Double Bubble. Double Trouble.

Last August, we wrote about the double bubble in the housing market: a more traditional bubble, then over-inflated by a massive asset bubble that drove prices up and up and up. The bigger the bubble, the bigger the pop.
In that post we wrote,

In every modern recession, the fall in housing prices follows the economy slowing down. What we have yet to see is the falling economy’s effect on housing prices. So if you think prices have already dropped, and might even be reaching a bottom, we think it’s the other way around: prices are about to start dropping.

And so here we are. Yesterday’s news of a mind-boggling 50,000+ jobs lost in a single day brings us now to the start of this second bubble popping. Because for all of economic talk about housing markets and prices and fancy new mortgages that were created, at its economic base, housing prices are just about the simplest thing in the world.
When people make more money, or more people move into a market, housing prices slowly go up. When people make less money, or people move out of a market, housing prices slowly go down.
The housing bubble popped, leading to recession, and the recession is now going to lead to a further decline in housing prices. Where will that lead?
The problem at the root of the housing asset bubble is that over the last few decades — since Reagan and the Republican free-market supply-side, trickle-down policies took over — Americans have not been earning more, they’ve just been able to buy more thanks to a litany of mortgage and other debt-raising products that compensate for the lack of earnings.
People used to be required to put 20% down before they could buy a house. How many people do you know, honestly, that have 20% to put down on a house now? How many do you know that actually have 20% equity accrued in the house they already own? We’re betting not many.
That 20% down payment requirement kept housing prices in check. But that became a 15% requirement, then 10%, then 5% then a negative 10% requirement, where you could actually get a mortgage for 110% of the value of your house. Well, they helped inflate the bubble.
On top of that, loan standards used to require that people spend no more than 25-28% of their income on housing expenses. This also kept prices in check. This was also set aside, and “liar loans” further inflated the bubble. Now that all has to be undone.
Last August, real estate experts were claiming that 2009 was to be the bottom of the market, and housing prices were going to head back up. Just like they claimed that 2008 was going to be the bottom and that 2007 was when the market would turn.
Sadly, the chances of real estate prices turning back up, in real dollar terms, has vanished for the next decade at least. There are two coherent facts behind this.
First, the size of the bubble means that someone who bought a house for $500,000 in 2005 is already 20-25% down in the price of the house. Factor in inflation, and it’s closer to 35 – 40% down right now, four years later. Of the millions of Americans who will lose their jobs this year, many will be unable to cover their mortgages. And foreclosures, short sales, sales right before the short sales, these will continue to increase, driving prices down even further. This all means there is little demand for high-priced houses.
Second, the bubble caused a building boom, and along with all the foreclosures there is now a huge supply of houses and condos waiting to be sold. And only then will the “shadow” market of people waiting on the sidelines for a better market in which to sell their houses kick in.
Only after all of these factors are cleared will market conditions even start to return to normal.
By 2010, perhaps 2011, perhaps we will see signs of a bottom of the real estate market, with prices having returned to their historical norms at a level that many suggest is 30-35% below where they are today.
For many, this will be personal financially troubling, even disastrous. From an economic point of view, it is the fundamental principal of supply, demand, and income proving to be true again, and a return to economic reality.
What can be done about it? The root cause of this and many other problems in our economy is the stagnation of incomes that began when Reagan was elected. Republican policies brought a massive concentration of wealth at the top with a select few reaping all of the benefits of our economic system. But this double-bubble collapsing-economy problem is costing their wealth as well. Trickle-down doesn’t, and when the rest of us are tapped out by misguided policies like these it spells disaster for everyone.

The Housing Market’s Double Bubble: The Big One Still Has Yet To Pop

Look what the Republicans have done to our economy by following their core “trickle down” economic ideology, which really means borrow and spend. They have run up a massive debt which combined with no oversight, a near total removal of regulations on corporate conduct, and watched and let Neil Bush run a savings and loan (oh, sorry, that was that other Bush presidency — when S&L owners and Republican campaign contributors robbed us blind and bribed Senators like John McCain and then got a massive government bailout.)
We have all been hearing a lot about housing prices falling, and about the effect housing prices have on the economy. The impact to date, while real, is actually overstated. Why? Well, housing markets and their impact are the turtle of economics, they happen very very slowly. Prices have to fall and people have to sell, when they sell they, if they get less than they expected, may not spend as much as they would have if they had reaped a huge profit.
Of course, the lack of higher equity is hurting those home equity lines people were tapping like McCain at an open bar. But ask yourself, honestly, how many people do you actually know who have either been forced to sell or have sold and not made a profit? Not that many — yet. People are still holding out.
Unquestionably the economy is slowing. Consumer debt is massive, companies are cutting jobs, inflation is rising, unemployment is a full percentage point ABOVE where it was a year ago, and with a work force of 200 million plus, that’s 2,000,000 newly unemployed Americans.

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Millions Of Dollars Versus Millions of Voters

In a democracy, every person has a single vote. Unfortunately, what is becoming increasingly true is that someone with millions of dollars and the willingness to fund front groups has the ability to influence millions of votes.
Take the issue of the Iraq War – by any and every national poll, millions of Americans want the war to stop as they see through the lies that got us in the war, the lies that have kept us in the war and now with even the Iraqi leadership asking we leave, the vast majority of Americans see no reason to fund billions on dollars in war every month.
However, despite their wishes and their votes, the wishes of the people are countered by the wishes of the few, or in today’s example, the wishes of one, Sheldon Adelson. Mr. Adelson is one of the very few wealthy “behind-the-scenes” manipulators that set up phony front groups and fund them with millions and millions of dollars to pollute our country’s discourse, smear people, spread fear and lies and the worst kinds of dirty stories. Every politician knows that this ugliness could be directed at them if they dare try to fight this kind of power.
Where do these Republican, pro-war front groups get so much money?

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“25,000 Members” But Only 5 Donors? Is This The New Math?

Earlier this week, we wrote about the Republican group, Vets For Freedom, and their ability to run $1.5 million dollars in TV advertising with seemingly no support.
In our blog post, we noted that the founder of the group was claiming thousands of donors. And the group claims to have 25,000 members. A number which if true might give a hint of credibility to their claims. However, when it is becoming increasingly clear that more and more real veterans are coming out in support of Barack Obama, is it possible that VFF actually has 25,000 members?
Well, we’re not from Missouri but frankly, we’d have to see the membership roster to even believe that they have 2,500 members, why?
First, in their last report, they have exactly 5 donors listed. One, two, three, four, five. So unless their marketing efforts are truly horrific, to the tune of a .00000005 response rate, we have to believe that their member list is slightly inflated.
Second, if you look at their web site traffic on public sites, you’ll see that the traffic is very very light; with some recent days in May hovering around zero, wouldn’t a 25,000 member person organization have more than a couple of thousand total visits a month?
Unfortunately, many news organizations are taking the 25,000 numbers as a fact versus a ‘claim’ — if we claimed that a million people read everything we wrote, it wouldn’t make it true — but who knows maybe people would start writing that — just like we are seeing these.
There’s an old expression, a lie can get halfway around the world before the truth gets its shoes on, and today from The Guardian in London, we have proof.

The £750,000 campaign launched by the 25,000-member Vets for Freedom implicitly criticises the Republican senator’s anti-war Democrat rival Barack Obama, who has stated he wants to withdraw combat forces within 16 months of taking office.

On the other hand, if Vets For Freedom really does have 25,000 veteran members, we’ll post the whole membership list right here, just send us the names guys, we’ll put everyone up.
After all, we can easily fit in five names right here.

Vets for Freedom Says Thousands Of Donors — We Count Five

In a recent story about Vets for Freedom’s new campaign in support of Republican Presidential candidate John McCain, the Virginia-Pilot quoted VFFs Chairman Pete Hegseth on donor disclosure.

Vets for Freedom’s efforts are being fueled by donations from thousands of people nationwide, Hegseth said. He said the group will not release donors’ names nor the size of their donations. The group is registered under a section of federal tax law that allows it to advertise and organize on behalf of particular policies while maintaining the confidentiality of its donors.
Donations to political campaigns or political action committees, by contrast, generally must be reported and are limited by law.

Thousands of donations? We looked up Vets for Freedom’s reporting records and found a total of five (5) donors and $2,050 total donations in the most recent period they reported. This reporting is for their “527” committee, which is legally allowed to ” influence the nomination, election, appointment or defeat of candidates for public office” but is not allowed to coordinate with any candidate’s campaign. However, their 501c4 charity arm, the part of the group that does not have to report its donors, can not legally do any of those things.
So what’s the takeaway? On one hand, we have a 527 group with a total of $2,050 in donations, not enough to pay for Mark Penn’s coffee break, and on the other we have a charity that legally can not be involved in direct political action? What’s happening?
Well if you have “thousands” of mystery donors unreported but supporting John McCain’s campaign and suddenly, a small fringe front group with just 5 real donors has over $1.5 million dollars to run a television campaign and there are plans for a major push this fall.
We’re betting this is nothing more than a conduit for one or two very large donations intended to get around election law to the benefit of candidate McCain.
The Washington Post‘s blog The Trail tried to pin Hegseth down on why this “non-election” group is advertising with McCain’s message in swing states important to McCain, and only just before an election with McCain as a candidate.
From the story,

Hegseth said his group is not operating on behalf of McCain and notes that federal law prohibits the organization from coordinating the ad with the campaign. The states were chosen, he said, not because they are crucial swing states for McCain, but because the heightened interest in the election in those states will give it a larger audience.

What Hegseth didn’t mention is that VFF’s ads were bought immediately after the McCain Campaign stopped advertising.
What Hegseth didn’t mention is that VFF is supporting candidates across the country, but surprise, none of the Iraq War or Vietnam veterans who are running like Jon Powers or Charlie Brown.
What Hegseth didn’t mention is that there are real veterans groups with real veterans signing real petitions and supporting a candidate, only those real veterans, are supporting Barack Obama.
The only thing Hegseth could do was concede that the message in the ad is almost identical to McCain’s on the stump — the surge worked; let’s continue the war until we win. He said McCain has been the “strongest advocate” for the veterans of the two wars.
Which is about as believable as McCain’s claim that real veterans groups support him.

Watching Freedom’s Watch: The Donors

Since 2004, we have been very involved in investigating, exposing, and uncovering the roots and exposing the tactics and lies of the right-wing smear machine. James was involved not only in John Kerry’s campaign, but also in the Truth and Trust Team, a group of Kerry friends and family who attempted to fight back against the Swift Boat Veterans.
Dave, of course, followed the campaign and those attacks closely, and then worked with James and others, including our friend, Taylor Marsh, on The Patriot Project in 2006. Created by John Kerry, David Thorne and others, The Patriot Project helped veterans such as Joe Sestak, Patrick Murphy and John Murtha defend themselves — even looking into previous attacks on John McCain. We also were part of the team that exposed the Economic Freedom Fund, a group created with a $5,000,000 donation from Bob Perry that attacked moderate Democrats, primarily in red states.
Why do folks like Bob Perry give money like that? It’s strictly business.

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The Boy Who Cried Terror

Jon Swift readers – I didn’t see that I wrote this with James Boyce when I submitted it. Go see Seeing the Forest’s Best of 2007
Message to Congress: No one believes Bush and this is dangerous to the country!
There is an urgent warning today from the FBI, that Al-Qaeda might attack shopping malls over the holiday season. See Exclusive: FBI: Al Qaeda May Strike U.S. Shopping Malls in LA, Chicago,

The FBI is warning that al Qaeda may be preparing a series of holiday attacks on U.S. shopping malls in Los Angeles and Chicago, according to an intelligence bulletin distributed to law enforcement authorities across the country this morning.

Is there a single person in this country who doesn’t wonder if this is another Bush trick? Be honest, it crossed your mind, didn’t it?
But what if it’s true?
Meanwhile, hardly a day goes by without another dramatic statement from Bush or Cheney claiming that Iran poses a grave threat to the world. But few bother to listen anymore. People just roll their eyes. Bush cried wolf over Iraq. Bush raised the terror threat level and announced arrests or warnings for political purposes. Bush pumped fear into the country to win elections.
And now another warning.
But what if it’s true?
Listen up, people! The FBI is warning about an al Queda attack on shopping malls this Christmas and almost no one will pay attention because no one believes this government anymore. Everyone has seen them manipulate terror threats, pump the fear for elections — or just to get another capital gains tax cut passed.
Bush has lost credibility, but the world remains dangerous. Congress must act! Congress must remove Bush and Cheney for lying to the country to start a war. Congress must restore the public’s trust in our country’s leadership. The current situation is dangerous. If the government says we are about to be attacked we need to be able to believe them and act on it, instead of rolling our eyes and wondering how these clowns think they can get away with more of this fear-pumping. Because there just might BE a time when we ARE about to be attacked.
One more time: Congress, stop posturing. Stop worrying about the political fallout. Start doing what is right for the country. Bush and Cheney have to be removed from office because they lied to us to get us to support war in Iraq, and now no one believes the government, and this is dangerous.

Al Gore WILL Be Smeared

If Al Gore Is awarded the Nobel Prize he WILL be smeared. There is no question about it.
On May 15, 2007, we wrote a post titled, We Guarantee Al Gore Will Be Attacked Next Week, We Absolutely Guarantee It. We wrote,

Al Gore has a new book coming out next week, titled, The Assault On Reason.
Because he is standing up, telling the truth and because he simply is a Democrat and progressive leader, Al Gore will be smeared mercilessly by the right-wing smear machine. He will be ridiculed, made fun of and mocked. They will tease and make fun of him.
They will rush to say that he is bitter about 2000, crazy, insane, pontificating and out of touch.
They will bring up his utility bills and the boards he is a member of.
They will talk about his kiss with Tipper, her crusade against vulgar rap lyrics.
They will bring up his weight and the beard. And say it’s all about 2008.

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Hillary Clinton: Mission Accomplished.

On January 22, 2007, as Senator Clinton went viral with her announcement that she was, essentially, running for The White House, we noted that her first challenge was to shatter the prism of the right. We wrote,

[T]his simply is a fact of modern politics in America. For the past three decades, the right wing has employed a powerful strategy of “$ell and $mear.” They insist on being the gatekeepers to public opinion and have developed a powerful machine that tells us who to like – and who to hate.
… They $mear Democratic and Progressive heroes, reducing American success stories such as George McGovern, Walter Mondale and Michael Dukakis into humiliated historical footnotes. They destroy our leaders. They destroy those that might become our leaders. There is no Democratic or Progressive leader of any note of the last twenty years that has not been attacked.

Essentially, what we meant was:

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