The Days Of Living Fat Have Come To An End
Readers discussed the economic fallout from the housing bubble. “My wife and I decided to speed the bust along by not participating in the consumer aspect of Christmas this year. Beyond a couple bottles of wine for our folks, we’re instead making a donation to our two favorite non-profits. My parents are definitely going ‘lite,’ or so they say. But I think it’ll take a couple more Christmas years before we see the real pain–all those rich people ARMs are just starting to reset, so they probably still have access to credit. 2009 or 2010 for total bust.”
A reply. “I have been fed up with the consumerism related to Christmas for years. In our family we mainly just give gifts to kids anyways, so aside from having a nice dinner we don’t spend all that much. But I get the sense that lots of people are doing the same thing. The housing bubble led to a credit and debt bubble, and this in turn led to a retail bubble. One by one they pop, and as each one goes, it sows the seeds for the popping of the next one.”
One had this. “As a lifelong miser who years ago told others (except my brother’s children) that there would be no gifts from me and there should not be any vice versa, i enjoy this year’s xmas spectacle of shut down the wallets. The american sheeple have needed this bat in the face for a very long time, and they are still sitting on the curb wondering why their face hurts so much.”
And one had this quote. “I had three pieces of limestone on my desk, but I was terrified to find that they required to be dusted daily, when the furniture of my mind was all undusted still, and threw them out the window in disgust. - Henry David Thoreau.”
From Marketplace. “Tess Vigeland: This week many of us were busy stuffing a turkey or pounding mashed potatoes into a pulp, but not everyone was lucky enough to be feasting. I met Elaine, a 41-year-old mother of two from Altadena, California, at the Foothill Unity Center. She was there with her six-month-old. Elaine: ‘We really just don’t know what’s going to happen, but we’ve been in foreclosure 77 days now, so…’”
“Elaine worked as a loan processor. Her husband was a mortgage broker. She says they cleared somewhere north of $100,000 a year and had no trouble supporting themselves and their two small children — until the housing market crashed. And now?”
“They defaulted on their home loan in January and quickly burned through about $20,000 dollars in savings, so now most expenses are going on credit cards. Her husband is pounding the pavement for a new job while she stays home with the newborn. Elaine: ‘We haven’t had a real estate transaction since December, so we had to take all of our E-Trade accounts, close them out. You know, we had to juggle from paying electricity, gas. It’s a humbling experience to go from making all this money and everything looks great and then all of a sudden just looking out and wondering where and when we’ll have money to buy food.’”
The Birmjngham Business Journal. “The tightened credit market and current housing slump in the Birmingham-Hoover metro area have forced several local mortgage brokers to shutter their businesses. Adam Pullen said since some of the more exotic loan products, such as the 80/20 loans and 100 percent financing, have dried up in the markets, brokers have been left out in the cold.”
“‘What’s happened is brokers have had to rely on lenders. Most of them are banks that have clutched down on lending,’ Pullen said. ‘The industry is shutting down brokers.’”
“The markets will remain crippled without non-conventional loans to offer consumers, Pullen said. ‘Let’s face it – most people need 100 percent financing to buy a home,’ he said.”
The Las Vegas Sun. “Casino and gaming executives from domestic and international companies weighed in on the current economic crisis at this morning’s Global Gaming Conference in Las Vegas. Harrah’s CEO Gary Loveman told attendees the tightening credit market is a much more important challenge in casino growth than the short-term drop in consumer spending. The Harrah’s CEO said casino developers ’spend capital like drunken sailors,’ building lavish facilities while seeing little return on their investment during the downturn.”
The Enterprise Record. “Longtime Chico manufacturer Bruce Norlie knows about painful cutbacks. His company, Norfield Industries, manufactures the equipment to make prehung doors, a staple of the housing industry. Each layoff was hurtful to Norlie, member of a longtime Chico family that values its employees and appreciates their productivity. Lucky for him, his other enterprises, including equipment supplies like saw blades, are still positive.”
“‘When the housing industry was going wild, our business was very strong. We’ve had a substantial number of customers go out of business, predominantly in the U.S., some in Canada,’ he said.”
“Over the years that Norlie has been in the industry, he’s seen other downturns. ‘It’s never been this bad though,’ he noted.”
The Union Tribune. “Matt Sauer, a young, single mortgage broker, planned to get rich quick after graduating from college. By age 28, he owned properties in Pacific Beach, Las Vegas and Florida. Today, the houses are underwater, and Sauer’s dreams of quitting his job to become a Christian missionary are on hold because of his financial obligations.”
“‘Like the Bible says: ‘The borrower is the servant to the lender,’ Sauer said. ‘I am enslaved.’”
The Valley Chronicle. “Though the economic future is uncertain for San Jacinto no less than other local California governments, measures are available to save $380,000 this budget year, City Manager Barry McClellan told the City Council last week and greater savings can be achieved if it becomes necessary. McClellan said he began working on reducing spending - all travel on the city dime must be approved by him personally - in August and department heads have come up with additional ways to save money should the need arrive.”
“It probably will. ‘The days of living fat have come to an end,’ said Mayor Jim Ayres.”
The News Leader. “The odds of landing a part-time job at department store operator Bealls Outlet Stores Inc. this holiday season are slimmer than getting into Harvard: It’s one out of every 45. The chances aren’t any better at 7-Eleven. One California store received more than 100 applicants in a week and a half for jobs that pay $8.50 per hour — and the retailer doesn’t even usually hire holiday workers.”
“‘I thought it was going to be pretty easy, but I am not the only one looking for a job. There are thousands of us going for the same thing,’ said Kimberly Caparo of Chesterfield, Mich., who has applied for part-time jobs at Toys ‘R’ Us Inc., Home Depot Inc. and Lowe’s Cos. Inc. in recent weeks since she and her husband were laid off.”
“In one respect, however, Springfield job applicants appear to fit a nationwide trend — rather than the usual pool of teens or stay-at-home moms looking for extra holiday spending money, those vying for jobs have much deeper résumés. As far back as September, Bealls Outlet Stores — which operates most of its 450 stores in Florida — was being flooded with up to 40 to 50 applicants a week, said Conrad Szymanski, president of the Bradenton, Fla.-based chain. A year ago, they saw one or two applicants a week per store.”
“‘What we are seeing is a profound increase,’ particularly in Florida, California, and Arizona, where the real estate market has been hit hard, said Szymanski.”
“David Ortega, a training store manager at the 7-Eleven in Citrus Heights, Calif., that got more than 100 applications, noted that many applicants have management experience — including those who owned construction businesses. The store in a suburb of Sacramento, which has been hard hit by the housing slump, usually saw candidates who came straight out of high school, he said. One recent applicant — a former manager in cosmetics at Macy’s — even wrote him a thank-you note for discussing the $8.50 per hour job.”
“‘You expect to see that for a higher-level position, like an executive,’ he said.”
“John Morris, who expects to be laid off from his Springfield marketing job at the end of the year, has applied for jobs all over the country.Morris, 41, said the impression he gets is that, although there is a lot of competition, there are a lot of jobs available, as well. ‘The thing that is probably killing the market right now is everyone is waiting for Jan. 1 for the new financial year to start before making any decision.’”
“He’s still optimistic he’ll find another marketing position but recently has been considering taking a job shuttling railroad workers to and from job sites. ‘The stigma there is how do I tell my family I didn’t really need a college degree?’ Morris said.”
“‘Right now I’m still hoping to get a job that is more continuing up the professional ladder,’ he said. ‘But if December comes around and there’s nothing there, then I will swallow my pride and get a commercial driver’s license and lower my expectations — and honestly, probably be happier. There’s not a lot of stress with driving a bus. It gets the bills paid and right now that’s the more important thing.’”
