Bits Bucket And Craigslist Finds For December 22, 2006
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Jim Cramer’s Stop Trading! Buy a Lender
Subprime lenders are a solid business right now, because credit losses aren’t a concern, Jim Cramer said on CNBC’s “Stop Trading” segment Wednesday.
Even so, companies such as Accredited Home Lenders (LEND - commentary - Cramer’s Take - Rating) have stumbled as competition has eroded their margins.
“What hurt them was not the credit quality but that Bear (BSC - commentary - Cramer’s Take - Rating) moved into the game and Merrill (MER - commentary - Cramer’s Take - Rating) moved into game,” he said. “It’s a margin-shred story.”
Cramer said investors don’t need to worry about defaults or a slowdown in lending because “we’re nowhere near the red light on credit.”
i wish everybody a happy and healthy holiday season
http://www.immobilienblasen.blogspot.com/
I subscribe to their “professional” site (Street Insight) to avoid having to even see the ugly puss of that screeching clown. I did receive his book in the mail for Christmas which I promptly donated to the local high school library (although in retrospect, that may have been a bad decision, lol).
My market year is over as I in early spring puts and just waiting for this nonsense to be over. Not the best year I ever had but it paid the bills and enabled me to avoid honest employment for another year.
It is funny how all the market gurus are all bulls. I think that is a bad sign in itself.It is unbelievable the market has held up this long. I’ve been expecting a 200 point loss day on the dow for a couple weeks.
Glad you made some money this year and hopefully a better year in 2007.
I am watching CNBC this morning. I wish I was at work so I wouldn’t even be tempted to do this. I can feel myself getting dumber.
Earlier Doug Kass was on and talked about “the great housing depression of 2006 & 2007″. Mark Haines, I think his name is, had to jump in and disagree right away. It was funny that Kass was sitting there on that split screen and his screen showed he is in Palm Beach. Who better to know about the Housing Depression than some guy sitting in Palm Beach.
I think the guy I now hate most on CNBC is that always screaming Rick Santelli (I think it’s his name). Somebody needs to punch him. I need to move. I hate sitting here, knowing I’m less than 6 blocks from all of these scumbags.
That is funny you live so close to all the action. You know I actually like rick santelli. He is a pretty sharp guy. I do not like cocaine larry kudlow. He is always full of bs.Becky quick is pretty cute.Everyday there is talk about housing on the show.With so many different predictions it is easy to get caught up in the nonsense.
Think about this…
They all make 100k plus a year for 30 to 60 minutes of work a day being a permabull.
Like pied pipers leading a ship full of rats. They’re all walking the plank and don’t even know it.
nycboy funny stuff
i am off work as well until 1/2 and doing the exact same thing, blogging and getting sick from cnbc in the background as i type the subrpime mortages and declining housing market will not spread to ur economy
rah rah rah unbelievable
“I do not like cocaine larry kudlow.”
There is so much intelligence and creativity on this blog that I’m surprised nobody has found a really good moniker for Larry Kudlow that incorporates the word “blow” into his last name. Somebody work on that please. Larry Kudblow is too simple.
“They all make 100k plus a year for 30 to 60 minutes of work a day being a permabull.”
100k in this city is nothing. I think for my wife and I to live the life we want to live we need to make 150k or more. That threshold allows you to rent well, go out on a regular basis, fully fund retirement and save for an emergency. I sleep well at night and get to live in the world’s largest freak show. It’s nice. Remember we live very simply. To live like the Joneses we would have to make 250k per year.
How about, “Uriah Heep Kudlow”. If you’re not sure who Uriah Heep was, he was a character out of Charles Dicken’s “David Copperfield”. Always had an ugly smile (Kudlow has one of the ugliest smiles I’ve ever seen) and was continually rubbing his hands together while saying, “Oh, Mr. Copperfield. I’m ever so humble, sir. Just an humble person who knows his place,” as he schemed and plotted to steal off his trusting employer.
Crudblow.
“It is funny how all the market gurus are all bulls. I think that is a bad sign in itself.”
I think of that as a strong contrarian signal.
I wish I had a nickel for every CNBC shill saying “Dow 14000″. I would have a $hitload of nickels.
My favorite most credible person on cnbc is art cashin. He is actually a trader for ubs but they interview him a lot. I think he is an honest old school guy.
“I think the guy I now hate most on CNBC is that always screaming Rick Santelli”
He should be selling cars on TV ala Cal Worthington.
IMO, the hardest to take is Steve Liesman (pronounced ‘Leesman’), because he Lies, Man! Highly educated with enough experience to know an asset bubble when he sees one, and what’s coming in it’s wake. I wonder just how much it takes to make a paid actor out of a formally educated businessman… I’m guessing these heads are north of $250K.
Try this, it’s fun. The next time you see Steve LiesMan on Squawk Box, imagine him wearing a pleated skirt, sweater with a $$$ sign, and pompons… you won’t have to imagine the jumping up and down.
For those of you who were commenting negatively about Steven Krystofiak (MBARL) a couple of days back, he was posting the same message on Ben’s old blog about this time last year.
For me he has some credibility, because he was warning while the KoolAid was still in full flow, but IIRC several posters (myself included :)) were pretty aggressive even then about suggesting he was too little too late.
He was definitely too late, way too late.
But he was still in there way, way earlier than anybody else. And for that I respect him.
U.S. November Personal Spending Rose 0.5%; Incomes Up (Update1)
By Joe Richter and Courtney Schlisserman
“Dec. 22 (Bloomberg) — Americans spent and were paid more last month, reinforcing the role consumers will play in extending the economic expansion to a sixth year.
The 0.5 percent rise in spending followed a 0.3 percent gain in October that was more than previously reported, the Commerce Department said today in Washington. Incomes increased 0.3 percent for a second month, and a measure of inflation was unexpectedly unchanged.
A separate report showed companies are hesitant about making equipment purchases. Orders for durable goods rose 1.9 percent last month, reflecting a rise in demand for commercial aircraft and military equipment. Excluding transportation, orders dropped 1.1 percent after a 1.6 percent decrease.
Business Equipment Orders
Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, fell 1.4 percent last month after dropping 3.9 percent in October. The back-to-back declines were the first since February-March 2005.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHjDeBb8Ds.M&refer=home
The Michigan Consumer Sentiment index is higher than forecast. Consumer spending rebounded in November, continuing to outpace consumer incomes. Woo-hoo, more debt for everybody!
I still believe being a saver is the way to go. I refuse to believe this thing will end in a rosy manner for the debt slaves and speculators.
I just hope your neighbours are not spending your savings!
The LA Times is still publishing Realtor the propaganda that we’re at or near the bottom of the market. I hope they’re named in the next class action suit as co-conspirators with the other industry shills: http://www.latimes.com/business/la-fi-homes22dec22,0,3519321.story?coll=la-default-underdog
Okay, now I’m starting to scratch my head. I used a name when I emailed radio show host #1, and last night a host on another show was making jokes about it (I’ve got one of those snow globes in the yard… the giant blow up things that blows snow around… I guess you could call it a bubbleboy .. haha). I did manage to call in, as the guy challenged anyone who thinks there is a bubble in Hampton Roads. It’s very difficult to get words in, as it’s their show and they control it. My first comment was something along the lines of “In the past 4 years, the housing prices in Virginia Beach have doubled, salaries have pretty much remained the same, and the population hasn’t grown substantially… how can you not say there are issues with the market?” response was … it was undervalued before. So much for their past comments of the demand drives the market value. Second line I managed to get in was “Well, when builders offer incentives and kick backs and anything else, technically the price has dropped… it just doesn’t get reported in the comps.” They were quick to say that is right, and everyone should take advantage bla bla… and suggested I withdraw 100% of the equity in my current home (I don’t have one), and use a 7 year IO loan to buy another property, hold it and sell it at 7 years. Gotta love it.
Just one question. Where is all my backup here in Hampton Roads? I know a few of the readers are local… you guys and girls need to help take action. You know there was a bunch of people listening that were nodding their heads in agreement. Of course, almost everyone that owns a place thinks the market won’t go down.
Why worry about it? Unless there is a development that can overcome supply and demand fundamentals the market will head in its “natural” direction sooner or later.
Tell them next time you call in that every you say is a lie and that you are lying right now. You may hear their heads explode on the radio as a result.
“and suggested I withdraw 100% of the equity in my current home (I don’t have one), and use a 7 year IO loan to buy another property, hold it and sell it at 7 years. Gotta love it.”
Amazingly stupid advice.
Having bought my house in Philly in 1998, I’m in the position to take that advice. Aside from the obvious idiotic risk of getting killed in the RE downturn, there is another factor that is never pointed out when these moron give such advice. I’d still have to pay the interest on the 400K I would cash out! Even at 6%, that’s still another 24K/year that I would have to pay. Not gonna happen.
I must admit that I admire your willingness to put up with the bias and stupidity which comprises those radio shows! I just can’t bring myself to put up with all the bs to try to get the message to a wide audience. I long ago learned that trying to use logic on issues where emotions play a large part of the decision-maiking process is not something that I am cut out for…
Even within my small sphere of influence, I have just about given up trying inform others and I am convinced that I should just let them go destroy themselves. I will be able to sleep at night because I did them the service of warning them - numerous times. Despite my tirades about housing and all the new construction at rediculous prices with no remaining buyers, even my girlfriend is talking about going out and buying a condo while she is in grad school, so that she is not ‘throwing money away on rent’. Unbelieveable.
You are correct in your assumption , no amount of logic will sway the majority in la la land. They will only venture out when la la land bursts. hence you are wasting your breath and time, that also includes time on this blog, It will have no effect on the outcome . It just gives you a place to vent
“even my girlfriend is talking about going out and buying a condo while she is in grad school, so that she is not ‘throwing money away on rent’.
This time it’s on her nickel. Get married and it’ll be on yours. Marry assets, not debt.
> even my girlfriend is talking about going out and buying a condo while she is in grad school, so that she is not ‘throwing money away on rent’. Unbelieveable.
If you two ever marry, keep your money separated.
The Consequences of Riskloves Setting Prices:
http://wallstreetexaminer.com/blogs/winter/?p=217#more-217
Good stuff. Hope they’re awash in copper when I build my house. Thanks, Russ.
Interesting article on the economy and housing:
http://atimes.com/atimes/Global_Economy/HL23Dj01.html
“…another explanation must be behind the Fed’s shift to more accommodative monetary policy. The most likely seems to be growing concern among Fed policymakers over increasing systemic problems for the US financial system arising from the collapse of the US housing market….
…
Cash-out mortgage refinancing accounted for about 50% of all mortgage refinancing between 2001 and 2004. In 2005, cash-out mortgage refinancing accounted for 73% of all mortgage refinancing. In the first half of 2006, cash-out refinancing accounted for a staggering 87% of all refinancing.
….
However, with the Fed rudderless, it is very unlikely that this self-correction will occur in an orderly and gradual manner. Rather, such self-correction will be sudden and sharp.
….
The growing real yield gap between the US and other countries will place enormous downward pressure on the dollar.”
So let’s see, in this system we penalize people that work hard and save money and reward people that take on huge amounts of debt. As inflation increases the debters gain - the value of the money they owe is less - and the the savers lose - the value of the money they saved is less. Wow that’s real fair.
the War on Savers is continuing on both sides of the ocean; in fact, I think it has been and is even worse in Europe. And I continue to think that the FEDs game plan is simply to use the black helicopters as much as they can, and sacrifice the dollar (and probably hope for a continuation of the gradual decline, as no one dares to be the first to run for the exits). Bernanke believes that printing more money is the solution to all problems (he wrote several books about the subject). Despite some hickups in the housing market, the US money supply growth rate is still increasing and the usual suspects like JPM are having their best year ever. Why would they change anything in the strategy that has always worked well for the FED and their friends?
Extremely rich people can take on lot’s of debt, invest in hedge funds - make some money, lose some money - oh well, they have a lot of it.
The conservative middle class doesn’t have that luxury. They can squirrel away a $1,000 each month but if they take on a lot of debt or invest in a risky investment, they could lose their life savings.
In the past 20 years, the public markets have opened to the general public. They can invest in index funds at Vanguard, trade stocks for 10 bucks a trade at Ameritrade, and use free and powerful research tools like finance.yahoo.com.
Maybe the extremely rich see these developments as a threat and are busy privatizing equity, increasing and hiding inflation as ways to maintain their financial hegemony.
Michael Lewis, author of ‘Liar’s Poker’, wrote about this topic recently:
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_lewis&sid=aA2teSlZKNRM
yes, I agree - it’s most of all a problem for the middle class who can loose everything this way. For the very rich and the very poor it’s not an important issue.
“…economic growth in Europe should suffer the least from slowing US economic growth in 2007. Monetary policy in the EU will tighten further, underpinning currency appreciation. Economic interdependence between EU members will insulate the region somewhat from slowing economic growth in the rest of the world.”
I think too many economists give too much credit for the future of europe’s economy. As far as I can see, we have similar problems and will follow in whatever happens in the U.S. if not worse, because ‘european economic community’ only exists on paper’, we are not one nation. The day the economy is hit hard, Europe will evaporate into small entities again.
yes, I agree. Today my newspaper mentions that a majority of the Dutch and the Germans want to go back to their old currency (Gulden and Mark) instead of the Euro. And that’s not just for sentimental reasons. Many simple people feel that they are being robbed by the printing presses of the ECB. I don’t think anyone in the street believes the ridiculous official inflation numbers (e.g. below 1% for Netherlands, while almost all necessities of life - except for food because of a supermarket war over here - increased at 8-10% every year after the start of the euro). This probably applies to some other EEC member states as well, so yes: when economic troubles increase, the euro might as well disappear into thin air instead of firming up against the US dollar.
Hi, I closely follow Realtor.com and Craigslist for Wash, DC. I think the spring (inventory) bounce has already begun. Who but a FB would post a place for sale a week before Christmas? Quite a few seem be to jumping the gun. Quote from a favorite post:
“Since it’s currently renting at 4548/month, I am clearly not desparate to sell such a strong investment property; so though the price is not inflexible please do not expect to buy the property with an uunreasonable offer.” According to the ad you can rent it as a “weekly luxury vaction rental” - wonder what the condo rules say about that. Bet the neighbors like it. The neighborhood is Adams Morgan - a decent neighborhood. I find $4500 for a 2/2 hard to believe. http://washingtondc.craigslist.org/doc/rfs/250793663.html
Gotta come up with a name for em’, don’t we?
Like “Real Sooners” or “House Soon”, or something to that effect.
Just the opposite of the 1889 Oklahoma Land Rush, people hoping to off their real estate~
http://www.answers.com/topic/crime-in-washington-d-c
650K huh? Does that include gun?
how the h*ll is it “owner-occupied to date since Feb-04″ AND “rented for 4500″ at the same time? i actually emailed the guy to find out, i’ll let you know if he responds. i wonder if that 4500 rent is for the whole year?
WashPost has a front page article on housing and immigration today:
http://www.washingtonpost.com/wp-dyn/content/article/2006/12/21/AR2006122101935.html
apparently the
how the h*ll is it “owner-occupied to date since Feb-04″ AND “rented for 4500″ at the same time? i actually emailed the guy to find out, i’ll let you know if he responds. i wonder if that 4500 rent is for the whole year?
WashPost has a front page article on housing and immigration today:
http://www.washingtonpost.com/wp-dyn/content/article/2006/12/21/AR2006122101935.html
hope this didn’t double post, having trouble w/ browser.
““owner-occupied to date since Feb-04″ AND “rented for 4500″ at the same time”
Good catch.
Here’s my pet peeve.
Why does the media (and some of us on this blog) always spell the term “Realtor” with a capital “R”??? Yeah, I know. That’s the trademarked spelling of the word. SO WHAT?! What if the NAR changed it to “REALTOR”, or better, to all-italics. Would we have to follow that, too?
Personally, I think that there is something amazingly self-important about anyone spelling his occupation with a capital letter. If I asked 10 random people to give a written response to the question, “What do you do for a living?”, the answers would look something like this:
“I’m a lawyer.”
“I’m a high-school teacher.”
“I’m a brain surgeon.”
“I’m a police officer.”
“I’m a photogpraher.”
“I’m a used-car salesman.”
“I’m an investment banker.”
“I’m a pastor.”
“I’m a painter.”
“I’m a Realtor.”
Seriously, WTF?!
“I’m a Realtor.”…before that I was a Liar. So I guess that makes me a realiartor?
Realtor is actually a registered trademark (note the ® after the term on all the Realtor-related websites) and therefore is (technically) a proper noun. Proper nouns are capitalized in English.
Silly? You betcha. But it’s pretty good marketing on their parts. Would a none-too-bright consumer rather use a realtor or a Realtor® to sell their house?
“Silly? You betcha. But it’s pretty good marketing on their parts. Would a none-too-bright consumer rather use a realtor or a Realtor® to sell their house?”
Silly, at the very least. But why does the news media (and some of us on this blog) agree to it? They should just call them “real estate agents” if they think it would be incorrect to write “realtor.”
When Prince changed his name to some silly symbol, the media called him “the artist formerly known as Prince” instead of agreeing to print his silly new name.
I use the initial cap for two reasons:
a) the programming still hasn’t worn off from my REIC gig;
b) as an homage to the very self-importance of which you speak
Realtor®
“I use the initial cap for two reasons:
a) the programming still hasn’t worn off from my REIC gig;”
Must..use…capital…R…Must…use…capital…R… : )
b) as an homage to the very self-importance of which you speak
Hmmm. I like that. So you use it to be sarcastic.
Phillygal, I live at 26th and Pine. You?
Currently I’m in the ‘burbs, in an area that used to be delightful but that is now Tollified beyond all recognition.
Think DelCo but closer to Chester Co. than to Philly.
When I lived in the city, I started out on the Parkway, then moved to South Philly, then ended up in Queen Village before I left for good. But I’ll be back in S. Philly for Christmas Eve dinner, and then on New Year’s Day, heading out to party with the animals, er, I mean Mummers on Two Street .
Where did you take those pix you posted on the HBB gallery?
Sounds like you’re near Glenn Mills or Chadds Ford.
S. Philly for Christmas Eve dinner? Either you’re Italian or your husband is! I grea up in Bensonhurst, Brooklyn. Same deal there.
The photos were taken in two places, either at 15th and Fitzwater or near the PECO plant in Grey’s Ferry.
Right on both counts -location and ethnicity. Of course I’ll be doing the 7 fishes thing on Christmas Eve, and enjoying the bombastic light displays “downtown”!
Have you noticed that in the RE want ads, it’s no longer South Philly, it’s “Center City South”?
Posers.
Grey’s Ferry… oh no. I just looked at the photos again. Figures that the outfit that I used to work for is advertising the “Coming Soon to a War Zone Near You” hell-traps. With granite counters, of course. Or is it tumbled marble, now? No matter, any way you slice it, in Grey’s Ferry, it’s going to end up rubble. And I just noticed the name of the Realtor on the sign…Mike McCann, the REal Estate Man…LOL…the stories I could tell about him. But that might get into liability issues so I will keep my big yap shut.
For now.
I’ll say a belated Welcome to the ‘Hood since you’re a native New Yorker. It sounds like you’ve adjusted well. But it can’t be so bad for NYers who move to Philly - Manhattan is only 90 mins away by Metroliner (or Chinese Bus).
Happy holidays to you and yours, and to all other bloggers du jour…!
I’m a CPA………..guess I’am on the same level as a Realtor
tl
A bag of Crap is still a bag of crap.
And, here’s the latest batch of “We May Have A Problem Here” articles from Tucson:
Why buying ugly houses might not be so pretty:
http://www.azstarnet.com/opinion/161424
Foreclosure “rescuer” gets major smackdown:
http://www.azstarnet.com/business/161458
Thanks for the TUS update. I am looking at the two Robson developments in your area, but waiting for the upper end to get hit. I think 2007 will be the year. So far the price reductions have been minor.
Txchick: From your post yesterday,
The Last Time The Commercials Were This Short….
12/21/2006 10:12 AM EST
More hints that things are not as good as the Wall street shrills claim:
1) Auto industry going down the sh!tter.
2) Merger mania (remember ‘99 ?)
3) The Philly fed reports manufacturing is declining
4) Heavy insider selling
5) And of course housing (the great ATM machine is running dry)
Bob
Somebody please shoot down the CNBC satellite so I quit watching today.
They just had a feature on used house salesmen now using YouTube to advertise properties. Aarrggghhhh! They are now going to kill YouTube. They also announced that there are 60% more used house salesmen than there were 5 years ago. There are 1.3 million real estate agents in the U.S. Holy crap, we’ve gone mad.
Funny…;-)
I was just about to post the same thing!
Little CNBC fluff piece on how resourceful Realtors ™ are using the power of YouTube to sell houses. Apparently, there’s about 4,500 houses for sale there.
Might be fun to find a few of the more psychotic ones….I’m sure there are plenty of them worth a laugh.
The saying goes;…If you don’t have a friend that is a realtor, you don’t have any friends….
Which begs the question, do Realtors really have friends? (I can think of one Realtor example who may well lose three friends very soon. These friends are carrying two mortgages, thanks to his advice.)
“Somebody please shoot down the CNBC satellite so I quit watching today.”
Yes, somebody please! Wouldn’t that be awesome! LOL.
NYCboy
CNBC is nothing more than a lightweight “Business Entertainment Tonite Comedy Show” except they don’t have Mary Hart of some other bimbo fronting it. However, they do have Maria Bimbolini which isn’t far off. I have it on most the time because I sometimes get a good laugh. I have real time charts and when I hear one of the CNBC shills saying how “such n’ such” a stock looks poised to take off, I quickly punch in the symbol on my charts. 99 times out of 100 (literally!) the indicators show something totally different. I NEVER trade individual stocks. Only ETF’s because the stock market is so corrupt that your only chance is safety in numbers. It’s also amusing to watch the people with a “hidden agenda” being interviewed like David Learah.
I figure when I’m trading, watching the CNBC comedy show is better than watching the 1000th re-run of the Andy Griffith Show.
What I really love is when they have an “Alert!” It’s fun watching the numbers run up - on good news or turn south - on bad news, then after a while go back to where they were before the “Alert!”. During that kind of event, Da Boyz of Wall Street really clean up as they exploit the suckers.
“Somebody please shoot down the CNBC satellite so I quit watching today.”
LMAO…. I with ya brother.
Ho ho ho. While we were watching the bubble deflate, the S&P has dropped well under that 1425 breakout from opex last week. My WAG is that the selling floodgates are gonna open on January 2 cause there’s some big gains to take.
I’m with you on that one. I’m looking for ways to put my money where my “bubble bust” mouth is. Looking at shorting from among CFC, LEND, NFI, and NCC (all or some of them).
We should all be sharing ideas on how to either (1) protect what we already have or (2) profitting from the RE bust.
I’m kinda targeting the Nasdaq, Russell 2K, Indian stocks, tech.
I read a fascinating description of the China visit by Bernanke and Paulson. The authors’ take on it was that the boys tried to get China to throw our Congress a bone, something, anything. They fear Democratic congress will push through trade tariffs. This would anger China, which threatened to dump the USD if it happened. However, oil producers who have a lot of dollars threatened to embargo oil sales to China if China dumped the USD. I’m not sure I believe all this, but if true this is a very dangerous situation. China really can’t allow their currency to appreciate without violent, unpredictable social unrest from their expanding working/middle class. This could be a huge mexican standoff.
It looks increasingly likely that the world is already slowly dumping the USD and starting to move to Euro’s as a reserve currency. You can only print so much paper money before other countries holding that currency get very concerned and this country has been on a printing binge for way too long. Truth is, the world is awash with dollar bills and the debts now stretch out in time as far as the eye can see.
However, a freight train doesn’t stop on a dime so this switch isn’t going to happen overnight but I think that oil will be eventually (in the next 5 or 10 years) be traded in Euro’s and the USD will be relegated to a level where it now rightly belongs. That is a “faith based” currency (not backed up by solid assets like oil or gold for instance) of a country which is trillions of dollars in debt (and growing) and which, because of the Bush administration, has no longer any credibility on the world stage. Sad but unfortunately true.
What that means is, that the country who will own this century (China) will slowly divest itself of most of it’s USD holdings as it watches the rest of the world doing the same and, finally being the last man out because it owns so much US paper, will probably eat any loss just to break it’s reliance on the USD.
the euro is not a real alternative; their printing presses are running just as fast as those from the FED (EU money supply growth averaged 8-10% over the last years). Only in the last months the FED has catched up and is now ramping up the money supply even faster than the ECB (currently +12% yoy).
The 10-year is tanking today. Any thoughts by our serious market watchers on this?
The PPT goes on vacation around holidays, and the real market peeks through. Remember the USD selloff after Thanksgiving? Don’t worry, the boys will buy bonds after the holidays. Interest rates really should be 4%. haha.
China had enough of the madness?
When the 10-year tanks, mortgage rates go up with a short (1-week?) lag. Merry Christmas to the soft landing crowd!
One more comment — the higher bond yields which accompany the 10-year tanking imply the stock market should re-equilibrate at lower price levels. Good thing the PPT stands in the way to make sure this doesn’t happen.
Good Gawd, I have not another comment, but rather a question. Has anyone ever seen such weird discontinuities in a daily price chart? What could possibly explain this? I never saw anything so strange before in a mathematics classroom…
http://tinyurl.com/y7obst
Coincidentally, this daily price chart has much the same weird pattern of discontinuities as the one linked in above…
http://tinyurl.com/ydj6tw
That’sh how I shign my name after a pint of Glenlivet.
(What’s the name of that fellow who used to stumble around on the Dean Martin show?)
just wondering how the housing bubble is affecting wage demands in your area. Here one grocery store settled for 21% over 3 years and our government jail corections staff started out at 27 percent over 3 years plus benifits, they are on rotating strikes , but have since started talking 21% plus benifit increases.
Delayed winter allows construction industry to flourish
http://www.cbc.ca/money/story/2006/12/22/nb-nosnow.html
hit the button
build! build! build!
“But there is one drawback — too few skilled workers to get the job done.”
sounds like the US.
Are the shorts mounting their Tet offensive? It is shaping up to be a good day to be short almost anything on the US market. Though if I were daytrading options for a living, I would probably buy mid-morning to catch the PPT wave at the day’s end. Because it would be bad to go into Christmas weekend with a stock market slump, wouldn’t it?
http://tinyurl.com/fzeuw
Stucco, all of the builders I’m watching have just gone red. This includes some such as KBH, MDC, WCI, TOL, PHM, etc. But like you wrote, beware the late day PPT bounce.
Ho ho ho. I sold Santa a few calls.
Took a look at the charts for the HBs, (BZH,CTX,HOV,RYL,KBH,TOL) they are all near the 200 day MA. IMHO, could be an opportunity, but until I see the strong upward momentum change, I would be VERY careful (i.e. goes down 5 - 10 %) and stays there). HOV took one hell of a WACK with a loss for the latest Q, stock got bloodied and didn’t tank as I expected. If the PPT gives up on this one THEN …
Like to wish everyone a very Merry Christmas…and remember, some families who bought homes will have more than sugar plums dancing in their heads this holiday season. Lets not forget that this housing crisis effects many - many who just wanted a roof over their heads to call their own…..Not everyone was in this to make a $$….Peace to All!!
The link to this article says, “Soft landing likely if housing, Fed cooperate.” To which I ask, does the housing market have a mind of its own including autonomous negotiating capability?
———————————————————————————
Top economists answer 10 burning questions
Wonder how 2007 is shaping up? We ask MarketWatch’s leading forecasters
By Rex Nutting, MarketWatch
Last Update: 12:01 AM ET Dec 22, 2006
WASHINGTON (MarketWatch) — The economic outlook is more uncertain than usual. Economists, policymakers and investors are sharply divided over where the economy is heading in the next year.
Will the U.S. fall into recession? Or will growth roar back, fueling inflation and forcing the Federal Reserve to kick interest rates higher? The performance of the stock market and other asset markets will depend to a large extent on the answers to those questions.
http://tinyurl.com/yyefbq
One sign of the expected improvement: “Housing will not be the center of all economic conversation” a year from now, Soss said.
Sure it will, but the smiles will have turned to frowns.
Lereah Responds to ‘Why are people so skeptical of you?’
http://tinyurl.com/sz868
David
http://davidlereahwatch.blogspot.com
catch him on the tube
” a sprinkling of cities in the East may be flat in 07″
fl was his only EC pick to lose $ in 07
Kellner to home sellers: Drop the price, or keep riding your falling knife on down…
————————————————————————————
IRWIN KELLNER
Mind over matter in housing market
Commentary: Buyers hold the upper hand, psychologically
By Dr. Irwin Kellner, MarketWatch
Last Update: 8:41 AM ET Nov 21, 2006
HEMPSTEAD, N.Y. (MarketWatch) — The fate of the housing market is no longer in the Federal Reserve’s hands, since psychology has now become the driving force behind the decline in home prices.
This means that last week’s reported plunge in housing starts and building permits is likely to be followed by more of the same for the foreseeable future. See full story.
As everyone knows by now, the 17 hikes in interest rates engineered by Fed policymakers since the middle of 2004 have punctured the housing bubble — the same bubble that the Fed, itself, helped create earlier when it pushed rates to a 45-year low.
The bubble blew up from the bottom of the market, as ultra-low interest rates, combined with creative financing by banks and other lenders, enabled people who otherwise wouldn’t have qualified for mortgages to purchase homes.
Once the Fed decided to raise rates, lots of low-end buyers found their monthly payments ratcheting higher, thus forcing many to sell. At the same time, others soon found that they couldn’t afford the house of their dreams and backed away altogether.
As a consequence, demand dropped while supplies rose, leading to a rare, but palpable, decline in selling prices. This has happened with both existing homes as well as newly constructed ones.
http://tinyurl.com/y5byyh
‘As everyone knows by now, the 17 hikes in interest rates engineered by Fed policymakers since the middle of 2004 have punctured the housing bubble — the same bubble that the Fed, itself, helped create earlier when it pushed rates to a 45-year low.’
WTF? Is this the latest explanation of how economics works? Way too simplistic. If rate increases had not occured, then what, would be we be sitting here on our hands talking about 2008 when prices may dip a few percent nationally? I think the lack of affordable home pricing has depleted the buyers for the most part. Only so much price a buyer can willingly afford before they shake their heads and keep renting. The bubble would pop any way, rate increases or not. Just be glad it does it sooner than later, so we can pick up the pieces and make up for the losses while we are young.
I work in an area that is celebrating their centennial as a city in 2008. It was a village that begun in 1808. We have a housing stock of about 7500 homes in an area of 4 square miles. Most of the folks have lived in their homes for 30 to 40 years. They have seen bubbles before. Even when they sell to retire down south they have either paid off their mortgage or have a small home equity. They see their house as a forced savings and plan on renting at age 65. Folks who lose on downturns are folks that have to sell for one reason or another. Otherwise, they will struggle and just stay put and hope the weather the same storm as their parents weathered before. It must be so different for other parts of the country that is only 5 years old. Everything is the same age and the same price and they all look alike. I continue to tell my clients it is better to live below thier means. You sleep better at night.
“I work in an area that is celebrating their centennial as a city in 2008. It was a village that begun in 1808.”
That would be a bi-centennial, I believe.
By the way your posts lack credibility to me. That’s the way I see it. I would like you to take a lie detector and answer whether or not you have muttered words such as “priced out forever”, “renting is throwing money away” and “there are multiple offers” when there weren’t multiple offers.
It is a centetennial as a “city” a bi-centennial as a “village” it is the charter that changes it disnitation. I could take a lie detector if you please. I just live in an area that has a different level of junk as it shows as real estate. At changes ever day. Slow market, fast market, 4 % unemployement. The most important factor is that when sellers want to sell that the property sells at a fair price and when buyers want to buy is that they get a fair market price. Can I ever win? Never! What is the most important is that I am honest! Oh! I forgot there is never an hosenst Realtor! We are all evil!
Why I rent - by OC_Stomp
The apartment we’re moving to in January.
1,100 sq. feet. 2Br, 1.5ba, 2 car garage, 1,800.00/month, month to month.
The house across the street (on the water - I’m not) - 6 bed, 4 bath, 5,500 sq. feet. Sold for $6,000,000 on 6/5/06.
The house two streets away, not on the water, 2bd, 2ba, 1,212 sq. feet. Sold for $1,368,000 on 11/8/06.
The end.
oc_stomp, have you spent any time getting to know the sounds coming from neighbors? i found a 1450sq in la costa for 1800.00 but there were hidden noises. cheers on the month to month. i think. ann
Happy Holidays to all! I call myself a real estate counselor, specializing in education and advocacy. So, as I share with my clients this blog, even as contrarians you all serve an important role. Knowledge is power. Thanks to all and to all a good night.
“… even as contrarians you all serve an important role.”
I, for one, am not a contrarian. I simply prefer the truth to truthiness. Kudos to Ben Jones for pulling away the curtain put up by the Wizards of Truthiness whose opinions dominate the MSM.
There’s some decent trades looking in corn and nat gas. Both long.
To paraphrase Madeleine Albright. I was born and raised Catholic, married a Baptist and then learned I was Jewish. My Chanukah bush has been lit and I wish all a Merry Christmas etc. My parting thoughts for this year revolve on unaffordability from the Economic Policy Institute.
Jobs recovery at five reveals uniquely weak expansion
“…Over the five years—November 2001 to November 2006—of this recovery, total payroll employment is up 4.5%, compared with growth rates of 17.3%, 16.4%, and 9.5% in the other recoveries. Note that while the 1990s recovery also had an early “jobless” phase, at this point—five years out—employment growth was more than twice that of the current expansion. This uniquely weak performance in employment growth is one reason why the benefits of the expansion have been slow to reach many working families, who are only now beginning to see some real gains.”
Since 2001 the majority of jobs have been created in government not in the public sector (BLS) and the public sector is the only group getting wage increases on a consistent basis. I hope to god that we are in a “goldilocks economy” and that my thoughts and posts are in error. I can live thru my errors,but as Yogi Berra said “the future aint what it used to be”. My warmest regards to all.
Hoz,
Thanks for many excellent posts.
GS
Goldilocks economy? Meaning what, we’re about to be devoured by bears?
Probably more of a GoldmanSachs economy; yes, times are better than ever for the lucky few.
Thanks, Hoz. Happy Chanukah and Merry Christmas. Ditto GS - I’ve enjoyed your posts.
Happy Holidays, Hoz! I also enjoy your many thoughtful and informative posts.
In the small victories department, my sister and her husband backed out of a contract to buy a Lake St Louis house offered at $300K (which recently sold in foreclosure for $248K), thanks to an independent appraisal (done on my advice) that came in at $282K and an inspection which revealed $15K (additional) worth of undisclosed defects.
Now she wants to know if she can sue for the contract’s failure to disclose $15K worth of hidden defects. Any thoughts or suggestions?
Thanks in advance, GS
“Now she wants to know if she can sue for the contract’s failure to disclose $15K worth of hidden defects. Any thoughts or suggestions?”
The bank probably didn’t know about the defects either; proving otherwise (the discovery process) would likely be time consuming and expensive. BTW, this place is probably about an hour from St Louis, so how did the prices get pushed up to the $300k realm? That’s lot of money for that neck of the woods.
YAY!!!!! Congrats, GS!!
Did a long post GS that was eaten. Sure wish Ben would feed the Blog so it would quit chomping my posts!
(Ok, probably has more to do with the slowest wireless card on earth.)
A couple questions: Why is she wanting to sue? Was her earnest money kept? Is she trying to recover the fees for the appraisal and inspection? Did she feel the defects were intentionally hidden or is it possible the homeowner did not know and thus could not disclose?
I think if she got her earnest money back and the defects were not glaringly obvious she has a tough road. However, if there was a clear attempt at fraud it might be a different story.
Most of all I hope she is very, very thankful that someone gave her some great advice!
How about an $80k mortgage kickback?
http://slo.craigslist.org/rfs/243978767.html
Way OT, but has anyone noticed how much modern Disney cartoons SUCK?!!! Tried sitting through “Mickey’s Christmas” (or something like that) with the kids, and could only endure ten minutes of it. These self-described “instant classics” are vapid, unoriginal, and lack any redeeming entertainment or moral value whatsoever. I recently got an older, politically-incorrect version of “Song of the South” and the kids loved it. Maybe I just love old, original things, built with care and quality, as opposed to the hastily thrown-together crap peddled by today’s HBs and has-been movie studios.
Sammy - the greatest example of that, that I’ve seen, is in the two versions of “Moulin Rouge.” The first was excellent, in B&W — a very comprehensible story based on the real-life romance between Toulouse Lautrec and Jane Avril. Even though I like Nicole Kidman, that second version was a nightmare, IMO; reminded me of the guys who throw a bucket of paint at a canvas and want the mess hung in a museum.
I don’t think that’s fair comment overall, although it may well apply to Christmas specials.
I have to say that I like a lot of the animated stuff that come from people like Pixar these days. OK, I don’t mind the old Disney cartoons either (but I’ve never liked Mickey.)
Disney today is all about quantity, quantity, quantity. After they spoiled us with Louis Prima as King Louie of the Apes in the Jungle Book, Walt died. Just buy the old movies to watch with your kids. I do like the Little Mermaid and Beauty and the Beast. Finding Nemo was the only Pixar with that magic ingredient, charm. I’m going to enjoy Rex Harrison’s Doctor Doolittle this Christmas with the youngins. God bless Netflix!
Apologize in advance for the long post, an excerpt from a newsletter I received today. Notice the prediction in bold.
“Washington Failed to Get China
To Boost the Value of Its Currency
It looks like Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke wasted a trip to China. I hate to say I told you so, but this was a no-brainer. Why in the world would China ever want to strengthen its currency? It has a cash cow on its hands and 1.3 billion people to take care of!
And even if China were to drastically strengthen the value of the yuan, it wouldn’t make one bit of difference to our trade deficit with the country, which is now at record highs.
Look, the average Chinese auto manufacturing job pays about $2 an hour. There is no way you can close the gap between the cost of production in China by making that country’s currency cost more. Even if the yuan appreciated by 300%, most goods would still be cheaper to produce there.
The only thing that’s going to come out of Washington’s continued pressure on China is trade tariffs, general ill-will between the two countries, or both. The only viable answer is that it’s not a case of the yuan being undervalued, but a case of the dollar being OVERVALUED.
If the U.S. is going to regain a competitive edge in the world, or ever have a chance of narrowing its huge trade deficit, the dollar must fall in value. Period.
Paulson knows this. So does Bernanke. Anything they do to try and talk the dollar up against another currency is merely a smokescreen. And if you buy into it, you’ll be buying into the biggest lie of all time, and you’ll probably lose your shirt to inflation.
Mark my words: Except for a small bounce here and there, I think the dollar could easily lose 20% of its value in 2007.
That in turn will set off the big picture for 2007 that I’ve been warning you about …
Inflation will ramp up at an accelerating pace. The jump in the Producer Price Index in November that I just told you about will pale in comparison to some of the figures we get on inflation next year.
Commodities will leapfrog higher again. Gold will head to $740 an ounce and beyond. Oil to $100, then higher.
Bond prices will succumb to reality, and plunge. Interest rates will unexpectedly soar.
Real estate prices in the U.S. will take one final hit early next year, then start rising because of inflation.
Most U.S. stocks will get whacked, while others, especially natural-resource-based stocks, will take off to the moon.
China and India’s economies will go on an upward tear.”
So, what do you think? Is inflation going to prop housing valuations?
‘Twas the nightmare before Christmas, when I talked with my spouse
Why weren’t we selling before buying the new house??
It must have been Suzanne, who researched this who me feel like a louse
St. Joseph was buried in the front yard with care
In hopes that a buyer would soon be there
My child and her dog both snug in her bed
No ideas of the horrors that lay ahead.
Our tree was bare, no presents to be found
To the subprime loan we were inextricably bound
The realtor and lenders said I’d feel no pain
That I’d be drinkin’ pink champagne but now I’m livin’ in black rain
I finally came to realize I’d been hit by the equity train
LOL - good one.