Thursday, April 24, 2014

2014 Is Turning Out To Be Eerily Similar To 2007

Upon receiving a message on my voicemail service this morning from a new home buyer company sales rep, whom of which wanted nothing to do with me in 2012, speculation began to rise inside my over inquisitive mind about why all of a sudden such an urgency had arisen to get me into a new home, and why all of a sudden my overly honest wages declaration form which I submitted to the bank in 2012 became all of a sudden 'Approved'.... 2 years ago these individuals were avoiding me like the plague, now some sales rep is leaving messages on my phone which resemble that of a game show host virtually begging me to become his next sales commission victim. Since it's an utmost rarity that other people's 'best interests' are given initial priority in today's society; I thought I best investigate and research the current situation in an attempt to satisfy my splintering curiosity.

Here's What I Came Up With:
The similarities between 2007 and 2014 continue to pile up. As we are currently seeing in Australia right now, and are about to see in the U.S. Home sales fell dramatically throughout 2007 even as the mainstream media of pseudo-journalism, our corrupted politicians and Federal Reserve Chairman Ben Bernanke promised us that everything was going to be just fine and that we definitely were not going to experience a recession. Of course we remember precisely what followed. It was the worst economic crisis in the U.S since the days of the Great Depression, and whatever event or likelihood of an event occurs in the U.S has been traced and analysed by independent researchers to usually unfold within Australia around 3,4 or 5 years later, if we're using the past century as our analytical platform.

And you know what they say - if we do not learn from history we are doomed to repeat it. Just like seven years ago, the stock market has soared to all-time high after all-time high. Just like seven years ago, the authorities are telling us that there is nothing to worry about. 

Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching. This time, we're going to really feel it.

Posted below is a chart of existing home sales in the United States during 2007. As you can see, existing home sales declined precipitously throughout the year...

Now look at this chart which shows what has happened to existing home sales in the United States in recent months. If you compare the two charts, you will see that the numbers are eerily similar...

New home sales are also following a similar pattern. In fact, we just learned that new home sales have collapsed to an 8 month low...

Sales of new single-family homes dropped sharply last month as severe winter weather and higher mortgage rates continued to slow the housing recovery.
New home sales fell 14.5% to a seasonally adjusted annual rate of 385,000, down from February's revised pace of 449,000, the Census Bureau said.

Once again, this is so similar to what we witnessed back in 2007. The following is a chart that shows how new home sales declined dramatically throughout that year...

And this chart shows what has happened to new homes sales during the past several months. Sadly, we have never even gotten close to returning to the level that we were at back in 2007. But even the modest "recovery" that we have experienced is now quickly unraveling...

If history does repeat, then what we are witnessing right now is a very troubling sign for the months to come. As you can see from this chart, new home sales usually start going down before a recession begins.

And don't expect these housing numbers to rebound any time soon. The demand for mortgages has dropped through the floor. Just check out the following excerpt from a recent article by Michael Lombardi...

One of the key indicators I follow in respect to the state of the housing market is mortgage originations. This data gives me an idea about demand for homes, as rising demand for mortgages means more people are buying homes. And as demand increases, prices should be increasing.
But the opposite is happening…

In the first quarter of 2014, mortgage originations at Citigroup Inc. (NYSE/C) declined 71% from the same period a year ago. The bank issued $5.2 billion in mortgages in the first quarter of 2014, compared to $8.3 billion in the previous quarter and $18.0 billion in the first quarter of 2013. (Source: Citigroup Inc. web site, last accessed April 14, 2014.)
Total mortgage origination volume at JPMorgan Chase & Co. (NYSE/JPM) declined by 68% in the first quarter of 2014 from the same period a year ago. At JPMorgan, in the first quarter of 2014, $17.0 billion worth of mortgages were issued, compared to $52.7 billion in the same period a year ago. (Source: JPMorgan Chase & Co. web site, last accessed April 14, 2014.)

It is almost as if we are watching a replay of 2007 all over again, and yet nobody is talking about this.

Everyone wants to believe that this time will be different.

The human capacity for self-delusion is absolutely amazing and it has virtually completely taken over our collective social psyche.

There are a lot of other similarities between 2007 and today as well.

Just the other day, I noted that retail stores are closing in Australia and in the United States at the fastest pace that we have seen since the collapse of Lehman Brothers. Look around you wherever you are, whatever city you reside in and take notice of the amount of empty stores 'for lease', take a look at your local zombie malls shopping malls which have just about every 2nd to 3rd shop 'vacant'.

Back in 2007, we saw margin debt on Wall Street spike dramatically and help fuel a remarkable run in the stock market. Just check out the chart in this article. But that spike in margin debt also made the eventual stock market collapse much worse than it had to be.

And just like 2007, consumer credit is totally out of control. As I noted in one recent article, during the fourth quarter of 2013 we witnessed the biggest increase in consumer debt in the U.S. that we have seen since 2007. Total consumer credit in the U.S. has risen by 22 percent over the past three years, and 56 percent of all Americans have "subprime credit" at this point.

Are you starting to get the picture? It is only 7 years later, and the same things that happened just prior to the last great financial crisis are happening again. Only this time we are in much worse shape to handle an economic meltdown. The following is a brief excerpt from my recent article entitled "We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis"...

None of the problems that caused the last financial crisis have been fixed. In fact, they have all gotten worse. The total amount of debt in the world has grown by more than 40 percent since 2007, the too big to fail banks have gotten 37 percent larger, and the colossal derivatives bubble has spiraled so far out of control that the only thing left to do is to watch the spectacular crash landing that is inevitably coming.

You can read the rest of that article right here.

For a long time, I have been convinced that this two year time period is going to represent a major "turning point" for Australia & America, not a positive "turning point" either.

Right now, 2014 is turning out to be eerily similar to 2007.

Will 2015 turn out to be a repeat of 2008?

I'll leave that one out there for you to ponder.

-Chris Rath- Truth Researcher, Orwellian Eye Australia


1 comment:

  1. JaeSp@ceV3Rsi0nFriday, April 25, 2014

    it will be an interesting situation to monitor and record. patterns do begin to emerge eventually-- that's usually the point when all your friends start calling you crazy for pointing out the obvious


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