Home “May Be Cheaper In A Month”: CEO
Some housing bubble news from Wall Street and Washington. “U.S. homebuilders’ sentiment dipped slightly in December, although they expressed greater confidence for mid-2007, the National Association of Home Builders said on Monday. The index fell one point to 32 but held above the 15-year low of 30 reached in September, the group said.”
“Economists expected the index would rise to 34, based on the median forecast in a Reuters survey. Just three of 31 economists polled forecast a drop, with Citigroup Inc. and 4Cast Ltd. economists predicting a jump to 37. Readings below 50 mean more builders view market conditions as poor than favorable.”
“The index of sales expectations for the next six months rose for a third consecutive month to 48 from 45 and its highest since June, even as the measure of prospective buyer traffic fell three points to 23.”
The Associated Press. “A JPMorgan analyst on Monday downgraded Sealy Corp. because she thinks the world’s largest bedding manufacturer will miss Wall Street’s estimates for fourth-quarter earnings, amid a housing slump.”
“‘It appears the significant housing slowdown is having a substantial impact on industry demand,’ analyst Dara Mohsenian said. She fears revenue could ‘decelerate significantly’ in 2007 as U.S. prices stagnate.”
From Bloomberg. “The U.S. economy has cooled significantly in recent months, with growth slowing to 2.2 percent in the third quarter from 5.6 percent six months earlier, as a recession in the housing sector and a slump among car makers take hold.”
From Business Week. “Treasury Secretary Hank Paulson traveled to China for his first strategic meeting with his Chinese counterparts. Do you think, as Wall Street’s recent behavior seems to suggest, that the housing slump has bottomed out? I don’t know whether it has bottomed out. The one thing I do believe is that we’ve had a correction that in many ways was inevitable and necessary.”
“‘The housing correction has taken about 1 percentage point off of GDP, so we’re growing below our sustainable rate right now. So whether [housing] has bottomed out, not quite bottomed out, or is going to take a quarter or two longer.”
Housing booms are short. are short and exciting. Housing busts, on the other hand, are long and painful. So don’t put much faith in those oft-heard assertions that the worst is already over. Prices are likely to fall further in many markets in 2007.”
“A BusinessWeek analysis of the past three decades shows that if history repeats itself, it’s likely to take 15 years or more for many parts of the country to get back to their inflation-adjusted peaks.”
“Advice to homeowners: If you need to sell and you’re not getting much interest, cut the price by an extreme amount. If you make halfhearted cuts, you’ll remain overpriced and you’ll follow the market all the way to the bottom.”
“Advice to buyers: Bargain hard. Many sellers are still asking for too much.”
“‘As tough as our market’s been, the toughest thing is to get sellers to understand that prices aren’t going up 18% to 20% a year anymore,’ says Ned Redpath, head of Coldwell Banker Redpath & Co. Realtors in Hanover, N.H.”
National Mortgage News. “An active secondary market has developed for buyback loans. As we went to press, one large subprime lender was coming to market with a $580 million portfolio of buybacks.”
From MarketWatch. “Hovnanian is slated to release fourth-quarter results after the closing bell Monday. In November, the Red Bank, N.J., company warned it expected to post a quarterly loss on land charges.”
“CEO Ara Hovnanian, at a recent industry conference, said the company isn’t overly optimistic about the housing market’s recovery and that it isn’t managing as if ‘everything will be hunky-dory in 2007.’”
“The CEO said the latest housing slump is different from previous ones because it wasn’t triggered by an economic shock but by a sharp pullback in the confidence of buyers, who are reluctant to purchase a home ‘that may be cheaper a month later.’”
From Bill Fleckenstein. “It is essential that folks understand the past, in order to prepare for what lies ahead. That the Fed was able to precipitate a housing bubble to bail out the equity bubble was a miracle. But there is no next bubble to bail out the housing bubble.”
“The fact that the economic strength of the past few years was powered by a housing mania, an unstable, unsustainable engine of growth, is what one needs to understand to realize that the ramifications of the housing bubble’s unwinding will be brutal.”
Paul Muolo also had this rumor in the NMN link:
‘There’s an interesting little story concerning buybacks making the rounds (that I can’t confirm) and it goes like this: midsized lender has been getting stung by buyback requests. The primary owner has staved off the problem, somehow, for months but the day of reckoning is approaching. His firm has a decent net worth but the buybacks it faces would put him out of business. So what does he do? He plans on bankrupting his current mortgage firm, shifting all the assets over to a new one. Sound crazy? One banker I ran it by had this to say: ‘Not crazy at all. Makes perfect sense to me. Why let the greedy Wall Street bankers making billions of dollars a year take you down?’
waht assetrs do they have ?
can you relate this to 1991 ?
buybacks sounds so perky
“An active secondary market has developed for buyback loans. As we went to press, one large subprime lender was coming to market with a $580 million portfolio of buybacks.”
Not really understanding this I will make a guess….. lenders are forced to take back non-preforming loans (buybacks) by big investment companies who bought them. Now these lenders are tring to sell them to “sombody else” thats the active secondary market? The 580 million portfolio of buybacks? If I got this right who the heck is going to buy them?
You buy them between 60 and 80 cents on the dollar. I was working on an idea this weekend. If you buy it at the right price, you could rewrite the loan agreement. You give the FB a chance to pay down principal the first few years at a below market interest rate, then gradually raise the interest rate to the point where they are rehabbed and can finance into a conforming loan. If the loan pays off early (3 years), you just made an annualized rate of return of 20-25%. If they pay off later (8 years), you still have an annualized rate of return of 11-13%. This way the FB benefits because they keep their home and quickly pay down principal, it’s a nice rate of return for the investor. The only ones taking it in the shorts are the dumba$$ lenders who made the loan in the first place. They quicker the loan is paid off, the bigger the profit is the the investor. This is a whole lot easier than buying these homes at foreclosure and praying the market turns around. Just an idea.
Can J6P participate as a buyer of such loans?
Ooops, I meant, can az_lender participate?
All the time I used to get postcards in the mail from people trying to buy MY notes at 60 or 70 cents on the dollar, even when I had no inclination to sell them. (And I have no such inclination now.) But that makes me feel the competition in buying private notes is pretty stiff, and I guess to buy from these big portfolios you probably need to buy some 8 or 9 digit quantity. ??? Also, the notion of buying at EIGHTY cents on the dollar presupposes the properties are really no more than 20% underwater. Still, I am intrigued, subsonic, since my whole Stock In Trade has been making persons in the lower part of the income spectrum feel that I am giving them a more-than-fair shake (when in reality I am giving MYSELF a more-than-fair shake).
The problem with the above approach is that many option-ARM victims don’t have the ability to rapidly amortize their giant loans even at a 0% interest rate. Take the Well Dunn family recently featured in the OC Register, presently upside down on a $800,000+ mortgage. To amortize $800,000 over 10 years means a $6,666 monthly payment — which is worse than the $6,000 adjusted payment (twice his present teaser-rate payment of $3,000) that is about to sink him.
Or maybe I’m misunderstanding your model, Subsonic. The problem is that with mortgage amounts so large, I just don’t see how they could possibly be amortized fast enough to help the borrowers out.
I guess what you’re saying is that if you can acquire a bought-back mortgage for 50 cents on the dollar, you can make a new first loan to the homeowner for half the original purchase price — basically cutting his effective principal in half. That might work.
Let’s say an investor buys a $200,000 loan at 70 or 70 cents on the dollar. Let’s say the loan was a buyback, never should’ve been made in the first place. Borrower is hopelessly over their head. Present PI pmt is $1,467/mo at an 8% rate. Give the lender $140,000. Lender takes a $60,000 bath. The borrower is looking at a foreclosure and still owes $200,000. Go the the borrower and say, lets make a deal. Offer the borrower the following deal. I will rip up your present note of 8%. You obviously can’t pay it. I will give you a below market rate for the first 3 years which allows you to pay down principal. Set it up as an ARM with a teaser rate of 3%, caps are 1% each year, max cap of 5%. Index is 1%, margin is 7%. Gradually the rate will increase 1% every 12 months. You can pay off any time without penalty. The beginning rate will be 3% on a 30 year amortization, your minimum payment for the first 12 months will be $843.21. I am lowering your payment $620/mo. Any additional money received goes to principal. Assuming the borrower pays the minimum payment, the balance will decrease from $200,000 to $195,824. In year 2, the rate increases to 4%, payment is $951.65, assuming min. pmt is made balance is $192,171. Then 5% year 3, 6% year 4, 7% year five, 8% year six and 8% every year thereafter. In year six, let’s say prevailing 30 year rate is 6% and borrower wants to refinance. Borrower obtains a loan to payoff the present mortgage balance of $181,032. Based on cash received less $10/mo subservicing fee paid, the yearly internal rate of return will be 12.88%. If the loan is paid back in 5 years, the IRR will be 13.55%. If paid off in three years, IRR is 17.78%. Even if the borrower doesn’t refinance in year 10, IRR is still 11.27% and the borrower has paid down principal to $169,261, they are way ahead of the game than they would be with their current mortgage. The FB would be in control of their own destiny by being able to pay down a lot of principal early on, then by the time the rate increases, would be encouraged to refinace to a safer fixed rate loan. Rates are cyclical so 7 years would give them enough time to get into a better product. The earlier the note is paid off, the greater the profit. Again, I run the figures and they look good, tell me where I’m wrong.
Sub,
Makes sense to me…….
Now, what has to happen, to make this a reality in the market is for the Feds to have a “come to Jesus” meeting with mortgage companies and give them a choice:
a) Sell off your underperforming loans at 60% NOW
b) We will force you to write them off, at 100%, against your reserves
So the conversation will be something like…..This is your brain (loan portfolio)….this is your brain on drugs (exotic mortgages)……Any questions?
Then, they can spin the transaction as “making 60%” by not losing it all, be hailed as a financial genius, and get bigger bonuses in time for next Christmas…….
Works for me because it totally screws the comps, which need screwin’, driving down prices to where I want to see them.
Buy the loans at sixty cents on the dollar, and immediately forgive 30% of the principal owed by the borrower.
**The spread leaves new debt-holders a 10% cushion to cover borrowers still unable to make the lower payments.
**Banks aren’t going to do better repo-ing and selling properties in this market.
**Occupants don’t have to hit the street (unless they are just so over there heads that they can’t even cover 70% of what they originally signed on for).
**Eventual refi’s will be swifter in coming, since loan-to-value is closer to reality.
… just thinking aloud.
>Buy the loans at sixty cents on the dollar, and immediately forgive 30% of the principal owed by the borrower.
Nope. The borrower is still on the hook for the full 200,000, in what subsonic says.
Now, if you are thinking of an alternative solution that the borrower’s are going to get a windfall of 30%, dream on.
“Buy the loans at sixty cents on the dollar, and immediately forgive 30% of the principal owed by the borrower.”
How do you know the borrower won’t HELCO out that 30% you forgave them?
‘Not crazy at all. Makes perfect sense to me. Why let the greedy Wall Street bankers making billions of dollars a year take you down?’
Makes sense to me, too. It’s time Wall Street bankers had a huge dose of their own medicine. Interesting that Wall Street can get out of a bad deal through a buyback, but FBs can’t. Suppose an FB could make the seller buy back the house at what they paid?
Sounds like someone will get screwed in this deal…
Wall Street. They need the lesson everyone else has to learn.
I will jump for joy when it happens.
me, too. No pity party for Wall Street.
But they need more tax cuts palmetto.
Wall Street is the cause of all the problems, IMHO. They should be the ones to take the hit. NO BAILOUTS!!! Not for FBs, mortgage originators/brokers and especially not for Wall Street!!!
I have been tracking potential mortgage fraud for nearly 5 months now, since if first discovered it may be occurring in Sacramento last August. There are 14 “potential cases” I have been tracking for a while, waiting to see the documents, after they closed. I am very pleased to tell you many of these deals seem to be stalled now. Some Pending Sales are entering their 4th month as “pending”, others, while still listed as “pending” are actively being market in other ways. Clearly, the sub prime lenders are entering a new era. Imagine, putting a company thru BK, then re-enter thru the back door, while you try to stay in business and keep producing…..well, that cannot be cheap or pretty. Perhaps they will learn that making good underwriting decision the first time around is much more efficient….
This promises to be fun match to watch
In one corner fighting for inflation, you have Ben dropping short term rates to 0 to get the economy going
In the other corner fighting for deflation you have banks raising rates to cover the bath they’re going to take on all this crap.
May the best Economic disaster win
(being Canadian, my money is on deflation)
I think you are right on the money. Deflation is THE risk
Ben has only raised or held interest rates so far. As was the case with inflated bubble house prices, reality could be a factor here.
Sounds as if the lender has taken a leaf out of Trump’s business model.
However, It would be interesting to see this happen. Unlike other companies that may go into bankruptcy, it needs goodwill to dump it’s obligations (MBS). If it tried this, It will be a pariah.
From my experience with companies that go BK, the courts look very, very closely and very suspiciously at transactions taking place prior to the filing. The courts have the ability to invalidate (reverse) these transactions as it sees fit. The IRS also takes a close look at these.
Prepare for a litigation flood, with claims for fraudulent transfer, preference litigation by the bankruptcy trustee, claims for successor liability against the acquiring entity arising either from its assumption of the former entity’s known debts and liabilities (which must be provided for in order for the former entity to be allowed to dissolve) or under a theory of de facto merger.
If creditors’ attorneys are worth their salt, it’s harder for a company to separate its assets and debts and get away with it.
“So whether [housing] has bottomed out, not quite bottomed out, or is going to take a quarter or two longer.”
Yes, yes, I’m waiting, complete your sentence please. Go ahead, spit it out.
“The CEO said the latest housing slump is different from previous ones because it wasn’t triggered by an economic shock but by a sharp pullback in the confidence of buyers, who are reluctant to purchase a home ‘that may be cheaper a month later.’”
Hey Ara Hovnanian, what you’re really trying to say was that the recent runup in housing wasn’t based on sound fundamentals, rather, cheap dollars, slick marketing and a boatload of lies to keep the momentum going.
Aegis Closes 2 Operations Centers
Aegis Mortgage Corp., Houston, which said goodbye to its longtime chief executive last month, has closed two subprime operation centers, laying off an undisclosed number of workers. The move comes one month after it also combined two operating units — Aegis Funding Corp. and Aegis Wholesale Corp. — and parted ways with its longtime chief Rick Thompson. AFC was a subprime wholesaler. AWC (the surviving name) is a prime and alternative-A funder. A spokeswoman for Aegis, which is owned by Cerberus Capital, said she did not know how many workers lost their jobs with the closure of the two op centers. She stressed that no account executives have been let go, and would not comment on Mr. Thompson’s departure. (Sources told MortgageWire that he was forced out.) She also would not comment on Aegis’ production volumes, but said that business, in general, is good. (For full details, see the Dec. 18 issue of National Mortgage News.)
Shortcut to: http://www.originationnews.com/plus/#4
From their website Testimonials:
“I’ve dealt with a few different companies and was totally unsatisfied until I got in touch with Aegis Lending. Very easy and very painless.”
- Jeff H.
Columbus, Ohio”
I bet it was !
Homes may be cheaper in a month. And even cheaper in 1-3 years. And I’ll save $90,000 by renting over the next three years … hmmm … not a tough decision …
OT- but SWZ a way to go
The mooted change was announced amid news that France’s most famous singer, Johnny Hallyday, has decided to become a Swiss tax exile to escape his native country’s crushing tax burden, which soars to 60 percent in the case of the most wealthy.
>60 percent in the case of the most wealthy.
sounds like a liberal’s wet dream. punish the rich!!!
ZZZZZZZZZZZZZZZZZZZZZZZZZZ
slump not spreading- if you sleep standing up
??? what are bb members plans for 07 ?
it’s apparantley going to sck
The Associated Press. “A JPMorgan analyst on Monday downgraded Sealy Corp. because she thinks the world’s largest bedding manufacturer will miss Wall Street’s estimates for fourth-quarter earnings, amid a housing slump.”
We all knew that the housing bubble would impact secondary industries, but I have to admit, I never considered the mattress supliers.
“Advice to homeowners: If you need to sell and you’re not getting much interest, cut the price by an extreme amount. If you make halfhearted cuts, you’ll remain overpriced and you’ll follow the market all the way to the bottom.”
Good advice. I’m glad to see it in the MSM even if we’ve been saying it for a while.
Neil
Neil,
I hadn’t considered mattresses either, but it certainly makes sense. This is another huge problem we face, and most have yet to connect the dots. In short, too many facets of our economy are presently tied to the building of new homes. I know that Andersen Windows and Weyerhauser have blamed the housing downturn for recent declines in revenue. How can we have a big housing downturn without large numbers of layoffs, and where will these people go? We won’t even go into the effect of declining MEW. This is why I just do not understand all the bullishness still prevalent on The Street.
Mass denial?
New mattresses and bedding is an expensive purchase, you can easily spend 2 grand for a King size bed and bedding. Of course it can go on the old credit card or you can even finance your mattress.
Rather than buy new beds, people will try to get by with what they have. I bet most would rather have the new flat screen TV before they justify a new bed.
Yep, you could spend 2K on a new king size, but I recently bought one for 390 bucks. Throw in another 20 bucks for a nice egg crate cushion and we are sitting pretty. I will never understand throwing money away like some people do.
I’m getting married this summer. I want the bed.
Neli
It is the whole market that needs to be viewed as a bubble. Take auto market - huge trucks, SUVS, vans driven by single person - this an effect of “freely available money”. The tight squeeze is going to affect all industries.
Corolla & Civics - 9k to 18K in 8 years - but did the salaries double? How about the # of SUV and VAN owners and the miles travelled per year? All is bubbled up to the point of collapse.
It is just a matter of time when “huge and enormous” goes out of fashion and “moderate and adequate” starts making sense.
‘Take auto market - huge trucks, SUVS, vans driven by single person - this an effect of “freely available money”.’
There is another reason, which is that SUV purchase is encouraged by tax loopholes and Clean Air Act exemptions…
http://4wheeldrive.about.com/cs/drivingtipssafety/a/aa041603a_4.htm
SUV tax loophole? This capability lasted for about 7 months, and then was repealed two years ago.
I’m starting up a new retail chain… Bed, Bath, & Bankruptcy.
Too funny :-0 When will you be opening? I need a job soon!!!!!
I’m gonna start “Blood, Bath and Bankruptcy”
“It is essential that folks understand the past, in order to prepare for what lies ahead.”
Gee, like having six months cash in the bank, no credit card debt and equity in your home to tap if need be? I’m sure this nation of FB’s will be just fine.
Here’s a question for you. What is the percentage of FBs and people otherwise living beyond their means with respect to the general population? Probably not too much, considering that the filthy rich have much more than 6 months worth of expenses in the bank, and that most of the poor live paycheck to paycheck and one minor mishap away from BK anyway. What’s scary is that most of the FB’s are a significant % of the middle class, and it’s the middle class that is going to take the brunt of this. Even the ones who are living within their means and have no debt are going to suffer for the folly of a comparative minority. Life sucks.
??mort buy backs??
anyone that can relate this to 1991
tia ?
“Housing booms are short. are short and exciting. Housing busts, on the other hand, are long and painful. So don’t put much faith in those oft-heard assertions that the worst is already over. Prices are likely to fall further in many markets in 2007.
A BusinessWeek analysis of the past three decades shows that if history repeats itself, it’s likely to take 15 years or more for many parts of the country to get back to their inflation-adjusted peaks.”
The last time the NAHB sentiment index dropped below a level of 40 was in 1991. So at least when measured by builder’s sentiment, the boom lasted for 15 years — not exactly short, IMO. An important question lurks to which I have no good answer: Are longer booms followed by longer busts?
hartford ct- which is pretty stable w insurnace co’s
1988 to 2002 to get to par
LA was 1989 to 2001, or thereabouts. It took 10-11 years to break even.
And this bubble is a much uglier beast.
It’s worse than that. If your house only breaks even after inflation 10-11 years down the line, and meanwhile you’ve been paying two to three times what it would cost to rent a similar place, those extra expenses have to be considered too - even after the house’s value catches up, someone in that situation has still lost a ton of money compared with renting.
Stucco: to me, this article is huge. What a difference from the past 5 years of media coverage! Indeed, this housing boom may qualify as the longest in US history. It would make sense, the bigger they are, the harder they fall. An elder told me that after the short boom of the late 80s-early 90s, they were technically underwater for almost 10 years. And this is in the bay area! So, because bay area prices have been skyrocketing for several years now, I think the downside will be worse than the last one.
I agree 100%. This article is HUGE. If the mainstream media is saying things like “it’s likely to take 15 years or more for many parts of the country to get back to their inflation-adjusted peaks”, then it won’t be long before the public runs away from RE in droves. It hasn’t happened yet, judging by the fact that I still know people who believe that RE is great investment. But articles like this will accelerate the inevtible crash.
I love the final paragraph:
‘Housing prices were pushed up in part by get-rich-quick speculation. Now real estate has lost its grip on the public’s imagination. Says Richard J. DeKaser, chief economist of National City Corp. (NCC ) in Cleveland: “We’re looking at several years of weak home prices. It’ll return to the time when no one is talking about real estate.” Oh, well. You can still take a flier on Google Inc. (GOOG ).’
Many people don’t realize that it took another artificially manufactured housing boom just for housing to reach the peak prices of the last boom. IOW, had the Fed not lowered rates to 1% they might still be underwater now!
Good point, TJ! Hadn’t even considered that one!
“Are longer booms followed by longer busts?”
That depends on how quickly a price correction occurs. If prices just go flat, like many predict (as home prices in normal cycles move upward in a step function–rapid increases in nominal price, followed by a period of nominal price stagnation), I think the bust will take longer than history would indicate.
If however, there is a more significant adjustment in prices in the near term, I don’t think there is any reason to believe this bust will be different than any other.
“That depends on how quickly a price correction occurs.”
Given all the happy talk which is currently in play to hide the bust from our TV-addicted nation’s view, I think the long, drawn-out scenario is far more likely. Significant near-term price adjustments require a wide-spread perception of what is going down, and happy talk intentionally clouds perceptions.
Unfortunately I agree.
I’ve personally come to the conclusion that I’m not necessarily looking for a price target before I buy, or I could be waiting for a LONG time, I’m looking for a financing market target.
At a minimum, I’m not going to make any decisions for the next couple of years, but once lending standards tighten such that my saved down payment, and my salary matter again, I’ll feel like I can have a more honest purchase process.
-
1997 prices + 3.5% annual inflation!
I’ve personally come to the conclusion that I’m not necessarily looking for a price target before I buy, or I could be waiting for a LONG time, I’m looking for a financing market target.
——————————-
EXACTLY!!!
I concur.
But its not just a financial market target, its also a “morale target.” When no one else out there is willing to buy and its difficult to get a mortgage… then I’ll buy.
That rules out 2007 and probably most of 2008. When exactly? I don’t know. It isn’t like we don’t have a year to just watch the market anyway!
Neil
Does anyone have a list of these mortgage lenders who are going under? I would like to see the trend and exicted to see what happens when real Elephant $hit hit the fan.
I disagree with Fleckenstein.
There will always be a bubble until the dollar bubble is no more. So, once again when recession rears its ugly head, Ben simply breaks out the printing press. Like his predecessors before him, and his successors after him.
yawn.
‘until the dollar bubble is no more.’
It has occurred to me that the Fed may have bet the ranch on the housing bubble.
It has occurred to me that the Fed may be directly purchasing stocks with freshly printed money (maybe through a proxy to hide the obvious), in a bid to shore up perceptions that the economy is doing great. If so, then the Greenspan put has outlived the tenure of its creator.
I’ve thought about that too. It seems like that markets are a place to start a world wide pooling just ripe for the pickin’s to remove a lot of the excess monitary liquidity floating around.
ben,
I’ve considered that too. But as long as China, Asia, and OPEC play along, the game continues. China will play the game until they don’t need the US consumer, which is still several years out (internal Chinese demand is growing 50% faster than Chinese exports, but still has long way to go to replace joe six pack).
OPEC will play because they need US military protection. Likewise Asia.
Given Ben Bernanke’s Licence to Print, I think the Fed will try to boost retirement plans (401k / pensions) which are heavily invested in stocks. Thus, boosting stocks bails these plans out (covering losses from the MBS gernades lurking in their portfolios).
Maybe I overestimate the Fed’s power, but history has shown “Don’t fight the fed”. btw — I believe in Jentzen’s “Ka-poom” theory.
Housing is going down and taking everything with it… it’s already happening. No matter how much koolaid Wall Street serves, the disconnect will eventually become obvious to all and the game will be up.
TJ — I agree, and from a very simplistic point of view. I sold and am renting because I found renting to be half the cost of owning. More people, not fewer, will learn/discover this. More rental properties will be available for less as excess spec inventory doesn’t sell. And finally, builders will build new houses for — it’s a miracle, folks! — less per square foot than the FBs are trying to get for their used places. Even my wife, a super-nester, is conditioned to renting indefinitely when it is such a relative bargain. There’s no way out for sellers except significantly lower prices and even the dolts will figure that out before long.
‘I believe in Jentzen’s “Ka-poom” theory.’
Can you offer a link?
Ka-poom
———-
Is it 1999 again? Yes and no: Creeping up to the Precipice
December 7, 2006
As the latest cycle of the Bubble Cycle—the one that produced the housing, private equity and USIP (Unregulated Speculative Investment Pool vs “hedge fund”) bubbles—comes to an end, another moment of truth approaches for the U.S. Federal Reserve and the Treasury, as well as for central banks and treasuries worldwide. The long debate over inflation and deflation among those whom our Jane Burns calls “the worried well”—those who probably are already hedged and are now looking for confirmation of the wisdom of their caution—may also be decided. I predict that within a year, two at the most, the jury will be in and the matter decided in the course of events.
http://alwayson.goingon.com/permalink/post/7841
Housing Bubble Correction
Fifteeen Years to Revert to the Mean
January 20, 2005
“If there is a real shift downward in housing demand, it would have a dramatic impact across the entire economy,” said John Benjamin, a professor of finance and real estate at American University.
http://www.itulip.com/housingbubblecorrection.htm
“So, once again when recession rears its ugly head, Ben simply breaks out the printing press.”
But the conundrum has weakened the Fed’s ability to bail out the economy with money illusion. This game plan worked best after the 1987 stock market crash, when AG had just taken the Fed chair position.
The FED does not print money. All they can do is make it easier to get a loan. This is done by lowering FED funds, lowering reserve requirements, and attempting to talk down rates. The FED has enfluence over the ability of lower grade borrowers to get money. There is precedent for central banks failing to expand the money supply 11/29 thru 1933 in the USA and Japan in the 1990’s.
If prices of stocks and realestate are historicaly high verses their potential cash flow (rent or dividends) there is great risk to the downside. The FED can not help the buyers that took on the toxic loans over the last three years. As their equity declines, they can not get new loans.
Of even greater risk is that the USA is a debter nation with a further unbalanced trade deficit. This leaves open the potential/probability of a dollar run in late 07-08. The FED would have to raise rates at some point to defend the currency as in the fall of 1971, Mexico in 95, Russsian in 1998, and Argentina in 2002.
Even with the ability to control rates in the USA in the 30’s and Japan in the 90’s those economies suffered deflation. “It is different this time”. We are debtors so we may have it worse as interest rates rise in our nation due to dollar problems. This could happen in the midst of a deflating economy. The perfect negative storm.
Please stop saying the FED can print money. They can not and have never done this. They need a solvent and willing banking extablishment and borrowers with sound balance sheets to expand the money supply….”print money”.
In desparation Roosevelt coined the changed psychology when he said, “we have nothing to fear but fear itself”. We will be able to reinflate someday but only after we go through the destruction of a great deal of the world’s debt structure. This will be a fearful time. It is easier to make and get a loan (inflate) after bankrupcy. It is very difficult to get that loan before BK contrary to what the credit score people claim. The USA and our people need to go through a BK of sorts.
The FED could buy USA debt and allow the government to cut taxes further and spend more. The risk again is the pounding the long term bond market and dollar would experience. By lowering short term rates to exclusive qualified borrowers the FED threatens long term rates.
“The FED does not print money.”
I guess whether this is the case depends on how literal you are about the meaning of the word “print.” Perhaps the following passage from a 2002 speech will shed light on the subject (and BTW, the price of gold was $617.90 the last time I checked):
—————————————————————————
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject’s oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm
Stucco: interesting thoughts there. I am a little bit frightened by the term “determined government.” WTF does that mean? And how do they “always generate higher spending?” They can’t literally make people spend if the desire is not there. Or can they? Should I put my tin foil hat on now? I think the Fed vastly overestimates their power and abilities.
“They can’t literally make people spend if the desire is not there.”
The Japanese govt had problems with this in the early 1990s. Asians are known for their cultural habit of saving money, which may help explain why the practice has been demonized over here to the point where our savings rate is negative.
The gold standard was abandoned because it is inherently deflationary. Saving is strongly encouraged in the US by a host of educational outreach programs and other government works, but our culture is made up of more than government outreach. The recent move toward opt-out rather than opt-in employer savings programs is another example of how you really need to be more careful about the details if you care to be credible.
“…if you care to be credible.”
I am not very worried about my credibility, as the MSM-quoted “experts” are incredibly weak in that department.
“The recent move toward opt-out rather than opt-in employer savings programs is another example of how you really need to be more careful about the details if you care to be credible.”
And you can take your employer savings programs and shove’em. As far as I can tell, the main purpose behind these is to shovel more money from the Gekkos of the world towards Wall Street, not to encourage savings.
“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply.”
Like gold, U.S. houses have value only to the extent that they are strictly limited in supply. But when you have an all-time record glut of recently built, overpriced stucco boxes sitting empty at prices which are not supported by local incomes, then it seems that there is a propensity for prices to fall. And if you try to print more money to offset deflating home prices, you inadvertently stimulate more building of ghost McMansion tract home developments out in the desert. The resulting situation is a version of the logical conundrum popularly known as Catch-22.
http://en.wikipedia.org/wiki/Catch-22_%28logic%29
‘After showing strong growth in recent years, the U.S. home improvement industry is currently facing headwinds in 2007, according to Fitch Ratings. At the moment, a fairly severe, probably multi-year housing market contraction, higher interest rates, slowing home price appreciation and high energy costs are tempering homeowners’ spending on most home improvement projects.’
‘With the housing market slowing down, there is concern that home improvement spending will stall, though Managing Director Robert Curran says that the housing market contraction has not significantly curtailed consumer spending thus far. ‘However, if the housing market continues its slump, which is likely to persist until at least the second quarter of 2007, consumer spending, particularly on home improvement projects, may pull back,’ said Curran.’
‘The United States could be facing one of its worst mortgage foreclosure crises, with an anticipated $100 billion or more lost from record foreclosures in the subprime market, according to the Center for Responsible Lending (CRL).’
‘The report—which will be released in full during a live, phone-based national news event (with full, two-way Q&A) at 1:30 p.m. ET tomorrow—is based on the first nationwide study of how subprime mortgages perform and includes projected foreclosure data for all major metropolitan statistical areas.’
‘Speakers for the phone-based news event include Michael D. Calhoun, president of the CRL; Pat Vredevoogd Combs, president of the National Association of Realtors.’
The United States could be facing one of its worst mortgage foreclosure crises, with an anticipated $100 billion or more lost from record foreclosures in the subprime market, according to the Center for Responsible Lending (CRL). The default of subprime mortgages originated from 1998 through the first half of 2006 is expected to hit low-income and minority borrowers the hardest.
Paging the poverty pimps in Congress!
“… expected to hit low-income and minority borrowers the hardest.”
Sounds like all those affordable housing programs which encouraged the use of 0% downpayment suicide loans to get low income households into homes they could not afford worked really well! Heckuva job, Fannie!
I love when folks try to pin this on W- yes, he was weal but the BS boom began w the community bankin bill, yo
If I seemed to be blaming W, it was not intended. I concur that the bubble had its roots in government manipulation of the housing market during the Clinton years (e.g., Raines at the helm of Fannie, $500K cap gains exclusion, etc). Of course, W backed the American Dream Downpayment Act (which enjoyed Catherine Harris’s strong support…)
http://www.whitehouse.gov/news/releases/2003/12/20031216-9.html
The default of subprime mortgages originated from 1998 through the first half of 2006 is expected to hit low-income and minortiy borrowers the hardest.
Naaa, this couldn’t possibly stall the upgrade market.
Did anyone else notice they said sales back to 1998! I thought once a mortgage was past 5 years it was pretty safe… But obviously the equity extractions of the last few years have yet to come home to roost.
Ouch. But this is more greed than anything else. So instead of pity, I’m investing in popcorn.
Neil
“This administration will constantly strive to promote an ownership society in America. We want more people owning their own home. It is in our national interest that more people own their own home. After all, if you own your own home, you have a vital stake in the future of our country. And this is a good time for the American homeowner. Today we received a report that showed that new home construction last month reached its highest level in nearly 20 years. (Applause.)
The reason that is so is because there is renewed confidence in our economy. Low interest rates help. They have made owning a home more affordable, for those who refinance and for those who buy a home for the first time. Rising home values have added more than $2.5 trillion to the assets of the American family since the start of 2001.
The rate of homeownership in America now stands a record high of 68.4 percent. Yet there is room for improvement. The rate of homeownership amongst minorities is below 50 percent. And that’s not right, and this country needs to do something about it. We need to — (applause.) We need to close the minority homeownership gap in America so more citizens have the satisfaction and mobility that comes from owning your own home, from owning a piece of the future of America.
Last year I set a goal to add 5.5 million new minority homeowners in America by the end of the decade. That is an attainable goal; that is an essential goal. And we’re making progress toward that goal. In the past 18 months, more than 1 million minority families have become homeowners. (Applause.) And there’s more that we can do to achieve the goal. The law I sign today will help us build on this progress in a very practical way.
Many people are able to afford a monthly mortgage payment, but are unable to make the down payment. So this legislation will authorize $200 million per year in down payment assistance to at least 40,000 low-income families. These funds will help American families achieve their goals, and at the same time, strengthen our communities. “
I type this one handed as the other is my heart whilst whisteling a patriotic tune.Just reading this brings a tear to my eye.
God bless us all. They are not make any more Americans. Price of America always goes up. It is in our constitution : The right to bear ARMs.
Bush is, was, and will always be stupid. Let’s see one of his kids go out and buy a house on money earned (not Daddy’s wallet), but then, again, his daughters don’t seem interested in all that crap.
Getting poor people to buy houses is the dumbest thing I’ve ever heard. How are they supposed to pay for them? The city of Bradenton (Florida) is now trying to take away a non-profit’s property (it has a communal garden where people can grow their own vegetables) for “affordable housing.” What a joke. Instead of building MORE hideous condos and selling them a lower prices with government subsidies, why not just wait for the bubble to collapse, and then everything will be “affordable?” But, no builders could make big profits that way.
Poor people who can’t afford so much as a down payment certainly cannot afford to “buy” a house, especially in Florida with out property taxes and insurance rates.
Bush’s “ownership” society is really a “debt” society, and the trillions in added “wealth” he refers to are imaginary and ephemeral.
“How are they supposed to pay for them?”
It is up to our newly Democratic Congress to work that out, with some generous help from taxpayers…
I recall the joke about the future New York Times headline “World Ends; Women, Minorities Hardest Hit.”
LOL — good one.
that’s EXACTLY what I thought of when I posted it
BusinessWeek’s article is probably the most bearish thing yet published by a “significant”, major, media source.
Could this be the first major crack in the damn?
The old saying is; “If it bleeds, it leads.”
Now that the red ink is starting to appear because of the defaults and foreclosures it will start leading in more and more of the major news media outlets. But for some of them were the biggest housing cheerleaders on the way up so it is going to take awhile for them finish their crow dinners before they start talking about the downside to the boom/bubble.
BusinessWeek also did an article “How Toxic Is Your Mortgage” a couple of months ago. Graphic was a giant python wrapped around a house. It was a pretty extensive article that blew the lid off all the lending crap over the last few years.
The smart money is out.
I wonder if that article coincided with the deadening of the real estate market….around June?
Been trying to figure out what triggered (if anything) the significant change in the number of available buyers at that point.
Been trying to figure out what triggered (if anything) the significant change in the number of available buyers at that point.
Affordability. Most of the buyers weren’t reading business week. Starting in June there were enough defaults that people were starting to understand friends could be in trouble. Also, in June the inventory was high enough that buyers understood they no longer had to panic.
The media is having little impact on the market turning. They’re a lagging indicator.
Neil
Agree with Neil. There was an article in Harper’s in (?)April called “The Road to Serfdom” (J6P trying to get rich quick in RE) — but you can bet your Euros that J6P doesn’t read Harper’s.
I agree, it was affordability brought on the seasonality of real estate and investor/builder/homeowner greed.
We reached a tipping point where the prices people were trying to achieve didn’t make any sense relative to the number of homes on the market.
Next thing you know, prices are flat/down, and up next, psychology shifts so that people begin to ignore price appreciation, and look at a home as a place to live. That’s when the real pain sets in.
I think we are in the middle of the psychological shift phase. There are still lots of people that feel this is a temporary phenomenon and that next Spring will be great. It make take until after another dead spring selling season in 2008 for people to get used to flat home values.
Again I agree with Neil, and this time az lender: the average person is reading US and People, not Business Week, Harpers, Economist, and Wall St. Journal. All have had cautionary articles over the past year. We are extremely fortunate that we now have blogs like this that handily package this info for us. Also, our educational system gives us almost zero finance knowledge. Honestly, if you aren’t a business or econ graduate, then it is doubtful you ever got any of the essentials. Even then, it still takes critical thinking skills which are something many apparently lack. I know many on this blog are not business people per se, but they are probably abnormal because they take the time and energy to learn. People here are independent thinkers that don’t follow the herd. I love this site! And, despite the easy access to the internet, I guess it will take personal experience before the masses understand. Until then, give them bread and circuses!
CA Guy, I’m pretty lame when it comes to “yields” and “spreads” and stuff like that. But I do read The Economist and Harper’s. Their articles are simple enough for a lay person with average attention span to understand. The Economist ran an article on the housing bubble for the first time in 2003, if I remember correctly. I gave it to a friend who was buying a house at the time, but it didn’t work its magic on her. I’m still trying to figure out what it is that people in this blog have that is lacking in other folks who are otherwise responsible and successful in what they do. I wish I could bottle it and give it to my kids with their breakfast…
Cassiopeia,
CAguy pointed out what most of the others don’t have, the ability to do critical thought. Unfortunately, its only taught by negative example as counter examples to a knowledge base.
I’ve also noticed people on this blog tend to have a gift for mathematics. Oh, maybe not the type expressed in school, but at least the type my grandfather had. He could look at a plot of land and buy concrete (for the foundation) more accurately than any engineer. Yet he never completed high school…
I’ve also noted, people on this blog read. That’s the other part of critical thought; you must be exposed to a multitude of mind sets. Read literature or trash, but if you’re going to make your own decisions read!
Stepping off soapbox,
Neil
Neil, you’re probably on to something. Maybe your grandpa could not solve a complex equation, but he had a knack for calculation so he could size up a situation and realize whether or not it made sense. I know I’m awful at math, but I’m good at spotting the flaws in an argument. I’ve made some enemies thanks to that, since I’ve learned to shut up only lately…
“The smart money is out.”
Exactly; the wall streeters are gambling today with the little people’s money, i.e., their pensions.
The smart money started making for the exits in 2003/4 - I read that right here on this wonderful blog over the summer. I just can’t remember the exact facts and figures but big capital was already on the move - never to be caught flat footed.
“The smart money is out.”
Agreed, 100%. I think the recent sale of some big-time REITs is evidence of this. Their presidents have been around a while, and know what is coming. I can’t blame them. If somebody from Wall St. foolishly wants to throw a ton of money in your lap, then you take it and laugh all the way to your private island in the Caribbean. Also, note the enormous amount of insider selling at the homebuilders. No doubt they know that their company will never again see those stock prices of last summer. Nothing lasts forever, no matter what the NAR and Gary Watts say.
this is tough BW medicine
THAT SAID, RIGHT NOW is not the ideal time to buy or move up, even with the recent price declines. The inventory of existing homes shot up 34% from October, 2005, to October, 2006, and now stands at nine months’ worth of condos and seven months’ worth of single-family houses at the current rate of sales. That backlog will take a long time, and a lot of price-cutting, to clear out. One housing bear, Ian Shepherdson, chief U.S. economist of High Frequency Economics in Valhalla, N.Y., guesses that prices nationally could fall 5% to 10% from the end of 2006 to the end of 2007, going by the Office of Federal Housing Enterprise Oversight housing price index. Using that same measure, Goldman, Sachs & Co. (GS ) predicts a 3% decline from 2006 to 2007. Before 2006, the index’ worst performance since its origin in 1975 was a 0.3% increase in 1990. The OFHEO numbers don’t cover the highest- and lowest-priced homes, which will probably do even worse, says Economy.com Chief Economist Mark Zandi.
From the Business Week article:
Yummy Bartiromo: “What would be the right way for China to adjust its currency?”
Paulson: “They need a currency whose value is set by the competitive marketplace. That’s what every other major participant in the economic system has. And China is unable to do that now and will be unable to do it until it opens up its capital markets…to competition and foreign investment.”
Catch that last phrase? Gosh, peanut gallery, do you think that Goldman Sachs could help China with that? Maybe they let Bear Sterns and the others have a few slices of the pie? Yes, kids, Buffalo Bob and Clarabell think that Wall Street will be the biggest beneficiary of this pressure on China, we sure do.
Fleckstein is a great read. He is a columnist for msn and his shell game/tag-team analogy for how the .com bust passed to housing and how there isn’t a gimmick left to channel the froth is spot on.
I would think that Az RE will be in for another leg or two on the downside. A theory that does persist is that the prices here will be butressed by California refugees flush with their bail-out money and retirees moving here. While I am skeptical, it makes for an interesting argument and I’m very curious to see how it will play out.
Aw, Charlie, stop being such a killjoy. Doncha know that everyone wants to move to Arizona?
Although, being a longtime Zonie, I can’t help but wonder what they’ll do when they get here. Such can’t support a house mortgage with one of our oh-so-abundant call center jobs.
Charlie,
I’m skeptical of that scenario also. While there may be people in CA that would like to cash out and move to AZ, just who is going to buy their house? If the housing industry is a structure, then the first time buyer is the cornerstone. People here can dream all they want, but for most they will be stuck unless someone buys them out.
Charlie — even if we assumed that a lot of boomers plan to move to Arizona, I think it would be dangerous to underestimate their ability to figure out the rent vs. own cost ratio and rent while they wait very, very patiently for a good purchase price.
agreed
Just came across this article on urban vs. suburban housing:
http://www.nytimes.com/2006/12/17/realestate/17njzo.html?ex=1324011600&en=7af81f10efbd0d1d&ei=5088&partner=rssnyt&emc=rss
The upshot: in the NY area urban is holding up better, but just because empty nesters want that urban condo doesn’t mean they can get it. They have to sell their suburban home first.
I cant imagine families really want to raise their kids in Port Imperial or Hoboken. I understand single professional yuppies but thats it.
Wasn’t Frank Sinatra born and raised in Hoboken?
Yep. My father-in-law was his next door neighbor in Hoboken. BTW: The last time that I saw “dad” before he died, he said, “Kitty Kelly got it right.” He was talking about her tell-all about Sinatra…
Most of them were raised suburban in 3000 sq. ft. homes…they have no idea what it’s like to raise kids in a small condo in the city - not exactly the same deal as being young single or married professionals when you add those little characters into the mix. They think they want it now, but I always wonder how it will really play out in the end…I have a suspicion that the lifestyle these developers are selling them isn’t going to look so pretty in the long run and that within 10 years you’ll be seeing a movement back to the ‘burbs.
Wow!
OFHEO FILES NOTICE OF CHARGES AGAINST FORMER FANNIE MAE EXECUTIVES FRANKLIN RAINES, TIMOTHY HOWARD AND
LEANNE SPENCER
Charges Seek Restitution, Civil Money Penalties
Full release (PDF) available at
http://www.ofheo.gov/media/pdf/RainesNOC121806.pdf
“OFHEO Director James B. Lockhart determined that the Notice of Charges was appropriate based on the findings of the special examination of Fannie Mae conducted in 2004-2006 and additional review by OFHEO’s Office of the General Counsel and the Office of Compliance.
“The Notice of Charges details the harm to Fannie Mae resulting from the conduct of these individuals from 1998 to 2004,” said Director Lockhart. “The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public. The Notice explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner. The misconduct cost the Enterprise and shareholders many billions of dollars and damaged the public trust,” Lockhart said.”
I predict a slap on the wrist and no more will come out of this.
he’s an AA protected species- hope all 3 get the aids bug in jail
Potentially trillions of dollars is on the line and all you can think about is the grotesque business of prison rape. This blog is constantly teaching me important lessons about how we all got here.
Um…most likely, it was not prison rape.
There’s probably quite a bit of scapegoating going on here, but at least they are pinning it on a guy that deserves it. I think they’ll take his bonuses back (with interest added), judging from the text of the press release.
You can subscribe to their email news releases at:
http://www.ofheo.gov/HPI.asp
The last few emails from OFHEO have put my in a rather cheery holiday mood….
Enron again? Luckily, Fannie Mae’s stock always goes up…
———————————————————————————
Ex-Fannie Mae CEO, others charged with manipulating earnings
By Greg Morcroft
Last Update: 3:04 PM ET Dec 18, 2006
NEW YORK (MarketWatch) — Federal regulators said Monday they have filed charges against three former Fannie Mae (FNM :Fannie Mae
News , chart, profile, more Last: 59.93-0.34-0.56%
2:52pm 12/18/2006) executives, former Chairman and CEO Franklin Raines, former Vice Chairman and Chief Financial Officer J. Timothy Howard, and former Senior Vice President and Controller Leanne G. Spencer. The Office of Federal Housing Enterprise Oversight (OFHEO)said the charges, “reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public.” OFHEO said it will seek civil penalties of up to $100 million from the former executives, and the return of bonuses totaling up to $115 million from the three.
Just a thought: I haven’t heard one single case of human being saying: “I am moving to America because I am trying to enhance my spiritual well being”.
Anyway, I am optimistic about Americans. Maybe after 230+ years of materialistic überconsumer ways of doing things, they will eventually learn something else. Maybe even lead the world for something better. Never know never.
Well, aside from the Pilgrims, Mormon converts, etc….
Not to mention Lebanese Christians, German Jews, Tibetan Buddhists, Persian Ba’hai, Chinese Falun Gong, Veitnamese Catholics…
Hard to be spiritually fulfilled when you’re pusing up daisies.
Of course, some would say that’s the point where the real spiritual fulfillment kicks in…
All in all, though, I’d rather, for the moment, remain slightly less spiritually fulfilled, and still breathing the sweet crisp clear wind after a Pacific storm passes. Sunday afternoon here in OC *almost* justified the ridiculous home prices.
From the Portland Business Journal:
Weyerhaeuser Co. said Monday it is permanently closing two veneer technologies manufacturing operations in Oregon — a plywood mill in Springfield and a veneer plant in Coburg — effective immediately.
The plywood mill had 86 employees and the veneer plant had 42 employees.
Federal Way, Wash.-based Weyerhaeuser said the plants closed because of shrinking demand for plywood panels due to a decline in housing starts and the increasing availability of alternative products.
Weyerhaeuser is providing the affected employees with severance pay and continuation of health care benefits, as well as job-transition services and counseling. Workers at the Coburg mill are represented by the Western Council of Industrial Workers union. Springfield was a non-unionized facility.
The Springfield plywood mill had been operating on a reduced shift schedule since January. Built in 1962, the mill had the capacity to produce 117,000 million square feet of 3/8-inch plywood annually.
The Coburg plant production had been curtailed since Oct. 28. The facility, which began producing veneer in the ’60s, produced dry veneer which is merchandised for internal and external customers. The annual capacity of the mill was 105,000 million square feet of 3/8-inch veneer.
During the next few months, the two plants will be decommissioned and some of the equipment will go to other Weyerhaeuser veneer technology facilities in Oregon. They are in Albany, Eugene, Junction City, Stayton and Sweet Home.
Weyerhaeuser continues to employ approximately 4,000 people in Oregon in a variety of businesses and manages about 1.2 million acres of timberland.
Hottest housing markets show the real statistics
http://tinyurl.com/yzv6jp
That article has already been posted and discussed here, but it is great to see it showed up in the OC Register. I wonder if Gary Watts has any comments to offer on its points?
I doubt it…I’ll bet Watts is laying low on some tropical island somewhere and starting a new career as a bartender…I can see it now….hmmmm
Tourist: May I have a Mai Tai?
Watts: “It’s in the bag!” (insert sporty Tom Cruise Cocktail moves here)
Very interesting take on Wall street & Treasury in the Guardian article
“Clueless in China”
http://commentisfree.guardian.co.uk/james_k_galbraith/2006/12/clueless_in_china.html
New mattresses and bedding is an expensive purchase, you can easily spend 2 grand for a King size bed and bedding.
——————————————————————————–
2 grand? I almost had a heart attack this last summer when I saw my first “deluxe” mattress at the local “Sit n Sleep” selling for close to
$ 8,000. No question that it was nice but SHEEEIIIIT - $ 8 k could have bought me two plasmas (just kidding!).
This has been an outstanding thread, IMHO.