February 11, 2018

A Result Of The Feeding Frenzy

A weekend topic on one place with one article from The Spinoff in New Zealand. “The mass migration has ended. Gone are the convoys of removal vans thundering down the Southern Motorway, and the scenes of Aucklander vs Aucklander vs Aucklander mayhem in Tauranga auction rooms. Gone too, as a result of the feeding frenzy over Tauranga real estate, is any semblance of home affordability in this city by the sea.”

“Hana Chadwick works in recruitment in Auckland, and – these days – none of her candidates want to move to Tauranga. They’ve heard what’s happened, or they’ve looked at properties online and figured it out. Tauranga house prices are now within cooee of Auckland’s – but Bay of Plenty pay rates remain dire. ‘Really?’ they say, when Chadwick quotes a pay scale tens of thousands below their Auckland income.”

“The latest instalment of the comprehensive Demographia International Housing Affordability Survey has outed Tauranga as the least affordable city in New Zealand – and the 12th least affordable of 293 cities worldwide. Tauranga is keeping company at the extreme end of the table with notoriously unaffordable cities such as Hong Kong, Sydney, Los Angeles and Honolulu. The survey works on the premise that a house which costs three times your household income is ‘affordable,’ while five times is ’seriously unaffordable.’ Auckland came in at 8.8 times; Tauranga at 8.9. The survey, from September 2017, placed the median Tauranga house price at $617,000 and the median household income at $69,100.”

“1st Call Recruitment general manager Angela Singleton says many candidates consider a 10% pay cut justifiable for all the lifestyle advantages Tauranga offers. But not 25%. Candidates have started to say no to Tauranga. ‘They never used to say that because they used to be able to buy a house in Papamoa for half a million, and it was a really nice home. Now it’d be $800,000.’”

“Singleton says when the minimum wage rises 75c to $16.50 in April, Bay businesses should raise their pay rates – and charge-out rates. She says a Tauranga builder charges around $1800/m2 while an Auckland builder charges around $2800/m2. ‘Tauranga needs to decide whether it’s going to remain rural or start playing with the big dogs. It’s a bustling city. Tauranga businesses need to start charging city prices.’”

“A Housing Demand and Need survey showed median house prices rose 464% in Tauranga in the 26 years from 1991 to 2017. Over the same period, household incomes rose just 128%. The report says while Tauranga’s affordability challenges have developed over many years, the situation accelerated with the recent surge in house prices and rents.”

“Economic confidence in the Bay of Plenty has fallen sharply since September 2017. Back then, 37% of households in the Westpac-McDermott Miller Regional Economic Confidence survey expected the economy to improve. By the end of 2017, that figure had fallen to 13%.”

“Realty Group CEO Simon Anderson says Tauranga house prices began to surge in 2015 and hit a feverish peak around October 2016. By the start of 2017, the Government’s Loan to Value ratio (LVR) restrictions were making an impact. Throughout 2017, the number of houses sold each month fell back 20-25 percent to what Anderson describes as more of a ‘normal market.’ House prices also eased back in 2017, but are still much higher than before the boom.”

“Anderson says the growth in Tauranga between 2015 and 2017 was the result of ‘trickle down’ from Auckland, where overseas investors had ignited the market. At one point, 40 percent of people attending Tauranga open homes were Aucklanders. Auctions often came down to three or four Auckland buyers battling it out. ‘It was seen as cheap, at that time, by Aucklanders.’ That has changed. There’s now less of a gap between what you’d get for your money in Auckland and what you’d pay for a comparable home in Tauranga. ‘It’s probably not much of an advantage for Aucklanders to come here now.’”

“Unfortunately, Tauranga’s property boom has done more than turn off prospective employees and skew the housing market: it’s forced some families on to the streets. Jan Tinetti, Labour list MP, was principal of Tauranga’s only Decile 1 primary school before entering politics at the last election. In 2015 and 2016, she saw countless families in the Merivale School community slip in to homelessness.”

“Tenants were evicted so rentals could be sold to investors. The new owners might let the property for a short time, then tenants would be on the move again as it went back on the market at an inflated rate. Many houses were left vacant to, as one investor told Tinetti, ‘protect’ the investment. Some houses were renovated and long-time Merivale locals were refused tenancies in the gentrified properties.”

“The 2013 Census found there were just over 50,000 dwellings in Tauranga city; of which almost 4500 were unoccupied. In Mount Maunganui North, where there are more holiday homes, unoccupied dwellings represented 32% of all dwellings. The next Census is scheduled for March this year, and is likely to show significant demographic and housing changes for Tauranga.”

“The housing boom is softening – values on estimate websites drooped throughout 2017. But rents, which rose markedly during the boom, remain high. So families sleep in their cars or in tents parked on friends’ lawns. Tauranga City Council estimates there are 400 homeless people living in Tauranga.”

“Not that long ago, Tauranga was a sleepy idyll. Houses were relatively cheap and many people worked night shift in the kiwifruit season to bump up their modest wages. Now, the landscape has changed. ‘It’s unaffordable for the middle class,’ Tinetti says. ‘But when you’re not even middle class, it’s horrific.’”

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Comment by Ben Jones
2018-02-11 07:13:12

‘Anderson says the growth in Tauranga between 2015 and 2017 was the result of ‘trickle down’ from Auckland, where overseas investors had ignited the market. At one point, 40 percent of people attending Tauranga open homes were Aucklanders. Auctions often came down to three or four Auckland buyers battling it out. ‘It was seen as cheap, at that time, by Aucklanders.’

Again, these things should never happen with houses. Yet no one in government or media will say boo when this occurs over and over all around the globe. It’s actually celebrated. Then the inevitable fallout hits home and like a cat climbing a tall tree, the only way down is uncomfortable and possibly painful.

Comment by Mr. Banker
2018-02-11 08:09:19

“At one point, 40 percent of people attending Tauranga open homes were Aucklanders. Auctions often came down to three or four Auckland buyers battling it out. ‘It was seen as cheap, at that time, by Aucklanders.’”


“Again, these things should never happen with houses. Yet no one in government or media will say boo when this occurs over and over all around the globe. It’s actually celebrated.”

It is actually celebrated because there are many people who benefit from these “buyers battling it out” and so few who don’t.

Let’s take a look …

The entire RE industry (Suzanne, Mr. Banker, appraisers. everybody else) benefits.
The owners of the comps benefit in that the equity of their house magically increases.
The lending industry benefits from making the initial loans AND by the equity cash outs of the owners of the comps.
Those on the receiving end of the spending from the equity cash outs benefit.
The tax assessor benefits.

Everyone benefits EVEN THE BUYERS!

(Even the buyers? How so?)

The buyers benefit because the perception (possibly/probably an illusion) is that real estate prices always go up. Proof of the truth of this perception is offered up to them by the “buyers battling it out” right before their eyes. And - get this - the MOST OPTOMISTIC BUYER is the one that throws out the highest bid, is the one that lands the deal, the one that buys the house and thus sets the values of the comps - comps that create wealth for total strangers who just happen to live nearby. What a hero he is.

And this does what again? Does it not keep the prices on the charts pointing upward? Does it not reinforce the mantra that “real estate price always go up”? Yes indeedy, this is exactly what it does.

Until it doesn’t.

Comment by OneAgainstMany
2018-02-11 08:24:39

And - get this - the MOST OPTOMISTIC BUYER is the one that throws out the highest bid, is the one that lands the deal, the one that buys the house and thus sets the values of the comps - comps that create wealth for total strangers who just happen to live nearby. What a hero he is.

See also winner’s curse.

Comment by Mr. Banker
2018-02-11 08:36:24

From Wiki …

“The winner’s curse is a tendency for the winning bid in an auction to exceed the intrinsic value of the item purchased. Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item’s intrinsic value.”

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Comment by azdude
2018-02-11 08:59:58

“Go lend to folks who are gonna vote democratic.”

Comment by 2banana
2018-02-11 10:00:03

Wait a sec - are we talking BITCOIN?

Comment by Neuromance
2018-02-11 10:16:41

Mr. Banker: The buyers benefit because the perception (possibly/probably an illusion) is that real estate prices always go up.

The problem is there’s no way to monetize that wealth. Oh sure, they can HELOC, but eventually they have to pay it back, with interest. They can sell but likely they’ll want to move into a finer, and yet more expensive house which has appreciated much like theirs.

My approach is always “follow the cashflow”. The cheerleaders are the ones receiving cash now. The buyer is promised cash inflow in the future when he tries to monetize the asset. Right now gets a “wealth effect” and cash outflow.

Comment by Oxide
2018-02-11 12:23:43

Retirees should be monetizing their gains by selling and downsizing into a smaller condo or a small house in the sticks. But nope, they buy $300k crapshacks in some pickle ball community in FL.

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Comment by Mafia Blocks
2018-02-11 13:10:34

Hey Donk

Comment by Neuromance
2018-02-11 13:59:17

Retirees should be monetizing their gains by selling and downsizing into a smaller condo or a small house in the sticks.

Seems to me old people need more support resources. So moving to the sticks might be a good option for someone middle-aged and reasonably capable. But old folks need ploughed streets, transportation, hospitals, pharmacies, food delivery, quick ambulance response.

Comment by BlackSwandive
2018-02-11 14:32:17

That’s actually an extremely poor plan, because there’s not any quality healthcare “in the sticks” when retirees are the ones who need it the most.

We shouldn’t have a system where asset price bubbles are distorting the economics of everyday living to an extent where people have to play a game of musical chairs insofar as shelter is concerned.

Comment by BlueSkye
2018-02-11 15:22:40

If you can’t figure out how to retire long before you need a walker you probably are a debt donkey or really enjoyed your job.

Comment by BlackSwandive
2018-02-11 09:52:34

It spreads like the flu. Some of the worst bubbles are not actually in the cities with the best jobs, but the outlying communities with paltry jobs and high unemployment where the money ran. Those are the places which see the most painful busts.

Comment by azdude
2018-02-11 10:45:39

drive until u qualify!

Comment by BlueSkye
2018-02-11 12:55:41

“In 2015 and 2016, she saw countless families in the Merivale School community slip in to homelessness.”

Comment by Ben Jones:

“It’s actually celebrated.”

Those celebrating consider these homeless families as giving them the middle finger.

Comment by 2banana
2018-02-11 07:43:10

They sold their house(?) and car and all belongings.

And it all added up to about $10,000.

And not enough money for any insurance?


Couple sells everything for sailboat. It sinks on day 2
Ryan W. Miller - USA TODAY - Feb. 10, 2018

Within two days, their dream became a nautical nightmare.

On their way to Key West, Tanner Broadwell and Nikki Walsh’s voyage abruptly ended in John’s Pass off Madeira Beach, Fla., when their 28-foot sailboat struck something underwater Wednesday night.

“Everything I’ve worked for, everything I’ve owned since I was a child, I brought with me. It’s just floating away and there’s nothing I can do,” Walsh told WFTS.

Broadwell and Walsh left Colorado last year after selling off all their belongings, including a car, to buy Lagniappe for $5,000. It took a year and another $5,000 to get the boat ready to sail, Tampa Bay Times reported.

Even with no savings and no place to live, the couple said they’re not giving up on sailing again one day.

“The boat sank,” Walsh told WFTS, “but our dreams didn’t sink with the boat.”

Comment by QuitYourYellen
2018-02-11 08:14:26

Kind of what you’d expect from people with names like Tanner and Nikki, unless you’re talking race car driver and bass player from a heavy metal band, in which case you would expect the demise to be fire related.

Anyway, just saw a listing for a foreclosure in my hood. Asking 516K, pretty trashed too. Sold back in 05 for 790K. How much you want to bet this place has been empty for at least 1-2 years, part of the shadow inventory (like the shadow government) that doesnt exist?

But real estate only goes up!

Comment by 2banana
2018-02-11 08:21:45

Unlike some sailboats…


But real estate only goes up!

Comment by Carl Morris
2018-02-11 19:40:18

ind of what you’d expect from people with names like Tanner and Nikki, unless you’re talking race car driver and bass player from a heavy metal band, in which case you would expect the demise to be fire related.

Hahahahahahahah :-).

Foust and Sixx would be proud.

Comment by OneAgainstMany
2018-02-11 08:22:20

That’s too bad. I feel for stories like this because they are just using their ingenuity to try to escape the housing bubble. The good news is that they are still alive and it seems they are out a modest $10k and some labor. If they were to have bought an inflated house, they carnage would likely be much worse.

Comment by Mr. Banker
2018-02-11 08:33:26

“The good news is that they are still alive and it seems they are out a modest $10k and some labor.”

This is indeed good news. Since they have no money they just may be forced to find their way to my bank and possibly may discover for themselves the wonders offered up by one of my Dotted Line Specials.

That’s the short-term view of their situation. The long-term view involves the hope on my part that they become extensive breeders and pass on their defective (but, oh so profitable) genes to their children (aka my future customers).


Comment by OneAgainstMany
2018-02-11 08:39:14

You’ve got such keen business acumen Mr. Banker!

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Comment by Mr. Banker
2018-02-11 08:50:30

It only seems that way. It helps that I reside in the Land of Dummies.

Comment by azdude
2018-02-11 08:44:27

is your mancrush the winklevoss twins?

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Comment by Apartment 401
2018-02-11 08:40:41

The best part of this whole story is that they left Colorado.

Comment by Drater
2018-02-11 08:49:53

Where is their GoFundMe so we can all help out?

Comment by azdude
2018-02-11 09:01:42

r u gonna go pay 50 grand to see yellen talk?

Comment by BlackSwandive
2018-02-11 09:55:09

Does she emerge from under a bridge?

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Comment by BlueSkye
2018-02-11 13:01:07

“The boat sank,”

I have sonar on mine.

Saved enough living aboard to buy dozens of boats.

Comment by rms
2018-02-11 22:25:25

“I have sonar on mine.”

A necessity for a live-aboard vessel.

Comment by Prime_Is_Contained
2018-02-12 01:28:16

I have sonar on mine.

How much warning would you get for, say, your average submerged shipping container? Do you always have it on when underway?

Comment by BlueSkye
2018-02-12 09:05:30

The hazards in my cruising waters probably don’t include shipping containers! I would say though enough time to slow and turn.

It is most useful for me to see how the bottom comes up when approaching shore or a submerged log or rock. The shallower the water the less forward visibility. In shallow unfamiliar water or after a big storm slow is better.

Also if something is buoyant enough not to sink it will break the surface a little. Eyes on the water are important.

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Comment by BlueSkye
2018-02-11 13:44:43

And not enough money for any insurance…

A $5000 old boat might not be insurable.

Comment by BlackSwandive
2018-02-11 14:36:50

And you’d quickly eclipse the value in insurance premiums.

Comment by azdude
2018-02-11 07:43:54

does the FED need equity holders to sell so they have some buyers for their bonds they need to unload?

This seems awfully strange how the FED has went silent. when the dow would go down 100 points usually someone was wheeled out on cnbc to reassure the markets.

Comment by 2banana
2018-02-11 08:10:33

Well, they did have democrats to re-elect at the time.

Comment by azdude
2018-02-11 08:50:05

do they want to make republicans look bad so the next election goes their way?

Comment by 2banana
2018-02-11 07:46:28

Any other industries that are going to crash and burn without massive Federal and State subsidies?

I can name quite a few…


Oklahoma Pulling up Red Carpet Offered to Wind Industry
USNews - Feb. 10, 2018 - Sean Murphy

Oklahoma rolled out the red carpet for the industry more than a decade ago with subsidies that now cost the state tens of millions of dollars each year.

Now those subsidies have all been ended, but there is still a push to impose a new production tax on wind energy and maybe even cap previously promised incentives.

Comment by OneAgainstMany
2018-02-11 08:35:52

Take a look at levelized cost of electricity per megawatt hour in the US and you’ll see that renewables (solar, wind, hydro, geothermal) are already the low cost options and are set to put even greater distance between dirty energy. The only thing that is competitive right now with renewables is natural gas. Renewables don’t need subsidies to stand on their own. The horse has left the barn. But that hasn’t stopped Perry from trying to protect coal and nuclear:


Comment by 2banana
2018-02-11 09:07:51

There is no data for cost of electricity in your link.

However - there is data here for the levelized cost of electricity per megawatt hour in the US:


Gas and then Coal and then Nuclear are the least expensive and solar and wind are the most expensive.

Comment by ibbots
2018-02-11 10:53:17

Institute for Energy Research - The Institute for Energy Research (IER), founded in 1989 from a predecessor non-profit organization registered by Charles G. Koch and Robert L. Bradley Jr.

I’m sure their not biased or anything.

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Comment by 2banana
2018-02-11 11:53:46

I present data and a source.

You present nothing but “I feel so right in my emotions.”

The summary of a conservative in a discussion with a liberal.

Do you have ANY DATA showing wind/solar cheaper than coal when all subsidized are taken out?

Or will you show us some more emotions.

Comment by OneAgainstMany
2018-02-11 13:36:42

Try this:


And here’s an update:


• Solar and wind dominate the future of electricity. We expect $7.4 trillion to be invested in new renewable energy plants by 2040 – which is 72% of the $10.2 trillion that is projected to be spent on new power generation worldwide. Solar takes $2.8 trillion and sees a 14-fold jump in capacity. Wind draws $3.3 trillion and sees a fourfold increase in capacity. As a result, wind and solar will make up 48% of the world’s installed capacity and 34% of electricity generation by 2040, compared with just 12% and 5% now.

• Solar energy’s challenge to coal gets broader. The levelized cost of electricity from solar PV, which is now almost a quarter of what it was just in 2009, is set to drop another 66% by 2040. By then a dollar will buy 2.3 times as much solar energy than it does today. Solar is already at least as cheap as coal in Germany, Australia, the U.S., Spain and Italy. By 2021, it will be cheaper than coal in China, India, Mexico, the U.K. and Brazil as well. (For definition of levelized costs, see note below.)

No amount of fracking is going to increase the efficiency of of dirty energy to match the productivity rate of solar and wind, and that is not even considering next-gen perovskite cells.

Comment by Mafia Blocks
2018-02-11 14:10:54

Housing my friend…..

Andover, MA Housing Prices Crater 13% YOY


Comment by ibbots
2018-02-11 14:35:25

Coal’s as dead as the majority of your brain cells. Go google ‘cost of wind power v. coal’ if you want to see data from unbiased resources.

‘Though a lot has changed since 2016, not much has changed for energy economics in the US. The cost of wind generation continues to fall, solar costs are falling, too, and the cost of coal-power energy has seen no movement, while the cost of building and maintaining nuclear plants has gone up. And none of those conclusions reflect subsidies and tax credits applied by the federal government.’

Comment by Mafia Blocks
2018-02-11 15:28:30

Coal and oil will remain the cost effective energy of choice for a very long time. Select any scale, fossil fuels are a fraction of the cost of wind/solar.


Comment by BlueSkye
2018-02-11 15:35:29

The economics of solar and wind power is simple. Those who are in the business don’t use it to produce their own stuff.

Comment by Saltwater Catfish
2018-02-11 15:38:51

Coal = Red State votes

Comment by Sam (SW)
2018-02-11 16:53:46

Check this out OAM. I can find a lot more in depth studies and analysis. Bottom line is renewables will not take over in the next 15 years due to financial and operational constraints.


Disclosure: I work in the utility industry.

Comment by OneAgainstMany
2018-02-11 17:24:51


Those subsidy amounts don’t match the CBO’s estimates:


I agree that renewables are subsidized more now than fossil fuels, but this is a very recent phenomenon. Fossil fuel has received the lion’s share of the subsidies for a very long time.

Turning to nuclear, one of the problems with nuclear is that it’s not cost effective:


Often places where it is generated and projects are approved the consumers are forced to buy electricity at higher-than-market rates for long periods of time in order to recapture the outlays used to finance expensive projects. And then there is the storage problem. The Yucca mountain issue and then there are the poor tribes in our state who want to bring in the stuff and bury it here because they don’t have any way to get money.

Full disclosure: my father lived through Fukushima Daaichi and our family has spent lots of time in China where air quality is terrible. I’m also an RN along the Wasatch front and so I deal with the fallout from dirty energy due to thrombolytic events (heart attacks, strokes, pulmonary embolisms, etc.), asthma, and respiratory illness.

Comment by tresho
2018-02-11 20:07:00

thrombolytic events (heart attacks, strokes, pulmonary embolisms, etc.),
Those are really thrombotic events. The treatments offered tend to be thrombolytic.

Comment by Sam (SW)
2018-02-11 20:28:58


The irony in these complaints is that for fifty years the selection of generating capacity has been rigged in favor of nuclear power with socialized accident insurance and waste management costs, forced purchase of overpriced power, and advanced recovery of construction costs.

I’m pretty sure all of this is patently false or extremely misleading. This is another one of the media hit pieces that derides nuclear.

The energy market is extremely distorted for numerous reasons. I am very sure that we will stop our renewables advance in less than a decade due to soaring power prices and rising grid instability.

BTW… if we want to clean up the environment nuclear should be subsidized heavily.

Fukushima wasn’t the disaster we’ve been led to believe.

Comment by Sam (SW)
2018-02-11 20:34:03

PPPS…I know the two ladies who travelled to Fukushima. One 6 months pregnant. Their blog post is very eye opening.

Comment by OneAgainstMany
2018-02-11 20:42:13

tresho, you’re right. Typing too fast, I stand corrected.

Comment by BlueSkye
2018-02-11 20:47:17

“Fukushima Daaichi”

It is unfortunate sometimes when one’s toys are more powerful than one’s self and they get out of hand. Leaving a legacy. I survived Three Mile Island back in the day.

I think it might be “Daiichi” but I could be wrong.

Comment by OneAgainstMany
2018-02-11 20:48:49

I think you’re right. I don’t speak Japanese (my father does). He was regional VP at the time and was stationed in Japan.

Comment by tresho
2018-02-12 07:41:11

Leaving a legacy.
One significant story from 3/11 involves ancient monuments posted by Japanese ancestors along some/all of the shoreline in the affected areas. I don’t know if modern Japanese are still able to read the inscriptions which basically said, “Don’t build below this level, or else you will be destroyed by tsunamis.” That was a real legacy that was apparently ignored by modern Japanese culture. I don’t have enough info to know if heeding those ancient warnings would have prevented the Fukushima power plant disaster.
This reminds me of the tsunami warning sirens in Hawaii that the locals make a point of never telling tourists about.

Comment by ibbots
2018-02-11 11:02:00

“The Institute for Energy Research (IER), founded in 1989 from a predecessor non-profit organization registered by Charles G. Koch and Robert L. Bradley Jr., advocates positions on environmental issues including deregulation of utilities, climate change denial….”

I’m sure there’s no bias at work there.

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Comment by OneAgainstMany
2018-02-11 20:47:42

I am very sure that we will stop our renewables advance in less than a decade due to soaring power prices and rising grid instability

I guess we will see. I for one plan on being completely energy self-sufficient when we purchase our next place. I will go full-scale solar roof with home battery storage. Just waiting for the economics to come down a little bit more. When you talk to EV owners, they relish the independence of not having to go to the gas station. It is liberating in a way that only someone who has made the transition knows (of course, there is range anxiety). I want to be liberated from the grid. Battery technology is the next frontier. We need a lot better batteries.

Comment by BlueSkye
2018-02-11 22:13:48

We need a lot better batteries…

This has been the case for a very long time. However, you can work around this easily by designing your place in terms of watts rather than kilowatts. I am off grid for days/weeks at a time with about 600 amp hours of conventional lead acid batteries. Then I stop at a gas station. I need to anyway to take on drinking water.

The freedom you speak of, but have not experienced, is a hook. If you spend twice what you must to have unconventional power you will work at your job several years longer to get to the point of economic freedom.

We had a poster on here who bragged that he spent $25K for a rooftop solar system that was going to save him I don’t remember something like $100/month. Economic idiot and environmental disaster.

Remember that EV costs more than it pays back. Always. Well, buy your system right before we run out of conventional, 15 years before you’re dead and before the government subsides run out.

Comment by Professor 🐻
2018-02-11 22:46:33

“$25K for $100 a month”

Isn’t that $1200 a year in savings something like a 4.8% annual return? Maybe I am missing something (depreciation?), but that doesn’t seem ridiculously bad…

Comment by BlueSkye
2018-02-12 09:09:28

Right! Memory fail.

Comment by Karen
2018-02-12 10:00:33

“$25K for $100 a month”

Isn’t that $1200 a year in savings something like a 4.8% annual return? Maybe I am missing something (depreciation?), but that doesn’t seem ridiculously bad…

Sure, and it will only take you 21 years to recoup your original cost at that rate. Sort of like a 21 year CD. I’ll take two.

Comment by Karen
2018-02-12 10:02:51

Hmmm…except after 21 years you haven’t even “made” any money off of it. You’ve only recouped what you put in.

Comment by OneAgainstMany
2018-02-12 12:57:48

Remember that EV costs more than it pays back.

For early adopters, yes. But EVs are now reaching parity when considering fully-loaded cost-to-own, so this seems to be no longer true. For instance, if I were to own an EV, I would save at a minimum $1000/year in fuel (we pay $.07 KwH). I almost bought a used Chevy Spark two weeks ago because I’m tired of waiting for my model 3. The Chevy Spark EV was $10,600 and had 4k miles on it. It gets 82 miles per charge. An equivalent used Chevy Spark would have cost me about $9k. So it’s pretty easy to see that buying the EV is a lot more economical, especially since you don’t have to deal with other ICE maintenance. This is obviously not true for high end Teslas, but I can easily see a Bolt EV or a newer Nissan Leaf being more economical over a 10-year period than say, a Honda Accord or a VW Passat.

Comment by OneAgainstMany
2018-02-12 13:00:54

Sure, and it will only take you 21 years to recoup your original cost at that rate. Sort of like a 21 year CD. I’ll take two.

Well, considering the US government is selling 30-year CDs at 2.75% and that electricity costs are prone to jump higher over time, it actually doesn’t seem like a bad bet. The economics of rooftop solar work in some places, and not in others. Some of those I know who have done the math are getting pay-offs in about 7 years and then it’s all gravy after that.

Comment by Sam (SW)
2018-02-12 13:50:13

OAM…I think you’re forgetting the subsidies for EV ownership. Even the used Spark factors in the subsidy at first sale.

As far as solar panels, most people won’t go truly energy independent. They remain tied to the grid and are not paying for the grid which they still rely on.

Comment by OneAgainstMany
2018-02-12 15:11:45

OAM…I think you’re forgetting the subsidies for EV ownership. Even the used Spark factors in the subsidy at first sale.

Yes, but the subsidy on this car has already been used, most likely by the manufacturer (GM) since the car was a lease. In other words, the economics of the resell work for me, without any subsidy. Even if you were to impute the full value of the subsidy ($7500), it still would be economical over a long enough time frame since I save $1k on 10,000 miles of driving a year, which is not much.

To put it another way, I would imagine that it will start to make sense for local municipalities to start replacing their chargers and muscle cars with Teslas pretty soon given the fuel cost of officers. They literally drive all day, unless they are parked scanning for speeders. The fuel cost of our city police force is astronomical, and that is at $2.50 gas. If the average driver hits 12k miles per year, our police force is probably 2-3 times that. That equates to $3k saved annually on an electric vehicle. Amortize the higher initial cost over the useful length of the vehicle and you’re probably at parity. If not now, very soon.

Comment by Carl Morris
2018-02-12 20:47:26

They literally drive all day

That doesn’t work so well yet for EVs, they can’t drive “all day” on a charge. But maybe it could work if you put quick chargers at the donut places.

Comment by OneAgainstMany
2018-02-12 21:42:59

It seems like all the food establishments along the supercharger network from my neck of the woods down to San Diego all seem to be doing a brisk business.

Comment by Carl Morris
2018-02-13 19:58:24

In China I also see it pull business to eating establishments at the malls where there are superchargers. But I don’t know whether that’s as practical for government employees on the clock as it is for the ladies who lunch. And if the vehicle really is being driven continuously I don’t know that one charge at lunch and between shifts will be enough.

Comment by Drater
2018-02-11 08:52:38

…if Obama had a windmill

Comment by Mr. Banker
2018-02-11 08:59:44

“… if Obama had a windmill”

… it may have lots of dead eagles lying at its base.


Comment by Mr. Banker
2018-02-11 09:05:41

Here’s a short video of a windmill taking out an eagle …


Comment by Mr. Banker
2018-02-11 09:30:54

While I am at it I might as well share with you folks a video of a solar plant roasting flying birds right out of the sky.

“Streamers” they are called. Whatever.

Enjoy …


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Comment by alphonso bedoya
2018-02-11 10:15:23

Eagles, polar bears, bees….

Comment by Professor 🐻
2018-02-11 11:44:56

It’s terrible how environmentalists support energy generation technologies that harm wild animals.

Comment by Professor 🐻
2018-02-11 11:50:13

California solar power plants ignite birds mid-flight
Folks who frequent the route from SoCal to Vegas will recognize this one.

Comment by BlueSkye
2018-02-11 13:05:04

It’s terrible how environmentalists support energy generation technologies…

That will never return the energy that was wasted to produce them.

Comment by Mafia Blocks
2018-02-11 09:54:15


Comment by Apartment 401
2018-02-11 10:21:23

The National Renewable Energy Laboratory in Golden, CO got $17,000,000,000+ of Recovery Act Obamabux back in 2009 and produced very little to show for it.

Lots of soyboys working there when I left two years ago.

Comment by ibbots
2018-02-11 10:57:35

Looks like the wind and solar industry will just have to pick themselves up by the bootstraps and tough through it without the benefit of any subsidies like the oil and gas industry did.

Comment by BlueSkye
2018-02-11 13:06:17

We did this in the 70s. Nobody seems to remember how that turned out.

Comment by ibbots
2018-02-11 14:47:04

A lot has changed since the 70’s, wouldn’t you agree? Even in oil and gas loving TX, close to a quarter of the energy produced is from wind. Price wise it is as cheap to buy a 100% renewable plan as a traditional one.

The notion that any subsidies or tax credits are a waste is just political. Geez, even in its mature state, the oil and gas industry enjoys tremendous subsidies / tax benefits.

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Comment by BlueSkye
2018-02-11 15:42:48

I was very interested in solar and wind power in the 70s and in the 2000s. Very little has changed except for the scale. The laws of physics have not been repealed and the rules of math are pretty much as they were. Just because something is gigantic doesn’t mean it’s not a mania.

Comment by ibbots
2018-02-11 16:32:14

Maybe so.Some oil/gas cos are doing stuff with renewables, investing, etc. which makes me think it pencils out. Shoot, even oil man T Boone Pickens called the US midwest the Saudi Arabia of wind power. It is here to stay for sure.

Comment by Mafia Blocks
2018-02-11 16:55:58


Comment by OneAgainstMany
2018-02-11 17:29:40

There are national security implications too with having large dependencies on centralized energy production and storage. When you have natural disasters and state-sponsored hackers (e.g. Stuxnet) that can take down the grid and literally knock out an economy due to taking out its electricity supply, it makes more sense to have decentralized power generation and storage like what Tesla and other energy storage companies envision. Granted, that part is not economical now except for in some areas where KwH is super expensive and variable, but it will in the not-too-distant future.

Comment by BlueSkye
2018-02-11 17:54:45

knock out an economy…

You bring up a good point, though it is to change the subjecct. Most Americans would panic if convenience was interrupted. Most Americans are totally unprepared to simply get by in a low tech setting, like lights out. It’s something I find ironic about the true believers in the hoax of renewable energy. So worried about the planet. So unwilling to consider a lower impact lifestyle. Totally unconcerned about efficiency. Convinced that the most wasteful technologies we have are going to save the way of life. Not all, just the vast majority.

Who’s going to pay for Tesla’s battery to keep America all lit up? He proposed one for Puerto Rico, but I don’t think he was going to donate it.

Comment by OneAgainstMany
2018-02-11 18:31:40

Very right about a lower impact lifestyle. I know this is something that you do with your boat lifestyle and I find it admirable. There are minimalists who make do with less stuff, and less power. But I think for home energy storage to go mainstream, it is not going to be economical at first. Like most technologies, there will be early adopters who will take the plunge because they find the convenience of having their own home battery storage useful in the event of some emergency.

These early adopters will allow manufacturers to get to scale and push price to where it truly is economical. Now cell phones are ubiquitous, but I remember when they were expensive bricks reserved solely for the wealthy. Same with hybrid/battery cars. Now EVs are approaching parity whereby the total cost of ownership over the lifetime of a vehicle may be lower than a new ICE car.

Comment by Mafia Blocks
2018-02-11 17:44:05

Housing my friends…

Newcastle, WA Housing Prices Crater 5% YOY


Comment by redmondjp
2018-02-12 11:44:23

You seem to have this fascination with that place, and yet you know nothing about it.

Fly out to Seattle and I’ll give you a guided tour. You’ll find that it is one of the nicest Eastside neighborhoods and there is no cratering going on there.

Comment by Mafia Blocks
2018-02-12 11:59:47

Hello my good friend.

Redmond, WA 98052 Housing Prices Crater 7% YOY



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Comment by 2banana
2018-02-11 08:20:03

NYC just recently announced that they won’t do anything to those urinating, defecating and masturbating in public.

And now this.

Good or bad for property values?


Turnstile justice? Manhattan eases up on fare jumpers
Associated - February 10, 2018

NEW YORK (AP) — Fare beaters who hopped over grimy subway turnstiles back in the early 1990s were the first targets of a policing strategy that went after the smallest offenses and was credited with helping to drive crime down to record lows.

So now, a new policy to halt the prosecution of turnstile jumpers in Manhattan has some city officials and riders questioning it as a foolhardy turning back of the clock.

“The New York transit system is facing major problems already,” said Dottie Jeffries, 67, a daily subway rider who was just getting off the train in Greenwich Village. “And not caring about whether someone pays … sets a tone of permissiveness that could cause more trouble.”

Comment by MacBeth
2018-02-11 08:43:15

“And not caring about whether someone pays … sets a tone of permissiveness that could cause more trouble.”

Statism/socialism at its finest. The hell with ethics and morals. Everyone else is doing it, why shouldn’t I?

Comment by Neuromance
2018-02-11 10:29:46

“And not caring about whether someone pays … sets a tone of permissiveness that could cause more trouble.”


Comment by Apartment 401
2018-02-11 08:43:46

This is the “fundamental transformation” that Obama promised us and that Mayor DiBlasio is continuing.

Comment by Apartment 401
2018-02-11 08:49:47

Related article from the other coast:


BART ridership down because people don’t like train stations that smell like urine? That’s unpossible.

But the Bay Area voted 90% for Obama both times so no surprises here.

Comment by Mr. Banker
2018-02-11 09:41:05

The smell of urine?

Bahahahaha, that’s nuthin’. I offer to you a blast from the past …


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Comment by Apartment 401
2018-02-11 10:14:42

Considering California is the most impoverished state in the country, would you expect anything less?

What has the Bay Area contributed to USA and the world in the past few decades?

Nancy Pelosi


Comment by In Colorado
2018-02-11 10:24:39

To be fair, a lot of real tech is invented in the bay area, it just isn’t considered glamorous and doesn’t make headlines.

Comment by Mafia Blocks
2018-02-11 11:08:32

Unprofitable companies like freakbook and scAmazon?

Comment by jeff
2018-02-11 11:23:16

“fundamental transformation”

Had a good week…

Girls make history as they join the Boy Scouting in Greenwich

By Alexandra Villarreal Published 4:50 pm, Friday, February 9, 2018


PC culture killed our school’s father-daughter dance: parents

By Anna Sanders and Sara Dorn February 3, 2018 | 4:14pm |

The DOE ordered schools to “eliminate” any “gender-based” practices like the dance in a March 2017 policy update unless they serve a “clear” educational purpose.


and last but not least…

CNBC shows you what the American family should look like in this 1:33 video about the right time to buy a house where my buddy on this blog may or may not have made an appearance from 0:35 - 0:38

Kevin O’Leary: Unless you can pass this two-question test, don’t buy a home


Comment by azdude
2018-02-11 11:40:15

buy a house and get rich!

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Comment by Apartment 401
2018-02-11 12:12:21

Repost of some more fundamental transformation:

“The family lives in a small one-bedroom apartment in downtown Berkeley. Ben designs and creates jewelry for a local gallery and Sara manages their building to help cover the rent. Charley and James share a bedroom with bunk beds; Ben and Sara’s bed takes up nearly half of the living room. They’re insured through Medi-Cal, which means Sara has had to spend hours on the phone, getting the right exemptions and exceptions so James can go to the Child and Adolescent Gender Center at UCSF Benioff Children’s Hospital, a leader in treating transgender children, where physicians monitor his march toward puberty.”


California is such a f*cking joke.

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Comment by jeff
2018-02-11 15:39:58

Good thing that second grade girl figured out all on her own with nobody else’s help that her inner self was a boy.

At What Age Is The Brain Fully Developed?

It is widely debated as to which age the brain is considered “fully mature” or developed. In the past, many experts believed that the brain may have been done developing in the mid to late teens. Then along came some evidence to suggest that development may last until at least age 20. These days, a consensus of neuroscientists agree that brain development likely persists until at least the mid-20s – possibly until the 30s.

The fact that our brains aren’t developed until the mid 20s means that “legal adults” (those age 18+) are allowed to make adult decisions, without fully mature brains. Someone who is 18 may make riskier decisions than someone in their mid-20s in part due to lack of experience, but primarily due to an underdeveloped brain. All behaviors and experiences you endure until the age of 25 have potential to impact your developing brain.


Comment by OneAgainstMany
2018-02-11 17:40:16

This is a strong case for not people get married before they are 25. From a medical standpoint, I treat transgender patients from time to time. Sometimes I don’t realize gender and anatomy don’t match until I’m placing a catheter. Almost all the clinicians I work with universally agree with withholding any sort of transitional surgeries or hormones until at least until the legal age of consent, possibly longer.

Having said that, I took my little guy to the park and there was another dad with his two children, 3 and 4, playing there. The one little kid came up to us and wanted to see if we would play The Avengers. I said sure. He immediately raised his hand and said, “I get to be black widow!” This kid’s mannerisms, speech, and flamboyancy was a dead give-away that he was gay or transgender. The striking contrast was that his brother was the polar opposite of him. He kept growling and saying he was the Hulk.

I talked with the dad for a few minutes and he is an extremely rugged cowboy type and they live far away (they drove into town to spend time at the park). He said simply, “My two boys are quite different.” What an understatement. The kid was lovable and extremely bright. It was a pretty clear to me that this kid was not socialized to be the way he was. I got the sense that there was maybe some tension at his son’s mannerisms and expressions. Since he was a stranger, I didn’t broach the subject. I hope his parents are prepared to raise this little guy through what might be a difficult adolescence.

Comment by Oxide
2018-02-11 12:34:23

There is absolutely no reason for girls to join the Boy Scouts. The only advantage to the Boy Scouts is the Eagle Scout tank, which used to look good on an entry-level resume. But the ES has been watered down and most people have college degrees, so why bother. The Girl Scouts should have created their own Eagle Scout equivalent decades ago, instead of coattailing off the boys.

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Comment by BlueSkye
2018-02-11 13:12:25

Political Correctness will have its consequences.

I was very active in the Boy Scouts into young adulthood. Many years ago I was offered the position of Girl Scout troop leader in NJ. It would have been the first. I didn’t think that would be right at all and said no thanks.

These male scout leaders are going to rue the day when “metoo” catches up with them.

Comment by tresho
2018-02-11 20:12:05

Why not have parent/child dances, rather than father/daughter or mother/son?

Comment by OneAgainstMany
2018-02-11 20:49:51

Seems reasonable to me.

Comment by jeff
2018-02-11 21:49:15

“Why not have”

Good luck with that.

PC culture killed our school’s father-daughter dance: parents

By Anna Sanders and Sara Dorn February 3, 2018 | 4:14pm |

The DOE ordered schools to “eliminate” any “gender-based” practices like the dance in a March 2017 policy update unless they serve a “clear” educational purpose.

“The DOE . . . has strict guidelines about how we present information,” Scamardella wrote. “They have a ‘gender neutral’ policy that must be adhered to at all times.”

Some parents “have taken to Facebook to challenge this ruling,” she added, but “there is no challenge.”

The DOE’s new Transgender and Gender Nonconforming Student Guidelines, issued last March, were behind the change, and not any parental complaint, according to Bennett.

“Father-daughter dances inherently leave people out. Not just because of transgender status, just life in general,” said Jared Fox, the DOE’s LGBT community liaison. “These can be really uncomfortable and triggering events.”

Comment by rms
2018-02-12 09:20:18

“Father-daughter dances inherently leave people out.”

In the ghetto it is likely, “Who’s your daddy?”

Comment by azdude
2018-02-11 08:43:06

“QT is like the FED taking money out of the economy and throwing it in a furnace.”

Comment by MacBeth
2018-02-11 09:10:34

Off topic.

To all on this board that want to view something wondrous, illuminating and at times hilarious, watch the two videos below.

They are interviews with folks aged 80-100 years old. The year? 1928-1932 approx. Great stuff!! Very lively, salty individuals.

A few of the many highlights:

A guy named Mr Draper. LMAO! Find him at about 5:40 on the 1928-1930 video. Tap dances at age 90, and likes women’s dresses short.

Then there’s the couple seen right after him - married 75 years. Married six years BEFORE Lincoln was inaugurated! “Don’t say I suppose so!” Funny.

Another man, I don’t remember who, says he voted Republican (for Lincoln), after having voted Whig in previous elections.

Lydia Stewart upon reaching age 100 on October 3 1929: “The first 100 years were the hardest.”

Rebecca Latimer, age 94, former Senator and slave holder - the vinegar of this woman as she sits on her porch stairs is something else. I don’t quite know what to think of her.

Anyway - enjoy. Lots to see. And you’re welcome.



Comment by Parker
2018-02-11 22:05:01

These are real gems. Thanks for sharing.

Comment by Senior Housing Analyst
2018-02-11 09:29:12

Elko, Nevada Housing Prices Crater 28% YOY


Comment by goedeck
2018-02-11 09:59:26

That’s gold in them that hills.

Comment by In Colorado
2018-02-11 10:17:57

while an Auckland builder charges around $2800/m2

That’s about $280/sqft. (~$200 USD).

Are the toilets gold plated?

Comment by Apartment 401
2018-02-11 10:23:42

Don’t be a Realtor.

Comment by azdude
2018-02-11 10:22:46

how high does the FED raise rates so they have some room to cut them when the credit cycle ends?

Comment by Neuromance
2018-02-11 10:33:38

Rating junk debt as AAA and selling it globally. And no one went to jail for it. Quite an accomplishment.

“Laws are spider-webs, which catch the little flies, but cannot hold the big ones.”

Comment by BlackSwandive
2018-02-11 14:54:34

And they’re doing it again, and the same schmucks are buying it.

Comment by azdude
2018-02-11 10:49:29

is it safe to say the bubble economy is a result of unbacked currency?

Comment by Professor 🐻
2018-02-11 12:30:38

The dollar is backed by stable prices of all the things it can buy (or not).

By contrast, Bitcoin is backed by the faith of HODLers in higher future prices at which they expect to be able to sell.

Comment by Professor 🐻
2018-02-11 11:33:40

“Unfortunately, Tauranga’s property boom has done more than turn off prospective employees and skew the housing market: it’s forced some families on to the streets. Jan Tinetti, Labour list MP, was principal of Tauranga’s only Decile 1 primary school before entering politics at the last election. In 2015 and 2016, she saw countless families in the Merivale School community slip in to homelessness.”

It’s a tale that absolutely HAS to describe the plight of countless California families.

“Tenants were evicted so rentals could be sold to investors. The new owners might let the property for a short time, then tenants would be on the move again as it went back on the market at an inflated rate. Many houses were left vacant to, as one investor told Tinetti, ‘protect’ the investment. Some houses were renovated and long-time Merivale locals were refused tenancies in the gentrified properties.”

If anyone knows of similar stories about how opening up individual residential housing units to Wall Street and international investors of all stripes helped drive California’s long slide into poverty, please share.

Comment by oxide
2018-02-12 07:10:43

It’s not the California. This is going to happen every time some developer pours some Powellbucks into “value-adding” a Grade B apartment complex into el luxo.

It’s a win-win for the developers. If people can afford the high rent, great. If people can’t afford the high rent, beg the government to subsidize part of the high rent. The idiots in Denver fell for this scam.

Imagine if the only cars available are luxury class, and every economy car or used car has been cashed for clunkers. You either drive in style or you walk. This is what has been happening with housing for the past 15 years.

Comment by Mafia Blocks
2018-02-12 09:01:37

The reality based outcome?

“Rents Are Falling in New York and Silicon Valley”


Comment by OneAgainstMany
2018-02-12 13:02:33

Imagine if the only cars available are luxury class, and every economy car or used car has been cashed for clunkers. You either drive in style or you walk. This is what has been happening with housing for the past 15 years.

This is a brilliant observation. The housing market, taxes, financing, and overall structure is geared to create unaffordable housing.

Comment by rms
2018-02-12 14:12:23

A shameful government intrusion into a basic need.

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Comment by Senior Housing Analyst
2018-02-11 11:41:32

Plano, TX 75093 Housing Prices Crater 10% YOY As Housing Correction Expands Across Texas


*Select price from dropdown menu on first chart

Comment by Professor 🐻
2018-02-11 18:40:30

Opinion: Here’s a strategy for making money on the Dow whether it rises or falls
By Thomas H. Kee Jr.
Published: Feb 9, 2018 11:46 a
Bet on both increases and declines now that buy-and-hold is dead
Get comfortable with bearishness.

What’s working in this slumping stock market?

Everything seems to be getting hit, no stock looks safe, and suddenly investors care about risk again. It’s because central bank direct asset purchases were slashed in January! This is what normal markets look like. Ours also just so happened to be extremely overvalued because of that fake demand from central banks, so extra degrees of volatility exist.

Normal market conditions are a welcome sight; depending on fake money is not a healthy way to grow, but given the material declines recently, investors may need to see something more positive than that right now. The market has been in a long slumber, with virtually no volatility, and now we have an environment that is not too unlike what we feel like after a midday nap. It can be painful, unless you are proactive.

Comment by Professor 🐻
2018-02-11 11:57:32

Is it safe to assume that the market turmoil of the past two weeks is over?

Comment by Professor 🐻
2018-02-11 12:00:24

How bitcoin’s plunge may have been a precursor to market turmoil
Stephanie Landsman
Published 4 Hours Ago CNBC.com
Fundstrat’s Tom Lee sees parallels between bitcoin crash and stock market turmoil

A volatile area of the market may have been a harbinger of the stock market’s worst week in two years.

Fundstrat Global Advisors’ Tom Lee acknowledges bitcoin’s crash two months ago could be seen as a signal stocks would plunge next.

As the cryptocurrency weakened and investors bolted from risk-sensitive assets, “it could easily look like a chart that looks like the S&P, because both had a parabolic move and then subsequently gave back some of these gains,” Lee told CNBC’s “Trading Nation” last week.

But that’s where the relationship may stagnate. Lee added that “the connection between the two is really, really limited.”

Comment by Professor 🐻
2018-02-11 12:18:39

No worries ahead about the XIV collapse last week. All is contained (maybe…).

The Threat of Contagion
By James Rickards
February 10, 2018

To understand the risk of contagion, you can think of the marlin in Hemingway’s Old Man and the Sea. The marlin started out as a prize catch lashed to the side of the fisherman Santiago’s boat.

But, once there was blood in the water, every shark within miles descended on the marlin and devoured it. By the time Santiago got to shore, there was nothing left of the marlin but the bill, the tail and some bones.

In this metaphor, the marlin is XIV. During regular trading hours last Monday, there was not much blood in the water. But, once traders saw the damage to VIX, they smelled blood in terms of the value of XIV.

At that point, markets (the sharks) no longer traded XIV in relation to other instruments. Instead markets systematically traded against XIV in an effort to force every holder, sponsor and guarantor to suffer a total loss. They were out to break it.

Markets intended to pressure the price of XIV until there was a suspension of redemption, a collapse to zero, or ultimately noteholder litigation.

I apologize if this sounds a bit technical. The bottom line is, the damage seems to have been contained.

Comment by Professor 🐻
2018-02-11 12:26:04

A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.

– Mark Twain

Comment by azdude
2018-02-11 12:55:18

the debt that has already been created out of thin air is impossible to pay back.

Comment by Professor 🐻
2018-02-11 16:24:43

As we recently discussed here, the 10-year Treasury yield has been rising more or less steadily off the 7/08/2016 low of 1.37%, ever since the Brexit freakout moment. To suggest that the most recent increase from 2.4% to 2.8% is the source of concern seems like a sign of journalistic sloth. For heaven’s sake, the Treasury yield web page is publicly accessible, and in excellent working order.

Why the bond market is freaking out Wall Street
By Matt Egan and Danielle Wiener-Bronner
February 11, 2018: 9:28 AM ET

1. Blame the bonds: The normally boring bond market is causing serious drama on Wall Street.

An avalanche of selling sent the Dow and S&P 500 careening 5% lower last week, one of the stock market’s worst weeks since the 2008 financial crisis.

The culprit: Rapidly rising bond yields are alarming investors who got hooked on a decade of low interest rates.

So what’s going on here? And why the focus on the bond market?

Modern financial markets function on the belief that U.S. government debt is the safest investment on the planet.

Knowing how much they can earn from “risk-free” Treasury bonds allows investors to determine the cost of stocks and other riskier assets. Treasuries serve as the benchmark for all other forms of credit, from junk bonds to mortgages.

“The 10-year Treasury sets the price for every asset in the world,” said Brent Schutte, chief investment strategist at Northwestern Mutual.

That means the surge in the 10-year yield — from 2.4% earlier this year to about 2.8% now — has increased the cost of money generally.

Investors fear that if rates continue to spike, the stock market won’t look like such a bargain anymore. When interest rates are low, investors are willing to pay up for stocks — and vice versa.

“Bonds and stocks are absolutely connected at the hip,” said Schutte.

Rates remain very low historically — but they’re climbing fast enough to unnerve a market accustomed to cheap money.

The spike is being driven by a range of factors, including faster economic growth and the anticipation of higher inflation now that the recovery from the Great Recession is nearly nine years old.

Related: Stocks flew too close to the sun. Now what?

Comment by Professor 🐻
2018-02-11 17:43:43

Not to fear: A closely watched pot never boils over.

Barron’s Cover
Seat Belts Fastened: Volatility Ahead
By Vito J. Racanelli
February 10, 2018

For 15 months, from the 2016 election of President Donald Trump until recently, the stock market was a smooth, one-way trade: up 34%, with nary a significant pullback. A turn on the Brooklyn Cyclone it was not.

“Investors were in love with the economy, earnings growth, and the tax bill,” says Bob Doll, the chief equity strategist at Nuveen Asset Management. “It was a beautiful thing.”

That beautiful ride is now over.

A fast and vertiginous drop in February points to a material change in investor psychology, to cautious from enthusiastic. Where previously rising interest rates were acceptable because of strong global growth, now investors are focused on the potential inflationary threat from such growth.

The underlying concern is that rising prices could cause the Federal Reserve to tighten monetary policy faster than the market is anticipating. There is also a new unknown factor: Fed chair Jerome Powell, who was sworn in Feb. 5.

Comment by Professor 🐻
2018-02-11 18:00:30

The Financial Times
Market Volatility
Bridgewater investment chief sees new era of volatility
World’s biggest hedge fund expects end of easy money to trigger market ‘shakeout’
Bob Prince, co-chief investment officer at Bridgewater, predicts the broader economic backdrop was setting the stage for more turbulence later this year
Robin Wigglesworth, US markets editor
7 hours ago

The world’s biggest hedge fund has warned that global markets are entering a new era of volatility as the world adjusts to higher interest rates after a decade of ultra-loose monetary policy.

Bob Prince, co-chief investment officer at Bridgewater, said last week’s market turbulence, which helped trigger record outflows from global stock funds, was set to continue.

“There had been a lot of complacency built up in markets over a long time, so we don’t think this shakeout will be over in a matter of days,” Mr Prince, who runs Bridgewater’s $160bn of investments alongside the fund’s founder Ray Dalio, said in an interview. “We’ll probably have a much bigger shakeout coming.”

Markets were thrown into a tailspin last week when rising bond yields triggered a sell-off in stocks that was exacerbated by the collapse of several complex volatility-linked funds and algorithmic trading strategies also tied to the level of stock market choppiness.

US equities managed to stage a late comeback on Friday, lifting the S&P 500 index to a 1.4 per cent gain and paring what at one point looked set to be the worst week for stocks since the financial crisis. Instead, the US equity benchmark managed to pare back its weekly loss to 5.2 per cent, the biggest decline since early 2016.

Mr Dalio has also become increasingly gloomy over the past year, concerned at the deepening political polarisation in Washington and a shift in central bank policy.

Comment by Professor 🐻
2018-02-11 18:31:36


U.S. & Canada
Market Extra
Remember when the head of the world’s largest hedge fund said you’d ‘feel pretty stupid’ holding cash? How’d that work out?
By Mark DeCambre
Published: Feb 11, 2018 7:14 p.m. ET

The S&P 500 and the Dow have slipped squarely into correction territory since Dalio’s comments

Comment by Professor 🐻
2018-02-11 12:12:50

Heard on the Street
Why Banks Will Cut Stock Market Fuel Supply
Loans that boost stock market bets look riskier after last year’s big loss
By Paul J. Davies
Feb. 6, 2018 10:08 a.m. ET

When stock markets hit air pockets like the past couple of days, margin calls are never far behind. This time, banks already have reason to be nervous about lending against shares.

Investors borrow to boost bets on stocks, using so-called margin loans. But when prices fall investors have to either stump up more cash to repay some of the debt, or sell shares. When things move too quickly, it is the banks and brokers that made the loans who take a bath.

Comment by azdude
2018-02-11 13:10:18

u have a lot of power and control over people when u can create credit and issue debt out of thin air and then collect interest.

Comment by Mr. Banker
2018-02-11 13:55:45

Whatever the power one has over debtslaves is power that is handed over by the debtslaves themselves.

Comment by Mr. Banker
2018-02-11 13:58:05

A debtslave is the best sort of slave in that the care and feeding of these slaves are tasks taken on by the slaves themselves.

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Comment by Professor 🐻
2018-02-11 14:02:45

How do you expect debt slaves to handle their FOMO?

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Comment by Senior Housing Analyst
2018-02-11 12:43:01

Highland Beach, FL Housing Prices Crater 11% YOY


Comment by BlueSkye
2018-02-11 13:22:33

New Zealand used to be “at the end of the world”.

When the Maori arrived by boat a few thousand years ago they were greeted by a race of “fairy people”, tall, white, blond haired, and green eyed folk who had settled there already. The blond race (included redheads) hailed from Persia. They left Persia to get away from constant wars. They’re still around.

The Scots have a very similar history.

Comment by azdude
2018-02-11 13:36:07

XIV craters from 145 to 5 bucks in a matter of a few days based on folks thinking volitility would stay low or go lower after being suppressed for years. Here is your sign!

Comment by Professor 🐻
2018-02-11 14:01:28

Sign of what? That Wall Street is blowing up the central bankers’ market stabilization scheme yet again, with the prospect of more bailouts on the horizon?

Comment by azdude
2018-02-11 14:21:06

where is the line in the sand? At what # on the DOW is powell wheeled out?

How does a trader account for this risk? If you believe stocks are overvalued u place your bets. But there is always the risk of more money printing that u have no control over at all. Even with all your research you can still be wiped out by a central bank intervention.

Yellen pretty much wiped out all the short sellers who tried to analyze fundamentals. She suspended risk for a long time. It never went away. It has built up to extreme levels.

And here we are we a grossly overvalued market that has melted up for years.

Comment by BlackSwandive
2018-02-11 15:36:48

“Sign of what? That Wall Street is blowing up the central bankers’ market stabilization scheme yet again, with the prospect of more bailouts on the horizon?”

You mean like cutting their nose off to spite their face? Wall St. = central bankers. They’re the same people.

Cue George Carlin:

“But there’s a reason. There’s a reason. There’s a reason for this, there’s a reason education SUCKS, and it’s the same reason it will never, ever, EVER be fixed.

It’s never going to get any better, don’t look for it, be happy with what you’ve got.

Because the owners, the owners of this country don’t want that. I’m talking about the real owners now, the BIG owners! The Wealthy… the REAL owners! The big wealthy business interests that control things and make all the important decisions.

Forget the politicians. They are irrelevant. The politicians are put there to give you the idea that you have freedom of choice. You don’t. You have no choice! You have OWNERS! They OWN YOU. They own everything. They own all the important land. They own and control the corporations. They’ve long since bought, and paid for the Senate, the Congress, the state houses, the city halls, they got the judges in their back pockets and they own all the big media companies, so they control just about all of the news and information you get to hear. They got you by the balls.

They spend billions of dollars every year lobbying, lobbying, to get what they want. Well, we know what they want. They want more for themselves and less for everybody else, but I’ll tell you what they don’t want:

They don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interests.

That’s right. They don’t want people who are smart enough to sit around a kitchen table and think about how badly they’re getting f**ked by a system that threw them overboard 30 f**king years ago. They don’t want that!

You know what they want? They want obedient workers. Obedient workers, people who are just smart enough to run the machines and do the paperwork. And just dumb enough to passively accept all these increasingly shitty jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and vanishing pension that disappears the minute you go to collect it, and now they’re coming for your Social Security money. They want your retirement money. They want it back so they can give it to their criminal friends on Wall Street, and you know something? They’ll get it. They’ll get it all from you sooner or later cause they own this f**king place! It’s a big club, and you ain’t in it! You, and I, are not in the big club.

By the way, it’s the same big club they use to beat you over the head with all day long when they tell you what to believe. All day long beating you over the head with their media telling you what to believe, what to think and what to buy. The table has tilted folks. The game is rigged and nobody seems to notice. Nobody seems to care! Good honest hard-working people; white collar, blue collar it doesn’t matter what color shirt you have on. Good honest hard-working people continue, these are people of modest means, continue to elect these rich c*ck suckers who don’t give a f**k about you….they don’t give a f**k about you… they don’t give a F**K about you.

They don’t care about you at all… at all… AT ALL. And nobody seems to notice. Nobody seems to care. That’s what the owners count on. The fact that Americans will probably remain willfully ignorant of the big red, white and blue dick that’s being jammed up their a**holes everyday, because the owners of this country know the truth.

It’s called the American Dream,because you have to be asleep to believe it.”


Comment by azdude
2018-02-11 13:45:52

10 highest VIX closes

Thu 20 Nov 2008 = 80.86
Mon 27 Oct 2008 = 80.06
Fri 24 Oct 2008 = 79.13
Wed 19 Nov 2008 = 74.26
Fri 21 Nov 2008 = 72.67
Fri 17 Oct 2008 = 70.33
Wed 29 Oct 2008 = 69.96
Fri 10 Oct 2008 = 69.95
Wed 22 Oct 2008 = 69.65
Wed 15 Oct 2008 = 69.25

Comment by Professor 🐻
2018-02-11 16:05:12

Market drop is a ‘welcome correction’ for the IMF, says Christine Lagarde
- Last week’s roller-coaster ride for the markets is not a major source of concern for the IMF — rather, it sees it as a “welcome correction.”
- The S&P 500 officially fell into correction territory on Thursday, down more than 10 percent from its January peak.
- The market sell-off saw the Dow Jones suffer its worst week in two years and volatility levels hit multi-year highs.
Hadley Gamble | Natasha Turak
Published 8 Hours Ago

Comment by Professor 🐻
2018-02-11 16:37:33

The 1966-1982 period was unkind to investors in U.S. stocks and bonds, not to mention savers in U.S. dollars, whose HODLings were ravaged by double-digit inflation.

Is it 1966 again, and if so, how do you plan to manage your household finances to survive the market turmoil to come?

Comment by Professor 🐻
2018-02-11 16:45:13

Even ‘Safe’ Bond Investments Falter as Markets Tumble
Stocks aren’t the only thing dropping. Bonds, which are supposed to be the safe part of your portfolio, are faltering, too.
Feb. 9, 2018, at 5:19 p.m.
Specialist Jay Woods works at his post on the floor of the New York Stock Exchange, Friday, Feb. 9, 2018, as the chart behind him shows the day’s Dow Jones industrial average volatility.
(AP Photo/Richard Drew)

NEW YORK (AP) — The stock market isn’t the only thing dropping. Bonds, which are supposed to be the safe part of every investor’s portfolio, have faltered, too.

In what’s been a rude awakening for some investors, bond funds have lost ground these past couple of weeks, unlike in past downturns for stocks. What’s different this time is that the same things undercutting stocks are hurting bond prices: worries about inflation and the possibility of much higher interest rates.

Bond losses have been more modest than the setback for stocks, but more may be on the way. And swings in bond prices are likely to become more common than in recent years, when returns were unusually smooth, experts say.

Nevertheless, experts are sticking with the mantra that bonds will be safer than stocks and that investors can continue to count on them as a stabilizing force for their portfolios.

Ken Mahoney, president of Mahoney Asset Management, said he has been hearing from clients this week who were surprised by the struggles for bonds.

“They kind of say, ‘I thought when stock prices go down, bonds go up?’” he said.

Instead, while stocks were dropping 10 percent from their record high, set on Jan. 26, the largest bond mutual fund lost 0.8 percent through Thursday.

Comment by BlueSkye
2018-02-11 17:40:50

1966-1982 period…

Oh the raises I got during those years.

Comment by Professor 🐻
2018-02-11 16:56:19

If not due to FUD, why would anyone want to buy bond funds?

Investing #​StockWatch
Feb 3, 2018 @ 12:30 AM
Don’t Buy Bonds Out Of Fear
David John Marotta ,
I write on the small changes that can yield enormous gains over time.

I read John Waggoner’s October 23, 2017 article in Investment News titled “Why are investors still flocking to bonds?” in which he wrote:

Bond funds have been astonishingly popular, despite an eight-year, rip-snorting bull market. The past five years, investors have poured $634 billion into taxable bond funds and ETFs, according to the Investment Company Institute, the funds’ trade group. At the same time, investors have yanked $9.5 billion from domestic stock funds and ETFs.

How has that worked out? For bond investors, not so well. The bellwether 10-year Treasury note yield has risen to 2.31% from 1.61% the past five years. Bond prices fall when interest rates rise: The total return for the Bloomberg Barclays Aggregate Treasury index has been just 1.24% annually for the past five years, less than the 1.30% rise in inflation over the same period.

…One answer, of course, is fear. Investors have suffered through two soul-searing bear markets since 2000, and the vaunted long-term returns from stocks don’t seem terribly exciting if viewed from a 17-year lens.

Comment by Professor 🐻
2018-02-11 17:12:32

Bond-Stock Clash Has Just Begun as Inflation Looms
By Brian Chappatta
February 10, 2018, 9:01 PM PST
- Tug-of-war plays out as equities crumble amid higher yields
- CPI release is ahead, expected to show slowdown from December

The tug-of-war between stocks and bonds is at the heart of the shakeout roiling financial markets. This week’s U.S. inflation report could hold the key to the next phase.

Seemingly every time 10-year Treasury yields approached a four-year high last week, equities investors panicked, fearing the specter of higher inflation and a more aggressive pace of Federal Reserve rate hikes.

Whether you want to say Treasuries are in a bear market or not, the surge in yields to start 2018 has left investors reassessing the value of equities and corporate bonds. Profits were easy when the 10-year yield traded in its narrowest range in a half-century, inflation stayed subdued and volatility across financial markets plumbed record lows. Gains are harder when low rates, a linchpin of the post-crisis recovery, start to disappear.

Comment by Professor 🐻
2018-02-11 17:27:31

This is interesting. But it seems like 1978 levels of double-digit inflation and Treasury yields is a long way from here.

Investing #​StockWatch
Feb 11, 2018 @ 04:19 PM
The End Of The 36-Year Bond Bull Market
Intelligent Investing
Ideas from Forbes Investor Team
Bert Dohmen, Contributor

Treasury yields and commodity indices must be watched very closely to see if a potential huge change will continue or if this is another false start.

For several years now the Federal Reserve has been trying to revive inflation under the theory that rising prices will encourage economic growth. But so far, all of their efforts, and the creation of trillions of dollars of artificial credit, have not done the job.

The big question: will that change now with the new economic policies coming from the White House? Will inflation rise? And what will be the consequences if it does?

One consequence is rising bond yields and therefore declining bond prices. (I gave reasons over the past many months in my Wellington Letter why the rise in yields could be shockingly significant.)

I warned in January, regarding the chart of the 10-yer Treasury-bond yield: For us, this very long-term pattern says that yields will go higher, perhaps much higher. That would have very important implications for all the markets. In January, T-bonds had a scary decline in terms of price. My warnings were very timely.

Should this be a concern for investors? You bet, especially if you own bonds! But it also opens up great, new opportunities.

Are we getting signals that this is happening now? For the answer, we have to look at the yield on Treasury Bonds. The most widely watched yield is that of the 10-Year U.S. Treasury bond. This is the “risk free” rate of return, i.e. the rate against which ALL risk is measured, in stocks, commodities, corporate bonds and mortgages, among other asset classes.

Below is a chart of the 10-year U.S. Treasury yield index. Be sure to realize this is the yield, which is the inverse of the price. Note that in 2013 it penetrated the big downtrend line (blue) in effect since 2007. In 2016 it formed a double bottom and then had a strong rally.

The first pause may come at the 200-day moving average. Eventually, the 40 area seems to be a good target. That would have very important implications for all the markets, and great pain for big bond investors.

The chart below of the iShares Barclays 20+ Treasury Bond ETF (TLT) for long-term T-bonds, goes back to 2003. This is the price of the bonds, not the yield. Remember, as yields rise, bond prices decline. It’s mathematical. Note the very volatile uptrend in the chart. In January 2014, when you couldn’t find a bull on T-bonds, I gave a buy signal. A huge rally followed over the next 13 months.

Currently, the long-term uptrend in price (support) has just been broken. This breach is a very important signal that bond prices will have a meaningful decline.

A strong confirmation of bond prices being in a bear market would be the early 2017 low in the TLT. Note that at 115, it is now only about 2.5 points away. When that is penetrated decisively to the downside, bond investors will feel severe pain.

You will hear some other analysts being bullish on bonds, saying that bond yields will decline as bond prices rise because of money flowing out of stocks. Furthermore, they will say bonds will make a better alternative to stocks because higher bond yields make them more attractive than the average stock.

I have made a strong case against that view. But of course, almost anything is possible in today’s world, except that pigs will fly. For a perspective, I have discussed for months the similarities to 1978-1980, which we called perfectly at the outset of our new research business.

There is an old saying, “History doesn’t necessarily repeat, but it often rhymes.” Well, for me, it has been rhyming for months.

I have been in business long enough to remember the 1978-1980 period. In 1978, the new Fed chairman announced that he would not fight inflation with “tight’ credit, but instead would use interest rates. Wall Street analysts became bearish on stocks as they had been taught for years that higher interest rates are automatically bad for stocks.

I had the opposite view and wrote that this was a prescription for “inflation full speed ahead” and much higher interest rates. Below is the chart of long-term T-bond yields. You can see the sharp rise in yields on the left side of the chart and our forecasts. The huge three-year rise in yields was followed by an amazing 36-year decline in bond yields.

The Fed chairman’s statement in 1978 caused us to forecast a 40%-50% decline in long-term T-bond prices over the next several years. One well-known chief economist of a major Wall Street said this was impossible as it would destroy our financial markets. But it happened! Furthermore, I said it would cause a big rise in gold and silver prices, along with commodities. It happened!

But my forecast that rising inflation and interest rates would cause stock prices to rise, as stocks would become inflation hedges, was greeted with the greatest skepticism as it was the exact opposite of what Wall Street was forecasting.

What happened over the next two years? T- Bond yields soared to 15 ¾% in 1980 and the prime rate soared to 20% thus fulfilling exactly our forecast of 18 months earlier. Inflation surged to over 15%. Meanwhile, gold soared from below $200 in 1978 to above $800 in 1980. The DJI gained around 24% in this environment, perplexing almost all other analysts. Commodity speculation became very popular as commodity prices soared from 1978 to 1980, presenting opportunities of a lifetime.

This is very important market history. Save it! It may be a guide to the future.

However, nothing is forever. A huge trend change could be starting now. Central bankers will cheer and encourage that trend. A cheaper dollar will be one of the goals.

Have you noticed how analysts are puzzled by the weak dollar now in the face of rising interest rates?

However, has the inflation trend already reversed to the upside? My work suggests that inflation bottomed and higher inflation is ahead. The fact that 85% of global government bonds yield less than global inflation is very stimulative. It means that inflation basically makes borrowed money free.

When loan growth accelerates, it will be the green light for inflation as in 1978. Then it remains to be seen if the negative effect of higher interest rates will be more powerful than the beneficial effect of a stronger economy and sharply rising corporate earnings.

The big question now: could we see a repeat of 1978-1980? During that time, we were one of the few investment research firms who anticipated double-digit inflation, a 20% prime rate, plunging bond prices, and soaring precious metals, allowing our clients to profit from these big moves. Could it happen again this time?

One caveat: if the stock market has a true crash, with major indices down more than 20%, it would abort the positive economic environment. That would be a big game changer for a while as the central banks will be forced to reverse their policies. All of the above would then become “inoperative.”

Comment by azdude
2018-02-11 17:54:17

markets r rigged

Comment by Mr. Banker
2018-02-11 16:45:27

Bahahahaha … she borrowed lots of money to go to college so as to get an education and now that she has graduated her real education has begun …


Dumb ‘em down, and profit.

Comment by Professor 🐻
2018-02-11 17:47:26

Is there any chance of a student debt jubilee with the Republicans in control, or will this have to wait for the next time the Democrats have the upper hand?

Comment by Carl Morris
2018-02-11 19:56:52

I’m skeptical that TPTB will allow their slaves to be freed so easily no matter who is in control. Unless of course the taxpayers want to step up and buy their freedom for an inflated price. I suppose that’s where some bleeding heart philosophy comes into the picture.

Comment by Professor 🐻
2018-02-11 20:06:02

“Unless of course the taxpayers want to step up and buy their freedom for an inflated price.”

Keynesian economic logic to the rescue?

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Comment by Professor 🐻
2018-02-11 20:10:59

February 9, 2018 4:08 pm
We Must Cancel Everyone’s Student Debt, for the Economy’s Sake
By Eric Levitz

Late last year, congressional Republicans passed a $1.5 trillion tax cut, which delivered the lion’s share of its benefits to the wealthy and corporations. The GOP did not justify this policy on the grounds that all corporate shareholders and trust-fund hipsters deserved to have their wealth increased. Rather, the party argued that, however one felt about making the rich richer, the tax cuts would ultimately benefit all Americans by increasing economic growth and lowering unemployment.

But what if we could have achieved those objectives, at roughly the same price, by forgoing tax cuts — and wiping out every penny of student debt in the United States, instead?

A new research paper from the Levy Economics Institute of Bard College suggests this was, in fact, an option.

In America today, 44 million people collectively carry $1.4 trillion in student debt. That giant pile of financial obligations isn’t just a burden on individual borrowers, but on the nation’s entire economy. The astronomical rise in the cost of college tuition — combined with the stagnation of entry-level wages for college graduates — has depressed the purchasing power of a broad, and growing, part of the labor force. Many of these workers are struggling to keep their heads above water; 11 percent of aggregate student loan debt is now more than 90 days past due, or delinquent. Others are unable to invest in a home, vehicle, or start a family (and engage in all the myriad acts of consumption that go with that).

Comment by BlueSkye
2018-02-11 20:54:13

The real shame about student debt is that the government encouraged it and thereby encouraged the costs to skyrocket. Now we’ll have a generation that will tell their kids not to go to college.

Comment by OneAgainstMany
2018-02-11 21:03:16

The Economist did a good piece on the diminishing value of college in last week’s edition. I seem to recall reading that the average debt load for graduates is somewhat misleading since it lumps all sorts of disparate graduates together. Some med school and law school grads have huge debt loads, but these are easily serviceable with their higher earning potential. The real victims to student debt are those that go to college, take on debt, and never get the degree. They end up being some of the worst casualties. Furthermore, because stats end up showing lifetime earnings of college grads vs non-degree seekers, the comparison groups are skewed since the college grads group don’t include those who started and never finished.


Comment by tresho
2018-02-12 07:54:08

because stats end up showing lifetime earnings of college grads vs non-degree seekers were/are based on a pre-internet, pre-YouTube environment. So many learning activities can now be essentially outsourced to online activities, that the price of many modern educational activities can & should plummet. That is not much happening due to rent-seeking & cultural/mental inertia. I do want health care takers to still be trained the old fashioned way, in the presence & under the personal / physical supervision of real / qualified / experienced human beings, in areas where that still matters. Subjects like anatomy, physiology, and pharmacology are, for the most part, feats of memorization. They do not require classroom attendance with all its expenses.

Comment by redmondjp
2018-02-12 11:47:49

And while we’re at it, now that we’ve got that student debt thing fixed, let’s give everybody a Universal Basic Income too!

Comment by OneAgainstMany
2018-02-12 13:07:10

So many learning activities can now be essentially outsourced to online activities, that the price of many modern educational activities can & should plummet.

I partly agree, and partly disagree. The flipped classroom model where learning proceeds much like Khan Academy lessons is probably the way of the future. But the research is showing that just because online courses are available free online, there is value in structured learning in and of itself. In other words, sitting kids in front of a laptop isn’t sufficient bring about education. You need some facilitator and mentor to sort of fill in the gaps and lead. The learning should be different and will shift from “sage on the stage” to “guide on the side.” The more we learn about learning, the more we realize that the instructor is not obsolete in the process. Rather, the nature of instruction changes to facilitator, mentor, coach, and guide instead of sage and knowledge-dispenser.

Comment by Professor 🐻
2018-02-11 20:49:01

It’s pretty surprising that so many of the states with the biggest student debt overload are in the Midwest. And that California doesn’t even crack the top ten!

If my math is right, then $1.5 trillion averages over 44 million borrowers to about $34,000 per individual. But if this slight financial burden is helping these individuals avoid the fatal mistake of taking out a far larger loan to purchase an astronomically overpriced house, then perhaps the student debt is providing a societal benefit.

The 10 states most impacted by student debt
Abigail Hess
10:48 AM ET Fri, 9 Feb 2018
Eduardo Munoz Alvarez

There’s one thing that brings over 44 million Americans together — student debt. Today, Americans with student debt collectively hold nearly $1.5 trillion in student loans.

But not all states have the same levels of debt. WalletHub analyzed data from all 50 states and the District of Columbia in order to rank which states were most impacted by student loans.

They considered factors such as average student debt balance, the proportion of students with debt, the share of student loans in default as well as grant and student work opportunities in order to calculate a figure that represents how severely student debt affects each state.

High levels of student debt can impact states in several ways. Broadly, citizens with high levels of student debt are less able to invest in their local communities. For instance, Federal Reserve Board of Washington, D.C. found that an increase in student debt has led to a decrease in home ownership.

Comment by Senior Housing Analyst
2018-02-11 19:31:35

Hillsboro, OR Housing Prices Crater 12% YOY


Comment by Professor 🐻
2018-02-11 23:00:17

Any thoughts on how much higher long-term Treasury yields will climb before leveling off?

U.S. Budget Director Warns Interest Rates May ‘Spike’ on Deficit
Arit John and Mark Niquette
February 11, 2018, 9:06 AM PST
- Mulvaney says Trump’s economic moves ‘not a sugar high’
-:OMB is adjusting 2018, 2019 budgets after spending bill passed
Bloomberg’s Jodi Schneider reports on President Trump’s 2019 budget.

The U.S. will post a larger budget deficit this year and could see a “spike” in interest rates as a result, but lower deficits are possible over time based on sustained economic growth from Donald Trump’s tax cuts, said Budget Director Mick Mulvaney.

Mulvaney spoke on “Fox News Sunday,” a day before the White House is expected to release 2019 spending proposals — and after weeks in which financial markets have been spooked by prospects for rising inflation tied to higher deficits and lower taxes.

“This is not a fiscal stimulus; it’s not a sugar high,” Mulvaney said on of the president’s economic program, including the $1.5 trillion tax cut passed in late 2017.

“If we can keep the economy humming and generate more money for you and me and for everybody else, then government takes in more money and that’s how we hope to be able to keep the debt under control,” Mulvaney said.

In a separate interview on CBS News’s “Face the Nation,” Mulvaney said rising budget deficits are “a very dangerous idea, but it’s the world we live in.”

Comment by tresho
2018-02-12 07:56:17

I am more interested in how far rising interest rates can go before “this sucker goes down”.

Comment by Professor 🐻
2018-02-12 06:16:00

Rally in equities and Treasury yields set to resume?

Comment by azdude
2018-02-12 06:33:59

china wheeled out the ppt.

Comment by Professor 🐻
2018-02-12 09:14:38

Makes sense… the markets are behaving this morning like someone dropped buckets of cash out of helicopters.

Comment by Mr. Banker
2018-02-12 08:57:48

Did somebody once say that children will not know what snow is?


Comment by Professor 🐻
2018-02-12 09:20:16

Has anyone tallied how much electricity is getting wasted daily on Bitcoin mining?

Comment by Professor 🐻
2018-02-12 09:33:05

I guess this is less pernicious than meth production…but it must suck to pay higher electricity bills to help subsidize a mania.

The Wall Street Journal
Bitcoin Mania Triggers Miner Influx to Rural Washington
Small towns confront surge in power demand as firms that generate new cryptocurrency units ask to set up shop
By Alison Sider | Photographs by Sofia Jaramillo for The Wall Street Journal
Updated Feb. 11, 2018 12:01 p.m. ET

In Wenatchee, Wash., a bitcoin invasion is under way.

Home to hydroelectric dams that harness the flow of the Columbia River, north central Washington has some of the cheapest power in the U.S.

That has made the largely rural area best known for its apple orchards a magnet for bitcoin miners, who use powerful specialized computers to generate new units of cryptocurrencies — a process that requires vast amounts of electricity to run and cool thousands of machines.

Comment by redmondjp
2018-02-12 11:50:45

Living adjacent to a federally-subsidized hydroelectric dam, with power provided by a non-profit public utility, you will have the lowest cost of electricity in the entire country.

My friend, who lives near The Dalles dam on the Columbia river along the southern WA to Oregon border, pays about $.06/kwh. He heats his 1970s-built cedar cabin with electricity since it is so inexpensive and he doesn’t have natural gas in his area.

Comment by rms
2018-02-12 12:40:27

Grant County PUD - Residential, Increased on 4/2017.

Daily flat rate: $0.53 + $0.045/kW-Hr

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Comment by OneAgainstMany
2018-02-12 13:10:29

It seems like the electricity providers could rectify this situation by implementing a tiered KwH charge. For instance, you could start dramatically ramping up price per KW at, say, 2 or 3 times median electricity usage. In other words, you could keep prices at normal for the majority of users and really force those who are using the cheap energy for BitCoin mining to pay a higher rate.

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