Mortgage Prisoners Trapped In A Financial Squeeze
It’s Friday desk clearing time for this blogger. “The Las Vegas real estate market is as hot as the desert heat. ‘There’s a lot of investors buying these properties, so the competition is becoming fiercer and more difficult for the average home buyer,’ said Avi Dan-Goor a real estate agent in the region. ‘I’m not concerned about a bubble, not concerned about a burst, I think a correction will come, and I think it’s already slowly starting. The median home price right now is about $290,000, so it went up for a long time, it continued to go up. I think last month was the first time that it dropped, around $5,000. I don’t think that’s indicative of anything bigger coming.’”
“After a long run of positive numbers, home sales in the St. Louis area have declined slightly through the first 7 1/2 months of the year. Coldwell Banker Gundaker President Jim Dohr says demand is there, but many homeowners, especially those who bought or refinanced when interest rates were especially low, don’t want to sell and buy a new home at a higher rate.”
“‘That’s a big difference is somebody goes out and finds a home and gives up an interests rate below 3 percent and then acquires a new mortgage at over 4 percent, so a lot of people are just sitting still, staying put, if you will,’ he says. Dohr says the lowest inventory is for homes under a half-million dollars, while there are plenty of homes on the market for over a million.”
“Austin, it looks looks like we might have a foreclosure problem. This summer, the Austin area posted alarming year-over-year jumps in the number of homes starting to go through foreclosure, according to ATTOM Data Solutions. The Austin area saw a 65 percent increase in what’s known as foreclosure starts in May 2018 compared with May 2017; that was followed by year-over-year increases of 44 percent and 29 percent in June 2018 and July 2018, respectively.”
“‘The widespread upward trend in foreclosure starts across a geographically diverse set of markets this summer indicates there is more to this trend than just natural disasters driving increased distress,’ said Daren Blomquist, senior vice president of ATTOM. In total, 96 of the 219 metro areas analyzed in the ATTOM report, or 44 percent, posted year-over-year hikes in foreclosure starts in July. Twenty-one states saw increases, including Texas (7 percent).”
“Houston was the only other Texas market listed in the report as having notched three months in a row of significant year-over-year increases in foreclosure starts. The Houston area saw a 76 percent spike July compared with last July, the ATTOM report says. This followed two months of double-digit increases in the Houston area compared with last year: 62 percent in June and 153 percent in May.”
“Curious about what seemed to be a trend of vacant properties for sale, Realosophy president John Pasalis ran the numbers and discovered that 28 per cent of properties listed for sale in the Greater Toronto Area are advertised as being vacant, up 17 per cent year-over-year. ‘I’m finding that there are a fair number of stubborn sellers holding out for an unrealistic price for their home, though they’ve already moved on to another home or downsized (which reflects some financial security/stability because most people can’t afford to have a house sitting on the market empty for 6-12 months),’ he writes, in a recent report.”
“According to Pasalis, the regions showing the largest increase in vacant home listings also experienced the biggest price decline in the spring of 2017. And there are also newly built properties to take into account, which he says may explain some of the increase. ‘For many of these home ‘flippers’, selling at today’s prices would mean incurring a significant financial loss after factoring in their construction costs and the peak price they paid for the houses when they purchased them in late 2016 or early 2017,’ he writes.”
“Battered hard during the eight-year debt crisis, Greece’s construction and real estate face a long way to revival in the post-bailout era, according to official figures and experts. Greece has one of the highest home ownership rates in Europe at more than 80 percent and purchase of a home was regarded as a good investment. In 2016, investments in the housing market was just 0.7 percent of GDP and had cumulatively declined by over 23 billion euros (26.6 billion U.S. dollars) in nine years.”
“‘Real estate properties in Greece were not opportunities anymore. To a large extent they were overpriced and in addition one had to pay significant sums in taxes,’ explained Lefteris Potamianos, President of the Real Estate Association of Athens — Attica. Within less than a decade, according to the official figures, private building activity dropped by 90 percent, and the number of employees in the sector by 83 percent. Residential property prices also took a dive by more than 40 percent nationwide.”
“Over a nine year span, the cost per square metre of apartments in central Beirut rose from $1,200 in 2004 to up to $4,700 in 2013, a 400% increase based on research by Global Property Guide, owing partly to an influx of investors from the GCC post 2008. Real estate prices average $3,693 per square metre. It takes an average of 22 years of rental income to make up for the cost of investing an apartment.”
‘Meanwhile, construction activity since the period has been weak and prices have since stagnated, even declining marginally. There also remains a large pool of unsold property. Research by real estate consultancy RAMCO indicates that there were roughly 3,600 unsold apartments in Beirut as of November 2017, outnumbering buyers and forcing developers to offer significant discounts to facilitate sales.”
“A recent survey revealed that the value of the new home launches in northern Taiwan has exceeded NT$750 billion in the first eight months this year, sending a disquieting signal to experts that the housing market would crash in a near future. The total value of newly-built and pre-selling residences has reached NT$752.3 billion in Jan.-Aug., 2018, and is set to reach NT$1.15 trillion the whole year, up 34 percent from last year’s NT$837.3 billion, according to a report released by My Housing.”
“While the supply surged in the first half of the year, the new home sales remained weak; if the property oversupply couldn’t be digested, the housing market would resemble a fast moving train about to derail, said My Housing Market Research Manager Ho Shih-chan.”
“Malaysian Prime Minister Mahathir Mohamad on Monday declared that foreigners will not be granted visas to live in the giant Forest City real estate project on the country’s southern tip, a major threat to the marketing strategy for the development. It is not his first broadside against the plan by Chinese developer Country Garden Holdings Co to create a new city that was envisaged to eventually house 700,000 people on reclaimed land near Singapore, but it could be his most damaging.”
“The once sleepy town of Gelang Patah known for its mangroves and fishing villages now has a skyline of skyscrapers. Work to build more high rise residential towers, town houses and commercial buildings is continuing full steam, with dozens of heavy duty trucks carrying sand and materials while cranes dot a skyline that is growing taller and denser as high-rise apartments rapidly approach completion. Forest City is barely inhabited, with only a handful of staff living at its service apartments and guests at its hotel.”
“It’s being described as a ‘mortgage mirage.’ It’s an offer from the bank that looks too good to be true and, as it turns out, for many it is. ‘About 40 per cent of people who tried to refinance were unable to do so,’ Digital Finance Analytics principal Martin North said. ‘If you go back a year it was 5 per cent.’”
“‘When people took out the loans there was a lot of widespread fudging of the numbers,’ chief investment officer with funds management firm, Forager Funds, Steve Johnson said. ‘People were getting loans on the basis of a four person family having $30,000 a year of living costs living in Sydney. And it’s quite clearly impossible to live in Sydney on that much money a year. The biggest issue is that people have borrowed too much money relative to their income and that is a very difficult problem to unwind.’”
“But, Mr Johnson said, it is not just the banks that have messed up. ‘I think the banks have done a lot of unconscionable things, and I think credit has been far too easy to come by, but there is also an element of personal responsibility here in terms of people saying, ‘well, the bank offered to lend me $1.5 million but I don’t really think that is a sensible amount of money for me to borrow.’”
“Mr North has calculated there are now close to 1 million Australians on the edge of mortgage stress — defined by Digital Finance Analytics as borrowers who are going further into debt or eating into savings because their expenses are greater than their income. Given that, it’s understandable that when the big four banks advertise discounted mortgage rates, financially stressed-out households flock to the banks to bag a better deal.”
“‘And then they’re stuck, because suddenly they find that that wonderfully alluring low rate that’s being hung out to them is inaccessible,’ Mr North said. He calls these borrowers ‘mortgage prisoners’ because they go home empty-handed, trapped in a financial squeeze.”
“Mr North has calculated there are now close to 1 million Australians on the edge of mortgage stress — defined by Digital Finance Analytics as borrowers who are going further into debt or eating into savings because their expenses are greater than their income.
I hope every one of them ends up living in cardboard boxes. They ran up house prices for everyone: now let them reap the full consequences of their greed and financial irresponsibility.
“It’s being described as a ‘mortgage mirage.’”
The link is dead on this one.
Thanks for letting me know, I got it fixed.
Castro Valley, CA Housing Prices Crater 5% YOY As Sellers Beg For Offers…. Any Offer
https://www.movoto.com/castro-valley-ca/market-trends/
“It’s being described as a ‘mortgage mirage.’ It’s an offer from the bank that looks too good to be true and, as it turns out, for many it is. ‘About 40 per cent of people who tried to refinance were unable to do so,’ Digital Finance Analytics principal Martin North said. ‘If you go back a year it was 5 per cent.’”
Oh, pray tell, why is this so?
“‘When people took out the loans there was a lot of widespread fudging of the numbers,’…”
Bahahahaha …widedpread fudging of numbers means what? Outright lies, perhaps?
“… chief investment officer with funds management firm, Forager Funds, Steve Johnson said. ‘People were getting loans on the basis of a four person family having $30,000 a year of living costs living in Sydney. And it’s quite clearly impossible to live in Sydney on that much money a year. The biggest issue is that people have borrowed too much money relative to their income and that is a very difficult problem to unwind.’”
(enter laugh track here)
“But, Mr Johnson said, it is not just the banks that have messed up. ‘I think the banks have done a lot of unconscionable things, and I think credit has been far too easy to come by, …
Yes, yes, go on …
“… but there is also an element of personal responsibility here in terms of people saying, ‘well, the bank offered to lend me $1.5 million but I don’t really think that is a sensible amount of money for me to borrow.’”
Ya think? Bahahahahahahaha.
“Mr North has calculated there are now close to 1 million Australians on the edge of mortgage stress — defined by Digital Finance Analytics as borrowers who are going further into debt or eating into savings because their expenses are greater than their income.”
I feel their pain.
“Given that, it’s understandable that when the big four banks advertise discounted mortgage rates, financially stressed-out households flock to the banks to bag a better deal.”
It’s understandable because the people who are stressed out are people who have been proven go be quite stupid.
“‘And then they’re stuck, because suddenly they find that that wonderfully alluring low rate that’s being hung out to them is inaccessible,’ Mr North said.”
😁
“He calls these borrowers ‘mortgage prisoners’ because they go home empty-handed, trapped in a financial squeeze.”
Bahahahahahahahahahahahahahahahahahahaha … ha.
“There’s a lot of investors buying these properties. . . . I’m not concerned about a bubble, not concerned about a burst . . . The median home price right now is about $290,000, so it went up for a long time. . . I think last month was the first time that it dropped, around $5,000. I don’t think that’s indicative of anything bigger coming.”
He admits speculation drove the prices up for a long time and is still occurring even though prices are falling, but he isn’t worried at all. I can never really tell if these realtors are liars or are just completely incompetent.
“I can never really tell if these realtors are liars or are just completely incompetent.”
It doesn’t matter what you can tell or cannot tell; Their utterances are not targeted to you.
Checked in at SeattleClownHouse and once again… The clown says prices are rising, inventory falling and demand sky high.
Sketchy clown.
Slap that clown upside the head with a serious lowball.
September 14, 2017
A report from the Sydney Morning Herald in Australia. “I have a ‘liar loan’ – a mortgage based on less than absolutely factual information. I’ve pretty much always had liar loans. And I recently obtained a ‘liar credit card.’ So what? Given readers’ (and therefore the media’s) love of stories that combine housing and doomsday scenarios, investment bank UBS received saturation coverage with its idea that $500 billion in ‘liar loans’ are a hanging over the Australian housing market, set to come crashing down on the economy at the first hint of trouble and damn us all to hell.”
“How many people want to do the work to supply detailed financial information about their mortgage application and, apparently, admit they lied? Something isn’t adding up. And there’s the particular case of the ANZ which received the worst result: ‘Of those who took out loans with ANZ in 2017 (directly or through a broker), 55 per cent of respondents stated their application was completely factual and accurate (implying 45 per cent of customers misstated their application), down from 66 per cent in 2016.’”
“The most obvious point is, when applying directly to your bank, the bank should know more about your finances than you do anyway. For my ‘liar loans,’ all my income and spending washes through the bank cheque account. I’m Australian – near enough is good enough.”
http://thehousingbubbleblog.com/?p=10201
‘I’ve pretty much always had liar loans. And I recently obtained a ‘liar credit card.’ So what? Given readers’ (and therefore the media’s) love of stories that combine housing and doomsday scenarios, investment bank UBS received saturation coverage with its idea that $500 billion in ‘liar loans’ are a hanging over the Australian housing market’
Empty handed mortgage prisoner trapped in financial hell.
’set to come crashing down on the economy at the first hint of trouble and damn us all to hell’
It took about a year, but yeah, that’s what happened. Read that California?
“The most obvious point is, when applying directly to your bank, the bank should know more about your finances than you do anyway.”
How many of you believe the bank knows more about your finances than you do?
April 29, 2018
From Brinkwire on Australia. “Lending institutions have been using a tool to measure expenditure which some lenders say is underestimating their monthly outgoings. It has led to a culture where borrowers were being given loans they never had a hope of repaying. ASHLYNNE MCGHEE, REPORTER: This is Jason Hannagan’s life, running his own delivery business. But despite his long hours, he is stuck in a financial nightmare. His troubles began back in 2012, when the Hannagans took out a $600,000 loan from a lender called Pepper Money. He estimates their monthly income was about $9,500. Their mortgage broker recorded their expenses at just $1,300 a month.”
“JASON HANNAGAN: That’s for five people. It’s an imaginary figure. Our living expenses were, like, $4,000 and then our mortgage was, like, $3,000. So that’s $7,000. The broker just told us to sign the page. And we faxed it back to her and she said she’ll fill out the rest.”
“ASHLYNNE MCGHEE: Jason Hannagan regrets it now. He says they could never afford the loan. Months later, they had to offload their investment property in Sydney and, three years on, they were forced to sell their family home in Brisbane.”
http://thehousingbubbleblog.com/?p=10417
‘mortgage prisoners’
I believe it is “device”
Point taken. Though for mortgage prisoners, device seems most appropos.
People really are quite stupid. Exhibit A: A Blast from the Past (from 2008).
Enjoy. 😁
Watch “The Debt Trap | The New York Times” on YouTube
https://youtu.be/b-uPoX-1tKU
That video = how to do just about every possible thing (financially) wrong.
‘the regions showing the largest increase in vacant home listings also experienced the biggest price decline in the spring of 2017. And there are also newly built properties to take into account, which he says may explain some of the increase. ‘For many of these home ‘flippers’, selling at today’s prices would mean incurring a significant financial loss after factoring in their construction costs and the peak price they paid for the houses when they purchased them in late 2016 or early 2017’
If you have flipping in any significant amount and duration, it always ends like this.
buying on speculation always ends in tears.
Allen, TX Housing Prices Crater 6% YOY As Dallas Area Homeowners Realize Their Head Is In A Guillotine
https://www.movoto.com/allen-tx/market-trends/
“Zanganeh isn’t worried either and thinks homeowners should see the rise in value as a good thing for the market.
- Translation: My commission has been rising due to the housing bubble 2.0 is a good thing…for us realtors.
“He understands why some people may be concerned that the serious rise will lead to a crash, but says the circumstances surrounding the current growth are much different than in previous situations.”
- This time is different.
thank god for equity cause I have some big bills to pay this month.
Don’t you save money buying crow in bulk?
It’s your equity, your money, and you have a right to it!!
I was considering how the Federal Reserve missed the 2008 Financial Crisis. I was reading snippets coming from Jackson Hole this year (Aug 23-25), and they listed Raghuram Rajan as someone who warned that a financial crisis was coming:
Mr. Rajan Was Unpopular (But Prescient) at Greenspan Party
By Justin Lahart
Jan. 2, 2009
Wall Street Journal
To outline his fears about the U.S. economy, Raghuram Rajan picked a tough crowd.
It was August 2005, at an annual gathering of high-powered economists at Jackson Hole, Wyo. — and that year they were honoring Alan Greenspan. Mr. Greenspan, a giant of 20th-century economic policy, was about to retire as Federal Reserve chairman after presiding over a historic period of economic growth.
Mr. Rajan, a professor at the University of Chicago’s Booth Graduate School of Business, chose that moment to deliver a paper called “Has Financial Development Made the World Riskier?”
His answer: Yes.
Mr. Rajan quickly came under attack as an antimarket Luddite, wistful for old days of regulation [...]
He pointed to “credit-default swaps,” which act as insurance against bond defaults. He said insurers and others were generating big returns selling these swaps with the appearance of taking on little risk, even though the pain could be immense if defaults actually occurred.
Mr. Rajan also argued that because banks were holding a portion of the credit securities they created on their books, if those securities ran into trouble, the banking system itself would be at risk. Banks would lose confidence in one another, he said: “The interbank market could freeze up, and one could well have a full-blown financial crisis.”
Two years later, that’s essentially what happened.
Many of the big names in Jackson Hole weren’t ready to hear the warning. Former Treasury Secretary Lawrence Summers, famous among economists for his blistering attacks, told the audience he found “the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be misguided.”
https://www.wsj.com/articles/SB123086154114948151
Perhaps the largest economic disruption since the Depression, and virtually all of the big name economists were blissfully clueless.
I reached a conclusion: Economics is predictive and speculative. It’s not a science, And profit-making right now will take priority over future predictions of harm, because there can always be some doubt.
Something to keep in mind while listening to the august pronouncements. Missing something as massive as the 2008 Financial Crisis is something that really needs to be focused on, and considered.
“Perhaps the largest economic disruption since the Depression, and virtually all of the big name economists were blissfully clueless.”
A nation of dummies, starting from the top and going all the way down .
P.S. Anyone remember the concept of black swan theory?
And the quants, anyone remember the quants?
The quants, they had all the answers.
‘Over a nine year span, the cost per square metre of apartments in central Beirut rose from $1,200 in 2004 to up to $4,700 in 2013, a 400% increase based on research by Global Property Guide, owing partly to an influx of investors from the GCC post 2008. Real estate prices average $3,693 per square metre.’
So far, so good!
‘It takes an average of 22 years of rental income to make up for the cost of investing an apartment’
Gosh, that’s a long time. What if I have to sell because I need the money?
‘Prices have since stagnated, even declining marginally. There also remains a large pool of unsold property…there were roughly 3,600 unsold apartments in Beirut as of November 2017, outnumbering buyers and forcing developers to offer significant discounts to facilitate sales’
This is what they are about to discover in Orange County. You can actually build more of these things! Sure go to the moon, that just gives the builders more room to bury you in inventory.
I got a chuckle out of this attitude from Geithner:
“It was late January 2010, and Treasury Secretary Timothy Geithner sat slumped in a leather chair as the afternoon sun cast shadows across his ornate corner office. He’d just gotten off the phone with Federal Reserve Chairman Ben Bernanke. The economy was, if not exactly healthy, light-years ahead of where it had been when he took the job a year earlier—a moment when the world teetered on the brink of another Great Depression. The financial contagion had been halted. Growth had returned. The stock market was 10 months into a bull run that continues to this day.
But Geithner had the weary resignation of a beaten man. I’d been following him for months for a long magazine profile, and this was our valedictory interview, his chance to pull back and make his best case that the Obama administration had rescued the country from financial ruin. Geithner had every confidence they’d made the right choice by focusing single-mindedly on restoring growth rather than indulging what he derisively called the public’s clamor for “Old Testament justice.” — https://www.bloomberg.com/news/articles/2018-08-30/the-biggest-legacy-of-the-financial-crisis-is-the-trump-presidency
Another word for “Old Testament justice” is “justice”.
It sounds crazy to the PTB, but while they’re furiously redistributing purchasing power, maybe a measure of fairness and justice in the redistribution might be socially beneficial. Crazy thought I know. Economics not being a morality play and all, per Krugman.
The problem is that the FIRE sector elites have discovered a way to subvert the system, to extract vast wealth from the society, without actually creating things that people value. When it blows up, the government (and the Fed does what the government wants) just makes them whole by having one of its arms (the Fed) covertly extract purchasing power and give it to the FIRE sector elites. Remember the vast bonuses Wall Streeters got immediately after the Financial Crisis? Darkly amusing. The “Cleaners” vs “Leaners” debate at the Fed (should the Fed try to intervene if it detects danger (”lean”) or just clean up after it blows up (”lean”)).
So yeah. Let’s just call it “justice” and “fairness” and they would be good goals to strive for.
Another part of the problem is property taxes and the fact that local governments NEED that money. When prices fall, the local governments are in a world of hurt because they have to lower tax assessments.
They never save for a rainy day because if they run a surplus then they can’t ask for more money, which they do every year. They have a “we need to spend all this money” mentality. It’s disgusting.
I have heard first hand reports of the county saying that they need to hire people and give raises to spend that money now because they won’t have it in the future and they know it. They want to assume as much financial risk as possible, which is the opposite of how a government should run. But the people running it are gaming the system.
It’s not much different for the Feds, especially the DoD. You’re punished for coming in under budget.
‘Another word for “Old Testament justice” is “justice”.’
Geithner qualified it in order to downplay the relevance to the Fed’s financial wealth redistribution decisions.
Nobody up there talks about moral hazard anymore.
Let’s see who Trump picks to replace Smelly Mel. Maybe we’ll get a real person instead of a crony (doubtful).
I feel like all this “wealth effect” stuff is a little like fractional reserve banking - making people think they have all this money that’s not there. It works until there’s a run.
I heard someone note that Apple’s market cap of a trillion plus would not exist if everyone tried to sell their shares at around the same time. Then I imagined some boiler room type saying, “But they don’t! Don’t you see?”
I seem to recall the Chinese stock market starting to implode a few years ago, but the government stepping in and buying shares, and implement other policies that made it hard to short or sell. It seems to have worked. Mostly. “To the moon, Alice!”
In that AEI interview with Bernanke, he agreed with the interviewer that the wealth effect was about four cents on the dollar. Wonder what the negative is when that perceived dollar disappears.
“A bridge that relies on wealth effects, you better hope that you got enough growth to justify the asset price increase which created the wealth effect in the first place.” - Raghuram Rajan
Vienna, VA Housing Prices Crater 10% YOY As Fairfax County Housing Bust Accelerates
https://www.movoto.com/vienna-va/market-trends/
The last time the Vegas market was hot was right before the Boise market crashed. I’m boots on the ground in Boise. Lots of out of state license plates but this time around a lot more older cars with decals and plates from California, Nevada, Oregon and Washington.
“…but this time around a lot more older cars with decals and plates from California, Nevada, Oregon and Washington.”
So refugees rather than equity locusts?
I like that. Housing refugees escaping the damage caused by cheap credit and relaxed regulation.
Realtor team busted for manipulating MLS data. But according to the article it is so common for realtors to manipulate the data that it’s hard to make a legit case against this one.
https://therealdeal.com/miami/2018/08/31/broker-who-extorted-the-jills-exposes-industry-secret-mls-manipulation-is-widespread/
It’s tough to convict attractive ladies with connections.
http://www.thejills.net/learn-more-about-the-jewish-national-fund/
At trial, Eber acknowledged as much. “We didn’t think it was wrong,” she said during her court testimony.
Lying Isn’t wrong? Well as long as you believe it’s ok then let’s let them go. They are, after all, highly trained, well educated realtors / experts in the RE industry, with the seller and buyers best interest in mind. /S
“Commercial Real Estate Paying The Lowest Return Since Before The Housing Crisis”
“The euphoria associated with the US economy even as the overall global economy is rolling over means that those bearing the brunt of risk for commercial mortgage backed securities are getting paid the least. This also comes as a result of investors chasing yield, which could be another obvious canary in the coal mine that the now record bull market could be reaching an apex.”
https://www.zerohedge.com/news/2018-08-31/commercial-real-estate-paying-lowest-return-housing-crisis
If the For Lease signs in front of every San Diego office complex are any indication, then it is easy to see why those returns are so low. No tenants, no returns.
According to the Urban Institute, below are the top 10 cities in danger of a housing bubble:
#1 San Francisco-Redwood City-South San Francisco, Calif.
#2 San Jose-Sunnyvale-Santa Clara, Calif.
#3 Miami-Miami Beach-Kendall, Fla.
#4 Oakland-Hayward-Berkeley, Calif.
#5 Portland-Vancouver-Hillsboro, Ore.-Wash.
#6 Seattle-Bellevue-Everett, Wash.
#7 Los Angeles-Long Beach-Glendale, Calif.
#8 Riverside-San Bernardino-Ontario, Calif.
#9 (tie) Denver-Aurora-Lakewood, Colo.
#9 (tie) Sacramento-Roseville-Arden-Arcade, Calif.
https://www.magnifymoney.com/blog/news/new-housing-bubble-cities-risk-1046860889/
Looks like 6 out of 10 metros are in California.
What a relief to know that San Diego is not on the ee-bola risk list!
No Las Vegas, even though last time it devolved into the US foreclosure capitol?
We have previously discussed the disgraceful system of medical billing in this country where doctors and hospitals hit patients with grossly inflated bills in the hopes of coercing money from families or settling for a small fraction with insurers.
https://jonathanturley.org/2018/09/01/texas-teacher-hit-with-109000-bill-despite-having-insurance-bill-reduced-to-332-after-media-coverage/
This is not a bug of the US healthcare market, it’s a feature.
“Prices will rise to whatever the market will bear.” To Rosenthal, that’s the answer to Scalia’s question. The health care market doesn’t work like other markets because “what the market will bear” is vastly greater than what a well-functioning market should bear. As Rosenthal describes American health care, it’s not really a market; it’s more like a protection racket — tolerated only because so many different institutions are chipping in to cover the extortionary bill and because, ultimately, it’s our lives that are on the line.
https://www.nytimes.com/2017/04/04/books/review/an-american-sickness-elisabeth-rosenthal.html
Realtors are liars
What would a realtor do if he found out a pair of agents were egregiously manipulating MLS data to make their numbers look better? He would extort the hell out of them of course.
What is the standard response from a realtor to a charge of data manipulation? We didn’t know it was wrong. We are realtors. Isn’t that what everyone does?
https://therealdeal.com/miami/2018/08/31/broker-who-extorted-the-jills-exposes-industry-secret-mls-manipulation-is-widespread/
Trust me, I’m a REALTOR
Here’s a good read …
“Thoughts from the Frontline - The Growing Economic Sandpile”
https://mail.yahoo.com/neo/m/message?sMid=0&fid=Inbox&fidx=1&sort=date&order=down&startMid=0&filterBy=&ac=WnC7yv8T.s0f688QkvwiTX4vNdU-&.rand=1880062128&midIndex=0&mid=AJq2sS8LWud4W4o5OAJdeLjVKFU&fromId=&blockimages=0
Here’s an important snippet from the article for those of you who are too lazy to read the whole thing …
“Now, let’s couple this idea with a few other concepts. First, economist Dr. Hyman Minsky points out that stability leads to instability. The more comfortable we get with a given condition or trend, the longer it will persist, and then when the trend fails, the more dramatic the correction. The problem with long-term macroeconomic stability is that it tends to produce unstable financial arrangements. If we believe that tomorrow and next year will be the same as last week and last year, we are more willing to add debt or postpone savings in favor of current consumption. Thus, says Minsky, the longer the period of stability, the higher the potential risk for even greater instability when market participants must change their behavior.”
Personally I like to look at it like this:
The longer a trend persists the closer to the top it gets.
The closer to the top it gets the greater grows the risk.
The greater the risk the greater should be the caution.
FWIW and all that.
As I was reading this I couldn’t help but think of Taleb’s book Antifragile, so it was perfectly appropriate that Mauldin himself referenced this book. The article also echos some themes in Gladwell’s The Tipping Point and the Gaussian copula (probability theory).
Personally I think having a 30-year mortgage is to supremely neglect the idea that Hyman Minsky is putting forward (stability leads to instability). Who can project 30 years into the future? How can one make accurate predictions of what the local, state, national economy will look like in 10, 20, or 30 years? What about the ups and downs in one’s personal fortunes and how will that impact the ability to service debt? This is why the 20% down was required long ago. It was a buffer to smooth out the vicissitudes of life. But with 3% down, there is no longer any semblance of protection against the shocks that are the growing red sand piles.
“Thus, says Minsky, the longer the period of stability, the higher the potential risk for even greater instability when market participants must change their behavior.”
What if a protracted period of stability is exacerbated by central planners offering an implicit guarantee of bailouts in case of bad luck at the gambling casino. Wouldn’t that be a form of moral hazard that heightens the level of foolish risk taking by gamblers who realize that they have nothing to lose if their bets head south?
“Mortgage prisoner”: another term cropping up with increasing frequency. Banks are pretending to want to help these debt donkeys refinance, but since so many of them lied on their mortgage applications to get up on that property ladder, no relief is going to be forthcoming, especially with interest rates rising.
https://www.bbc.com/news/business-45018643
I borrow to consume.
Carry on. Please.
Double down!
Good news, Australian mortgage prisoners: more rate hikes are on the way.
Oh wait - that’s good news for savers, not debt donkeys.
http://www.abc.net.au/news/2018-08-31/rate-rises-roll-out-as-suncorp-and-adelaide-bank-follow-westpac/10187804?section=business
+1 The classic squeeze of interest rates and energy prices rising.
I think we need to discuss WeWork……its simply staggering what they are gobbling up now the Freedom Tower….
WeWork close to large lease at 1 World Trade Center
Deal would make coworking giant the city’s largest office tenant
http://www.crainsnewyork.com/article/20180829/REAL_ESTATE/180829871/wework-close-to-large-lease-at-1-world-trade-center
WeWork is one lease away from being the biggest office tenant in Manhattan
https://www.recode.net/2018/8/23/17770704/wework-nyc-top-office-tenant
With the Oligopoly media treating us to a never-ending story of the passing of valiant hero and so-faux “maverick” Sen. John McCain, a reality check is in order for this rabid neocon stooge of the banksters and globalists.
https://www.scmp.com/news/hong-kong/article/2162347/john-mccain-was-chronic-warmonger-not-war-hero
“The California Legislature voted Friday to allow power companies to raise electric bills to cover the cost of lawsuits from last year’s deadly wildfires amid fears that Pacific Gas & Electric Co., would otherwise face financial ruin.”
https://www.kcra.com/article/california-legislature-approve-wildfires-measure/22891246
looks like a bailout for PG&E
Pretty soon u will have to finance your utility bills. These folks are a huge monopoly.
If battery prices keep coming down, someday rooftop solar + battery will make it economically feasible to just go off grid completely.
“If you take a walk, I’ll tax your feet” —The Beatles
Not to interrupt the discussion, just checking to see if comments are posting OK.