The real estate market has been one of the strongest pillars of the economy following the greatest financial downturn since the Great Depression. Amid low interest rates and a great deal of intervention from policymakers, home buyers received an added incentive to purchase a home. Meanwhile, sellers enjoyed low inventory levels and rising prices. However, a new survey finds that sellers might be losing their control on the market.

In the third quarter, 72% of real estate agents said now is a good time to sell a home, down from 86% in the previous quarter, and the first drop of the year, according to Redfin, an online estate brokerage. On the other side of the closing table, 55% of agents said now is a good time to buy, up from 46% at the beginning of the year. Thirty percent of agents also said that sellers are having difficulties getting their home to appraise for the contract purchase amount.

“At the end of this summer, you could smell the rubber on the road from buyers hitting the brakes,” said Redfin San Diego agent Sara Fischer. “The cutthroat competition and frenzied demand has relaxed considerably.”

Although interest rates are still low on a historical basis, the recent rise in home prices is affecting home affordability. In the second quarter, 69.3% of new and existing homes sold were affordable to families earning the U.S. median income of $64,400, according to the National Association of Home Builders. That is down from 73.7% in the first quarter and is the first reading below 70% since late 2008.

In August, home prices across the nation increased on a year-over-year basis for the 18th consecutive month. According to CoreLogic, a property information and analytics provider, home prices jumped 12.4% in August from a year earlier. In fact, home prices have logged double-digit gains for seven straight months. Home prices are still 17.1% below their bubble peak in April 2006, but every state posted an annual increase in August.

GOLD: Good for the global economy?

Going forward, the survey from Redfin finds that only 5% of agents believe home prices will rise a lot in the next 12 months, down from 44% at the beginning of the year. Meanwhile, 11% of agents believe prices will drop a little over the next year, compared to only 4% in the second quarter.

POLL: Congress less favorable than dog waste and cockroaches

Wall St. Cheat Sheet is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Recently, Warren Buffett said that the Fed was the world’s largest hedge fund. He is wrong. The world’s largest hedge funds are owned by people who are risk takers with their own money, since they are usually the largest investors in their funds. The academics at the Fed are playing with other people’s money.

However, if we consider that the Fed, led by its chairman, is the most powerful organization in the world — because by printing money, it can finance the government (fiscal deficits) and wars, manipulate the cost of money (interest rates), directly intervene in the economy by bailing out failing institutions (banks) or countries (Greece, etc.), intervene in the foreign exchange market and even influence elections — then the question arises whether it makes sense that so much power should be given to Fed members, who are “group thinking” academics and most of whom have never worked in the private sector. In my opinion, the enormous power of the “academic” Fed is a frightening thought. My friend Fred Sheehan recently quoted from Johann Peter Eckermann’s conversation with Goethe, Feb. 1, 1827. We talked about the professors who, after they had found a better theory, still ignored it. From Eckermann and Goethe:

“This is not to be wondered at,” said Goethe; “such people continue in error because they are indebted to it for their existence. They would have to learn everything over again, and that would be very inconvenient.” – in Dailyreckoning

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A Corrupt System that Rewards Stupidity

Robot Manufacturing – Ed Note: 30 Seconds of video below to get the idea.

“Here is a fascinating look at auto manufacturing at Tesla. Reflections on “Real Problems” follow. I will tie the two seemingly unrelated ideas together.”

Please take that video into consideration when considering a rant from Paul Craig Roberts called The Real Crisis Is Not The Government Shutdown

Roberts claims the “The real crisis is that jobs offshoring by US corporations has permanently lowered US tax revenues by shifting what would have been consumer income, US GDP, and tax base to China, India, and other countries where wages and the cost of living are relatively low. On the spending side, twelve years of wars have inflated annual expenditures. The consequence is a wide deficit gap between revenues and expenditures.”

I will grant him that war-mongering is a huge problem. As for the loss of manufacturing jobs, I would point out that even China is losing them – to automation.

More importantly Roberts fails to understand the relationship between Fed policy and Nixon closing the gold window for the initial outsourcing. Roberts also fails to understand that unions wrecked GM and that GM is on the rebound because of wage reductions made in GM’s bankruptcy.

Gold and the Trade Deficit

For an explanation as to how gold is related to the trade deficit, please see Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold’s Honest Discipline Revisited
 Roberts continues with his mostly-nonsensical rant: 

The real crisis is the absence of intelligence among economists and policymakers who told us for 20 years not to worry about the offshoring of US jobs, because we were going to have a “New Economy” with better jobs.

As I report each month, not a single one of these “New Economy” jobs has appeared in the payroll jobs statistics or in the Labor Department’s projections of future jobs. Economists and policymakers simply gave away a good chunk of the US economy in order to enhance corporate profits. One result has been to create in the US the worst distribution of income of all developed countries and of many undeveloped ones.

In the scheme of things, the enhanced profits are a short-run thing, because by halting the growth in consumer income, jobs offshoring has destroyed the US consumer market.

Disability Fraud and the Demand for Goods

The demand for consumer goods is surprisingly high. And I believe that’s a bad thing. People ought to be more concerned about retirement, and less concerned about the latest toy or gadget, than they are. 

Rampant fraud in collecting disability checks and welfare just may explain the lack of concern, or at least a healthy chunk of it.

I have been talking about disability fraud for five years, but mainstream media is just now investigating: Mainstream Media Finally Catches on to Disability Fraud: 60 Minutes Reports on “Disability USA”

The “real” problem is not offshoring, NAFTA, or declining real wages as Roberts suggests. Those are symptoms of problems not the “real problem”. However, I can easily name many real problems.

Ten Real Problems

1. Fractional Reserve Lending
2. The Fed
3. Lack of a gold standard
4. Deficit Spending
5. Public unions
6. Davis Bacon and prevailing wage laws drive up costs
7. Disability fraud
8. Warmongering
9. Politicians get into bed with corporations, unions, and crony constituents
10. Lack of incentives to hold down costs on medicare, food stamps, and entitlements

If you fix the first four or five, most of the rest of the problems will be fixed automatically. 

Wage Inequality and Declining Real Wages

The primary reason for wage inequity is the Fed’s inflationary boom-bust practices. In addition, public unions and untenable pension obligations drive up costs (and taxes).

As I have stated dozens of times, inflation benefits those with first access to money (the banks and the already wealthy). 

Three Key Reads On Who Benefits From Inflation

• Top 1% Received 121% of Income Gains During the Recovery, Bottom 99% Lose .4%; How, Why, Solutions
• Reader Asks Me to Prove “Inflation Benefits the Wealthy” (At the Expense of Everyone Else)
• Illusion of Prosperity: Deflating the American Dream; No Recovery in “Real” Income

Ironically, “onshoring” is now the buzzword. Thanks to robotics, some manufacturing has returned to the US (but the jobs didn’t, and won’t).

When it comes to “real” problems, Roberts really misses the boat. 

By Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

The Renminbi will be a serious competitor for the US Dollar

The free trade area of the renminbi is for Marc Faber only a matter of time . In an interview , the investor explains what consequences this may have for the world economy – and why he does not particularly like Chinese stocks .

Summarily translated from German :

http://www.fondsprofessionell.at/news/markt-strategie/nid/faber-renminbi-wird-ernst-zu-nehmender-konkurrent-fuer-den-dollar/gid/1011933/ref/4/

It is a project that takes on all industries and sectors of the global economy influence : The Chinese government wants to rehearse the free trade of the yuan in the just recently founded Special Economic Zone in Shanghai. Marc Faber this step is only logical that the renminbi is traded freely , for it is inevitable anyway . “China is testing so happy in miniature. , The government looks exactly which benefits Hong Kong with his free economy ,” the investor said in a recent interview with the Business Week .

Government is communist , ultra- capitalist economy
Once the Renminbi is freely convertible, he become a serious competitor to the U.S. dollar , said Faber . Already, China is in many important sectors of the global economy than the U.S.. Faber, who lives in Thailand and Hong Kong for more than 30 years of watching the rise of China . The economy holds the investor now for ultra -capitalist, but the government still for communist, he said the economy week .

Faber: “I do not especially Chinese companies “
How you can benefit from it , do not know Faber . However, much depends on whether the renminbi remains strong, or whether China moves into a currency war with Japan. Faber personally do not particularly Chinese companies , as he betrayed . The good companies are already expensive, and the poor are so poor that he did not have . “Who wants to take advantage of China, the best buys shares from Hong Kong. Moreover, shares of casinos in Macau are interesting,” said Faber . Although it was not unriskant , but if you are bearish, could be worth that , according to him .

Statistics fake? Growth of more than four percent
And there’s a reason why Faber Chinese companies prefer to avoid – even though he is of the opinion that they are even superior to their Western competitors : He does not believe the current statistics. The current growth estimates Faber on top four percent – about three percentage points lower than specified by the authorities. ” In recent years, China has extremely extended the loan amount . Growth with much money you can always blow up ,” says Faber . “This puts tremendous growth . ” ( dw )

….more from Marc:

Artificially Low Interest Rates causes Excessive Debts

Today a man who has lived in 18 countries around the world, and witnessed collapses in many of these countries firsthand, told King World News, “What shocks the people is how quickly things can flip.  One day everything seems to be alright, and the next day there is panic.”  Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also spoke about some of the astonishing firsthand accounts of what he witnessed.  Below is what Barron had to say.

…..read more HERE