Bits Bucket And Craigslist Finds For March 13, 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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CDOs May Bring Subprime-Like Bust for Buyouts, Junk-Rated Debt
the next domino to fall…
plus kass vs cramer and schiff
http://immobilienblasen.blogspot.com/
New Century: Understated Credit Suisse debt by $500 mln
http://www.marketwatch.com/news/story/new-century-understated-credit-suisse/story.aspx?guid=%7BBCF34F0C%2D4C70%2D4D46%2DAD86%2DDB31437BD678%7D
“New Century Called it an inadvertant error”
er, that extra $500 Million, we owe you.
funny. read just an article in the german “handelsblatt” were they praised the low pe ratios of almost all financial stocks especially from the investment banks…..
well, when they back out all the losses as a “extra charge” the results may look good……
of course, the general public has to take over these stocks from the big boys before they go down. Some Dutch financial stocks like ING (from ING Direct fame in the US) are also on the edge of breaking their uptrend of many years today.
Holy freakin’ cow! $500M is *not* a small amount of money. That’s more than their annual net income during their peak times!
Dang,
I hate it when I cannot remember that kind of money is lying around the apartment…
Got popcorn?
Neil
Maybe they should check under the couch cushions.
Hmmm….where to hide this $500M liability….let’s see, revenues a credit…let’s put it there.
Subprime: The risk to Wall Street
As subprime woes widen, the money machines at Morgan Stanley, Goldman and other banks may sputter.
http://money.cnn.com/2007/03/12/news/companies/subprime_brokerages/index.htm?postversion=2007031217
The hell you say!
I think post-earnings pumps on these IBs might be great opportunities to buy long dated puts if one is a speculator. Don’t overpay
Oh, TX, you love the GS puts and you know it. I can hear you licking your chops from here.
Actually I like Lehman and UBS just as much.
Tx -
You know any mid sized biotechs (market cap 500mil +) planning to release Ph3 data in the next few weeks? Looking to gamble in the cnbc challenge… Any idea where one can find this kind of info?
thx
Are you on Minyanville? You could email David Miller. He’s there biotech guy and gives a lot of good info.
will check it out -
thx
also found this…
http://www.biospace.com/news_category.aspx?CategoryID=8
thx again
Good. I don’t follow the midcap biotechs. Sometimes fool with the small cap disasters, that’s about it.
there is an idiot with a few quotes on this orlando update:
http://www.orlandosentinel.com/news/orl-homes1307mar13,0,3733020.story?coll=orl-news-headlines
Where I live (Tempe, AZ), there are suddenly a lot stores displaying the “Going out of business” sign - CompUSA, Hancock Fabric. I know RadioShack is closing half of its stores, and so is OfficeMax. All because of stores that are in weak or saturated markets, or not performing well.
I shop at Walmart for basic personal care products, house supplies and pet food; prices have gone up for almost all items since January - 50 cents, $1.00 - on each product. Grocery stores such as Sunflower Market, Sprouts and Whole Foods have all increased prices of items that I buy.
And I cook my own food and do not splurge at all; I live cheaply and save and save and save. But the price increases have really been bothering me. No matter which store you go to or what item you shop for - gas, food, even fabric - 90% of the products have had prices increases in the last 2 months. Get ready for tough times!
The Amount of Inflation in america is staggering…..
Just yesterday in Rite Aid i bought some cheap decongestant pills, and lo and behold they used to be 2×24 or 48 in a box now its 36 and guess what?
they still used the 24 pills per package, but only filled 18 of the holes, no kidding they left 6 holes empty…..not even trying to hide how bad inflation is anymore……
That’s comical!
I should send a picture to Ben…..see if he will post it………
I’ve had my health insurance plan for 6 months. I just got a notice the premium will increase 9% next month.
Also I’m spending about 30% more on groceries this year. Maybe I’m 30% hungrier.
In our business we ship products using UPS. We used to pay 35 cents per $100 to insure through UPS. We checked and they have
raised their shipping insurance rate to $1.25 per hundred dollars.
Talk about inflation.
HEY UPS is now charging Dimensional weight…..you cant input the size of you box anyone and find out its oversized…… And to get an actual amount so you can charge the Ebay customer correctly!
I just had to send some plastic cd racks by the USPO i am hoping they wont charge me with mail fraud…..
UPS wanted me to pay $72 to LA for less then 25 lbs actual weight in 2 boxes There is no more oversize flat rate at UPS…
So i sent it media mail USPO, and the teller look at me and said we open packages you know……..
So Will it get delivered? Will they hold the package until buyer coughs up another $45 the difference between media mail and parcel post…..will they bill my credit card for the $45?
scary… websites dont work anymore….
The giveaway of the decade (for coin dealers) is the $8.10 flat rate priority boxes, with a weight limit of 70 pounds.
You can ship a $1000.00 face value(worth around $9,000) bag of 90% Silver Coins, for around $25.00 coast to coast, fully insured.
I have a little home based business and have never been able to use UPS - they have always been expensive. Even when I buy things I need (usually on ebay) I stay away from people who ship UPS it is always more expensive.
Well it all depends on what you sell….. UPS is good for expensive stuff, i have never had a lost or damaged shipment.
And until they raised their fees and insurance it sometimes cost LESS then the USPO. or more but only by $1 or 2
I used to ship boxes of records by ups, and avoided USPO media mail, but now the price difference is way too much, and buyers wont pay $60-90 for say a 14×14 with 90-100 lp12″ records, (about 2 records per pound) but now media mail is like 1/2 …..but for how long??????
I ate at El Pollo Loco last night. I love the taco al carbons. Last week they were $1.00 each last night $1.19. 19% inflation. Sucks.
I have noticed a lot of price increases at the retail stores, Costco, etc.
I’ve noticed that the sales at Safeway are what the old normal prices used to be.
All 4 Albertsons within driving range of my house are in the process of closing. Naturally, this means I get twice as many Albertson’s flyers in my mail box now.
This shows that deflation is a scare tactic; inflation is reality.
This makes me wonder…people have been debating whether we’ve been having inflation or not the last two years. I haven’t seen anything like this for a long time. It makes me think that if it’s debatable, then you cannot really conclude there is widespread inflation. You can point out examples - houses, health care, and so forth. Even health care is debatable. I pay $101 per month for $5000 deductible insurance and I practice preventable health care - I have worked out seriously for over 30 years (since age 17). The price of computers has decreased. Imports from overseas kept prices and wages down.
And I don’t want to see any conspiracy theorists saying this is a GWB coverup. Please! Bush-hating has gone so far as to lose credibility.
“Imports from overseas kept prices and wages down.”
YEP! Especially wages.
And now are gov wants to crush the dollar (excuse me revalue the Yuan Renminbi) to make Chinas items more expensive ….
I think we have more inflation than the FED would like. I also think the FED will let inflation stay high because if the FED tightens the money supply more the housing correction will become a meltdown.
“I pay $101 per month for $5000 deductible insurance and I practice preventable health care - I have worked out seriously for over 30 years (since age 17).”
I work-out too. However, this simply makes us eligible to pay more for those among us who can’t stop eating and need that gastric-bypass surgery, diabetic care, etc., since societal democracy has replaced individual liberty.
There is no such thing as inflation just dollar depreciation as they try to increase the amount of credit and money in the system while they point to interest rates and say “we are trying to control inflation”
Of course there is inflation. Inflation is an increase in the money supply.
I wonder if Helicopter Ben will be forced into implementing the Volcker Cure at some point.
You are absolutely correct.
Gas was $1.64 a gallon when George Bush took office!
Love those oil companies???
Lets see…..
Fuel UP 300%
Housing UP 250%
Food UP 75%
Health Insurance UP 100%
All since 2000 and the economy is “roaring”? And wages are “increasing”? And jobs are “plentiful”?
Has anyone else had enough of the elected happy talk charlatans? These clowns wouldn’t know the truth if it were right in front of them. So much for honesty, integrity and character.
LOL but you forgot the prices that have gone down, the computers, the digital cameras, the VCR and DVD and Plasma TV etc. And we all need lots of those, who needs housing and food and energy?
Real estate prices are starting to come down. Their previous rise, along with energy prices, is what has caused any inflation. I believe both real estate and energy are starting to go down in price, which will lead to deflation going forward. There is a time lag, so it won’t happen overnight, but we will have deflation for years. The Fed may even raise short term rates, but that will only speed up the deflation (which they may realize, and is why they haven’t raised rates already).
I believe both real estate and energy are starting to go down in price?
Energy is going down? On what planet would that be?
Eric Janszen at Itulip had a great graphic yesterday on inflation - looks like it is whatever you want it to be, just pick your category.
http://www.itulip.com/forums/showthread.php?t=1058
“Energy is going down? On what planet would that be?”
You might want to read the news since last summer. Oil down 20%, natgas down 50% (off the top of my head).
All the Peak Oil/Global Warming fools said we would have $100 oil by now…..
Yep, it’s deflation, just not all at once.
June 2000 spot oil price, bbl, $21
Mar 2007 spot oil price, bbl, $61
Doesn’t look like oil is going down to me or anyone else here. But lets take a look at natural gas.
2001, spot price/therm, residential, 9.68
12/06, spot price/therm, residential, 12.68
Hmmm….. doesn’t look like natural gas is going down like you said….
(You might want to check the top of your head. Possibly someone emptied it)
If energy is going down, then why did I just pay $3.19/ gal for gas yesterday, and saw the premium listed for $3.39/gal, and this was not at an expensive place here in Los Angeles. This is the most it’s ever been around here.
Kane wrote, “(You might want to check the top of your head. Possibly someone emptied it)”
That bit of snarkiness was uncalled for, Kane. Mark was contributing to the thread and offering his opinion. Your lack of civility is a poor reflection on yourself.
Maybe the Fed should print more money.
Bingo was his name-o
Hopefully the free flowing stream of cash doesn’t start a hyperinflation cycle, and luckily we have the best and the brightest of financial acumen @ our disposal to thwart any possibility of this happening.
Count on it. We helicoptered pallets of cash to Baghdad, and we can do the same for USA. A million dollars for everyone!
Here is a question: what is a credit crunch?
The FED fears a credit crunch, in which an over-reaction wipes out even sensible borrowing. But the economy may have become so dependent on funny money that even freely available mortgage credit at 10% down, with payments equal to 30% of your income even at full rates, for borrowers with a record of paying money back, could seem like a credit crunch.
Which gets to another point — how many Americans can meet those standards, relative to the past? The two-tier labor contracts and social security tax increases hit in the early 1980s, as prior generations took a rising share of young people’s incomes. And, the young have faced higher housing costs is some places, making it difficult to save. So, it seems to me, the young don’t have savings.
Based upon the latest data…
Older citizens of our country have no savings, either (-1%)
When (forget “if”) the brobdinagian mass, that is our system of credit, goes down, we go down the tubes, right with it.
If we become a cash and carry country, korporate amerika will grind to a halt.
No it won’t…it’ll just move overseas. Duh…
this problem is worldwide (in the anglosaxon world that is). Sensible borrowing hardly exists these days. In my country, if they used credit standards of just 15 years ago and removed all the free housing subsidies etc., I guess that less than 5% of current home buyers would qualify. That should be enough for more than 90% decline in home prices. So just forget that credit standards will ever get sane again - central banks simply cannot and will not allow it (also check the warning from the idiots at the OECD from today …).
I think the situation of the young in Europe is a bit different though: many of them started out in an excellent job market with relatively high incomes. They may have high debt and no savings, but that is at most a problem for 3 years if everything goes wrong. They are much better off than many people in their forties who started out at a time of massive unemployment and after that ran into all the trouble of a surging housing market.
And for a look at how sticky these problems are, check New Zealand: they raised interest rates several times to battle inflation, rates now up to 7.5%, and the party in the housing market continues like nothing happened (and no, they don’t even have all those subprime, ARM or HMD issues there). Probably the Kiwi $ has to go the way of the Iceland Krona (and attract even more carrytrade hedgies for the time beying) before all this blows up.
(And for a look at how sticky these problems are, check New Zealand: they raised interest rates several times to battle inflation, rates now up to 7.5%, and the party in the housing market continues like nothing happened)
If inflation is anywhere close to what it is being reported as, real short term interest rates are NOT low. The Fed has jacked them up to 2.5% to 3.0% real. Yet we are awash in funny money.
“The credit market is working off a totally new paradigm, in which interest rates continue to stay low.”
the problem with that is that obviously CPI is nonsense …
Looking at money supply numbers rates are at an all time low, both in the US and Europe. And that is why the party continues, and probably will continue for a lot longer (although there might be some roadkill now and then).
We couldn’t help but notice many stories about the carry trade between Japan & New Zealand, when we were in NZ for a few months, last year.
The phenomenon was so advanced by Feb of last year, that one of the stories I remember being in the news there, was Japanese housewives were investing in Kiwi $’s, in CD’s, on the basis of the excellent interest rates, as nhz mentioned above.
yes, funny thing is that there are now stories about that in our Dutch newspapers every day (but they still didn’t write anything about the -9% stockmarket blimp of last week!). It is all caused by Japanese and Chinese pensioners that are selling yens and investing in Kiwi dollars and US Treasuries etc. Seems like financial authorities are looking for a scapegoat in case things get out of control; apparently someone in Wall Street did a good job of organising some worldwide publicity for their latest rant.
But I do think it is a dark cloud that is gathering over the tiny NZ economy. It is not just the flash capital piling into the Kiwi dollar, it is also the thriving speculation in NZ real estate by wealthy foreigners and all the other speculation that goes with it. When this flash capital decides that it is time to go home all hell might break loose - lucky for them they may have some time to learn from the experience in Iceland which will probably crash first.
When I was in NZ in 2004 really everyone was talking about the spectacular gains in the housing market. It seemed like every Kiwi you talked to had a sister or uncle that had become an instant millionaire by selling a piece of land with the proverbial Kiwi bach on it. Even very simple citizens were speculating with their retirement money by buying small apartments, subdividing their lots etc. More than two years later nothing has changed, except that the fever has now spread to most of the country instead of just the areas with high population density.
I agree…
I have a good perspective about NZ, as i’ve been around 10 times since 1981 and watched it go from the ultimate craddle to grave socialist country, to a wide open anything goes capitalistic country and I like the changes that have come…
But~
You are correct, NZ$800k houses are doomed there, once the money fades away.
My wife and I await the crash and will buy a small place, somewhere in the Southern Alps, once the dust settles.
Not only was it in the news but the residents in NZ new what the Carry Trade was, how it worked , and how it affected their economy. I doubt if 10% of Americans have a clue.
actually I think it is less than 10% of NZ residents (most of them probably wealthy immigrants from Asia) that know what the carry trade is and take advantage of it. But I agree that the ignorance in the US (and Europe, probably) is even higher.
From the WSJ, the subprime contagion spreads:
Accredited Home May Seek to Cut More Jobs, Raise Additional Capital
The San Diego company, long viewed by analysts as one of the stronger subprime lenders, became the latest home-loan provider to disclose its challenge to access funding, reflecting the broader struggles of an industry plagued by rising delinquencies and cutthroat competition.
http://online.wsj.com/article/SB117377766671035305.html?mod=home_whats_news_us
LEND down 50% premarket.
http://finance.yahoo.com/q?s=LEND
Another one bites the dust
I shorted that…last year (and covered last year).
friend w a 32K tax rollover liability calls me- the closest he can get to rent ratio is a 400k townhouse that will get $1800 a month rent
“pay the fcking taxes dude” !
March 13 (Bloomberg) — Accredited Home Lenders Holding Co., a U.S. lender to people with poor credit, said it will seek debt waivers and try to raise new funds after creditors asked for more money to cover the risk of defaults.
The company will cut jobs to reduce costs and may delay filing its annual report, it said in a statement distributed by Business Wire. San Diego-based Accredited has paid about $190 million in margin calls this year, with two-thirds of that since Feb. 15, according to the release.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNf.bYYHpFAU&refer=home
Today’s episode of “as the subprime world turns” deals with more bad news out of New Century Financial and Accredited Home Lenders. The skinny…
* New Century Financial is now under investigation by the Securities and Exchange Commission. The company’s lenders are demanding the subprime mortgage company repurchase the outstanding mortgages they helped finance.
* Accredited shares are getting crushed … again … in early pre-market trading. The company said it’s seeking waivers on its debt agreements, is looking at raising new capital, is planning to cut more jobs, and will likely miss the March 16 deadline for filing its annual report. The company has had to pony up $190 million in margin calls in 2007, two thirds of that in just the past few weeks, per Bloomberg.
No lender left behind!
Actually, no lender left with a behind!
NEW delisted from NYSE (on CNBC)
txchick, funniest post of the day. God, after puzzling over nhz’’s post (God, why did I go for Latin and literature instead of economy in school?) I needed some comic relief.
“The company’s lenders are demanding the subprime mortgage company repurchase the outstanding mortgages they helped finance.”
So how are they supposed to repurchase, all the money they made went out the door in expenses, salaries, commissions and dividends to the owners, the corporation itself is nothing more then a shell. I bet all their offices and equipment are leased.
One of the telling things about the RE bubble is that so many of the people screaming about “RE always goes up” were operating out of leased office space.
Karen Shaw Petrou, managing partner of Federal Financial Analytics, noted that subprime mortgages account for an estimated $1 trillion of the $8 trillion U.S. home-mortgage market.some mortgage industry executives told lawmakers that the subprime turmoil is a cause for concern but does not warrant government intervention, because the financial market can weed out the problem companies.
“There’s absolutely no question that there were lenders with this product that got aggressive,” John Robbins, chairman of the Mortgage Bankers Association, testified at a hearing of a House Financial Services panel. Those lenders are now being punished by the market as investors abandon them, he said.
“It is a very distressing picture at this point,” she said. “People forgot that subprime means higher risk, higher risk means more losses.”
well, maybe the corporations get punished (or actually the holders of their paper, by now probably mostly pension funds, widows and orphans and the taxpayer) and not the crooks that run these corporations. I have no doubt the crooks will be back soon with the mountains of cash they gained in the last few years. They have learned that crime pays very well, especially if you commit crimes that Wall Street and the government silently cheer.
nhz, amen. I don’t see any way out of this other than making everyone a little poorer so the crooks can keep their share. God, this whole think is so horrible I think I’m going to start reading Dante’s inferno. At least there the bad guys get their punishment.
CFC getting killed pre-market. I wanted to sell my NEW puts yesterday and move them into CFC. D’ohhhh. I think there is still a lot of room for this beast to fall. Check out the chart. It will revisit 2002, in my opinion.
LOL, I wasn’t watching it yesterday but my stop hit. That was a loser!
Like NEW and LEND recently, CFC is going to be the issue that will “keep giving” for the next few weeks. What a great ride.
Here’s how we got stuck deep into the credit mess
The beginnings:
It’s 1949. Businessman Frank McNamara schedules dinner at Major’s Cabin Grill, a New York City restaurant. Dinner over, Frank realizes he has left his wallet in his other suit. His wife rescues him and pays. He resolves never to face this embarrassment again.
February 1950. McNamara and his partner Ralph Schneider return to Major’s Cabin Grill. When the bill comes, McNamara presents a small, cardboard card, a Diners Club Card, and signs for the purchase. In the credit card industry, this event is known as the First Supper…
And when supper was ended, he took the card.
Again he gave you thanks and praise.
He broke the card, gave it to his disciples, and said: Take this, all of you, and pay with it. This is my credit. It will be lent for for you and for all men, so that debts may be forgiven. Do this in memory of me.
Wow. Just 57 years from innovation to social destruction. The third generation has had no idea how dangerous credit is… There must be a useful anthropological maxim in that story somewhere.
This might be appropriate. Hat tip to whoever posted this here a few days back.
“My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel.”
- Rashid bin Saeed Al Maktoum
I’m pretty sure I can acquire a black velvet rendition of said event, from my sources in tijuana~
You forgot the sound of ringing bells after that act of consecration…the ringing bells of a register.
And the chorus? What about the chorus. Maybe they would be saying: This spring, while the flowers bloom/The card that brought the boom/will also be our doom.
All in a sudden the music stopped on both ends of the mortgage spectrum. A lot of bagholders looking for chairs including possibly the Dallas police and fire pension, NY teachers pension (new century stock holders) and UNC endowment.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0uS8xp4v2CE&refer=home
how about GE and the untouchables ?
look what happened to FBR
If the NY teacher’s pension fund loses money, NY taxpayers (the highest taxed in the country) must make it up. The pensions are guaranteed by the state constitution.
I thought constitutions are supposed to protect the rights of citizens by defining the limits of what the government can and cannot do.
In this case the constitution protects the government from the citizens, by ensuring the government gets its due regardless, at the expense of the citizens.
Time for a constitutional convention…
What? It is protecting the teachers. People.
The government is protecting its own. Teachers. Government employees. And non-teacher government employees.
“Time for a constitutional convention…”
Testify!
Tortious is correct. The beneficiaries have rights too. It’s a contract.
Tortious is correct. The beneficiaries have rights too. It’s a contract.
Did the taxpayers of NY sign this contract? If not, I hardly see your point.
I imagine their representatives (who they voted for) did sign this contract. So, yes…it’s a contract and should be honored.
Oh, you mean like my lost UAL pension? I lost 40% of my monthly check & I want my “rights”. There are no “rights” in this economy/legal system.
As long as people are making the dough, you can tax them up the ying yang and they will just whine….Problem is, when the recession hits the taxes remain (Remember that Guaranteed contract !) the sheeple get real pissed as they watch The coupon clipping pensioners eat @ five star and the taxed sheeple are eating top romen….At that point, its Bye Bye New York or any other entitlement burdened area…Its happening in business (Ford, GM)…Why won’t it happen to muni’s ??
I imagine their representatives (who they voted for) did sign this contract. So, yes…it’s a contract and should be honored.
So the people who didn’t vote for the representatives responsible for this are exempt?
The idea that government decrees are equivalent to contracts is absurd. Contracts imply free association and agreement to terms. Government decree is the antithesis of this as it is always backed by force or the threat of force.
I think this is a problem in many countries. One of the biggest speculators in the housing/mortage market worldwide is the Dutch pension fund ABP (representing the pensions of most of the government workers) and their hedgefunds (yes, a government workers pension fund that uses hedgefunds, totally beyond government control). When their losses grow (this happened before around 2001) the taxpayer has to pay the bill. And because the FB’s will probably not have very much real money available when the housing market craters, everyone can figure out who is going to get stuck with the bill for all this. Don’t worry about ABP’s managers though, because even if they totally mess up they alwasy leave with million dollar golden parachutes on top of their incomes (which are several times higher than those of our highest paid politicians - despite the fact that they are ordinary government workers just the same).
Wt,
All the city and state pensions are grossly underfunded, as Bloomberg has noted repeatedly. State Constitution or not, watch for this to be reworked come crunch time. You can’t get blood from a stone, and I’m too lazy this a.m. to look it up, but I believe NY is now running 1 civil employee–cop,teacher, fireman, bureaucrat– for every 2 private sector employees. So you think the private sector, without health insurance, or pensions themselves, will impoverish themselves to pay these pensions?
This is a fight that is really going to rip the political and social fabric of the state.
So you think the private sector, without health insurance, or pensions themselves, will impoverish themselves to pay these pensions?
————————–
Time for the private sector to quit whining and grow a pair. Instead of, “if I can’t have it, nobody can,” they ought to try to better their own situation.
We are perfectly capable, as a society, of providing decent health care and retirements to our working people (and disabled). We simply have to decide what our priorities will be: grossly over-compensated executives who usually produce nothing (and the constant drumbeat for more “growth” for shareholders)…OR…the productive workers who are the backbone of a society.
I vote for the workers. Time for Americans to wake up and realized the only thing standing between their standard of living vs. people in third-world countries is unions. The sheeple have been brainwashed.
Just see what happens to private wages & benefits if the unions are totally dismantled (but, somehow, I think the executives will be just fine!).
I must disagree, the only thing that will make the US third world is the union. *( I lived in a third world country). while Unions started out with a noble cause, nowadays workers in the Unions are less productive than workers of say 20-30 years ago. I talk with a friend of mine who is a union supervisor… while he would start out by defending unions, he would complain that it was hard to run business when workers are unaccoutable.
Let’s hear it for Unions!
How many jobs will be lost due to China now shipping to Mexico and trucking to the US because of Unionized Dock Labor?
How many of our children suffer through public school systems that has such terrible success record (and yet costs as much if not more per student than highly successful private schools)
How many big manufacturers are now on the ropes because Unions don’t allow them to adjust with the market?
Unions had a great history, but they were they really that great or was the world just learning to adjust to industrialization and Unions happened to be at the right place at the right time?
I’ve worked in Union shops and been forced into Unions. As far as I’m concerned, they are tied for government regulation in terms of how much they’ve harmed the economy.
CA renter-
Did i just hear a “workers’ of the world, Unite” ????
Let’s all revisit this in 10 years. Somehow, I think more people will finally get it. Unfortunately, it will be too late.
This is a fight that is really going to rip the political and social fabric of the state.
You sure got that right Spike!
You are going to hear but “It’s a contract” from coast to coast. Well, I had a contract & it meant nothing. It will mean nothing to those coming next for the very simple reason “the money isn’t there”. Too bad……….move along please, next problem?
Oh, that hits close to home. Good friend managing one of those entities. Ouch.
Why wont these Pension fund managers tell the truth???????
Pension funds are bankrupt in America, because of all the people who don’t smoke anymore, and they need to raise the contributions from day 1, and/or End all early full payout 20 and 25 year retirement plans…..25, 1/2 pension and 30 year full pension, and only after you turn 65
Less smokers means more payouts…..Just the unintended consequences of all the non-smoking campaigns.
Not to mention the ability to ‘retire’ with full pension while also continuing to work full time at the same job, which is allowed by some states & municipalities, such as in Ohio. Talk about double-dipping at the taxpayers’ largesse…
smokes fo votes
better distibute filterless butts
Pension funds bankrupt? Not really, but their assumptions are for 9% returns on funds, in perpetuity. Thus the rush for real estate, REITS, hedge funds, and private equity. Once again, they’ll be disappointed. Their hurdle rates should be 30-year US treasuries plus 100 or 150 basis points. (i.e. 7% or so).
wow 9%, that is conservative: some of our pensions funds assume 11% returns (and why not, they own some big hedge funds … and anyway if it turns out to be -11% no problem for the managers).
The problem is not that people are living longer and smoking less it is that the unions and retierees due not want to use the new updated life expectancy tables. Retierees want to recieve the higher payments for a longer time period than the pool of money can cover. They want more than they put in. It is the American way. Guess who is going to get screwed? My generation.
Looks like UNC didn’t go in too far deep, actually. They’ll be fine. Well, not in the NCAA Tournament where they’re losing to Texas, but you know what I mean.
Go Jayhawks!!!!
Rooooooooooock Chaaaaaaaaalk Jaaaaaaaaaaayyyyyyyhaaaaaaaaaawk Kayyyyyyyyyyyy Uuuuuuuuuuu
That would be beautiful if power-hungry statists like the Dallas Police, NY teachers and leftist UNC professors have an impoverished old age. Crash, baby, crash.
Even better when the sick and starving crash the gates of the exclusive enclaves of the rich so they can pillage and plunder the wealth of the capitalists.
(rolls eyes)
I don’t think we have to worry about that CA renter. 5 years from now, SS and national healthcare will be fully funnded all by taxing the wealthy/corporations at the rate they’ve always been taxed…. Until 1980 that is.
There is hope on the way.
And the wealthy and corps will just move to Dubai. The sheep-like middle class will be the ones taxed, as well they should be. The welfare state will die along with the housing bubble. Good times coming.
But grasshopper… you have much to learn. Not only will SS be fully funded, the health insurance will be the best you have had.
BTW, the Morning Snooze reports that TXU engaged in Enronesque power market manipulation in the (very hot) summer of 2005. The buyout may have to be rejiggered. I’m short TXU and the utility index as mentioned a few weeks ago and think there’s a lot of air under that one too.
I read about that too. If I was a TXU customer in North Texas I’d be outraged.
I read about that too. If I was a TXU customer in North Texas I’d be outraged.
Well you’re a consumer of California Electricity, which was bilked by Enron. Where was the outrage? Oh yeah, at Gray Davis.
People scream for “completely free markets”, but need to be careful what you wish for
That said, Enron really exploited PARTIAL deregulation (not full deregulation), but still I can only imagine and fear what they could have done in full deregulation.
The corporations are out for one thing: money. What a wonderful world.
Clownifornians love big government control, so they deserve a good reaming.
All these LBO/PE deals rely on the continuation of the easy money, easy financing, low yield spread environment. The subprime mess is starting to cause spreads to widen. IF — and that’s a big IF so far — fear seeps into other credit markets (corporate, junk, etc.) as a result of subprime losses, you could start seeing some of these deals fall through. Definitely worth watching.
Hey txchick ! You mentioned a while back that you mentioned that tech stocks are cruising for a bruising, now the MSM sees the light
From the WSJ
Tech Companies Bleeding Red Ink Pursue IPO Gold
Technology companies that bleed red ink are once again lining up to go public — and once again finding plenty of takers.
A number of unprofitable tech companies have launched initial public offerings in U.S. capital markets since the beginning of 2006, and more than half the tech companies now in the IPO pipeline are in the red. The trend recalls the dot-com boom of the late 1990s, when deeply unprofitable tech concerns — often with no clear business models — were snapped up by eager investors as soon as they hit the market. Turn the way back machine to 1999 when I worked in telecom. The job market was CRAZY I actually was thinking DON’T WORRY SOMETHING WILL SCREW UP, THINGS ARE GOING TOO WELL… i didn’t have to wait very long …
I do like Sun Micro and some of the networkers and have those.
TXU is the stupidest LBO, and made as much sense as AOL’s Acquisiton of Time Warner. (An excellent market signal to sell by the way)
Yeah, and selected REITS at the Zell/Crow sellouts too. I don’t know what people need to see. I like stuff like that better than shorting things already down 50% with bad news everywhere.
Bloomberg has a good story about the possible impact of the subprime problems on the CDO-fueled, easy money environment. I tried to explain it at my blog in plain English. Here’s the post and the story …
The subprime problems are causing bond investors to look more closely at collateralized debt obligations, or CDOs. CDOs are a fancy form of fixed income investment. They hold bundles of loans, bonds, and derivatives. You can buy various pieces of a CDO, from the lowest-rated, highest risk, highest return piece on up to the highest-rated, lowest-risk, lowest-return piece.
Investors have been snapping up CDOs like candy to boost their returns. A whopping $918 billion in CDOs were sold last year. That aggressive demand has fueled the aggressive creation of new CDOs, which in turn, has sparked aggressive bidding for risk assets — including high-risk mortgages — to go into those CDOs.
It has been a virtuous circle that drives funding costs down for consumers and corporations and suppresses risk premiums. But if fears of subprime-driven CDO losses spread, it could cause CDO demand to wane. That would raise borrowing costs market-wide, leading to potential liquidity problems, especially in the high-flying leveraged buyout/private equity takeover markets. After all, most of these mega-deals rely on a steady stream of incredibly cheap debt.
The post:
http://interestrateroundup.blogspot.com/2007/03/subprime-saga-continues.html
The story:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a0uS8xp4v2CE
U.S. retail sales rise 0.1% in February on cars, gas
From the article…………
WASHINGTON (MarketWatch) - U.S. retail sales stayed soft in February, rising just 0.1% after no gain in January, the Commerce Department reported Tuesday. Sales were led by a solid 0.9% rise in auto sales and a 1.2% rise in gasoline station sales, which was boosted by higher prices at the pump. Sales were weaker than Wall Street’s expectations for 0.2% gains for both overall sales and for sales excluding autos. Sales elsewhere were weak. Sales excluding autos fell 0.1%, the first decline since October. And excluding both cars and gasoline sales, retail sales fell 0.3%, the largest decline since April 2004.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B2A2F2974%2D4570%2D4BDA%2D8D9C%2D90EFEE0797E9%7D&dateid=39154%2E3543362732%2D891527774&siteid=mktw
Since inflation is rising at 3-7% p.a., a ’solid 0.9% rise’ really translates into a net fall in real retail sales. For the second month in a row.
Check the last sentence……….
And excluding both cars and gasoline sales, retail sales fell 0.3%, the largest decline since April 2004.
I am shocked, shocked I tell you, that there was bad weather in February. I remember growing up in Minnesota where we used to hit the beaches and sunbathe throughout the month of February. Between waterskiing and golfing we would make sure to go to the malls and buy anything we could find. This bad weather in February really took me by surprise. I have to give this a big “WTF?” this morning.
Goldilocks is a skank.
What you said.
Thanks for saying it for me.
Well since you grew up in MN, you can hardly imagine the harrowing trials and tribulations that the southern californians had to endure this february, where temperatures plunged to 35 degrees overnight, and struggled to get into the high 50’s during the day.
I mean, c’mon, when it’s sub-60 degree weather it’s not like it’s possible to go all the way from your house to your driveway, get into your car, turn on the heat, and drive all the way to the mall, get out of the car, and walk 10-20 steps into the heated building.
I’m exhausted just SAYING the above, much less doing it. My god… if you do all that, you better bring a passenger along who is weaker than you so you can eat them when you run out of food at the foodcourt!
LMAO!
Has anyone else read the Credit Suisse report by Ivy Zelman titled, “Mortgage Liquidity du Jour.” Scary, scary stuff. Ivy’s the best in the business (she’s the one who accused Bob Toll of “drinking Koolaid” when he had some massively optimistic statement). In any case she states in terms that are more measured than I would have written, that the house of cards is about to fall. Required reading if you can get your hands on a copy of the report.
A MUST READ.
link?
Got popcorn?
Neil
No link.
63 page research report.
Gotta have access to Credit Suisse research.
That said, Ivy is the best in the homebuilding analyst bidness.
Read it last night on CR. Kudo’s to Ivy!
What is CR? I would really like to read it if possible.
THX
I’ve got it. Good stuff but nothing we didn’t already know.
I thought the Alt-A info was more damning that most believe or are aware of….
JMHO
I can’t wait to see the A stuff, the masters of the universe, go in the tank. Talk about some arrogant mofos, and they were as greedy and stupid as the subprime in a lot of cases.
Are home builders about to break through 52 wk lows to the downside?
If not… why?
They’re toast.
I’m getting a kick out of the broker blogs… pure schadenfreude.
Got popcorn?
Neil
Tried posting this earlier (sorry if turns into a double post)
http://tinyurl.com/2tezj6
Found Ivy’s repost at the NARREIA site.
[partial quote]
“We remind investors that the headwinds from deteriorating credit will impact supply and pricing conditions, as well as incremental demand. With delinquency and foreclosure rates continuing to rise, we believe this will result in more supply hitting the market throughout the year. In addition, we estimate that current inventory figures released by the NAR could ultimately be 20% higher when homes currently in the foreclosure pipeline hit the resale market.
Finally, we believe that tightening liquidity and more stringent appraisals puts current builder backlogs at considerable risk for fallout, which should lead to another surge in cancellations and additional spec inventory on the market. As such, we believe the impact of these headwinds will be felt throughout the entire market (regardless of builder price point), and will likely contribute to the next tranche down in pricing, which in turn could lead to impairment risk surpassing our initial estimate of 20% of book as detailed in our “Wonder-Land” report.”
Looking at the charts for the HB’s… They’re just now starting to test their 6m lows, and I’m no expert, but I’m thinking that they could pretty quickly be following subprime into the dumper. After all - all this talk about the homebuilders making money even in a down market counts on people still buying… And at the rate that the credit crunch accelerating, looks like RE will be in the deep freezer faster than even many on this blog have predicted, regardless of how fast the market psychology is changing.
Basically, at this point, even if there are still optimistic people out there, there is no longer any way for future FB’s to leverage themselves into new spec houses.
Also wondering about the time frame for us to start seeing the REITs and financials starting to tank. I’ve been watching GGP for a couple of years now and it’s still up about 30% since December, still seems to be completely ignoring fundamentals (recession etc.).
Replying to my own comment about the next leg down… I decided to finally try my luck shorting WCI after reading nothing but negatives about it for the past year.
Anyway, now Icahn is buying it for $22 when the last price (yesterday) was $19.
Luckily, I’ve cancelled my order to short at $19.
WTF is wrong with Icahn?
WCI was my last batch of individual LEAPS. I sold a few months ago and switched over to indexes. Tx Chick’s comment about getting a “William Lyons enema” made me see the light. I just don’t have the time to monitor each issue that closely.
BTW, here’s shocking news: Casey lost another house.
That sounds like it should be an old-timey spiritual. “Casey lost his house.”
Casey? Casey who?!? You… you, CAN’T mean Casey Serin?!? The Real Estate mogul himself? The Sage of Sacramento? The Mullah of Moolah? That most Spectacular of Speculators?!? I don’t believe it! He had many, many ’sweet deals’ in the works! What is sub-prime coming to…
The Sage of Sacramento? The Mullah of Moolah
Funny….
Back to the bank it goes.
I hope Casey read about the two who were sentenced to a year in jail for mortgage fraud for doing exactly what Casey Serin did.
in the future…inside vacant trashed houses…you will find in neon paint:
“Casey was here”
With all this “shocking” news in the sub prime meltdown
i thought where did i hear about the strong possiblity of this
happening? oh yeah it was here on this blog!
i guess we can put down our tin foil hats now
Hey…..I just ordered a new one.
http://en.wikipedia.org/wiki/Image:Tinfoilhat.jpg
Why don’t you make your own? The instructions are widely available. Any World Cup favorites? Any coverage links?
I’d rather hat a BOAT styled one myself side ways of course
Or this???????
http://www.moonbattery.com/archives/hillary_tinfoil_hat.jpg
I watched the last installment of the PBS documentary series “Commanding Heights.” Close to the end, they mentioned LTCM, and their government-orchestrated, privately-funded bailout.
It got me wondering about Wall Street buying up all the mortgage companies. Could this be some kind of preemptive bailout?
The Minsky Moment:
http://wallstreetexaminer.com/blogs/winter/?p=504
The Great Unraveling?
I do the grocery shopping in my household and am a big user of coupons.
Last year at this time my ‘coupon’ envelope was bulging at the seams and I was saving about $15/wk.
Now, I’m lucky if there is one coupon a week.
Anyone else notice this?
Credit crunch? I’m betting on it!
Oh, and most of the products I buy are going up 10-20 cents/ wk!
Produce esp.
Gnome:
Yep. Prices on everything took a huge pop up recently and it seems to be across the board.
Prices are just starting to rise and by winter 2007 cereal and soda will be up 40% / meat will be up 75% / Chicken will double from 49 to 1.00.
“Chicken will double from 49 to 1.00.”
Man, In Manhattan you’d have lines for chicken at that price. On sale, try 1.40-1.99 lb for a decent bird. That said, grocery packaging seems to remain the same, but the contents keep shrinking. More “hide the inflation” tactics.
And whaddya suppose that does to corn prices? Old corn trader here, think it’s totally bogus but why not make a few bucks on it.
TX, I am an older corn trader and simple country farm boy with lots of farm land before I hit a town. As long as the Goverment is going to give a 110% tax credit to companies that produce ethanol (See ADM 10K), then the price of all grains will continue to increase. Obviously the Government could eliminate the Tax credit - but how many times has the government done that. It is unfortunately not bogus. If you have a deep freezer, stock up now.
I got corn, but not in the freezer
Spike, I should say doubling of prices for the market area since stores Mark to the Market.
Thankfully, we *don’t* own a house. We will be buying one at some point, and the cost of produce has convinced me to purchase a house with well water and no HOA (they don’t like vegetable gardens). I gotta have good tomatoes.
I have my garden started for this year.
Forget the $1.50/lb. flavorless tomatoes at the grocery!
Ewww.
Don’t forget the new “convenient, stackable” 3 litre water bottles which charge the same price for 21% less water.
No inflation here…
I’m so glad that I grow some of my own veggies.
FRANKFURT, March 13 (Reuters) - “European shares fell on Tuesday as banking shares continued to weigh on markets amid concerns about the U.S. mortgage market and ahead of U.S. retail sales data.”
And,”The yen rose against the dollar and euro as concerns about the U.S. mortgage market and caution ahead of key U.S. retail sales data prompted investors to trim exposure to high-yielding currencies.”
Could we have a worldwide financial crash because of the subprime disaster? Eeeeks.
Last night the Newshour on PBS had its own report on the subprime meltdown. Gwen Ifil asked all the good softballs and Mark Zandi did us proud, IMO. They brought up liar loans, teaser rates, now down, better credit standards, I/O and Alt-A. It’s not news to us, but a nice summary for the viewing public.
Transcript:
http://www.pbs.org/newshour/bb/business/jan-june07/loans_03-12.html
oxide;…Thanks for the post…
WSJ is reporting HSBC’s legal department is cracking down on mortgage brokerages nationwide going after every signle penny and leaving no stone unturned.
God, I love the smell of napalm in the morning!
When I say this mortgage is cleared, its cleared.
Great, now I have Wagner stuck in my head.
Got popcorn?
Neil
Hi,
I need some advice or at least some validation that I have thought about all the possible points/angles…
We talked with our landlord to stay in the place we currently rent until Aug 2008 (when we are planning to buy something if we find something we like for a reasonable price). He wants to increase the rent $50 a month. The increase is more or less consistent with the current rents around our area (for townhouses)…and the place has everything we want (2 car attached garage, huge basement and no yard maintenance/snow removal).
However, I have been thinking about the numbers. So even if we would move to a nearby city with a lower rent per month of $200 (I don’t think we could do better and we might have to downsize); that will be savings of $2,400 a year but there you have the moving expenses and the deposit.
Taking into account that our time is very, very, very valuable for us (I don’t want to take vacation time for the moving)…we are inclined to take the increase and stay put. Also we like the neighbours and the area.
Have we thought about everything? have we thought about all the benefits/costs?
Feel free to comment/give advice.
Thanks.
If your time is valuable to you, then moving to a $200 cheaper place farther out isn’t worth the $2400/yr savings (moving expenses and the hassle of moving wipes out part of those savings).
Another way to look at it is: what’s $50 bucks a month? Sure, over those 18months it adds up to $900, but you don’t have to move, and you have the safety and security of knowing you’ll be in the same place for the next 18 months. Of course, that assumes that your finances aren’t stretched to the limit and you’ve got plenty of dough left over at the end of the month.
If you like the place, plan to stay. Offer 25 and see if they counter with 35/40
Agree with these folks… if you have a good relationship with the landlord offer some token resistance but just fork it over in the end if you have to. $50/month is about the interest on $12-15K in cash… if you’re buying you DO have that much saved up, right?
I’m renting at about $150-200 under market and would be happy to “only” pay an extra $50 on my next lease.
Thanks a lot for the advice.
More information. We are almost paying the mortgage payment for our landlord but our rent doesn’t cover HOA and taxes (and in Naperville property taxes are a killing I’d guess extra 500-700 a month) so I don’t feel so bad about the $50/month increase (I don’t want to be greedy). At the same time I know my landord (a realtor working in a downtown agency in Chicago) has bought a condo in the city for 600k (!!!) last October, so I would think he shouldn’t be short of cash :-).
On the other hand the increase is from August on, so it will be a total $600 extra. It won’t hurt us but it is almost a ticket to Spain (I always think about the opportunity cost), but we live well below our means and able to save every year a bit more than a 1/3 of our gross combined incomes (that with max 401k).
I know I might kick myself later when the rental market becomes cheaper (and I know it will in Naperville/Wheaton where we want to rent or buy), but there is the opportunity cost of stability and not having to worry about the moving.
I don’t feel comfortable counter-offering the rent increase, I am not good at it unless I have a winning hand.
Oh, you live around here.
Paying just the mortgage payment in rent (ignoring assessments and taxes) is just about right for Chicago. IOW, for each $1000 in rent around here the cost of ownership is about $1500-1600 right now.
I’m with you on being as frugal as possible and thinking in terms of what you *can’t* spend money on, that kind of thing, but the whole point of being frugal in the first place is to gain the ability not to sweat extra costs when you can’t avoid them.
Ok, so I shouldn’t complain about the rent or the rent increase. That sounds about right.
We are frugal because we are used to live in Europe (lower standard of living) and my husband has a phd so he is used to live with a poor student salary during his twenties… Now we live in “luxury” compared with our previous “lifes” and we have very good jobs, so we are saving as much as we can for the “bad times” and for a darm good down-payment.
NAM,
If I may interject something……
People are looking at the situation for the RENTER’S point of view. Let’s put on your landlord’s hat for a minute. HE knows replacing a tenant is expensive. HE knows the next tenant might be a jerk, or worse. If you’ve been a great tenant….paying on time, no compliants, takes care of his property…..try this:
“I’d like to stay here and hope you agree we’ve been a great tenant for you….and take care of the property as if it were our own. Since we are on a tight budget, $50 has a big impact on us. Would you reconsider the increase?”
Put it back in his court….nicely…and to the point. The worst thing that will happen is you’ll have to pay the full increase. The best outcome is rent stays the same. Let HIM offer a compromise……
Dan,
thanks for the sugestion…but we would lie if we say that we are on a budget and the $50 would impact our pockets (we are on a budget but $50 a month is not even 1% of our income and we hope to have salary increases during next year)…and I might be too good of a person or too stupid but I cannot lie.
We have been very good tenants (we also had very good references from previous landlords) and he has been a good landlord (it means not been around unless need it, I hate when landlords cannot keep coming to the property). I think we will leave it as it is.
NAM, Dan has a point. We have been tenants for 12 years and have a very good relationship with the landlord. We are paying his mortgage and he only raised the rent once by $250 in all these years. Now, every time I call to say hello, I can tell he is worried that we will take off and rent something bigger or buy. For a landlord, it is not easy to find good tenants, and he sure has to count that as part of HIS equation, just like you are counting your opportunity costs. There should be some room for negotiating, unless your rent was very low to begin with.
Hi Cassiopeia,
but I don’t want to abuse my good luck. We might ask for some “heavy” maintenance(we want the carpets to be steam-cleaned by professionals, the landlord didn’t do it when we moved in) instead of lower rent.
the rent wasn’t really low, I think it was right for the market and time. We negotiated $50less than what he asked for and now he is increasing the rent to what he wanted last year…we’re good tenants, we clean the house like crazy (we’ve a dog, we have to keep the house clean otherwise we will smell the dog everytime we open the door), we pay on time, we don’t disturb neighbours, we don’t smoke in the house or in the garage, we keep the cars in the garage, we pay the utilities on time, we are the poster child for credit card companies
We might ask for some “heavy” maintenance(we want the carpets to be steam-cleaned by professionals, the landlord didn’t do it when we moved in) instead of lower rent.
NAM, then, by all means, pay him the $50. Personally, I am a carpet maniac and I have it cleaned by the guy I like every six months, which costs about $190 bucks. So, if the guy is going to pay for the carpet cleaning you come out ahead.
You know the old saying “A bird in the hand…”
You know what you’ve got there. Besides being expensive & time consuming, moving is a crapshoot, you could end up with awful neighbors or some other unforseen situation. $50 seems like a small prices to pay for peace of mind.
Accept the $50. but ask for a two year lease….That hedges against further increases and is consistant with your timeline for a purchase….
My landlord wants to raise my rent and his reason is he is losing a couple hundred $$$ a month. Baught the house at the top of the market in late 2005. HAAHAHHHAHA … oh ya he also works for HSBC on wall street. HEEHEHE
Bloomberg reporting New Century delisted from NYSE. No longer worthy.
Is LEND next in line? Off 63.77% so far this morning (versus just over 1% for the DJIA and 1.33% for the NASDAQ). High beta stocks really bite on the downside!
http://finance.yahoo.com/q?s=lend&x=0&y=0
Time for some real discounts…in bubbleurope Spain!
http://www.aifos.info/mas_informacion.cfm?edicion=15&mes=02&anio=07&id=11&idioma=EN
“500 homes are offered with substantial discounts of up to 35% off the selling price…”
“…After the 28th(of February), we will improve any offer we make. Show us a property you want and, if its price is more affordable than our properties, we will match* it….”
Weren’t houseprices supposed to go up?
How do you match this?
difficult to judge … you don’t know how realistic the initial selling price is. I think with 35% off the builders (or speculators) in Spain still make a very nice profit.
“We can assist with mortgage financing up to 100% of the price of the house, combined with the most convenient repayment plan to suit your budget.”
Scary…I predict 2007 to be the peak in the Spanish market and then the “pop”.
http://blogs.periodistadigital.com/ladrillos.php/2007/03/13/las_inmobiliarias_condenadas_a_ganar_men
The article is again in Spanish (but ok we are talking about the Spanish market)…the most valuable information: in 2006 they built 846,000 condos!! I don’t think there is enough demand for all that even condos being the number 1 housing option in the country, even with all the British and Germans buying in Spain…
NAM
If you speak some spanish, you could maybe update us once in a while by visiting this link…
http://www.burbuja.info/inmobiliaria/
Thanks for the compliment…so my written English doesn’t totally suck and withoug spelling check.
Actually Spanish is my first language and English my second, Dutch is my (kind of nowadays) third one.
That forum is really interesting. There are quite a lot of people talking about the housing bubble in Spain, some trolls saying “nothing to see here, you loosers, move on with your petty lifes”, they talk about Porsche Cayennes second hand sales as a measure of the bubble (like the Hummers thing in the US), others talking about deflation and recession, there is an interesting threat about the US market and the subprime market (and the difference with the Spanish/European market is that they expect a bail-out from the European governments if something like that would ever happen in Europe).
I will bookmark that webpage and post some comments in the craiglist threads.
Gracias, thanks, bedankt,…
John,
In the website http://www.burbuja.com there is a thread about the US housing bubble, they mention this website and that they expect the same timeline for the Spanish market during 2007-2008 (so around one or two years later than in the US). Good finding! thanks!
and don’t forget the Dutch speculators
I agree that there is not enough real demand (certainly not from the locals at current prices), but there is still unlimited virtual demand for those condos. Although the Spanish market is looking a bit mature by now, many people from northern parts of Europe are still investing their equity gains in Spanish RE and with 100% financing etc. (and the attraction of buying RE with black money) it is very difficult to say how far things can stretch. On the big Dutch investment websites RE in Spain (and other parts of Europe)is still cheered as an excellent investment.
natuurlijk mijnheer…maar..they will cheer all the way to the bank, they will cheer ’cause they need to unload all those extra condos. Builders will get their fat profits, Banks and realtors their big commisions…but for that they need to keep selling and cheering up. They won’t admit the market is overbuilt until the market collapses.
Prices in Spain (for condos and not only in Madrid) are now more expensive than in XXX Amsterdam. Prices have reached a point where to pay just at the teaser rates is too expensive even for Nothern Europe incomes.
well, I don’t know that much about the Spanish or Dutch condo market (in Netherlands this is a relatively insignificant market) but normal homes in 90% of Spain are still far cheaper than in the Netherlands. Even most of the homes at the Spanish costas are still very cheap compared to similar homes in the Netherlands (less so by local standards of course because Spanish incomes are lower). A median home in the Netherlands now costs a little over 8x median income - how is this statistic in Spain?
I agree that the Spanish RE market seems a bit nervous lately; I have a family member who got an enormous amount of money offered for her town home last year (the builder wanted to convert it into condos) but a few months later suddenly no one was interested in buying the place. And I keep hearing about new developments outside the cities where there is plenty of choice for buyers (a bit like the stories from the US). I hope the Spanish Costas are going to crash hard, that will wipe out millions of highly leverage speculators from other EU countries (mostly UK, Ireland, Germany, Netherlands). That would probably prick the bubble in the rest of Europe.
Hi,
How is the statitc in Spain? well average condo price in Madrid 350 or 400k, average income 24k…hummm I am not surprised there is no demand and the ECB increases their rates (that’s not going to help). Most of my friends in Spain (professionals, good salaries and good careers) must have two salaries to survive (i.e. to pay the mortgage with the one of their salaries, living expenses are paid with the other salary, almost no savings and a lot of help from their families for extra or unexpeceted expenses). The debt is higher than the savings for Spanish families. There is no more internal demand, period, it is like the Californian market, even professionals cannot pay those prices.
Condos is a major market in Amsterdam and in down/mid-town main cities (Utrecht, Nijmegen, Eindhoven, Den Bosch…). A friend of mine living in Nijmegen told me he has to find a girlfriend, that would be the only way to be qualified for a mortgage for a condo (not even a rowhouse) and he is an engineer! Another fried in Eindhoven had a lot of problems to pay the mortgage in their rowhouse once his wife switched to part-time (to stay at home with the children) and he is also an engineer and she works at Philips. Poor guys! I was ok, I bought a condo only 3x my income because I coudn’t take the rental market any longer.(although the bank tried to approve me for a huge mortgage).
NAM, thanks for your posts. It looks as if Spain is going to get “interesing” soon. Keep us posted.
NYCityBoy:
Thank you for posting the Money Masters link a few days ago on another thread. I don’t know if you’ll go back and check this now stale thread so I wanted to post here how much I enjoyed it. I just got done watching the two parts of that video and it is excellent!
I’ll have to check and see if I missed any discussions the past few days but I saved the movie link on my computer and took notes. When my children are a few years older I will show this to them.
It’s chock full of historical info, and if you can let your mind go there, it is pretty terrifying. I noticed the video was made 11 years ago. I’m wondering if there have been any updates produced.
Can you repost the video links? thx
http://video.google.com/videoplay?docid=-1583154561904832383&q=money+masters
Not only American bubblewatchers are funny….
http://www.thepropertypin.com/forum/viewtopic.php?t=1015
That’s funny stuff…
Todd-o on Minyanville reports that the GS quarter ended 2/27 and the subprime market didn’t get “bad” until 2/28 and into March, so not likely to have impacted the previous quarter. Works for me, I’ve bought some puts but figure the beast may continue up a bit more.
Good opportunity. Did you notice VIX is back down to mid-2 digts?
I just got the inside scoop… The big shot law firms (the type that defend corporate execs after scandals) have, for the past 6 months or so, been attempting to accumulate as many highly skilled litigators as possible despite having little to no immediate need for them. Former US Attorneys, etc are being subjected to bidding wars even when they aren’t actually looking for a job.
Person I talked to is so busy they have no idea what’s going on in the world. I told him about this mess and he said a lot of recent stuff inside his firm made more sense.
If you can handle the workload, big firm lawyering is the business to be in. They always make more money than the previous year. Always.
Oh yeah. Jenkens & Gilchrist blew up in Dallas and I don’t hear about anyone from there in the soup kitchen. They got into trouble in the late 80s, early 90s bust too.
lawyering always goes up
Pulte (PHM) 52 week low 26.02… today PHM selling down at 26.94 at market opening. My 25 PUTs are looking mighty tasty.
Networkers:
http://www.itworldcanada.com/Pages/Docbase/ViewArticle.aspx?ID=idgml-7aa12697-0d2e-469d-b8cc-234434d5aeba
Great article txchick57, thanks.
Interesting article on why experts’ predictions are not very accurate:
One problem experts tend to have is loquacious overconfidence: They have a lot of information, so they can put together very convincing stories to describe extreme outcomes. Tetlock also found that experts were more likely to predict extreme events if they were forced to imagine specific story-lines.
http://money.cnn.com/blogs/generationrisk/
I think that one of the reasons the predictions were so far off is because the very people doing the predicting/reporting are homeowners. How does someone who just bought an overpriced house write a report that RE is going down ? It just won’t happen.
Have you seen the “Real Home of Genius” with your namesake? Here’s a link:
http://drhousingbubble.blogspot.com/2007/03/real-homes-of-genius-today-we-salute_08.html
As Borat would say, “Nice…”
If even loanofficers start thinking this way…
http://forum.brokeroutpost.com/loans/forum/2/102760.htm
God, it’s like reality suddenly hit them upside the head.
Much like the SDCIA board, these guys are beginning to sound more and more like us (you know, the “Ben Jones’ Groupies over at Ben’s Mushroom Farm”).
Not hearing too many jokes about us (HBB’ers) these days…
Florida will be better off than more responsible places, according to the money post in this thread:
“One other thing to consider. Say you have someone who is upside down in their mortgage and another has about 30% equity. Both lose their jobs and are unable to pay their mortgage. Which one is the bank sooner to foreclose on?”
Is the 30% equity real? As in, once you consider the “current value” of the home, do you still have 30% equity? If so, I can’t believe that a responsible person would simply stop paying the mortgage.
If they lose their job and are responsible, they probably have a decent shot at getting a new job fairly soon. In that case, a HELOC on that real 30% will probably cover the mortgage payments long enough to find a new job. If the person takes a serious look at their job prospects and decides that the chances of finding another good job that pays as well as the last is too low, then it seems to me that putting the house on the market for a 10-15% discount of the real current value should produce a buyer fairly quickly. In the worst case, the seller can chop the price down all the way and walk away with nothing from the sale except a spotless credit record and no debt.
In the depression banks often foreclosed faster on the homes with more equity, because they knew they could discount the house until it sold and still reap a profit. Sucks!
Sounds like most of those Broker Outpost remarks could have been written here.
I like how the blame it all on “greedy realtors”.
Realtors are greedy for inflating prices, getting customers to fall in love with a dream home they can not afford, and convincing them that an option-arm is a legitimate way to finance the house.
Realtors are greedy for slashing prices 25% so that they can make a quick sale.
OK, which is it guys? Make up your mind! Are realtors responsible for inflating prices or slashing prices?
Realtors are greedy when they lie.
In San Francisco?
That would be pretty much whenever their mouths are moving.
The headline says home prices rise, but the data shows YOY median declines of 4.4% in resale houses, 4.1% in resale condos and 12.4% in new homes/condos. What gives?
——————————————————————————-
Mixed signals for housing
Home prices and sales rise in county, but so do foreclosures
By Roger Showley
STAFF WRITER
March 13, 2007
San Diego County housing prices and sales edged higher last month, DataQuick Information Systems reported yesterday, but real estate experts see growing danger signs to market stability from an escalating number of foreclosure sales.
http://www.signonsandiego.com/uniontrib/20070313/news_1b13housing.html
I have been following the sales numbers in OC, specifically NPB,Laguna,Irvine. I have noticed a WIDE discrepency between the DQ “sales” figures for these towns and the Melissa Data sales as taken from the OC recorder. Examples: Laguna Beach 92651: DQ shows 35 sales in 2/07, Melissa Data, 19. For Corona Del Mar, DQ shows 22 sales, Melissa Data only 5! What’s going on here? These DQ numbers have got to be fixed. Any thoughts?
For one thing, DataQuick sales figures include foreclsores as sales. See Athena’s Sonoma Housing Bubble blog for confirmation regarding this (Jan 22, 2007):
You are not going to believe this! I live in Shasta County, California. The local newspaper, the Redding Record Searchlight (http://www.redding.com/) publishes addresses and $ amount of sales monthly. Their source in Data Quick. FORECLOSURES are being posted with the sales and counted as sales
(i.e. lender foreclosure before property is sold to new owner.)
http://sonomahousingbubble.blogspot.com/2007_01_01_archive.html
Doesn’t DQ include foreclosure trustee sales in the numbers?
Carmichael -
I replied to you a while ago and it has not posted - this may end up being a repeat.
DataQuick includes Forclosures in their total Sales number. See Athena’s Sonoma Housing Bubble blog, Jan 22, 2007 post. It has been confirmed by DataQuick that this is a quirk in their data gathering:
http://sonomahousingbubble.blogspot.com/2007_01_01_archive.html
I nearly spilled my coffee this morning over this one:
“Graham said the total monthly payment of $2,100, when allowing for income tax benefits, is roughly comparable to the $1,100 rent she paid for a unit downtown.”
So a “radio station music director” is roughly in the 50% tax-bracket? Wow.
“One person who saw a buying opportunity was Jeanette Graham, 28, a local radio station music director. In December, Graham bought a one-bedroom unit in the Icon condo project in downtown San Diego, a four-building complex that incorporated a portion of the old Carnation dairy at 10th Avenue and J Street.
“I just think because the interest rates were still low and there was a lot of inventory, I could use that to my benefit,” she said. “I was able to negotiate more when I bought the place.”
The developer, Levin Menzies and Associates of Walnut Creek, is paying 18 months of Graham’s homeowner association dues – about $500 a month – gave her $5,000 in closing costs and helped her arrange two loans, one that requires interest-only payments for 10 years and another that is a 30-year fixed loan. Graham said the total monthly payment of $2,100, when allowing for income tax benefits, is roughly comparable to the $1,100 rent she paid for a unit downtown.
“I felt it was a good time to buy,” she said. “
For the last couple years I’ve listened to Larry Kudlow crow on and on about the great American capitalism system, Goldilocks and “The greatest story never told”.
Well, just like I thought, Larry is full of crap.
The great capitalism he extolled was based on nothing more than rampant speculation. Those record corporate earnings he crowed about were based on financial wizardry and record consumer spending.
Goldilocks was a figment of his imagination. We have inflation, record high debt levels, high gas prices and now a society burdened with a collapsing housing market.
The greatest story never told was the TRUTH ! Maybe, just maybe if the media had an ounce of brain matter, they would have reported something other than cheerleader articles. Does anyone remember the CNBC town hall meeting on real estate in the summer of 2005 ? When the host mocked Shiller for saying that real estate was a risky investment at the current prices then ?
And where does the NAR and DL fit into this ? How long are we going to let this shrill organization capture and manipulate the RE numbers to further fleece the sheople ?
As gratifying as it is to see this unwinding occur, I want change so that it doesn’t happen again. You would have thunk that we would have learned this lesson from the dot com crash, but it appears not. Unfortunately.
I second that! Many people due to their own lack of knowledge have been fleeced by the Real Estate Industrial Complex. It is despicable.
Wow, my first cup of joe and the bits are at 188…
How about this perspective: Tim’s theory of “credit crystallization”
Thermodynamic view:
Now put yourself in the place of a molecule within a pure and perfect crystal, being heated by an external source. At some sharply defined temperature, a bell rings, you must leave your neighbours, and the complicated architecture of the crystal collapses to that of a liquid. Textbook thermodynamics says that melting occurs because the entropy, S, gain in your system by spatial randomization of the molecules has overcome the enthalpy, H, loss due to breaking the crystal packing forces:
This can only mean that a crystal is more easily destroyed than it is formed. Similarly, it is usually much easier to dissolve a perfect crystal in a solvent than to grow again a good crystal from the resulting solution. The nucleation and growth of a crystal are under kinetic, rather than thermodynamic, control
http://en.wikipedia.org/wiki/Crystalization
rephrase the first sentence, second paragraph to: “This can only mean that a “house loan is more easily destroyed than is created”
Was it judge Stewart Potter that said: “any ass can kick down an asset barn…but it takes a skilled FED chairman to build one”
Tin-foil hat on the rack…going out to the garden now…
HB’s are crashing now. Isn’t KBH heavily dependent on subprime buyers? Down 7% today.
I suspect so hooper….Around here, they deliver the low end market product….
It looks like they’ve got other troubles brewing as well…
http://www.bloomberg.com/apps/news?pid=20601103&sid=aWybBnNrwqzY&refer=us
Although, I am not sure how reliable these “people” are…
Hot off the press: The Mortgage Bankers Association just released its Q4 delinquency and foreclosures stats. Here’s a rundown of the data. There’s also a link to my blog, where I built a quick chart showing the history of the DQ rate going back to 1979.
* The overall mortgage delinquency rate climbed to 4.95% in the fourth quarter. That’s up from 4.67% in Q3 and 4.7% Q4 2005. Historically speaking, it’s the highest in three-and-a-half years.
* Subprime delinquencies jumped to 13.33%. That’s up from 12.56% in Q3 and 11.63% in Q4 2005. It’s also the highest in just over four years.
* But it’s NOT just subprime, and it’s NOT just ARMs that are starting to show problems. Even the prime, fixed rate category showed a spike in delinquencies to 2.27%. This number had been in a tight range of 2% to 2.11% for several quarters.
* The foreclosure rate popped to 1.19% from 1.05% in Q3 and 0.99% in Q4 2005. The last time it was higher was in Q1 2004.
This survey covers more than 43.5 million first mortgages on 1-4 unit residential properties. It’s one of the broadest delinquency and foreclosure surveys in existence.
http://interestrateroundup.blogspot.com/2007/03/q4-mortgage-delinquencies-jump.html
Picking up from yesterday, let’s talk about subprime shorts. Who’s left? CFC has limited exposure to subprime, but decent alt-a exposure. What else is left?
Look at a 5 year chart for various HB’s. There’s still plenty of room to go.
Regarding subprime, everyone here knows that Alt-A and Prime will be next to blow. Borrow creditworthiness means nothing when home prices drop by 40% or more. The MSM also fails to recognize the high level of fraud accross the lending spectrum.
Ultimately, the attorney’s will go after the deep pocketed enablers, i.e. Wall Street investment banks such as LEH, MS, BSC.
Short CFC, TOL, KBH, MS.
Is there any good data source showing a breakdown of lender exposure to Alt-A ?
Fluff piece…read if bored
Upside in L.A. housing market
By Annette Haddad
Condo sales downtown, where prices start in the mid-$300,000 range, are still relatively strong.
http://tinyurl.com/3xj6sx
Homebuyers still in driver’s seat
The median price of an O.C. home fell $2,250 in February, the first annual price decline in a decade.
http://tinyurl.com/2q6or3
O.C.’s new home inventory doubles
Wonder why builders are offering eye-catching incentives? Here’s a peak into conditions in the new-home market for January from Hanley Wood Market Intelligence in Costa Mesa.
• Inventory – finished properties for sale plus residences under construction but not under contract – were 113 percent higher than a year ago.
• The cancellation rate – deals buyers didn’t close as a share of all deals – was 14 percent, vs. 17 percent in the same period 12 months earlier.
Jan. ‘07 For sale Vs. ‘06 Cancel Year ago.
House 233 +59% 24% 16%
Condo 443 +88% 11% 21%
T-home* 184 +776% 10% 14%
Total 860 +113% 14% 17%
*T-home=Townhomes, duplexes
First joint I gambled in… lost 15 cents… 1978
Vegas’ Stardust casino imploded… how poetic…next…
http://www.chron.com/disp/story.mpl/ap/nation/4624589.html
O.k., something has to be rotten with this listing (too good to be true…)
http://nh.craigslist.org/rfs/292668788.html
A lot of people on Craigslist purposely leave out some of the zeroes in their prices so that their listing will still show up in a price-limited search.
I smell a Recession.
No, you’re just feeling…depressed…
I wrote Jerry Lewis (my rep in Congress) last year about the housing problems and he wrote a canned response back that they were conducting a housing panel / interview at the House.
I wrote him again last month regarding the current breakdown in the market and that this should be a top priority in Congress. This was his canned response:
March 12, 2007
Dear Dr. Mason:
Thank you for contacting me regarding the domestic mortgage market. It is good to hear from you and I am pleased to respond.
Despite rising interest rates, mortgage lending in the relatively low-interest-rate environment made 2006 the sixth record-breaking year in a row for U.S. banking industry profits. While there are signs of mortgage lending slowing, the year-over-year change for 2006 was 6.6% higher than 2005. However, in the fourth quarter of 2006, residential mortgage loans grew by only 0.05%.
Thanks again for taking the time to get in touch. You can be sure I will keep your thoughtful views in mind as Congress crafts policy options in the months ahead. Please feel free to contact me in the future on this or any other issue of concern.
Sincerely,
Jerry Lewis
Member of Congress
Wow, lovely. What a canned piece of shit. They don’t get the problems until they get hit with a 2×4 across the face. Oh well. This should provide some consolation to those who worry about a bailout–at least a quick one.
Bend over and take it HBBers:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1×64z58hsB4&refer=home
Note to Mozilo (Countrywide CEO):
Step away from the tanning bed.
Top News March 14, 2007, 12:00AM EST text size: TT
The Mounting Uncertainty over Subprime
Torrents of bad news from the sector leave Wall Street wondering how far the financial fallout will spread
by Will Andrews
Related Items
Stocks Tumble on Mortgage Worries
Making Sense of the Subprime Mess
Winners Could Emerge from Subprime Woe
The subprime mortgage industry’s rapid decline is exerting an amplified effect on the markets as uncertainty grows over who will ultimately foot the bill. On a day when regulators revved up postmortems on the mess and even General Motors was touched by the bad news, the question seemed to coalesce: How deep will the subprime problems extend?
The leeriness spilled into the broader financial markets Mar. 13, with the Dow Jones (DJ) index shedding 242 points and other major Wall Street indices declining about 2%. The selling was spurred by a Mortgage Bankers Assn. report that foreclosures hit a record high at the end of 2006 and government data showing paltry February retail sales (see BusinessWeek.com, 3/14/07, “Consumers Feel a Chill”).
Some in the mortgage industry believe investors are provoking a liquidity crisis, overreacting to the correction among subprime lenders, companies that loan to borrowers who are considered risky because of their spotty credit histories or low incomes. “You don’t know who is swimming naked until the tide goes out,” Countrywide Financial’s (CFC) chairman and chief executive, Angelo Mozilo, said in a televised interview with CNBC. Mozilo also said the likely “ugly” shakeout of the pure subprime lenders would help companies like Countrywide—the largest U.S. mortgage lender—and banking giants such as Wells Fargo (WFC).
http://www.businessweek.com/investor/content/mar2007/pi20070314_841924.htm?chan=top+news_top+news+index_top+story