Bits Bucket And Craigslist Finds For October 6, 2006
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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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It appears Vegas is different!
http://www.reviewjournal.com/lvrj_home/2006/Oct-06-Fri-2006/business/10069821.html
“They look at sales down 41.7 percent from September ‘05″
__________________________________________________
I guess so. LOL
“Those looking to buy a home in Las Vegas maybe shouldn’t be holding their breath while they wait for prices to drop by double-digit percentages as predicted by many national real estate experts and reports.”
LOL Who’s holding her breath? Prices will drop, incomes will rise, or I’ll rent. It’s not worth going without oxygen in Las Vegas.
very interesting in the face of the bancruptcy from kara homes yesterday
ratings homebuilder / moodys
http://immobilienblasen.blogspot.com/2006/10/ratings-homebuilder-moodys.html
…it looks like they are going to wait for the evidence then downgrade…but by then its too late…ignore the trend…
That’s the way almost all of the “rating services” work, because they are paid by the “ratees”. That wouldn’t cause a conflict of interest, would it?
Share Repurchases Can’t Save This Stock Market
http://tinyurl.com/fzlub
very good
…particularly some of the players in HBuilding sector.
Basically following the philosophy that a company can’t down size its way into the Fortune 500!
Try telling that to corporate America. Be on the lookout in the next month or two for more bad news. You know its going to happen. They just don’t get that cutting jobs is (IMHO) admitting FAILURE that they could not improve profits any other way.
A BIG Boo Hoo to the CEOs who take this easy out.
“They just don’t get that cutting jobs is (IMHO) admitting FAILURE ”
I used to think that but the world changes and companies, perhaps, need to transition from one market to the next and shed employees.
As an example, if you saw the “What Ever Happened to the Electric Car” movie, I was amazed at how many auto parts a gas powered vehicle requires. Electric cars, on the other hand, require very few. After seeing that movie, I understood that Delphi, which is shedding jobs, might have been doing it because they realize that many folks would be quite happy driving a nearly “maintainence free” car around– you don’t have radiators, water pumps, oil pumps, you name it!
The bigger problem is our ideology which links wealth to jobs. California, I think, is looking at letting employees pay cash to retire early– that way, someone else can have your job and supposedly “make money.”
Jobs aren’t the only way to make a living. Just ask anyone who has his or her own business.
MS. If I break a window someone has to fix it. Jobs are created. GDP grows. Is the economy better off?
For a good read check out Bastiat’s “Candlestick Makers’ Petition
Arizona Slim,
Jobs are the only way to make money! The people who do the jobs make money for themselves and for the owners of the business. The economy is based on people working, providing services and creating things. Flippers are finally learning that in the long run you cannot create wealth by holding onto an unproductive asset.
MS - that would be true in SOME manufacturing jobs as you give a good example. In the services and financial sectors, it is a load of BS. Unless there is some automation or SOMETHING that can justify the layoffs, it is just dumping more on the survivors. Unless business is down or you lost 20% of your customers, unloading employees is a pathetic attempt to boost stock prices. Trust me on that one - I know all about it.
“lectric cars, on the other hand, require very few. After seeing that movie, I understood that Delphi, which is shedding jobs, might have been doing it because they realize that many folks would be quite happy driving a nearly “maintainence free” car around– you don’t have radiators, water pumps, oil pumps, you name it!”
GM lost over $2 billion on the EV1, and lost money on every single lease. There were lots of significant battery problems.
Electric cars will come back again in some form, no doubt, but there’s no question that EV1 was not economically viable.
MS — you make an interesting argument that wasn’t yet addressed:
“The bigger problem is our ideology which links wealth to jobs. California, I think, is looking at letting employees pay cash to retire early– that way, someone else can have your job and supposedly “make money.””
I’m not sniping at you, not at all — please expand on this.
…they can reek havoc on the shorts, however.
That’s “wreak” havoc ^_^. But they sure do reek, too ^_^
thank u
“Share Repurchases Can’t Save This Stock Market”
So far, something is keeping it on a permanently high plateau in the face of signs that a recession is on the way…
Yes, the PPT (Plunge Protection Team) is hard at work. Can’t have a crash before an election, now can we?
You got it.
Housing Slump in the U.S. versus UK, Australia and New Zealand / roubini
http://www.rgemonitor.com/blog/roubini/
i have made a summary with extra links
by the way i don´t agree that the uk etc won´t face a hard landing. a little bit premature. fact is that the us will for sure be the hardest hit
http://immobilienblasen.blogspot.com/2006/10/housing-slump-in-us-versus-uk.html
I don’t understand how he saw the correction and soft landing in UK. Maybe he was talking about UKraine.
yes. this was my feeling too.
UK baffles me- London financial sector yadda yadda
why are the rebounding w a 1/4 % rate cut ?
He makes a convincing arguement for a comparatively harder landing in the US; (1) perhaps the UK benefitted from petrodollars as a result of post 9/11 laws here in US; (2) Australia and New Zeland did benefit from the China induced commodity boom and as a result are generating real savings unlike here in the US where savings is non-existent; as a result, property owners in Aus and NZ may be able to weather the storm better than us here in the US.
Perhaps the projected experiences’ of all the countries mentioned can be summed up by Robert Toll’s spectral description of the US housing market; he said, “it’s not a soft landing; it’s harder than a soft landing.” In other words, the US experience is on the *harder* end of the spectrum, AU and NZ in the *softer* end, and UK somewhere in the middle. In the end, however, they are all going to be affected by the downturn in housing.
I don’t think any of these countries has had a ‘landing’ of their housing market yet. It’s far too early to draw any conclusions.
As to savings rates, I think the info in the article is wrong. I know the Netherlands has positive household ’savings’ because they include the gains in stock and home values; without those the savings rate is firmly in the red. I would be surprised if the situation in the UK is much better. Countries like UK, Netherlands and US (to name a few) are using the same debt-based economic expansion policies lately.
I remember reading an article that Sydney home prices have declined 30%. What is soft about that?
that’s not correct for average home prices, not even in Sydney; I think it was appartments in a certain area. How much is the average home price down for the whole of Oz - I doubt it is more than 5% yoy.
Home prices in certain regions of Amsterdam also declined 20-30% around 2001; people were calling the end of the Dutch housing bubble, it proved to be nothing more than a small bump on the road.
Perhaps most importantly, new supply in the UK is severely restricted by planning laws (you think Ca is tough?). You don’t have the massive inventories by builders that are going to knock the stuffing out of prices in the US.
yes, and I think that applies to most of Europe. Because of that (government interference on all levels) the ship in Europe is turning much slower than in the US, and this allows the bubble to grow much older and bigger before it blows.
Harder than soft. I like that.
The devil in me, on first reaction to this post, proclaimed “Robert Toll is all wet!” But the angel in me replied “He’s wetter than dry.”
I think this article has a lot of errors and biased opinion.
Prices in the UK and New Zealand are still rising; both are within 1% of their all time high. That the housing bubble was ‘pricked’ over there is nonsense. As for Oz I don’t know the details but I think average home prices are not that far down from last year, but some speculative areas have obvious problems. Regarding monetary policy I think the statements in this article are not very accurate either. Rates in the UK have been going up and down a bit lately, and in NZ not much has happened during the last few bubble years. The Oz and NZ economy has been profiting from the hard/soft commodity boom for sure, and this has probably held up the housing market - but can’t say the same for the UK. So, there are many differences that make a comparison problematic.
His statement regarding the US about ‘the mother of all housing bubbles with real home prices rising almost 90% between 1997 and 2006′ is a joke, the price increase in the Netherlands over this time is at least 5x bigger! (up 600-1000% from 1990-2006).
And I’m not so sure that UK, Oz and NZ all have positive household savings rates and mostly (compared to the US) fixed rate mortgages. I thought the UK had loads of explosive loans too, just maybe a bit different kind that the US.
If we are having a soft landing, what is the aircraft that they are comparing the housing market to? Have wheels touched down yet? In my summation, as a plane lands, additional lift is needed to land softly, or additional thrust is needed if it is a VTOL. This can only come from rate cuts. How else do you see the fed engineering a soft landing?
I think with today’s payroll and earnings number , there is little doubt that the next Fed move will be a cut. I’ve believed all along that the strategy is to create a soft landing in RE - keep rates low as long as possible , comnbined with a massive campaign to get people to refi into fixed rate loans- at least those for whom it is possible to do so. I am seeing it already - hearing commercials on the radio etc for fixed rate 30’s now which hadn’t heard in a long time. Many of the specu-tards etc will go belly up , but that’s just a given anyway , no matter what happens. Better to try to save the much larger pool of marginal borrowers from foreclosure, and protect the banks etc and the hedge funds et al holding the crappy carved up paper.
Then , disaster averted , turn to fighting the vastly under-reported inflation threat. Can it be done ? Who knows.
“We’re absolutely positive that Bernanke’s main instinct is to slash interest rates right now. And we’re not surprised. The prospect of being in the hotseat during a crash in the biggest housing bubble in the country‘s history can‘t be very pleasant. No wonder Alan Greenspan bailed out when he did.
But the Fed can’t be seen to be just shrugging off inflation, which is after all, still extremely high in the US compared to the UK. The US is relying on foreigners to buy its debt - if they work out that the country’s top central banker, the man in charge with maintaining the value of their investment, couldn’t care less if the dollar halves in value as long as it keeps house prices afloat, then they’ll start selling that debt.
That would drive up long-term interest rates, which unlike in the UK, are the main driver of mortgage interest rates rather than the rate set by the Fed. So that would put more pressure on the housing market anyway.”
http://www.moneyweek.com/file/19528/can-the-feds-balancing-act-save-the-us-economy-.html
Slashing rates, say to 4% or under, would decimate the dollar and should stop bond purchases by foriegn banks. Thus, the net effect might be rather little change in long term rates. I think that the fed really has limited scope for preventing a housing crash.
“Slashing rates, say to 4% or under, would decimate the dollar and should stop bond purchases by foriegn banks. Thus, the net effect might be rather little change in long term rates.”
Agree, unless they need for foreign banks to buy them, then they will have to offer higher yields(much higher)
The bond market determines the yeild/price at the sales, so long term interest rates are out of the US control. Unless they get more mysterious buyers coming from the Bahamas again.
Can someone explain why Bernanke could not just let rates stay the same for awhile? Based on my experience, it seems that right now rates are not high and not terribly low. What’s wrong with keeping it that way for more than a couple meetings of the Fed?
(I don’t work in finance, so please answer in layman’s terms. Thanks!)
Thanks for that piece - I agree with the theory. My personal feeling is that it cannot be done , but damned if they won’t try anything. And that imo is what they are doing anything and everything - and that includes lying through their teeth as concerns the true inflation numbers. They pretty much have to - as the author notes , it is foreign debt that is the 800 lb gorilla in the room ( at least immediately). But these guys are also in between a rock and a hard place when it comes to the massive dollar holdings they sit upon. I can’t see Asians biting their nose off to spite their face, yet they cannot be stupid enough to believe that their is no inflation threat in the US. And so we all play these little games. The US continues to underreport inflation data, the Asians quietly begin to reduce $ holdings while simultaneously appearing to support the dollar.
“I think with today’s payroll and earnings number , there is little doubt that the next Fed move will be a cut. I’ve believed all along that the strategy is to create a soft landing in RE”
Can you explain to me why the Fed is beholden to the real estate industry? Your point makes sense if the Fed cares about FBs and real estate agents and mortgage brokers more than it does the profit margins for banks and its own power and perseverence.
I don’t think the Fed is beholden to the real estate industry at all SF. I think that they would prefer not to see the RE Market crash. I don’t think they care about individual FB’s , or realtors or mortgage brokers. I think they believe , and rightfully so imo, that a RE crash would be bad for the economy. They will do what they can to soften the blow. Just as they did after the market crash 6 years ago. As for the banks and their profit margins , my guess is that a crash of RE would have adverse effects on them as well, both in the form of bad loans , as well as decreased borrowing. As for the Fed’s own power and perseverence, the only thing that will make that come to an end is when Americans wake up and see the Fed for what it is. And the chances of that happening would be much greater , imo , after nice fat housing caused recession or worse, -so again a RE crash probably isn’t in their best interest from that perspective either. jmo
I agree with that. I don’t know what’s going to happen, but the dow jones is looking really fishy lately.
Remember owners who are upside-down cannot refi no matter what the rates are - and they are exactly the people who will be in the most trouble.
Yogurt : Upside down are also ones who cannot sell either. If they short sell, they’ll be hit with a tax hit. Same with a foreclosure I believe. Their ‘home’ will become their prison.
I wonder how many people will withdraw their “For sale” from the market and just live in the place even though it is now a net negative financially.
Huck — that’s interesting — you and I think pretty much in synch, from what I can tell. Yet, I think the Fed 75% will stay the same and 25% increase a quarter point. Theory time.
This is picky, but correcting might save the verbiage of being picked apart — I should have said, “Huck, you and I generally have thought much in synch…” Then the rest makes better sense.
Soft landing, for this aircraft, carrying 180% of the maximum prescribed weight, is aerodynamically impossible. It only exists in the fantasy world of Hopefuls.
Jas Jain
They could postpone the landing a year or two, as for the Airbus A380.
Ice is forming on the tips of my wings. Unheeded warnings, I thought I thought of everything.
No navigator to find my way home, unladen, empty, and turned to stone.
A soul in tension that’s learning to fly
Condition grounded but determined to try,
Can’t keep my eyes from the circling sky
Tongue-tied and twisted just an earthbound misfit, I……..
Always appreciate a Pink Floyd reference. Good song. What album was it off of?
“Momentary Lapse of Reason”
More like a decade long abandonment of all reason.
I’d have to dust off the bong to recall that album title for you.
“I’d have to dust off the bong to recall that album title for you.”
Dust it off and overnight it to “aztrias” or “Hopeful”….I have a feeling they’re in desperate need of some herbal relief.
No it can’t be true
I could fly if I wanted to
Like a bird in the sky
I believe I can fly
Why I’d fly
Clearly I will go sailing, no more
I think flippers, realtors, and FB’s will be singing the words of another Pink Floyd song soon … if not already, as they recall w/fondness the glory days of the RE boom.
Here’s the lyrics that come to mind:
“The grass was greener
The light was brighter
The taste was sweeter
The nights of wonder
With friends surrounded
The dawn mist glowing
The water flowing
The endless river
Forever and ever”
For all the sheeple:
“What do you get for pretending the danger’s not real.
Meek and obedient you follow the leader
Down well trodden corridors into the valley of steel.
What a surprise!
A look of terminal shock in your eyes.
Now things are really what they seem.
No, this is no bad dream.”
U.S. SEPT. AVERAGE WORKWEEK STEADY TO 33.8 HOURS
U.S. SEPT. AVERAGE HOURLY EARNINGS UP 0.2%
U.S. SEPT. FACTORY JOBS DOWN 19,000; RETAIL DOWN 12,000
U.S. SEPT. CONSTRUCTION JOBS UP 8,000, REAL-ESTATE JOBS FLAT
U.S. SEPT. UNEMPLOYMENT RATE 4.6% VS 4.7% IN AUG.
U.S. AUG. NONFARM PAYROLLS UP REV 188,000 VS 128,000 PREV
U.S. SEPT. NONFARM PAYROLLS UP 51,000 VS 123,000 EXPECTED
Job growth decelerated to its slowest pace since the hurricanes struck the Gulf Coast last year, the Labor Department said Friday. Nonfarm payrolls expanded by 51,000 in September lower than the 123,000 expected by economists surveyed by MarketWatch. But the separate household survey showed more strength. The unemployment rate ticked down to 4.6% in September from 4.7% in the previous month. Economists forecast the unemployment rate to hold steady at 4.7%. In addition, there were 62,000 more jobs created in July and August that previously estimated. Average hourly earnings increased 4cents, or 0.2% to $16.84. Economists had been expecting a 0.3% gain. Earnings are up 4.0% in the past year. The average workweek held steady at 33.8 hours, in line with expectations
when you take the revision seriously the growth has fallen of a cliff.
i question by the way the construction data plus real estate related jobs.
at best some of them are employed but the salary must be way way down
“when you take the revision seriously the growth has fallen of a cliff.”
Not if Sept. non-farm payrolls will be rev up 160,000 vs 51,000!
maybe they have to revise the birth/death model
upwards. just because the economy is so much stronger in 2006 than in 2005…..
here is a summary including the statistic on the birth/death model.
the bls assumes the same creation in construction compared to last september.
here the bls and the other stats on the report
http://immobilienblasen.blogspot.com/2006/10/us-arbeitsmarktbericht.html
no, most RE jobs here are self employed- as they crap out they actually boost the jobs number , taking w2 type jobs, mostly crappy ones
Like Walmart greeters, burger flippers, and pizza delivery.
8,000 gain in construction jobs is essentially flat. However, I’ve noticed a phenomenon here in Jacksonville Beach of accelerating construction activity on condos nearing completion. There are a lot of projects everywhere under construction, and workers get hired as needed for drywall, window installation, electrical, etc. I also conclude that developers are hustling to finish and/or subs are hustling to finish up and get paid because both are concerned about the economic future. If I were a subcontractor on a large project being run by an overextended builder or developer I would be hustling as fast as possible to get done and keep my position in the pack for getting paid ASAP.
Very true. Also, many governments (including the Feds) are looking at fiscal year ends on September 30. New money flows beginning October 1. This is why a large number of contracts, road improvements, etc. seem to stall right around back to school time and pick up again in October. The October employment numbers should show a slight uptick, but it really only represents rehiring from projects which have been re-funded.
Yes!!!!!!!
Confirmation that the majority of the nation’s economists are still behind the curve on the impact of the bursting of the housing bubble (at least publicly).
I noted another comparison to when Katrina hit N.O. and half a million people were running for their lives in the report from MarketWatch:
http://tinyurl.com/edxs8
“The weakness in September employment was concentrated in the manufacturing and retail sectors. This was offset by gains in health care and finance.”
Notice that weakness in producing sectors is offset by gains in sectors that produce nothing.
good point
healthcare is mostly gov now= trnasfer payments= less than nothing
CU.S. SEPT. CONSTRUCTION JOBS UP 8,000, REAL-ESTATE JOBS FLAT
Construction jobs up? Commercial? Federal?
Hmm, this is an interesting way to market overpriced POS “luxury” condos that aren’t selling… confuse it with the DC party scene, and get people to sign up while they’re drunk!
http://www.clubcondodc.com/
That’s too funny. Are today’s young people that naive? Well, given how much attention they pay to Paris Hilton, maybe so. But how well will a sales contract hold up if you sign it while intoxicated?
Do you suppose that after the condo party you wake up the next morning with a scary-looking realtor in bed next to you?
OK my previous post seems to have vanished. sorry if this is a duplicate.
—
Hmm, this is an interesting way to market overpriced POS “luxury” condos that aren’t selling - mix things up with the DC party scene, and get people to sign up while they’re drunk!
http://www.clubcondodc.com/
“sorry if this is a duplicate.”
Hmm, good memory, you only changed one word.
Fark, my post doesn’t seem to be working. Too tired to make the joke anymore.
http://www.clubcondodc.com/
But this cracked me up. Desperation in the “luxury” condo market?
LOL, no kidding! The old “throwing away money on rent” chestnut just written better.
Cool building though.
Now why do these guys have to use Flash video on their site? Drives me nuts, when all I want is info, not fluff and movies.
Oh but wait, fluff and movies ARE what they are pushing. Maybe they figure those of who don’t install that on our stripped-down browsers are too careful to fall into their sales trap anyway. (That said, I do keep a fully-laden Internet Exploder 6.0.x at hand, just in case I really need to see this stuff. I just don’t use it too often.)
“Do you really need a reason to stop putting money in your landlord’s pocket for that crappy rental unit?”
Uh, OK, so I can put twice as much in *the bank’s* pocket and some more yet in the condo board’s pocket for what will soon be nothing better than a crappy rental unit if these things don’t sell?
that’s just it… they are marketing this exactly the same way that DC party promoters market nightclubs… it’s hilarious to me. I mean, how the hell does “invitation only” have any meaning when you can sign up for a damn invitation right there on the site?
Get an amazing, seriously cool, hot..so hot, powerful POS condo and a
grown-up gift bag?
The ultimate shopping experience
Do you think it’s at Club Lima? That’s about 2 blocks from the White House. They call themselves Club Lima and yet don’t server Pisco Sours.
Lennar homes had this ad in Craigslist for the Orlando Area.
http://orlando.craigslist.org/rfs/216388861.html
Amazing. The sooner they cut prices and get the crash over with, the better for everyone.
Mortgage brokers with appraisal review problems — lenders getting more conservative?
http://forum.brokeroutpost.com/loans/forum/2/63604.htm
Great info!! One guy actually used his real name, so I will re-post his:
I love this thread!I am one of many hard money lenders on the post! It gets even better when you get to the larger loan amounts. The investors on the secondary market are getting very tight. They are now actually doing a QC on every file sold in a securitization. On loan amounts of 1mm+ they require 3-4 BPO’s! You guys are spoiled by the refi boom! You now must request an appraisal of actual value, not a request for future value! Keep your fingers crossed that the market will emulate the early 90’s…. short sales, FHA streamlines, and 125% 2nd’s!
Look on the bright side, as it gets tougher to qualify a loan the inexperienced LO’s will head back to the used car lots and strip clubs!
Tom Sharer | Account Executive
FlexPoint Funding Corporation
30 Executive Park
Suite 100
Irvine | CA | 92614
(949)-399-6772 Telephone | (949)-399-6773 Facsimile
Im happy to see the industry finally taking the appraisal serious . Really, the property is all you have to secure the loan, so it better be right . To much potential for fraud in a declining market also . According to the above thread alot of people getting fired also .
thanks.
I’m also seeing a lot of underwriters, AE’s and in one case the Vice President of some of my usual lenders quitting, getting fired, layed off, etc. Could be a connection here.
and
To answer the actual question that the original poster asked, yes, lenders are tightening up across the board. They are not only tightening up on appraisals. I am seeing lenders eliminate some of the riskier products that they have offered in the past. I think it is just indicative of where the market is and where lenders think it may be going.
“yes, lenders are tightening up across the board. ”
About damn time! That is one of the nails in the coffin that we have all been expecting, but has been FAR too long in arriving!
Jon
Here was another beauty:
Here’s an example: I am working on an assignment where each sale in the last 60 days has been lower than the previous one. The sales start at $290,000 and end at $218,000 (for model or near model matches). Sales from 3-6 months ago were at the upper end of that range. In addition, there are 20 listings scattered between $225,000 and $330,000. In order to present an accurate picture of the market I will have to include a variety of these sales and listings - the most recent are the most relevant.
The days of “pull three comps and throw them on a grid” are over. Appraisers who best describe current market conditions and use the most proximate, recent and similar sales are the ones who have the least trouble with underwriting.
Don’t know where he is, but from 290K->218K in 60 days… These are sales on nearly identical models. Nice data in there.
I spit my coffee out on this one!!! Thanks for posting this!
I agree that this is a very important piece of information. It got me thinking on how they count mortagage applications. For September, refi’s were way up, but new applications for purchase were up over 4%, if I remember correctly. Perhaps applications that are turned down are, nevertheless, counted as applications. In that case, one buyer might make several applications before finally getting a loan or getting discouraged. May next month, new loan applications will be up 50%, even though approved loans are down. If this happens, it will provide a good shorting opportunity after the lenders bounce on the applications data.
So, am I correct in assuming that “new applications” mean just that and would be counted even if they are turned down?
“None of them had a requirement that the appraiser reach my value. They all had estimated values based on information I got fromt he borrower but the value they gave me on each and every one of them was different than what I requested anyway (some lower, some higher). If I was coercing a stretch out fo the appraiser I would understand them getting cut but that isn’t the case.
I’m also seeing a lot of underwriters, AE’s and in one case the Vice President of some of my usual lenders quitting, getting fired, layed off, etc. Could be a connection here.”
Well, uh, gee George, ya think?!?
“If you want your deals to go smoothly, you really do need to call around looking for the appraisers that do NOT do comp checks. Typically, those are the appraisers who’s work will make it through underwriting with few to no problems. If you can’t do this, be prepared for many, many more cut and unacceptable appraisals once they are reviewed. The appraisal games are almost over.”
For the guy wondering about Vega holdings (on the right)
http://stockpickr.com/portfolio.php?id=1511
So that’s the plan. Hype the 30 yr fixed, encourage those who can to get out of their toxic loans to do so. At the same time, lower the Fed rate to make the 30 yr rate attractive. Neat! At the same time, cut oil prices to reduce consumers’ gasoline and utility costs. These efforts, in concert, will certainly reduce the number of foreclosures and make at least a marginal difference. What else can the govt. do? How about doubling the deduction for interest and R.E. taxes for a few years. Say a schedule like 100% extra deduction in 2006 and 2007, then 80%, 60%, 40%, 20% phase-out schedule, like they did for credit-card and auto loan interest a decade ago. These are all possibilities. Other possibilities?
the point is, we have a FED chairman who thinks everything in the economy can be fixed by more government manipulation and invertention. I think the market will prove him wrong, somehow. It’s just very difficult to predict how big the damage will be and who is going to pay for it (another war in the cards, real soon?).
Where did the canard come from that war is “good” for the economy ? Why would death and destruction on a large scale improve anything? all the government would do is print more money which is all they ever do anyway. Think about it: would a cholera epidemic be good for the economy ? Just think of all the profits that could be made on pine boxes!
I don’t think war is good, but most of US policy makers clearly have a radically different opinion. Part of the problem is all the flawed concepts in current keynesian economics (e.g. counting replacement/repairs of damaged goods as ‘economic growth’ and considering that a boon for society). I just don’t understand that they had to wage their latest war in the Middle-East instead of in the US, they could have had far more ‘economic growth’ by bombing the US back to the stoneage ;-(
“(e.g. counting replacement/repairs of damaged goods as ‘economic growth’ and considering that a boon for society)”
Go out and break a shop window — it will stimulate economic growth. Or if you really want stimulation, then pray for war or a hurricane…
War is good for the economy as long as it isn’t your troops fighting, the fighting isn’t in your country and you’re the one selling weapons to both sides.
“Go out and break a shop window — it will stimulate economic growth. Or if you really want stimulation, then pray for war or a hurricane…”
Only if you pretend opportunity costs don’t exist. There’s a reason this is called the “broken window fallacy.”
Hammer gold…
I shake my head in disgust.
there is plenty of ammunition with the central banks and JP Morgan (naked gold shorts etc.) to keep gold down until the elections, so better get used to it
Don’t shake your head, nod it. Just say “yes” to buying more gold at a subsidized price! Where else can you get such a bargain?
It (the war on gold) really doesn’t bother me. I am long-term buy/hold on all dips, silver too, and am quite confident and comfortable in doing so. It’s funny, I can second-guess with the best of them, but for myself, buying Au is a slam-dunk good decision regardless of the fiat exchange rate.
The ECB ONLY SOLD 2.3 tonnes of gold in the final week under the terms of the Washington Agreement for the calendar year Sep 26/05 thru Sep 26/06. This only brought the total up to 400 tonnes.
This is a big deal because numerous banks such as UBS and Barclays have reported HUGE central bank selling around the Fix for some time now. These banks all suggested it was massive selling of gold by the European banks to fill their quotas of that agreement. For many weeks now it was my contention the selling was more likely The Gold Cartel. This latest report reveals that GATA IS CORRECT. There is no other explanation for this enormous selling to knock gold down … ahead of the US elections.
The motive is the same as always. The ferociousness of the selling by the cabal is remarkable. As mentioned for months, Paulson doesn’t care how it looks, in his typical, arrogant Goldman Sachs style. He wants interest rates down and the stock market up for the elections.” - From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com
From Ben’s Money & Metal yesterday:
“Elsewhere in the bullion market, Barclays Capital is accusing the Bank of France of selling 100 tons of its gold holdings in addition to the roughly 393 tons already reported by the ECB Wednesday, according to a report by London’s Telegraph. The sales were allegedly made via the futures market to disguise the effect, the story says.”
The following banter from yesterday’s lemetropole.
QUOTE Barclays Capital said Europe’s banks had sold an extra 100 tonnes from reserves in a rush to meet a quota deadline on September 26, but had done so by selling through forward contracts that disguised the effect- END
Disguise the effect! Are you kidding me? How about being able to use leverage of futures to pretend that they have 100 tonnes to sell (while planting news stories that they were going to meet their quota) to create a huge down draft that allowed their bullion bank cronies to cover a bunch of toxic shorts! That would be closer to the truth.
The article continues with a further quote from Barclays:
QUOTE “We have been able to infer this from trading patterns. It has had a major impact on the markets,” said Costanza Jacazio, the bank’s gold expert. Barclays is one of the world’s three top bullion traders. “We suspect that the Banque de France has been involved,” she said.
END
Now what do they know that they are not telling? On what basis do they suspect the Banque de France to be involved? I would suspect that that is a red herring. The BOE is a more likely suspect!
Then there is the best of all from Barclays:
QUOTE Barclays said the group had in reality met the 500 tonne limit, with others snapping up the unused quota of the Bundesbank — which has balked at selling in order to assert its independence against Berlin’s politicians.- END
Now isn’t that amazing. We can have it both ways. The WAG2 CB’s didn’t meet their quota by 117 tonnes but Barclays said that they did meet it! The balance was met by bombing the market with paper gold, but for these guys paper gold and real gold are the same thing, just as gold in the vault and gold receivables are the same line item!
Cheers
Adrian
Whichever way you cut it, Barclays is full o’ crud, murky crud. This was Gold Cartel selling, or induced, and these Barclays mental midgets are scrambling for cover.
Article on crude oil, gas, gold & silver intervention.
http://news.goldseek.com/GoldSeek/1160150129.php
Somebody has to pay the price of saving US retirement wealth by keeping the headline stock market indexes up on the permanently high plateau…
the Fed doesn’t control the tax code/law — that’s something that has to get pushed thru Congress.
they could allow people who lose $ on the sale of primary residence to deduct it. Currently you get no deduction … alot of people are going to feel the pain of this in the coming years.
also they could allow people to deduct interest based on > $1M in RE properties, or interest deducted on > $100K HELOC loan.
I sure as hell hope they don’t do these as it amounts to a bail-out program. It could happen, but doubtful. They didn’t take away the $3K cap loss/year deduction after the stock mkt bubble burst.
At the same time, lower the Fed rate to make the 30 yr rate attractive
Lowering the Fed rate will reduce confidence in the $, scare away foreign bond buyers and send the 30 year rate up, not down.
Next bubble: Coffee makers.
When the mortgage rate resets, trips to starbucks stop.
In my office, we finally realized, on a daily basis, 5 people stop at dunkin donuts for coffee every morning for a total of $12 going to DD.
We could brew twice as much coffee in the office for app. $0.89. ($1.60 if we want to get real fancy)
Has anyone done the calculations on brewing your own beer….?
So you wanna brew your own beer?
http://www.soyouwanna.com/SITE/syws/makebeer/makebeer.html
Thanks, belch, John.
JA, I’ve forward a request to a qualified scientist for calculations per your request. Since he stays up late consuming a prescribed amount of said beer each night, and consequently rises late, a response should be forthcoming later this afternoon.
I sense a Nobel prize in the making.
OK, here’s the facts:
If you take a look at a place like
http://www.brewsource.com/
You can see that kits for making good beer cost about $25 for the normal stuff. This is the most expensive way to do home brew since you are not starting from grains but using malt extract instead. The standard for kits is to end up with 5 gallons of beer. That’s a little over 2 cases of beer (12 oz bottles) so let’s say 9 sixers. So that comes in at about $2.75 a six pack. About half the price of comparable store-bought beer. If you start from grains and do the mashing yourself you can probably make beer for around half that much.
It’s all great beer when you do it right but it is labor intensive. For each 5 gallon batch I made (by the time I stopped brewing I had made about 30 batches!) I figure I spent about 8 hours in cooking, cleaning and bottling.
People may still go to starbucks and get coffee beans to grind their own coffee. I do that sometimes. My friend’s neighbor brews his own beer. And it’s some of the best beer I had. Probably a great idea. I don’t know if it’s cheaper than $7.99 for 6 bottles of hefeinweizen though.
no - but as you say, the home brew is better…
On the topic of bubbles, here are three beers you gotta try at least once:
1. Arrogant Bastard ale by Stone Brewery near San Diego (www.arrogantbastard.com)
2. Lagunitas “Censored” Ale by Lagunitas Brewery in Marin; their Czech pilsner is also pretty good.
3. Anchor Steam.
I’ve never tasted anything better than the microbrews from (mostly northern) California… there are a couple other local microbrews I could mention but I haven’t seen them for awhile so not sure they are still making them.
Of course if you want to send me a bottle of your home brew I’ll be happy to compare! European can keep their crappy fizzy beer.
I did not like Anchor Steam when I tried it last time I was out in SanFran. Adnam’s though in London… that made me happy. Wish I could get it somewhere in NJ.
Yeah, who wants any of that Guinness, Erdinger, Leffe, Hoegaarden, or Newcastle Brown crap
hahahaha… anchor steam is best ice cold out of the tap, but I’ll take it from a bottle anyday. Okay, if you love beer you won’t go wrong with Arrogant Bastard or censored.
Brew your own beer, buy your coffee beans at Trader Joe’s (big cans of french roast for way cheaper than StarF#cks), and sell your own home. You can save lots of $$$…
Wait six months on buying a house and you can save enough to drink yourself silly with your favorite microbrew.
Speaking of Coffee, Vivace, considered one of the best espresso joints in North America, sells beans online. I am hopelessly hooked on their Dolce. The funny thing is that compared even to bulk sellers like Costco, pound-for-pound their prices are about the same. Not that I’d consider buying beans in bulk anyway - they can go stale in a matter of days.
Has anyone done the calculations on brewing your own beer….?
OT, but yep, been there, done that. If your labor is worth $2.50/hour, then it pans out. If you like a beer that’s really hard to get and don’t care about the time you spend making something similar, then it pans out. If you care not about quality but want cheap alcohol based on the fastest method and cheapest ingredients, then it (almost) pans out. Otherwise, it’s just a good hobby that pays for itself by keeping you off the golf courses. Until you start deciding you need a bigger house to set up all your brew equipment. Then the cost per bottle works out to $65.57 plus whatever interest you’re paying on your option ARM.
“In my office, we finally realized, on a daily basis, 5 people stop at dunkin donuts for coffee every morning for a total of $12 going to DD. We could brew twice as much coffee in the office for app. $0.89. ”
If you do this 300 days a year, thats $1200 in savings.
My batches usually end up coming out at a little over a dollar worth of ingredients per 24 oz bottle. Pretty good money wise, but when you factor in the extreme amount of labor involved plus the initial equipment investment plus the never ending quest for better equipment it’s a hobby done for love not money. Of course the real comparison would be picking up a six pack at the store or heading out to the pub for a pint, and those economics are pretty self evident.
I used to brew my own beer, and it came out to be about the same price as the upper-end supermarket brands.
The only thing is that I was never able to attain the same quality as the commercial brewers. They have refrigerated rooms for lagering, super-clean facilities to prevent contamination, and filters to get rid of the sediment, which makes you fart (except for me, because I never fart).
some Dutch bubble news again:
the Dutch housing market is looking more and more like that in the US. There are now reports that most of the new (and relatively expensive!) housing that was build over the last 10 years is of such bad quality that it is already falling apart (normally a Dutch home should last at least 50 years or so). Politicians (it’s election time) have already responded by suggesting a huge fund, partly paid for by the government, to pay for all the necessary repairs. Obviously, we can’t have the homeowners pay for that themselves, after their stellar home value performance. This fund would also be great for boosting jobs in the home building industry! After building all those lousy and expensive homes with 50% taxpayer money, they are now going to fix them up with even more taxpayer money. Maybe a good suggestion for the US, where they have similar quality problems?
Maybe your Christian Democrats-led gouvernment is mixing up Christianity with Socialism.
I’m curious to see what the next Socialist-led gouvernment will come up with.
I don’t think a socialist-led government will be any different, they both do everything they can to prop up the housing bubble. The CD’s do it for all their developer/builder buddies, and the Socialists for their friends in ex-govt. housing corporations that own most of the country’s rental stock, and of course for all the ‘labour’ voters who want to live beyond their means.
Credit regulations independent of the free market is moving in the direction of socialism. I doubt any socialist would object.
Totally OT and self-absorbed, but what the heck…
Who else here knows, or knows someone who is aware of how much of their mortgage is paid off? And they and take note or even celebrates as payment milestones are reached?
As of this week, we’ve passed the 1/3rd point in paying off the house we purchased 41 months ago. I’m picking up something special for dinner tonight to mark the occasion. Maybe it’s silly, but I like to note the progress my wife and I are making towards our goals, and to set an example to our kids.
It’ll probably take 9 more years to pay this house off at the current rate. With just one wage earner and 2 kids it’s never easy, especially after switching jobs last year (more sanity, less pay), but we’ve managed to stay non-mortgage debt free for several years now. Once it’s paid off, there is only the kids college to worry about, but we have a decent amount already invested for that.
After they grow up and leave*, we expect to move to a house less than half the size of this one. I don’t really care so much what the price is the day we sell it as I think of it in terms of equivalent buying power. About 1/2 of the proceeds shoud be able to purchase a house about 1/2 the size, and the other half should be enough if invested to generate about enough to cover the new place’s expenses. I would hope though, that when that happens, we are in a time where there is a sane connection between wages and home prices. (Tax implicaions, however I do worry about)
The bubble was good for simple people like me; We bought with an eye on the total costs over the life of the loan and didn’t believe that historically low rates would stick around forever. We’re probably accidently lucky (due to location) and unlikely to be even close to upside down during the crash we all are bracing for.
Debt = selling your future. Time & freedom = precious and far to scarce.
I really like it when I see people paying off their debt . I wish more people were like you .
“With just one wage earner and 2 kids it’s never easy…”
I resemble this scenario. Nothing wrong with a traditional family setting, which I feel offers a better foundation for the children’s future. Well, mom is working part time now while the kids are in school; needed some social life outside the home. Hat off to you, sir!
I used to have our amortization chart up on the fridge. Every month without fail, cross through another line… and when we could make an extra payment to principal, cross through a lot of lines at once!
(No longer own house, so no more amortization chart.)
I wake up every day wondering how I can get out from my mortgage faster…
I don’t want to pay off my mortgage any faster than I already am doing. I have a 5% 15 year fixed loan with about 12 1/2 years left. If they make the “dollar” completely worthless, they will also make my mortgage completely worthless. If I paid it off, my “dollar” liquidity would be at risk for hyperinflation.
You might also do things with that money: A fast glance at Schwab’s home page: 6 month CD yields 5.25%
I saved and bought cash. All be it a smaller older house. ANd yes we are in need of more space, but the only bills we worry about are utilities taxes and home owners insurance. The latter being very low as to the size and age of the house. Neighbourhood is excellent however.
Our mortgage is on-line and the unpaid balance is right there. The internets are a great way to track money. Better than Lotus 1-2-3 on a DOS PC.
I’d open a 529 for each kid and channel money into that rather than pay down the home loan early. You’d be able to deduct 100% of the contribution. The home loan is probably at a much better rate than any student loan and a line of credit on your home to help pay for college would cost ~7%+ and it’s leveraged by your home.
I remember when a ordinary savings account earned 5.25% so I’m not as kean about reducing my a 30 year 5.6% loan before my expected retirement. Our 6 month cash reserve is very liquid and now earning around 4%.
I paid off my 15-year mortgage in 30 months, back in the late ’80s. I’d paid cash for a nice piece of land and then had a small rancher built. Sold the house four years ago, a few years after I retired.
I’d always considered home ownership a sure thing financially until I started reading this blog and realized how lucky I was to sell in an appreciating market rather than a depreciating market.
I did the same with my car (bought it when I was in college, no way at the time for me to pay cash). Did the same with my educational loans. If I don’t end up buying a house with cash, I’ll do the same for my mortgage. Through my limited experience, I learned to avoid debt as much as I can and to plan and track my finances to the penny, including investments and savings. SoCalMtgGuy convinced me I wasn’t insane for thinking this way
Here is a letter to the editor in this week’s Arlington Sun Gazette (northern Virginia):
http://www.sungazette.net/articles/2006/10/05/arlington/opinion/acmt936c.txt
Editor: In your Sept. 21 issue, you had a number of articles full of happy talk from real estate agents on the theme “prices will stabilize” and “come back, this is a good time to buy.”
These are the people in the business, so maybe they know something. On the other hand, they are also the folks who make six percent when they sell a house, so maybe they like people to think it’s smart to buy so the transactions keep on rolling.
I am sitting in my house which I bought 20 years ago, and expect to live here until I die, so I have no interest in whether the market is active or not.
Why do people buy houses? Four factors, I think: to have a place to live; because it is more fun to live in a place you own than in a rental; because it is a place to store your money; and because you hope to make money.
And all of the factors have been positive for the last few years. A $600,000 house with a mortgage [of] $520,000 at 6 percent gains you $60,000 a year in appreciation, while you spend $32,000 on the mortgage, $6,000 on taxes. You are way ahead.
Do the same math with house prices going down 2 percent a year: the house loses you $12,000, you spend $40,000 on mortgage, taxes, improvements and lost interest income - your total housing cost for the year is $52,000. You’re not feeling so smart. You are thousands of dollars behind. Even if prices stay absolutely level, you are a loser compared to renting.
If you want to sell, you have to pay 6 percent to make the transaction go, that’s $36,000 you need to spread over the years you own the place.
What I am saying here is, unless prices are going up, people are better off not buying. There’s no obvious reason it won’t stay that way for years; it did the last time we had a big real estate run-up, and then prices plateaued for years.
Dave Schutz
Arlington
I posted yesterday that there might be a surprise looming in the jobs report for September. While overall jobs creation was weaker than expected (just 51,000), the unemployment rate dropped to 4.6% from 4.7%, August’s number was revised up big, and wage pressures (up 4% YOY) remain at a five year high. In other words, I guess now we know WHY Fed heads have been saying this week, essentially, that the bond market had things WRONG about how imminent a rate cut is.
I’m not exactly sure how all this will settle out longer-term, but I will point out that bonds are getting whacked. Long Bond futures swung from a 15/32 gain in price right after the report came out to a 19/32 loss. Rates are up across the board.
http://interestrateroundup.blogspot.com/
well, looking at the 10Y Treasury, rates are clearly still within the downtrend that started a few months ago. No essential change for now.
Oh I agree. Weekly charts don’t show a convincing turnaround yet, and we’re still in a daily short-term uptrend, or at least, that’s how I read them. BUT I would just point out that lots and lots (did I say LOTS?) of both hot money and real money is long bonds right now. ANY surprise could really hurt these guys (long bond futures now off 26 ticks … a swing from up 15 ticks in just a matter of hours … or almost a full point and a half). In bonds, that’s a big move on a daily basis.
I should make clear the “short-term uptrend” comment refers to Treasury price, not yield.
Maybe we will get lucky and another hedge fund will blowup.
How many hedge fund blowups would it take for levee failure, given the reinforcements that were probably put in place behind-the-scenes after LTCM?
I wouldn’t put much faith in the financial levee holding since the same folks designed and built the N.O. levee and we know how that one failed when finally put to the test.
Just wait till the day when the Atchafalaya Old River structure finally gives way and the Mississippi River diverts its flow by 100 miles to the west. I think this is a better metaphor for the hedge fund risk than Katrina levee failures.
http://www.newyorker.com/archive/content/?050912fr_archive01
Thanks for the reminder. I diligently read about the Atchafalaya about six months ago however the ability to conjure it up as a metaphor eluded me.
John McPhee’s book, “The Control of Nature”, is a beautifully written account of the US Corps of Engineers increasingly failing attempts to keep the Atchafalaya from changing course.
Here in northern Virginia, a builder is going to tear down a brand new condo building and rebuild it due to unsafe construction. Is this an example of the rushed, poor quality construction during the busy housing boom? Here is the article:
http://sungazette.net/articles/2006/10/05/arlington/news/nws851b.txt
New Condo Building to Be Torn Down to Foundation
A new 22-unit condominium project on Lee Highway will be torn down to its foundations and rebuilt, the developer says.
The Ed Peete Co. has decided to take the rare step to correct design issues in the Bromptons at Cherrydale, an upscale project located between North Oakland and North Pollard streets.
Based on a review by consultants, the developer “believes it is best to dismantle the existing work to the foundation and re-erect the building with new reinforcements and recommended modifications,” said Megan Winsten, the project manager, in a letter to Cherrydale residents.
“While it would have been possible to make the structural modifications to the building as it stands now, dismantling and re-erecting the building will result in an earlier completion date,” Winsten wrote.
The developer will first have to get plans to dismantle the building approved by the county government. Plans for reconstructing the building will be submitted to the county government by the end of the year, and reconstruction will take approximately a year, Winsten wrote.
According to the project’s Web site, most of the 22 as-yet-unoccupied condominiums are already sold. Two remain: a 1,555-square-foot unit priced at $599,900 and a 1,763-square-foot unit priced at $649,900.
[I gotta think this is going to provide those buyers with much-wanted chance to walk away from their contracts now that home prices in NoVA are falling rapidly.]
I guess they figured it was cheaper to rebuild than pay to defend an onslaught of lawsuits.
Yes, since the county is involved it’s hard to see how they would approve all this without allowing pre-construction buyers to be compensated with deposit + interest + (even perhaps a stipend). Which makes me then think - is this thing really going to get rebuilt? I doubt it.
Too Many Chips on Odd?
http://www.xanga.com/home.aspx?user=russwinter&nextdate=10%2f6%2f2006+23%3a59%3a59.999
“The larger issue is that all markets are vastly overtraded, crowded, and geared, which in turn leads to very overpriced securities, risk adjusted.. Viewed objectively this set-up is nothing more than a massive Rube Goldberg machine (RG).”
This brings to mind the velocity theory of money; something like
PT = MV (Price*Transactions = Money*Velocity)? (Weinerdog, correct me if I am wrong — I am not a monetary economist).
Anyway, gearing (leverage) drove the price of stocks through the roof in 1929, as I recall. Leverage means that each dollar of money in circulation can get traded more frequently, increasing the V in the above equation which induces some combination of increase in P and T (houses and stocks trade more frequently at ever-higher prices).
Is it different this time?
I guess the usual lettering is
MV = PQ, where Q = quantity of items purchased per unit time (same as my T=transactions).
Russ –
BTW, your graph is interesting, but I need to caution you about comparing time series across differing time scales (e.g., overlaying one series for a period of a few months against another for a period of a few years). To see the pitfall, check out these two linked graphs:
http://tinyurl.com/ouu47
http://tinyurl.com/f5boq
Using different time scales can manipulate the appearance of the data to a considerable degree.
“The Bromptons” - what kinda name is that? Sounds like something out of P.G. Wodehouse. I live in Arlington, and Cherrydale still has a bit of residual charm from the old days when it was essentially a small town in the middle of mostly uninhabited Arlington County…though that was a LONG time ago. I’m guessing that “The Bromptons” don’t add much charm.
Conundrumish correlation really svcks. It seems like there are so many days when all these price changes are pointing in the same direction of across disparate asset classes. How is a poor 401(K) investor supposed to diversify when every asset class moves in lockstep? Time to go reread Tobias’s “The Only Investment Guide You’ll Ever Need.” I remember fondly that he recommends including a stash of canned tuna to keep under your bed as part of your diversification plan.
http://www.marketwatch.com/tools/marketsummary/default.asp
Realty Times is singing a different tune:
http://realtytimes.com/rtmcrcond/California~San_Diego_County~daveharlan
“Here are some revealing statistics. San Diego County had 20832 homes on the market this morning but only 2043 homes sold in the last 30 days. This means about 9 out of 10 homes didn’t sell. Wow! Where are all the buyers? How does this affect the price of your home? Is now a good time to buy? I can help answer these questions and more.”
http://realtytimes.com/rtcpages/20061006_flippingreality.htm
“In today’s market where double digit depreciation is, to some degree, about to replace double-digit appreciation, consumers should consider additional sources of real estate investment reality.”
Since this is the “Bits Bucket”, I’ll take this opportunity to wish y’all a Happy Sukkot! סוכות
At least, for a week, you can live in your Sukkah! As far as I know, the cost of living in a Sukkah hasn’t gone up much this year, apart from Etrog costs.
(This is what a Succah looks like, in case you’re not familiar with one
http://en.wikipedia.org/wiki/Image:Jerusalemsukkas.jpg
or stores that sell them: http://www.sukkah.com/
It’s a “booth” that Jews build this time of year
Happy Sukkot!
Where did they get all the wood to build those things in the desert? I have been to Israel and I didn’t see too many trees!
Can a tent from Academy be used as a Sukkah?
That thing is $600,000 starting price in SoCal
Many apologies for my lapse into the Hopeful persona yesterday. I am back to normal again, as my posts this morning demonstrate
Ha! Ha! I recognized you after the third post. Didn’t recognize you at first with the new haircut and suit. I don’t know about the haircut but the suit looked okay!
GS,
Can’t believe it was *you* trolling around Ben’s site. Didn’t we have a “Hopeful” poster here before?
I like the “real” you better.
11:45Bush calls Sept. jobs report ‘good news’
http://www.marketwatch.com/news/story/story.aspx?guid=%7B6EF9AEFC-36B3-404F-BDE3-F992F432273F%7D
How long can the Google “dog-and-pony show” business model keep their bloated share price up in the air? Someone should come up with a quantity theory of BS along the lines of the quantity theory of money I alluded to above…
“Google in talks to acquire YouTube for $1.6 bln: WSJ
By Katherine Hunt
Last Update: 11:44 AM ET Oct 6, 2006
SAN FRANCISCO (MarketWatch) — Google Inc. (GOOG :Last: 413.76+1.95+0.47%
11:38am 10/06/2006 ) is in talks to acquire video-sharing Web site YouTube Inc. for about $1.6 billion, according to a media report on Friday. The discussions are still at a “sensitive stage”, the Wall Street Journal reported on its Web site, citing a person familiar with the matter. The existence of the talks was reported earlier today on the TechCrunch blog, the Journal reported.”
Oh, I wouldn’t bet against Google here. I don’t really like the market, but if somebody said pick one large stock to go up 20% between now and Christmas, I’d choose GOOG.
Google’s very safe until the anti-trust ruling against MS expires.
I will not debate PE but they have some underlying strengths.
It’s easy to switch search engines but the company has the most extensive database on individual consumer habits and they have a lot (thousands) of very smart machine learning and mathematical researchers developing methods to connect customers to advertisers.
They also have a unique computer architecture with very low latency and costs becuase they are leveraging moore’s law better than anyone else.
My guess is Google wants to advertise to Youtube viewers. Mark Cuban makes a good case against youtube but google has the technology and business infrastructure to offer highly focused advertisements to youtube viewers.
GS,
Don’t bet against Google. I went short and long on them in 2005, and panicked both ways (largely because I don’t study the sector, like I do housing, and didn’t know sh@t about what I was doing). Anyway, Google kicked my tail upside-down and sideways. Be careful!
October 06, 2006
The US Job Market — FAT & ULGY!
If one looks at the job-growth trend it is in areas of sickness-care, “education,” financial services, fast foods, bars, adult entertainment, sports services, etc., etc.
So much of it is with borrowed money. At some point the consumption based on borrowed money would have to end. AT THAT POINT THE US COULD LOSE 10-15 MILLION JOBS IN A SPAN OF 1-2 YEARS. That is how depressions happen. Bankers’ Mischief leads to over-indebtedness and the stage gets set for a depression. America’s bankers not only have not learned how to avoid major depressions, they keep on making the depressions worse and worse. Yes, it takes almost a lifetime for a major depression to reappear. WE ARE VERY CLOSE TO THAT POINT IN TIME.
Soft landing?
Bernanke only learned how to take off; he doesn’t know how to land anyway. Be prepared for a crash landing.
Jas
Bill in Carolina said: “So that’s the plan. Hype the 30 yr fixed, encourage those who can to get out of their toxic loans to do so. At the same time, lower the Fed rate to make the 30 yr rate attractive”.
Strongly agree. Its all over the radio about refing into fixed rate loans. These refi junkies will go for it again, but this time there is no more money in the house ATM… at least the homedebtor wont loose their home as quickly as with a toxic loan product.
The banks win again.
the banks win … and the War on Savers continues.
And in so doing the saver is again punished. The debtor, on the other hand, is rewarded.
You get the behavior that is rewarded. The question always is, who is doing the rewarding, and what is the reward of the rewarders?
Local radio stations starting to air ads for foreclosed properties. It must be aimed at dimwits as it says people who’s last names started with A-M can call today. Everyone else can call after 9 am tomorrow. I’d love to see feedback on who jumps at that one. And who sits and waits for their turn.
http://www.foreclosureforum.com/mb/messages/19062.html
Reality is slowly dawning on Madonna, the unlucky Florida flipper from a week ago:
“I feel helpless and really stupid for getting into investing. My once awesome credit will be ruined which wouln’t of been so bad, but to have to pay all this makes it really bad. There is no light at the end of the tunnel.”
Here is her exit strategy:
“Winning the NY lottery is the only thing that could help it seems.”
How about a reality check on Zillow:
http://www.foreclosureforum.com/mb/messages/19111.html
10901 Zelzah Avenue Granada Hills Auctioned off for $548,129.91
Zillow: $753,653
1821 Nort Evergreen Street Burbank Auctioned off for $432,656.97
Zillow: $712,067
3445 Granada Avenue El Monte Auctioned off for $234,000.00
Zillow: $401,382
There are more, but the picture is pretty clear…..
maybe a repost but this is fantastic
i´m not sure if this was postet before.
but this is the best i have ever seen.
a comiplation from the tapes with lereah, shiller bernanke, etc
over 70 minutes of superb bubblehistoy video´s alle the famous quotes “not a bubble, a baloon” call to arms at lows etc.
spread this one around. this is a must see!!!!!!!!
http://www.paperdinero.com/BNN.aspx?id=20
That is so cool. Historical interviews with David Lereah on the MaNeil Lehre Report with various economists and various other reports. I didn’t get to catch them in real time so quite fun to see them now after all the buildup and discussion on Ben’s blog. Those guys (DL, etc. all) are so busted!