Bits Bucket And Craigslist Finds For November 8, 2006
Plese post off-topic ideas, links and Craigslist finds here.
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any bank failures yet?
At least one bank in Florida is in deep trouble!
http://www.usatoday.com/news/nation/2006-09-03-sperm-destroyed_x.htm?csp=34
That is a sperm bank, you goof ball. I think oikonomikos was referring to financial entities. Maybe you should make a deposit to help keep the Florida bank “solvent”….
Good topic. There seems to be little mention of this possibility anywhere.
Did small regional banks play it smart by staying tough on standards? Those are the ones I would consider most vulnerable.
Will it be mostly large players who take the hits? They are probably diversified enough to absorb it.
(sorry for the repost below)
I inquired some 6 months ago at my local Credit Union about loan standards. I had a sizeable Money Market account.
There were still offering 100% LTV. I cashed out all but 25k in a 25k min. account. I would not trust the local banks and S&L’s.
FDIC ? FSLIC ? I don’t care. I didn’t want to argue about the money. Treasuries were paying 2 points better, anyway.
They have been using my money to force me out of the real estate market. I would like to transfer all but about 2k, but then I would not have a readily accessible emergency fund.
I think some of them will crash.
diogenes (Tampa):
You should close the account and get the rest of your $25k out of there.
Just use a bank with a very low account minimum of maybe $500 or even less, and simply perform ACH (automated clearing house transfers) to periodically move money into your checking account. I move money this way twice a month from my Ameritrade brokerage account into my local checking account. ACH is one or two additional day(s) than a Fed wire transfer, but it is free.
I buy everything on credit cards (I pay off the entire balance) and I write about 1 or 2 checks a month, so a 25 cent per check fee is no big deal. Just be sure you have a very low account minimum so when they fold you won’t lose $25k, you will only lose $1,000 or less.
Put your cash in a Federal money market fund from a large family of mutual funds that supports ACH transfers, (I have Vanguard’s Fed MM fund #0033), but any large family of funds should work. Make sure they don’t get an arm and a leg up front and on the back end. (These fees should not even exist in a MM fund because of the highly liquid nature of these MM funds.)
You have very good instincts as far as how to protect your money. Yeah, FDIC insured, so what? Can you wait for years while your “FDIC insured” money is frozen while stuff gets sorted out? During times of high uncertainty, there is a flight of money away from weakness into strength and quality. The big boys do this, so should everybody else.
Italic off.
Ok, now they are off.
Need some advice for my brother in law in Picayune, MS. He has a house he bought in ‘02 for $65K. Its getting too small and he wants to move into a newer bigger house (they are expecting another baby in Feb). A realtor told him he could get $100k for it. The house he is looking at is $175K. He could easily afford the payments with a fixed 30yr 20% down loan. His problem is that he knows he only has 2 more years in Picayune (Navy). His realtor told him that since they arent rebuilding fast in that area the new house is going to appreciate very quicky. Sounds like a party line to me. Anyone out there know anything about gulf coast RE? Picayune is about 40 min from New Oleans right across the MS state line.
In a normal market it takes several years to recapture your transaction costs from RE. Why not rent for 2 years so you dont have to A) take a gamble on a depreciating asset and B) have to deal with the time and trouble and COST of selling the home. Alot of landlords are flexible when it comes to painting and customizing the home to your liking. You can always paint it back to neutral when you leave.
I agree with this. And I’ll take it a step further - who cares if you can’t paint your walls multi-color. Live with white and hang some pictures…it’s only 2 years for crying out loud.
OT, but don’t repaint your walls if you’re having a baby in 4 months…..
More OT -
Good point OB Tom. A great paint that has almost no fumes and is easily tolerated by sensitive people is Kelly Moore’s Envirotech paint. I do not have any stake in the company, just like their paint.
Not to mention that there is a reasonable chance he will get nailed with a hurricane in the next 2 years. Being a renter could save him a lot of headaches if a disaster were to occur.
The eye of Katrina went right over his house. Every tree in the yard was torn up but the house only had a little roof damage. It was build in the 50’s. That was another argument I had for my brother in law… dont by new construction.. it will blow away in the next hurricane. He has a big lot, he could always add on to his current house. I think rentals are scarce down there. I’ll tell him to check his Navy housing office and see whats avail to rent. Thanks for the advice. He is very smart with his money and I didnt want to see him fall for the “its different here” bs from the realtors.
How much would it cost to rent a similiar place to the 175K house?
rent
In the “normal” world prior to two years ago, this would be a no-brainer: RENT.
“A realtor told him he could get $100k for it”…..
And he should trust that estimate…..why? If he buys before he sells his first place he’s nuts. There are precious few buyers, at any price level, these days. This is likely the worst real estate market in a generation so all risks are magnified and your need to do your homework and manage the process INTENSELY is critical.
Even then, the lack of buyers may trump even the best research, best advice from the best broker.
If he buys before he COMPLETES his sale he is taking the largest risk in real estate in 40 years (or more).
If his place is really too small to be tolerable, then he should sell it now, and just rent a bigger place. Don’t buy. The post-Katrina boom on the high ground areas is fading down there. A friend of mine putting in a development on high ground an hour north of New Orleans is being faced with much slacker demand than when he started the project earlier this year, and existing-home prices in lots of those areas are now stagnating. Some other developers are scaling back their plans as well, he says.
Whatever your BiL does, under no circumstances should your he buy a bigger house before he sells the old one — that’s asking for disaster as house prices stagnate. (I won’t call it a slump there yet.) But given that he’s looking to move in two years, he’d be nuts to buy now, given the transaction costs involved and the risk that the market could remain really soft even to 2008.
As for being nailed by another hurricane, that’s unlikely. He’s pretty far inland there, and it takes a direct smack monster storm like Katrina to cause the damage that they got. I’d consider that a minor worry, with the main focus there being simply the insurance costs.
Whatever he does, he should avoid one thing: buying without a contingency that the new house is only closed upon if the old house is definitely sold.
Step one - find some possible acceptable rental options. No need to sign a lease, but at least identify some areas/costs for renting that he could live with.
Step two - put house on market for $100k or what he (in consultation with realtor) thinks is acceptable.
Step 3 - step back and watch and see how easily his house sells.
Step 4 - make a decision about renting or buying a new place AFTER you have a rocksolid/stable offer on your house. I would lean towards renting - especially since he is probably going to be out of the area - but, at least he’ll be making the decision after being: a) educated about the strength of the market by how quickly his own house sells, and b) not liable for two mortgages and under severe pressure to lower current house price.
A lot of folks never would have been stuck with two mortgages if they had concentrated on making sure they sold theirs before they bought the next one. It’s tough to have that discipline in a booming market, I’ll grant you — but it’s a great way to limit risk.
That is excellent advice zero. I think it was probably just good common sense in a days gone by era, but nowadays it needs repeating.
Here’s the best advice for your brother or anyone else for that matter. DON’T TRUST A REALTOR. 99% of them are used car sales pitch artists. That’s ALL they are. If you don’t believe me, check back on realtors comments just one year ago as they tried to sucker in more dummies. “Prices are going to continue to rise. Now is the time to buy,” kind of crap. On the other hand (and there are no laws which say you have to be nice to them) tell your brother ask them, if they are so almighty sure the property will rise in value, if they are willing to sign a contract stating they will reimburse him the difference if the property he intends to buy has a lower valuation in the next 2 (or 3 years) and he has to sell.
Since when has the point of sales people been that anyone “trusts” them? You are a naive capitalist.
Bah, everyone has missed the third option.
If he’s leaving in two years… why even move at all? Another baby in February is four months away. You can do 20 months standing on your head.
The difficulty of finding a new place/moving is greater than the difficulty of making do for 2 years. It doesn’t matter whether it’s renting or buying.
It matters when you go to sell. Maybe the market will be worse in two years (I think so). Or maybe it will be better.
That is the real question.
He should rent.
A couple of news items this morning. Mortgage lending took a huge jump due to refinancings. Consumer spending dropped in September by the largest amount since the recession of the early 1990’s. Auto loans lead took the biggest hit. Things slowing down? Now with the elections in the rearview, we’ll see.
“Mortgage lending took a huge jump due to refinancings.”
How do you refinance when the value of your home is dropping? And why?
Just curious.
As long as you have equity left to borrow from you can still refi. According to Fannie Mae, something like 65% of refi over teh last year were pulling cash out of at least 5% more than their origianl loan balance. Most often at a higher interest rate than they had previously. Its pretty simple, lots of folks have front and back end DTI’S that are not sustainable. So they rack up their charge cards, refi to one lower payment, rinse and repeat. At some point the music stops. They will pay for an appraisal to do it yet again and then get mad at the LO/Appraiser for ripping them off when there house comes in 45k less that it did last year when they refi’d.
This is so true. The rinse and repeat of home equity depletion. Exactly what my dumb father in-law kept doing the past 8 years.
When I got into this biz in the early 90’s, only about half of the potential refi’s were doable because of LTV issues. Anyone who has jumped into this business in the last 5 years doesn’t even understand what that kind of market is all about. If they’re still standing in 12 months, they’ll get a chance to find out.
nnvmtgbrkr,
You are correct about refinance values hurting refinances. I bought in 1990 with 25% down. In 1994 I had to but another 10% up for a CASH IN REFI. That hurt, but it lowered my interest rate 3% and my PITI went to $681 in Sacramento. There will be a lot of people with these 100% loans who are simply stuck. No way out.
They’ll walk.
Speaking of FNMA, they are delaying their 10-Q (cough)
“In a filing with the Securities and Exchange Commission, Fannie Mae said it determined financial statements from January 2001 through the second quarter of 2004 should no longer be relied upon, due to issues with accounting practices and material weaknesses in internal controls over financial reporting.”
On another note, here is another excellent report on the bubble by Paul Kreisel. A must read.
http://safehaven.com/article-6255.htm
Jumbo Crames sez that FNMA is going to “soar” now with the Democrats in charge. LOL
TX,
Can you day trade Kramer?
LOL. He’s actually right about this one, in theory at least.
For no reason other than typical partisan politics, I’d have thought that the Democrates would now tear into FNMA, as a corrupt frankenstein fed by the Republicans and now about to be slain by the Dems — and then born again as (pick a fuzzy adjective) FNMA.
As long as you have equity left to borrow from you can still refi.
Yeah-bogus equity created by a cooked appraisal done by number hitting hack.
A couple of reasons to refinance now.
1) 30 year fixed are 6.25%
2) The ARM’s are adjusting to LIBOR + margin (LIBOR ~5.5% margin 2.5%) or adjusting to T Bill + Margin ( T Bill ~ 5.25% Margin 2.25%)
Those with ability to get into a 30 year fixed should jump at the chance - especially those with LIBOR arms, since the BOE is going to keep raising rates.
All you need is to pay for a loaded appraisal. Oops! Did I say that out loud?
For those in the NJ/NY Metro area, Northern NJ preliminary sales data for October is in!
Northern New Jersey October Residential Sales
January
Average Sales (2003-2005): 2000
2005 Sales: 2013
2006 Sales: 1705
(Down 15.3% Year Over Year)
February
Average Sales (2003-2005): 1583
2005 Sales: 1578
2006 Sales: 1395
(Down 11.6% Year Over Year)
March
Average Sales (2003-2005): 2193
2005 Sales: 2256
2006 Sales: 2033
(Down 9.9% Year Over Year)
April
Average Sales (2003-2005): 2322
2005 Sales: 2383
2006 Sales: 1817
(Down 23.8% Year Over Year)
May
Average Sales (2003-2005): 2615
2005 Sales: 2725
2006 Sales: 2298
(Down 15.7% Year Over Year)
June
Average Sales (2003-2005): 3486
2005 Sales: 3682
2006 Sales: 2911
(Down 20.9% Year Over Year)
July
Average Sales (2003-2005): 3495
2005 Sales: 3338
2006 Sales: 2428
(Down 27.3% Year Over Year)
August
Average Sales (2003-2005): 3661
2005 Sales: 3668
2006 Sales: 2599
(Down 29.1% Year Over Year)
September
Average Sales (2003-2005): 2854
2005 Sales: 2655
2006 Sales: 1968
(Down 25.9% Year Over Year)
October
Average Sales (2003-2005): 2570
2005 Sales: 2280
2006 Sales: 1867
(Down 18.1% Year Over Year)
Graphs available at the above link.
Caveat Emptor!
jb (aka grim)
so sales are picking up slightly w lower prices
No, the decline was in full-swing last October. We’re at a point where we are compounding YOY losses. So while the % decline is decreasing, we’re still trending downward at a pretty dramatic pace.
jb
Grim — that is the awesome part — a negative number applied to a negative number. The REIC will spin it so that it appears as we/flatffplan would have interpreted it, absent the prior October’s number-with-decline.
For those of you who read the posts on yesterday’s Arizona thread about the level of Lake Mead, that’s not emergency level.
This is emergency level (given that we’re coming into summer here in Oz).
http://www.abc.net.au/news/200611/1782175.htm?goulburnmurray
mutter … mutter … bl**dy Google
try http://abc.net.au/news/australia/vic/goulburn/200611/s1782175.htm
Here’s what I wonder.
By the time the ‘08 elections roll around, we should be mired in a pretty ugly RE and economic slump. Will the voters then blame the Democrats too? The stuff I saw said that voters were satisfied with the economy and that the Iraq war was the issue. That suprises me. Who is doing exceptionally well other than oil company executives, WS types, hedge funds and others who can basically steal whatever they think they need.
P.S. Still short TOL. Looking good this a.m.
Will the PPT throw in the towel now that the Dems are running the House, and the election windowdressing motive is behind us?
This morning China is moderately nervous about the Democratic house. Their reasons appear to be a fear that a tarif bill on Chinese imports may now be on the table. Should such a bill appear, I hope to god that the PPT exists and directly interferes in markets because China may halt buying US Treasuries. Hello Renminbi
Hoz –
Thanks for your many insightful posts, including this one.
Hoz — if the Dems have the House but not the Senate, and certainly not the Prez’s approval, how would they pull this off?
There are almost always well meaning, poorly informed senators that vote in what they perceive as their constituents best interest. China’s exploding foreign reserves, expanding export as well as the diminishing productivity in the US will make China the hot button topic of 2007. Now that the elections are over, we will not hear of the “illegal immigration” problem again. It was a bogus ploy and the new topic will be China. Sorry for feeling this way, but I agree with this days Onion article.
Politicians Sweep Midterm Elections
Resounding Victories In All States, Counties, Cities, Towns
…While analysts had been predicting a possible sweep for months, and early exit-poll numbers seemed favorable, politicians reportedly exceeded even their own expectations, gaining an impressive 100 percent of the overall national vote.
“It’s a good night to be a politician,” said Todd Akin, an officeholder from Missouri. “The American people have spoken, and they have unanimously declared: ‘We want elected officials to lead this nation.’”
The Onion
http://tinyurl.com/uyckh
How true. It’s the reason Libertarians don’t win much — they aren’t real politicians and generally do not enjoy holding office.
I think we could be nearing a correction because we have reached resistance in many areas according to the charts. Not sure how big the correction will be but the Wall Street Financial Gangsters (brokers) will decide. I’m never quite sure what causes rallies, like the one still in progress. Logically it shouldn’t happen but if you use logic if you trade the US financial markets you will go broke very quickly.
That said, this administration is so corrupt and has so many powerful entities to do their bidding in almost every industry from oil to pharma, to Wall Street, that I think this may have been a fake rally in order to pump up the 401k’s and make the voters feel good.
It makes no difference if it’s fake or not. It’s all manipulation. I stopped looking, long ago, at the numbers because, again long ago, I discovered just how manipulated everything is in the US financial markets and thus, it’s a waste of time researching numbers. The likes of Cramer, Kudlow, Abby Joseph Cohen, other analysts, etc, are simply shills. Just like the people at the NAR. Why bother with them? The charts tell you all you need to know. I just follow the tracks of the big dragons (the Wall Street brokers) and pick up the crumbs they drop as they consume most of the cake.
As for the PPT? They were simply put in place to prevent a sudden financial “earthquake.” Like 9/11. That’s all. If a cisis happens, they will move in to ease the market down slowly until the panic subsides.
txchick,
When did you go short? I’m still short @22.70….still have a long way to go.
Good luck. The home builder stocks have apparently been held in mid-air for months now by the verticle blast of a giant liquidity fan.
GS,
thanks, I’m hoping they continue to break down from here on. I almost doubled down at 30.00 but decided otherwise. We’ll see how it plays out.
I made out pretty well earlier this year with TOL. So relatively speaking I’m not too worried.
Yesterday at 28. I have a 28.88 stop on it.
Why go short and assume to risk when you can either go long puts or some type of straddle? Yes their is a premium, but the risk is limited.
I have a 3% stop on it. No biggie. Have large profits in things like PANC, CROX and my little roach motel so no problem.
I’ve been short tol since Sept. Didn’t expect the trend break. Anyhow, finally broke even yesterday. My trading strategy is to cover with calls/puts in the meantime. Picked up $30 puts for 80 cents. Not too shabby.
Yes, much blame will go to the Democrats.
I saw a little bit of Stephen Colbert last night. He was acting dejected that the Dems won the Senate. So he goes to his limo, and then realizes “Wait a second, the Democrats have been in power for only a few seconds, and they’ve already gotten us mired in Iraq!”
obviously, he was kidding, but make no mistake that the Dems will take much of the blame for the economic implosion.
It is not too dissimilar from GWB taking all the blame for our recession starting in 2000-1. Although he clearly didn’t make things better (major tax cuts combined with major spending and pork to his corporate friends and major social programs and an expensive war), some of the issues that led to the recession occurred under Clinton’s watch.
I echo Txchick and Clouseau’s sentiments. I’m having trouble *not* envisioning a housing-led recession, in spite of the fact that I’m usually not a pessimist. We’ve only seen the first groanings of a housing slowdown, and the worst is still to come. Unless Democrats have a tricksy rabbit they can pull out of their hats, they’ll bear the brunt of this issue. (Whether deserved or not).
“U.S. homeowners took cash out of their homes in the third quarter at the highest rate in 16 years”.
And that might be the last time, as the water has been thoroughly squeezed out of the turnip, and you can’t get any blood out of it, either.
I was talking to a close family member who called me a few days ago, concerned about a recession/depression. He wondered if I’d seen land for sale that we could subdivide on the cheap. I told him land would get a whole lot cheaper if what he was thinking came true, and the best way to prepare for a recession was to get/stay out of debt and diversify his assets. (Not to hold them all in one bank, etc.) His wife would never let them sell the house first, though, which is a shame, because they are now empty-nesters with a 4-bedroom.
I’m not so sure if we will have a recession/depression soon. I would think 2012 would be the time. I think there is time to build up reserves in T-bills, platinum, and gold. Another idea is to buy 5 acres of land in 3 or 4 years where there is plenty of water. Maybe put a manufactured home on it.
In my case, my job is good through this December 31 but I may be out of work for a few months after that. So I’m minimizing my expenses and building up 3 month T-bills in my http://www.TreasuryDirect.gov account. It’s a personal race to be able to have high interest-earning cash for 3 months if need be. My client is offering me a job as a salaried employee, but I refuse to accept it, knowing I can get greater pay remaining an engineering consultant. I’m open to anywhere in the U.S. and can move within a week. Being footloose the next 7 years is the best advantage any professional can have to get the edge on top incomes.
Another idea is to buy 5 acres of land in 3 or 4 years where there is plenty of water.
I grew up in what was a fairly small town…10,000… Next door to my grandparents….I can count basicaly on one hand what they purchased outside the house…98% of the food was generated out of the backyard of a 50 x 150 plot of land…Every fruit or vegtable (plus chickens) known to man (Almost)….
Point;….Could I live like that again ?? You betcha…..Couldn’t we all ???
Interesting sentiment, a clue to future trends I suspect…
“Another idea is to buy 5 acres of land in 3 or 4 years where there is plenty of water. Maybe put a manufactured home on it.”
And that definitely rules out Phoenix. In thirty years or so, due to lack of water, it will be hard to give homes and land away, much less sell them.
Gridlock works for the Americans. 2 cases: Republican Reagan 1981 to 1988: We had tax cuts and massive cuts in regulations while the Demothefts were running Congress. Move ahead to 1993 to 1994 when we had Democrat Congress and Democrat Clinton: People were not ready for massive Hillary Health Care socialism. Usher in Republican congress 1995 to 2000 while President Narcissus was chasing skirts and allowing UBL to build up his plans: We had a great economy due to gridlock.
The Repugnants did themselves in the last few years. The only victories were the 2001 and 2003 tax cuts, the crushing of the Taliban in Afghanistan, and the permanent retirement plan tax cuts (made recently). Other than that, goof offs over immigration and potentially giving our port security to Islamo-fascists.
My 2 cents (I was ineligible to vote, having changed my address back to Arizona from California this November 1).
-
“Speaker Pelosi”. I think I’m going to be SICK.
American voters got what they wanted. Didn’t H.L. Mencken say that ‘Nobody ever went broke underestimating the intelligence of the American people’? Very true. Out of protest over the fumbling of the Iraq war, the people decide to vote in a party that both walks the walk and talks the talk of bigger government and nanny state. At least the Repugnants have rhetoric against big government. (sigh).
But you know, the sun is up today. No Democrat knows that I buy gold with cash and that I forget how much I paid for it. No Democrat knows that I seek the biggest tax loopholes I can find. I thumb my nose at them and live my life freely.
It will be alright I really doubt that moonbat can do much damage, she is to far left for much of the Dem party.
Hey Gekko heard any good one’s lately?
gekko posts ““Speaker Pelosi”.
Hey sonny that’s Madam Speaker to you!
gekko posts “Speaker Pelosi”
Can you say Massa Rangle?
gekko posts “Speaker Pelosi”
How about Bossman Waxman…. drink ah’ water Bossman?
Here’s the scariest thought:
Something happens to Bush, and Cheney has another heart attack, leaving us with Pres. Pelosi.
With as many mod Dems elected, and gaining the majority stake, the Dems could hold a special election for a new majority leader. They definitely need someone with better press-etiquite.
Having Pelosi as president could not be any worse than our government for the last 3 years. Personally I find her repugnant.
she is a nasty mean witch
“she is a nasty mean witch”
and Bush / Cheney and Carl Ruthless, I mean Rove are all Choir Boys….
“she is a nasty mean witch”
Be careful what you say, she might drop a house on you. (HELOCed no doubt)
The only Pelosi that I like is Alexandra.
>>>>American voters got what they wanted. Didn’t H.L. Mencken say that ‘Nobody ever went broke underestimating the intelligence of the American people’? Very true.>>>>
Keep in mind these ar ethe same “American People” who bought multiple houses over the last couple years beause “real estate prices never goes down”. They are also the same “American People” that decreased savings to bellow 0 and decreased home equity even though prices were rising. And got liar loans and other “creative financing” which will all are convinced will pay off when “prices continue to go up 25% FOREVER”.
I could go on and on.
I still think the average American is a dumb a$$
Tax cuts are truly victorious. “Vote for me, I’ll cut your taxes!” What a hero! In California, every bond issue passed, and every tax increase failed. In a Democratic state. P.S. the gridlock from 1995-2000 left the country in slightly better shape than gridlock from 1981-1988 (plus the House gave Reagan pretty much everything he wanted.)
“Tax cuts are truly victorious. “Vote for me, I’ll cut your taxes!” What a hero! In California, every bond issue passed, and every tax increase failed”
Looks like Prop H, the one billion LA affordable housing measure, is about to pass. final tally not in but has a sizable lead with half of votes counted.
The California Voters just keep on piling up the Debt. All you have to do is put the words’water and parks’ and every bond measure passes automatically.
I am Not against all bond measures, but CA voters just pass them indiscrimantly as if the Cal gov is a gigantic Santa Clause. But they sure as hell scream if there is any mention of tax increases to pay for this stuff.
Am I just dreaming that a couple of years ago the Gubinator swore on a stack of bibles never to deficit-finance again?
I echo Peter and Stucco’s comments. I couldn’t believe the returns in California. We massively increased our debt at the same time that Kindergarden Cop’s only plan for the next four years is no new taxes. I think I may soon change my handle from Premature Curmudgeon to Information Hermit.
Bill in Phoenix - i didn’t realize the Taliban had been crushed. From what i’ve read, the Taliban is alive and well and running large parts of Afghanistan.
bubbleboi posts “Bill in Phoenix - i didn’t realize the Taliban had been crushed. From what i’ve read, the Taliban is alive and well and running large parts of Afghanistan.”
You are right and they kill and engage NATO Troops all of the time. As you know thier boss Bin Laden is still alive and running the show….”mission accomplished!”
Yeah and the film of Bin Laden holding the latest NY Times is just about to be released……………
He’s been dead for a year, bet on it. A ego like his couldn’t keep quiet for days much less the months.
I agree ‘Ol Sammy Bin Laden has been worm dirt for a long time now, no way that freak show could stay away from the cameras this long.
Does it matter?
Administrations come and go, people blame Bush for the Iraq war.. But, the one thing that can definately hung on Bush is that after the dot-com burst he should of let the economy take its course instead of influencing Greenspan to drop rates and let the borrowing binge begin to pump money into the economy, that, he is responsible for. Now the correction will be that much worse and the impact much longer. He didn’t want the economy to tank on his dime.
Jake
It was not the “Dot-gone” bust… it was the dropping of the two towers much later.
I’ll have to disagree, I made a mental note at the time when rates actually started to drop(I’ve been following rates and housing prices since 2000) and the twin towers did not help, but the rate drop was started in motion as a result of the dot-com cornholing.
They had dropped some, but didn’t they take the elevator down after 9-11? (and to an unprecedented low? And maintained there for an unprecedented length of time?) They were easing before, but probably would have stopped far short than where they did due to 9-11.
“… some of the issues that led to the recession occurred under Clinton’s watch.”
Oh really? SOME of them???
LOL, that’s a good one.
anoninCa posts ““… some of the issues that led to the recession occurred under Clinton’s watch.”
#1 He balanced the Buget.
#2 He kept us out of war
#3 He refrained from deficet spending.
#4 No tocix loans issued to home buyers.
#5 He got a bj by a tubby chick.
See Federal Reserve notes 1994; There is more than ample documentation concerning an orchestrated expansion of “free money”. Discussion by the Fed concerning “Exuberance” “asset bubble formation” were dismissed by the Clinton administration. The only reason that the budget may have been “balanced” is based on future tax increases that never came to pass. I do not blame Clinton per se (he was a pawn), but I do blame the Clinton administration for encouraging the Federal reserve to run a 10% + monetary inflation policy.
Hate to be a grammar stickler, but the object in #5 should be plural.
chip “Hate to be a grammar stickler, but the object in #5 should be plural.”
Yes you are right. I stand errected.
AE — LOL.
A.E. Newman_ LMAO.
To the contrary txchick. The bifurcated economy and corruption was at the top of the priority list based on exit polling. One can say it’s raining while pissing on your leg for just so long before the victims fight back.
Maybe gravity will eventually matter in the stock market — not sure…
http://tinyurl.com/kx8en
Watching those charts reminds me of watching a lava lamp. I never know what it’s going to do, but it’s fascinating anyway. Fortunately, you can lose only $20 or so on a lava lamp.
I’m not a voter satisfied with the economy. Who was polled? No one called me…
What percentage of the voting population is really, truly satisfied? I’d wager a guess that most homeowners are for sure because they’re still in denial - I’m sure the majority of them believe that this beginning of the impending correction is just a silly, little slump.
I can totally see the argument that the Dems will be to blame for the upcoming economic “fiasco” (I won’t necessarily use the word recession), but IMO that blame will come from uninformed Americans. You know - the ones who live under a rock…granted a rock that they own and believe is now worth twice what it was 5 minutes ago…but a rock nonetheless.
And, BTW, my post is in no way blaming either party for anything. I’m as non-party affiliated as they come, believe me. I’m simply stating that finger pointing usually happens without full knowledge of the facts leading up.
“I’m not a voter satisfied with the economy. Who was polled? No one called me…
What percentage of the voting population is really, truly satisfied?”
I agree EastCoaster: I always yell at the television when someone makes the statement that people are happy with the economy. I’m guessing they’re referring to the segment of Americans that make a sizable portion (or all in the case of retired folk) of their income from market investments taken care of by hired professionals. Although I’m sure many investors are quite adept, I have a few relatives that just hand over the reins and don’t want to think about it. The broker has full choice without much oversight.
I suppose any investor who does not himself work in the financial sector, may not remember the market runup before the ‘87 crash. Case in point, my friend who went back into HBs shared that these investments were part of the college plan for their 8 and 1 year old children…..made $80k in the past few years, why not stay in and pay for it all?…..My assessment of that statement and I do believe this comment did pass my lips was, “So I guess you’re never planning on these stocks going down?” There seemed to be no concept of cycles or any attempt to place where HB stocks were within any cycle.
For many, I believe between the ongoing equity extractions and the stock market earnings, there are lots of people not perceiving the forest thru the trees. They’re still humming along fat, dumb, and happy. And I wonder: would the average financial planner tell clients what’s coming? Are they afraid arming their clients with that info might cut into their own short term profits? Have they been around long enough to fully comprehend and prepare for a downturn themselves? Or are some just order takers?
Once again, time to get down and genuflect to the generous posters and provider (Ben) of this blog for sharing the analysis and insight with the masses.
What, are you kidding? We Rs (and I do this for a living in DC) are going to dump the entire RE debacle in the D’s lap.
It doesn’t matter that they had little to do with it–they are the victorious ones in power and they get stuck with the responsibility for it.
And a loss of an entire Congress is a VERY powerful motivator for voting out the Ds and replacing it with a small-govt R argument, which is where the Rs are going to be moving over the next few months. The big spending neo-con Rs were a disaster–and we can prove it.
Yesterday’s change in the House and Senate will be knows as a Pyrrhic victory in 1 year and 9 months. And the disaster known as the RE market will help lead the way.
I’m looking forward to the next two years being in the minority, knowing the economic mess that is looming ahead and what it offers to us small-govt Rs.
Karl Rove must have planned this… ;^)
Lmao!!! Is that a skit you just wrote poshboy?
If not, good luck with that.
“And a loss of an entire Congress is a VERY powerful motivator for voting out the Ds and replacing it with a small-govt R argument…”
Wow!!! I though the stuff they say on TV makes no sense.
Poshboy, you R’s were just handed a turd. Quite trying to polish it up. Just eat like a good boy. More dining treats of the way!
“small-gov’t Rs”???
Yeah right. The repubs have created the biggest government in US history, the biggest deficits, the biggest spending….and you think anybody believes in the existence of “small-gov’t republicans”? Ain’t a single one ever been seen in 6 years.
Spike66 — …”and you think anybody believes in the existence of “small-gov’t republicans”? Ain’t a single one ever been seen in 6 years.”
That is exactly why they lost and I think nothing can possibly turn that around within two years except political suicide by the Dems. Their nature is to be too unorganized to get that done.
The bigger question re the blog, though, is, “How does this affect the progress of the bubble burst, ARM re-sets, etc.” I think there will be no effect and that, once we get beyond dissecting this election, we’ll be back at generally bipartisan prognosticating and well-deserved gloating about our wise financial choices.
We will get to that later. We are still serving up the cold turd and sausage sandwiches for all of the Roveifarians out there.
On the FRONT PAGE, of yesterday’s paper… not front page of home section, or page A3…. but the front page, in the best position where you can see it on newstands:
“Too many agents, too few buyers”
http://www.startribune.com/417/story/792677.html
“Chris Galler, senior vice president of the Minnesota Association of Realtors, has some advice for real estate agents who handle only a few transactions a year: Consider getting out of the business”
“That conundrum may prompt some to quit the business voluntarily or involuntarily, a reduction in commissions as agents compete for a smaller share of business, or both.
It’s getting so crowded that hints to less-productive members are no longer subtle. In his association’s fall member resource update, Galler asks: “Is it time for a career adjustment?”
I have a neighbor who has a Masters and a good job at Kaiser Permanente. For the last year she has been doing RE on the side…. its her “dream” to quit her day job and do RE full time. Yikes. Talked to her last week and she said that things are beyond slow and she is sooooo glad she didnt quit her day job.
Good topic. There seems to be little mention of this possibility anywhere.
Did small regional banks play it smart by staying tough on standards? Those are the ones I would consider most vulnerable.
Will it be mostly large players who take the hits? They are probably diversified enough to absorb it.
“Did small regional banks play it smart by staying tough on standards?”
With no data whatever to base my hunch on, I doubt it. Why? In a word, competition. If the big boyz had an operation in town which forced the small regionals to compete, then either the regionals had to lower standards or else lose deals.
For analagous situations, think about (1) “smart” buyers who stuck with traditional fixed-rate financing and a downpayment, only to find themselves in 1/2 the house of the “dumb” neighbor with the same household income who used I/O Option ARM financing; (2) “honest” appraisers who went hungry because they refused to hit the number.
In general, tearing up the rules of the game favors those who play dirty.
With no data whatever to base my hunch on, I doubt it. Why? In a word, competition. If the big boyz had an operation in town which forced the small regionals to compete, then either the regionals had to lower standards or else lose deals.
Point well taken.
At one time no smaller lender would be caught dead using a “known” number-hitter appraiser. Most had “reputations” to uphold.
However as time progressed, the real estate agency principals began coming thru the door sayin’, if you don’t use “Jack Hack” to do all the appraisals on my firm’s transactions, forget about my agents bringing any biz to your operations.
So in order to compete with the big boyz and bucket shop independant crowd the locals succumbed, trashed their established legit appraisers and climbed into the gutter with the other lending garbage.
They will pay for their indiscretions.
I’ll have to take this spot to give my local Bank of America fair credit. Three years ago (pre-Ben Jones), when I wanted a HELOC to allow me to pay cash for a next house and then sell the current one, their appraiser came in well below what we believed the place was worth and, in fact, well below what it shortly sold for later. I respected them for that and still do.
Downtown ‘urban pioneer’ shot
http://www.sptimes.com/2006/11/08/Hillsborough/Downtown__urban_pione.shtml
So much for living in blighted areas!
Sheesh. When you’re in the ‘hood, you don’t tell strangers to “be quiet”.
You can avoid problems in the ‘hood. I’ve had jobs that required me to go into them regularly. But don’t make eye contact and mind your own damn business.
I’m guessing this will be the first of many such incidents. The north and east edges of downtown Tampa are all housing projects and high-crime neighborhoods. Sounds like a great place for a $500K condo.
What’s interesting is that you have to be a very good shot to hit someone the first time, from that distance, with a handgun.
Speaks volumes as to the level skill and amount of practice achieved for small arms users in the neighborhood.
Most of the peolpe I talk to believe that the housing bubble will relive by spring next year. I have asked them why they think it is so, and most have answered that the fed will lower rates as the economy is slowing to a halt… How many of you have heard this, and what are some points that can be used to counter? I have been countering with the inflation, 45K Mc donalds store managers’ salaries, price of gas, housing etc, that has inflation running rampant, but what else is there. Bear in mind that I am not an economist, but someone who got severely burned by the last tech downturn, and am still licking my chops unwilling to get burned for a second time!
Pinch, The issue is simply affordability, people making $40 K a year, if they’re lucky, in the middle of a recession\depression cannot afford a $300K house. What I usually do(and I do not gamble) is offer to make a large wager on the final outcome, that is when they usually change the subject…….
The Fed might pay lots of attention to the economy, but they pay even more attention (or should and would, if some of the other members have their way) to inflation numbers, which are not terrible now but look ominous.
Maintaining monetary stability is what they aim for, and if inflation takes off, that will force their hand to raise rates, even as they moan about the effect on the economy. My main worry is that they’ve already been late in raising rates, and in the world of inflation-prevention, it’s a case of “ounce of prevention is worth a pound of cure”. I fear that we might later be in for the pound of cure if they discover in the coming year that they have to overcompensate for their previous timidity on rate rises.
my view from Europe: we have been hearing the ‘monetary stability’ mantra for years from the ECB and I can assure you it is all smoke and mirrors. The ECB is inflating away like mad while the sheeple believe their ‘price stability’ lies; actual inflation is 8-10% you instead of the official 1-2%. There is no way back, the ECB knows this and they will continue inflating away until the system crashes.
To me the current situation in the US still looks similar like that in Europe around 2001/2002. At that time house price gains in many EU countries were at least similar to those we see now in the US, and many were calling the top of the bubble. Well, outrageous gains didn’t prevent prices from going much higher. The babystep rate increases by the ECB have not stopped the EU housing bubble either (but they strongly encouraged more refi activity). In most EU countries housing has appreciated much faster than the CPI during the ECB rate increases. This is all possible because of ultra-loose monetary policy, and I don’t see any change in that on either side of the pond.
“How many of you have heard this, and what are some points that can be used to counter?”
1) Lower interest rates are believed to take 9-18 months before any collective effect on the economy is realized.
2) There are concerns that core inflation is already too high, and we just saw the lowest unemployment rate in five years last week. Unless there is serious evidence of an economic slowdown (for instance, mass layoffs in the private sector), the Fed would have a hard time making the case for lower interest rates without spooking the bond market with inflation fears which, without intervention in the long-term Treasury market, would result in higher long-term interest rates (caveat: the conundrum may have permanently ended this “normal” feature of the bond market).
3) If unemployment spiked up to a level which justified monetary easing, a recession would be pretty much baked into the pie at that point. It is hard to find a point in the time series of US unemployment rates when unemployment spiked up without eventually leading to a 2% increase in unemployment, as most CEOs are really sheep at heart (when they see others laying off workers, they follow suit).
I’ll add #4 to GS’s list: In the last housing downturn of the early-to-mid 1990s, interest rates were dropping. It didn’t help the housing market, which took 6-7 years to stop declining/flatlining.
Wouldn’t one think that once all these bad loans surface that the lending institutions would tighten lending requirements? This, in itself, would provide a big pin prick in bringing house prices back to earth in the bubble areas. I don’t see an end to the bubble by spring because of this reason.
Let them believe whatever they want. It aint happening. If you are a regular reader of this blog, you should be well equiped with the reasons as to why. Do you think that the people that you are talking to just “might” have a self serving interest to help them believe/WISH that a turnaround is coming…
Pigs get fat, hogs get slaughtered. There’s gonna be lots o bacon for the people on this blog.
There are of course vested interests. In one case, ID10T bought a house at 190K in Mas around 1999. Now owes 400K on it as he has thoroughly gone through it and updated it. (it was an old colonial). Of course he is a plumber, so definitively has a lot of skin in the game. Was hoping to sell, and buy a multiplex next year! Others have minor investments, or marginal incomes for the houses that they bought, and are sincerely scared.
I have been reading the blog for a long time, and I have some of the answers, but when I tell them, it is almost as if they cannot understand what I am saying. They act incredulous that Bernake is going to let housing tank, and of course take them with it!.
It is frustrating, because I get the same reaction out of my parrakeet when I talk to him, and I generaly assume that if it speaks, it can interpret data. I guess it is my bad then…
If they want to stick their fingers in their ears and yell, “la-la-la”. There is nothing you can do. I get the same reaction from within my company. Whenever i bring up this subject or blog with my c-workers or superiors, i get chastised. They no i am right but, refuse to acknowledge that it exists. This is driven by obvious concerns for our employment but even moreso by the fact that we all own homes. Those of us that are the “millionaire next door types” will all be laughing in the end.
Again, I say most are just simply uninformed.
So….. I wonder how many Republican staffers and appointees next year, will be leaving Washington and need to sell their houses?
Ha! Never thought of that. Good point. And of course, they’ll feel entitled to top dollar.
Should we expect large-scale emergence of bears from hibernation on the news that tax-and-spend liberals have taken over the House? Because isn’t it generally bad for Wall Street to have Dems in charge?
http://tinyurl.com/yffud6
Well, being the cynical beyatch that I am, I’d think after the bonuses are nailed down for this year, the GOP types will be far less “motivated” to see the market up and in fact would probably like to see it crap out for a few years so they can lay that one at the Democrats’ feet too . . .
OTOH, you can probably put the alt-energy stocks on your watch list, some technology, health care that isn’t big pharma, etc. Wild and crazy types might try shorting oil.
Good point — tank the economy when the Dems are in control, so the Repubs can get their House back next election. Watch out below, Gekko!
I think it all works better with a Democrat president and a solid Republican Congress. Congress legislates spending and raises/lowers taxes. Demos are prone to overspend, as we’ve seen in Reagan’s term, the 25 years prior to Reagan and Bush senior’s term and will see in the next 2 years. I want to see more cases of government shutdowns like in the 90s. This current Republican administration combined with Republican Congress was very bad on America, but not as bad as Carter’s doings, with a Democrap Congress.
“tax and spend liberals”….
Please, how about a little accuracy…see the republicans and their spend, spend, spend the country into bankruptcy plan, with their intention of letting those who are now infants and toddlers reduced to carrying the financial burden like mules. That is if your children and grandchildren aren’t condemned to being merely serfs for Chinese overlords.
Sorry you could not detect my sarcasm.
The wonderful thing about the election results are the return to a system of checks and balances. While the republican party controlled both houses and the white house, Federal Deficit spending went 8 Trillion negative (I voted republican for what I believed to be fiscally responsible reasons - was I confused?). I hope that never again will one party control the reins.
I agree. The country runs best when the two parties exhaust their energy with partisan bickering.
Yes. This election shows Americans’ fundamental good sense that neither party should run the whole darn show. A fair amount of gridlock is a good thing, since less wacko stuff gets through.
Why is it people always say this and then when you suggest voting Libertarian they call you a wacko?
Feep — it is because Libertarians, by the very virtue of their disdain for government, fail to get their message out. Look at Bill in Arizona, if I have the screen name right — he became disillusioned because Libertarians seemed to be pot smokers intent solely on legalizilg marijuana. We have to confront that — I do so by posting links to the archives of Dr. Ron Paul, a 100% libertarian in Congress as an elected Republican, and Charley Reese, my favorite columnist. IMO, much of the work of libertarians is education, rather than conquest.
not confuse. you were suckered.
Gridlock is our friend. Keeps the people in Washington from getting anything done. That leaves the private sector to handle problems and take advantage of opportunities.
Hoz and GS — I agree — I hope we do not again see, in my lifetime at least, the Presidency, the House and The Senate controlled by a single party. I’m cynical enough to believe that even such a division is insufficient, but as GS notes, the discord is a good start in minimizing the quantity of bad legislation.
GetStucco posts ” Because isn’t it generally bad for Wall Street to have Dems in charge?”
Look at a chart. I had a guy tell me that when Bush lost to Clintion. I held my positions they went straight up.
I live in NoVa, and I didn’t think of that! Another silver lining in the dark political cloud hovering over Washington today (and it is grey and raining here today, which did not help getting up this morning at all…)
Hopefully that larger-than-normal exodus will drop the price of some inside-the-Beltway housing in Arlington and Alexandria a bit faster than anticipated. Still waiting for that affordable 1920s bungalow in DelRay…
Donnie Rummy’s house is for sale! 1 more down and an entire Administration left to go…. I hope Bush doesn’t do his lame duck quack to loud around Cheney or he’s liable to get a keester full o’ birdshot! Quack! Quack! …BAM!
that is not a problem because dem staffer will be moving in to buy those houses.
Has ACORN figured out the massive scam that has recently been perpetuated on its constituents in the form of suicide lending dressed up as affordability loans? I am wondering how the bank regulators, not to mention quasi-governmental agencies with an affordable housing mission, will answer to the charges when lots of recent low-income buyers cannot make the resets? Or is the plan to get high rates of housing price inflation back on track before this unpleasant development ensues? MrIncomeStream, can you offer us any insights on this one?
http://www.acorn.org/index.php?id=2627
Better to have said “perpetrated” (but maybe also “perpetuated”)…
Ask yourself if lower interest rates would get you to buy a stock that’s falling….buy it on margin…while the entire stock market is declining. Sure, it might work out but do you really think MOST people will take this risk?
People will always tell you that they’ll step up to the plate and “buy low”. Unfortunately, that is not the history of human nature. When markets fall volumes decline. Why? Less interest. Often volume is lowest at the very, very, bottom of markets.
It takes a lot of courage to take risks when the recent history of an asset category is flat (much less severely in decline), no? That’s why those who buy at bottoms DESERVE their huge gains because they have guts, knowledge and vision (or just plain luck) that others don’t.
Until human nature changes there is little the Fed can do to stem a regression to the mean that occurs relentlessly in markets far out of whack.
“Ask yourself if lower interest rates would get you to buy a stock that’s falling…”
Acorn — excellent, timely one-liner.
The NYSE will cut 500 employees post acquisition of ARCA.
Yep, NYC is special. These are all highly-paid employees.
Yeah, that’s what I read last week, layoffs but not because business is bad, but because black boxes are taking over the world. Kind of like Skynet in the Terminator movies.
I argued this point over a year ago. I’m one of those guys responsible for these people losing out.
But no, everyone here makes boatloads of money was the argument.
It’s “disintermediation” — cutting out the middle layer. And you can bet your bottom dollar it’s going to hit NYC like a ton of bricks.
You’ve got to admit. The bonus numbers are obscene this year.
“The bonus numbers are obscene this year.”
Do these bunuses have any relationship at all to the prices we have paid and will pay at the gas pump, or is there too much a disconnect/non-relationship to even speculate about that?
(By the time the ‘08 elections roll around, we should be mired in a pretty ugly RE and economic slump. Will the voters then blame the Democrats too? )
That’s why I would consider taking the Senate a “loss” for the Dems. Their idea situation — take the House, and have the Senate be 50-50 with Cheney breaking ties. Bush can do no more, but the Dems can claim not to be in charge of Congress.
Gekko-
What is your spin on this? Look like AMERICA spoke and they threw out the right wing nut jobs!
Now lets throw out the left wing nut jobs in 2008!
Don’t feed the trolls…
Im for throwing out anyone who uses their belief in an imagineary invisible magician to guide their running this country.
What is an imaginary invisible magician, and are you asserting that I believe one runs the country?
I am for throwing out anyone who creates dumb straw man charicatures of other posters’ beliefs.
Me thinks he was referring to Bush. His quote on when asked if he consults his father and he responded he doesn’t need to cause he consults a “Higher Authority”
PS. The spelting currectchen below just made you appeer thin skinned………..”Im” Go fur soumething meatier next time.
Im thin skinned…
oh… never-mind then
I’m also for throwing out anyone who does not know that Im is not a word.
Imaginery invisible magician was a play on GW (though not him exclusivley) and how he uses GOD to influence his decision making. It was not a crack on xianity or any other specific religion. I am sick and tired of world leaders of all countries using the vail of religion to reinforce public doctrine.
IM not into spelling bee, gramatical error or apostrophe nazi’s. When i speak to a person in person, how do they know if i capitalized or which way i spelled there, their, they’re. Sorry if “Im” confuses you.
Sorry, didnt want a political/ religious/grammar war. You can now return to your regular bubble programming.
“…I am sick and tired of world leaders of all countries using the vail of religion to reinforce public doctrine…”
AMEN! Whether is nut jobs in DC or Iran or Afghanistan!
using the vail of religion to reinforce public doctrine
Hmmm. This sounds pretty descriptive of early American governmental documents. Doesn’t it?
(And while we’re all picking on spelling, Vail is a ski resort)
And sorry, MD, the spelling jab was good-natured. Couldn’t resist.
Gee Tango this is your first post and your apologising for GetStucco? Mmmmmmmm…
My bad Tango. I missed your immediate post above…. Ssorry
Sorry about the jab, MDMORTGAGEGUY, I don’t always nale the speling eether!
No harm, no foul
“This sounds pretty descriptive of early American governmental documents.”
I take it you’ve read the Jefferson Bible? Available on Amazon.
…and empowering those who want to control our pocketbooks and tax us to death. Right MDMortgage?
My post, i believe, was mis-interpreted. Im not pro-anybody. The last vote i made was for Ross Perot. See my response to Getstucco. I have made the case before on this blog that blowing up the TOO (just for you, Getstucco) party system is long overdo.
overdo=overdue
/paranoid
His spin will soon be he sold all his long positions yesterday . . . has to wait now and see if things tank from here.
getting the senate is far more important than the house or the executive. just think about it, the judiciary is very much influence by the senate and no law can ever be passed without the senate on board.
Was driving on hwy #99 going south, in Ca., when I ventured upon a giant $100k sign next to the highway that proudly proclaimed “Chowchilla-A Unique Way of Life” and not 120 further down the road was another smaller sign that proclaimed “California State Women’s Penitentiary, next exit”
A pair of signs that ought to be photographed together, oh the irony~
That should be 120 feet
I thought the PETA folks were buying up the last of the lead-based paint to throw on the Chowchilla folks.
“of” this country
Here’s something I’d like commentary on if anyone here is an FCC lawyer or in the telecom business:
Is there any possibility of revival of TA of ‘96 type “reform” or initiatives which would be unfriendly to the incumbent carriers and more friendly to the clec types? I’m wondering if a change in gubbmint leadership would be the catalyst to revive the moribund networking and telecom equipment businesses. Talk about a dead bunch of stocks although Cisco is coming out of it a bit . .
Not sure how much more unfriendly it could get toward the former incumbents as far as letting anybody who promises a lower rate for the consumer use any available facilities. Just speaking from the local level here in Arizona.
Is there a particular technology you’re thinking about? If nobody has any pricing power, there’s no reason for the CLECs or anybody else to install duplicative and soon-to-be obsolete equipment.
Hey, how about this idea? The class action reform from last year gets tossed and the ambulance chasers see a great opportunity to file class action suits against everyone in sight in this housing bubble - the insiders at the HBs who sold, the builders for construction defects, the supplies for product liability, the lenders for “predatory lending,” - gawd, the possibilities are endless . . . John Edwards may want to quit politicking and go back to work!
We have something similar to class action suits going on in the Netherlands for stock-leasing plans from the 90’s. About 700.000 Dutch households (that’s about 1 in every 10 households) were involved in that, most of them using borrowed money. Most of them lost lots of money when the stock bubble collapsed (after first pocketing some gains in the 90’s, of course).
Politics has been trying to stop the cases in court because the company that is sued (large financial) could go bankrupt and the massive lawsuits are blocking the courts. Current ’solution’ offered by politics: people who were speculating with borrowed money will be compensated, people who speculated with their own money have to sit on their losses.
I can see clearly what is going to happen when the Dutch housing bubble collapses. What the mortgage and RE mob is doing is very similar, only this time the % of households, the amount of money and the leverage involved are far bigger. It will be the biggest bailout in history and of course, all the real criminals will walk away unharmed.
P.S.: in 1635, after the collapse of the tulip bulb bubble, the Dutch government tried to negotiate a bailout for the ’small speculators’ because all the bad debt was a serious economic problem (almost the whole population was involved). But they could not agree on the conditions so nothing happened. We have come a long way since then
Maui prices are slowing but do not buy yet.
http://honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20061108/BUSINESS04/611080317/1071/BUSINESS
Mortgage Fraud. I apologize if this is a redundant post.
http://tinyurl.com/y2p2rn
It is. But thanks — it might not have been.
Sorry about the dupe post.
I’ve another on derivatives and how they may be a factor in preventing or exacerbating the MBS market:
http://www.oftwominds.com/blog.html
“Synthetic Collateralized Debt Obligations”
That was original, I believe, though Charles Hugh Smith is often linked here. You’re on the right train of thought.
Whoa, and I was proud of myself for using Mobil 1.
Minyanville filled with good & funny stuff today
4. Six in ‘06
So with Democrats seizing control of Congress and gubernatorial seats, the handwriting is on the wall for a clear legislative push against a lame duck president who is taking heat for an increasingly unpopular war. Gridlock? We don’t think so.
The first noticeable change in Washington will likely be House Democratic Leader Nancy Pelosi’s ascension to the role of Speaker of the House, the first female speaker in history.
Fortunately, we already have a very good idea of what her agenda will be: Boston Globe: “In House, Democrats vow aggressive agenda.”
Ever heard of Pelosi’s “Six in ‘06″ platform? Well, we hadn’t either. But you soon will.
We took it upon ourselves to uncover what the “Six in ‘06″ are, but ran into a bit of difficulty since the following list appeared in three separate articles under a “Six in ‘06″ Google search
Depending upon whom you ask, the platform includes the following:
- Increase in minimum wage.
- An end to oil company tax subsidies.
- Reduced interest rates on student loans.
- Pension reform.
- Modifications to the senior prescription-drug plan.
- Phased withdrawal of troops from Iraq.
- Preserving Social Security.
- Enacting recommendations from Sep. 11 Commission.
- Energy Independence.
Wait, that’s nine. Right, but six is part of nine, so there you go.
Regardless, real market winners and losers are emerging from the ashes of “Grim Decision 2006.”
Winners include Fannie Mae (FNM) and Freddie Mac (FRE) as Democrats favor more lenient GSE regulations packages.
As well, look for boosts to biofuels entities and alternative energy companies.
Minyanville Professor Jon “Dr. J” Najarian this morning said he expects alternative energy companies such as Evergreen Solar (ESLR), SunTech (STP) and Sunpower (SPWR) to benefit.
Believe it or not, certain Life Insurance companies may ultimately benefit thanks to a potential loss of support for major changes to estate taxes. This helps annuities and other Life Insurance death benefits plans retain their attractiveness.
Among losers, look no further than Retailers who are dependent upon minimum wage employees.
With prescription-drug care back on the agenda, look for Pharmaceutical companies to feel pressure until Washington lobbyists get their feet back under them.
What about oil companies? Watch for plan specifics to emerge in the coming weeks for how to cut subsidies and tax “profit windfalls” related to oil companies.
Bottom Line?: Republicans praying Pelosi falls victim to “Ghost of Gingrich.”
In Txchick’s above info re Pelosi’s Six in ‘06:
“Winners include Fannie Mae (FNM) and Freddie Mac (FRE) as Democrats favor more lenient GSE regulations packages.”
So there’s our answer. Party change=no help for this debacle! I thought Dem’s represented the masses and not banks and big business…oh yeah, that was before the 2 parties melded into one big lobby-driven mass!
Both parties suck, heading us in the same direction, more gubment more control and much less freedom.
Amen. I note with pleasure, though, that my Libertarian Party lost no seats.
BTW - talk about is that the Senate went DEM, but TV here is saying it is tied up.
Yep. The only difference between Democraps and Repugnants is that Democrats do not lie about their desire to increase the size and scope of government. They want BIG government and are not embarrassed to say so. Repugnants, on the other hand, lie to you and say they want minarchy - small government, fewer regulations, and lower taxes. You get some of those, but you get more government spending programs and taxes have to go up in the long run to pay for them. Even though Democraps are honest in their intentions, I certainly will never vote for them. A proper protest vote should have gone to any Libertarian Party candidate. Those voters who hate the war in Iraq should have voted for small government. They, the voters, behaved shamefully Tuesday. We’ll see Repugnant control of Congress either in 2008 or 2010 with a Democrap president.
“Winners include Fannie Mae (FNM) and Freddie Mac (FRE) as Democrats favor more lenient GSE regulations packages.”
How can you get anymore “lenient” than they have been?
Twelve months ago you could microwave a corpse for 30-seconds, remove –> poke a few holes –> rotate, and cook for another 30-seconds and presto…we have another member of the ownership society.
Rummy is gone. TxChick, any market implications?
http://tinyurl.com/yyedb8
Short the defense contractors if anything.
I apologize if this has been posted before. Federal Reserve President Janet Yellen gave this speech and IMHO this is very alarming with her candid statements. I do not recall the Fed ever being this open in the past.
“…the distribution of displacement has shifted towards the highly educated: workers holding a college degree saw nearly a 50 percent increase in their displacement rates between the early 1980s recession and the most recent one in 2001, while workers with a high school degree or less actually saw a slight decline in displacement rates. So, more educated workers are seeing erosion of their job security relative to their less-educated counterparts. Of course, job displacement still remains a more significant issue for low-paid workers, but the instability that they have always faced has increasingly spread to higher-income groups…This comparison of the U.S. and other advanced industrialized countries, though just a sketch, is suggestive. The possible responses to rising inequality do not boil down to “either/or” kinds of solutions. Rather, these responses range along a fairly wide continuum, reflecting the tradeoffs that policymakers face between efficiency and equity. Certainly some market-determined income differences are needed to create incentives to work, invest, and take risks. However, there are signs that rising inequality is intensifying resistance to globalization, impairing social cohesion, and could, ultimately, undermine American democracy.”
federal reserve san francisco
http://tinyurl.com/yzc3we
More extortion of the US middle-class…
Six figure college tuition bills and debts for non-existent future jobs.
Meanwhile SallieMae cleans up…
“Certainly some market-determined income differences are needed to create incentives to work, invest, and take risks.”
A young woman with two kids on welfare receives roughly 80% of the net income and benefits of the average woman with a four year college degree; so where are these “incentives” to work?
Note how “productive” the top 1% of earners are:
“As I will discuss later, among this top 10 percent, the growth was heavily concentrated at the very tip of the top, that is, the top 1 percent.6 This includes the people who earn the very highest salaries in the U.S. economy, like sports and entertainment stars, investment bankers and venture capitalists, corporate attorneys, and CEOs.
Fannie Mae expects to spend $1 billion on financial review this year. Still no date when the financials will be issued but don’t worry they are working very hard.
“The government-sponsored company, which finances one of every five home loans in the United States, is emerging from an accounting scandal that brought the ouster of top executives and a record $400 million civil fine in a settlement with federal regulators. Fannie Mae also said it would miss a regulatory deadline Wednesday for filing its financial report for the third quarter of 2006. The company hasn’t filed an earnings statement since late 2004.” Full article from Yahoo:
http://tinyurl.com/yxnnxy
Nice to have indefinite forebearance. Who grants it?
just proves how strong the US Finance Economy is - infinite credit from ‘investors’ without any reliable data …
the emperor is walking around naked for everyone to see, but people don’t use their own eyes and simply trust the Wall Street fairytales instead.
“Nice to have indefinite forebearance. Who grants it?”
GetStucco — that is an excellent question. It should be asked, again and again, until it is credibly answered.
Here’s a funny one. “Beware of owners”…
http://losangeles.craigslist.org/wst/apa/231857693.html
LOL. These days, it is not difficult to imagine. Man, am I glad I have choices.
Cisco’s guidance may break the Nasdaq out tomorrow.
this will make you sick
http://www.msnbc.msn.com/id/15537899/from/ET/
MSNBC.com
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NYC’s Affordable Housing Project Costs Homeowners
WNBC-TV
NEW YORK - Mayor Michael Bloomberg’s plan to develop affordable housing was intended to help families of all incomes purchase housing in New York City. The plan, which was slated to run for five years and cost more than $7.5 billion, was described by Bloomberg as creating “a spectrum of affordability for people on all income levels.”
However, a six-month NewsChannel 4 investigation has revealed that the affordable housing program has backfired for many residents for a variety of reasons, from substandard construction to unresponsive developers.
Ralph Munoz is one resident who believed the plan would help him.
“It’s the American dream to own your own home,” Munoz said.
It was a dream he held for 20 years, Munoz said. He saved the money he earned as a salesman and in 2003, he cashed out to make that dream come true.
The home Munoz bought is on 119th street, in the brand new Madison Park Homes in East Harlem.
“Just to live in Manhattan, I was very happy,” he said.
Munoz said the three-family home cost $532,000. Of that, $109,000 was subsidized by taxpayer dollars, lowering the price to $423,000. Then, Munoz said the extra apartments would provide rental income to help him reduce expenses and help pay the mortgage.
“I’ve been fixing my house since I got there,” he said.
Munoz said the problems started shortly after he moved in. He said he has leaks, and when it rains he said the water pools in the basement right next to the electrical box, rusting the equipment
There are cracks in the foundation, a leaky roof, leaking plumbing, sewer pipes that have been cemented over and heating bills in excess of $900 each month because of poor insulation, Munoz said.
Munoz said he contacted Elizabeth Velez, a member of the mayor’s commission to increase minority presence in the construction trades, about the problems his home faced.
“I told them what the problems were and they said they would help take care of the problem,” he said.
Velez’s organization was selected by the city to be the developer of the Madison Park Homes.
Munoz said his calls did nothing.
So Munoz said he and his neighbors took action. They called the Housing Preservation and Development, or HPD, the city agency along with the housing partnership in charge of the housing.
However this also resulted in no answers, he said.
Munoz said this has continued for between two and three years.
“Nothing at all (has been done), and it’s not only me. There are 20 other families in the same situation,” Munoz said.
Munoz said the city has been giving residents a runaround. He said the city blames Velez and Velez blames the city, and residents are still complaining that nothing has been done.
DEVELOPER APATHY
East Harlem is not the only place where the affordable housing plan has hit a snag.
It is a similar situation in the South Bronx at the Clinton Estates, another development in the city’s plan to solve the problem of affordable housing.
That’s where Miguel Figaro and his family bought their first brand new home.
“I’ve been in this neighborhood for 20 years. You have the park next door and the highways, the trains, buses — this is my neighborhood, and I love it.”
The Figaro’s three family home cost $344,000. The city subsidy of $100,000 lowered the total price to $244,000 and the extra apartments provide income to pay the mortgage, but the Figaros said as soon as they moved in they too had problems.
“We have a lack of insulation from the outside of the house you can see? Both rooms used to get ice cold,” Figaro said.
He also said there are problems with the floor and the foundation, as well as leaks, leaving water damage and mold.
“I complained several times but to no avail, they said, ‘Yes, yes we will fix it’ and that was it and then they said that ‘You are lucky to get affordable housing.’ Housing like this?” Figaro said.
Pedro Robles, his Clinton Estates neighbor, said his house also contains leaks and mold.
Robles said he called the developer, Jobco on Long Island, to complain.
“The contractor actually came after numerous complaints. One day he came by on a rainy day and I went outside and got him and I said ‘You need to see this water coming in.’ He came in and put circles where he saw leaks,” Robles said.
Robles said that was the last time he saw the contractor.
In addition to problems in Harlem and the East Bronx, there are also reports of problems in East New York.
LEGAL ACTION
Many residents, unable to get their new homes repaired, have sought legal help.
James Vagnini, a lawyer representing homeowners at Madison Park Homes, along with several other city-subsidized affordable housing units in New York City, said all of his clients share similar problems.
“I see lighting issues, electrical issues, plumbing issues, plumbing that was supposed to have a 4 inch waste pipe have a 3 inch pipe. So you have all kinds of things backing up into peoples’ bathrooms, waste pipes in the middle of someone’s living room,” he said.
Vagnini has filed a lawsuit against the city, the Velez organization and others.
“It’s low-income housing that you are providing a subsidy for. You are making the benefit, the banks are all making their money, the builders are getting paid and cutting corners and profiting. At the end of the day, it is costing these families hundreds of thousands of dollars in heartache, aggravation and in repairs,” Vagnini said.
Homeowners also cannot sell their homes, because of a stipulation of the subsidy that requires they live in their homes for 10 years.
Munoz said his American dream has turned into a nightmare.
“Basically, it’s just a shame what I’m going through right now,” he said.
This is true for many residents ? it’s a nightmare that wont go away because they cannot get their homes repaired. Many said they have had to spend thousands of dollars of their own money to fix their problems.
The Mayor’s office was asked by NewsChannel 4 for information on what homeowners should do to get their homes fixed, but they have yet to respond.
Several requests for interviews with the commissioner of the HPD were also denied.
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On the TV show “What’s My House Worth” (or something to that effect) they showed a couple who took advantage of this program 3 years ago with an apartment in Harlem. They purchased it for about $160,000 and after putting some money into it they want to sell it and move to the suburbs. It appraised at around $800,000. Nice investment return on the backs of taxpayers.
I tend to lean left on economic issues, but housing subsidies for the poor to buy houses with has got to be one of the most foolish ways to waste taxpayers’ money. Seems the politicians who support these things can’t understand that throwing taxpayer money at housing will only make it less affordable in the long run. Makes me sick…