Monday, December 19, 2011

US Homebuilders See Surge in Potential Buyers

How's Paul "We are under depression conditions right now" Krugman going to handle this?

From CNBC:

Not since the spring of 2008 have the nation’s homebuilders felt this good about the potential for new business. An industry association survey measuring builder sentiment rose for the third straight month in December, with significant gains in the component measuring traffic of perspective buyers...

“This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend,” said National Association of Home Builders Chief Economist David Crowe. “While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months

Right on time, just as the Austrian Business Cycle model suggests. Fed accelerated money printing is boosting, in manipulated fashion, the capital goods sector, which includes the housing markets. The question now is, When will Krugman state that he hear's the howl of Keynesian animal spirits and declare that the bust phase of this business cycle is over?


  1. "How's Paul "We are under depression conditions right now" Krugman going to handle this?"

    I'm not sure what exactly you're trying to get at by mocking "under depression conditions." Depressed conditions in Krugman's framework is whenever output is under potential capacity. Unemployment could fall down to 7.5%, but the economy would still be in depressed conditions. While you're looking at the rate of change of growth and proclaiming victory, Krugman is looking at level of growth compared to a pre-recession baseline and noting that it's still way below trend for it to be called a recovery in any meaningful sense.

    Are there any other Austrians who are bullish as Wenzel? Are there any other Austrians who are looking at M2 and predicting a swift manipulated recovery? Or is Wenzel going rogue? I've read several Austrian blogs and Wenzel is the only guy. I've seen plenty of stagflation predictions (Robert Murphy for example), but not many swift recoveries any time soon.

  2. what?! if anything this seems to reinforce the Keynesian models! Much of what they've been trying to do with the fiscal and monetary stimulus is to create a floor under falling prices, particularly in the housing market. It's also silly to pretend that only Austrians believe in the business cycle.

  3. >> Right on time, just as the Austrian Business Cycle model suggests.

    Seems a bit of an exaggeration. Does the ABCT say anything about predicting the timing of such events? Or just that they will eventually happen.

  4. Krugman is just a statist hack...That's exactly why the political parasite won a Nobel Prize.

  5. We are in a Depression-they're long periods of cumulatively bad economic performance, covering at least a decade, that include both contractions(that are stronger than in non-Depression periods) and expansions(that are weaker than in non-Depression periods). We're currently in an expansion, and it's very close to ending. The home builder index referred to is still at terribly weak levels in an absolute sense and far, far below the levels seen in the bubble expansion phase. The increase in traffic, which, again, is at very poor levels in an absolute sense, doesn't mean those 'potential buyers' can qualify for a mortgage to actually purchase a property; some of the 'traffic' may be 'lookers' hoping to be able to find a desperate seller willing to hack their price to true bargain levels, aka off at least 2/3rds from the peak valuation back in '05.
    Wenzel is constantly flacking this 'de economy, it gittin' better 'n better' meme for some reason. It's not, and Wenzel's debasing Austrian economics by blathering that it is. He's undercutting Ron Paul as well, since if the economy is improving, 'inflationary' or not,
    the Obozo will be back for four more.