Hysterical comments from Federal Housing Finance Agency Director Mel Watt

Real estate has always been a major asset class in the world.  As real estate goes, so goes the entire debt Ponzi.  Sure there are other asset classes that government is trying to debt up such as student loans, etc. but few asset classes rival the real estate debt market in terms of sheer size.  When real estate rolls over, the whole debt Ponzi is done.  Government knows this just as well as I do.  Don't kid yourself that they are "stupid" or "don't get it".  They get it better than most people. They know it is a scam from day one but also that it can go on for a long time and while the debt Ponzi is running then politicians get away with pretty much whatever they want.

While the credit is flowing, a politician can tell the people "Hey, you know what?  For your safety I think we'll just implement a policy of indefinite detention without trial or charges.  You know, it's really for your own good".  Or how about, "Hey folks, for your good we are going to feel up everyone who travels on an airplane.  We'll also be taking naked pictures.  Hope you don't mind. Heck if that works out we'll expand to trains too".  A politician can get away with almost anything while the herd is distracted into chasing the fake money.  We'll lie, cheat and steal in order to get that fake green paper.  This, folks, is a clear sign of a mania.  It is no different than standing in line to buy Pet Rocks or Beanie Babies.  All manner of foolish behavior is possible while a mania is running its course.

But when this credit mania - and that is exactly what it is folks - finally collapses you will see people reevaluating everything.  Priorities will change.  Having the biggest house and the most stuff and the newest gadgets will no longer be so important and family will begin to take back its traditional role of importance.  Of course, the debt pushers running the show will not give up easily.  GW Bush told us all about the home ownership society right up until the housing bust hit.  He was told to do it and so he did it.  He was told why to do it and he agreed to sell the American people down the debt river.  And now that we are right at the edge of an even bigger collapse than occurred in 2008, the Director of the Federal Housing Finance Agency, Mel Watt, wants to make it even easier to take on debt in order to "buy" a home.  Of course "buy" is a euphemism in this case.  If you acquired a home using debt, did you really buy it?  Do you really own it?  The answers are "no" and "no".  There is an illusion of personal ownership but the bank really owns the asset.

Well, housing was weak in Q1 2014 and the fed is telling us what we already know: weak housing means weak everything.  Why?  Because when people buy lots of houses in our economy they are invariably doing it using debt.  That new debt increases the money supply and an expanding money supply (AKA inflation) is what has passed for "growth" for the past 4 decades.  In the ridiculous hope that loans are somehow too difficult to acquire, Watt wants to throw common sense lending rules out the window (again) in the hopes of reflating the housing bubble (and thus the broader money supply).  Unfortunately for Mel, it is very difficult to re-blow the same bubble once it has burst.  You need a whole new con if you want to con the same group as before.  Failing that, you have to wait for the generation to die off so that the lesson is forgotten.  In the unmistakably understated Fed speak, Yellen testified that, "The recent flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery.”

"Could" my eye.  "Will" is more like it, and not just a little.  We are at the peak of a historically significant debt bubble.  When it finally implodes of its own corrupt weight it will leave a mark.  This is going to take years to play out.  Any talk of future "growth" is foolish until all that bad housing and other debt is wound down.  Only then can they re-ignite the animal spirits and fool the willing fools into the next round of debt driven pump and dump economic activity.  Of course, if we have any brains we will use the coming collapse to get rid of the federal reserve and of the plagues known as fiat currency and fractional reserve banking.