In recent weeks, U.S. propagandists have (once again) mouthed-off about a “bottom” forming in the U.S. housing sector – despite data which confirms the market is still plummeting downward. Furthermore, the collapse is guaranteed to get much worse in 2010-11 (see “U.S. mortgage-crisis to get MUCH worse in 2010-11”). The spike in U.S. interest rates is just another nail in the coffin.

On what are the talking-heads basing their ludicrous optimism? In some of the most-decimated markets (which have already seen price declines of 40% to 60%), there has been a surge of buying – though not enough to stop the downward plunge in prices.

A Reuters article puts these purchases into context: “... vulture buyers were now swooping in to snap up bundles of homes at foreclosure auctions...”

In short, it appears that the only people who have been duped into re-entering the U.S. real estate market prematurely are greedy speculators. Inevitably, such purchasing is being leveraged with high levels of debt. This means that after these homes have already been foreclosed (at least once), they are going right back into the hands of leveraged debtors – who clearly cannot withstand the next down-leg for this market.

Thus, with a tidal wave of foreclosures already on the way, due to record numbers of mortgage “resets” in 2010 and 2011, all that the talking-heads have accomplished with their despicable propaganda is to add to the calamity which will occur over the next two years of the U.S. housing collapse.

This pathetic propaganda campaign of calling “bottom” after “bottom” in the worst real estate collapse in human history seems completely counter-productive – as it only postpones and intensifies future problems. However, when viewed in the context of the Geithner sham known as the “bank stress tests”, the propagandists don't have much choice.

The U.S. financial crime syndicate is still a “house of cards” trying to survive a hurricane. These fraud-factories cannot withstand the trillions in additional losses looming ahead, from a combination of the continued housing collapse, the beginning of the commercial real estate collapse, and record delinquency levels in every other category of loans – simultaneously.

Therefore, this cabal of compulsive liars are doing the only thing they know how to do: lie incessantly and pray for some miracle to save them. As I have suggested before, the problem for these people is that they have been uttering the same lies for so long (“Helicopter” Ben has already “predicted” five U.S. economic “recoveries”) that they have begun to believe their own propaganda.

There is no doubt that many of these people actually believe there will be more substance to Bernanke's fifth prediction than the hollow promises of the first four. They can actually “see” the completely mythical “green shoots” - since the propagandists have been parroting this phrase ad nauseum.

Meanwhile, back in the real world, interest rates are rising rapidly, unemployment is still soaring (see “U.S. economy to lose 20 MILLION jobs this year”), and the U.S. equities “rally” cannot be sustained by the Plunge Protection Team and the lies of the propagandists.

In luring speculators back into housing markets which aren't even close to a bottom, they are squandering the limited capital which could have been used to help form a real bottom – once U.S. housing prices approach some potential equilibrium level.

Keep in mind that U.S. home prices tripled from 1997 to 2006, while inflation-adjusted incomes were falling during this entire period. None of that increase in property values is sustainable. Thus, U.S. homes prices must fall by an average of 67% before a real “bottom” is possible. However, since markets typically “over-shoot” equilibrium levels (especially in such a violent plunge) it is more realistic to expect across-the-board price declines of closer to 75% - across the entire U.S. market.

As I pointed out recently (see “U.S. Pension Crisis: the $3 TRILLION question”), cash-strapped baby-boomers – looking to begin their retirements at the same time that their retirement savings have collapsed in value, will likely be seeking to dump at least $1 TRILLION in real estate onto this over-saturated market to try to fund their retirements. This will likely keep downward pressure on this market for somewhere close to a decade.

Do not allow yourself to be wiped-out by these phony promises and "predictions". As with virtually all asset classes in the U.S. economy, the old maxim applies: caveat emptor.

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