shitstorm – The Burning Platform

Via Zero Hedge

Mortgage applications fell 17.0% this week on a non-adjusted basis (following a 7.2% the previous week) for the biggest 2-week drop since January 2015. Even on a seasonally-adjusted basis the last 2 weeks have dropped 6.2% and 7% (the biggest 2 week drop since Feb 2015). However, just as Sept 2014 was notably seasonally weak for mortgage applications, for this time of year, mortgage applications have not been weaker since 2000.

So we have mortgage rates still hovering near record lows. We supposedly have the lowest unemployment rate since 2007. Obama is tweeting about the 13 million jobs he has created. The economy has supposedly been growing for the last six years. Consumer confidence is back to pre-recession highs. And home prices have risen by 30% since 2012. The National Association of Realtors reports price wars and tremendous demand for homes.

One question. In a normal, non-manipulated, market based housing market, wouldn’t homes be bought by families who obtained a 30 year mortgage? Does the chart below present a strong recovering housing market?

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Mortgage applications to purchase a home are at 2009 recession lows. They haven’t gone anywhere in five years. The peak was 2005 and the housing market was in full collapse mode in 2008. Mortgage applications are 40% below 2008/2009 levels. They are 50% below 2001/2002 levels. There is no housing recovery. Tolls Brothers and Hovnanian are reporting lower sales versus last year.

The entire housing recovery meme is bullshit. Wall Street, the Fed, the Treasury and the White House have colluded to drive home prices up to benefit the Wall Street shysters and to use as propaganda in their game to convince Americans the economy is great. Chinese and Russian billionaires, hedge funds, and flippers have been the major buyers driving up prices to unaffordable levels for most Americans.

This shitty recovery is all we’ve gotten with mortgage rates at all-time lows. Imagine the shitstorm headed our way with mortgage rates headed higher.

I wonder who could have predicted this. Oh Yeah. Me. I wrote Subprime Auto Nation in September 2012. The entire auto recovery storyline peddled to the masses over the last few years is a sham. It’s just another Federal Reserve easy money created subprime bubble. Ally Financial and the rest of the Wall Street criminal syndicate have doled out subprime auto loans to any high school dropout that can fog a mirror, quicker than Bill Clinton does interns. The entire scheme was to give the appearance of an economic recovery and not worry about the future losses. The taxpayer would pick those up. The falsity of the fantastic auto sales meme is proven by the fact that automaker profits have fallen and their stocks are lower than they were in 2010.

Now the chickens are coming home to roost. 1 out of 12 subprime borrowers have failed to make payments within the first nine months of taking the loan. I wonder how many will make all the payments over the 7 years of their loan?

WTF did highly educated finance professionals think would happen when you loaned Shaquesha Jackson, with a 630 credit score, $40,000 to buy a Cadillac Escalade? Did they think she would make the payments with her EBT card? Did the fact she had defaulted on prior loans convince them she had learned her lesson? There are $40,000 vehicles all over West Philly, parked in front of $25,000 hovels. Who in their right mind thought lending money to these people for a rapidly depreciating vehicle was a good idea? Only an Ivy League educated Princeton economist could think this would work. Or maybe they just wanted to keep the ponzi going long enough to exit the Federal Reserve and start making $300,000 per lunchtime speech about how he saved the world.

The delinquency rates on all car loans at 2.6% are already approaching 2008 levels. I might want to remind you the government and MSM have been telling you we are in the midst of a strong economic recovery. As 2015 erodes into a greater depression, these default rates will soar well past 2008-2009 levels. The coming shitstorm created by the easy money mal-investment over the last five years is going to be epic.

Even Mark Zandi Admits It: Auto Loan “Credit Quality Is Eroding Now, And Pretty Quickly”

Submitted by Tyler Durden on 01/09/2015 10:14 -0500

Just 2 days after President Obama reflected on his glorious ‘save’ of the US auto industry – forgetting to explain how so much of this ‘buying frenzy’ has been predicated on massive low-quality-borrower-based credit extensions – The Wall Street Journal bursts the bubble of ‘contained-ness’. Auto loan delinquency rates are surging to levels not seen since 2008 and stunningly, more than 8.4% of borrowers with weak credit scores who took out loans in the first quarter of 2014 had missed payments by November. As even glass-half-full-status-quo-hugger Mark Zandi is forced to admit, “It’s clear that credit quality is eroding now, and pretty quickly.”