Bits Bucket And Craigslist Finds For September 9, 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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news from roubini.
http://www.rgemonitor.com/blog/roubini/
March 2001: 95% of Forecasters Predicted No Recession….Too Bad the Recession Had Already Started Then…
Nouriel Roubini | Sep 08, 2006 These days I get asked daily in interviews and talks: “How do you explain that the market consensus is still so far from your recession call for 2007? Why does almost everyone on Wall Street believe that there will be no recession? What do you know that they do not?”
Actually I do not know anything that they do not; we use the same public information and, of course, I have no inside information. My explanation of the consensus view about a “soft landing” is that there is a massive and systematic bias in forecasting recessions. Take the following telling example: in March 2001 in a survey 95% of US economic forecasters predicted that there would not be a recession in 2001; 95% of them! Too bad that the recession had already started exactly in March of that year!. So, even as late as March of 2001 when it was totally obvious that the economy was spinning into a recession 96% of all forecasters were still living in the delusional dream that the US would avoid a recession. This even after the tech and investment bubble had totally busted in 2000; even after the 2000 Chrismas sales were a disaster and growth was already crawling down to zero by the end of 2000; this even after the Fed went into a panic mode on January 2nd 2001 and cut the Fed Funds rate in between FOMC meetings because of the collapse of Chrismas sales and the collapse of the NASDAQ that day was clearly signaling a coming recession. There was systematic delusional bullish bias among forecasters, among investors and in the Fed.
There’s definetly a large segment of “financial” professionals( Bagdag Bob’s) that feel it’s their duty to constantly cheer lead the sheeple to the cliff.
they get payed to spin things to the positive.
in doubt the numbers are at least “better than expected”. no matter how worse they are.
when you know how things work it is raelly like watching comedy. (often really bad comedy…)
Here is what Bob Chapman said in today’s letter:
“International Forecaster:
” For the last 1-1/2 years housing headlines have been dominating the news in the same way the Nasdaq did in the late 1990s. Successive years of sizzling sales and appreciation have begun to be followed by massive inventory increases and flattening to falling prices. Affordability has plunged as well. Housing prices may never match Nasdaq’s 78% decline, but they are in decline and their ill fortune will affect the entire economy. The debate is how far down. Residential real estate accounts for 5% of GDP and has accounted for 40% of economic growth over the past five years.
” As prices begin to fall equity extraction will end. That should begin next year. By then speculators and second homebuyers should have all left the scene. They have been 35% of the buying market. We are now in a phase where adjustable rate, option and interest only mortgage rollover buyers are meeting negative equity. Late payments on present ARMS are running at about 13% and the delinquency for these borrowers with poor credit histories was the highest in two years. Just a year ago prices were rising at a 17% rate. In July, they rose 1%. The fall in house building, sales and prices will cut 0.5% off of GDP for the second half of the year and 2% in both in 2006 and 2007. Single-family housing starts over that period should fall 50%.”
Consumer Borrowing Slows in July on Sharp Deceleration of Credit Card Debt, Fed Reports
WASHINGTON (AP) — Americans increased their borrowing in July at the slowest pace in four months as the gain in credit card debt fell off sharply.
The Federal Reserve reported Friday that consumer borrowing rose at an annual rate of 2.8 percent in July, down from an increase of 7.3 percent in June.
The slowdown was led by a sharp deceleration in credit card debt, which rose by just 3.4 percent in July after gains of 13.2 percent in June and 13 percent in May.
i would have thought that because the consumers are so desperate that there would be a spike in cc debt. looks like the indestructible us consumer is mortal.
That occured in June
“A bag of money and a box of Stupid”. Looking at listing prices on Long Island, it’s apparent that sellers are still looking to get rich off their houses. Buyers should no longer pay attention to listing prices. Don’t be affraid to bid low, sellers need to start hearing it. I recomend staying away from flippers and sellers who have only owned for a few years or less, let em burn. Find sellers that have lived in their house for a least 5-7 years and have substantial equity , they have room to come down in price. Above all don’t fall in love with a property and be prepared to walk away from the deal if it dosen’t make financial sense.
Excellent advice for every market, not just Long Island.
Ditto.
here is in addition to socalmtgguy example
another example of some fineprint
fits exactly into it.
http://immobilienblasen.blogspot.com/2006/09/fineprint-kleingedrucktes.html
You’re right. These two posts deserve to be read together. I hope it’s OK for me to repost SoCalMtgGuy’s link here. I know that there must be others such as myself who can no longer keep up with all the posts. Neigher this jmf’s current post nor SoCal’s post yesterday should be missed.
http://www.housingbubblecasualty.com/
off course it is ok.
To pick up on the topic of the impact of blogging, and why I love this blog.
Years ago, newspapers had reporters that they sent out in the streets to gather news stories. I think it was common wisdom that some things you just have to see with your own eyes. Those “on the street” reporters are just a faint memory. It is a lot “more better”, to sit in an nice office and fabicate stories, cut and paste, outright plagerize and attend fancy parties where impressive people will feed them some nice sic whor duerves, if they lend them their ears and the brains of their readers.
Here at this blog there are “embedded reporters”, in every area of the country. The anectdotal evidence reported here is extremely useful, as one could NOT come to the conclusion that maybe one was just acquanted with a couple of isolated financial lunatics. After the Greenspan “froth, in a few bubbly areas” All one had to do was read this blog and see that the exact same activities were going on everywhere. This collective knowledge is very powerful.
Another reason I love this blog is that there are so many intellegent numbers and macroeconomic types reporting here. I take what I see with my own eyes and read here the explanations complete with the data and formulas. It is nice to know why something is happening from a macro and even global level. When someone writes something that does not match up with what I see on the street the I know it is BS. And usually I can see through what they have left out of their equations, with the help from you guys and gals.
Keep up the good work everyone.
Jannifl:
Great post, couldn’t have worded it better myself.
It’s incredible as to how much I’ve learned in the last 18 months. Much of it right here (including the links FROM here as well!)
clouseau
jannifl: welcome to the “The Wisdom of the Crowds” at work!
Thanks for the link, the county fair example reminds me that the carnies will soon be migrating back to Florida in Oct, I can not wait!! I love to listen to their stories. Note I have a widely divergent social circle. Anyway, have found them to be extremely hard working, quick thinking and intellegent people, with a lot of common sense. Unlike those in the real estate biz. Note: They were not fooled by the housing bubble.
Spoke with my SD realtor yesterday. She said in San Diego things were “scarily bad” and we were “lucky” we sold in 04.
She told me of the story of a listing she obtained after the home has been on the market for a year with another realtor. It was near SD State and originally listed for 650K.
She said that she finally wound up selling that puppy for 500K. She also mentioned that if the owners would have priced it low to begin with, they would have probably sold it for 575K. 150K drop and it’s getting worse!
There is justice in the world. Nothing in the universe goes unrewarded or unpunished.
I prefer HL Mencken’s quip:
“No good deed goes unpunished.”
August, 2006 - Northern Virginia
http://www.mris.com
2006 prices, 2005 prices
Arlington County Median Sold Price: $ 420,000 $ 490,000 - 14.29 %
Alexandria Median Sold Price: $ 440,000 $ 449,000 - 2.00 %
Fairfax Median Sold Price: $ 469,000 $ 500,000 - 6.20 %
Loudoun Median Sold Price: $ 486,500 $ 506,100 - 3.87 %
Prince William Median Sold Price: $ 375,000 $ 395,000 - 5.06 %
These medians lump condos/coops in with single-family houses, which I think is why Arlington County shows such a dramatic drop.
makes sense excp for Alexandria - they have a high % of condos
DC area is the biggest “can’t happen here” market cause of fed employment
wait tilll 09 when the military gets hacked
even some precious fed goldbricks may get the boot
Where is DC bubble? Dc is different. Looks like it is - which worse than CA, at least for now.
*much
I don’t get why people here in DC think it’s different. Natural disasters and terrorism threats make it undesirable to have government geographically concentrated. Telecommuting makes it unecessary.
“wait tilll 09 when the military gets hacked”
Now *that* is prescient. Kudos on the long-range thinking.
“wait tilll 09 when the military gets hacked”
I’m prepared for that. Been in the defense business since graduating from college in the mid-80s. I survived the defense cuts in the 90s, and it was major, although it caused me to lose 20% on the value of my house. I lived in a military town. I managed to dodge the bullet and never really was unemployed. I tell my friends that we could have a regime change in 2009 that will be similar to 1993. My current line of work looks very lucrative and I doubt if the Democrats will succeed in having that particular program to be killed. To head off any negative comments about defense contracting: The U.S. Constitution says one function of our government is to provide for the common defense. That costs money. It will take some form of taxes, whether tariffs, or income taxes. But defense is necessary. I will be paid either way, whether I return to being a government employee or stay in the private sector.
What was the transaction volume like?
Transaction Volumes
2006, 2005
Arlington Total Units Sold: 300 373 - 19.57 %
Alexandria Total Units Sold: 226 288 - 21.53 %
Fairfax Total Units Sold: 1,454 2,393 - 39.24 %
Loudoun Total Units Sold: 448 851 - 47.36 %
Prince William Total Units Sold: 530 1,161 - 54.35 %
YIKES! Thanks
wapo has an article on the pres of nar w a house listed for a year= DOOOOOOOOH
1.4 million ,now worth ? 1.25 ?
and a year carry cost of about $60k w taxes = totally stupid
http://www.washingtonpost.com/wp-dyn/content/article/2006/09/08/AR2006090800760.html
He, of all people, should have known better.
The president of the National Association of Realtors, Thomas M. Stevens of Vienna, admits he didn’t follow his agents’ advice when the real estate market started to cool. That, he says, is why his old house in Great Falls has now been on the market for a year at the price of $1.45 million.
This Great Falls Colonial belonging to Thomas M. Stevens, president of the National Association of Realtors, has been on the market for about a year. (By Thomas M. Stevens)
“What I should have done,” confessed the senior vice president of NRT Inc., parent of Coldwell Banker Residential Brokerage, “was listened to my agent and cut the price by $50,000 to $100,000 early on, and the property would have sold last October.”
Yep , the real estate campaign has started .If the senior vice president of the NRT ,(the parent of Coldwell Banker ),can cut his house price ,so can you . He should of listened to his realtor .
What they don’t tell you is the house is only worth a million .
Does anybody believe that a cut of 50k would of made any difference on this high priced turkey?
I fell for this article at first reading, and at the second. Then I realized — people at this level *always* are in the con game.
How is the piscture meant to be received? “Wow, ‘ol Tom is just like us and miscalculated and while I don’t sympathize too much because his house is so much more expensive than mine, this mess really is a big surprise for us all, isn’t it?”
That is the snooker. I believe it is pure, organic bullshit.
(Bet the Realtor he refers to will even back up what the Prez of the NAR said, too!)
I’ve noticed of late that it is MUCH MUCH easier to sway people away from buying a house.
2 years ago, people looked at me like I was crazy.
Last year, I educated HARD CORE my 2 close friends (success story, they’re renters!) I also had a few other success stories, but not many
this year, especially the last 2 months, it is super easy to sway people away from foolish buying. (in some cases buying may still make sense… I’m not swaying everybody).
My current project: new acquaintances, just sold in St. Louis, now buying a condo in Chicago.
They have NO idea of the loan terms. When initially asked, they said ‘well, we have a geat loan broker, he got us a great deal’. they ONLY knew the initial monthly payment, and that it was an ARM. I then asked “Fine, what’s your interest payment? What is the maximum cap it can raise? What’s the worst case payment you may get from this? Can you afford that. what’s comparabe rent?”
they had none of those answers.
So I sat them down and used an ad from a paper (using those teaser rates), and showed them how they COULD be screwed if they’re being put in an option ARM.
I could see the lights turn on for the first time.
FWIW: they had never heard of a “bubble”, never knew there could be a “bubble”
They already have the house under contract, but haven’t closed. I’m sending them the much heralded option ARM article from BW this week.
The MSM is now working WITH us.
Psychology is truly changing.
I believe in Karma. If I save these 2 then I’m sure someone will save me in the future! If nothing else, I’ve received a lot in my life, and perhaps I owe this karma!
clouseau
You may want to also throw in this YouTube link in your “new acquaintences” educational package. Sometimes people literally need a picture drawn for them…
http://www.youtube.com/watch?v=7RTqk1NbKJU
This is a good time to repost an anectdotal that I posted I think it was at least a year and a half ago, maybe 2 years ago.
Many of my co workers fell into the real estate craze and interest only loans when they first came out. I went to great
lengths to explain the housing bubble and what interest only loans entailed. When my performance evaluation rolled around, in the “area that I need to improve on”, section, it said, Jannifl, “You need to be more positive”.
This surprised me as I tackle each assignment with great enthusiasm and am a top performer, and people like to be assigned to work on my team. So I asked for a specific example, and my evaluator thought long and hard and said, “You are always talking about interest rates”.
Well you betcha I clammed up on that topic. I was not going to jeopardize my income, trying to educate a bunch of Lu Lu’s.
To sum it up, let the chips fall where they may. I vote for no bail out. The information was available for people back then, they just could not be dissuaded.
“Well you betcha I clammed up on that topic.”
Unless you’re preaching to the choir, that’s your best bet. Some of my own experiences over the last year:
A coworker has been trying to sell his house in Scottsdale, which he bought for $220K 10 years ago, for $600. He was beaming—”The bank says it’s worth $600!!”. I wanted to say “Yeah, well, is the bank going to buy it from you for that?” but I just told him that basically it’s only worth what a buyer will pay (needless to say it’s been sitting with no offers). I then said I was waiting for about a 40% correction before I would even consider buying. He got very defensive and said “That’s NOT going to happen!! In the past 100 years real estate has NEVER gone down more than 3%!” I could have argued, pointed him toward innumerable web sites, this blog, told him about California in the late 80s, but honsetly, what’s the pont? I just said “well, I guess we’ll see” and let it go.
Shortly after I took my current job last fall I was having lunch with my boss. He has an MBA, and is a very sharp financial manager. He gave me the name of his realtor, gave advice about where to look for houses, advantages and disadvantages of various locations etc. I told him I thought that the market was a little strange, and that appreciation might not contiune to be what it was (I’d already been reading here for several months). He said something along the lines of “well, it will probably slow, but it’s still going to be at least 5%.” Fast forward a few months to early February. Lunch conversation again, with me saying that I was still uncomfortable with the state of the market, and him responding “yes, I think it really would be best for you to wait.” Fast forward again to last week–”Boy, this market is really depressed.” No argument from me, of course.
Another coworker, this time our twentysomething help desk person. He’s been on the phone repeatedly over the past several weeks with lenders, appraisers, and insurance companies trying to re-fi his house. He lives in Surprise, which is right in the middle of glutville—five for sale signs on every street. He complained “gee, my house isn’t worth nearly what I thought it was.” It appraised at $285–he bought it five years ago for $140. He’s HELOCed it once already, and is trying to do so again to spend $25K on remodeling the kitchen. I gently tried to talk him out of it, saying that that was basically a lot of money to spend just for a new kitchen. His response? “It will add to the value of my house!!” Why, so you can just HELOC it again in a couple of years??? No comment from me, of course, but it’s sad to see someone at that age spend money that he’s NEVER going to get back on some silly remodeling project instead of, say, starting a college fund for his kids (I bet his current kitchen does what he needs it to do just fine.) Needless to say he contributes nothing to our company’s 401K plan.
So, you just can’t argue with people—they either get it or they don’t. It’s like arguing religion, with the exception that with religion proof is neither possible nor required—you either believe or you don’t. With housing, proof of the decline and evidence that it’s going to worsen are everywhere. Those who get it don’t need to be persuaded, and those who, against all evidence, have blind faith in the value of their house simply won’t be.
I have a term for these types of people: REtards.
“So, you just can’t argue with people—they either get it or they don’t. It’s like arguing religion,”
Pretty much. Before I go into any real estate explication I always get a sense of how much the person knows already, and how willing they are to take in any new information before I say anything. Unless it’s a good friend, mostly I keep my mouth shut and let another greater fool bite the dust. There’s a lot of financially sensitive toes out there you don’t want to step on. Sometimes, though, casual coworkers are ready to hear (particularly those looking but have not bought yet).
As for the MSM now being on our side, the MSM is and always will be 90% garbage. Whether it was undercalling the bubble before, or overcalling it now, nothing they say is trustworthy. Occasionally they will report some hard data from a good source, but other than that, I pay no attention anymore.
That being said, I am getting bolder to speaking about deflating RE.
Smart people, that I have talked RE bubble with before are offering/planning for 50% declines in So Cal.
Smart people, that I have talked RE bubble with before are offering/planning for 50% declines in So Cal.
So, they’re starting to come around?
Talon — nice story. Thanks to Ben’s blog, pretty much all of us have come to understand that we’ve made the right decisions and that those who haven’t, don’t want to hear about it. Since their loss doesn’t affect our gain, I leave it alone. Silent gloating is a lot different from rubbing it in, and a lot safer.
To keep things in perspective 1.5 years ago, the only people gloating were the homebuyers. And usually they would drag me into the conversation. After a lengthy brag about how much money they were making they would say, “So why haven’t you bought a home?”
So yes I changed my tune and said things like “You were really smart”, I mean who really knows for sure(it is not looking good though). And now of course the topic never comes up so I am not put in that position.
Just a follow up, the person who gave me my evaluation was on the phone with a lender last week asking to add more to her signature loan.
at least that NAR guy didn’t take the advice of some realtors. you know, the one’s who said take your home off the market, spend some money fixing it up and list it in 6 months or so when the markets comes back.
This one’s good for a chuckle - “A Humbling Lesson…” Front page of today’s Washington Post real estate section. Seems the President of the National Association of Realtors has got an overpriced turkey on the market that’s been sitting for over a year. Oh well!
http://www.washingtonpost.com/wp-dyn/content/article/2006/09/08/AR2006090800760.html
I’m too cynical this morning.
This seems to be a PR type of thing. What better way to get the sheople to listen and pull their homes off the market, or reduce asking prices (in order to get some movement in the market and rev up those commissions) than to parade out some BS story of the Pres of the NAR who “isn’t doing his job as a seller”.
The whole article basically reads: “Listen to your NAR realtor. They know the market. They will price your home correctly, they always have. If your house isn’t selling, THEY are doing their job, but YOU aren’t”
yech.
I notice that DESPITE this story, he didn’t drop the price.
just you wait: 1 year from now his house will be bought at 1.45 Million PLUS 20% by some unknown person. (who will of course be related to the industry).
tinfoil hat off.
clouseau
only an economic girlie man would use a realtor
easiest thing in my life has been buy/selling on my own=no brainer
He didn’t drop his price and is spinning a sort of “look, who knew? We the realators are victims too” sort of thing.
Ole “Duke” Cunningham tried that ruse as well. He is in jail. We can only hope for a similar outcome.
He will probably use his political clout to help formulate some sort of bail out.
I am not sure what to think of this article.
On one hand it looks like a hype machine by the REIC, “hey sorry homes sellers who can’t move their overpriced POS houses and are seeing prices drop, you are not the only one having trouble our fearless leader is in the same boat. Dont worry tommorow will be a new day and all will be just fine. Just lower your price a few cents and it will move”
On the other hand - nothing
“But, he noted, in his defense: “Who knew last September how long this down trend was going to continue,” after so many years of climbing upward?”
Anybody here on this blog want to stand up and be counted? Reading this comment, an epithet from my years at summer camp came to mind; “dingle berry”.
“A Humbling Lesson for Realtors’ President”
The head of the NAR can’t sell his house!
http://tinyurl.com/kd6mu
Sorry DC_too. Didn’t see that you had already posted this.
Actually, Flatffplan got it first!
this relates more to the stock market and its complacency / indifferency to horrible news. we saw it with the builders last week, with pnc financial on friday and particulaly with the horrornews from broadcom where they doubled the expanses relatet to back dated options to 1.5 b$! stockj down a whopping 1%!
http://immobilienblasen.blogspot.com/2006/09/options-complacency-broadcom-brcm.html
by the way ben has new pictures on!
WCI Communities to buy back 3 mln more shares
http://tinyurl.com/rp6mb
Does it make sense? They have a negative cash flow for some time and they are cash strapped. Do they think they are going to increase their debt forever?
Damn, it was my favourite long put.
Of course the shares jumped on Friday after this news.
wow.
cannot believe that they will really buy back shares. the anouncement to me is more of a pr gag.
when they will buy back it will be very good for my shorts
i have a summary of wci here
http://immobilienblasen.blogspot.com/2006/09/wci-ausser-kontrolle-out-of-control.html
They will just take on a $hit load of debt and use it to buy back worthless stock. Then they will be stuck with an overwhelming amount of debt and no way to pay it back. Just more re-arrainging of the deck chairs on the Titanic!
i doubt that they will buy back any shares.
they are in massive danger to break some credit rules arlready.
as i said before the first quarter will be the make or break quarter. they want to close on the three condo buildings!
good look! i feel better every day with my shorts.
any company that has a junk rating from S&P and buys back shares is a natural short candidate.
Keep in mind that companies have been known to announce a share buy-back just for the momentary pop to let the insiders get out. Then they buy just a fraction of the number of shares in the announcement.
http://washingtondc.craigslist.org/nva/apa/204795258.html
Some person’s been trying to rent her $409k 1bd Odyssey condo for at least a few weeks now. Realizing that she can’t come anywhere close to covering her monthly mortgage + condo fee with ordinary rent alone, she tries to charge a premium by furnishing it. I assume no takers so far, which is why the ad keeps appearing.
Holy smokes! $2,500 for a one bedroom, in Arlington? No way.
Unless, the landlord gives great foot rubs, and she is hot.
jannifl’s comment on us “embeds” is brilliant. case in point: my DC Housing Bubble Blues blog post today, “What This Condo Seller Won’t Tell You.”
I live a few blocks from this “Can’t sell the house, so now it’s 4 condos” POS.
Whoa, check this out:
“Mass. takes action against lenders”
http://tinyurl.com/nm2nl
Just the beginning, I bet.
more to come!
Ooooh. Good find! Thanks for sharing.
“The Division of Banking on Friday also made emergency amendments to state regulations…”
Slime squared. “Emergency” means, “Omigosh, we just now discovered that these ne’er-do-wells might — and we emphasize ‘might’ — be doing something wrong.” Total BS. Vertical integration of CYA mode. Reminds me of the Dive!, Dive! submarine horn on the old “Victory at Sea” TV shows.
wow.
cannot believe that they will really buy back shares. the anouncement to me is more of a pr gag.
when they will buy back it will be very good for my shorts
i have a summary of wci here
http://immobilienblasen.blogspot.com/2006/09/wci-ausser-kontrolle-out-of-control.html
I agree that it sounds risky for WCI to be buying back its shares. Over the past few weeks I sold my Sept WCI puts, bought in May and June, for 125-220% profits. WCI bounced a bit on the news yesterday, but Florida is going to be a disaster, so I feel good about my Dec,Jan and March puts on WCI. Maybe I will buy some more of the Mar puts, if the stock goes up some more, but that seems unlikely.
http://www.gold-eagle.com/editorials_01/seymour062001.html
Priceless: 1927 - 1933 Chart of Pompous Prognosticators. See how the “experts” of the depression era, much like the clueless RE shills and “economic analysts” of today, got it completely wrong during the Great Depression.
From link above:
“We will not have any more crashes in our time.”
- John Maynard Keynes in 1927
“I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
“There will be no interruption of our permanent prosperity.”
- Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928
“No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”
- Calvin Coolidge December 4, 1928
“There may be a recession in stock prices, but not anything in the nature of a crash.”
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
“This crash is not going to have much effect on business.”
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929
“There will be no repetition of the break of yesterday… I have no fear of another comparable decline.”
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929
“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929
“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
“Buying of sound, seasoned issues now will not be regretted”
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929
“Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.”
- R. W. McNeal, financial analyst in October 1929
“The decline is in paper values, not in tangible goods and services…America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin.”
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929
“Hysteria has now disappeared from Wall Street.”
- The Times of London, November 2, 1929
“The Wall Street crash doesn’t mean that there will be any general or serious business depression… For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.”
- Business Week, November 2, 1929
“…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…”
- Harvard Economic Society (HES), November 2, 1929
“… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”
- HES, November 10, 1929
“The end of the decline of the Stock Market will probably not be long, only a few more days at most.”
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929
“In most of the cities and towns of this country, this Wall Street panic will have no effect.”
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929
“Financial storm definitely passed.”
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
“I am convinced that through these measures we have reestablished confidence.”
- Herbert Hoover, December 1929
“[1930 will be] a splendid employment year.”
- U.S. Dept. of Labor, New Year’s Forecast, December 1929
“For the immediate future, at least, the outlook (stocks) is bright.”
- Irving Fisher, Ph.D. in Economics, in early 1930
“…there are indications that the severest phase of the recession is over…”
- Harvard Economic Society (HES) Jan 18, 1930
“There is nothing in the situation to be disturbed about.”
- Secretary of the Treasury Andrew Mellon, Feb 1930
“The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.”
- Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930
“… the outlook continues favorable…”
- HES Mar 29, 1930
“… the outlook is favorable…”
- HES Apr 19, 1930
“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
- Herbert Hoover, President of the United States, May 1, 1930
“…by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent…”
- HES May 17, 1930
“Gentleman, you have come sixty days too late. The depression is over.”
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
“… irregular and conflicting movements of business should soon give way to a sustained recovery…”
- HES June 28, 1930
“… the present depression has about spent its force…”
- HES, Aug 30, 1930
“We are now near the end of the declining phase of the depression.”
- HES Nov 15, 1930
“Stabilization at [present] levels is clearly possible.”
- HES Oct 31, 1931
“All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.”
- President F.D. Roosevelt, 1933
Great post Sammy . The Great Depression is such a good example of the masses buying assets on credit or margin and not being able to sell or pay the payment when it becomes due .
The Banking system learned a lesson from the Depression and required down payments on home purchases after people were able to buy again years later . In the last 7 years the system forgot the lesson .The same risks apply to the housing industry as it did to the stock market in 1929 .
Yikes! Well if you look at the Dow, it’s still below its 2000 high of 11750. In my opinion, we will have a stock market crash, but it will be mild in comparison to the real estate crash. I anticipate the Dow industrial average dropping down to 9000 in a couple of years. I lost $300 on a couple hundred shares of a stock, but it hit its trailing stop and it is probably heading further down. My new thing lately is to not put money from my stock sales back into the market but to put it in my Vanguard Prime money market fund. However, I am putting additional funds from outside into more shares of my beaten stocks. I’m being verrry cautious, especially with October ’round the corner!
As for the last quotee by FDR 1933, I keep thinking about a good idea my ex-girlfriend (a year ago) had. She has a safe about 18 inches tall in her apartment. It’s probably weighing 75 to 120 lbs. It’s out in the open in her bedroom. I think she’s safer with that than with a bank safe. She’s from a foreign country and does not trust government much… I have a better idea for a place to have a safe, for people who don’t have real estate but I am keeping it to myself for obvious reasons.
Personally, I wouldn’t be surprised to see the DOW around $3,000 before all is said and done. Bear markets usually take back most gains from the previous bull. The latest bull market started after the crash of 1987.
but what about inflation? That’s over $6,000 if you have an inflation rate around 5%.
honestly, I think that stock market is a sham but…
Deflation. ‘Nuff said.
From the FDIC website in the section on what happens in the event of a bank failure:
“How can I access my safe deposit box?
If the FDIC finds a new owner for a bank where you have a safe deposit box, you will be able to conduct business as usual. If the FDIC cannot find a buyer for your bank, we will mail instructions to you that will explain how you can remove the contents of your box.”
Any guesses as to how long that will take??
Go here:
http://www.sentrysafe.com/
They have water-resistant safes that seem more than sufficient for Florida Hurricanes and fire department hoses (but not sinkhole submersion). Buy a gun safe, even if you are a Yankee and do not have guns. The heavy ones are a bear to get out of your house (by the bad guys) and the cost will be amortized soon enough, relative to a safe deposit box or two at your bank. For the cost of bank SD boxes that hold as much stuff as a gun safe, you can amortize in one year, two tops.
FWIW: The median Maui home price finally rolled over, to $749,000 in August ‘06, v. July ‘06 ($780,000, a record). Still up v. August ‘05 ($670,000).
The supply of SFR on Maui currently stands at 9.26 months.
The supply of Condos on Maui currently stands at 16.78 months.
Even worse on the Big Island;
The median sale price on the Big Island slipped 14% in August
http://pacific.bizjournals.com/pacific/stories/2006/09/04/daily47.html?surround=lfn
“There were 145 vacant lots sold in August, but was that a fraction of the 597 that sold a year ago. A rush to buy lots in Puna district has lost steam — 88 lots sold last month compared to 377 in August 2005. The same thing happened in Kau district, which saw 124 lots sell in August 2005 but only 24 last month.”
7 mortgage brokers shut down by state
http://www.boston.com/news/local/massachusetts/articles/2006/09/09/7_mortgage_brokers_shut_down_by_state/?page=full
The state yesterday shut down seven mortgage brokers in Massachusetts and banned a variety of deceptive lending practices in what regulators called a sweeping crackdown on rogue brokers who steer customers in poor urban neighborhoods to loans they cannot afford.
Japan
http://www.safehaven.com/article-5846.htm
Great story. Hate the thought that the LA market could also take years and years to deflate. Makes buying tricky.
For those interested in the NYC market. Scroll down to all the comments:
http://www.curbed.com/archives/2006/09/05/curbed_roundtable_september_state_o_the_market_report.php
excellent contribution, gekko! the comments are most illumating — although a few are quite on target, most of them make ben’s posters seem like true geniuses!
i couldn’t help but notice that jonathan miller (oft-quoted appraiser, millersamuel.com, occasional poster here) chose the following to defend and summarize his own viewpoint of the manhattan market and why the schiller bubble chart “didn’t apply” to manhattan:
“The chart is based on housing costs in 1890 as a baseline? Does that not seem a little, i dunno disproportionate, even with adjustment for inflation? The chart should be based on the last 30 years, say 1975 onward. Real estate in 1890 had different effects than now. Imagine in 1890, you had a choice of buying a townhouse on 5th Ave in the 50s for say 100,000 or you could build a mansion for 50,000 in say the farmland of queens. The availability of land and options were different then. You cant use this chart even remotely seriously. At least in 1975, you can use a better guideline. And even then, you have to consider where is this ’standard house’ located that is used as a priceline for the entire nation? And then finally the financial situation in 1890 was different. Could a black person get a interest only mortgage in 1890? Not only were loans harder to get but mortgage options were different. I am sorry but this chart is useless due to not properly comparing something that is comparable to our time. Capital is easier today and land is scarcier. “
if “land is scarcer” then why is manhattan absolutely FLOODED with recent and anticipated new/pre-construction condo inventory, unlike anyone could have imagined just a few years ago. i guess that’s the manhattan r.e. myth: they’re not making any more of manhattan island.
but you wouldn’t know that by looking at the tens of thousands of new luxury condo apts. coming on the market. yes, even in manhattan.
Probably just adding to what you intended, but valuations in the 1800s could not possibly have imagined the vertical square footage that is buildable today. The error could well be to the credit of the earlier side of the chart, not the later.
The quote from the roundtable is attributed to “anonymous” not J. Miller. Was it changed?
see further down in the comments — jmiller approves it (”bingo #11) beneath in his own comment #23.
23. Anon 11 - BINGO!
By Jonathan Miller at September 5, 2006 4:08 PM
Long time lurker, but just had to add this. I also lurk on a family finances board, and this was just posted the other day under the heading, “Anyone been through forclosure?” If this is a legit post, it confirms my worst fears about what is coming up…
“We are trying to decide the best route with our situation. We are/were investors with building spec houses. We currently have one house left and the market here is terrible. So we have our house (the one we are living in) and the spec house on the market. Two mortgage payments, and we are reaching the end of being able to do this. We are considering stopping payment on the spec house and letting it go into foreclosure. We have a real estate attorney and he advised us to avoid foreclosure, but we simply cannot keep paying two mortgages forever. And we have no way of knowing if one of the houses will sell next week or next year.”
“Anyone been through a foreclosure that can tell me exactly what to expect if we go that route? Thanks so much!”
Then there are a couple of posts, suggesting things like rent out the spec house, or sell the family home and move in the spec home, to which she responds with this post:
“We do have our current house for sale and neither of them is selling. Renting it- well maybe, but it’s a very expensive house, so there is almost no way the whole mortgage would get paid- we’d still be supplementing it, and I’d hate to do that for very long.”
“The house is only in dh’s name, not mine, so at least it wouldn’t ruin both our credit. We have excellent credit. I kind of figure that we’d have an “explanation” for the bad mark on dh’s credit….”
“Does anyone know the steps in foreclosure? Like do they sell the house for whatever they can get and sue for the difference if it’s less than we owe or how does that work? I mean, they can’t sell it for $100,000 less and hang us for the difference, can they? Is there some limit on what they can sell it for?”
I feel bad for these people (we were upsidedown on our house for a while in the early 90’s and it was miserable, but we stuck it out and eventually came out ahead). However, how can people call themselves “investors” when they haven’t even researched what could happen if things don’t go as planned? How many FB’s like this are out there? Pretty scary.
Just want to add, before anyone jumps in saying these people deserve what they get, etc., that my “I feel bad for these people…” comment is in the sense that I feel bad as another human being for someone who ends up suffering big time for stupid decisions. They obviously screwed up and hopefully will learn from it.
Sell the spec house for a cheaper price even if you have to bring money to the table by taking out money by a loan on the regular house and get out of the deal .Don’t feel that sorry for people with two houses that have a means of cutting the loss,especially if they are still ahead overall .
I feel bad for them too. To a large degree, we are all a victim of our environment… if everyone else is doing it, it must be rational. The problem is, everyone is over their heads in debt, or most everyone.
“The problem is, everyone is over their heads in debt, or most everyone.”
Everyone except the regulars on Ben’s blog, perhaps. For one, I have CDs and zero debts, nada. I love being to tell politicians to kiss my a– (though more politely), because I am not beholden to them for a single thing. Took me a long time to get here, but it’s nice.
>Despite all that, only two showings of the house have taken place since it was put on the market. Likens doesn’t think the price, $327,900, is the problem. It was arrived at with lots of input from Mary Condon, their Coldwell Banker Burnet agent, and other area brokers. They even held an open house just for agents so they could get feedback on how much they should ask.
Help! Home for sale
‘It’s very frustrating,’ says Terry Likens. He and partner Duane Przybilla are ready to move on but can’t get any interest in their townhouse in Eden Prairie, Minn.
By Les Christie, CNNMoney.com staff writer
September 8 2006: 2:27 PM EDT
NEW YORK (CNNMoney.com) — Travel agent Terry Likens and his partner, contractor Duane Przybilla, own a three-bedroom, four-bath townhouse in Eden Prairie, Minn. They would rather have a single-family house with more space and a backyard.
So they want to sell - but these days, that’s a problem.
When they bought their home for $294,000 in June of 2004, real estate inventory was flying off the shelves, even in the relatively calm markets of the Upper Midwest.
Homeowners in the Minneapolis metro region had enjoyed steady house price increases for years - an average of 9 percent a year for the 4 years through June 2005, according to the Office of Federal Housing Enterprise Oversight (OFHEO).
In the year since, prices grew just 4.7 percent.
For Likens and Przybilla, the problem is not that their townhouse has been on the market so long - it’s been only four weeks - it’s that it has attracted almost zero interest.
“The hardest part is not being able to pursue new properties,” says Likens. “We already lost the house we really wanted.”
Prime condition
The failure to attract any buyers is not the house’s fault - it shows well. The pair bought it new and opted for several upgrades, including cherry wood cabinets, ceramic floors, Cambria countertops and a custom built bar. There are crown moldings, stainless steel appliances and about 1,900 square feet of space.
Everything’s in mint condition and Eden Prairie is less than 10 miles from downtown Minneapolis.
Despite all that, only two showings of the house have taken place since it was put on the market. Likens doesn’t think the price, $327,900, is the problem. It was arrived at with lots of input from Mary Condon, their Coldwell Banker Burnet agent, and other area brokers. They even held an open house just for agents so they could get feedback on how much they should ask.
Of the two buyers who have looked at the home, “One older couple didn’t like that it has three levels,” says Likens. “They didn’t want to climb stairs.”
According to Condon, Minneapolis market conditions are still decent, but the Likens/Przybilla property is in a challenging price category.
“There are currently 140 similar priced homes (between $250,000-$350,000) in Eden Prairie, and there’s a 7.9 month supply of homes in this price range,” says Condon. “It’s important to point out that Terry’s home has been on the market only for 30 days, and the average time on market for all properties in the Twin Cities is 70 days.”
Condon says all it will take is a little more patience and they will succeed in selling the house.
Not selling has hurt, though. Losing the house they wanted hurt even more.
“We made an offer that was quickly accepted and was contingent on our house selling,” says Likens. “The sellers were willing to push the closing date back to Nov. 30.”
Likens and Przybilla lowered their asking price from $334,900 on the townhouse and sat back waiting for the bids to come rolling in. Nothing happened. Then, they heard that a family from California had made an offer on the house they wanted.
“We basically had 48 hours to sell our place,” says Likens, “which didn’t happen.”
The alternative would have been holding two mortgages at once - an option that would have made them even more anxious to sell and could induce them to accept a really low bid.
Already they don’t expect to make any money on the sale. “By the time we pay the selling expenses we’re not going to turn a profit,” says Likens.
Meanwhile, the partners are halfheartedly looking at other listings, but, so far, only on line.
“Do we want to put our emotions into finding the right property, getting a proposal together and putting up earnest money without knowing if we can sell the townhouse?” says Likens. “It’s very frustrating.”
http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
Oh boo hoo. They have a beautiful and spacious (three bedrooms for two dudes) home that they just bought so why don’t they enjoy it. So many people in this world would dream of having their problems. The only downside is they overpaid during a bubble so hopefully they won’t HAVE to sell.
I have never seen so many people selling so shortly after they have purchased ,(within 1to3 years ),without a job transfer or anything like that .Back in the old days if you sold to soon after a purchase you could eat it with the marketing and closing costs ,(not to mention the original sales costs to buy in the first place ) . Why is everybody turning property as if it were stock.
-
i love how they say “(we don’t) think the price is the problem.” of course the price is the problem, idiots!
I agree, I see it all the time here in Reno too. What happened to homes being long-time investments? This reminds me of the dot-com era.
In some desirable neighborhoods, 4 out of 5 homes have been sold in the last 6-7 years, and 90% of these homes have been remodeled with granite and stainless steel…
I use to think 60% off todays prices was FAIR, but now, I have changed my mind to hoping we see 200% off todays prices. This made sound unheard of to alot of people here, but believe me, I have done research and it it unbelievable what home sold for not that long ago, and after a quick fix, back on the market they go for 300% more than what they were purchased for.
Something is definitely wrong with our mindset, it goes against basic housing principles and I see a Japanese style crash by the end of this year.
I hope all of us bloggers will be holding tight and ready for the ride of our lifetimes…
Laura — it’s nice to see your post. It might be that others here grappled with a possible reply and declined. Your thinking is good, but your math needs some tuning up. This is not critical, just intended to help you post more and better.
A price can never, ever go down more than 100%, because at that point it will be zero or, presumably, free. If we saw 200% off today’s prices, that would mean that the seller not only trandfers title to their property, but also that they owe an equivalent amount, extra, to the buyer. Ain’t gonna happen, ever, since Timothy Leary is long gone.
Percentages and fractions are difficult to learn, but I fault today’s government schools for the abysmal extent to which they are taught, if at all. In the context of your post, all you really need to focus on is that the percentage DOWN, to get to the same amount, is not the same as the percentage UP.
Example: A house cost you $100,000. If you sell it to Fred for $150,000, you sold it for a 50% profit. However, if Fred sells it for $100,000, the amount you paid originally, he suffers only a 33% loss.
If you like this math lesson, please vote against every single politician who is running for re-election in November, regardless of their party. Only by voting out of office as many politicians, of either party, as possible, will you and other average Americans be able to get “Washington” to pay attention to what you really want. Sucks, but it is true. Good luck to you.
I pulled this from tpmcafe.com, which is a little political, but I love reading Stirling Newberry and his thoughts mirror mine:
“My friend Hale Stewart has been on this topic for over two years now, pounding home relentlessly that Americans can’t hope to save for the future by spending on housing, because housing isn’t investment, it is consumption.”
http://www.tpmcafe.com/blog/coffeehouse/2006/sep/08/wage_wars
Comrade MS — a “little” political? That is like me trying to convince experienced bloggers here that I am apolitical. Come on, MS. This guy starts out as an apologist for not only an increase in the minimum wage, but a huge one at that. That is economic death for the entry-level workers in this country. It will only put more people out of work.
The “Housing is consumption” stuff you mentioned is, IMO, just a straw man to suck people into reading Comrade Newberry’s postings. Both of you might want to add links to:
http://www.cpusa.org/
In regards to the 1980’s savings and loan crisis
Practices at 26 Failed S&Ls versus 26 Solvent Ones
Cited by examiners for recordkeeping and control deficiencies
Failed 26, Solvent 9
Unsafe practices in nonlending activities, such as acquiring a subsidiary without first obtaining an appraisal
Failed 26 Solvent ?
Cited by examiners for improperly analyzing borrowers’ abilities to repay
Failed 24 Solvent 13
Violated the regulation limiting the amount loaned to a single borrower.
Failed 23 Solvent 11
Violated the regulation against dealing with other firms controlled by the same officers and directors
Failed 21 Solvent Minor
Violated the regulation against conflicts of interest
Failed 20 Solvent 3
Passive boards of directors
Failed 19 Solvent 8
Insiders charged with crimes
Failed 19 Solvent 7
Cited by examiners for excessive compensation of officers
Failed 17 Solvent 3
Change in control
Failed 16 Solvent 3
I have been reading a little on this topic this week.
I know a person who lost $600,000 in that debacle. NOT $600,000 in home price appreciation, NOT $600,000 in stock price appreciation, but $600,000 in cash.
Read who the players were, read what they are up to today and read who was given forbearance and loan forgiveness. Oh and plug in todays numbers.
Chilling.
Things must be getting bad in England, if a person selling a home can complain that a neighbors garden gnome is scaring off potention buyers!
http://news.bbc.co.uk/1/hi/england/cornwall/5330538.stm
“Now police have served Mr MacKillop with a notice for “placing a garden gnome with intent to cause harassment”.”
Huh. Guess I must have skipped the criminal law class that talked about this …
I think it would be interesting to have a topic of various purchase prices with the length of time a current owner held a home in his name before re-listing it for sale again. Here in Reno, I found it repulsive that someone bought a home in 2001 for $250K, did some improvements, (no more than 80K is my guess) and early last year tried to sell for 1,150K! Thats around a 300K profit! Here we are, 1 1/2yrs later, and the seller still cant sell it - he made reductions all the way down to 850K - this listing is here in the SW area of Reno, no mansion, just a regular 60’s home sitting on about 1/3acre on a busy street.
It’s pure greed I tell’ya…
VMaxer said:“A bag of money and a box of Stupid”. Looking at listing prices on Long Island, it’s apparent that sellers are still looking to get rich off their houses. Buyers should no longer pay attention to listing prices. Don’t be affraid to bid low, sellers need to start hearing it. I recomend staying away from flippers and sellers who have only owned for a few years or less, let em burn. Find sellers that have lived in their house for a least 5-7 years and have substantial equity , they have room to come down in price. Above all don’t fall in love with a property and be prepared to walk away from the deal if it dosen’t make financial sense”
AMEN.
http://news.yahoo.com/s/prweb/20060907/bs_prweb/prweb434292;_ylt=AkvC1aYBP9zG79bZYqfOulOyBhIF;_ylu=X3oDMTA0cDJlYmhvBHNlYwM-
Way off topic — but the tinfoil hats in here might not be so crazy after all.
Sammy — thanks for an interesting piece. Am I shocked? No. Am I surprised? No.
What I truly love is that blogs are, temporarily, our salvation from these lies and deceipts.
Thank you, Sammy. My husband and I had a heated debate about this the other night, and you just helped my side!
“PRWEB” is not news.
http://www.loosechangeguide.com/LooseChangeGuide.html
Housing Bust links
Of Bubbles Past: A Chronological Listing of News Headlines from the Last Housing Bubble in Southern California
Home Prices Do Fall - A Look At The Collapse Of The 1980s Real Estate Bubble(Northern New Jersey Real Estate Bubble)
Housing bubble correction could be severe
ALL BOOMS BUST!
Housing bubble’s burst could cost 1 million jobs and cause a recession, experts say
Global credit ocean dries up
It’s RIP for the housing boom By Bill Fleckenstein
I Want My Bubble Back!
Straight talk on what the Fed has wrought By Bill Fleckenstein
Bubbles caused by cheap cash menace world economy
Feds say that banks’ futures tied too closely to real estate
The economy’s next time down has begun Bill Fleckenstein
Lowering the Boom? Speculators Gone Mild
As real estate market cools, ‘buys’ return
Mortgage lenders grapple with deflating housing bubble
For-sale signs multiply across U.S.
White House sees housing cooling gradually
Painful ARM twisting
New issue for homeowners: Inflated appraisals
THE PARADOX OF HOUSING
In slumping house market, creative thinking required
As Valley home market cools, emotions heat up
Owners frustrated as work halted on high-rise condos
Region’s home builders hear sobering news
New condos could become apartments as sales cool
Condo Conversion-Conversions
After 5 Years of Growth, Home Prices Drop
First Yearly Home Price Drop in a Decade
Condo Prices See Significant Drop(San Diego)
S.D. mortgage defaults double
Demand for office space dip
An almost silent auction for the BLM(Las Vegas)
Sticker shock kills Phoenix state land sale
Don’t be chicken about the real estate market
Homeowners feeling plan of rising rates
The Return of the Short Sale
House Broke:
Millions of Americans bought into the real estate boom with adjustable mortgages and home equity loans. Now rising interest rates are forcing them into agonizing financial choices.
Bubble Blog:
A popular blogger explains how he predicted the cooling of the real estate market and what the mainstream business press can learn from sites like his.
Bill Fleckenstein is a genius
Y’all want to know what causes at least a part of the “Peak Oil” hooey? It’s NIMBYs like this:
http://tinyurl.com/fg5vo
Peak oil might be “made” to happen by governments, but without government intervention, there would be plentiful oil for us, our children, our childrens’ children and so on. The cost per barrel might rise, for sure, but so does our efficiency in its use. As for “oil,” we are OK.
Chip, as an ex Libertarian and now, more of a conservative (pro-defense), I tend to agree. There are a lot of areas off limits due to environmentalists’ doings the last 30 years. However, I do remember the 1970s oil spills of Santa Barbara. I kind of understand the disgust and anger when someone pollutes the areas of others. I do consider myself an environmentalist, but in the free market sense that the radical libertarian scholars in Cato Institute came up with. Sell pollution rights. I do think that groundwater pollution contributed to the cancer deaths of my parents. I’m not gung ho on capitalism unless we can go all the way and sell the waterways and sell the air. That’s radical, but in my opinion will do far more to cut pollution than any planned economic program. In a pure free market system if we had it in the 1970s, the owner of the beach sand in Santa Barbara would sue the oil companies responsible for the spill onto the sand.
Accidents will happen, but over time, both technology and a history of punitive damages will encourage more safety.