Struggling To Offload Their Investment
A report from Better Dwelling in Canada. “Toronto real estate sales were down in the million plus range in August. TREB reported 965 sales over a million dollars, down 37.66% from the same month last year. This was due mostly due to soft demand in the detached market, where sales above a million are down a 42.67%. Detached and condo apartments combined showed 12,808 active listings in August, up 54.68%. Breaking that down, TREB reported 9,215 active detached listings at month end. This is up 117.48% when compared to the same month last year.”
“The back half of 2017 is going to be very different from the first half. Be careful how numbers get thrown at you if you’re an investor. In the first half of 1999, investment grade Beanie Babies were up 2,400%. In the back half of 1999, they were worth less than the purchase price, retaining just 4% of their value. That’s an extreme example, and lucky for most, homes retain value better than Beanie Babies. However the takeaway is the same. Assets bought with disregard for historic data for price discovery on the way up, typically disregard historic data on the way down.”
From the Daily Mail in the UK. “Hundreds of thousands of pounds are being knocked off the asking prices of properties valued around the million pound mark as the top end of the housing market cools, it has been revealed. The trend is particularly pronounced in London, where values tend to be higher and £1million often doesn’t extend to much more than a two or three-bedroom flat in some areas. Discounts of up to 50 per cent can be found, according to estate agents.”
“Nicholas Fine, of Garrington Property Finders said: ‘The London market’s shift from blistering price growth to stagnation and now gentle decline has been gradual, but it’s no less remarkable for that. Of course the capital’s gravity-defying, double-digit rates of annual price growth were always going to be unsustainable.’”
The Gulf News on Saudi Arabia. “For the first time in decades, residential rents are declining in Jeddah. A large number of expatriates interviewed also said that the owners of their buildings have reduced their rent without them even requesting for it. Vacant apartments are also mushrooming throughout the city with ‘Apartment for Rent’ signs on almost every building.”
“A real estate agent, who has his office in an affluent neighbourhood, said that despite rents being reduced, very few people have stepped in to inquire about renting an apartment, and even fewer have actually rented. ‘The demand for rented apartment has gone down drastically,’ he said.”
From Reuters on China. “International sanctions on North Korea have helped sustain a housing glut in China’s border city of Dandong, through which most trade with the North flows, in contrast to falling inventories in much of the rest of China, sales data showed. Dandong, with a population of around 860,000, has accumulated more unsold housing inventory than much larger cities. ‘North Korea’s constant talk of war has meant Dandong property prices have never gone up,’ said local resident Xiao Tengfei, who along with other family members purchased several apartments in Dandong’s New Zone seven years ago.”
“Xiao said she never moved in when her building was finished in 2013 due to a lack of surrounding facilities and was now struggling to find buyers to offload her investment. ‘My money has been tied up in here for years now.’”
From Your Property Investment on Australia. “Apartments purchased off-the-plan at the beginning of Brisbane’s unit-construction boom are selling at significant losses. According to Michael Yardney, CEO of Metropole Property Strategists, buyers who bought off-the-plan apartments in high-rise towers in Hamilton, Bowen Hills, and Fortitude Valley were particularly hard hit. ‘This comes after an unprecedented building boom over the last five years, which created a massive oversupply of high-rise apartments,’ he said. ‘It seems that price drops of 20 to 25 per cent are not uncommon for resales after off-the-plan purchases.” And things are not going to improve any time soon: Just look at the skyline and you’ll still see cranes everywhere.’”
“The current glut of apartments is causing anxious Brisbane landlords to resort to desperate measures to secure tenants, according to Yardney. ‘Typically they’ll offer at least a month’s free rent to incentivise a tenant to take a 12-month lease,’ he said. ‘Other landlords are even offering an iPad, a free gym membership or a gift voucher to secure tenants. One large Fortitude Valley developer was recently offering three months free rent and $1,000 cash to tenants who took 12-month leases.’”
From The Australian. “Brisbane apartment owners face a potential $4 billion drop in property values over the next three years in the face of oversupply and a falling market. Almost a quarter of Brisbane apartments lost money in the first three months of the year, up from about 18 per cent of sales making a loss mid-last year. Across Brisbane each loss-making sale, including homes, wiped off an average $27,000.”
“Official property searches show some off-the-plan apartment high-rises completed at the start of the boom have since resold at significant losses, as high as 35 per cent, in the densely built areas such as Newstead, Bowen Hills and Hamilton. Resale losses include a $145,000 fall on an original $400,000 purchase in Bowen Hills, a $152,000 fall on an original price of $522,000 for a Hamilton two-bedroom unit and a $115,000 loss on another Hamilton two-bedroom apartment.”‘
“An analysis provided to The Australian researched resales since last year in Newstead, Bowen Hills and Fortitude Valley developments with more than 50 apartments each that were completed over the past five years. It showed 90 per cent of the 83 sales were at a loss. A 63sq m one-bedroom apartment in Bowen Hills sold in 2011 for $371,000 and resold in May last year for $260,000. Another 59sq m Bowen Hills one-bedroom unit originally sold for $390,000 and resold five years later for $285,000.”
“Jill and Matthew Egerton are selling their two-bedroom Paddington investment property and the townhouse, where they live, to buy a more spacious family home. The Egertons are willing to negotiate but if they cannot get their desired price they may consider renting it out again. ‘(It’s) probably not the best time to sell it — with all the other units, brand new units on the market,’ Ms Egerton says.”
‘Of course the capital’s gravity-defying, double-digit rates of annual price growth were always going to be unsustainable’
Ah yes, the old, “everybody knew it couldn’t last” line. I’d bet Nick was telling everyone that would listen “buy now or be priced out” blah blah.
The lights are still on, and the band is still playing away. It got dark outside a while ago - not really sure when, and the punch bowl is still half full. Is it just me, or are a lot more people milling about over there close to the exit door?
So long as taking away the punch bowl continues to be a keen topic of discussion at the Fed with no follow-through, there will be no need for investors to ever egress.
Agreed. and everyone is keeping an eye on the punch bowl.
I think there are a *lot* of people out there that think “I’m smart. I’m not going to get caught like those suckers 10 years ago, because I won’t wait to unload my position as soon as I see that a downturn is starting..”
Now, as to their ability to make the call as to when a downturn is beginning, that is probably suspect for most. I think most people in an effort to ‘not be too hasty’ will need to see clear proof - which as we saw last time means it’s already well underway.
Not everyone is gambling in this casino.
‘The current glut of apartments is causing anxious Brisbane landlords to resort to desperate measures to secure tenants…One large Fortitude Valley developer was recently offering three months free rent and $1,000 cash to tenants who took 12-month leases’
Developers screwing over their recent speculative clients. I believe we’ve seen this before.
‘(It’s) probably not the best time to sell it — with all the other units, brand new units on the market’
Whatever you do Jill, don’t give it away.
A comment to the last link:
“Caveat emptor” pop out apartments were always going to be a doomed investment due to oversupply.”
Another “everybody knew” thing. It should be noted these Brisbane airboxes were designed for Chinese buyers, who snapped towers up in a day, we were often told.
The trend is particularly pronounced in London, where values tend to be higher and £1million often doesn’t extend to much more than a two or three-bedroom flat in some areas.
I saw that this summer. And in parts of London that were nothing to write home about and were infested with “council housing” and people on welfare. In places that were nice, like say near Wimbledon, prices for flats were in 2-3 million range and small houses were a lot more.
‘For the first time in decades, residential rents are declining in Jeddah. A large number of expatriates interviewed also said that the owners of their buildings have reduced their rent without them even requesting for it. Vacant apartments are also mushrooming throughout the city with ‘Apartment for Rent’ signs on almost every building.’
‘A real estate agent, who has his office in an affluent neighbourhood, said that despite rents being reduced, very few people have stepped in to inquire about renting an apartment, and even fewer have actually rented. ‘The demand for rented apartment has gone down drastically’
I have it on good advice, it was a 2014 prediction IIRC, that oil is going up to 80 bucks.
‘who along with other family members purchased several apartments in Dandong’s New Zone seven years ago…Xiao said she never moved in when her building was finished in 2013 due to a lack of surrounding facilities and was now struggling to find buyers to offload her investment. ‘My money has been tied up in here for years now.’
Same poster said China just has a different way of building cities. Hang in there Xiao, this guy has a heck of a track record.
‘North Korea’s constant talk of war has meant Dandong property prices have never gone up’
It’s a head shaker. When you bought these lemons, North Korea was a shining star on the global stage and you had to play to win.
Perhaps a latter-day variant of Keynesian ditch digging and refilling can save China from its ginormous surplus of empty structures: Bitcoin mining. So long as the fantasy that Bitcoin has value continues to hold sway, where is the downside?
In China’s Hinterlands, Workers Mine Bitcoin for a Digital Fortune
One of the largest sources of Bitcoin can be found in the grasslands of
Inner Mongolia, despite Chinese skepticism over its potential for risk.
查看简体中文版
查看繁體中文版
By CAO LI and GIULIA MARCHI
SEPT. 13, 2017
DALAD BANNER, China — They worked as factory hands, in the coal business and as farmers. Their spirits rose when a coal boom promised to bring factories and jobs to this land of grassy plains in Inner Mongolia. When the boom ebbed, they looked for work wherever they could.
Today, many have found it at a place that makes money — the digital kind.
Here, in what is locally called the Dalad Economic Development Zone, lies one of the biggest Bitcoin farms in the world. These eight factory buildings with blue-tin roofs account for nearly one-twentieth of the world’s daily production of the cryptocurrency.
Based on today’s prices, it issues $318,000 in digital currency a day.
From the outside, the factory — owned by a company called Bitmain China — does not look much different from the other buildings in the industrial park.
Its neighbors include chemical plants and aluminum smelters. Some of the buildings in the zone were never finished. Except for the occasional coal-carrying truck, the roads are largely silent.
Inside, instead of heavy industrial machinery, workers tend rows and rows of computers — nearly 25,000 computers in all — crunching the mathematical problems that create Bitcoin.
Workers carry laptop computers as they walk the aisles looking for breakdowns and checking cable connections. They fill water tanks that keep the computers from melting down or bursting into flame. Around them, hundreds of thousands of cooling fans fill the building with whooshing white noise.
…
Can you imagine the vast scale of wasted real natural and human resources to support imaginary Bitcoin mining operations?
Like so many things going on, it is feeding off a mania. It will crash eventually and then the waste will be obvious.
Next to an aluminum smelter is a good choice if you need heavy duty electricity distribution.
Next to an aluminum smelter is a good choice if you need heavy duty electricity distribution.
I had the same thought, Blue: co-location there suggests they picked a good spot, as smelters tend to be located where power is both abundant and cheap.
February 19, 2016
“When it comes to putting the frozen city of Yingkou, near the border with North Korea, on the style map, the developers are not short of ambition. But one thing is missing. There aren’t any prospective buyers. In fact, there are no people here at all. No cars on the eight-lane roads; no one in the Olympic-themed sports centre. As dark descends, light shines only from ‘The Happy Pizza Hut,’ Yingkou’s brush with western cuisine. Whole apartment blocks are black. ‘No one wants to live on this side of the river,’ explains a resident of the nearby old town. ‘It’s too far from everything. There are no jobs. It’s a complete waste of money.’”
“Among Yingkou’s developers, ambition has given way to desperation. They admit privately they’ve only sold a fraction of their stock. None would risk talking publicly, but I get a rare opportunity to sit down with Wang Shi, founder and chairman of Vanke, the world’s largest home builder by sales. ‘It’s a real problem,’ he concedes. ‘Many cities have an oversupply of housing.’”
http://thehousingbubbleblog.com/?p=9521
“Among Yingkou’s developers, ambition has given way to desperation. They admit privately they’ve only sold a fraction of their stock. None would risk talking publicly, but I get a rare opportunity to sit down with Wang Shi, founder and chairman of Vanke, the world’s largest home builder by sales. ‘It’s a real problem,’ he concedes. ‘Many cities have an oversupply of housing.’”
Selling is easy, if you use a Dutch auction approach. Just lower the asking price incrementally until a buyer steps forward to snap it up.
July 14, 2016
“Nearly five years after construction began on the new $338-million suspension bridge linking Dandong to Sinuiju across the Yalu River, and close to two years after it was due to open, China and North Korea remain silent on what – if anything – will happen to the project. Meanwhile, Dandong’s New District – a multi-billion dollar area built from scratch on the back of promised trade with North Korea – faces economic meltdown.”
“When construction of the bridge began in October 2011, China paid for everything. New development around the bridge had already been planned on a vast scale, according to published details. Fast-forward five years and Dandong’s New District is suffering economic free-fall. The driving factor for this slump remains the city’s New District, a giant building site where huge developments lie abandoned while ‘for sale’ and ‘for rent’ signs dominate almost every building, wiping millions of yuan off investments for each day the new bridge fails to open.”
“The bulky 25-storey Guomen Tower, the first building visiting North Koreans would see if they ever get to drive over the bridge, lies finished but empty. On the opposite side of the street, the enormous New Yalu River Bridge Port Center has held some exhibitions, but mostly lies disused. The entrance was blocked off and manned by a lone security guard on one recent visit.”
“Foreign investors here have seen initial optimism they would be on the front-line of North Korean economic development slowly turn to despair. The South Korean chaebol SK Group has invested in three operations in Dandong’s New District: a logistics unit, another for manufacturing and sales, and a real-estate development. ‘There is the potential that this area could grow as rapidly as Macau,’ an SK source had told South Korea’s Dong-a-Ilbo newspaper back in mid-2012.”
“Today the firm’s 19-storey prime office space SK International Tower remains unoccupied, with the lower floors used to store building equipment and supplies. Eight adjacent apartment buildings are all but empty. Other South Korean investors in Dandong’s New District are understood to have packed up and left months ago.”
http://thehousingbubbleblog.com/?p=9688
The hideous waste of natural resources is one of the most despicable aspects of this worldwide credit orgy.
Yep. And according to the Keynesian playbook, digging ditches, then filling them back up with dirt is good so long as it keeps employment high, regardless of the resources that are squandered in malinvestment.
It surprises me that China has not converted some of this stuff into “council housing” of its own. I keep thinking of those 60-year old men living in cages down in Beijing. Why not move them to these ghost cities, and open up a gov-run store/complex where they can go for some daily food rations, a game of Go, and some basic medical care? For the residents, anything’s got to be better than cage living, and for the gov, it’s a better use of money than letting the globalists play Monopoly with it.
Anyone here is aware of what higher interest rates will do for housing, so ponder what happens if Warsh becomes Fed chief.
excerpt:
America, as we know, is a smoldering hell-hole desperately in need of Trumponomics, which can be understood as an amalgamation of deregulation and massive tax cuts, all to be held together with a liberal dose of easy monetary policy.
Warsh feels differently. He resigned as Fed Governor in 2011, at odds with the Fed’s easy money policies. He has urged the Fed to take on a firmer “strategy” on normalizing rates. Warsh is not, it’s safe to say, a low-interest-rate guy.
source:
https://dealbreaker.com/2017/09/kevin-warsh-may-not-be-the-perfect-pick-for-fed-chair-but-at-least-he-has-being-wrong-about-everything-going-for-him/
‘Trumponomics…can be understood as an amalgamation of deregulation and massive tax cuts, all to be held together with a liberal dose of easy monetary policy’
Almost everyone agrees corporations take their money out of the country to avoid taxes. They ain’t paying them! So offering a lower rate so we at least get something doesn’t seem like a wild idea. This is just another biased article about the Presidents position.
I know it’s crazy to suggest it, but what we voted for was something different. A different position on trade, globalism, immigration. Don’t tell me everything is so swell that we don’t have the right to go through the process, pick a candidate, if he wins get a chance to try some new ideas.
This is all kinda related to yesterdays topic: not so much low rates, but determined by those things we used to call markets? Remember that, capitalism? If this wealth effect crap worked Hillary would be in the white house right now.
Last night I watched Hannity interview Limbaugh. They talked about the tax plan being populist, not conservative. Then they got into the opposition from the deep state and the “establishment”. About how it’s not really elected people so much as donors, big corporations, unelected people in DC that never leave and have been calling the shots for decades. It dawned on me: here’s two well known guys casually discussing on network TV what’s basically not legal. You don’t get to use wiretaps to get dirt on political opponents. You sure as heck can’t use the NSA to decode presidential phone calls, not legally anyway. So where are the headlines today? Hannity and Limbaugh discuss major conspiracy theory!
Can’t we just try some new ideas about our government? Taxes, trade, immigration? If it all blows to hell you can tell us you told us it would happen and call in the old crew and we can go right back to what we got now. What are these people really afraid of? That it might work?
Almost everyone agrees corporations take their money out of the country to avoid taxes.
Maybe almost every agrees with that statement, but that doesn’t make it true.
Corporations are _keeping_ money that they earned outside of the country where it was earned: outside of the country. They are not taking money that was earned in the US and moving it abroad.
The reason that they do this is due to our archaic system of taxation that will try to tax it again if and only if they repatriate it back to the US. So they don’t.
In most part of the word, the territorial system of taxation that is in use would tax the moneys where they were earned, but not attempt to tax them again simply because you moved them to another jurisdiction.
One thing I find ironic, if a citizen earns money abroad, he pays US income taxes, at least the difference between US and the country it was earned in. Corporations are “persons” but this doesn’t hold true for them. Maybe they are simply allowed to have split personalities, taxed separately.
If a corporation is convicted of a crime, shouldn’t its Board of Directors serve the associated jail sentence? Shouldn’t the Board of Directors and the management team pay the fines, rather than passing those fines onto the shareholders?
We live in interesting times, and by the way, the Emperor is butt-naked.
Great point, Blue—there clearly are different rules applied. But the rules as they exist today don’t make much sense, and encourage this behavior.
Maybe they are simply allowed to have split personalities, taxed separately.
You hit the nail on the head there; normally they are incorporated in each country in which they do business. Split personalities, indeed.
They may not take their money out of the country to avoid taxes, but they set up their corporate structure so that the money never comes to the US in the first place.
Look up “Double Irish”.
Google takes advantage of this…in full sight of the world. Before Google did this, they asked for an IRS ruling confirming that it was OK.
In part, companies keep money earned overseas…however, they also set up their structure so that money is earned in low tax jurisdictions in the first place.
Territorial taxation would help, but not solve this entirely.
It’s a bit like estate taxes. The higher the rate, the more crazy structures are employed to avoid that high rate. HOWEVER, it’s a mistake to assume that no crazy structures would exist with a 20% estate tax rate. For some people, anything above 0% is too high. For many though, a low rate would be much easier to stomach and prepare for.
but they set up their corporate structure so that the money never comes to the US in the first place.
Sure they do—but when a person does good tax planning, we consider them wise (you do take full advantage of your 401k at work, right?), but when a corporation does good tax planning, we consider them evil?
I don’t buy that thesis. If we want different behavior from corporations, we should set up the tax code and tax law such that they are not incented to structure their businesses in these ways.
Re: the Double Irish: yes, I’m familiar. But you are pointing the blame in the wrong direction. The Irish parliament, the Dutch parliament, and the EU are all responsible for letting such incentives exist in their tax codes. The EU had a number of incentive intended to encourage companies to move to Ireland when its economy was considered highly distressed; apparently they were not careful enough in how they structured the code.
BTW, that issue has since been resolved, or will be in 2020 at the end of the sunset window (per Investopia):
“The End of the Double Irish With a Dutch Sandwich
Due largely to international pressure and the publicity surrounding Google’s and Apple’s uses of the double Irish with a Dutch sandwich, the Irish finance minister, in the 2015 budget, passed measures to close the loopholes and effectively end the use of the double Irish with a Dutch sandwich for new tax plans. Companies with established structures will continue to benefit from the old system until 2020.”
we consider them evil?
I don’t buy that thesis. If we want different behavior from corporations, we should set up the tax code and tax law such that they are not incented to structure their businesses in these ways.
I agree with you. However, my understanding is that corporations are already working on alternative structures–not sure whether they will still be successful in minimizing tax to the same extent, but they are trying.
The one fundamental tenet of economics that cannot be disputed is that people and corporations respond to financial incentives.
There is an infamous meeting that my partner had with a very left leaning, very wealthy individual. For 90% of the meeting the talk was political, discussing how the rich don’t pay enough, etc. The parting shot was that the individual and their family needed to leave for a meeting, because they were looking to do some near term tax planning to reduce their tax bill.
Hypocritical? Maybe. Or they are just paying the minimum amount that the law allows…nothing wrong with that.
When even the stanchest supporters of higher taxes use every loophole possible in the code to minimize their own taxes, it should be obvious to EVERYONE that a simpler tax code is better. The more complexity there is in the code, the more ability there is to exploit it.
I don’t support the 25% passthrough tax (even though it might benefit me). This is ripe ground for the same kind of individual shenanigans as there was for corporations with their “double irish” structures. PLUS, LLCs/LPs already have the advantage of avoiding double taxation (there is no tax at the LLC level) when comparing them to c-corp structures, so saying this 25% is to “equalize” LLC/LP structures to corporate structures is wrong.
I support the elimination of tax deductions (but I wish they went even farther to eliminate charitable donations as well as MID).
I support a territorial taxation system for corporations, but I’m not sure if the right rate is 20% or some other rate.
I would support the equalization of cap gains and ordinary rates…but would do so only if your basis in your investments were increased with inflation (so you were taxed on real gains, not nominal).
I would support all this being revenue neutral…our deficits are already too big. If government can reform spending to reduce deficits, well, then I might be able to support tax cuts.
The only thing worse than “tax and spend” government is “don’t tax and spend” government.
I like your proposals, RW—all of them in fact. I agree on the 25% passthrough, a disaster waiting in the wings to be exploited in unexpected ways.
On the corporate front, I’d go further, and make ALL corporations passthrough, but at the recipients’ marginal rate.
I’d go further, and make ALL corporations passthrough, but at the recipients’ marginal rate.
This would be an accountant’s dream. Everyone who owns stock would no longer get a 1099 for each brokerage account, but a K-1 for each stock owned.
I don’t see how this would work without a dramatic simplification of the reporting that each investor would need to do (which would require a dramatic simplification at the corporate level), and I just don’t see that happening in my lifetime.
Everyone who owns stock would no longer get a 1099 for each brokerage account, but a K-1 for each stock owned.
Brokerages could pretty trivially aggregate all of the pass-through income for your individual holdings into one line item.
Sure, we’d want some simplification in the code mixed in, but a per-share “here’s your net income” that is simply published rather than mailed to each shareholder would be pretty straightforward to implement.
The phantom income issues alone would be a nightmare. And cause huge collection issues…would you require each company to withhold taxes for individual investors?
If you’ve never heard the phrase “phantom income”, that’s the point.
For those who haven’t heard it, phantom income is when you get income allocated to you without any cash paid to you.
Something that happens ALL THE TIME with passthrough entities.
Example…the stock you hold in Google earns $100 for you, but doesn’t pay out any distribution (they hold the cash for re-investment). You still get the $100 in income, on which you need to pay taxes.
That $100 is “phantom income”.
Or would you require Google to make distributions for people to pay tax?
What about passive losses from prior years? Would those suck up gains for old investors, but not new ones? Would passive losses flow through to individuals? Would people get to take the losses the same way corporations do?
And what about the other 30 different line items that flow through on a K-1? Basis tracking?
We would need MASSIVE tax simplification to avoid a MASSIVE nightmare of accounting. I just don’t see it happening, or practical.
“so we at least get something ”
The concern here is moral hazard. If the people settle for “something,” the corporations will never pay any full taxes again. They will continually move money out of the country and thumb their noses at Congress until Congress is forced to have another tax amnesty, just to get something.
It’s not so different from the immigration concerns or any other concerns about Free Sh!t. Once you have one amnesty you can never stop.
They will continually move money out of the country
You know not that of which you speak; see my response above. They are not “moving money out of the country” to avoid taxes.
OX i beg to differ if we eliminate federal corporate taxes we also eliminate any federal tax loss refunds since you cant refund taxes your dont pay.
that would eliminate deals based on tax loss carry forwards, or shell companies that exist only for their past losses…
“Can’t we just try some new ideas about our government?”
I totally get what you’re saying, but in some ways I wonder if Trump represents the exact opposite; ie, can we STOP trying new ideas about our government for a while?
What is often forgotten is just what a radical experiment the last 30 years of globalist-technocracy has been, financially and politically.
It was an experiment that sought to redefine capitalism (bailouts, loan reforms, serial bubbles, off-shoring and trade), redefine money (QE and negative interest rates), redefine citizenship (creating a permanent underclass of non-citizen residents via H1-B and illegal immigration), and redefine representative democracy (governing against the will of the people through the unelected and largely unaccountable bureaucracy in the US and EU).
“What are these people really afraid of?”
Technocracy gets its power from the illusion of consensus, so within this grand experiment, all dissent was suppressed. Trump’s ideas may only look new or radical because it is the first time in years the consensus spell has been broken with legitimate opposition and the return of much-needed ideological pluralism.
“the illusion of consensus…”
No. We’ve been hammered that there was a consensus when there wasn’t. Enough of us awake that we threw a monkey wrench at the “consensus”. It is a step forward.
“Warsh is not, it’s safe to say, a low-interest-rate guy.”
The world might appear considerably different to him if he were appointed Fed Chair.
Realtors are liars.
anyone watch this series hwy 401 toronto…..
Heavy Rescue 401 S01E01 Shock and Awe
https://www.youtube.com/watch?v=lb3wEWoWYWE
hwy thru hellll vs heavy rescue interesting how towing is so different between these two areas
https://www.youtube.com/watch?v=O8S_wlxJxa0
“The back half of 2017 is going to be very different from the first half. Be careful how numbers get thrown at you if you’re an investor. In the first half of 1999, investment grade Beanie Babies were up 2,400%. In the back half of 1999, they were worth less than the purchase price, retaining just 4% of their value. That’s an extreme example, and lucky for most, homes retain value better than Beanie Babies. However the takeaway is the same. Assets bought with disregard for historic data for price discovery on the way up, typically disregard historic data on the way down.”
Correct me if I’m wrong, but I don’t believe that the U.S. federal government stepped in to save investors from their foolish investments in Beanie Babies. Why are dumb real estate investments given special treatment by Uncle Fed?
Correct me if I’m wrong, but I don’t believe that the U.S. federal government stepped in to save investors from their foolish investments in Beanie Babies. Why are dumb real estate investments given special treatment by Uncle Fed?
That diference is simple, PB, as I’m sure you realize: no banks were on the hook for the falling value of Beanie Babies.
“…no banks were on the hook…”
That thought did cross my mind as I was making that post.
But if we had had a debt-backed Beanie Baby Bubble with the banks holding the debt that was about to turn bad—then I’m sure we would have seen the Fed respond in force.
Imagine the comedic potential of a Beanie Baby Bailout!
What is the intrinsic value of a Beanie Baby?
What is the intrinsic value of a unit of housing?
I don’t think things will ever get so bad that one will be able to acquire a viable unit of housing for 4% of its replacement cost.
Exhibit A: Detroit.
It may be different now, but a couple of years ago you couldn’t give away houses there.
So it can happen…
You missed the operative word - viable.
Taken to the extreme, a housing unit in the middle of a toxic Superfund site has no value. It’s also not a viable housing unit.
Considering a house goes negative when financed and typically this occurs in the best of locations, just how viable is any depreciating asset like a house?
The intrinsic value of a house is production cost ($50-$55/sqft for lor, labor, materials and profit) adjusted for condition and depreciation. A house in reasonable condition is typically appraised at two-thirds the production cost.
I posted a couple of days ago about viable newly-built housing in San Bernardino that was torn down to prop up prices.
San Bernardino, where LA’s smog lives.
CA is where the nations poverty cases live.
Agree with most of what you said but I can’t imagine the corruption or the “deep state” becoming a regular news item. This is <a href=http://www.businessinsider.com/these-6-corporations-control-90-of-the-media-in-america-2012-6<why.
The “free” press is owned by big business and paid for with advertising from, you guessed it, big business. So since it is owned and paid for by a single group, it follows that it is structured to serve their interests. I had hoped that Trump might effect some real change but like late stage Rome, the rot runs too deep.
I think change can only come as a result of pressure from below and I just don’t see that anywhere on the horizon. But I keep hoping…
Change is far easier for politicians to promise than to implement.
Written in 1984, and it still holds true today.
“545 people are responsible for the mess, but they unite in a common con”
http://www.orlandosentinel.com/opinion/os-ed-charley-reese-545-people-1984-073111-story.html
The Tasmanian Bubble:
https://www.linkedin.com/pulse/hot-lips-hobart-david-white
That’s a devil of a bubble!
https://www.youtube.com/watch?v=cuos9YvAcsY
Used 2017 Toyota Tundra CrewMax Platinum - $94,732
https://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId=464061229
Better hurry… won’t last at this price!
I would buy it but I have to pick up and deliver 22 sheets of 4 x 12 5/8 FC drywall along with 6 buckets of joint compound 10 pieces of 10 ft. corner bead and a box of screws in the morning and there ain’t no way that short bed POS could carry it so I will have to use my long ago paid off 2004 F-250.
I lied.
I wouldn’t pay $90k for any pickup truck new or used no matter what I had to put in the bed.
Although the point still stands, I have to pick that load up in the morning and my old 8 ft bed 250 won’t mind a bit and the $90k Tundra CrewMax Platinum wouldn’t stand a chance.
“I wouldn’t pay $90k for any pickup truck new or used…”
+1 I hope some bank loses their “hind-quarters” on that truck.
The Tundra is an urban cowboy pickup (ditto the Nissan Titan)
manly men drive american trucks.
At least the ones who work with their hands. That said, at lot of urban cowboys drive American too.
That’s a big truck, but I don’t see anything about it that explains a $94k asking price.
The Truth About Car Payments
The bottom line with this exercise is simply this—what could you do with that $475 if you weren’t paying for the car every month? Anything you wanted!
Think about it this way: If you were to invest that $475 (remember, this is the average car payment in the U.S.) into a good mutual fund with a 12% rate of return, you would have over $100,000 in 10 years! At 20 years, you would have made $470,000. And at 30 years? That mutual fund would be worth $1.6 million!
https://www.daveramsey.com/blog/the-truth-about-car-payments
Where can I get a mutual fund that will return 12% per annum going forward for the next 20 years?
Liquidate the financed junk and depreciating assets like houses and you’re half way there.
I’m seeing commercials touting 72 month financing for MATTRESSES for corn’s sake!
Where can I get a mutual fund that will return 12% per annum going forward for the next 20 years?
In dreamland. good luck finding one that returns even just 8%.
I’m using 4% to 6% in my long term forecasts for my retirement funds.
IMO 12% is not sustainable over a 20 year time horizon when sovereign debt yields are so low.
“I’m using 4% to 6% in my long term forecasts for my retirement funds.”
That may end up being high.
You could always invest in a used 2017 Toyota Tundra CrewMax Platinum pickup truck for $94,732
your lucky to get any return after inflation.
I made my delivery this morning and I don’t even have to make a $1,777.00 monthly truck payment on a used 2017 Toyota Tundra CrewMax Platinum that cost $94,732
Vehicle price $94,732
Down payment $0 (of course)
Trade-in allowance $1,500
Interest Rate 5%
Years 5
Monthly payment: $1,777.00
https://www.mortgagecalculator.org/calcs/car.php
Denver, CO Housing Prices Crater 16% YOY
https://www.zillow.com/highland-denver-co/home-values/
Realtors are liars.
I saw more homeless junkies scratching at my car windows and lurching toward me on the sidewalk in Downtown Denver today than I’ve ever seen before. This city is junkie HQ. And they all live in the alley right below the bedroom window of your second floor “luxury’ apartment. LULZ.
Yeah, but those apartments have a great walk score, right?
Does that mean it’s an easy walk to score?
easy walk to bar.
https://www.wired.com/story/meet-camperforce-amazons-nomadic-retiree-army/
Neither could imagine spending the rest of their lives servicing a loan worth more than their house. So they bought the trailer and drove away. “We just walked,” Anita says. “We told ourselves, ‘We’re not playing this game anymore.’”
Bob blamed Wall Street. When he spoke about his decision to abandon the house, he’d rush to add that, before that moment, he’d always paid the bills on time. He’d kept good credit. His downfall had been his faith in the gospel of ever-increasing home prices. “I never had any expectation that a house would drop in value,” he says, shaking his head. Bob compared the “slow-dawning reality” of his new life to waking up in The Matrix: learning that the pleasant, predictable world you used to inhabit is a mirage, a lie built to hide a brutal reality. “The security most people take comfort in—I’m not convinced that isn’t an illusion,” he says. “What you believe to be true is so embedded. It takes a radical pounding to let go.”
How can a central bank driven bull market sustain itself with the punch bowl taken away? Will it really be taken away?
Some people work, some people buy instruments inflated by central banks.
It pays to know people on the inside.
Beware of angry old retirees rooming in the strip.
Being deep underwater on mortgages tends to make degenerate gamblers go unhinged.
Beware of anti 2nd Amendment politicians who can’t wait until the dead bodies are cold before virtue signalling on social media.
Seeing how it was a country music event I’m curious to see if it will turn out to be a terminal case of Trump derangement syndrome. Like stress isn’t already high enough between right and left…
Trump is a big country music fan? I hadn’t heard that one.
Not that I know of. But a bunch of his base is. As you know. And we’re seeing a lot of people on the left becoming unhinged in the last year. Seems like a possibility that used to be highly unlikely but I don’t think is so unlikely now. We’ll see. Just seems like a strange place for a right wing gun nut to lose his marbles.
https://www.youtube.com/watch?v=xtcIJk_EKAI
“Trump is a big country music fan? I hadn’t heard that one.”
You still haven’t heard that one.
A 60+ year old former accountant who supposedly made money as a real estate investor, played $100 per hand poker, and according to his brother, wasn’t political or religious.
Given what has happened with RE recently, it doesn’t seem to be the day that financial stresses would push someone over the edge–if financial stress were to make him snap, it should have happened 10 years ago.
He’s not quite the poster child for someone who is staunchly anti-Trump. The dude might simply have been a wacko.
The dude might simply have been a wacko.
Maybe so. Although the real estate thing makes me wonder. I honestly hope it was nothing political. Seems like we’ve all been up to our eyeballs in political lately.
I think he was just a nut, and I love conspiracy theories.
Just got back from the Strip. My daughter had an interview at NYNY at noon.
Didn’t get a chance to talk to my husband (asleep when we got back.) He did text in the middle of the night to say he was okay. He works security at Mandalay Bay; the shooting started right after he got there.
Damn. Glad your husband is OK.
Yikes, very scary Tarara! Glad he’s ok.
A lot of his lyrics were something like you felt you had lived through.
God it’s so painful
Something that’s so close
And still so far out of reach