“Nearer term, the housing boom will inevitably simmer down. As part of that process, house turnover will decline from currently historic levels, while home price increases will slow and prices could even decrease. As a consequence, home equity extraction will ease and with it some of the strength in personal consumption expenditures. The estimates of how much differ widely.”

“Surely difficult challenges lie ahead for the Fed, some undoubtedly of our own making”

Alan Greenspan 8/27/2005

Just when you thought it couldn’t get wilder - “Call it “funny money” for the housing boom: Now you don’t need actual cash in the bank to buy a house. All you need is somebody who says you’ve got money in the bank.

Need a hundred grand on deposit to convince a lender you deserve a million-dollar mortgage? You’ve got it … even though you haven’t really got it because you “rented” it from a company in Nevada for an upfront fee of 5 percent: $5,000.”

Newsday

“If we can maintain an adequate degree of flexibility, some of America’s economic imbalances, most notably the large current account deficit and the housing boom, can be rectified by adjustments in prices, interest rates, and exchange rates rather than through more-wrenching changes in output, incomes, and employment,” Greenspan said.

What is this man on? It must be good stuff to provide such rosy delusions. How do you change prices, interest rates and exchange rates without affecting output, incomes, and employment?

It appears that some of the speculators in residential real estate in the Sacramento area are getting nervous. As indeed they should.

“It’s a sign of the times: Jim Eggleston, owner of Sacramento’s biggest residential “For Sale” sign installer, predicts this will be his busiest week in 21 years in business. He’s had to hire an extra worker and buy a new delivery truck since his crew planted a one-day record of 225 signs on Monday. “There are whole lot of houses going up for sale,” says Eggleston, who promises next-day installation when a real estate broker orders a new sign. “The number of ‘For Sale’ signs we’re removing keeps going down relative to the number we’re putting up.”"

Sacramento Bee

Inventory chart (also SacBee)

For the “second half recovery”, must be.

Orders for semiconductor equipment fell 36 percent in July according to SEMI. Orders totalled $1.02 billion last month, compared with $1.59 billion the same period a year ago. The July number was 2 percent below orders in June. “The current data suggests that semiconductor manufacturers continue to remain somewhat cautious about increased capital spending as we enter the second half of the year,” said Stanley T. Myers, president of SEMI.

But AMAT is up more than 10% and the SOX index is up 20% y-o-y. Pump Pump Pump.