Bits Bucket And Craigslist Finds For August 16, 2006
Please post off-topic ideas, links and Craigslist finds here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Check out the
DROdio Real Estate Inc. Uses Lies, Deception, and Scare Tactics
http://tinyurl.com/ntply
They have a price counter on their website showing average selling prices going up when in fact prices are falling in Norhern Virginia. After my crtitical they have removed the price counter from their front page but it still is on another webpage.
David
http://bubblemeter.blogspot.com
“Become a home owner and have this $9.97/hour work for you, instead of against you!
Every hour you wait is costing you $9.97 in equity!”
That is just sick. Makes me want to vomit.
The realty firm has quickly removed the unethical home value clock and promised to replace it with one that reflects the current trend in real estate prices (which would mean downward, in the case of northern Virginia). I’ll be very surprised if they put a downward ticking home value clock on their website.
Bubble Meter declares victory over DROdio Real Estate!
Does anybody else know of realtors using ‘home value clocks’ on their websites to encourage buyers to buy before they get ‘priced out?’
“Using words like “lies, deception and scare tactics” to describe us… marginalizes the many, many satisfied customers we have…” -DR Odio
i’m sure they have plenty of satisfied customers as ignorance is bliss. David’s site is an alarm clock but the lazy folks round here keep hitting snooze.
same ph#, i bet this guy went to the DROdio skool of RE:
http://washingtondc.craigslist.org/nva/rfs/194969381.html
http://washingtondc.craigslist.org/nva/car/192865550.html
yes, i would like RE tax advice from a guy who makes 80k impulse purchases.
mortage application are down yoy 25,6%, up 1,4% week
here is a good artikel obout china rasing the bankr reserve ratio the secound time after the hike in june. main reason is the bubbel in china
http://immobilienblasen.blogspot.com/2006/08/china-steuert-erneut-gegen.html
Thanks for the China link, JMF.
It’s interesting to watch China’s efforts to reign in liquidity. Perhaps they’ve learned some lessons by watching what’s happened in the US the past several years?
Another indicator of the economic slowdown:
Wal-Mart reports first drop in profits for 10 years
…Lee Scott, Wal-Mart’s chief executive, said he believed the company’s American stores were suffering as the soaring price of fuel hit its lower income customers.
“We are, quite honestly, disappointed with the sales performance of Wal-Mart USA,” said Mr Scott in a conference call. “Some of the same issues affecting customers - high utility costs and gas prices - are affecting many businesses including Wal-Mart.”
Wal-Mart is closely watched as an indicator of trends in retailing. A second large American shopping chain, Home Depot, also struck a cautious note yesterday warning that its sales were likely to slow in the second half of the year due to “mixed economic signals”.
Full article at
http://business.guardian.co.uk/story/0,,1850986,00.html#article_continue
Wal-mart has developed a negative image to many people with money for one reason or another. Around here, the more affluent prefer Target. It’s easy to see how Wal-mart can be affected. I wonder how Target and other chains will fare?
IIRC, I read that Target’s profits rose 4.6% over the same time frame as Wal-Mart’s declines.
I just finished reading The Wal-Mart Effect. A very interesting take on Wal-Mart’s many social and economic effects (felt on a very global scale).
Wal-Mart is one of the stores that I boycott because they actively campaign against health benefits and a “living wage.” In my opinion, their “average wage statistic” is probably inflated by their CEO’s salary. The good news: I’ve become a saver because I’m afraid to support Wal-Mart’s “plantation economy.”
Ditto. I refuse to shop there.
I on the other hand will support WalMart just for the reasons you cited. One man’s garbage is another man’s banquet. WalMart is out there putting people to work and allowing those making less to buy at affordable pricing for them. Only difference is I go to WalMart at 5am to beat the crowds. Target does well in this area too but it has retarded checkers, long lines, poor parking, and a piss poor store layout.
Big fan of Wal Mart here too. I know folks have complaints about how they run their company, but I have yet to see anyone with the M-16s force someone to go to work there.
To be honest Wal Mart pays a lot better than several of the jobs I have held in my life. If there would have been one around when I was going to college I would have given anything to be able to work there and make that kind of cash. Even better you can get Top Ramen there really cheap!
Did you ever see the piece several months back about the pickets picketing WalMart in Nevada. I loved it. The unions hired illegals at minimum wage to do their picketing for them in the hot sun.
I use Walmart as a litmus test: anyone who hates them (other than for their eminent domain abuse in collusion with local gov’ts) is my enemy.
Salinasron,
it’s called outsourcing.
Unions got in the game too.
I’m not boycotting them, but I don’t go there. I shop at local small businesses in my area instead unless they are out of what I need then I go to the big chains. Saves on gas anyway.
I spent years working for WalMart, including store management. WalMart does provide opportunities for many people who would otherwise be stuck working at the checkout lane forever.
Sig, I agree. Many of the associates I worked with a good people who really and truly enjoy their jobs. The majority of the negative press is coming from a minority of employees who feel they should be CEO while barely having a GED and wanting to do the minimum necessary to get ahead.
I do not like their long checkout lines so I limit my Walmart visits.
Mike, there is no way that Larry Elder said that. Post a link or post a retraction.
Not sure I can go along with that that reason. They had a conservative talk show guy called Larry Elder here in Los Angeles who once said, after a PBS show was aired about child labor in asia, “Nobody forced those 8 and 10 year olds in India who are employed to re-cycle lead batteries to take the job….” He’s right of course but a handful of rice a day is better than none even if it means you need to fill your 8 to10 year old body with toxic lead to get the rice. As far as WalMart is concerned, they pay low wages but employees can afford more than a handful of rice (so far). However, WalMart has a more insidious side which affects everyone. They have very limited to no health insurance. WalMart employee have to go on public welfare medical if he/she gets sick because they certainly cannot afford medical insurance on WalMart wages. That means that you/me the taxpayer, subsidise WalMart. WaMart can afford to keep “Low Prices Everyday” because you/me pay for their employees costs if they get sick.
Again, that is a minority of people. Trust me, I have seen this first hand.
The average complaining employee choses not to pay the insurance premium because they have to make a gargantuan truck payment or need new spinner wheels or a car stereo. It’s all about priorities because the insurance is there and available for the employees.
Many smaller businesses where they would otherwise work don’t even offer insurance. I was stunned to find out that my favorite upscale bar/restaurant doesn’t offer insurance to it’s employees. WalMart gets the bad rap because of it’s size and nothing more.
The average complaining employee choses not to pay the insurance premium because they have to make a gargantuan truck payment or need new spinner wheels or a car stereo. It’s all about priorities because the insurance is there and available for the employees.
http://www.ufcw.org/press_room/fact_sheets_and_backgrounder/walmart/benefits.cfm
In 2002, Wal-Mart further restricted the number of employees eligible for coverage by requiring full-time workers to work six months before become eligible to purchase the company’s health insurance. Part-time workers need to wait two years for health care insurance.
This is the part I have the most issue with. I think they should be offered upon hiring. However as for what they have to pay for healthcare, welcome to the club! I pay just as much. Do I make more than an “average of $8/year” - well, yes. But that’s an average and includes kids working there PT - just like I worked at Kmart PT for years thru HS and college (and never needed health insurance since I was under my parents still).
Sorry, but it’s tough everywhere - not just at Wal*Mart. I think Wal*Mart does more good than bad (and, yes, I shop there - and will continue to unless and until anyone out there really beats their prices!). If ya’ don’t like the benefits, don’t work there. I’ve declined jobs based on crappy benefits.
If ya’ don’t like the benefits, don’t work there.
Fair. I just don’t get the part why the taxpayers have to subsidize certain practices of a private corporation, which is coincidentaly a very profitable one.
Medical insurance is a broken system. I let mine slide with the last job change. I’m just not going to get sick.
Max,
You are wasting your time and effort trying to educate a bunch of people who are just all about “me, me, me…me and what’s good for me.” They either don’t or can’t see farther than 5 feet in front of their eyes.
In the USofA we have a choice, and lots of them. I will state it again that I don’t expect everyone to like Wal Mart. I don’t go there all the time because of the huge lines. I will say that if one was around in Cleveland in 1982-86 when I was in college I would have much rather worked there than any of the other jobs I was able to get to help pay for school. Here is a news flash, none of those had any health insurance, so even a tiny amount would have been an upgrade.
As far as kids in India having lead problems, that is a sad tale if it is true. However we are talking about the United States, and again we have a choice. If you don’t like Wal Mart, don’t work there and don’t shop there.
Now wasn’t that easy?
I like and support Wal Mart and I am not a share owner. Some people are critical of Wal Mart because they do not pay “living wages”.
Absolute hogwash. How people are supposed to be paid? Should they be paid based on how much money they need OR be paid based on the value of their work? After all how much talent/effort it takes to scan an item on the cash register.
Absolute hogwash. How people are supposed to be paid?
Try Costco - they pay high by industry standards wages, and thus have very loyal employees and as a result - a tight and well-run company.
I agree Costco treats their employees well. I would also note that Walmart treats their employees well who move up the ranks and move into higher “value added” positions. I happen to like the fact Walmart is transitioning to a more “full time” workforce (that does get health benefits). You do know they are going to pay more for entry workers? However, Walmart wants/needs people to take on more responsibility; thus they are withhold higher pay rates unless people take the initiative to get promoted. I’m ok with that too. I’ve never been the type to “only do my job”
Much of the negative press against Walmart is by the unions who wish to organize their workers.
The reality is, if Walmart wasn’t paying a “fair wage,” who would work there? No one.
But they fact their sales are hurting tells you something about the working class right now…
I spend a fortune at Costco. Good store, good people.
I have a friend that is a Wal Mart manager (10 years). The store cut her hours from 40/wk to 29hrs/wk. As a result of the hourly cut she is no longer eligible for the health insurance plan from Wal Mart and is now under COBRA. She said they cut hours to all the employees in her store.
WALMART has been the catalyst for the moving of jobs off shore. Prior to the death of its founder, Sam Walton, WALMART proudly displayed an American flag in front of each store reflecting its montra of offering fair priced American made products. Shortly after his death all products started there shift to overseas all under the guise of lower pricing when in actuality prices stayed basically the same and the difference between the domestic and import profit pocketed by WALMART.
Don’t complain about the loss of middle class mfging jobs all the while shopping/sleeping with the enemy. If indeed that is one of your concerns…
Not only moving jobs offshore but putting small American businesses out of business. I hate that company and everything it stands for. I shorted their stock at the beginning of last year and still hold the short position.
Yes. The irony of Walmart’s success is that its cheap prices (on crap made in China) comes at the cost of jobs for the middle class — the same middle class who, given the loss of those good paying jobs, can’t afford to shop anywhere else.
Good business maybe, but rotten karma.
The place is a freak show…nothing but 300+lb hairy-armed women, sporting bad tattos on their fat calves, grazing on half-eaten bags of corn chips while oogling over the made-in-china “plasticrap’ that will be strewn about in their squatter camp.
Otherwise, they do have good prices on HBAs.
dd
WallMart sucks. And their merchandise is a waste of natural resources. The steel the Chinese use for bolts is such poor quality it breaks when you tighten them. Welded parts break too, because their slave laborers haven’t got a clue. Buy something and throw it out 2 weeks later.
…”buy something and throw it out 2 weeks later.”…. which is, of course, their point….. I completely agree w/Txchick…. predatory business, wouldn’t cross their threshold for free Chinese crap.
I won’t shop at either. They both drain the life blood out of the local economy. Shop local.
I agree. Costco is the worst abuser of eminent domain in the country and their selection is minimalist - about the same as Sam’s now. Walmart has crap quality stuff and crap service. I can find what I need cheaper on sale at the grocery store or at independents. But there’s only two of us. If I had lots of kids I’d probably shop there too. Keep an eye on the warehouse stores when shopping - they’re often more expensive.
What pray tell is a “living wage” Perhaps the minimum should be rasied to 20 per hr?
I make $20 per hour. With a little OT, Ill make about 45k and I think it is barely a living wage.
more on china and inflation from russ winter
http://www.xanga.com/russwinter
Jersey Housing Sales Dive 16.3%
June is a pivotal month in the housing market — the grand finale of the busy spring house-hunting season.
More than any other time of the year, it’s when homebuyers call their agents, book home tours and turn up at open houses, setting the high-water mark for homes sales in any given year.
But, apparently, not this year.
The National Association of Realtors said yesterday home sales in New Jersey tumbled 16.3 percent during the second quarter as more homebuyers, discouraged by higher home prices and interest rates, dropped out of the market. During the quarter, 157,900 homes were sold, down from 188,600 a year earlier.
Prices, which are released for metropolitan areas rather than on a state-by-state basis, have held up, although the increases have moderated substantially and in Central Jersey they actually fell, the NAR reported.
Year-Over-Year Declines Hit New Jersey
The median sales price of an existing home in the region that includes Monmouth and Ocean counties was $393,600, down 0.1 percent from the same period a year ago.
Real estate sales in New Jersey declined 16.3 percent in the second quarter.
There was a nine-month supply of homes for sale in both Monmouth and Ocean counties in the first six months of 2006. A year ago, there was a 4.5-month supply in Monmouth and a 4.3-month supply in Ocean.
For the first time in a decade, home prices in the region that includes the Shore have declined, although the drop in second-quarter prices was slight, the National Association of Realtors reported Tuesday.
The median sales price for an existing home in the region that encompasses Monmouth, Ocean, Somerset and Middlesex counties was $393,600 in the second quarter, down 0.1 percent from $394,100 in the second quarter of 2005, according to the association. The median means that half the homes in the area sold for more and half for less.
Caveat Emptor!
Grim
Can anyone share some insight about the NY Metro area (Manhattan, Brooklyn)? It seems that NJ, CT and LI are weakening while the city remains OK. Prices aren’t skyrocketing anymore, but properties seem to be moving close to asking prices and the supply of homes/apartments still seems to be pretty thin.
See the article from Newsday in the next post from Ben.
Long Island and Queens listings have doubled. I would say prices have declined by about 10%. That’s real prices, not the median bullcrap.
Thanks, Ed.
I saw that post, but I think that LI may be weaker than Manhattan/Brooklyn based on what I’ve seen/heard. Was hoping that someone could share some stories about trends here since there is no MLS….
I live in Queens. I have definitely seen price drop. They are still obscenely high. Overpriced by 60% or more. But I have seen houses on the market for months, and prices dropped by $50,000.
I follow the Manhattan market with OCD-like intensity. I would agree that prices generally are off about 10%, depending on neighborhood, on resales. It looks like Developers are trying to hold the line on new stuff — I am very curious to see who wins.
For price info in NY, I suggest regularly checking the listings on the big brokers’ sites (Corcoran, Elliman, Bellmarc, etc.), in addition to to the usual suspects like CL and Realtor.com. J. Miller’s site (I forget the URL — you can get to it through curbed.com) is also useful.
don’t you think the nytimes online r.e. section is the most comprehensive listing of manhattan apts??? free registration. that’s pretty much my source for market trends, and of course the quarterly reports from millersamuel.com.
I check those sites regularly. Just seems like co-ops in NYC are parked around $1,000/sq. ft. My sense is that prices here seem a little firmer than in the rest of the country.
Thanks all for the input.
A friend of mine’s been a realtor in Manhattan the past 8 years. She says the market is completely flat, nothing is moving and she wishes sellers would just get on with it and lower prices a bit.
She doesn’t think the market will crash, outside of newly gentrified areas (still in denial?). Her husband, a bank analyst, thinks the market will crash outright.
People in Manhattan are at a disadvantage because they don’t have Zip Realty . I guess all you can do is follow the MLS and check city records to see if stuff is selling below asking.
It’s a pain in the neck and there’s a time lag but there’s no other way to find out what’s actually going on.
I definitely would not depend on the local media or realtors, etc. to give you the straight scoop on this. They’re doing a rip-roaring lousy job in every major city, let alone Manhattan- forget it.
A friend of mine’s been a realtor in Manhattan the past 8 years. She says the market is completely flat, nothing is moving and she wishes sellers would just get on with it and lower prices a bit.
She doesn’t think the market will crash, outside of newly gentrified areas (still in denial?). Her husband, a bank analyst, thinks the market will crash outright.
People in Manhattan are at a disadvantage because they don’t have Zip Realty . I guess all you can do is follow the MLS and check city records to see if stuff is selling below asking.
It’s a pain in the neck and there’s a time lag but there’s no other way to find out what’s actually going on.
I definitely would not depend on the local media or realtors, etc. to give you the straight scoop on this. They’re doing a rip-roaring lousy job in every major city, let alone Manhattan- forget it.
I’ll be tracking “desperate real estate bagholders” over the coming months:
http://louminatti.blogspot.com/2006/08/desperate-real-estate-bagholder-index.html
Kewl. I bookmarked it. Put Dallas in there. Trust me, the desperation is already building. Wait until the Clownifornian newcomers who overspent see that Cali is coming down in price and want to go back. Oops! Can’t sell that Dallas Palace though!
Lou - nice contribution. Thanks.
Lou
Here is one for you in Phoenix. This is listed on the company I work for classified ads. I checked the county records and they paid 285K for the house at the very peak of the market. Trying to rent for 1,600 a month or sell for 305K. The comps in the area come in around 220K. It should rent for about 1,000 to 1,100.
3BR 2.5BA 1760 sq ft 2 car garage big back yard 2 stories can show upon request. Rent or lease at $1600 per month. Buy for $305,000
http://armlslistings.marketlinx.com/SearchDetail/Scripts/PrtBuyFul/PrtBuyFul.asp?prp=mls&AgentId=JT249&EmailKey=51581422
Lou
Go onto Craigslist for Phoenix RE and type in 480-332-5111. This guy takes the cake. Some kind of Con-man.
“Go onto Craigslist for Phoenix RE and type in 480-332-5111. This guy takes the cake. Some kind of Con-man.”
I posted a warning about this character in the same Craigslist section a couple of weeks ago. He is up to something.
That’s great Lou.
Well, I know you’ll get deluged with requests, but how about adding Seattle?!
I’ve seen a couple doozies on the MLS (sold 899K last August, back on market this year for a few months now , down to 883K, etc). But I’ve done no systematic tracking.
And when you tell people here that that kind of stuff has been happening, they either glaze over or accuse you of lying(!).
So I’d love to see a record of Seattle bagholders, and I’m sure many others would too.
I’ve added Seattle, OC and San Diego.
WASHINGTON (MarketWatch) - New construction of U.S. homes fell 2.5% in July to a seasonally adjusted annual rate of 1.80 million, the Commerce Department said Wednesday.
This is the fifth decline in housing starts out of the last six months. Read full government report.
Building permits - which foreshadow future activity - plunged 6.5% to 1.75 million annual units. This is the sixth straight monthly decline and the largest since September 1999. Permits are at their lowest level since August 2002.
Economists surveyed by MarketWatch were looking for a smaller decline to about 1.82 million starts in July. Read Economic Calendar.
June’s housing starts were revised lower to 1.84 million from 1.85 million.
On a year-over-year basis, housing starts are down 13.3% in July.
Economists generally agree that the housing market is rolling over. There remains a debate about the magnitude of the decline and its impact of the overall economy.
The confidence of U.S. home builders collapsed in August, falling to the lowest level since February 1991, the National Association of Home Builders reported. See full story.
The National Association of Realtors in a monthly forecast said it expects housing starts should decline by 9.1 percent to 1.88 million in 2006.
In July, starts of single-family homes fell 2.3% to a 1.45 million pace. Starts of multifamily homes fell 3.4% to 343,000.
Starts fell in three of the four regions of the nation in July, led by the 7.0% decline in the tiny Northeast market and a 2.9% drop in the West. Starts in the South fell 2.5%. Construction in the Midwest market rose 0.7%.
Sales data for July will be released in two weeks.
The government’s housing data are subject to large sampling and other statistical errors.
In a separate report, the Labor Department said the July CPI rose 0.4% while the core rate, excluding food and energy prices, rose 0.2%. See full story.
http://www.immobilienblasen.blogspot.com/
Anybody watch the segment just on CNBC. These maniacs are building thousands of new houses out in Vegas. Or near Vegas. Actually over an hour from Vegas, in the middle of nowhere. The interviews!- It was like an infomercial - the bleach blonde 50 year old and her husband with shirt open 3 buttons , both with the requisite bling and sunglasses saying how thrilled they are to be able to ‘get in’ and how their ‘property’ is already appreciated so much , it’s just great! All they were missing was the tropical drink in hand.
i´ve stopped watching cnbc since jan.2006
it. is refreshing. befor i wanted to puke at leat twice a day…
http://www.immobilienblasen.blogspot.com/
yeah, before I stopped watch TV, I wanted to puck too! life is so much better after I gave up that addiction.
I cancelled cable last month. Hadn’t even turned on the TV 4 or 5 months before, but since I’ve lived with cable all my life cancelling it felt kind of wierd. Now I’m thinking of selling the TV, dvd, and vcr, to make some space for book shelves, as books are pilling up on my coffee table. Feels nice, really.
I’ve not had cable for the past several years, and just realized we could pick up network reception about a year ago. To be honest, though, I don’t think I’ve watched TV for at least a couple of months except for videos on YouTube
I didin’t have a television for a year when I lived up north and I didn’t miss it at all. The only reason I ended up buying one was because I broke my leg and couldn’t go anywhere for a while. I have two shows I watch religiously now. Other than that, my TV collects dust and the occassional coffee cup.
life without grey’s anatomy? unthinkable.
State home, condo sales slip in key quarter
By Kimberly Blanton, Globe Staff | August 16, 2006
Home sales across the state fell nearly 11 percent in the second quarter as the real estate market slowed, with Cape Cod, central Massachusetts, and the Northeast and Southeast corners of the state experiencing the sharpest declines.
The price of single-family homes also dropped, though not as severely. Statewide, the median price fell 1.3 percent, to $360,000. The drop was largest in central Massachusetts, where prices were down 3.3 percent, to $290,000, compared to the same period last year
http://www.boston.com/business/articles/2006/08/16/state_home_condo_sales_slip_in_key_quarter/?p1=MEWell_Pos5
How about this for a new moniker:
“Sex, Lies, and Real Estate”
http://www.signonsandiego.com/news/state/20060815-0639-ca-prostitutionbust.html
“The suspects would dispatch the prostitutes, who charged between $200 to $2,000 for sexual services, Doyle said. They used the money to fraudulently secure loans for million-dollar homes around the Coachella Valley, authorities alleged.
“They were living large,” Doyle said.
(Thx, Snowman)
OMG, that’s hilarious.
If these guys had gotten upside-down on their various loans, they could have advertised their houses on Craigslist by offering free “maid” service for a year to the lucky buyer.
Rather “man-maid” services.
I wonder if the loans were fraudulent because of listed Occupation? or income ? a tremendous difference - If the income is present as well as the downpayment, assuming the young ladies could work for 10 yrs(?), then I suspect the fraud would be dropped (especially if they offer the judge a little behind the bench). In places where whoring is legal, I would expect the 1003 to reflect the young woman/man ’s occupation.
For Northern Virginia bubbleheads - I found a new blog (updated daily) by a real estate agent with fun moving graphs. He is very honest and realistic and has things to say like “The Real Estate Bubble is turning out to be a lead balloon. I just hope it doesn’t fall on my head.”
http://askmerv.choice3realty.com/
He mentions a link to a new way to search for property and also to leave feedback. From a broker in the LA area.
http://www.shackyack.com/
Now that is cool.
Thanks for the link. You know No.Va. is in for some turbulence when the realtors are starting to talk about “lead balloons.”
can we get an arson reading ?
halloween 06 will be the biggest burn ever
“Devil’s Night” writ large
http://en.wikipedia.org/wiki/Devil’s_Night
Not sure why the link does not work. Try entering “devil’s night detroit” in Goog to get there…
“$250000 HUGE PRICE REDUCTION ON TOTALLY REMODELED NORTH END HOME-1588 SQ FT”
This craigslist seller just slashed the price of their Boise home by 25%. Now it’s overpriced by just 100K.
http://boise.craigslist.org/rfs/194614193.html
Sweet — you can reach everything in the kitchen from one spot. And in Idaho, yet. Nutty.
Maybe I’m old-fashioned, but I would never pay $250,000 for something described as “cute.” Which, of course, is RE speak for “cramped.”
I would never pay for any home advertised as a “dollhouse” either. I see those listed in some real estate ads.
Be careful what you wish for - you might get it.
There are a lot of posters here that seem to be anxiously awaiting the crash in order to clean-up after. The problem is that if it occurs and there is a depression, how will you have preserved your wealth in the meantime in order to profit? I would be interested in if anyone has any ideas? Has anyone explored options outside the US to park your money?
Gold, freeze-dried foods, guns and ammo. Have a great day!
Seriously, what is this thing with Americans and ammo? I come from a land where deprivation is normal and disruption of supplies happens every now and then, and we don’t go around shooting each other for the heck of it.
You’ll do just fine without the ammo. Sit tight with family and community.
Americans don’t suffer deprivation and disruptions of supply well. You’d be wise to take the ammo advice if you begin to see things fall to the depression level in America
Sure, you can just fend of the theiving pilferers and marauders with kind requests. Or maybe if everyone in the community chants incessantly for them to stop - they will!
At a minimum, you NEED one high-power hunting rifle, one police assault rifle, and enough ammo to take on a small mob. You don’t want to be shooting at people and then explaining to them later that you ran out of ammo.
As the old man was fond of saying: “Kill ‘em all and let God sort ‘em out.”
“…You don’t want to be shooting at people and then explaining to them later that you ran out of ammo.”
ROFLMAO
It’s primarily a joke given that much of America was settled during an era in which you absolutely needed guns/ammo (old west). I joke about buying ammo all the time, but I’ve fired a gun exactly twice in my life, and one of those times was at a range outside the US.
You see, Americans have a sense of humor and are quite capable of poking fun at themselves despite the stereotypes you may have been fed.
What land is that? Here in the USA we have plenty of precedent, unfortunately, for the looters and criminals to come out of the woodwork in droves during natural or man-made disasters. Think Katrina and the LA riots. While you sit tight with “family and community”, entrusting your lives, property, and well-being to the tender mercies of thugs, I will be protecting my family and any deserving neighbors with a truly impressive collection of firepower that I won’t hesitate to use on some deserving dirtbag.
Wow… Sound like the plot of a bad action movie sequel.
Yensoy, you didn’t really think I was serious did you? Hahahahaha!
I have suggested a few times that the end of the conundrum would take its toll on hedge funds and other firms in the gambling sector. Is BB’s hedge-fund-trimming exercise working?
———————————————————————————————–
Lead article in today’s WSJ Money & Investing section:
“Hot Hedge Funds Stall in Japan
Vehicles Run by a U.S. Firm Lose Nearly a Quarter of Their Value; Jitters About Small-Cap Stocks”
Just wait until the fall.
Why? What do you foresee?
GS — I worried about hedge funds for a long time because they sound so big and bad. Finally read an article that is easy enough for non-pro me to understand — it describes how derivatives and swaps work and put my mind at ease, largely. It is a bit tedious, but is very comprehensible:
http://www.lewrockwell.com/rozeff/rozeff92.html
Sorry Chip, You should be worried. There are some excellent works on the LTCM debacle. And Rozeff’s analysis is flawed regarding this.
Can you say how it is flawed?
From Rozeff “The company made some big bad bets that unraveled when Russian bonds defaulted (another basic monetary cause). They went beyond conventional arbitrages and incurred undue risk.”
from :The Financial Economists Roundtable Statement
“The Financial Economists Roundtable finds that the Report sheds almost no light on the events surrounding LTCM?s collapse. The extraordinary role of the Federal Reserve in the LTCM episode is not even mentioned in the Report, and there is no analysis of the causes of the perceived breakdown in fixed-income markets that the Federal Reserve feared would turn the failure of LTCM into a worldwide financial and economic disaster…
…the Working Group Report to be a disappointingly uninformative analysis of the events surrounding the collapse of LTCM, and of the interplay between those events and the regulation of financial markets and institutions. Hopefully, a more detailed and thorough analysis of those events will follow at some point in the future, when all of the facts are in and can be disclosed to the public.”
The facts have been dribbling out for years and now the whole events have been put together.
They took no more risk than any of 2500 Hedge funds take daily. And if the street had not ponied up the moneys to bail them out - the world economy would have melted in 1998. The street bailed out LTCM at the request of the federal reserve in a demand meeting. There was nothing simple about the liquidation - it set South Korea back by a few years with Korean citizens donating money to the government to help bail them out, Russia is now capable of paying its debts back. LTCM involved 7 Billion in capital. There is no such thing as a perfect hedge using derivatives. Of the 3000 or so hedge funds operating, maybe 2% are run by financial geniuses, 70% run by mopes (like me), 25% by morons, and 3% by outright crooks. If hedge funds are so good why is the mutual fund average return higher than the hedge funds average return.
From Wikipedia
“Because these differences in value were minute — especially for the convergence trades — the fund needed to take highly-leveraged positions in order to make a significant profit. At the beginning of 1998, the firm had equity of $4.72 billion and had borrowed over $124.5 billion with assets of around $129 billion. It had off-balance sheet derivative positions amounting to $1.25 trillion, most of which were in interest rate derivatives such as interest rate swaps. The fund also invested in other derivatives such as equity options.”
The current derivative market is in excess of 100 Trillion dollars supported by 1.2 trillion in real assets. A sigma 3 event (1987 was a sigma 17) will devastate the worlds economies as hedge funds are forced to liquidate. For the last 2 months the volatility in the markets suggests programmed liquidation. I do not like to invest in anything I do not know how to get out of. I suspect the liquidation will be the equivalent of fire in a locked door standing room filled cinema.
Ah, well, so much for that brief respite of relative tranquility. I thought the part about so many swaps being re-swaps and re-re-swaps was a key mitigator, but apparently there’s a counter to that notion.
Getstucco — do you have a link to the article you described?
Factors Aligning Against the Boom Cycle
By Doug Kass
Street Insight Contributor
8/15/2006 12:20 PM EDT
URL: http://www.thestreet.com/p/markets/economics/10303517.html
All too often the demarcation between fantasy and reality is blurred by a new vision of utopia that enters the financial psyche, as it did in the euphoria of the late 1990s. During that period, the renewed prospects of a new paradigm (a sustained economic boom characterized by the absence of cyclicality) fueled an era of uberspeculation and sky-high price earning multiples.
This notion of a transforming period of economic prosperity was popularized in July 1997 in Wired Magazine’s cover story: “The Long Boom”.
Authors Peter Schwartz and Peter Leyden wrote: “We’re facing 25 years of prosperity, freedom and a better environment for the whole world. You got a problem with that?”
Unfortunately, the promise of a long boom proved to be, like Goldilocks, another fairy tale. And equities — particularly of a Nasdaq-kind — fell with a thud that plunged our economy into a recession.
While not as conspicuous as the last cycle, many are extrapolating the economic strength of the past three years to continue for the balance of the decade — a mini long boom, if you will. In the past I have argued otherwise — that the economic landing will be hard.
This morning I would like to go beyond my explanation of why the economy will weaken worse than many expect and discuss how difficult it will be for the economy to revive after its initial decline.
As growth now fades, many investors foresee a soft landing and a quick rebound. I do not. I believe that profit growth will continue to fall well below expectations, while the economy faces a long, lumpy road ahead before healthy growth emerges once again. Here are some reasons why.
1. An Absence of Wealth Generators
The wealth effect of rising stock prices in 1996 to 2000 was followed by a near-vertical climb in housing prices in 2001 to 2006. This provided consumers a dramatic and unprecedented rise in net worth. Unfortunately, there is no asset class that is likely to provide a similar degree of direct or indirect stimuli over the next several years.
Housing is not likely to be a stimulus:
Despite the quantum leap in home prices from 2000 to 2006, refinancing cash-outs have increased the American consumer’s leverage to real estate as the ratio of mortgage debt to home values has never been higher. Therefore, opportunities to fund consumption by leveraging the housing stock further are more limited than in past economic cycles.
Equities are not likely to be a stimulus:
Stocks have provided an unprecedented boost to consumers over the last 25- and 10-year periods. Looking ahead, a repeat performance is unlikely. Instead, I believe a period of lumpy and uneven economic growth is likely. This is especially true given the prospects for modest top-line sales growth and rising cost pressures. In fact, I believe that corporate profit margins remain quite vulnerable. Slow economic growth and shrinking margins are not a recipe for expanding price earnings multiples or rising share prices.
2. Mortgage Lending Isn’t Likely to Get More Creative
Unconventional and aggressive mortgages already have stretched the limit of lenders and the patience of policymakers. (Aggressive mortgages include ARMs, unusual teasers, high loan-to-value ratios, interest-only loans, reverse amortizations, etc.) Where can you go when you’ve gone too far? When mortgage lenders lend at 110%-120% of home value, what uncharted credit territory still awaits exploitation? Other debt markets were also creative and liberal in their extension of credit. The automobile industry, for example, has liberalized terms as far as it probably can. Indeed, manufacturers have helped create a tapped-out consumer by offering teaser loans and creative financing. Yet there is little top-line progress to show for it.
3. Businesses and Households Have Locked In Much Lower Interest Rates
David Rosenberg of Merrill Lynch did an excellent job recently of chronicling this interest rate cycle. In short, rates during 2003-06 were already quite low, so the Fed has little room to maneuver.
In the last cycle when the prime lending rate was pushed up to 9.5% at the peak, the average of the prior three years (1998-2000) was 8.5%. So when the Fed eased and the prime rate hit its low of 4%, there was very substantial stimulus, because everyone rolled out of high average rates to a very low rate.
But look at the current backdrop: In the past three years, prime has averaged 5.35%. The prime rate now is 8.25%. So say the Fed eases 200 basis points after this tightening cycle is done. Who cares? That would still leave prime at 6.25% or 90 basis points higher than the “average rate” being carried by the household sector (averaging out the past three years). You see — when the Fed eased 200 basis points from January to April 2001, it had successfully taken rates 100 basis points below what the average was and, hence, provided real stimulus for the consumer.
We can carry the same analogy to mortgage rates, especially adjustables, which averaged 6.2% to ultimately scale into a cost that was almost 300 basis points lower. Now that is called rate stimulus. But the average ARM rate from 2004-06 has been 4.5%, so even if the Fed eases enough to take the yield back down to 3.4%, the amount of stimulus based on the mathematics will fall nearly 200 basis points shy of providing the thrust it did in the last cycle.
4. The Lack of Savings Is an Economic Headwind
A 50-year low in the personal savings rate leaves the consumer exposed and illiquid. Simply put, there is no margin of error for the consumer. The decline in savings has dropped to dangerously low levels, so the stimulus of lower interest rates will have a lessened impact on retail activity than it has had in the past.
5. A Growing Schism Between the Haves and Have Nots
The plight of the economically important lower- and middle-income consumer has worsened considerably over the last five years. This reflects sluggish job growth, nascent inflationary pressures, and limited growth in real wages. In addition, tax policy has favored the well-to-do. This has accelerated the decline in the relative position and the overall economic role for the low- and middle-income strata.
6. The Consumer Is Spent Up, Not Pent Up
Responding to an unprecedented loosening of monetary policy, consumer installment and mortgage debt climbed ever higher during the last recession. This happened for the first time in modern economic history. Durable expenditures as a percentage of GDP have never been higher; for example, housing ownership has never been as broad. As a result, the debt-to-disposable income has risen by almost 50% over the last nine years (to 132%).
7. The Twin Deficits of Destruction Pose Structural Problems
The current account and trade deficits are unprecedented in size, and this limits the ability of our government to engineer a recovery through fiscal means. Ongoing geopolitical instability translates into large and protracted financial demands, and this will reactivate the debate regarding guns and butter.
In summary, monetary and fiscal policy has a limited ability to revive the economy as it has in the past. In addition, there are no asset classes that are likely to produce a new wealth effect for consumers.
This is particularly troubling given the massive twin deficits and overextended U.S. consumer. Over the next several years, aggressive monetary and fiscal actions would be required to catalyze lackluster growth. If these tools were used to the degree that is necessary, inflation forces would begin to percolate and bubble to the surface, leading to a vortex of blahflation — a period of blah economic growth (slightly above stagnating growth) coupled with rising inflation.
The U.S. is addicted to easy credit, low interest rates, foreign capital and federal deficits. Rising prices for stocks and housing have masked an unhealthy consumer that spends too much and saves too little. The U.S. economy is like a drug addict who needs ever stronger doses to achieve a high and the financial system now needs dangerous does of stimulus just to keep growing. Withdrawal will be unpleasant, and risks either recession or inflation.
We are now entering the phase of liquidation, e.g. selling our real estate, stocks, bonds, highways, and waterways to foreigners who have outsmarted US in our fiat money ponzi scheme.
Bottom Line, the US economy and world economies are dependent upon US household and government debt spending. In 1981, US households were in a far better position to withstand a recession after years of inflationary growth in the late 70’s. At this point, the Fed cannot raise rates much further without throwing the country and the world into a severe recession. At some point, borrowers (households and governments) cannot continue borrowing without assets, savings or solid expectations of increasing future incomes in the form of wages, tax revenues, and asset liquidations. The latter is usually a prelude to bankruptcy.
> We are now entering the phase of liquidation, e.g. selling our real estate, stocks, bonds, highways, and waterways
I agree, but I don’t think rich American as owners are necessarily better than rich foreign owners.
> (seelling) to foreigners who have outsmarted US in our fiat money ponzi scheme
All the foreigners have fiat money, too. It must be something else that they have in their favour. What could it be?
> In 1981, US households were in a far better position to withstand a recession
Yes, but they had already a fiat money system. Did they have something that we’ve lost and what would that be?
Peter T, you must be a foreigner. Good questions. Read here: http://www.epinet.org/content.cfm/Issuebrief203. It’s only gotten worse since 2004. Governments are manipulating their currencies. Who’s playing the game better. Don’t know, but a few players are mentioned. Taxpayers financed highways are being “leased” to foreign interests to fund cash-flow strapped local or state governments, not rich Americans as you say. As for US households and their ability to withstand a recession, since 1981, the US savings rate has dropped from about 8-10% to minus 2%, and debts as a percentage of assets has grown from about %15 to nearly 25%. In short, Americans have spent their way into a hole. All things are not equal comparing the potential damage in the coming recession to 1981-82. Hope this helps and thanks for your questions.
Went to a ‘network social’ last night. Lots of recruiters said the market is hot but there is a chill in the air. Everyone is sensing some kind of coming slowdown.
Thus I was struck with a thought today - how great it would be if gas was $2/gallon again. As much as I despised the wanton waste in the SUV craze, I think $2/gal gas would jumpstart the economy again.
Housing is toast but other strong sectors of the economy can minimize the harm. Right now it seems as if the whole ship is sinking instead of just having a flooded bow.
Sure it’s nice, so is the tooth fairy.
Inspired by Ben’s title for the first regular post today:
Splish splish, I was takin’ a bath
Long about a Saturday night
Here comes the rub – they just re-po’d my dubs
but told me not to get too uptight
Now I had one them loans
That you get on the phone
And the broker, he said it’s all right
But the ‘mount that I owed
It went up in I/O
And now I can’t pay for a bite
Splish, splash… They done gave me a bath
Well how was I to know there was a fraud goin’ on?
They was a-splishin’ and a-splashin’
Reelin’ in commission, shakin’ and a-bakin’
Rockin’ and a-rollin’, yeah
Bing bang, I saw the whole gang
Lined up on the booking room floor!
Flip flop, they were lyin’ to the cops
So they cuffed ‘em and threatened some more
There was Mortgage Man with the seller Suesan
The appraiser he was even there, too!
A- well-a, splish splash, I forgot about my “bath”
I went and put my runnin’ shoes on
I was a rollin’ and a strollin’, reelin’ with the feelin’,
Moving and a groovin’, splishin’ and a splashin’, yeah!
With thanks to whomever wrote the Bobby Darin original.
Heh heh… I like the cops part.
“Now I had one them loans
That you get on the phone”
Classic.
I stayed a few days with my mother and she got a couple of these calls every day. The first time I fielded one I told the caller that my mother didn’t need one of their loans since her house was paid off. After about the third call fielded I started to catch on. I felt like Austin Powers after being defrosted after thirty years or in my case living abroad for a long time. Now I know why everybody I visited had caller ID.
National Do Not Call List. Sign up. Wait for it to go into effect. If they call - sue ‘em!
Anybody catch the latest Flip This House show with the Montelango brothers? Jesus H. Christ. What the hell happened to A & E? They pull my Bill Curtis shows for that crap??!! What a couple of ass clowns these guys are. Here’s a little summary in case ya missed it…
They show up at this hundred year old dump which is unsuitable for a rat to nest in. While I’m waiting for the bulldozer to show up, they start discussing how they’re going to repair the foundation, replace the porch, and relocate the kitchen for… drum roll please… 10 grand. The arm candy bimbo wives show up and they proceed to screw off for 3/4 of the episode. Then the brothers degrade their wives and play head games with illegal aliens. The ACLU would be thrilled. Television at its finest.
Thank you for reminding me why I cancelled cable, not that I need any reminders.
I don’t know what happened to Trademark Properties from last season, but this season sucks. The brothers from Atlanta are almost as bad as the ones you mentioned.
My great-grand mother lived one block over from that street they were on. She sold her house for $40k over 20 years ago. That is still the going price for houses in that area.
No RE manipulation going on? HA!! Go ahead and pick this BS apart. Information is presented by the a-hole of the year, Gary Watts.
B. Listing Agent Advice
1. Price Reductions: Please do not put a “price reduced” banner on your listings, and if you
have one up, please take it down. It “falsely” advertises to the neighborhood that prices
in the area are going down. What is more true is that sellers are lowering their
expectations and becoming realistic.
Plus: For we who show property, it does not instill confidence in our potential buyers.
2. Sold Signs: When the listing goes into escrow, please put an “in escrow” or “sold” banner on the sign! The days of a panicked buyer, desperately looking on their own for a home, are long gone. Once again, we are advertising to the neighborhood the wrong information.
Plus: Imagine how potential buyers feel seeing all those for sale signs. Do you really think you’re helping them enter the market?
3. Signs: If you have a listing where there are other (or many) for sale signs nearby, I
would recommend that you call the other agents and see how many of them will remove their signs from their listings. At the very worst, rotate your signs until one (or more) of the listings sell, then make sure it has a sold sign on it!
4. Price Ranging: In a market like this, it is foolish to price range your listing-unless you
have a unique custom home on an exceptional lot! Price ranging deters buyers from
entering the negotiating process. They prefer to deal with properties that have a defined
price when beginning the negotiating process.
Forgive me, but I’m going to post this all over the place, ’cause I hate this crap.
“Plus: Imagine how potential buyers feel seeing all those for sale signs.”
Translation: we must hide the truth from buyers.
Plus: Imagine how potential buyers feel seeing all those for sale signs.
I would think they’d feel great…
How about a free cruise when you buy this overpriced condo?
http://orangecounty.craigslist.org/rfs/194829890.html
In the Aug 14 San Diego Business Journal, and article on the front page says that 73% of the “Predatory” Mortgages were made to middle and upper middle income folks.
Those loans called “Predatory” were interest only, excessive interest rates with higher points and fees, and baloon payments and huge penalties for pre payment.(didn’t even include ARMs)
I really like that word.
Whoops…Industry experts didn’t see this coming…
“The depth of the sales downturn in Inland Southern California caught some industry experts by surprise”
http://tinyurl.com/p4ukk
“Industry experts ” haha, what is a industry expert ? A realitor.
I like this article. Getting closer to Seattle
http://tinyurl.com/pcp6v
OT-
Here’s an interesting video clip. That found it’s way to my inbox this morning. Not bubble related but he speaks about fiat currencies and other things. The guy being interviewed is Aaron Russo he has a new movie coming out I guess which focuses on ridding the world of the Reserve Banks and the IRS in America.
http://www.freedomtofascism.com/ Click on the CMN interview.
It’s about 30 minutes long
View of the housing bubble from the Whiskey Bar.
“But whether the bust is national, as opposed to just regional, may depend as much or more on our Chinese benefactors as on the Fed.”
http://billmon.org/archives/002692.html
http://www.realtor.com/FindHome/HomeListing.asp?snum=4&frm=bymap&pgnum=1&mls=xmls&js=on&fid=so&vtsort=&ss_aywr=&poe=realtor&areaid=115&ct=Colorado+Springs&st=CO&zp=&primaryZp=&nearbyZp=&mnprice=600000&mxprice=700000&mnbed=4&mnbath=2&typ=1&mnsqft=3500&exft=iaoh51plus&exft=0&exft=0&exft=0&lid=Enter+MLS+ID&sid=071C6C4E6928C&snumxlid=1065621825&lnksrc=00001
More evidence, as if more was needed, that the “It’s different here” mantra of the Colorado Springs NAR zombies is in error. This house, in Colorado Spring’s much sought-after Old North Side, originally came on the market for $849,000 late last year. No takers. They’ve since had THREE $50,000 price drops, the most recent a few days ago. While there were about 14 listings in this area in January (not counting FSBOs), the number has ballooned to 33 as of this week. The only ones that are selling are those that have had fairly drastic price cuts (at least 15%) and even with those, the sellers probably accepted offers under the reduced price.
Oh, but I forget: Some NAR shill here told the local paper, the Gazette, that more inventory will translate into higher prices, because sellers will be motivated to bring their homes to market in much better condition. Um, yeah…inventory just hit an 18-year high, and the only places that I see selling are those that are steeply reduced or priced well below the comps.