Bits Bucket And Craigslist Finds For January 5, 2007
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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the “global gusher”
so much to the myth of “tightening” ………
http://www.immobilienblasen.blogspot.com/
The liars in power can continue talking about “Goldilocks” economy and continue selling their Google junk to big fat stupid Saudis or Chineese generals in need of parking the stolen money. Thats the way the cookie crumbles. While ordinary people are being eaten alive by inflation all over the world, the mobsters of all stripes are making huge profits and getting richer by the day. Market economy? No racket economy.
..on the “alleged go-go economy.” It is doing exactly what it is supposed to do. It is benefitting the people it is supposed to benefit.
If it isn’t benefitting you, well, that’s because it’s not your economy, silly.
If you haven’t already seen it, check out “Rolling Back the 20th Century” by William Greider. It’s from three years ago.
http://www.thenation.com/doc/20030512/greider
For the last 70 years, certain Republicans — who now control the party — have been operating on the premise that the New Deal was somehow made up from whole cloth for the express purpose of tormenting the wealthy, and only for that purpose. So the New Deal has be eradicated like the Romans eradicated Carthage. These folks seem to have forgotten that the economic system they want to take us back to used to fail roughly once a generation. There were depressions in 1877 and 1893, and a bank panic in 1907. That’s one of the reasons the Great Depression merits the adjective, to set it apart from the other failures of the system.
So take away the safeguards against another Depression that were an essential part of Roosevelt’s programs, and whaddya think is gonna happen. Did you say, “Another Depression?” If so, you get a gold star on your on your pink slip. And this time around, there will be no way for another FDR, should we be fortunate enough to produce one, to do a darn thing about it. Don’t forget, Roosevelt paid for the New Deal in part by running up the deficit. That’s hard to do when your national credit is maxed out and your collateral is gone.
Are they consciously trying to cause a depression? I tend to think not. I think it’s more a case of if one happens, no big deal. It’s not like anyone they know will have to live in a car. (And if someone they know does have to live in a car, that person will no longer be someone they know…) Plus, market forces will get us out of it, just like they would have gotten us out of the last one if that goddam commie Roosenfeld hadn’t stuck his fingers into everything. So there’s no real downside for them.
So it seems to my jaundiced eye….
The new deal did little to extricate the economy from the depression. The depression ended because the economy reverted to bare essentials and then rebuilt itself.
I’m not bagging on the the new deal. I think caring for the elderly and infirm and downtrodden are noble goals.
The point is that the safeguards put in place by the new deal prevented Depressions from recurring every 15 years or so.
The ones the neo-cons are destroying as we speak.
When the next depression hits you can thank the deregulate everything at any cost republitards starting with Ronnie Ray Gun.
You can thank Adolf Hitler for saving USA from the depression. There is nothing like a good war to boost business. The Cold War also allowed the US to prosper at the expense of these stupid communists. The next one is Iran. And then after that? With China.
Why do you hate America?
What we aren’t good enough to figure it out and dig ourselves out from under…we need to thank a facist dictator?
You must be a republibertarian.
Simple people attempting to spout simple solutions to complex problems are why we are in the mess we are today.
Call it death by soundbite if you will, what a way for a great republic to die….the stupid shouting down the well informed and wondering why they got A$$ raped by the powerful.
KennyBabes,
You must be a leftocrat. You think our complex problems are simply simple people attempting to spout simple solutions.
Or wait, since you think our problems are as simple as that, and you appear to be shouting about soundbites and A$$ rapings, maybe you’re one of those “republiterians” you’re talking about?
obviously you cannot read….I dont expect much from the inter-tubes. sigh
I can read a whole lot better than you can write - and clearly your writing leaves a lot to be desired. Perhaps you would do better to level the accusation “obviously you’re not psychic”, because one must have a little bit of ESP to understand what you wrote.
“What we aren’t good enough to figure it out and dig ourselves out from under…we need to thank a facist dictator” - is not grammatically correct. Is the first part some kind of question?
“republibertarian” is not a word.
“Call it death by soundbite if you will, what a way for a great republic to die” - is not a grammatically correct sentence. It appears to be some kind of run-on sentence.
“inter-tubes” is not a word. Did you by chance mean inner tubes? Classic.
You should learn to write before you criticize one’s reading skills.
And since you’re clearly into ad hominem attacks, let me say that you’re an a$$ hat.
Momma told me not to argue with the retarded….they dont learn anything and you just look mean.
I will live you to your wallowing in your semantic superiority now.
Here is an interesting analysis of the housing market. I won’t be online tomorrow as I’m on the road to Las Vegas so I’ll post it here. Someone feel free to post in tomorrow’s bits bucket if appropriate.
http://www.financialsense.com/Market/wrapup.htm
Calabasas Mortgage Fraud Update 1/5/07
Deb from the San Fernando Valley noticed a suspicious transaction in Calabasas and asked me to check into it. Conclusion? Some guy living in an apartment in Torrance now owns two houses with $1,600,000 in mortgages. It cost him NOTHING and he probably put some nice chump change into his pocket! See the written exchange and details below, from the Bits Bucket late yesterday. This funny money RE lending is more pervasive than sand on a beach.
_____________________________________
Comment by deb
2007-01-04 08:18:29
I follow the MLS in the SFV and see these deals come through periodically. One recently made me absolutely furious. The house had been on the market for months at $1,060,000. Suddenly, it enters escrow and the AGENT RAISED THE PRICE IN THE MLS to $1,225,000. I emailed the agent complaining that something was clearly fishy. He dropped the newly raised price to $1,200,000, but offered no explanation for his actions. I complained to our board of realtors, but got nothin’ there. The sale closed at $1,225,000.
There is no possible explaination for raising an asking price after a property has entered escrow other than to deceive the lender in some way. No one around here seems to care. I guess I’ll just have to wait a few months for it to show up in the foreclosure stats. Sure screws up the comps in the meantime.
I would be happy to help by making a donation to a site dedicated to exposing this kind of fraud. Maybe if enough of us are willing to help, we could make a difference.
If you are willing to provide any info on this property, the address is 23415 Park Hacienda in Calabasas, closed on 11/9/06.
(Comments wont nest below this level)
Comment by Paladin
2007-01-04 20:29:04
Deb,
The house at 23415 Park Hacienda sold on 11/27/06 for $1,220,000 with 100%, 80/20 financing from Cornerstone Lending to Alvin J. Staana. The property is 2243 SF, so the price is $546/SF. The house was built in 1977 and the prior purchase price was $413,500 (no date given), so there appears to be plenty of equity for a funny money transaction. There are other units in the area that have sold for similar amounts, but as I have stated before, the comps are very suspicious because of all the funny money lenders. The nearest comp with “regular” financing is 4631 Park Mirasol, for $1,130,000, for 2010 SF with a $642,000 loan.
You will be interested to note Mr. Staana also bought a house at 37637 Millbrook in Palmdale for $318,000 in August, 2006. He received $355,000, 112% financing on that purchase from Lime Fin’l Services Limited. Perhaps that deal went so smoothly, he decided to up the ante!
Strangely, it apprears he actually lives in an apartment on Madrid Avenue in Torrence. Clearly, a few months ago, he seemed to only have a rental payment. Now he has mortgages totalling $1,600,000 with no money needed as a down payment.
You called this one right Deb. The residential real estate world is a very surreal place right now. You do not want to get near it with a 10 foot pole. It is clear the crash has not even started. No one is feeling any pain…..yet.
Is the house in Calabasas even occupied? Please clue us into the scenario details.
Paladin
Former Jackson County Executive Charged in Mortgage Fraud Case
Jan 4, 2007 07:50 PM PST
By DAVID TWIDDY
Associated Press Writer
KANSAS CITY, Mo. (AP) — Former Jackson County Executive Katheryn Shields and her husband were indicted Thursday on federal charges of taking part in a mortgage fraud scheme.
A grand jury charged Shields, 60, and her husband, attorney Philip Cardarella, 59, and nine other people with one count each of conspiracy and 11 counts each of wire fraud.
Federal prosecutors allege that the couple were approached by a group of individuals last fall who offered to sell their home, which was listed at $699,950, for $1.2 million.
The couple was to receive $707,000 of that amount, the remainder being split among other co-defendants and explained to lenders as a “management fee.” To get the mortgage approved, the defendants allegedly provided lenders with fraudulent financial information and inflated property appraisals.
Its happening all over the Country.
Deb, here is the link to a story in the Tampa Bay Tribune I was trying to find for you. It is fine investigative reporting by Shannon Behnken, a great reporter there.
http://tinyurl.com/yffyww
“…Dawn L. Molen quit her job as a commercial loan officer and set out to become a real estate agent. The 26-year-old got her license and quickly landed a job at Charles Rutenberg Realty in St. Petersburg. With three months’ experience, the agent who had never listed a home closed her first sale Jan. 27 in a working-class neighborhood. Her buyer paid $45,000 more than the asking price. It stunned her peers.
From then on, Molen brought in contracts by the stack.”
This is a fascinating story of a nice young lady who is headed to prison on felony charges. Deb, contact the FBI and help put your fraudsters (brokers, buyers, lenders & sometimes the sellers) in jail. Good luck.
Paladin. How does one find out the details of a sale? I just watched a house sell for over $200k over recent comps in Reno, and nobody has even moved in. How do I find out the information regarding the lender, purchaser, seller, money down (or cash back on closing) etc.?
Go to the county records office and look at the recorded closing documents.
You can call the customer service division of a local title company and they can pull the info. Tell them what you specifically want (sale price, buyer, seller, loan info). I happen to have access to a tittle company computer, which lets me access it all in minutes. Remember to use that title company when you buy and sell real estate.
In some states, at least, you van go to the county gov’t Web page and from there to the tax office and look up the history of individual properties. Often you can search by several criteria, including of course owner name and address.
The mortgage brokers are having a hard time coming to terms with a declining market. They still think the appraisals are supposed to come in higher all the time. It blows their deals when they can’t get the “right price”.
Here’s a link to some dicussions:
http://forum.brokeroutpost.com/loans/forum/2/56148.htm
Did you notice the date of posts being August 2006. A person could use the mortgage broker posts as a time line for the destruction of the housing market.
Paladin,
Thanks for all your work….and it IS work. This info doesn’t fall from the sky; you’ve got to dig through the BS and put all the pieces into place.
Thanks Dan. This fraud issue clearly has me intrigued. It is like watching a slow motion train wreck of unparralled proportions. I can’t seem to avert my eyes….and it keeps drawing me back with the unreality and the magnitude. I want to get people to sit up and take notice, but it is hard to get them to see the destruction, since there is no direct hit to them.
I am making some major progress with law enforcement and the media now, though. I predict a big home builder will be seeing some felony indictments soon, along with a lot of other individual fraudsters. I have tweaked the interest of a few very major organiztions….finally.
I have promised myself, my employees and my family that I will give this all a rest for a while, now that the wheels of justice are set in motion. It is important to stay balanced in life and so I am going to forego posting and researching for a while. Thank you all and keep spreading the message.
Paladin
“Wire Palaldin, San Francisco”
Have Gun, Will Travel
I love reading your posts. I am likewise very heartened that you have taken your own time to try to help make the authorities aware of this disgusting mess. Good work and nicely done.
I second what flatffplan said. Start a site. We really need these people to pay for all the fraud, and unfortunately, without people like you, it’s not gonna happen. So break that promise and keep at it!
Way to go Palladin. You just keep knocken’m out of the park on daily basis!
Great job, Paladin. If you find you have a real taste for this. You can work for shorting hedge funds as a researcher. Of course, you’ll go from being a ‘hero’ to being a scum bag that gets rich off other people’s ‘troubles’
None of this fraud would be possible without the gov’t agencies packaging the loans and re-selling them. More unintended consequences of interfering in the free market.
I hope the coming collapse of Ginnie and Freddie brings down the state.
Hmmm, I share Mark’s disgust with Ginnie and Freddie and Fannie, but “brings down the state” is a little scary — wanna live in Iraq or Afghanistan or Haiti?
All of those countries have and have had gov’ts; that has been the problem with them. Do you really think Americans would suddenly become Afghan tribesmen if we got rid of the income tax and the Congress?
We don’t need to. We are “importing” them at a rate fast enough that real Americans will be a minority in their own country in just about 20 years. The talaban will probably be a major party.
Mark you are sooo right. The late Milton Friedman was anti big government. Everyone involved in the fraud loans knows about it EVEN THE LENDER. They stick the MBS holder and.or government/tax payer with the bad loan.
As a taxpayer I never get to review or approve the loans I’m guaranteeing! Yet I have to sit and watch the crazy cash back at close deals go thru, inflate comps, then leave the place wrecked with vacant foreclosures next year. lovely situation we have here. Theorectically it can continue until a critical mass of fraud/defaults happens.
Paladin, alas, your family needs you. We’ll be waiting here when they are looking the other way. Before you go, can you please help me understand one thing? I know next to nothing about how loans work (I never bought a house in the US), but I thought it was the lenders who had the property appraised so that they wouldn’t lend more money than the house is worth. From what you are saying, it looks as if in the best of cases the lenders would be left holding a property worth a lot less than the money they paid for it. My question is, doesn’t it look to you as if at least some people working with the lenders themselves are in on the scams. How could they possibly overpay so much if that is not the case?
Cass, the brokers in local areas package the loans and select the appraisers. The lenders have review appraisers in the main office. They have developed software to stop the fraud, but now there is so much fraud, the comparable sales are based on other fraudulent deals…unless you know the market and look more closely. For example, the Estates at Lincoln Crosssing has EIGHT stupid loans now at $200,000 over market comps. How? They all use the prior fraud deal as a comp. Nevermind there are FOUR houses in FORECLOSURE on the same street for less than the new loan amounts, and 10 houses for sale at $200,000 less than loan amounts. If the lenders look, it is easy to stop. If they turn a blind eye, the fraudsters start snookering the lenders. They have taken New Century for $800,000 over market on 4 deals in 60 days! Hard to make that up in volume!
Thanks, Paladin, this helps to understand things a little better, but I’m still suspicious as to why lenders would turn a blind eye. It looks as if there would be something for them in the deal, even if only for the review appraiser who should know about the foreclosures and the houses for sale at a lower price. To me, they’re either in on it or they are incredibly naive (not) or they are incredibly lazy. Maybe I should change my screen name to “suspiciousinLA”. Thanks for all your work and best of luck. Take your family out to Big Bear for the weekend, but try not to look at all the “for sale” signs up there.
“…but I’m still suspicious as to why lenders would turn a blind eye…”
Greed. Plain and simple. Lenders want to lend as much money as possible. That’s their business. The more deals, the better as far as they are concerned. And, though I am no accountant, I would imagine a lot of these (soon to be) losses, are write offs. But, I anticipate they will do a much better job of loss prevention in future booms.
Bear, you’re probably right. It looks as if it’s profitable for them to pass the buck. The day of reckoning will look like a kind of biblical comeuppance…
Palidin,
Thanks for your efforts. We’ll see how this unwinds. Enjoy your rest.
fiveseals
start a site
weresendingyoutojail.com
include mls #s so agent principle and mort broker all know they’re going down
I agree, what better way to Blue Falcon everyone invovled in these scams than to set up a site to expose everyone involved. If you want I’m willing to setup a CMS (content management site)for you. It would allow you to easily create a site with all the details of the various scams. It could even have a forum where people can rant and expose local scams.
Thanks, Blue. Max at Sacramento Real Estate Statistics is going to help me after my “break”. I am going to get a college student to administer it and we can Pay Pal into his college fund. It will be a “searchable” site, so all the rating agencies can pull specific addresses and toss the fraud deals back to the lenders. Wow, think about that….you stupid lenders who are creating havoc in our communities.
Fantastic Idea, I am sure many of us would be happy to help, and have a good break, you have earned it.
Fantastic Idea, I am sure many of us would be happy to help, and have a good break, you have earned it.
Paladin — great work — seems like your knowledge and contacts should be worth decent bucks to someone, as a bounty hunter. Bagholders? Local tax authorities?
Paladin, Impressive work! Have a great rest and when you return I for one will help you as much as I can. And as ft lauderdale said above, I am sure many of us would be happy to help.
Ok so that deal in Calabasas looks like there was cash back at close for 140k? The price history change up by that amount is totally in the MLS the house sat for 3 months at 1060k unsold, then sells for 1,200,000
Are they actually breaking any laws until the loan is in default?
So what can be done? Wait until then, and then report to FBI?
losangeles.fbi.gov
Max, loan fraud is a felony. Unless they are disclosing the cash out on the escrow statement to the lender, this is fraud. The lenders are actually trying to batten the hatches now and have never agreed to more than 3% cash out, and then only for “repairs”.
The FBI is seeing the magnitude of the problem and are going to string a lot of people up by the yard arm, to get this $h!t shut down.
Hey Deb or Paladin,
Anyone talk to Ralph at http://www.flippingfrenzy.com/ ?
Looks like he’s working to stop it mortgage fraud. Has a hotline and links to fbi, ecc
This looks like a great site. I will examine it and see if we can just use it, instead of creating a new one. A perfect find.
I also spent some time on that forums.brokeroutpost.com site.
Its very weird to read the posts - they post looking for a lender for these crazy deals like 100% on an apartment building etc.
What they don’t post is thier fraud change the interest rate on close day or sneak in a pre-pay penatly crap. I hate mtg brokers, every time I used one they tried or did screw me - I learn the hard way.
Crash,
This is a great site! I read the following and could not agree more,
“Reform will take a very long time and will offer no relief for those already victimized by fraudsters. In his book, “An Inconvenient Truth,” former Vice President Al Gore wrote: “We have everything we need to begin solving the crises, with the possible exception of the will to act.” An informed and concerned community of consumers is the fraudster’s worst enemy! A community-based approach to fraud prevention presents opportunities for consumers to avoid exploitation, especially when initiated by industry insiders. FlippingFrenzy.com is a perfect example of a learning opportunity for consumers and industry insiders alike. I predict that fraud statistics in 2007 will escalate to startling heights. For reasons I cannot comprehend, legislators and industry leaders will continue to approach the problem with stone hearts and closed minds.
Real estate and mortgage fraud is a human issue that can only be solved through a shift in public policy and public perspective. Once society recognizes that human suffering is the primary cost associated with fraudulent activity in the housing market, things will change. The system is broken and needs fixing, and while 2006 saw some progress, sadly, it was not nearly enough. ”
Posted By: Ed Rybczynski @ 12:39 am
Filed under: Mortgage Fraud, Real Estate Fraud, Ed Rybczynski
I could see some synergy between Paladin and his soon to be vast HBB minions and this site.
Thanks!
Wow, I see you have been busy on the case. I was out playing with my kids all day!
Thanks for checking on the Park Hacienda property. The thing that really got me with that one was the fact that the agent actually raised the asking price by $165k as he put it into escrow. The only reason to ever do something like that is simply to deceive the lender. It was so obvious, yet no one cared.
The sale was easily a couple hundred over market. I know the area really well. I know it will turn up in default before too long. Makes me so mad!
Thanks for your efforts!
S.D. home builders scaling back
County permits likely to be fewest in decade
By Roger Showley
STAFF WRITER
January 5, 2007
San Diego County’s home-building industry entered the new year in “slowdown mode” and will likely see the fewest building permits issued in a decade, the California Building Industry Association said yesterday.
The association’s chief economist, Alan Nevin, who also works for San Diego-based MarketPointe Realty Advisors, said between 10,000 and 12,000 houses, condos and apartments are likely to be built this year, compared with nearly 12,000 last year.
The last time San Diego permits dipped below 10,000 was in 1996 at the tail end of the last major recession when 6,868 permits were issued, according to the Burbank-based Construction Industry Research Board, the source of Nevin’s building counts.
“The real estate construction industry in San Diego County is in slowdown mode,” Nevin said in a report released yesterday and discussed in a teleconference among California journalists and industry officials. “It is one of the two areas of California – the other is Sacramento – that has seen a severe reduction in permit activity.”
http://www.signonsandiego.com/uniontrib/20070105/news_1b5builder.html
“Fuzzy Realtor Numbers In Phoenix, Tucson, and Vegas”, by Peter Coy, Hot Property blog, BusinessWeek, January 3, 2007.
http://tinyurl.com/y7jwvq
“Twisted minds: Was BusinessWeek bamboozled by bubble-blogstress?”, by Greg Swann, Bloodhound blog, January 4, 2007.
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=853
I just clicked on that link. Peter Coy has removed that post from his blog! He now says:
‘Dear Readers,
I posted an item yesterday questioning the precision of MLS data in Phoenix, Tucson, and Las Vegas, but several people are questioning my questions, so I pulled the item off the blog until I can sort out the truth. I hope to have something to say on this subject next week.’
Should have added: Can anyone here give me the gist as to what Coy said about Vegas?
TIA!
He quoted some one off another blog trying to interpret the MLS stats, saying they went to zero and even negative numbers in the last month of the year in 04 & 05. It looks to me like she took existing listing (say 1500) and subtracted expireds (say 1600) of which there are a lot at year end, and said there are -100 listing. When in fact, there were 3100 listins coming into year end, and 1600 expired, leaving 1500 actual listings. It was definitely a big gaff.
If there had only been a few more ice storms, the holiday shopping season would have been far more successful for retailers. Thanks to global warming, the December retail season was dismaying.
—————————————————————————————————
Retailers dismayed by December sales figures
NEW YORK TIMES NEWS SERVICE
January 5, 2007
Gap’s board, it appears, has had enough.
After a dismal holiday season – the third in a row – the chain’s directors are participating in a broad review of the company’s strategy, intensifying pressure on the chief executive, Paul Pressler, to pull it out of a protracted sales slump.
Gap said yesterday that sales plunged 9 percent in December after a return to the simple fashions that fueled the chain’s meteoric rise in the 1990s, such as T-shirts and hooded sweaters, failed to lure customers back into stores.
The company cut its earnings forecast for 2006, blaming deep discounts – such as $100 off fur-lined parkas – required to sell leftover piles of winter clothing.
“We are clearly disappointed,” Pressler said in a statement.
Several retail groups reported December sales numbers yesterday that were disappointing. The government’s final December sales figures, which include all types of retailers, will be released mid-January.
Analysts blamed the results on mild weather that depressed sales of winter wear, and consumers – worried about the housing market and energy prices – who waited until just before Christmas to do their shopping.
http://www.signonsandiego.com/uniontrib/20070105/news_1b5sales.html
“Analysts blamed the results on mild weather that depressed sales of winter wear, and consumers – worried about the housing market and energy prices – who waited until just before Christmas to do their shopping.”
With warmer winter weather, why should consumers worry more about energy prices? People in Tundraland are getting serious relief in their heating oil bills so far this season.
When I used to live in Tundraland, I would wait for the day in December when we had the first serious snow or ice storm to do my holiday shopping, as I would be nearly the only customer in the stores. Conversely, so far as I know, warm weather increases foot traffic at stores.
Exactly. I had to scratch my head at the comment of sales being hurt by mild weather. Normally sales are hurt by bad weather. And have we as a society really become that stupid - to put off buying a winter coat because it’s warm for a few weeks in December? Being that we also had an unusually-frigid start to the month even?
They gotta’ blame something! ANYthing! Why not weather this go `round.
“to put off buying a winter coat because it’s warm for a few weeks in December?”
yes, it’s not just december, there hasn’t even really been a hint of cold. people don’t need anything but a light coat, so they won’t buy a heavy new one unless it gets cold. don’t forget, lots of sales are no doubt also from people doing winter activities, if people don’t go skiing, they don’t gear up.
people have to get in the mood to shop or go skiing. if it’s warm, they don’t think about going the slopes or going to the store to buy a winter coat. it’s not needed.
Isnt anything other than everyone spending all their money = dismal?
Not every year will have 5% gains.
Lots of retail establishments are having trouble, but if you compare carefully you find the Gap is down roughly twice as much as other stores in that industry. Gap has been a leader in the past, but recently it has been trying to hard and having too many misses with customers. Even the with the best management retail and style channels are pretty much impossible to master in the long term, and the Gap was known for idiosyncratic management, trying to be smarter than everyone else, and going for hit products. This story is primarily about the fall of an individual fashion competitor.
The Gap is on something like a six-year losing streak. There was a time, up until about 1999, when the Gap sold clothes that were well-made, not too expensive and stylish without being too trendy. Anyone between the ages of 15 and 50 could wear its clothes. Then it deceded to become Abercrombie and sell overpriced crap only teenagers wanted to wear. Then not even teenagers wanted to wear the stuff (teenagers can be like that). It hasn’t been the same store since then.
Bubbly, I agree. I remember discovering Gap when I came to the US for my honeymoon 16 years ago. It was a reasonably priced heaven for the quality minded clothes shopper. And God knows I dropped a lot of money in baby clothes there when my kids were born. Then, something happened and I started to come out empty handed every time I went into a Gap store except for kids underwear and socks. This really irks me because I have to shop aroung instead of buying almost everything in one place, the way I used to do. Now it’s jackets here and shoes there and sweaters somewhere else. I really felt they had decided to drop shoppers like me, but it looks as if they are paying the price.
I went to old navy the other day, they used to make ok clothes, but now the quality is just terrible. the materials are so cheap you can see it with your own eyes, you don’t even have to try the clothes on.
Yeah, and Old Navy seems like the set of some MTV show; if you’re over 25 you feel out of place.
The other genius behind the old Gap is you could wear it everywhere: work, a date, hanging out with friends, just lounging around the house, whatever.
I think Eddie Bauer is the closest to what the Gap used to be. Maybe I’m getting old, but Target and Kohl’s have plenty of wearable stuff as far as I care. I have tried Wal-Mart (gasp!) but everything was festooned with too many pockets and/or logos.
It was the news stories about sweatshop labour in Asia, used to make their clothing, that turned me off GAP.
Try Costco. I do a lot of my “fashion” shopping there. LOL
Actually, the more I go to Target, the more I like it.
I have found some neat things at Target too. It’s hit or miss, though, not as reliable as Gap used to be.
Yeah, but at some level, a story in October of “retailers expect Christmas to make up for sluggish year” folowed in January by story on “Retailers dissappointed by holiday sales” are annual stories. The only thing that needs to be changed are the year and the excuses (explanations) .
i see some new jokes coming on starting out
“so a realtor walks into a bar……..
can some of the creative types elaborate i need a good laugh this morning
at 2 AM to find his next five clients. They must be able to fog a mirror and have their “beer goggles” firmly attached. They are prequalified in five minutes and own $8 million in real estate with an hour……
Were you looking for fiction, MGNYC, cause I was just relaying facts. Somewhat funny facts, but the seeming truth in this market.
so a realtor walks into a bar……..with a parrot on his shoulder. The bartender says thats beautiful, where did you get it?
Parrot says, ” RRRAAAUT, the unemployment line, they are all over the place.”
lol
thanks guys
…with a parrot on his shoulder. The bartender says [anything] and the parrot says, “Buy now or be priced out forever. Real estate always goes up. They’re not making any more land. This house is so special I’m not showing it to anyone but you. Hey, honey, I f**ked another sucker.”
Alternative joke(s): “David Lereah has seen more bottoms than –” fill in your tag: “proctologist, bartender in a strip club, etc.” Or I guess you could go with “David Lereah has seen more false bottoms than a Beverly Hills plastic surgeon”…
So a realtor walks into a bar and is approached by a beautiful lady. She takes a quick look and walks away. The realtor says “wait, why are you leaving?” The lady says “I wanted an interest-only relationship”.
I’m here all week, tip your waiter.
167K vs. 115 on the jobs number. Bye bye rate cut.
Cool!
It’s just to temporally boost the dollar. Sell a lot of paper sh-t to the stupid foreigners, like the russian morons, spruces up the indices and create a panic in the commodities markets. Hey the US dollar is real hot hot hot today. Wow!
You see it works sufficiently long to sccreeww the hedge funds and the stupid foreigners. Stupid Russia and the fat morons from Saudi Arabia will be soon giving their oil almost free for dollars, like in 1999. What a great system !
Hello again, Phillips curve.
http://en.wikipedia.org/wiki/Phillips_curve
Bye bye rate cut hopes for Wall Street’s cargo cult members.
http://en.wikipedia.org/wiki/Cargo_cult
Speaking of Cargo Cult, I am reading Jared Diamond’s latest book “Collapse”.
He has an anthropologists description of the housing bubble in his chapter on the Bitterroot Valley of Montana.
Charles Schwab and Huey Lewis buying big vacation ranches and pricing out the locals.
Don’t get me started on Charles Schwab. The person or the company.
I think Huey has been there for some time….??? I belive he left Sausalito, Cal. a long time ago….??? Wanted to raise his family in a slower Environment…
no welfare= no problem
what was “unemployemt” in 1776 ?
No taxes=no problem
What was the income tax rate in 1776?
0.0%
Why dont you fellas move to Mogadishu instead of trying to re-create it here?
Kenny, why don’t you move to North Korea instead of trying to recreate it here? Oh wait…lots o’ entitlements already. Too late.
What was the f-cking inflation rate? Something like 50-300%; No f-cking gold standard either, drones.
The inflation rate in gold was approximately 0%. Too bad for those stuck with rapidly depreciating fiat paper currency, though.
Good thing that could never happen here.
Hello higher mortgage rates (the bond market selloff will soon translate into an uptick in mortgage interest rates… maybe by next week?).
————————————————————————————–
ECONOMIC REPORT
Job growth accelerates to 167,000 in December
Average hourly earnings jump 0.5%; jobless rate remains at 4.5%
By Rex Nutting, MarketWatch
Last Update: 8:53 AM ET Jan 5, 2007
WASHINGTON (MarketWatch) — Job growth in the U.S. unexpectedly accelerated in December, with nonfarm payrolls rising by 167,000 and the jobless rate remaining at a very low 4.5%, the Labor Department reported Friday.
Job growth was much stronger than the 100,000 expected, dashing fleeting hopes held by some that the Federal Reserve would cut interest rates soon.
“We continue to believe that monetary policy is on hold for the foreseeable future,” Joshua Shapiro, chief economist for MFR Inc., wrote in an email following the “solid report.”
Bonds sold off on the news. Stock futures indicated lower prices at the opening.
http://tinyurl.com/ygtvx7
No they are counting on the stupid morons in Russia, Libya and Saudi Arabia to give you the oil for free. You know what? Stupid as the Russkis are about US and the american dream and propaganda, it will probably work. Yes Russians are really really stupid when it comes to the USA. Vladimir Putin is a little less stupid but he is very much alone. The same can be said for the fat and stupid Saoud family in Saudi Arabia. Ben Laden was right on one thing. The Saoud royal family is fundemetally stupid. Personnally I wouldn’t bet on higher interest rates.
This should be an interesting day. The mother of all short squeezes has lasted 6 months now. The PPT has regularly sheparded the homebuilders higher regardless of negative news. No matter how serious the news about a homebuilder, all of them have been driven higher, day after day. The precision is astounding. They repeatedly plummet at the open and then sharply reverse in the first half hour of trading. The reversals are across the board. Not just a few homebuilders but all of them. And all of them at the same time. Beautiful to watch. Have to admire such perfection. But grossly illegal and damaging to those of us who have studied the industry and understand that it is in a major decline.
So will it continue today? We have had two days of normal market action(or at least directionally normal). Will the PPT hit the wall eventually? Of course it will. But when? Because they have the printing press behind them, they seem to have no limits in funding the buying. One wonders, though, how much they can buy before they have to cough it up during a major market collapse. And how much pressure do they feel as the dollar weakens and weakens? Will they have to stop because of the added depreciation of our currency? Who knows.
But the other side of this mother of all short squeezes, when it comes, will be massively profitable. What numbers will WCI report for their last quarter? Seems likely that they will be eyecatchingly bad and they should start disclosing something soon. How far is it from bankruptcy? Seems pretty close, IMHO. Before the year is over methinks.
For those who sold homebuilders short and have backed them with sufficient liquidity, a huge payday is coming. Keep the faith.
And let’s see what today brings.
Posted at 9:01 EST.
“The PPT has regularly sheparded the homebuilders higher regardless of negative news.”
Are you basing this opinion strictly on prices trending in the opposite direction from fundamentals, or do you have independent evidence?
The evidence that supports my statements comes from daily observations. I monitor homebuilder stocks throughout the day. I have posted the link to the charts of daily trading from time to time at this site. The pattern is clear.
That’s old news to me, pal. In fact, I believe I may have been the first one to post about that pattern (or was it Professor Bear?).
Who cares about fundementals ? Make a nice number and the morons will react in the intended direction. Hocus pocus like today. Hocus pocus don’t even try to go short on a world based on phony baloney numbers and ficticious numbers. The bears are still loosing their shirts. Why even try to short. Buy physical silver, gold, platinum and wait. But never mind shorting. They see them coming and they kill them.
“But grossly illegal and damaging to those of us who have studied the industry and understand that it is in a major decline.”
What is illegal about this?
Although I can’t cite the exact law being broken, I firmly believe that manipulation of the market is illegal. Do you agree?
That would be my guess, too, but I am not an expert on securities law. Would any SEC employees lurking here care to comment?
There is an imperceptible line between “market manipulation” (which BTW is not illegal) and simply stupid decisions.
You could say that the years 1997 to 2000 in the stock market represented “market manipulation” by stupid speculators, but we mostly see it as stupidity now. No PPT required for most investments… many would suspect the “PPT” has no basis in fact. (I would be one of those, since my tinfoil hat has been removed) (www.stopabductions.com)
The fact that the fundamentals don’t support an investment’s price…. uh…. isn’t that the whole point of this blog? It’s like telling me that one of the hairs on a dog’s back is blonde when the rest are brown… it’s still on the dog.
We cannot underestimate the stupidity of investors, or their motivations.
“market manipulation”
john Doe –
Are you saying “market manipulation” is perfectly fine, no matter who is doing the manipulating? For instance, is it OK for top managers to “manipulate” prices by sharing inside information with their friends (Martha). Or how about if top government officials and top corporate leaders colluded to prevent share prices from falling below a preset floor; would that be legal?
I guess I have to suspect that whether manipulation is OK depends on who is doing it and how…
What you’re describing is insider trading. That is illegal, and you can go to jail for it. “manipulation” means changing the stock prices. Similar to dumping or pumping… not illegal in stock trading.
It would be perfectly legal if the government were to put a “floor” on certain share prices, although I don’t think that the the benefit of a few at the price of many would really be a good use of taxpayer money. It would also be highly profitable if someone were to be able prove it happens.
On the other hand, naked shorting (which is not illegal, but should be) is one of those things that is not commonly understood or talked about. That’s clearly a manipulation tactic by brokers. In my opinion, if someone wants to buy to protect a share price… and they’re stupid enough to put up their own money to speculate like that… they get everything they deserve. The trend is your friend.
BTW, hedge funds regularly manipulate shallow stocks for their own benefit. Like I said, there is an imperceptible line between market manipulation and stupidity.
Oh, BTW,
I didn’t mean for people to think I thought it was “fine” - just legal because it would always be impossible to prove intent. People are, after all, throwing away their money.
It’s not illegal to lose money.
OTOH, markets are not perfectly efficient information machines, as is evidenced by the ability to speculate and garner greater returns in one stock than another. If you suspect a stock is being manipulated, I would recommend placing a trade in the opposite side of the manipulation.
hard to believe this number ( with all the layoffs from the mortgage related industry).
In financial activities, commercial banking added 5,000 jobs in December.
Employment in financial activities was up by 153,000 over the year; job gains
occurred in insurance (46,000) and in credit intermediation (62,000), which
includes commercial banking.
Employment in construction was about unchanged in December following losses
in October and November that totaled 53,000. After increasing by 295,000 in 2005,
construction employment was little changed in 2006. Over the year, gains in non-
residential speciality trades and in heavy construction were largely offset by a
decline in residential specialty trades.
i think the chance that we see a falling of the cliff in the job numbers are growing. when the impact is not yet included (warm weather, rush to finish projects etc)
the birth death model only accounted for a third of the december gain
clearify.
hard to believe the number in the financial segment.
I used to be in commercial banking. Banks need staff when the shite hits the fan. A deteriorating portfolio has more demanding servicing requirements. Add in the strict federal regulations on commercial banks, and there’s no place to go . . . you have to hire.
that could be a reasonable explanation.
Who or what is the PPT?
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
I don’t think it’s THE ppt per se. it’s people like gates, the automatic pilot funds(like what gekko investments) and all the supposed smart people who look at the PEs think there will be a soft landing and buy. I don’t know how many supposedly smart investors went on CNBC or the sunday fox shows, thought the homebuilders were undervalued before the housing bust started and said they were buying. a few months later they all had to admit they got in early because the stocks were down 20%.
larry kudlow said homebuilding was the next american business thing. he said it would become the next auto industry.
“I don’t think it’s…”
Which it do you think brings the headline indexes up near their opening levels on any days the rough winds of change shake the darling buds of May? I personally doubt this can happy with the frequency we see without some form of coordinated intervention which the Gekkos of the world cannot muster. However, I have no way to prove or even to investigage this, which is why I lost interest in discussing the subject some time ago.
happyhappen (my Freudian slip is showing again!)Here is an excellent article on the Plunge Protection Team:
http://www.sprott.com/pdf/TheVisibleHand.pdf
And here are some interesting tidbits:
http://tinyurl.com/ghoxe
Richard Daughty
Hear me, doomed ones!
Fri Sep 15, 2006 00:00
“This is also probably pretty funny to Chris Laird, of the Prudent Squirrel newsletter, who writes “As financial markets start to show big stress, the central banks and plunge protection teams are going to spend a gigantic sum of money trying to support them. Previous economic collapses have not had the present battery of coordinated central banks and programs such as plunge protection teams to manage their crashes. We now are in a situation where, the next time we have major stock drops, these CB’s and PPT’s are going to pull out all stops to try and stop a stock panic.”
From Lemetropolecafe.com:
“Interesting commentary on one of the gold forums this morning citing WSJ article:
1:16 p.m.: Jeffrey Saut, chief investment strategist at Raymond James, finds something very fishy about the Dow’s record-setting run.
In his weekly Web-site commentary, Mr. Saut notes that the Dow, defying precedent, has risen steadily from its bottom in July with hardly a correction. Most suspiciously, whenever a correction has seemed imminent in recent months, he says, “mysterious buyers materialized in the futures markets,” forcing a higher opening and resulting in big days for the Dow.
He cites Robert McHugh of Technicalindicatorindex.com, who points out that 1155 points of the Dow’s 1200-point run since July (excluding today’s rally) have been gained in just nine big days of trading: July 19, 24 and 28; August 15 and 16; September 12 and 26; and October 4 and 12. “[O]n ALL of those nine trading days, according to our notes…the aforementioned ‘mysterious’ futures buyers were at work,” Mr. Saut writes.
In his commentary today, he notes that futures buyers again seemed to step in this morning, followed by another 100-point Dow rally. He also vows he is not a conspiracy theorist — he believes Lee Harvey Oswald acted alone, for example, and that Tom Cruise and Katie Holmes really did have that baby. But he says the “mysterious” futures-market action has him and many floor traders “mysteriously cautious,” afraid to bet against what he calls an “overbought” market.
But he still believes the end of the Dow’s run could come with the end of the fiscal year on Oct. 31, when money managers have no more need to pretty up their portfolios by buying blue chips that have enjoyed solid gains since July. Or perhaps the end could come after the election, he suggests, if those “mysterious” futures-market buyers are politically motivated.”
From Rigging the Market; the secret maneuverings of the Plunge Protection Team
By Mike Whitney
http://www.informationclearinghouse.info/article14979.htm
“The Plunge Protection Team is a working group of high-ranking officials from the Dept. of the Treasury, Wall Street, and the Federal Reserve. Its purpose is to establish the protocols for preventing another incident similar to the stock market crash of 1987. In the event of a steep decline, the team is prepared to buy large amounts of equities in an effort to stabilize the market.”
And see: http://www.lewrockwell.com/decoster/decoster114.html
http://tinyurl.com/vyz59
http://worldvisionportal.org/wvpforum/viewtopic.php?t=204
http://tinyurl.com/ybtsvg
“As financial markets start to show big stress, the central banks and plunge protection teams are going to spend a gigantic sum of money trying to support them.”
Free financial markets and governments with computers, printing presses and access to options markets don’t mix.
“In the event of a steep decline, the team is prepared to buy large amounts of equities in an effort to stabilize the market.”
It would be folly to wait until a fire broke out to take preventive measures. Instead, optimal fire control policy requires steadfast ongoing fire prevention measures — controlled burns, as it were — to avoid large conflagrations.
In the case of the financial markets, controlled burns actually result in more rapid growth of the tinder to fuel future firestorms, in the form of speculative parasites who attempt to exploit all forms of financial manipulation until the gap between prices and fundamentals reaches critical mass.
Ben, you’re “rich.” Housing bubble domain names for sale, $250K each. All likely to be bought by the NAR, and filled with information that prices are at a permanently high plateau.
http://cgi.ebay.com/Housing-Bubble-Internet-Real-Estate-Domain-Names-5_W0QQitemZ280066389441QQihZ018QQcategoryZ3767QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
Ben — Don’t sell out to the NAR for less than $40m! LOL
NAR can get a 100% liar’s loan…they’re good at that.
Just got back from vacation the west coast of Florida. There’s a place called Perico Island that I often kayak around - it’s sad because a large portion of this island’s native environment has been flattened for St. Joe’s project Seven Shores (I say native though I’m not really sure it was native - it was mostly Australian pines I think, which aren’t native to Florida).
Anyhow, this project is 686 condos. In the first full year of sales, a grand total of 9 sold.
http://www.islander.org/12-27-06/perico_marina.php
Maybe the fact that the starting price for the lesser condos is $600k has something to do with it. These are condos, mind you, not single-family homes.
Just found a related article - turns out the original asking prices were above $700k and have now dropped to $534k.
http://www.bradenton.com/mld/bradenton/business/16302409.htm
(the headline reads “prices dip $60k”, but that’s only the most recent dip)
“But representatives of St. Joe Co., the company building the 13 condominium buildings on 353 acres fronting the Intracoastal Waterway, deny the reduction in price has anything to do with concerns about a slowing condominium and housing market.”
What a bunch of crap…
Can’t imagine what the condo fees will be on that baby, once they add in the new insurance premiums.
http://finance.yahoo.com/
167,000 Jobs Added to Payrolls in Dec.
AP -
Employers stepped up hiring last month, boosting payrolls by a brisk 167,000 and keeping the unemployment rate steady at a still historically low 4.5 percent. Workers’ wages grew briskly.
Did they really boost payrolls by a brisk 167,000 jobs? This was posted at index calls this morning:
“Last DEC the birth/death model added 63K.”
So if the birth/death model added something like 60K jobs in December, employers might not have boosted quite as briskly.
correct, and the BLS uses a measly 90% confidence interval, so you’re looking at an interval with the monthly change in total employment on the order of +/- 430,000. nice margin of error, eh? lol
–
It is fun to watch the Wall Street and Media Cheerleaders lead bulls to the slaughterhouse.
Driving forward while looking back leads to crash landing, not just hard landing.
EMPLOYMENT IS A LAAAAAGGGGGGING INDICATOR AND SOMETIMES IT KEEP GROWING **** INTO THE RECESSION **** AND FALLS DURING AND PAST THE RECESSIONS, NOT BEFORE.
Jas
What do you think about Cisco getting into internet security?
–
They got to keep buying companies to keep the Scam going. That is JC’s claim to fame — He showed Silly.con Valley that there is no need to innovate, or invest in internal R&D, just go and buy companies because you can play accounting games that way.
Jas
Isn’t that what the entire world of finance has figured out? Jeez, I thought we had established that rule of thumb over 80 years ago when train companies began to buy related industries and competitors.
As I understand it, the vast majority (about 90%) of those jobs are service-sector jobs, not production/manufacturing.
Northern NJ Residential Sales Data for December 2006 is in:
http://njrereport.com/index.php/2007/01/05/northern-nj-december-2006-residential-sales/
October
Average Sales (2003-2005): 2570
2005 Sales: 2280
2006 Sales: 1867
(Down 18.1% Year Over Year)
November
Average Sales (2003-2005): 2330
2005 Sales: 2135
2006 Sales: 1858
(Down 13.0% Year Over Year)
December
Average Sales (2003-2005): 2671
2005 Sales: 2269
2006 Sales: 2050
(Down 9.7% Year Over Year)
Full Year
2004 Sales: 34,986
2005 Sales: 32,987 (Down 5.7% Year Over Year)
2006 Sales: 24,929 (Down 24.4% Year Over Year)
Graphs available at the above link.
Caveat Emptor!
jb
Credit Condition Watch:
http://wallstreetexaminer.com/blogs/winter/?p=263
Awesome post! (What else is new?)
The report that 51% of current SD home sales are vacant is utterly stunning (surpassing even Phoenix’s 47% of homes sold vacant). See the chart on Russ’s link — the percent of SD homes sold vacant was only 23% as of June 2004. What on God’s earth are these people thinking? Ghost tract homes for everyone!
“As mentioned yesterday, there are now 19,000 foreclosures in the works in California. Bulls will be quick to note that this is only about 0.35% of the state’s 5.5 million homeowners. But it’s the rate of increase that is the real story, up 19% in a month. It’s been that way all year.
Further, there are key areas of the state where vacant units make up an incredibly high proportion of the sales. 51% of San Diego’s December’s sales were vacant, and Phoenix, Az had 47%. It doesn’t take a rocket scientist to see that vacant, high priced housing that is declining in value is problem enough. But add paying property taxes, insurance and debt service to the mix, and it makes default and then foreclosure all to real. There are nearly $1 trillion in mortgages due to reset in 2007, including many neg am pay options, with 110% regular am clauses. The location of those unusually toxic loans are noted in the final chart. This is a good explanation of this toxic bomb, except that very few have 120% triggers, most are 110 and 115. The foreclosure trend will surely worsen, and in San Diego as elsewhere, new building permits are coming to a crawl.”
Excellent post Russ….
That “payment option percentage” chart there is also quite interesting/scary!
What’s the deal with Salinas? (home of the highest percentace of option payments).
An east-coast version would also be interesting — I’ll bet the Florida gulf coast and Orlando area would be some of the highest “option” areas. Yikes!
Great post, Russ. I particularly like the mortgage-lender Implode-ometer site. Link provided by Russ:
http://br.endernet.org/~akrowne/ml-implode.html
There is a sign outside of the Lincoln Tunnel “Invest your Bonus wisely” bottom is for some realtor…I guess they really belive the hype
I have to admit, I did get a good chuckle out of that. I thought it was for a developer, not a brokerage.
jb
A new site for following subprime mortgage implosion.
http://br.endernet.org/~akrowne/ml-implode.html
Implode-O-Meter
That is awesome!!! Love the picture as well. Thanks for the link
Very nice. I just added you to my favorites.
That LIME Financial you mention as picking up Meritage Mortgage’s ex-staff is the one that Paladin mentions upstream in his post about fraud. Apparently they gave a buyer $355,000 to buy a $318,000 home. Wonder how long they’ll be around.
Most of you have probably already seen this, but here is a story on how large houses are going out of fashion:
http://www.latimes.com/classified/realestate/printedition/la-re-gellner31dec31,1,3324211.story?ctrack=1&cset=true
Thank you for this post.
Now that price appreciation has turned south and fashions are rapidly rediscovering the “Small is beautiful” concept, it is too bad someone can’t just wave a magic wand and make the McMansion glut disappear before our very eyes.
“…it is too bad someone can’t just wave a magic wand and make the McMansion glut disappear before our very eyes.”
That would take a magic bulldozer. Nothing wrong with a big house per se. What I don’t understand is putting a 4000 sq ft house on a 5000 sq ft lot. You might as well buy a townhouse.
This is so true. One of our family friends just put a gigantic house right in the middle of what used to be a neighborhood of small, 50’s and 60’s era homes. Seriously huge. The backyard is a strip of grass about 8 feet wide and the front yard is even less. It’s just ridiculous.
In Seal Beach it’s 3,000 s.f. on a 25′ x 80′ lot.
You’ll know you’re near the bottom when people start talking about “Simple Living” or recommend reading “Your Money or Your Life.”
“Your Money or Your Life”—I live that book. Literally. In fact, it’s the primary reason that I was just able to accept an offer for a great job that pays squat (or at least less than my savings pay). I’m always surprised at how few people seem to have heard of it.
Written by a guy who was a Wall Street bond trader, no less.
Yeah, how ironic is that? The amazing thing is, Joe (and Vicki’s) program works for anyone, not just Wall Street and the rich.
RIP, Joe…
This morning, I actually entered one of the McMansionvilles that have wrecked this area, and drove through it. There were at least 100 in this particular development, vintage 2002-3. I exited thinking, “these people are going to be in debt for the rest of their lives.” It was just a gut reaction, but I’ve been around this area long enough to be acquainted with the demographics, and the folks moving in and out.
When I got home I checked Melissadata for the median income info on that particular zip code. It was inching up to $60k, as of 2004.
It appears that a lot of citizens have just accepted debt accumulation and servicing as the new reality. What’s really sad is that this “new paradigm” isn’t driven by any actual need, but by the desire to keep up with one’s sister-in-law.
On the payroll employment number, it is just that — the payroll employment number. It does not include the self-employed.
There are lots of self employed people in real estate/mortgage banking/construction.
For the last few years in certain places, the household-based data, which does include the self-employed, has shown vastly higher gains than the payroll employment data. Especially around Los Angeles, where truck drivers, movie stars and others are also self-employed. We’ll find out how much was real estate related.
When I write reports these days, I aways give both the payroll employment change and the household data employment change.
If a realtor makes NO comissions in a month (fairly common in bubble-bust areas), are the self-un-employed?
If a tree falls and noone is around to hear it, did it make a sound?
If a bear poops in the forest, and there is noone around to smell it, does it really stink?
These are all qustions that the human mind is too frail to comprehend… please move along, all RE agents are millionaires, and will bring back our economy singlehandedly.
“For the last few years in certain places, the household-based data, which does include the self-employed, has shown vastly higher gains than the payroll employment data.”
Does the “household income” also include interest income? I’m thinking about a post that I read recently saying that most people who HELOC actually don’t spend all of the money at once. Rather, they stash it in a bank account and spend it over time. Just wondering…
OK. Just noticed that you said “household data,” rather than “household income.” If Ben were BusinessWeek, I’d ask him to remove my post. Thankfully, *this* blog retains any errors and retractions:
Please consider my previous post “retracted.”
And if you don’t understand my reference to BusinessWeek, see John M’s post, above. BusinessWeek is pulling stuff off of their blog so that we cannot see it!
Be sure and see the housing related ones here:
Active Trader Update
Kass: 10 Rumors That Could Rock Stocks
By Doug Kass
Street Insight Contributor
1/5/2007 9:47 AM EST
The following are 10 rumors I’ve picked up from trading desks and other industry sources this morning.
1. Apple (AAPL) will announce that Steve Jobs will be taking a leave of absence from the company.
2. The low-end cellular-phone market has been jammed with inventory as demand erodes. Guidance will be lowered by the leading manufacturers as margins erode and average selling prices continue to fall. (Motorola (MOT) is just the tip of the iceberg.) The high end is no better, as an all-out post-holiday price war seems to be developing.
Internet distributor Wirefly will announce an offering of a free Motorola Razr, Nokia’s (NOK) E62 and other high-end handsets with a T-Mobile, Sprint (S) or Cingular one-year contract.
3. Personal computer retail sales have fallen off dramatically in Japan during the month of December. Dell (DELL) will shortly guide down earnings expectations for the first quarter of 2007, in part because Vista (the release of the business version of Vista has come and gone) has started out slowly.
4. Microsoft (MSFT) is coming under scrutiny for sending out free AMD-equipped Acer laptops preloaded with Vista to prominent technology bloggers in an apparent effort to get press. APC magazine journalist Dan Warne writes that “whatever the subtleties of the offer were, it comes across as nothing more than a bribe, and that is a very bad look for Microsoft.”
5. More signs of an imbalance in the residential real estate market are appearing. For example, there’s been a surge in vacant homes because of foreclosures, owners who bought another home and await sale of their first home, and homes that are for rent because they can’t be sold. In certain regions of the country, such as California, vacant homes represent nearly 50% of annualized sales (triple the levels of four years ago).
6. A medium-sized private homebuilder and two more prominent subprime mortgage originators/servicers will shortly announce bankruptcy.
7. HSBC (HBC) is considering the sale of its Household Finance subsidiary because of the hemorrhaging of profits in its mortgage business.
8. The falloff in subprime lending and the tightening of standards at traditional originators has caught the eye of the now Democrat-controlled House. There will be an attempt by the Democrats to introduce legislation that will subsidize first-time homebuyers, who because of affordability issues and less availability of subprime loans are having trouble getting mortgage financing.
9. The dramatic drop in prices in the energy complex coupled with a general decline in commodity prices will reverberate in the hedge fund market over the next month, as at least three large funds have each experienced $1 billion-plus losses.
10. Retailers — caught with unexpectedly high inventories — are worried about the first quarter’s profitability and will announce initiatives (and create incentives) that will encourage consumers to spend their gift cards quickly. (For example, Home Depot (HD) recently announced that it is offering to donate 5% of the gift card value of all gift cards redeemed by Jan. 28 to help build and maintain USO centers.)
——————————————————————————–
At time of publication, Kass and/or his funds were short DELL and MSFT, although holdings can change at any time.
“Apple (AAPL) will announce that Steve Jobs will be taking a leave of absence from the company.”
Apple’s board has assured us that Steve Jobs is clean. End of story.
How bout the three hedge funds with $1B plus losses. Gee, ya think they paid themselves bonuses anyway in Dec? Wonder if that’s why Hedgefundanalyst is MIA for weeks now. He should be back bragging by this time.
I personally suspect that Gekko was a reincarnation of HFA, trying to find GFs to buy, buy, buy more stock by pretending to be a Joe Soccermom idiot.
Last time I remember seeing him was the day when you and he had a screaming argument on this site. Congratulations on winning it, I sensed you were more right, though I’ve forgotten substance.
(my comment refers to arg txchick57 vs Hedgefundanalyst)
7. HSBC (HBC) is considering the sale of its Household Finance subsidiary because of the hemorrhaging of profits in its mortgage business.
This just seemed dead obvious to me when HSBC first went for the purchase of Household some time back. I couldn’t imagine what their analysts and advisors were thinking when they blundered ahead into that deal, though I suppose they had a far rosier view of the housing market’s prospects than we do here.
They also probably imagined that the fat margins on some of the loans would hold up aginst the anticipated default levels. Ha ha! Well, they would have, so long as housing prices kept their skyward march, since buyers in trouble could always bail out easily. Not any more.
The question I’d ask now is this: Who would want to touch Household, given the current environment?
The housing party continues in Vegas:
Developers broke ground on a new planned community in North Las Vegas that it supposed to add 16,000 new houses to the local market. Of those, 500 are going to be “custom homes.” I guess that means that the rest will be cookie-cutter style?
Countrywide is apparently still hiring mortgage loan people here. Met a woman who just started work there this week.
Rhodes Homes has been advertising a community called Pravada in large newspaper ads. The homes range from approximate $150K-$355K. They are located in Golden Valley, AZ. I’m new here and the mileage from Vegas is not noted in the ad, but it sure seems to me that this is way too far from Vegas to be considered commuting distance. I also have doubts as to whether there’s any local employment whatsoever in Golden Valley because the ad bills GV as “the perfect place to relocate your business.” Yeah, right.
Finally, the formerly ubiquitous ads advertising $80K cash back from Day Dawn Homes have seemingly been replaced by a new ad for a free seminar on how to profit from foreclosures. I don’t watch much TV but I am already tired of seeing this same advertisement over and over.
Golden Valley is “the perfect place to relocate your business” if you’re in the business of making and selling Crystal Meth.
My first hand experiance with the area is around 8 years old but for those wondering about the commute… Golden valley is 100 miles from the south end of Vegas (Henderson), but you wouldn’t have to worry about traffic since there is nothing between in between the two places besides the Hoover Dam. Besides the distance the main thing I would be worried about in Golden Valley is where they are going to get water, unless they’ve figured something else out the last I heard you either had to truck your water in or drill a very very very deep well. That sounds like the life for me!
From Russ Winter’s post (see link above):
“51% of San Diego’s December’s sales were vacant, and Phoenix, Az had 47%. It doesn’t take a rocket scientist to see that vacant, high priced housing that is declining in value is problem enough.”
I am trying to grasp how the 51% of SD home sales which were reportedly vacant squares with MSM reports that investors have stopped playing the flipping game. I have three hypotheses about this number; would be curious to hear thoughts on these:
1. As of December, flippers armed with subprime loan money represented over half the SD purchase market. Believing REIC assurances of a soft landing, they are speculating that they are buying the dip, and will make big gains after home price appreciation gets back up to “normal” levels later in 2007.
2. Builders are using some kind of Enronesque scheme to prop up home prices through the use of borrowed money to buy back their own recently constructed homes.
3. The gubmint has an unannounced corporate welfare program underway to support home prices through buying up the surplus production. Later they will give away vacant homes for free to po’ folks, same way as they give away surplus cheese which currently sits molding away in limestone caves around KC…
http://query.nytimes.com/gst/fullpage.html?sec=health&res=9402E6DB1239F93AA25754C0A965948260
“2. Builders are using some kind of Enronesque scheme to prop up home prices through the use of borrowed money to buy back their own recently constructed homes.”
Funny you should mention this. I’ve been watching the houses that are under contract here in Vegas, and I’ve noticed that many houses that are reportly owned by realtors (per the listing ad–owner acting as agent) go under contract almost as soon as they are listed.
I’m also monitoring the tax records to see which of these realtor-owned “under contract” houses actually sell. I haven’t seen a single one sell yet, though I may have missed a sale or two. Gotta work, yah know…
I don’t think that the realtors are actually using phony money to *buy* houses, but I have been wondering whether they’ve all agreed to sign a contingency contract to purchase one another’s investments in order to give the appearance of propping up the market.
Any other ideas of why this would be happening?
“… go under contract almost as soon as they are listed.”
That ought to be a red flag. I am guessing the average time to sell a home in Vegas is currently over six months?
“That ought to be a red flag.”
That’s what I thought, GetStucco. I’ve been watching homes in two different Vegas neighborhoods that interest me that have been for sale since last April. The non-realtor-owned homes seem to just sit there…few contracts…fewer sales. Meanwhile, the realtor owned homes go immediately under contract…no sales. Definitely seems weird to me. As I mentioned in my first reply, I may have missed a couple of sales, but surely not all of them. Something is not right here.
“I am guessing the average time to sell a home in Vegas is currently over six months?”
I don’t know what the average time to sell a home in Vegas is. I simply don’t see a lot of houses selling where I’m looking (Summerlin and The Lakes). I can tell you that per another blogger’s site (bubbletracking.blogspot.com) the Vegas listing per population ratio was 1:86 as of 1/1. Not as bad as Atlanta’s listing to pop ratio (where I’m from) but still seemingly very, very high. I dunno…maybe this is must New Math???
“must New Math”
Must New English??? LOL. Sorry!
Peggy — I will bet that it is because these houses were bought 2+ years ago and that the owners plan to lie to the IRS — that the houses were their principal residences — and claim capital-gains exemption.
Paladin — got room for this on your plate? : )
I’ve noticed the very high rate of vacant home sales as well. At some point, these units will become occupied. I can only speculate that will entail reduced rents and reduced sales prices over time.
“As home sellers grew more frustrated with the slow local real estate market in recent months, they abandoned their for-sale signs and put their homes up for rent”
“Carter’s landlord, Maurice Philogene, said he has bought at least 20 condos since 2001, with the intention of renting them out for the long term. Philogene, a software engineer, said he planned to live in the unit Carter now rents but changed his mind. He cut Carter a break on the rent because she signed a two-year lease. The unit, he said, is “pricey — it was nerve-racking to cover the mortgage.”
A software engineer bought AT LEAST 20 condos. WTF
(article requires username password)
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/04/AR2007010401794.html?sub=AR
“A software engineer bought AT LEAST 20 condos. WTF”
Does anyone have the stats on how many flippers bought more than one home? The number of McTrumps out there has to be huge, but I have no idea how to find it…
“A software engineer bought AT LEAST 20 condos. WTF”
No wonder Windows Vista release was so far behind schedule.
“Windows Vista” sounds like RealtorSpeak ™.
‘”My Realtor advised us to rent the condo for a few years, which is what I’m trying to do,” Goel said. “Eventually the condo market will improve. But at this time, it is oversupplied.”‘
Eventually we will all be dead. (Keynes)
‘If the overall housing market remains cool and more sellers become landlords for another few quarters, apartment hunters might start seeing lower rents, researchers at Delta and some apartment management companies say.
“Brokers say that come spring, the housing market will be back, and if they’re right, then this phenomenon with the apartment market is a one-time blip,” Leisch said. “If they’re wrong and the housing market stays cool, which I’m betting on until fall of 2007, then the phenomenon will likely continue.”‘
MSM articles like this one, which repeates the NAR mantra that the market will pick up at the end of 2007, will help encourage flippers to follow the rest of the proverbial lemming herd over the edge of the cliff.
My current lease is up in February, but I intend to get a six-month renewal and take advantage of the rental glut coming in August.
Well GS you are right on target again! Those little Lemmings are a breed of rat. They have exceptionally poor eyesite and never hybernate even in the worst weather — they are constantly looking for food and in that search fall right off a cliff in their poor vision zeal to find a rich diet. Hey! This does resemble a flipper huh?
DJIA down over 90pts nasdaq and sp also down big
Like I said, the first two or three days of Jan are seasonally positive, then kaboom. Tues/Wed were great days to get short.
Last year, I think the January high was not seen again until November.
No problem there that a little afternoon plunge protection can’t fix…
tx-chick have you seen ICE?
up over $20 in 3 days
I don’t know what it is. I have a basket of 50 stocks I’ve traded for 10 years plus the indices/etfs. I get into trouble when I mess with stuff I don’t know
This mix of red and green numbers does not bode well. Merry Christmas!
http://www.marketwatch.com/tools/marketsummary/
GS/TX - Why far more 52-week highs than lows? Which
sector(s)? Definitely not energy or commodities.
It’s a new era on Wall Street, where stocks are only allowed to hit new 52-week highs, and never allowed to hit new 52-week lows.
http://abclocal.go.com/kfsn/story?section=local&id=4907270
Buyers are stupid.
“I think the housing market is about as low as it’s going to be and it just seems like a really good time to buy.”
Larry Fortune, Commercial Realtor, says “Our land [in Fresno] is cheaper than the Bay Area or San Francisco,” and thinks people and businesses will move from SF and LA to the San Joaquin Valley.
With brains like that, Larry, you’ll need the good Fortune you were named after. Betcha the realtors-per-capita index is higher in Fresno than in LA/SF.
intercontinental exchange, they are buying nybot and the deal was half cash-half stock announced around 4 weeks ago, since then it has gone through the roof, my friend who is a nymex seat holder told me to buy it in feb 06 at aound $50, well anyway he said when the deal is official the thing will plunge when they start selling
but some nice gains in the meatime
Well, I’m ashamed to admit this but I bought the Google IPO and then sold it out 5 days after it started trading. And the other day, I saw an “upgrade” w/a 700 target on it from a firm which I believe said to avoid the IPO at 85 bux.
Even Martha Stewart homes break contracts and sell at a discount. About 10% in this case.
“Kistler said he paid about $359,000, or $41,000 less than the original asking price.”
http://www.orlandosentinel.com/business/orl-marthahomes0507jan05,0,6674453.story?coll=orl-business-headlines
Housing is affecting copper, as I predicted it would.
http://www.bloomberg.com/apps/news?pid=20601012&sid=adgV4vFU.QGc&refer=commodities
“If overall housing sales stay slow, you could easily pare another 30 or 40 cents off of copper,” Frank McGhee, head metals trader at Intergrated Brokerage Services Inc., said yesterday. “Copper is a leading indicator. It’s very sensitive to perceived economic conditions.”
A slowdown in new-home construction shaved 1.2 percentage points off of growth in the third quarter, the biggest decline in 15 years. Builders account for 46 percent of copper use, putting about 400 pounds of the metal in the average U.S. home, according to the Copper Development Association.
“Demand is down in the U.S. and outside of the states,” Guido of Societe Generale said. “Now, we have the reality of a surplus of metal.”
Ironically, when copper falls it gets cheaper to build a house, which will put some pressure on existing house prices, making the market worse !
I e-mailed the editor at CNN to ask why his network was reporting really interesting facts, like Brittany Spears going to a club wearing no panties, but reporting NOTHING about the massive fraud taking place in the real estate industry.
If you have been following Paladin’s posts on this blog (great posts) you might get some idea of just how bad the corruption is and how deeply entrenched it is with even District Attorneys grabbing what they can via fraud.
Of course, CNN has not responded. I suppose in “Celebrity-Brain-Washed-America”, I shouldn’t have expected a response. Also, most of these media networks are owned by much bigger corporations (General Electric for example) who are involved in banking, mortgages, defence contracting, etc, and so reporters these days are not really reporters. They are simply conveyers of news their paymasters have selected and censored. Hearing about Paris Hilton giving a bj to yet another 48 hour current boyfriend (that being one of her more long term relationships) is FAR more important that watching society being undermined by fraud and corruption.
Pretty sad statement as to where we are these days and a scary insight into just how much our lives are manipulated by these big corporations.
“I e-mailed the editor at CNN to ask why his network was reporting really interesting facts, like Brittany Spears going to a club wearing no panties, but reporting NOTHING about the massive fraud taking place in the real estate industry.”
Mike, try e-mailing that same info to Glenn Beck@cnn.com. He enjoys finding stories “no one else will report” He’s already done some light reporting on the housing bubble although hasn’t touched credit bubble or fraud that I’m aware of. If you spoon feed a bit of i-tulip or jmf/Russ Winter/GS factoids, I bet he’d dive into researching this topic.
He’d be a great person to get the word out. Supposedly his ratings since his show started about 6 mos ago have gone thru the roof.
You know the press corps in this country really svcks when we hand them great stories on a platter and yet very few of them ever bother checking them out.
The Washington Post has a good story today about rental rate growth softening up in the D.C. area due to stuck flippers trying to rent to stop the cash flow bleed (and other factors).
http://tinyurl.com/yg5w6o
I mentioned this trend in a blog posting yesterday. I think that we simply built too many housing units of ALL types, that many attempted flips will turn into rentals, and that condo conversion-reversions are being dumped onto the market en masse. The result: Already-elevated vacancy rates will climb further, suppressing rental rate growth.
http://interestrateroundup.blogspot.com
Yep, I read that article this morning. Of course I predicted exactly the same thing when arguing with lance over on bubblemeter last year. Rents might go up short term because of housing being taken out of the mix in the condo-conversion process but a massive oversupply of housing is SURE to lead to lower rents and prices.
Worth a review: Mish’s prophetic post (from September 2006) on Dr. Copper:
http://globaleconomicanalysis.blogspot.com/2006_09_25_globaleconomicanalysis_archive.html
Very informative GS. Do you teach economics?
Watching CNN early this a.m. around 6 am PST, the woman who hosts their Saturday morning ‘home’ show was there to promote a special running Saturday afternoon around 2 pm EST, on the subject of foreclosures, and their marked increase in the last year. The promo showed a couple with a toddler who had recently lost their home to foreclosure, due to some kind of mixup with payments not being recorded after their loan company kept getting acquired by some new company, or some such nonsense. Sounded like they were dealing with one of those fly by night operations that multiplied in the last 5 years. May be worth tuning in to, we’ll see.
I’ve been watching these clowns who live in an overpriced luxury condo building near me post their as on Craigslist:
http://washingtondc.craigslist.org/search/rfs/nva?query=Continental
Asking prices are down over 10% already, from $582500 in Sept to $535000 now for this one guy who reposts his ad every week, and recently set up an entire website and domain to sell his condo (http://www.851glebe.com).
None of these units are going to sell, they are almost 300 times the monthly rental cost of apartments in the area that don’t have granite countertops, and $400/sqft is absurd for this area.
Yes, when you break it down to price per sq. ft. these prices do venture into the realm of absurdity. When you say “for this area”, is that property in our near the ‘hood?
What makes my heart glad is the fact that Phila. is smack in the middle of the east coast megalopolis, and as such will cave into pressure from the south (DC), and the north ( Boston, NYC metro).
I’m thinking the domino effect will add to the haircuts coming from our own overbuilt condo situation.
I haven’t yet accessed the link you posted, but it seems like this condo is also a FSBO. 9 out of 10 of these end up with realtors, anyway.
It looks like Secured Funding has gone down. This appears on their website for a bit and then the main website appears.
“Dear Valued Customers,
Based upon market conditions and limited product availability, we are ceasing wholesale operations. We have stopped accepting new applications, and will have until the 12th of January to fund out the pipeline. We appreciate your patience as we undergo this transition.
Thank you for your support”
Cue Queen,
boom, bomm, boom, Another one bites the dust …
O.k. all: Windows based PC or Mac.
My desktop gave up the ghost last night.
Thanks for any input.
mac for graphics
that is all
http://www.macsurfer.com/
Wouldn’t agree graphics are all Macs are good for. If you mainly need a computer to run MS Office programs, though, you’re better off with a PC.
I’ve had a Mac for two years after using a PC for six years. I like the Mac and probably would buy another one. But the Mac is not Nirvana. Computers are commodities. Get the cheapest one that meets your needs. That probably means Windows, especially if you are currently running Windows software.
Thanks philly gal and mad_tiger.
I was under the impression that you had zero chance of a virus crashing your PC on a Mac.
I stupidly downloaded an email with a bad attachment to my harddrive. Dumb, stupid mistake. I’ve been fighting the issue ever since.
Last night, blue screen and “dumping physical memory” message.
I’m going to try wiping the hard drive and see if I can recover the old one.
Once again, this board is full of more useful info than I could ever get anywhere else.
Novasold
“I was under the impression that you had zero chance of a virus crashing your PC on a Mac.”
Your odds are much better with a Mac. Some viruses have been written to infect Macs. However virus writers, like software developers, prefer to go for the bigger Windows market. If I had your experience I probably would buy a Mac. You should get input from someone who has experience with the newer Intel-based Macs which supposedly can run Windows as well.
In case you don’t know, Mac is Catholic, DOS protestant, Windows an Anglican-style schism.
Worth reading
BG:
That’s funny!!!
I use both Macs and PCs. Prefer Macs for creative content (digital video/music, illustration and photo-editing, etc.). OS X is a far more stable and intutitive OS than Windows, which reflects the bloated, middle-age mediocrity of the Microsoft company itself. But I also have a PC, since I have to be proficient on both platforms when I deal with corporate clients.
At any rate, hold off on the purchase, if possible, until the new Windows Vista comes out on January 30th, or better yet, until the latest iteration of the Mac OS X, Leopard, comes out this Spring. By that time there will also be new technologies like Intel’s flash-based “Robeson” or hybrid hard drives (using NAND memory) that will represent major advances in technology.
Final word: if you buy a PC, consider a silent/quiet one. I love mine - most mass-market PCs sound like wind tunnels.
http://www.endpcnoise.com/
Excellent Sammy!!
Great info.
The first PC I ever had sounded like there was a gerbil running on a wheel inside
I bought a PC from those guys a year ago. Its more quiet than the TV or the small refrigerator. Its heaven. The TIVO makes more noise.
I didnt the crazy expensive one either - just a regular case they sell with foam insert. The watercooler PC case they sell is overkill unless you do music recording or have super noisy high end vid card, IMO.
I didn’t realize how distracting things like fan noise can be until I got a quiet computer. Gotta correct you on one thing though: they use computer cases, i.e. Antec SOLO, Nexus fans, and other components that are specifically designed for ultra-low noise. Here’s another great resource if you decide to go the quiet PC route.
http://www.silentpcreview.com/index.php
The new iMacs are also very quiet, though I’d rather wait to buy a new Mac until Leopard comes out and Adobe releases their new Creative Suite 3 in April that will optimised to run on Intel processors.
How about recontextualising the question to “Red Hat or Mandrake or Ubuntu?”
we figured he wanted to get something done other than tweaking his kernel
j/k j/k
Apple cultist from 1982 to 1995. PC cultist from then on. Funny thing: In the 80s the hardware engineers snickered at us softies (software engineers) who bought Macs. Then in 1994 when my colleagues and I caught wind of Windows 95 we decided to buy PCs in quantity. A hardware engineer at that time snickered at us because we were not buying Apple products!
ITS OFFICIAL - add another one to the dead pool:
http://bakersfieldbubble.blogspot.com
Great site, Crispy! Maybe we should start calling the Bakersfield-area FBs “crispy critters.”
LMAO!
Hawaii December Home sales
http://the.honoluluadvertiser.com/dailypix/2007/Jan/04/M15601814.GIF