Exactly Like 7 Years Ago? 2014 Is Turning Out To Be Eerily Similar To 2007

By Michael Snyder.

Bubble - Photo by Jeff KubinaThe similarities between 2007 and 2014 continue to pile up.  As you are about to see, U.S. home sales fell dramatically throughout 2007 even as the mainstream media, our politicians and Federal Reserve Chairman Ben Bernanke promised us that everything was going to be just fine and that we definitely were not going to experience a recession.  Of course we remember precisely what followed.  It was the worst economic crisis since the days of the Great Depression.  And you know what they say – if we do not learn from history we are doomed to repeat it.  Just like seven years ago, the stock market has soared to all-time high after all-time high.  Just like seven years ago, the authorities are telling us that there is nothing to worry about.  Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching.

Posted below is a chart of existing home sales in the United States during 2007.  As you can see, existing home sales declined precipitously throughout the year…

Existing Home Sales 2007

Now look at this chart which shows what has happened to existing home sales in the United States in recent months.  If you compare the two charts, you will see that the numbers are eerily similar…

Existing Home Sales Today

New home sales are also following a similar pattern.  In fact, we just learned that new home sales have collapsed to an 8 month low

Sales of new single-family homes dropped sharply last month as severe winter weather and higher mortgage rates continued to slow the housing recovery.

New home sales fell 14.5% to a seasonally adjusted annual rate of 385,000, down from February’s revised pace of 449,000, the Census Bureau said.

Once again, this is so similar to what we witnessed back in 2007.  The following is a chart that shows how new home sales declined dramatically throughout that year…

New Home Sales 2007

And this chart shows what has happened to new homes sales during the past several months.  Sadly, we have never even gotten close to returning to the level that we were at back in 2007.  But even the modest “recovery” that we have experienced is now quickly unraveling…

New Home Sales Today

If history does repeat, then what we are witnessing right now is a very troubling sign for the months to come.  As you can see from this chart, new home sales usually start going down before a recession begins.

And don’t expect these housing numbers to rebound any time soon.  The demand for mortgages has dropped through the floor.  Just check out the following excerpt from a recent article by Michael Lombardi

One of the key indicators I follow in respect to the state of the housing market is mortgage originations. This data gives me an idea about demand for homes, as rising demand for mortgages means more people are buying homes. And as demand increases, prices should be increasing.

But the opposite is happening…

In the first quarter of 2014, mortgage originations at Citigroup Inc. (NYSE/C) declined 71% from the same period a year ago. The bank issued $5.2 billion in mortgages in the first quarter of 2014, compared to $8.3 billion in the previous quarter and $18.0 billion in the first quarter of 2013. (Source: Citigroup Inc. web site, last accessed April 14, 2014.)

Total mortgage origination volume at JPMorgan Chase & Co. (NYSE/JPM) declined by 68% in the first quarter of 2014 from the same period a year ago. At JPMorgan, in the first quarter of 2014, $17.0 billion worth of mortgages were issued, compared to $52.7 billion in the same period a year ago. (Source: JPMorgan Chase & Co. web site, last accessed April 14, 2014.)

It is almost as if we are watching a replay of 2007 all over again, and yet nobody is talking about this.

Everyone wants to believe that this time will be different.

The human capacity for self-delusion is absolutely amazing.

There are a lot of other similarities between 2007 and today as well.

Just the other day, I noted that retail stores are closing in the United States at the fastest pace that we have seen since the collapse of Lehman Brothers.

Back in 2007, we saw margin debt on Wall Street spike dramatically and help fuel a remarkable run in the stock market.  Just check out the chart in this article.  But that spike in margin debt also made the eventual stock market collapse much worse than it had to be.

And just like 2007, consumer credit is totally out of control.  As I noted in one recent article, during the fourth quarter of 2013 we witnessed the biggest increase in consumer debt in the U.S. that we have seen since 2007.  Total consumer credit in the U.S. has risen by 22 percent over the past three years, and 56 percent of all Americans have “subprime credit” at this point.

Are you starting to get the picture?  It is only 7 years later, and the same things that happened just prior to the last great financial crisis are happening again.  Only this time we are in much worse shape to handle an economic meltdown.  The following is a brief excerpt from my recent article entitled “We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis“…

None of the problems that caused the last financial crisis have been fixed.  In fact, they have all gotten worse.  The total amount of debt in the world has grown by more than 40 percent since 2007, the too big to fail banks have gotten 37 percent larger, and the colossal derivatives bubble has spiraled so far out of control that the only thing left to do is to watch the spectacular crash landing that is inevitably coming.

You can read the rest of that article right here.

For a long time, I have been convinced that this two year time period is going to represent a major “turning point” for America.

Right now, 2014 is turning out to be eerily similar to 2007.

Will 2015 turn out to be a repeat of 2008?

Please feel free to share what you think by posting a comment below…

———-

A former Washington, D.C., attorney, Michael Snyder runs a number of websites, including:

This entry was posted in Business / Economics, Politics / World News. Bookmark the permalink.
  • colinjames71

    I’m sure there’s more similarities, plus now thanks to the putsch in Ukraine we have the BRICS on an accelerated course to dump the petrodollar system, I’ve read that every night there are three major banks on the verge of collapse, we never recovered from the crash of ’08 as unemployment figures are drastically worse than advertised, we have an entire generation with unfathomable student loan debt topping ONE TRILLION dollars, wages flat, soaring wealth and income disparity, there’s been not a single useful reform on Wall St. as the big banks have only grown bigger, and beyond their blatant criminality, now have dramatically increased their involvement in holding and distributing physical commodities, engage in rampant control fraud with no incentive to curb illegal activities as they know for a fact they will never be prosecuted, lord knows what their exposures are to derivatives except it dwarfs the combined GDP of the world economy, gas prices are through the roof and I’m assuming heating oil and gas is too, US Gov debt is astronomical, bubbles abound, every market is manipulated, still, the Eurozone is a broke mess too, and we seem to be on a collision course with WWIII. Maybe the preceding factors are why. Yet our dear leaders seem more preoccupied with being Regime Cange, Inc, than lifting a finer to help out the states and the citizens of this country, as well as pushing thru TPP and TTIP in order to cement corporate dominion over all aspects of the lives of every person in the affected countries, with further deleterious effects on the environment, agriculture, civil rights and national sovereignty. A Brave New World Order partying like it’s 1984 .

  • chelsea webber

    Declining (non-existant) home sales is wonderful news. In the same way a doctor says the progression of illness turns for the worse before the patient improves, so it is with the biggest scam in US History. You guessed it, real estate. If anything, the failure to realize the causes of the financial crisis by herds of folks who’s very wealth depends upon sustaining an industry that sees millions of Americans reduced to transient, barely able to survive paycheck to paycheck, migrants — is eerily similar to any failing nation suffering from denial and delusion prior to it’s implosion. Fear and loathing in the gated communities where the bandits remain unprosecuted draws little compassion from those they’ve oppressed.

  • Name

    Maybe we should nationalize the federal government.

  • Sammy Meanor

    Snyder is another paid performance artist. Web based vaudville serves a number of purposes. The time honored journalistic technique of spreading gloom and doom helps produce apathy, it’s subtle of course. Much like the Wizard of Oz implored Dorothy not to look behind the curtain, the actual purveyors of destruction are lecturing to us about “solutions” from their so-called independent, capitalism-exposed, sensationalist blogs, sometimes while laughing to the bank with ad revenue.

    Synder of course, is scared of losing his house and his wealth, and is especially fearful of the natives. Security is critical to capitalism’s survival, which is why Wall Street’s US Government has put the web to such good use. Prisons aren’t metal bars and concrete cell blocks necessarily, they can be digital warehouses. There is only one kind of capitalism, the predatory kind. Another 2008 would serve the parasite class very well, either that or another spectacular act of genocide.

  • mmckinl

    Excellent piece … Indeed we are heading into rough water … Look around the world, China, Japan, India, the EU, Russia etc etc all turning down. The US has destabilized the entire world from Latin America to Africa to the Middle East to Russia to Asia.

    The causes of the 2007-8 crash were never fixed. Th TBTF banks are still engaged in unprecedented leveraged derivatives based on interlocking guarantees that are nothing but bounced checks masquerading as real insurance.

    To make matters worse all government statistics, and I mean all government statistics have been rigged to make things look Okie-Dokie. The lies emanating from the MSM, Wall Street, the Regulatory Agencies, The White House and Congress are epic.

    To add insult to injury when we do crash we will either hear; No one saw it coming or we will be in yet another war to be used a a coverup for this criminal financial and governmental cartel run by the Oligarchs through the Federal Reserve … This when fascism will really take hold.

    We are one “national emergency” away from a presidential decree amounting to the implementation of a totalitarian police state.

  • Fullblad

    America has an industrial war economy and is ruled by soulless bankers and the corporations that have grown up around them and all are corrupt and morally degenerate to the bone. Even though the collapse will bring much pain and needless suffering, and it is coming very soon, perhaps then the people will demand a return to a system ruled by law, justice and empathy.

    • http://www.lifenews.com/category/national/ Washington76

      You are spot on patriot!

      Corporatocracy: How the Corporate Welfare State Divides and Conquers

      • Fullblad

        great link to a James Corbett (Corbett Report) explanation of the situation…James hosted here by another of my favorite journalists Sibel Edmonds of Boiling Frogs Post.

  • Southernfink

    What the US economy needs is higher minimum wages, much higher than present level, somewhere in the region of $20 an hour and up.

    People need to be able to save money from their income, as opposed to corporations posting increasingly larger profit’s, it’s high time to stop corporate welfare and tax them like they should be or do away with corporations altogether.

  • Alex

    Dear oh dear. It’s not “exactly like” or “just like” in 2007. It’s half and one third of that. Just look at the vertical axes (the number of units sold) on your graphs. Graphs 1 and 3 stretch over 1600 and 270 units respectively, while graphs 2 and 4 stretch over 800 and 85. Therefore, the 2014 graphs “look” at least twice as steep as the 2007 graphs. Why are you trying to upset people using this well known trick of advertisers and manipulators of public opinion?

    • Ronald Pottol

      I have to agree, if you want me to take this seriously, you need to use the same range and scale on the charts, for example, home sales are very seasonal, six months of one period are in no was comparable to a year of another. You need to explain why you did this, or don’t do it, if you want to be seen as credible.

  • Alex

    Corrected: – – Dear oh dear. It’s not “exactly like” or “just like” in 2007. It’s half and one third of that. Just look at the vertical axes (the number of units sold) on your graphs. Graphs 1 and 3 stretch over 1600 and 270 units respectively, while graphs 2 and 4 stretch over 800 and 85. Therefore, the 2014 graphs “look” at least twice as steep compared to the 2007 graphs. Why are you trying to upset people using this well known trick of advertisers and manipulators of public opinion?

    • Alex

      On the horizontal axes (time passed) the difference is between 8 and 12 monts (on third). On the vertical axes (units sold) the difference is two to three and a half times. That’s hardly proportional.

    • Alex

      On the horizontal axes (time passed) the difference is between 8 and 12 monts (one third). On the vertical axes (units sold) the difference is two to three and a half times. That’s hardly proportional.

  • dani

    Thanks for writing this. I was expecting it for 2016 but it may be coming sooner. Unfortunately, I still get stares by most people when I mention that the debt economy is mathematically doomed because of the exponential nature of the growth needed to sustain it.

    And why wouldn’t they give me stares…? No one’s talking about it, how is it even possible to imagine a scenario where the world over, politicians know about the inevitability of collapse – if we keep on the same economic system – and are not even mentioning it? How is it possible to imagine such a thing?

    And yet, here we are, the economies of the world are headed for another stumble as it’s expected by the unsustainable growth model – ever more frequent and deeper crisis.

    The only reason I can give people as to why governments are not talking about it is that those who control us (the .001% or so) are engaged in disaster capitalism, and the crumbs are falling on the top 1%, which includes most politicians. An on-going economic crisis allows – as Friedman taught us unfortunately – the introduction of previously unpopular measures. If people do not want to privatize water, a good crisis which “forces” the government to sell off basically the lifeline (water) of its people is what is needed. Of course privatization solves nothing and makes things worse, but not for those involved in the deals.

    But even that level of widespread deviousness is beyond imagination. Are ALL politicians and ALL media on the take? Why is there no public debate about the imminent collapse?

    The consequences of silence can be counted in human lives. How is it possible that we have elected assassins time after time – every time?

  • http://www.michaelpshipley.com/ Michael P. Shipley

    Image links are screwed up.

  • Dee

    Well if the problem with the nation is economical how about some of these websites posting links to websites that educate the citizen about basic economics starting with how to balance a check book and how credit works? https://www.khanacademy.org/better-money-habits
    If the problem is ignorance about our history , how about some links about American History? http://teachingamericanhistory.org/
    If the problem is about how our political system works how about websites that explain it? http://www.ehow.com/how_2121940_lobby-washington.html http://www.commoncause.org/site/pp.asp?c=dkLNK1MQIwG&b=4923011 https://votesmart.org/education/how-a-bill-becomes-law#.U1ppaDYo6Fw
    If the problem is apathy how about some links to how legislation is passed, laws made, and how to let your representative know how you feel, how to lobby.. addresses, not just in Washington but local offices and state legislators.
    And not just post them , push them
    You can’t expect folks who do not understand basic money management, debt, and credit , maybe even investing or saving money to understand why it is concerning or even alarming that the government is in debt to the degree it is if they don’t understand their own mortgage. http://money.cnn.com/magazines/moneymag/money101/ Justin Beeber and Kim Kardasian haven’t mentioned any of this , The news is busy with missing planes, baskeball scores and the weather, if it was actually important it would be actually visible, maybe even ‘trending” there would be songs about it http://www.youtube.com/watch?v=-1A2qdcE5Io https://myspace.com/hollynearmusic/music/song/you-bet-81830019-90148354 http://www.youtube.com/watch?v=auYyO2GJJ9g&feature=kp .. it wouldn’t be all about how oppressed folks are and unfair life is and how powerless the 99% is..
    There would be hard facts and reliable information on how to increase your personal power and impact on the world, http://www.betterworldhandbook.com/2nd/traps.html how to better control your life instead of how to be a bigger consumer. http://namastenutritionist.com/take-charge-of-your-money-and-change-the-world/ Things you can do instead of things you can’t do. How to treat elected officals as your servants instead of your masters.. how to show big business that the consumer controls the market instead of the market controlling the consumer. How to screw up corporate data gathering, how powerful each dollar you spend is. http://smallbusiness.chron.com/home-cottage-business-ideas-4294.html If America wants jobs .. you buy American made stuff, made in America, by Americans.. you don’t need legislation, you just need the will to make some hard choices , maybe do without until demand brings the corporations around and gives the customers what they demand. How staying in constant relentless contact with legislators and getting all your friends to do the same can make a difference, done not as some big protest, but as a part of your weekly routine.. don’t like banksters get the hell out of debt, starve them. got a skill , fine, go cottage industry http://www.sba.gov/content/home-based-businesses .. want to save the environment, great, turn off a damn light occasionally. Don’t like GMO, then don’t buy it and don’t grow it in your backyard get involved at the local farmers market both as customer and supplier. http://www.pickyourown.org/
    And here you have this wonderful blog and you point out all these terrible things that are or can or might happen and I have to go and find how I can stop being part of the problem all on my own.
    It isn’t just about fixing the worlds problems.. it is also how specifically, all the options , small things practical things, daily things, personal things , public things , social things I can do to not be part of the problem. we are not talking breastfeeding here .. knowing this stuff is not innate.. it has to be learned , you think it is taught in public school?, folks pick it up on social media? NO duh!. Stop whining, teach. No man fears to do what he knows how to do.

    All links provided are pretty much random choices out of pages of options , with a few exceptions of links I use regularly.. but that does not imply they are the best for you.. but most of them are pretty good.

  • http://www.lifenews.com/category/national/ Washington76

    How The Democrats Caused The Financial Crisis: Starring Bill Clinton’s HUD Secretary Andrew Cuomo And Barack Obama; With Special Guest Appearances By Bill Clinton And Jimmy Carter

 

 

Twitter