. I am however saying that the majority are, and they are illegal immigrants out of poverty and desperation. I do not support measures to pacify illegal immigration in Canada, and I do not even support temp foreign worker programs. It is my feeling that we have plenty of people in the country(Canada) that are underemployed and simply need skill training to do jobs that are being handed to foreign workers. If I was an American citizen, I would be furious with the governments turning a blind eye to this source of cheap labour.
  39. Dr Demento from Canada writes: Yes David Herzog the USA built the Panama Canal strictly for altruistic reasons - we all know that. They didn't "let" all of mankind use it. Do you have any idea how much revenue the Panama Canal tolls generated for the USA? But it was a Canadian who solved the Suez Canal crisis and was awarded the Nobel Peace Prize.

    Here is the main reason that the US wanted a canal across Central America:

    http://www.history.navy.mil/photos/images/h73000/h73411.jpg
  40. Yvonne Wackernagel from Woodville, Canada writes: Of course, being me, I am going 'against the popular edict'. I still believe that we should let the 'greedy' or 'easily misled' fall on their swords in a hurry and start to rebuild quickly by bringing in higher interest rates to attract the millions of people who are just waiting for this opportunity to start investing again. Let us stop this "follow the leader and doing what others do because they do not know better'. Those who used their own common sense and had a conservative balanced portfolio, maintaining their hard assets, avoiding unnecessary debt, etc. will now be in a more secure position to continue with their discretionary financial behaviour and enjoy their usual contentment.
  41. David Gibson from Hamilton, Canada writes: Canada avoided the last economic drawback the US had, and it will avoid this one. We will get a slowdown, but not like the US. We have neither the highs nor lows that the US gets. House values have risen many times more than Canadian prices in the past ten years. Their housing market has been hyper-inflated, and it will be corrected. Canada will suffer from falling exports, but we are not a cog of the US economy, even being as close as we are.
  42. Mary Smith from United States writes:

    Gary Dare

    Actually, it is NOT a proposal, but is in effect. And of course, Blago is a Democrat.
  43. Larry Robinson from Canada writes: My Gawd, there is a Christmas ... I totally agree with Yvonne Wackernagel.

    People and institutions who had very poor judgement, incredible greed and simple poor financial planning should suffer the consequences of their actions. No more bail-out.

    People and institutions who have read, planned and followed a path of fiscal prudence should have the opportunity to profit by their decisions. Low prices equal buying opportunities.

    A little aside to any smug Canadians. Mortgage lending is not the sole responsibility of chartered banks listed on blue chip equity funds. There are many second line lenders in Canada. Today, my partner who was offered a $275,000 mortgage on no equity nor income last year visited the same financial institution today to re-balance her new RRSP portfolio. I have advised her to ensure some future income as her first step to fiscal recovery. The representative she met strongly advised her that real estate was by far a better investment strategy and he would immediately make available the $275,000 mortgage based solely upon her small savings for one year.

    Cheers, and Happy New Year Yvonne.
  44. Neo the Con from Calgary, Canada writes: This subprime crunch will only get worse. This is just a warm-up act we're seeing now. More of these ARM's and LIAR loans are resetting this spring (in 3 upcoming waves of resets). We're in Act 1 of a 4 act play. The exodus from apartments to the suburbs will reverse. A lot of people qualified for "bogus" financing that shouldn't have. A lot of other people took the opportunity to make easy money flipping houses. Every idiot knows that the easy money never lasts forever. 85% OF THE FINANCING
  45. T R from Canada writes: Good. Maybe the suburban sprawling will go down with it.
  46. John Doe from Halifax, Canada writes: The Great Depression: First there was a bubble in stocks, then a spreading liquidity crisis, then a recession and job losses, then people who could not pay on their mortgages lost their homes and just "walked away" from mortgages with balances greater than the reduced value of their homes. Liquidity froze as banks failed. A deflationary spiral set in as the money supply contracted.

    Those who do not learn from history are doomed to repeat it...
  47. J Kay from Canada writes: Dave Herzog: The USA finished the Panama Canal but the French started it in the 1880's and quit after more than 22,000 workers died of Malaria and other tropical diseases. The USA took over construction after the French left. Panama prior to this was part of Columbia but the USA 'aided' the province of Panama in achieving independence from Columbia to create the nation of Panama in which the USA would act as protectorate and would gain complete control of the Panama Canal Zone. The US prevented Columbia from responding to Panamanian 'Independence' through a naval blockade and then sent troups to Panama to protect it's economic and strategic interests. The Canal provided significant revenues to the US (millions of dollars per year) and also allowed the US to use the canal to it's economic advantage, choosing to allow or prevent rival economic nations and companies from entering the canal, thus being forced to take the much longer route around the Cape Horn, through the Drake passage.

    While the US handed back control of the Canal Zone to Panama under conditions laid out in the Torrijos-Carter Treaty, the fact of the matter is the provisions laid out in said treaty gives the US the right to militarily intervene in the Canal Zone and re-assert control of the Canal should it feel it necessary to do so. This is hardly true independence then.

    The US history with regard to the Panama Canal is hardly so innocent and benevolent. The USA recognized the 'independence' of Panama because it served the USA's economic and strategic interests, not because they cared about Panama. The USA had previously been in negotiations with Columbia as part of the Hay-Herran treaty to build the canal as part of Columbia. When the Columbian senate failed to approve the treaty the USA help incite and aid Panamanian independence from Columbia. This was simply a case of the US interfering with a sovereign nation to support it's own economic interests.
  48. J Kay from Canada writes: Larry Robinson: The problem with that view, the one which you and Yvonne espouse is that other people get caught in the crossfire. Real estate is largely valued not by the house itself but by the property values of the homes around it. Thus a 3 bedroom, 2 bath, 2500 sq ft home in Fargo ND, is far far lower priced than one in San Francisco, simply because of location. Within a given a area a 'nicer' home may sell for slightly more than a dump but largely the price discrepencies are not significant. Therein lies the problem.

    If you have a pocket of people who did things right, have a good job, can afford their homes, living around a bunch of people who lived the high life on cheap debt, who are now about to go under, their doing so not only hurts them but it lowers the property value for everyone around, impacting those people who did it right. Now they have a mortgage on a home which they bought at the top of the market which very well may be worth less than the mortgage. With some 2 plus million estimated homeowners about to be significantly affected by ARM resets, which the Paulson 'plan' is designed to aid, at risk of bankruptcy, the numbers are large enough that this can have a chain reaction effecting those who did it right as you say. That's the problem here. The effects go beyond those who did things wrong and impact the rest of America.
  49. Alyssa Watson from Canada writes: i dont know why people predict doom and gloom if the US goes into recession, even if they are our biggest trading partner. Look at all the other countries emerging. We have almost everything they want. We are putting ourself in position to be a economic superpower in the foreseeable future. I also think this goverment is not doing much when it comes to alternate energy simply because when the world runs out of oil canada will still be extracting it from the oil sands for the next 150 years .
  50. Kenneth Yurchuk from Canada writes: Alyssa Watson from Canada writes: i dont know why people predict doom and gloom if the US goes into recession, even if they are our biggest trading partner. Look at all the other countries emerging. We have almost everything they want. We are putting ourself in position to be a economic superpower in the foreseeable future. I also think this goverment is not doing much when it comes to alternate energy simply because when the world runs out of oil canada will still be extracting it from the oil sands for the next 150 years .
    ___________________________________________________________
    Alyssa, The problem with Canada depending on "emerging" economies like China and India for trade to shelter us from a US downturn is that their economies are also largely dependant on US trade. Given time their economies will mature and become self driven by their massive domestic market, but that won't happen until a critical mass of domestic middle class consumers develops. I don't believe that China and India are quite at that stage yet, and another generation (20 years) is probably needed before that happens
  51. Marv M from Edmonton, Canada writes: " Alyssa Watson from Canada writes: i dont know why people predict doom and gloom if the US goes into recession, even if they are our biggest trading partner. Look at all the other countries emerging. We have almost everything they want. We are putting ourself in position to be a economic superpower in the foreseeable future. I also think this goverment is not doing much when it comes to alternate energy simply because when the world runs out of oil canada will still be extracting it from the oil sands for the next 150 years ."

    First off, the other countries that are emerging (China, India) are doing it primarily thanks to their massive trade (and trade imbalance) with the US. This might come as a shock to you but if the US economy tanks, everyone tanks even the emerging countries. It's an absolute pipe dream to think that the MASSIVE spending by the US consumer does not impact the rest of the world. Also, Alberta's oil sands could never ever in a million years even come remotely close to proving the world it's oil. We are only currently able to extract barely over a million barrels a day, the US alone consumes over 21 Million barrels a day. If Alberta were to triple or quadruple their oil sands production the fresh water that would be wasted and unrecoverable plus the C02 emissions would be STAGGERING. The Oil Sands is VERY DIRTY oil and a bad solution.
  52. Larry Robinson from Canada writes: J Kay .. the issue is not just falling real estate valuations.

    The problem is falling valuations on properties that have no or minimal equity and were qualified on marginal income.

    Basically, borrowers leveraged themselves beyond traditional income and equity guidelines and lenders diluted borrowing requirements and encouraged "friendly appraisals" that put property valuations at optimistic levels to allow the amount of money borrowed.

    Falling real estate only affects those leveraged beyond valuation and with insufficient income to carry the property.

    In short, the sub-prime lending created a fantasyland. Reality is now coming back. I have heard from fellow realtors in Arizona where developments are vacant, overgrown and vulnerable to extreme devaluation, possible squatting and vandalism.

    We have yet to see the whole wave. And any intervention can only be for those who would qualify "normally". Bad debt and high risk borrowers will be flushed out and there will be an adjustment period.
  53. Dr Demento from Canada writes: Marv M from Edmonton, Canada writes:

    "The Oil Sands is VERY DIRTY oil and a bad solution."

    Which is why we need hundreds of new nuclear power plants to produce Hydrogen - and the next transportation evolution.
  54. Gary Dare from Portland, Oregon, Canada, writes: Mary Smith writes, "Actually, it is NOT a proposal, but is in effect." The latest references that I can find were from Business Week of 12/14 ...

    http://www.businessweek.com/the_thread/hotproperty/archives/2005/12/taxpayer-backed.html

    And in his year-end wrap-up, no mention by Andy Shaw of ABC 7 Chicago (nothing came up by Mike Flannery at CBS 2 Chicago) ...

    http://abclocal.go.com/wls/story?section=news/politics&id=5853899

    Any references will be greatly appreciated, thanks!

    "And of course, Blago is a Democrat." I never disputed it, just wondering about the relevance. Edgar and Ryan were GOP but kinda spendy when I was in Chicago.
  55. James P from Spruce Grove, Canada writes: Someone needs to hit the reset button. Debt is the trump card and the consumers are going to be the ones holding it. Anyone can see that if all these loans get called in the banks are going to lose. I agree with some of the posts above that say let the banks hold this bag they bought. Sure millions wouldn't get to buy the newest TV and sure the economy will tank but if you are a like the average American, you'll find a way to feed the family. Pay back is a bit@h, but the bit@h is getting her payback.
  56. OZZY RULES THE WORLD! from Canada writes: http://www.youtube.com/watch?v=oIO8B6fpFSQ&eurl=http://www.brasschecktv.com/page/242.html

    Here is some real news, listen to what Bhutto said about Osama not to long ago.

    As for US housing, is this really a surprise..eventually everyone will run out of credit.
  57. CatMan Due from Canada writes: The housing meltdown is going to cause some big time pain. The experts are saying that price declines are not anywhere near their peak, and that inventory is at a 10 month supply. You do not have to be a rocket scientist to know that anyone in construction and real estate are going to take it on the chin. Don't forget about insurance companies , finance companies etc...these will be the others caught up indirectly. Lets also understand the domino effect of less credit on consumer spending, cars, TVs , travel. Bend over this is going to hurt!
  58. Brian Lilly from Canada writes: Who is George 'DUBBYA' going to blame all of this on???
  59. Rocky Balboa from United States writes: Of the half dozen or so new homes completed in my California neighborhood in 2007 (all infill type/tear down projects), none have been sold to third parties. Three became rentals, one was "purchased" by the developer to move into and three remain vacant. Not very promising for all parties concerned. One can only guess how long the developers will be able to carry their unsold homes. So much for the old saw, "Buy land, they ain't making any more of it".

    I don't know how much real estate prices fell between 1929 and 1933, but I suspect that in 1933 cash was king and there were lots of bargains to be had, whether you lived in Toronto or Scarsdale, NY. In September 1929, one month before the stock market crash, my father and his 2 sisters bought the house I grew up in and the one next door for all of $2,500 (for 2 houses in central Toronto!). I doubt that anyone in those days could get a loan with little or no money down. Nowadays, the 2 houses would probably sell for close to $1 million for the 2 of them.

    The US housing market has a lot of problems to work through and prices will undoubtedly drop some more, especially in inflated neighborhoods, before they start to move back up. We live in interesting times.
  60. harry carnie from Northern, B.C., Canada writes: John McCaffery from Austrailia. You suggest investing in the infrastructure of
    a country(highways, schools , hospitals, water, power systems)

    The far Right view such thoughts as subversive.The rich must be allowed to get richer...that is ALL that counts.

    Considering what IS BEST for ANY country...or its citizens is considered
    Socialist,/ Communistic...and NOT encouraged..you must be aware of that?
  61. Mary Smith from United States writes:

    Gary Dare

    It is called the Opportunity I-Loan Program. At the time (late 2005), Illinois became only the second State to offer loans to illegal immigrants (the other was WI, but there was a Bill to reverse it. I don't know if it was done).

    No matter what Party does it, giving loans to people with no social security number, credit history, bank accounts, or tax returns is poor policy. To top it off, they get low interest rates. Break the law, no credit, little financial history and you get rewarded.
  62. harry carnie from Northern, B.C., Canada writes: Well... golly gee ....WILLICKERS....you do not suppose there is a problem in the U.S.A. economy because of the tens of thousands of jobs that have been "outsourced" over the past few years?

    Naaah THAT could not BE......or was that fellow Ford correct when he paid his workers a decent wage so they could purchase the product they were manufacturing?
  63. Larry Robinson from Canada writes: Harry ... A free enterprise capitalist system only works if there are enough participants exchaning labour for capital to participate in the market and if there are enough entrepeneurs providing enough services and products to for choice, competition and price stability.

    Globalization has eradicated the two requirements and artificially given the low income/low productive labour the quick means of purchasing power via easy debt, and used offshore cheap labour to eradicate local entrepeneurs and initiative.

    The ugly truth is huge high risk debt to keep an artificial economy on its shaky wheels.

    Keep printing money and don't ask questions ...
  64. Kim Morton from Qualicum Beach, Canada writes: More like prospective buyers finally quit listening to the hype and are waiting for the prices to come back down to reality. I hope lots of speculators get burned.
  65. harry carnie from Northern, B.C., Canada writes: Larry Robinson........would say you are right on the MONEY..

    Sorry about that........will shut my mouth...we are ALL in the same boat
    and it will NOT take much rocking...Have a good 2008.
  66. garlick toast from Canada writes: on the other hand,people who live within their means and have savings are going to get screwed by inflation which,to me, seems to be low-balled by the BoC. extending "overnight liquidity" to the lenders might turn out to be "putting out fire with gasoline".
  67. Jo Geoghegan from Canada writes: All this blathering logarrhea about the credit crisis resulting from bad loans and overblown residential prices in the U.S.A. Yet nobody seems to have checked out Standard and Poors U.S. house price index -
    see
    www2.standardandpoors.com/spf/pdf/index/CSFHomepriceHistory122622.xls

    It shows that the current average cost of a house in San Francisco is 202k and Boston 169k. The highs in these sample cities, which peaked in 2006 and 2005 were 217k and 182k respectively.
    Compare that with the still skyrocketing average cost of similar sized Canadian cities of Toronto at 450k and Vancouver at 500k respectively.
    It is interesting to note that average U.S salaries are higher, and home loan interest and property taxes are tax deductable ( although capital gain applies if a principal residence is not replaced in year).
    Would you want to be holding the mortgages on THESE overpriced Canadian homes?
    Now who exactly is overpaying for dubious equity? Or who is successfully hiding the real story?
    Oh sorry I forgot.
    This is Canada. It couldn't happen here. Wanna bet?
  68. garlick toast from Canada writes: Jo Geoghegan from Canada, i have no doubt that this mess is coming soon"to a theatre near you".and i don't mean "you" personally.somehow, housing has become a commodity instead of a reasonable reward for working hard.after 30 yrs. in construction i can say that the modern "mcmansion" is often a piece of wasted space with a lifespan of 40 yrs.also, the canada building code has been somewhat high-jacked by the materials manufacturing lobby.
  69. John McCaffery from Australia writes: harry carnie - Actually, my previous comment should not be interpreted as left or right, since, the rich will get richer in a community where people are better educated and the infrastructure works. However, my point was that the idea of a community simply lusting for more is neither left or right - it is simply destructive, but probably a natural weakness in us humans. I believe the left and right thinkers are often aiming for the same thing, where they differ is how to get there - the right generally prefers people be free to choose, where the left is comfortable to have big brother dictate. It seems the right side of politics sometimes fails on the principle that it is government’s role to protect the community, while maybe the left fails to protect the community from the government.
  70. J S from Toronto, Canada writes: Beleaguered Middle-Class from Canada - Thanks for the laughs!!
  71. Beleaguered Middle-Class from Canada writes: J S from Toronto, Canada writes: Beleaguered Middle-Class from Canada - Thanks for the laughs!!

    Your very welcome. Happy New Year. Although I don't think I can say the same for the American economy, that mattress just a'int gonna be thick enough. Time for another war I think......
  72. W M from Canada writes: It is always hard to predict where the economy will go and when, but there is certainly the potential for a hard landing, given that it is not just certain homeowners and the institutions that have lended to them that are overstretched. The problem is that Bush delivered a massive tax cut for the richest 2% of Americans without any reduction in spending (which could have had its own negative ramifications). Instead, he financing the shortfall by borrowing massive sums, mostly from developing and developed Asian countries, which is why the US is now massively indebted and the lending countries are starting to question whether they want to continue to add US securities (some are even starting to sell those they already hold). What they will do, if the US economy really does tank is anybody's quess, but one thing that is certain is that, thanks to George W. Bush, the US no longer controls its own destiny to the extent it did prior to his election. The reason it is hard to know what they will do is the damage that a US collapse would do to them. Even if the US economy contracted with no change in exchange rates, it would hurt US suppliers like China alot; but the falling value of the US dollar exacerbates that fall, by cutting the purchasing power of each dollar. To avoid that, China, Korea, Japan, Thailand, etc. may try to prop up the US economy to keep their export industries ticking. However, in the absence of some real changes in the US, the lender countries can only delay (and possibly worsen) the eventual collapse. And, given the mess that Bush has created, there will be no easy fixes. Hopefully, there will be at least one lasting lesson learned from Bush: the next time a candidate tries to present his status as a half-wit as a desireable quality in a future president, people will say no thanks.
  73. Brian Pelican from Canada writes: WM, are you lying or just ill-informed?

    The Bush tax cuts were accross the board with many people at the bottom effectively taken off the tax roll altogether.
  74. Brian Pelican from Canada writes: And further, the US annual deficit is this year about 1% of GNP, less than many European countries, as much as you may want to exaggerate it.

    I am constantly amazed by people on these boards who either think they know what they are talking about or who just want what they say to be the truth.
  75. Dr Demento from Canada writes: Brian Pelican - your myopic ideology is blinding you to the reality of US economic woes. "The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows. "We're on an unsustainable path and doing a great disservice to future generations," says Chris Chocola, a former *Republican* member of Congress from Indiana and corporate chief executive who is pushing for more accurate federal accounting. Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later. The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition. Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined. Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities. State and local government retirement plans account for much of the rest. This hidden debt is the amount taxpayers would have to pay immediately to cover government's financial obligations. Like a mortgage, it will cost more to repay the debt over time. Every U.S. household would have to pay about $31,000 a year to do so in 75 years."
  76. Brian Pelican from Canada writes: So, Demento reads the USA Today - that tells me a lot about his intellect. That rag is given away in hotels and is read by travellers out of touch with their local newspapers -it is hardly an intellectual publication. It is also well known as being skewed to left of centre, which is probably the reason it suits Demento. What also suits Demento is that the article he quotes, but doesn't give a link to, is in line with his viewpoint. Now had the USA Today, for a change, said anything positive about the US during Bush's term, Demento wouldn't have believed it, and certainly wouldn't have quoted it. What the article fails to mention and Demento fails to comprehend is that, although the government uses the social security taxes paid by workers in a year for general expenses, it does not report social security taxes paid as income in its budget calculations. That more than offsets the annual increase in expense of the net present value of future amounts owed to retirees. And has Demento the ability to figure out what the net present value of $31,000 a year in 75 years at a 3% discount/inflation factor is? $3,377 - a really staggering sum. Demento also fails to mention, but has been told before, that most candidates in the upcoming elections have owned up to plans to uncap the social security tax payment threshold, which will raise hundreds of billions. Unlike Canada, in the US with its significant number of high earners, the top 5% of income earners in the US (incomes over $137,000 p.a.) pay 57.1% of all taxes. Once again, his opinions and the source of his information are selected carefully to line up with his fixed viewpoint.
  77. Brian Pelican from Canada writes: So, Demento reads the USA Today - that tells me a lot about his intellect. That rag is given away in hotels and is read by travellers out of touch with their local newspapers -it is hardly an intellectual publication. It is also well known as being skewed to left of centre, which is probably the reason it suits Demento. What also suits Demento is that the article he quotes, but doesn't give a link to, is in line with his viewpoint. Now had the USA Today, for a change, said anything positive about the US during Bush's term, Demento wouldn't have believed it, and certainly wouldn't have quoted it. What the article fails to mention and Demento fails to comprehend is that, although the government uses the social security taxes paid by workers in a year for general expenses, it does not report social security taxes paid as income in its budget calculations. That more than offsets the annual increase in expense of the net present value of future amounts owed to retirees. And has Demento the ability to figure out what the net present value of $31,000 a year in 75 years at a 3% discount/inflation factor is? $3,377 - a really staggering sum. Demento also fails to mention, but has been told before, that most candidates in the upcoming elections have owned up to plans to uncap the social security tax payment threshold, which will raise hundreds of billions. Unlike Canada, in the US with its significant number of high earners, the top 5% of income earners in the US (incomes over $137,000 p.a.) pay 57.1% of all taxes. Once again, his opinions and the source of his information are selected carefully to line up with his fixed viewpoint.
  78. Gary Dare from Portland, Oregon, Canada, writes: Brian Pelican writes, "And further, the US annual deficit is this year about 1% of GNP, ..." There you go again, using the net deficit rather than the gross deficit, from which internal trust fund borrowings are subtracted to yield the net figure. But the absolute US federal debt grows by the gross deficit, which is what bond traders follow. I have previously provided this reference from Fortune magazine, which explains how US debt and deficit would look if GAAP were followed:

    http://money.cnn.com/2007/08/31/magazines/fortune/deficit\_sloan.fortune/index.htm

    [please remove backslash to retain the underscore]

    If Fortune is too left wing for you (: (: (: this sort of discussion also happens regularly on the Fox business shows, Ben Stein raised a similar point on the Saturday 12/15 "Cavuto on Business", you might find the transcript still posted on Neil Cavuto's home page for his shows ...
  79. Gary Dare from Portland, Oregon, Canada, writes: Brian Pelican writes, "Demento also fails to mention, but has been told before, that most candidates in the upcoming elections have owned up to plans to uncap the social security tax payment threshold, which will raise hundreds of billions." I'm only of two, Hillary Clinton's 'donut' proposal to resume collection of the SS tax at $250K while Barack Obama wants to simply eliminate the cap. Edwards probably has something, I'm not aware of it. So "most" is two or three of twenty people ... (:

    But on a serious note, this 'solution' has been criticized for still falling short of supplying the total liabilities for Social Security as the boomers pass through. (I may have a link in my archives on a machine back on the west coast so I will leave it to the readers to disprove those assertions.) Yet the real political effect would be to enhance borrowing from the additional SS tax collections against the actual gross deficit, yielding nice net deficit numbers to show off while the actual national (federal) debt balloons further.
  80. harry carnie from Northern, B.C., Canada writes: Brian Pelican................WoW.........it would be great if your optimistic prognosis is correct.................

    .....`cuz if AMERICA gurgles down the tubes.(economy wise)..Canada will be 2 minutes behind.
  81. Dr Demento from Canada writes: Brian Pelican from Canada writes: "So, Demento reads the USA Today - that tells me a lot about his intellect. That rag is given away in hotels . . ."

    Once again Brian Pelican is driven by that neocon urge, that when unable to adequately rebuke an argument, to turn to simple ad hominem attack.

    USA Today is an international AMERICAN newspaper; so if you think that all things American are great - how do you explain it?

    The fact is that Chris Chocola is a former REPUBLICAN congressman, and the views expressed are his - a right-winger.

    Also note that David Walker, the USA's comptroller general - top accountant for the US government, has been trying to tell Americans about the impending economic disaster. Maybe the comptroller general of the USA is a left-wing moonbat?

    Here is an article on his views from FoxNews (hopefully you do not consider that left wing).

    http://www.foxnews.com/story/0,2933,301997,00.html
  82. Brian Pelican from Canada writes: Gary Dare, I believe you must have seen me post before on this subject. I am well aware of the social security funding shortfall. The current shortfall is - $50T. The accumulated government surplus is -$9T. They are quoted separately because the SS shortfall has no current effect on the economy. If we add them together, people like Demento will be still talking about the separate SS shortfall.

    Re presidential candidates, my meaning was all the candidates that have a chance at winning this election (Clinton or Abama) have gone on record at removing the cap.
    • Posted 31/12/07 at 1:59 AM EST |