Bits Bucket And Craigslist Finds For March 20, 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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Name:Ben Jones
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China Bars Firms Speculating With Stock-Sale Funds
Credit Crunch Is a Sham / really? time will tell
plus a very funny picture
http://immobilienblasen.blogspot.com/
jmf:
Excellent as always…
Thanks!
Funny how China’s government seems to recognize the problems with speculation, while the U.S. government seems to want to freely encourage it (at least the Treasury Dept).
China’s governement wants to make sure that their economy remains on a firm foundation and a healthy path. They don’t want to take any chances with that.
The U.S. could care less. It’s all about living for the moment here, with absolutely no thought to the future. We’re very Zen-like.
Sarcasm off.
According to a blurb I heard during ‘Marketplace’ this morning, National Public Radio’s show ‘Talk of the Nation’ will cover the housing bust and subprime meltdown on today’s show. Check your local public radio station’s schedule for air time; otherwise check for your local listing at http://www.npr.org Maybe some of us will call in and comment…
They’re more than a little late to the party, as was the rest of the news media.
Late to the party :
(just published this morning)
http://www.prweb.com/releases/2007/03/prweb512663.htm
Granted this is just some PR site, but even the fact that there is just one person working on this article gets me.
Never admit defeat.
Why did you post this? It is not an independent report. It is probably BS.
Probably BS? It’s total; that’s what PR companies do….
Yes - The key thing is who were the people, what tower were they all over. When this type of information is missing you have to be very skeptical.
WAman,
It’s definitely BS. I posted it because somewhere a marketing person thought this would be a good idea and spent an hour and a half working on it. What do you think her/his thinking was?
What worked 3 years ago will work today?
You’ve got to create the buzz if you want to sell?
I’m going to counter all the latest negative articles with this gem?
If you think positive, good things will happen?
Wait ’til Shiller reads this?
Good find! Hilarious stuff — based on “reports” from RE folks. I’ll bet genuine Boston area “inventory” tells a different story (and, even then, only part of the story, since condo inventory is almost surely under-reported).
This guy is saying the same thing about “over asking” offers and volume of interest in Boston area condos: http://www.bostonbubble.com/forums/viewtopic.php?p=824#824
Anon I responded check the thread.
Surprising how many people still don’t see or understand what’s happening. Unless it touches the wallet a lot of people are helplessly ignorant to world events. It’s time to save this to the history books and start talking about the coming long slide in the economy. That’s where the next chapter starts.
Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
Here is another one of Upton’s quotes
“If fascism ever comes to America, it will come wrapped in the flag and carrying the cross.” - Upton Sinclair
Oh my gosh…
He NAILED it!
“Patriotism is the last refuge for a scoundrel”
Samuel Johnson, circa 1760
Homoaner, Here’s the link to the blog discussion for NPR’s “Mortgage Meltdown” show this afternoon.
http://www.npr.org/blogs/talk/2007/03/mortgage_meltdown_1.html
I heard David Wessel, of the Wall Street Journal, in an NPR interview this morning. He seems to have no clue about the implications of the subprime implosion, as he is fully bought in to the stories circulating around the speculator community that the damage will be limited because subprime represents a small share of the financial sector.
The aspect of the situation that Wall Street types seem to completely miss is the degree to which California residential property valuations float atop a swamp of subprime debt. Drain the swamp, and destroy the valuations — it is pretty much of a no brainer, but nonetheless too complex for bovine brains to grasp.
I caught part of it in the car at lunch. Mostly sob stories, although it’s nice they had someone from the Center for Responsible Lending on the show…. as opposed to…. say…. David Lereah.
Accredited Lending back from the dead ?
Accredited Gets High - Interest $200 Million Loan
NEW YORK (Reuters) - Subprime lender Accredited Home Lenders Holding Co. (LEND.O), trying to avoid a cash crunch, said on Tuesday it had received a five-year, $200 million loan with an annual interest rate of 13 percent.
http://www.nytimes.com/reuters/business/business-usa-subprime-accredited.html
So LEND got a subprime loan? LOL!
From “Farallon Capital Management LLC, which manages equity capital for institutional investors and high-net worth individuals, agreed to the loan, which Accredited can use to fund mortgage loans and as working capital.”
I would be pulling my money from this group…this is nothing but a high stakes bet.
Farallon is the biggest hedge fund in the world. They know a few things.
Methinks they’ll be bashed against the jagged rocks, that have sunk many a ship, in the hell that is the Farallon Islands, just outside of San Francisco…
A place where Great White Sharks prowl the waters~
They lose a few and could well take a loss on this one, but that wouldn’t even be a blip for them. The Accredited transaction was probably not among the bigger deals Farallon did that afternoon.
Have the folks from Farallon management been to Stockton? Los Banos? Have they ever driven through the Inland Empire? Perris? Menifee? Rubidoux? Rialto?
Have they met a California subprime borrower in person?
Running sophisticated models and stats is one thing, but the physical reality might point in another direction.
As I mentioned before metaphorically…
You’ll see their supposedly solid economic ship go up against rocks, that aren’t going to budge.
Or as they would have done on Batman (circa 1966)
BAM!
POW!
KABLAM!
SPLAT!
“Farallon is the biggest hedge fund in the world. They know a few things.”
yeah, and a lot of banks were hurt in the subprime mess. I’m not impressed.
Well, you have to understand, Farallon is in the business of doing just this — analyzing and pricing a distressed asset and paying less for it than they think they can make on the flip. Even really bad debt can still have value, and these guys think they can ascertain what that value is. The reason they’ve made such a pile of money is that they’ve been right more often than not. When they’re wrong, they’ve got ways to deal with that also. And yes, they probably do know what’s going on in Stockton, they’re based in northern CA and, besides, that analyst’s $10 million xmas bonus depends on knowing it.
I’m not arguing that the whole subprime sector isn’t in a world of pain, but the professionals know how to profit from a bloodbath, you just watch.
I’m sure there is more to the warrants than was discussed in the press release (I’d check the Form 8-K if I had the time).
Probably contains classic “vulture capitalist” death-spiral penalties-miss a payment, number of shares purchasable with the warrant increase/strike price decreases, etc. etc. until they can convert the debt to stock/enforce on the collateral/exercise the warrant/ whatever and essentially own the company for $200 MM.
Their debt is probably senior to all others, I’m sure they ready to pick through the wreckage and make some money. Farallon is probably assuming they won’t get paid-there is some other play there.
I bet Farallon already wrote a big chunk of CDS’s on LEND’s loans, which would have left them on the hook for the loans coming back. My hunch is that they’re propping up the company until they can get the related risk off the books.
How long will 200 million last them? Is this enough to buy back all of the bad loans that are still in the pipeline? I doubt it.
They sold all the loans in the pipeline last week, so this is to fund new loans. They’ll need a couple more weeks of proving they are surviving and they’ll have to get a securitization under their belts to really prove it.
Probably stated income too.
It won’t be enough. They will also likely fall within the next year!
LEND up $3.03 ( 34%) in premarket trading Everything will be OK
Right …
A young colleague at work bought a few hundred shares of Lend at $4.00 or so. He is happy. Me? I buy grumpy old bricks and mortar with earnings.
And how much profit did the lender make from their stock when this hit the markets? Instant profit just by saying they were going to infuse $200M. Sounds akin to Donald Trump selling his name.
Not only was it at 13% interest, but they got warrants for 12% of the company at $10/share. That’s one heck of a price to pay for $200M. I guess the alternative was to go BK.
13% ! You can’t loan that out at 6.5% and make money !
“13% ! You can’t loan that out at 6.5% and make money ! “
Maybe they are going into the payday loan business, though it seems like its already saturated.
Or how about they give out loans to people who bring in their car title so they can pay their monthly mortgages
How many people these days own the title to their car ? I do, but I bet many, many others don’t. We live in a society that borrows to the hilt.
There’s a great business concept embedded in your post. Bring in the title to your house, and get a “payday loan”. We don’t care how many loans you already have against your house. We’ll fund you until the next payment comes due!
Is the LEND loan a payment option ARM?
If the housing bubble of 2007 can be blamed on any particular American generation, it is the first generation. The first generation had a large group who supported the idea of a centralized national government, they were known as the Federalist. The famous, “The British are comming” Patrick Henry was not a Federalist. When asked about the secret discussions used to create the US Constituition and why he did not go, he said something like, “I smell a rat”. The problems we face today were anticipated by a small group of patriotic Americans (like Patrick Henry) in the late1700’s known as the Anti-Federalist. The Anti-Federalist writings on why no American should sign the US Constituition read a bit like many today on the Housing Bubble Blog in their condemnation of the who and how of the creation of the current bubbles and why we should not bail bubble troubled people out.
The assurances given by the Federalist to the Anti-Federalist to gain support for the US Constitution were vastly proven false after President Abe Lincoln destroyed much of the nation and the idea that the Union was voluntary, as well as fully establishing the power of the government over all, expressed as a form of Socialism where all persons and property became the property of the government - all were made slaves. LBJ locked in the unfunded liabilities, then Nixon erased the biggest financial constitutional restraint on government when he ended the dollar to gold fix (via The Greatest Generation). The theoretical limits on government ended the day the US said the rights expressed in our constitution were only for certain particular American citizens and not just any person who lives (via the Boomers). Then they renamed the USA to the The Homeland expressing their causi beli while they continue to usurp the States and Federalize local laws and police forces, even to militarized the entire population (via Generation X and Y).
Many economic booms and busts occured throughout this timeframe. Those booms and busts were limited in their destruction because of the dollar gold fix. The creation of scripts, species and credit by private as well as by government entities fuel inflations and panics after creating booms and busts, however; they were still somewhat limited by the dollar gold standard. Too bad though, the limitations of gold on the dollar cannot entirely overcome a population and government intent on unknowingly destroying itself with the multiplication of taxes, rules, regulations, fees, fines and other liabilities.
The housing bubble madness in Florida in the 1920’s ended and the repercussions were not felt in Montana. The housing bubble madness in all of Amerika 2007 has not ended, yet. Without the restraints of a dollar fixed to gold there is only economic or military collapse to stop the increases as a Federal Reserve Chairman who does not bow to political pressure and increase the creation of money or sustain low rates to borrow will be replaced by one who will satisfy the public demands. The cycle of inflate and collapse cannot be stopped without a dollar fixed to gold or some type of limited supply dependant on physical existance and not theoritical limits such as that for electronically printing or sub prime borrowing. Manipulation of the dollar can only go so far, as the French and so many other fiat nations in history found out. Sooner or later the questions is, become an empire that has conquests and spoils of war for its economy or self destruct and become something else!
There is no limit placed on the ability to make war, create money, laws, regulations, taxes, rules, fees, fines or other liabilities. We currently fully ignore the limits placed on government by the US Constitution. We dismiss those who disagree by saying, “only the government has the power and ability to interpret what the US Constituition really means” or we vote for what is unconstitutional without creating an amendment.
In the 1900’s, a US President would promise, “a chicken in every pot” to get elected, yet he failed to deliver what he had no right to deliver, no ability to deliver, and was impossible to deliver. Today, Senator Dodd is making the same sort of promise in attempting to bailout the FB’s and the mortgage bag holders, one that is also impossible to deliver on, yet widely hoped for - by the Federalist loyalist population.
Returning to The Articles of Confederation and a fixed dollar is the solution to todays economic, military and political difficulties. The Federalist are the problem. The Federalist can even be said to be un-American. The Federalist today believes that the government can do anything, there are no restraints on government (or that government can restrain itself) government power covers the world and is unlimited and undefined. To a Federalist, the individual is fully subject to the government, and has limited priveledges as determined by the government. There really is no difference today between a Democrat and a Republican, they are both Federalist in support of an expanding centralized national government. An unlimited and unfunded expanding government is what fuels the desire to increase the supply of money which creates distortions in the economy giving rise to malinvestments that create the bubbles that are so very destructive on our economy and our culture.
It would seem to be a good idea to stop blowing bubbles and stop supporting The Federalist by joining the Anti-Federalist in ending this bubble creating Anti-American system, however: pessimism rules, such an act would probably be seen as too difficult or costly and as ineffective as voting Libertarian - even though it is the right thing to do. Is that every generations failure?
Clark, did you forget your little pills this morning?
LOL!
Curse you, Patrick Henry…
I knew back in 1774, he’d be trouble, 233 years later.
Come on, be nice to Reverend Patrick Henry, the guy had 16 children and you know what children can do to you! LOL
My question as well…..that’s pretty out there. When you start off a diatribe with Patrick Henry (!) warning that the British are coming, well, you’re going to lose a lot of folks who know better.
It’s southern history! You know, like the Charleston tea party.
Ha ha. very funny. Same reply I got when I said the word housing bubble in 2002.
I find the history interesting, dont you?
Clark,
Sorry, you can’t get there, from here, talking about Patrick Henry, trying to make some sense of this mess.
Clark:
Although we are mostly anonymous here, and nobody knows who is who, in just one morning, your street cred is more than a little shaky~
Clark,
Do you really believe that without the current US constitution and the resulting federalist biases, the USA would have become the economic powerhouse that it once was? I’m not so sure. Trade between the states was a big problem and getting worse. The federal government might as well have not been there - it had no money and could never build the consensus needed to make a decision.
For all anyone knows, if the USA were still operating under the articles of confederation, this discussion on the internet may not have happened.
Might not be any worse than what we have now, perhaps better. Sure is a mess now. Savers and responsible people bailout the reckless, stupid and the ignorant without any choice in the matter? Paying 20 years of taxes over a 40 year working life is free and better?
“I have but one lamp by which my feet are guided; and that is the lamp of experience. I know of no way of judging the future but by the past.”
Patrick Henry
If you did not buy in 2002 and then sell in 2005 you lost a ton of money!
Clark, Please read
“An Economic Interpretation of the Constitution”
Charles A. Beard (linked below)
Some of your ideas are ?, some have merit; but the problems of today are not likely the result of actions taken by my ancestors over 200 years ago. I do not believe Thomas Jefferson held a gun to Alan Greenspans head and told him to print more money.
http://tinyurl.com/2yxa92
For god’s sake please don’t answer Clark’s last question….Wew ! I went through a whole cup of coffee on that one…
Two cups of coffee later… still having troubles with blameing our past leaders on this bubble. The real estate bubble we now have is the result of to much money [inflation] in the system. Why was it we had little or no inflation “before” the federal reserve was founded in 1913?
Federal reserve printed excess money and lenders loan out all this excess money creating inflation making the dollar of 1913 today worth 4 cents. What happened? Ask any banker why and “I guess that is the way it is” will be the answer. Unbelievable, laughable if it wasn’t so important to see how the currency has been debased.
Clark:
I agrre with Voting Libertarian as a protest vote…but i think everyone misses the point i am trying to make.
This is the First generation in American history that is dumber then their parents, and “THE MORON GENERATION” was needed to make this housing bubble work.
By Dumbing down our Public School sysytem so they couldn’t even figure out 5th grade math, and by being complate WUSSIES……have you listened to the WUSSIE ROCK of the past 10 years????? Couple that with the refusal to teach Black people how to read write and speak English in our public school and Forcing Hip hop and rap onto the public 24/7….you had the makings for a bubble so big that it spread to the whole nation….
So this is also true:The housing bubble madness in Florida in the 1920’s ended and the repercussions were not felt in Montana. The housing bubble madness in all of Amerika 2007 has not ended,
I think you are talking about my generation (being dumber than our parents). I’m not insulted. I keep an effort to use my brain and keep learning. It’s been said that the average American several generations ago had a better vocabulary and better reading comprehension. But look at the United States today. We have been too nice to school children to flunk them. That is a liberal permissive trait that brought us to this situation today, when people earning $30,000 per year have $300,000 or $400,000 mortgages. They did not read the fine print. In my own opinion, if you do not understand what you are investing in, you should hire a qualified third party to help you understand. That is what real estate attorneys are for, right? A 7th grader in the year 1850 would certainly understand that! I shed no tear for FBs.
Bill, I’m not going to defend the moron generation, but where do you get the stats taht the average American several generations ago had better vocabulary, etc.? From what I understand, at the turn of the previous century, only a small percentage of Americans attended school. When IQ was tested on potential WWI soldiers (the first time IQ had been tested on such a large sample), it was discovered that nearly half were mentally deficient. I think it’s much more likely that we’ve always been a nation of imbeciles, and always will be.
I resemble that remark!
Lionel,
I’d have to find a URL for you. But I found this in more than one place on Internet. The common people in the late 18th century were well aware of Thomas Paine’s essays, for example, and later in the 19th century could understand exactly what Abraham Lincoln’s speeches were about.
Bill, I’d love to read it. Maybe we just became stupid in the 20th century.
oh well, bill always like to give you those nice statistics. and always attach the work liberal to those nasty happenstances. do you think he will ever listens?
my impression is that american have stagnated because of those *anti-liberals* (the future should be as it has been) and the world has basically caught up and starting to surpass us. our accumulated advantage is slowly eroding and there seems to be no end in sight.
Somewhere in my debris I have my father’s 8th grade botany notebook, circa 1927,….Gorgeous cursive writing/delicate drawings, but most of all, polysyllabic, precise prose. I keep it to remind myself of my own deficient schooling, fueling my efforts to continue to learn.
Good observation Mary Lee, I have kept similar writings of my fathers.
The, “public system” would not be in place without the past generational failures.
Another supply side witch doctor paranoia rant? It is the very fact that there is no oversight that we’ve had the series of boom/bust cycles in the last 30 years. Don’t blame the fed, treasury, D. Lereah or banks. The “free market” voodoo economics that G.H.W Bush so eloquently stated in 1980 is the cause of this mess.
Supply side? Get real. The Fed IS to blame - ya gotta be PAID for to say otherwise. http://www.lewrockwell.com/paul/paul376.html
People are stupid they need rules!
“The Fed IS to blame” What influenced the 1929 Depression that created 25% unemployment? Business was pretty free to do anyhting they wanted, and I don’t remeber if there was anything like the FED to blame on that one.
The Fed was created in 1913. Their first big job was to create a bubble… that burst in 1929.
Fed was created in 1913. The credit bubble we’ve had would be difficult to create if each bank had separate notes, and each bank had the potential to fail based on their loan decisions (and wipe out a depositor).
This whole debate is whether you believe in socialism and a dictatorial sytem of governance, or capitalism and a democratic republic. From the comments above, it would appear that most of the bloggers want a dictatorial government and a socialist government. The rest is debating the pros and cons of such systems.
You’ve been reading Dr. Roubini. For a counterpoint to his latest, check Mish’s retort, and try thinking for yourself while educating yourself about the Fed, Treasury, DL and banks before exonerating them.
Ignorance of the masses is why we’re in this mess.
Ignorance, greed, and laziness (…”let’s see - how can I get rich without having to do any actual work?”…).
YEP…….
The only thing I learned from Roubini’s rant was that he’s a socialist. Given his company over at NYU, no surprise there. At least he got half the equation right…that is, the effect part. His zealous faith in all things governmental blinds him to the primary cause of this mess, though. The Austrians would chew him up and spit him out, even after ingesting a gallon of not so fine wine. I hope the good Dr. discovers what a real is all about. I’m not holding my breath waiting, though.
Ditto claw. I lost whatever interest I had in Roubini after the first paragraph of that rant. The idea that central planners can decide for you, for me, and for all of us better than we can do ourselves is preposterous. I’d love to see Dr. Hermann Hoppe eviscerate Roubini after that diatribe.
Oy. Beggin to differ in a big way. Libertarianism is as easy to hijack by thieves as any other unrealistic economic or political doctrine. Corrupt opportunists have used this myth of a free market as their window dressing for years –all the while stealing everything not nailed down from their back boiler rooms. We got into this mess precisely because government drank this Libertarian koolaid and looked the other way — not because it interfered. The grownup question to ponder is how to get the government to set adequate ground rules for market behavior so criminals dont’ wind up owning us. — So the market can be fair. We have to lay down this fantasy of a free market — it will always wind up being free only for those who can game it the best — and a misery for anyone who believes in decency, ethics and fair play.
I don’t trust any political doctrine that doesn’t address, first and foremost, how resilient it would be in the face of human vice. If it can handle that kind of real-world stress, it’s worth talking about- otherwise it’s a waste of time.
Clark, I know of what I speak. I live in Brooklyn — that boro, and Queens too, are just chock full of libertarians now –who despise government intervention in their affairs. They’ve created their own libertarian marketplace, eschewing government regulation. Their views are so popular HBO has even made a show about their kind!
The Lucheses, Gambinos and Gottis –examples of what Libertarianism morphs into once it hits the real world. They got your free market, they got it right here.
Housegeek I totally agree, we have changed (but not enough IMHO) We had a Laissez-faire type of government of the 1920’s, with sharks like Joseph Kennedy in the stock market
David Kennedy, author of Freedom From Fear, describes the Wall Street of the Kennedy era:
“ (It) was a strikingly information-starved environment. Many firms whose securities were publicly traded published no regular reports or issued reports whose data were so arbitrarily selected and capriciously audited as to be worse than useless. It was this circumstance that had conferred such awesome power on a handful of investment bankers like J.P. Morgan, because they commanded a virtual monopoly of the information necessary for making sound financial decisions. Especially in the secondary markets, where reliable information was all but impossible for the average investor to come by, opportunities abounded for insider manipulation and wildcat speculation. ”
What is needed is to admit that we don’t have free markets. What we have is a market-based economy with government intervention. And what we need is a market-based economy with LIMITED government intervention. And keep hammering home the LIMITED part. Get J6P to understand that government intervention is mostly bad but a certain level of it is needed (such as putting frauds in jail).
I’ve flirted with the Libertarian idea. A lot of the concepts have merit. However, once I thought about it a bit more I realized that I like breathing clean air and relaxing in parks. And there’s no room for that in a Libertarian system.
Brian,
You haven’t investigated libertarianism enough. Serious libertarian scholars have discussed solutions to cleaning the air and waterways through pure free markets. Sadly, you can (and probably will) shrug it all off as a ridiculous waste of your time and have the warm fuzzy feeling of voting for a big gubment Al Gore solution though. The Cato Institute and the Reason Foundation have enough essays and white papers on free market solutions to pollution to fill volumes of books.
The Cato Institute and the Reason Foundation = people getting paid good money by the super wealthy trying to convince the masses that being bent over and “robbed” is good for them.
Libertarianism is simply another way to get the masses to close their eyes so they can be robbed. I pity the True Believers who fall into this trap of no regulations and no oversight at all. The thing is most of these guys are old line law and order types. What irony.
You want a libertarian utopia? There’s a lab already set up - no laws, no regulators, no government taxes or waste. All waiting for you over in Mogadishu Somalia. Better bring your AK-47 and plenty of cash to pay all the warlords off though!
Actually, Somalia has fared much better than most of its neighbors since the government was thrown down.
http://snipurl.com/1dij6
You cannot instill a tradition of human rights and respect for private property overnight in a nation which has suffered under brutal oppression for as long as any of its inhabitants have been alive. It took centuries for Western Civilization to figure this out and you think a backward third-world country in Africa with few natural resources can do it overnight? Now who’s deluded?
Better bring your AK-47 and plenty of cash to pay all the warlords off though!
Warlords or the IRS: they both will kill you if you resist them.
“You cannot instill a tradition of human rights and respect for private property overnight in a nation which has suffered under brutal oppression for as long as any of its inhabitants have been alive”
remove all those regulations and laws and taxes and it will take us overnight to be like them. remember iraq?
remove all those regulations and laws and taxes and it will take us overnight to be like them. remember iraq?
You mean the Iraq that was previously a model of the free market and respect for private property? No? Oh, you must mean the Iraq ruled by a man who idolized Stalin and modeled his government after him? That Iraq? Hard to believe it descended into chaos after decades of barbaric rule.
Honestly, my vision for America is much closer to the ideals this nation was founded upon than anyone in this thread disparaging them. Adams, Jefferson, and Washington wouldn’t recognize the current incarnation of America as anything other than a totalitarian regime. But I’m the nut…
“We live off the international community—of Somalis,” Dini answered with a chuckle. “That is where all the money in the country comes from.” There are more than a million Somalis living and working throughout the world, a diaspora accelerated by the disorders of the nineties. Dutifully conscious of their obligations to family at home, these expatriates send back as much as 700 million dollars a year, “20 million dollars a month into Mogadishu alone,” says Dini.
Taken from toasts link….oh yea that is free market success everybody left and sends money back to the few who could not escape….and this the first sentence of the piece.
“Somalia appears to be the very definition of what we call a failed state”
This they label a success??? and they are running our country and people listen to them like they are serious people…it would be hilarious if it wasn’t destroying us.
Anyone reading that article knows you cherry-picked it to death.
Go away.
Yes gawd knows quoting the opening sentence of the piece is cherry picking…let me repeat it.
“Somalia appears to be the very definition of what we call a failed state”
I’m not a libertarian, but I am an anarcho-capitalist. It’s not that I think anarcho-capitalism will work any better than any other economic system, it’s that it’s the only system in which someone isn’t put under someone else’s heel. It’s what is right from a philosophical standpoint. To support any other economic system is to say that certain men are entitled to oppress others - that they are above the law, so to speak. Dostoevsky obliterated that idea in Crime and Punishment.
If you support regulation or socialism, or anything other than pure free market capitalism, you are admitting that certain people must be controlled. I reject that thesis.
Move to Darfur then….they have your dream economic system in place
So you’re on record as saying you think certain men have the right to put other men under heel? Thanks.
Haha - very funny.
Reasonable laws are ‘putting another under heel?’ What’s wrong, someone oppressing your pedophelia? Can’t murder that guy who got a promotion over you? Being threatened with jail if you burn down that McAlbatross hanging around your neck. Oh, the pain of such oppression!
Get real.
“I am an anarcho-capitalist. To support any other economic system is to say that certain men are entitled to oppress others - that they are above the law, so to speak.”
LOL. This sounds like a voice over from a 70’s B-movie.
Your rights end when they infringe upon someone else’s. In every case you just listed, you are infringing upon someone else’s right to life, liberty, or property.
One man’s “reasonable” law is another man’s oppressive law. I’m sure Stalin thought most of his laws were perfectly reasonable.
Laws are no substitute for morality. As Thoreau said, one should not have a respect for the law so much as a respect for what is right. The two are often at odds with one another. And simply because the majority thinks a law should be implemented doesn’t mean its a good idea.
Whenever one man, or a group of men, make decisions which affect your life, liberty, or property that adversely affect you in order to benefit the public good, they are putting you under heel.
How many eggs is it alright to break to make a tasty omelette?
So you’re on record as saying you think certain men have the right to put other men under heel? Thanks.
Sign me up, too.
85249, although you and I disagreed extremely on a couple of things, however your views on anarcho-capitalism are appreciated. Two of my favorite reads have been “The Market for Liberty,” by Morris and Linda Tannehill. Also “No Treason: The Constitution of No Authority,” by Lysander Spooner. In fact, after reading Spooner’s essay, there is no looking back. Government control is a fraud. It’s just that few of us, myself included, profit by pretending it’s legitimate; most of us do not want to know it’s not legitimate. I go way back to around 1980 when I read these things. Everyone else took that other colored pill.
Thanks, Bill. I’m very opinionated and quick to disagree or defend my positions when someone opposes them. It’s both my best and worst trait. Drives my wife crazy sometimes.
nice ideals. wait till one individual (or group) thinks he got shafted, with there are no redress available and very limited capacity to enforce common good, you could end up in an irreversible mess in a flick of a switch.
Woman: I didn’t know we had a king. I thought we were an autonomous collective.
Dennis: You’rw foolin’ yourself! We’re living in a dictatorship. A self-perpetuating autocracy in which the working class…
Woman: Oh, there you go bringing class into it again.
Dennis: Well, that’s what it’s all about! If only people would…
King Arthur: Please, please, good people, I am in haste. Who lives in that castle?
Woman: No one lives there.
King Arthur: Then who is your lord?
Woman: We don’t have a lord.
Dennis: I told you, we’re an anarco-sydicalist commune. We take it in turns to be a sort of executive officer for the week…
King Arthur: Yes…
Dennis: …but all the decisions of that officer have to be ratified at a special bi-weekly meeting…
King Arthur: Yes I see…
Dennis: …by a simple majority in the case of purely internal affairs…
King Arthur: Be quiet!
Dennis: …but by a two thirds majority in the case of…
King Arthur: Be quiet! I order you to be quiet!
Woman: Order, eh? Who does he think he is?
I think a limited govt (with big sharp teeth) is the answer as well. The referees don’t play the game, but they can sure as hell stop the play when the flags go down.
The trouble with the Libertarian idea is it’s all a mind flirt, Bill in Phoenix. I’d love to hear how a free market is going to make clean parks, valid driver licenses etc. and also avoid temptation to close the parks to everyone but the rich, to license poor drivers for a bribe, etc. Again, with the inconvenient truth about human vice…show me exactly how a libertarian scenario would disgourage vice and you have my ear.
Lord knows big govt is not perfect, but the founders were right on about checks and balances. If the banks (and the Enrons) had bought themselves a clue about these principles, we might not be in this mess.
The worst thing about letting corporations run amok with their greed is that they end up destroying their consumers, then themselves - it is another colossal myth of the free market theory that corporations know how to behave in their own interests. What history has taught us time and again is that corporations know how to create short-term profits, even if it means they implode in the long run. If the principals get theirs without going to jail –they win. Again with the thievery…
If you would like to hear about it, I invite you to peruse the http://www.cato.com site and find the information there. There are full time scholars who have the ability to communicate it better than me. I’m a lowly software engineer. I read most free market literature when I had a lot of time on my hands 25 years ago. My favorite is “The Market for Liberty,” by Morris and Linda Tannehil (or Tannehille?).
Thanks Bill, but I wonder why you believe what you cannot explain. It’s not a matter of being lowly. If the Cato folks can’t make themselves understood to even a fan, they might be masquerading weak arguments with a lot of smoke, if you know what i mean.
I invite you to invite the fonts of wisdom at Cato to step up here and (clearly) explain how a libertarian system could ever control for vice. And how it can even exist without being instantly corrupted. Simple questions. Me and all the realibertarians out here in Bensonurst and Howard Beach, we’re all ears.
Shorter Cato
1. Deregulate everything
2. ?????
3. Profit.
Hat tip to southpark
http://en.wikipedia.org/wiki/Underpants_Gnomes
but in this case we actually know what number 2 is…..rape pillage and burn…moving your headquarters and your personal wealth offshore can either be 1)a or 2)a
We are currently deep in number 2….how is that working out for everybody?
Housegeek,
You make excellent points. As a matter of fact, I’d bet that if we could eliminate human nature (greed, tendency to hoarde — and how we are designed to lie, cheat, steal and kill for resources), most systems of government would work very well.
Fact is, humans are not inheritantly good. We need to be regulated in order to have the greatest number of people live in the safest, most secure environment possible.
Thank you for your well thought-out posts!
What puzzles me about the government intervention debates is that I don’t think lots of rules vs fewer rules is the real issue. From my perspective, few rules are followed or enforced anyway. Isn’t that what we mostly rant about here?
If we write more laws for both the masses and our gov officials to only ignore its kind of like “if a tree falls in the woods…..”, isn’t it? I don’t know what the answer is to that either. It permeates our entire culture.
I, too, agree. Libertarian best describes my beliefs, but like any philosophy, once you toss humans into the mix, the slick quickly figure out how to game it, and the fun begins - again. It’s forever a mystery to me why these discussions fly between the extremes of total government control vs absence of any control (regulation) at all.
We would be much better off if we were taught two things:
What is money? (medium of exchange, store of value, unit of measure)
Wht is a dollar? (Silver coin with 371.25 grain of fine silver)
Also, if anyone would read the constitution, they might notice that our current monetary system is blatantly unconstitutional.
I highly recommend “Pieces of Eight - The Monetary Powers and Disabilities of the U.S. Constitution” by Edwin Viera.
The history of our money is the true history of our country, and one that we are purposely not taught about in school.
“We would be much better off if we were taught two things:”
You can this to the list:
When some jerk states “it’s good for the economy”, it almost always means whats good for HIS economy and bad for yours.
HEY SUPPORTING GAY MARRIAGE IS GOOD FOR MY ECONOMY
Think of all the JOBS we would create in the wedding business……Gay people wont do the cheap I-POD weddings….and i could sue use the business right NOW!
Now how can a good republican be against creating JOBS in America..????
lol. I always looked at it as a tax issue: Why should gays be exempt from the marriage-tax penalty?
Anybody willing to sacrifice to take care of a partner in old age, rather than having him or her end up in a nursing home at public expense, is OK by me.
That is the kind of permanent, life-long marriage for gays we’re talking about here, right? Not the kind most heterosexuals get.
Here is a Thought To ponder:
If we as Thoughtful Americans supported MONOGAMY and Marriage for gays 25 years ago, just think of how many hundreds of thousands might not have suffered and died from AIDS and most at public expense.
Yes no one supports monogamy for gays….I’ll bet Not even Hillary or Obama!
Homer Simpson already did this. He made a few quick bucks.
Nice job Clark. One deoesn’t have to agree with all of your points to appreciate you thinking for yourself. The purveyors of our fiat currency have an unparalleled disdain for gold and silver (real money), of this there can be no doubt.
http://www.tocom.or.jp/souba/gold/torikumi.html
http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm
It’s really rare these days to hear from a pro-slavery advodate:-)
You should hang out on right wing blogs more often.
I would like to see you back up that statement with quotes and links. And here’s a free clue: Neo-National Socialists are not right wing.
why?
British? Lincoln?… Clark are you a former Banker…enjoying self-gratification in retirement?
lol
Just because you wrote a lot of words doesn’t mean it makes any sense. There’s nothing wrong with the Constitution … It’s the “interpretations” and outright disregard that is the problem here … That and borrowing above our means as a nation (and as individuals).
actually, “the British are coming!” is attributed to Paul Revere.
and “the British are comming!” is attributed to Posh Spice.
Longfellow not Paul Revere; Paul Revere was in jail for falling off his horse when he left on his famous ride.
The famous, “The British are comming” Patrick Henry was not a Federalist.
First, the saying is “The Redcoats are coming”. Second, it was Paul Revere, not Patrick Henry, who allegedly shouted that on horseback. Third, Paul Revere most likely did not actually shout that because there could be loyalist spies. He probably was far more subtle in delivering the message. Still, props for trying to get the history right.
Actually, Patrick Henry is one of my favorite of the founding fathers, along with Jefferson and Franklin. Patrick Henry was known for his great passion for liberty and his equally great rhetoric. “Give Me Liberty or Give Me Death!” - Patrick Henry, May 23, 1775
Patrick Henry was against slavery, strong centralized government, and the presidential veto (as it went against the will of the people). He was a key proponent of the Bill of Rights, which was passed to balance the federal government’s power as stated in the Constitution. Unfortunately, Henry never became president. I think he would have made a good one.
Graphs R Fun…
http://www.autodogmatic.com/forum/viewtopic.php?p=1226#1226
Cool graph! Any guesses what a 30 year fixed will be in 12 months?
Any guesses what a 30 year fixed will be in 12 months?
I just applied for a mortgage yesterday on a house I bought here in town. The first was 5.75% which was the same rate on my mortgage I had 5 years ago.
I was going to do a piggyback loan for 10% and the rate was 8.25%. Compare that to the last piggyback loan I had 5 years ago which was fixed at 6.0%. My credit is the same as it was back then (excellent); it seems the banks are starting to price these 2nd’s a bit differently now.
I opted to come up with the cash vs. financing @ 8.25% so I could avoid any additional fees the bank charges for PMI
So much for any recovery in 2009-2010…looks like the Option ARM resets will be gearing up just then.
This year’s fun looks suspiciously like the Chrysler Building…
And those option ARM resets will be brutal, right? Because of the pressure of interest rate change AND potential onset of principal contribution requirement?
Wow. Just wow.
I prefer to call that chart “The Towering Inferno”
er, “The Towering Inferno of Financial Pain”, that is.
Can someone give a brief summary of what each of those ARM types are? e.g. what is an “Agency ARM?”, an “Option ARM” etc.? Forgive my ignorance - there are only two ARMs I’ve ever used (currently using to type this).
Thanks.
In an Option ARM, I believe you have several choices for your monthly payment (until the loan recasts or it hits it’s LTV limit). The minimum payment option is normally less than the monthly interest, so the loan principal then increases (”negatively amortizes”).
Several commentators (who?, me???) believe that a large percentage of Option ARM borrowers only ever pay the minimum amount, and in fact have probably opted for this type of loan precisely because it offers the lowest possible monthly payment. At least initially it does.
-it’s
+its
(that exception to the apostrophised possessive always gets me)
knowledge of obscure grammar rules should be a requirement for citizenship in this country…
Fortunately for ajh, he/she lives in Australia, IIRC.
The question is, when did the loans resetting at different times originate? Some that originated late last year already had higher rates, while some that originated in 2003 might have had reasonable prices. It is the 2004 to 2006 loans that will not be able to survive an increase.
this is the Domesday Book and the Seer Stone all rolled into one.
$50B resets in November. $50B/400k average loan is 125,000+ units. 1/3rd go under, that’s 40,000 properties in one month. Spring 2008 is going to be a trainwreck.
I’m kinda getting tired of always looking forward to the trainwreck… but yes.
I just want to thank everyone who offered me their support and help yesterday in my quest to find a rental. I was just having a good vent about my frustration in dealing with the local REIC and a bunch of you came forward with great suggestions including an offer of a rental property. I didn’t expect it, and it really meant a lot to me.
So, thanks, folks.
Which thread? I missed it.
Maybe this weekend will prove to be better
Anecdotal evidence credit tightening is real, and not just in housing:
2 weeks ago an acquaintance had secured bank financing to purchase a used 130K motor-yacht. 2 weeks later, the deal about to close, the bank informed him they were backing out because he did no qualify according to their new lending standards. He’s now scrambling to secure a loan elsewhere.
Bummer…
Your acquaintance might miss one of the two happiest days in a boat owners life.
Got popcorn?
Neil
We live not too far from a nice lake and luckily for us, our neighbors have a 22 foot pontoon boat…
I’m actually very pro boat ownership, as long as somebody else owns it.
I 100% agree.
I’ll even pay to use it.
The quip from this blog about a year ago was:
If it flies, floats or fornicates, rent it.
I like this line about yacht racing from my buddy the naval architect:
“It come down to standing in an ice-cold shower, with your clothes on, ripping up hundred-dollar bills.”
Where is this lake and pontoon boat?
Somewhere in the Sierra foothills…
Thanks. I though you might have been referring to my relatives.
I guess I should have asked “Where ARE . . .” Sorry about that.
Yeah, one my friends has only memories of his first happiest day as owner of a 46-foot Chris Craft. His bank was happy, too. Now his bank is still happy, as are his mechanic and his marina owner.
The second of his happiest days, however, is being much delayed. His floating white elephant has been for sale for two full years now, with no success, not even lookers. Maybe it’s because he calculated his selling price as his original price paid plus all the cost of work he put into it, which seems to make it unsellable to me. But like a homeowner with a 100%-financed mortgage, he “needs to get that much to sell it”, else he’d have to come to the sale table with a certified check. So instead, he coughs up almost $2k per month as he waits for “the right buyer”. Ouch.
More anecdotal evidence.
Was out looking at houses this past weekend. Went into an open house (overpriced) and the realtor was clearly happy to see someone. It was past 3:00 and I bet that he had not seen anyone else. My wife said we decided to come in because he looked lonely. He then volunteered that last weekend his wife and kids came to spend time with him.
BOAT=
Bust Out Another Thousand
Funny…
Heard on MSNBC this morning that Mozillo and Ridge are not running for reelection to the Countrywide BOD. I don’t know if this means anything but thought worth mentioning.
Think about it. Lawsuits down the line against BOD. Of course that won’t shield them from being included.
That’s what I figured but I’m still in the learning process about all of this kind of stuff.
Wouldn’t their D&O insurance make lawsuits a non-issue as directors?
Sure but why go through the hassle of sitting in a million depositions fielding accusations from a bunch of sleazy lawyers trying to make their own buck off the mess. Ever done that? To call it irritating would be an understatement.
No doubt on irritation, but it strikes me that the threat of lawsuits is a red herring.
In particular, I wonder whether they ditched the BoD or whether the BoD made it clear they were going to be ditched. I bet it was the latter.
BTW, bonus points to you for the term ’sleazy lawyers’. Your background is law iirc?
Novasold must correct herself. I should know better than to post anything I hear pre-coffee.
They are stepping down from the BOD of Home Depot.
My apologies.
LOL. Wow, the blog done steered me wrong. More coffee all around…
Snap, Crackle, Pop
http://wallstreetexaminer.com/blogs/winter/?p=539
http://www.investors.com/editorial/IBDArticles.asp?artsec=16&issue=20070319
FHA/Hilary to the Rescue
I hope she lets Bill do the driving. Because stepping on the gas pedal and the brake pedal at the same time is a very bad driving strategy.
Notice that FHA “loosening” funnels in taxpayer bailout money from a number of different angles, without raising much political opposition:
1) FHA mortgages are insured, at the taxpayer’s expense.
2) The 3% downpayment with below-market interest rates are provided courtesy of taxpayer subsidies.
3) Homebuilders are skirting the 3% downpayment requirement by financing it on the loans, under the guise of “incentives;” of course, if the buyer eventually gets foreclosed, the FHA will make good on its insurance (at the taxpayer’s expense).
4) Keeping the subprime party going continues the process of screwing the middle class (also under the radar screen) by giving households of more modest means the ability to outbid the middle-class taxpayers in the housing market. Of course, they can only do this thanks to the typical Democratic ploy of forcing the middle class worker-taxpayer who does not qualify for FHA assistance to subsidize the leapfrog effect. Low income and wealthy Americans continue the process of bleeding the middle class to death, with Democrat assistance.
Hopefully there will be a silver lining to this situation, as middle class voters see through this, and block Hillary at the voting booth.
‘At the same time that lawmakers are looking to restrain subprime lending, they also want to loosen restrictions at the Federal Housing Administration, which backs loans for borrowers with modest incomes.
“We need to expand the role of the FHA to issue more mortgages at better rates,” Sen. Hillary Clinton, D-NY, said last week.’
A couple months ago DL was blaming psychology for flatenning demand. Recently, he blamed the weather. What excuse will DL use next? Bloggers? Subprime?
March Madness! “Everyone” is watching college basketball right now.
Yeah that’s it. It’s a new thing for 2007!
mrktMaven, I’ve been wondering if there isn’t some very strange philosophy or form of psychology that folks like us here in the HBB haven’t been told about and left out of. I can understand corporations as con-men, conning others out of their money and spinning things their way.
But now it seems the cons are even conning themselves, and it is dawning on me that they actually believe in themselves and what they are doing. So I’m beginning to think maybe a bunch of us here didn’t go to the right schools or missed some sort of national announcement about the way people are supposed to think.
In other words, how did we escape the mass indoctrination? Maybe there’s something to be said for tin-foil. Fess up, HBBers. We’ve all been using paint and aluminum to shield ourselves from RF waves.
Like George Costanza said,
“It isn’t really a lie if YOU believe it.”
Perhaps we’re all nonconforming critical thinkers who enjoy turning the rubik’s cube more than most.
mrktMaven FL,
That’s good…also, some of us, are victims of “experience”
I’ll go with the first part, but I hate Rubik’s cubes. I like the weekend FT crossword though.
http://www.cnbc.com/id/17702056/site/14081545
a conundrum. housing starts are up, but homebuilder confidence is low and credit is supposedly getting tighter
Housing starts rise 9% in February. Note in the this is a M-O-M - month over month. A 9% increase from January (and I also saw one on msn Money http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&Date=20070320&ID=6636790 ).
The news can be good or bad depending on how far down the starts have been over a longer period of time. Housing starts are basically houses under construction right? They don’t necessarily have solid buyers for each house, as we know. Besides, some posters wrote here before that in the early 1990s in Houston, unsold tracts were bulldozed in that downturn.
This is a lagging indicator. The only folks howling about subprime back in Jan. were us. Now that the cash is tightening up I’m sure the starts will come down again.
Isn’t it a BAD thing if housing starts are up going into a bust? It means more inventory later, right? Am I the only one who thinks this way?
No, you are not the only one - there are some of us who fully understand the “law of” supply and demand. We are celebrating too. It seems logical to mean there will be forced lower comps. If I was a homeowner or mortgage payer, I would hate to see any increase in supply.
Chatted with a young couple yesterday ,who just bought a solid Older 30’s house with a basement in good part of town.150k.we are in non bubble central s.c..It’s still good to buy ,if everything comes together for you.If you need a house .They noted they were tired of looking at all the newer houses,with all the fancy warrenty papers,and fancy trim and all ,that all seemed to be coming apart or getting creaks in odd places,in other words not that well built…How are all the new houses going to hold up in 70 yrs. or even in 30 yrs..maybe they’re throw-away houses,like cars?
I’ve seen some nice places on the net listed for really cheap in the surrounding areas of Columbia, S.C. What’s it like around there, jess? Not that I’m thinking of moving, not yet. But I’ve considered SC as an alternative to Florida. I know, I know, you guys probably hate all the Floridians coming your way. It seems that SC has been depressed in price for so long. I’ve never understood why.
I am flying to SC tomorrow for 4 days from So Cal…I will check it out.
Thanks, Sobay. Would love to hear your impressions of the place. I usually check in with the Florida thread, or the bits bucket thread. We have a few South Carolinians on this board, but they are smart folks, they talk very little about the positives of the area. Wish Floridians had done the same.
We’re in deep doo-doo here in FLA and the denial is incredible. The so-called “insurance bailout” is shaping up to be a disaster. Florida just went into the re-insurance business, to make it more attractive for insurance companies to do business here. Here that, Floridians? We as taxpayers are now on the hook to bail out insurance companies! And what did we get? More outrageous insurance increases in some cases and nominal, pissant decreases in other cases. When our governor Charlie Crist of the moist brown eyes was questioned about it, he just got all arrogant (taking a leaf from Jeb’s book) and said “That’s the beauty of the free market system, you can choose who will insure you”.
WTF? Since when are taxpayer guarantees “Free Market”? What a charlatan! He should have said “Now you can choose who will screw you”.
“That’s the beauty of the free market system, you can choose who will insure you”
No, it’s more like you can “cross yuor fingers and pray to God” that you don’t get stuck with Citizens because noone else will insure you. Since when, of late, have Floridians had the luxury to choose who to insure them> WAKE UP CHARLIE!!!! Argh!!!
Palmetto, the part of S.C. (circa 1962) I’m familiar with really sucked.
It is called Parris Island—not exactly a 12 week vacation at a world renowned spa and resort and sometimes the staff were downright rude and nasty.
old houses are energy efficiency nightmares
unless the previous owner did the upgrades.
only so much you can do on homes this old
Yes Its amazing how cold PLASTER WALLS can get….and peel if and even get some mold mildew spots, if you put a bookcase against an outside wall for years.
all these old homes around NYC cost something like $400 a month to heat in the winter. mom lives in one of them cheapo new constructions in colorado. her home is around 6 years old and just a little heat makes you sweat in there because it’s a lot more efficient. and she doesn’t even have the junk that they spray in between the walls to make it really efficient or the really good windows
Not if it is an old rowhouse.
If you investigate it, you’ll find that there are some tax credits to be had for making homes more energy efficient, and some for silly things such as upgrading appliances or hot water heaters as well.
Friends of mine bought a beautiful old house in the Garden District in New Orleans years ago, and they expected high electric bills because of poor energy efficiency. They still were not prepared for that $1200 bill the first month of full A/C usage! And not much they could do about it without very major rip-outs and renovation.
Still, they desperately enjoyed the place, and lucky for them, they could handle warmth and humidity, even indoors, and from that time on they kept the summer thermostat in the low 80’s inside and used little heat in the winter. Live with the seasons — the original energy-efficiency method.
That reminds me of high school in Orlando in the early ’60s — no a/c at all — just open the windows. And the one-liner about our cars was that their a/c was 4-60. Four windows down at 60 miles per hour.
I was wondering when you’d be back, Chip. Welcome home!
I would check for termintes, lead paint and hire experts to look for state of plumbing, water leaks (basement). Repairs could run into thousands. I have coworker that bought house built in 30’s. They are spending thousands on terminate damage and stucco repairs.
Roubini’s Rant: Who is to blame for this fiasco?
http://www.rgemonitor.com/blog/roubini/184125
what free market?
not since 1913
My first impression of Roubini was that he was an economist with a decent grasp on the world, housing bubble, credit bubble, etc. Now I see that he too needs those little pills to keep him under control.
He’s one of the most brazen governmental cheerleaders out there. Pavlov would have a field day analyzing his behavior.
Pavlov’s dog has been hanging out in Vegas, for some time now.
LOL aladinsane, btw where in the eastern sierras are you located?
Perhaps he had the aha! moment. Everyone is waking up to the scandal a little pissed. Even a couple posters complained of rising blood temperatures.
It is a paranoid rant. I think Bush has driven previously sane people nuts, with Krugman the prior example, just as Clinton did to the Republicans.
Just because he is paranoid doesn’t mean the WSJ isn’t out to get him.
wow-Bloomfield Hills MI , a nice place listed 500k went for 130k at auction
on the yahoo marquee
soon owning will be cheaper than squatting
Housing starts up 9%.
The MSM (CNBC) says this is good news? I suppose perhaps for the builders, but I don’t see this as good news at all for the broader housing market. We have a huge inventory overhang, why is more building a good thing?
BTW, I am really asking a question here, not being “smart”. I very well might be missing something here, but I just don’t think that more building is a good thing when you have so much inventory on the market?
Are they comparing apples with apples?
Jan was revised down from 1408 to 1399 and expect a downward revision from Feb next month. Also Permits were below expectations. expectations 1550 (previous month 1571) actual 1532.
check the historical numbers from census.gov
housing starts went up 40% from 1990 to 1995
Permits were down 2.5%. I would look at that number as that will give you an idea of future home starts. I am sure the 9% pop will be cheered. It could always be revised down, much like our recent GDP numbers.
No matter haw Wall Street spins the news, the avg joe will see it as a positive. The savvy marketer will see it as more pieces of shi#$ coming online to drive prices down further. On a supply/demand curve today’s data is anything but good news.
Here is average joe saying this is good news - my laugh of the morning
http://tinyurl.com/ypogcm
Rising starts is good news to RE bears. Bring on the good news!!!
AP isn’t spinning…
WASHINGTON — Construction of new homes rebounded in February after a big decline in the previous month, but building permits slid further, indicating more problems down the road for the troubled housing industry.
I am in the midst of reading an amazing diary, the diary of a Jewish German gentleman, who chronicled the nazi years, and it was what kept him going… It’s called “I Will Bear Witness”, by Victor Klemperer. There are 2 books, 1933-41 and 1942-45.
http://www.amazon.com/Will-Bear-Witness-Diary-Years/dp/0679456961
Hopefully somebody will chronicle the events that are unfolding before us, with similar clarity.
I’ve read that.
Whadya think?
“Hopefully somebody will chronicle the events that are unfolding before us, with similar clarity.”
Try this: http://www.thehousingbubbleblog.com
Pass — ditto. Ben will have an outstanding archive, between his thousands of links and posts.
aladinsane, thanks for the recommendation.
Hi Ben I never have said what a great blog site you have. So here goes: I really appreciate the time you have taken to put this blog together and hopefully have helped some people out.
There is a great article on Yahoo about houses in Detroit selling for less than cars!
Houses cheaper than cars in Detroit
ditto on the props to Ben and his blog!
I just read that, ohmygod it was incredibly depressing. Even from here in AnnArbor, knowing how bad things are in Detroit, that seemed shockingly depressing.
Auctioneers reminding people that the land goes with the house ya know. The land! In an American city that once was the grand home of the grand American auto industry.
http://news.yahoo.com/s/nm/20070319/ts_nm/usa_subprime_detroit_dc
Of course, you need the extra $$$ to pay for the armored vehicle and 50 cal. machine guns…
Haahah. Subprime lender takes on more debt to stay afloat –I am amused despite myself..
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajGoZ33rZ04s&refer=home
“…doin’ the best that I can”
For the whole of this blogs life many have bashed the boomers and other ignorants for the big credit mess. Without the system we have the FB bailout would not be a consideration. If you consider the big picture, some dont.
The guy who said people are dumb is correct. I know because Im one of them. It took a cartoon for me to understand monetary theory. Most of us dumb people are so busy chasing money that we never stop to think about what money is and how it works.
Did you guys learn what you know in college or did your parents teach you?
http://video.google.com/videoplay?docid=-9050474362583451279&q=money&hl=en
“Did you guys learn what you know in college or did your parents teach you?”
If you’re asking did we learn about money from parents or college, I’d have to say neither. Many parents are really lousy teachers when it comes to money. I can’t speak for the others on this blog, but what I learned from my parents about money was stupid stuff like “Kids these days don’t know the value of a dollar” (of course, this is without bothering to explain what a dollar is or what value means) “Money doesn’t grow on trees”, “Do I look like I’m made of money?” “We’re poor people”, “Money is the root of all evil” (This was from my grandmother, who didn’t know the entire quote and was very religious). Anyway, most of what I first learned about money was stupid responses to my requests for certain toys or clothes or whatever. Stuff that was designed to make me shut up and not ask for money. My parents meant well, but it would have been more helpful if they had sat me down and explained what it was and how people got it, etc. I also learned that this thing called “money” was something parents argued about a lot. And then I learned a little bit about money from Soupy Sales (for those of you not from the boomer generation, Soupy Sales was a whacky kiddie show host) who once told his audience of children to go into their parents’ wallets and send him some of the green paper they found. And by God, enough children did exactly that and it caused a bit of a scandal back in the day.
“Value of a dollar”. Feh. What does that even mean?
I’ve been fortunate in my life, as truly the best things, cost nothing, or close to nothing.
I backpack around 300 miles a summer, in the High Sierra and from the moment I take my first steps, from the trailhead, money is simply ballast, of no use. Coins are even worse, because they make noise.
Every trip I see what Ansel Adams and John Muir saw, in all it’s glory and because my countrymen have become so amazingly lazy, there are oh so few people, an added bonus.
aladinsane, really great post. You should become a philosopher/photographer, I mean it sincerely. You have a really good way with words and a good feeling for what you observe.
palmetto,
Thanks for the compliments…
I’m just a shameless voyeur, in this game we call life.
Money is not wealth, money is a claim voucher on existing wealth. Wealth is that which makes us “well”, that which satisfies human needs and wants.
If your needs and wants are satisfied, you are wealthy.
You are a wise man.
Learned a lot from my parents, but the best education came from getting kicked in the teeth a few times financially in my twenties and early thirty. Experience is the best teacher, and the trick is not to get overwhelmed in the process.
Most of the best lessons I learned in life, came as a result of mistakes I made.
Parents were a huge influence. 50% of every gift, my allowance and any money earned went into the bank immediately starting at birth. I started working at 12 as a babysitter and a groom for rich people who bought show horses and never did anything with them and half my income was due to the bank on “payday.”
No one in my immediate family has ever owned a new car including my wealthy yuppie attorney brother. My parents thought buying quality used made a lot more sense than leaving a few thousand on the showroom floor. (The last truck I bought had 2,200 miles on it and was $7,000 under a realistic new price or about $9,500 below sticker. This was 8 years ago – am hoping to get two more years out of it.)
My parents used credit cards for convenience but never carried a balance. They both owned their own businesses and in the later years there was a lot less financial stress as they became successful. Both worked hard on the house - they did all the repairs and renovations themselves. My mom was a gifted artist and my dad could repair anything and no one was above getting hot, sweaty and dirty to do the work. You work hard and work together was the message I got.
There were few discussions about money in the house - it was “follow by example.” But they lived below their means and managed to save a nice nest egg. Unfortunately, their biggest waste of money - cigarettes - meant they could never really enjoy it and both died many decades too early.
So my messages from my parent were save A LOT, live below your means, hunt for bargains, don’t smoke or drink to excess, and buy a home you love and live there for decades. Not a bad set of messages, no?
Nice insight, thanks for sharing.
Some high school, some college, some via parents. 80+% because I was curious and searched for answers.
One thing I tried to teach my children (by example) is the principal of delayed gratification….Just because you can does not necessarily mean you should….
I learned my lessons about money from my parents and also getting kicked in the teeth a few times.
In the late 1960s when I was in my early teens, my parents were forced to declare bankruptcy. Believe me when I say this was the last thing they wanted to do. However both my mom and dad was laid off at the same time, my mom was dealing with medical problems, there were five kids to feed, house and clothe, and my biological father decided at that time not to pay child support. This ended up to be the perfect storm that caught my parents. Living on welfare for a couple of years until my parents were able to get back on their feet and the bankruptcy my parents never again let themselves get caught in that situation to this day.
You would think I had learned a hard lesson. Not true. In my twenties and into my thirties I was irresponsible with my money and ended up in $15,000.00 in debt. I was borrowing money from my parents and siblings to help pay some of the debt that I had created with my own recklessness. I paid off my debt, paid back the money I borrowed with interest to my parents and siblings.
Whenever I feel the need to be reckless, I remember what my brother asks himself: Is it a need or a want. 99% of the time it is a want. By asking this question, saving money, and not forgetting the past (recklessness and irresponsible) has kept me on the financial track of responsibility.
Houses cheaper than cars in Detroit
http://news.yahoo.com/s/nm/20070319/ts_nm/usa_subprime_detroit_dc;_ylt=Alsc0QP7QhojC5AK4dyFiM_MWM0F
When we start reading about houses being cheaper than cars in San Diego, now THAT will be a story….
More condos in Southern California; just what we all need.
http://www.ocregister.com/ocregister/homepage/abox/article_1624726.php
Who wants to pay those exorbitant HOA dues to live in Santa Ana?
Does anyone have any statistics on the number of posting to this blog over time? Have they increased lately? Have the prognostications become more dire or statyed about the same over time? I am trying to gauge sentiment.
Here in NYC…….yes its different here, i see people buying housing that they live in, nice indian family with the 2 kids moved in last year across the street, they took their front yard all of maybe 250 sq feet and planted veggies…..and then had the old craked concrete driveway redone. I think those are not flipper things to do.
So i think houses will take a long time to fall in price, but they will fall back to reasonable level, I think the condo co-op maket will fall drastically since after its ONLY an apartment…..unless you have the back yard or roof included in your space.
Yes, they have increased exponentially in the past few months. I also watch that. Got a funny feeling that the housing/lending related stuff is going to make a bounce that’ll drive people here nuts for awhile. Hedge funds buying into LEND, etc. = people still think they can make money on this subprime stuff.
Got a funny feeling that the housing/lending related stuff is going to make a bounce that’ll drive people here nuts for awhile.
I agree with your sentiment here. The spring selling season (illusion) will have to play itself out before this thing really goes down for a good and prolonged spankin. Govt talk of bailout might have the perverse effect of providing additional emboldening/inflating of the housing pig. Q3 is when I expect the economic pulse really starts to wither.
BTW, wouldn’t be surprised to see S&P @1500 soon…..Dow @13,000…soon.
Me either and I’m fully long right now.
Check out MLS# F672373 in Coral Springs, FL. On the Market for over 550 days with six price reductions. I thought that most sellers like this eventually take down their listing. Have any of you MLS watchers out there seen similar properties that just sit forever? I wonder what the record is for days on the market.
A house that my wife and I looked at, in another state, in early Fall 2005 is still on the market, same listing #, no price reductions. As I recall, they were planning to trade up and they seemed a bit arrogant about the value they ascribed to the place.
Not sure if anyone posted this already. Excellent article by Gary North on Uncle Sam as ultimate Sub Prime Borrower
http://www.lewrockwell.com/north/north518.html
Are you listening, Dr. Roubini?
Refinancing in Russia
“Refinancing is most interesting for people who received loans five or six years ago. Five years ago, the interest rate was maybe 15 or 16 percent, and to be able to decrease your interest to 9 percent now is very appealing,” said Roman Vorobyov, a board member at Raiffeisen Bank.
http://www.moscowtimes.ru/stories/2007/03/20/041.html
In Soviet Russia, loan finances YOU.
Russian mortgage industry to double to a big bad $17 billion in 2007!
http://www.moscowtimes.ru/stories/2007/03/20/042.html
Is Spain the European trigger?
Vacation Homes Boom in Spain May Bust as Banks Recoil (Update1)
March 20 (Bloomberg) –
” Vacation home prices in Spain, a leading indicator of Europe’s property market, may face a slump that’s worse than the real estate decline in the U.S., based on the loan terms banks are imposing on developers.”
“Property agents in Spain, Europe’s hottest housing market this decade, are likely to cut vacation home prices by as much as 10 percent this year, according to RR de Acuna & Associates in Madrid, which values real estate for about 40 percent of mortgages. A slowdown may have a “psychological” effect throughout Europe, said Tobias Just, an analyst at Deutsche Bank AG in Frankfurt.”
“Spanish homeowners may be more vulnerable than Americans to defaults as interest rates rise because about 98 percent of mortgages in Spain have floating rates, according to the central bank. In the U.S., most mortgages have fixed rates.
The Organization for Economic Cooperation and Development in January said house prices in Spain may be overvalued by as much as 30 percent. A sudden acceleration in interest rates could cause an “abrupt adjustment in which prices would plunge,” the Paris-based OECD said. A 30 percent slump could reduce Spain’s economic growth by as much as 1.8 percentage points, according to Deutsche Bank’s Just.”
http://www.bloomberg.com/apps/news?pid=20602093&sid=aCk.OYMSRtDA&refer=rates
Generalisimo Francisco Franco…
Is still dead.
A message from Ron Paul courtesy of the Implode–meter: Blame the FED
http://www.house.gov/paul/tst/tst2007/tst031907.htm
Sadly, nobody listens to Ron Paul and he seems to be powerless to make any changes. Still, it is nice to know there is one small voice of reason in Washington.
Agreed. Unfortunately “blame the Fed” isn’t obvious enough to be accepted by the other members of Congress, who will be busy blaming everyone but the Fed.
Dr. Paul is the only elected person in Washington for whom I have high respect.
I went to an open house in Palo Alto, CA on Sunday. Dressed-to-kill renovation of a 30s cottage now on the market for $2.3M ($100K price reduction). The agent said that of 37 sales in their office last month, 35 had multiple offers.
There is a house on every street in Palo Alto that is undergoing MAJOR renovation.
For those of you who have never been to Palo Alto it’s worth a side trip if you are in N. Calif. It’s amazing what $2M of renovation can do to what was originally a 800 sq foot house built in the 1930s
Some of the houses were fabulous to begin with I can’t even imagine the cost of those renovations.
As a Georgist, I been trained to separate the SITE VALUE from the home value. PA is one helluva nice place to live on this planet.
OZ;…Those reno’s are running well in excess of $500. per foot…Some go over a $1,000. per believe it or not….
Too bad they will all get wiped out in the next big earth quake. What will a home buyer pay for a house with $2M in renovations when they can’t afford earth quake insurance ? Is the bank going to let you hold a 1.9M$ mortgage without insurance ?
twedee;…Earthquake Ins. not required by lenders in almost all area’s around here….
Good to see it’s even nuttier than when we left…and we left at the height of the dot-com boom. Nice places to eat on University Ave., but come on, $2,300,000 for a shack with granite, travertine, and stainless steel?
Today I dropped by an open house in my Westwood zip code, 90024. Nice Spanish in very good condition on a good street and school district, 2000 sq ft and basement, very small backyard. I’ll give you the sale history and you tell me the asking price (just a hint, the flyer says BIG REDUCTION).
1996: 525,000
1997: 455,000
1998: 590,000
2007: ?????
I’ll take a flyer on $950,000…
I’m guessing $1.4M…is that close?
Sorry, try thinking outside the box. This is LA!! $ 1,695,000, and the price has been reduced.
New York Post: Cramer reveals a bit too much
“In the video from TheStreet.com’s “Wall Street Confidential” Webcast, Cramer boasts about manipulating the price of a high-flying stock down, and even acknowledges that doing so might have been illegal. The video is making the rounds on YouTube.
He added that the strategy — while illegal — was safe enough because, “the Securities and Exchange Commission never understands this.”
A call to Cramer was not returned.”
http://www.gata.org/node/4920
Here is the Cramer video on YouTube. Amazing.
He never knows when to shut up. His mouth will put him in jail at some point.
He can make Casey his bitch.
I used to run a major hedge fund. This guy wants people to think he was a big shot. If he was, he would not be on TV daily. He seems to desperately want our approval. You can see it in his eyes. Total Bull Sh..
http://www.investors.com/editorial/IBDArticles.asp?artsec=16&issue=20070319
“The Bush administration also supports steps to revitalize the New Deal-era agency. It backed a bill last year that would have eliminated the minimum 3% down payment requirement for FHA loans. The bill easily passed the House, but stalled in the Senate.”
“One could only marvel,” he said, when Congress “sees a disaster sweeping through financial markets and tries to figure out how it can be a part of it.”
Why eliminate downpayments? I don’t understand the position of the government - Americans should not save? Saving is bad? Live beyond your means? Borrow, borrow, borrow… is this the message?
Isn’t it curious that the Senators from New York (Wall Street Investment Banks) and Connecticut (Hedge Funds) are leading the cries for a gov’t bailout when NY and Conn are probably among the states where homeowners are least affected by the subprime implosion. Last I heard, New York City’s market is in great shape thanks to the record wall street bonuses last year.
How about because they are investing in the debt and the subprime companies?
“…when NY and Conn are probably among the states where homeowners are least affected by the subprime implosion.”
After hearing credible stories about New York City cabdrivers and hairdressers investing in condos as a sideline, I have to question whether this is the case…
Ben posted in a thread yesterday about foreclosures in Ct.
“The Bush administration also supports steps to revitalize the New Deal-era agency.”
Is Bush a closet New Deal liberal?
Closet? Have you forgotten his prescription drug benefit?
hey that abortion benefited exactly who it was supposed to.
My JNJ stock has done quite well thank you.
Just another way to funnel our tax dollars into their pockets…and whats worse is for all that cost their is no real benefit out of it (well to actual citizens anyway) ….we could have actually gotten a worthwhile prescription drug benefit from all that money. Instead we got another Republican boondoglge.
Kenny, what’s JNJ?
NYSE ticker symbol for Johnson and Johnson
Oh, don’t get me started on those guys.
This blog is all about sharing.
I know, and I can’t thank people enough for all they have taught me in this blog. But if you want to talk about pharma, Ben would need to start another blog. My husband is a doctor, so I see how they operate. It’s not a pretty sight. Everyone gets screwed, patients, doctors, hospitals, but those guys always land on their feet. They have so much power it’s obscene.
“Closet?”
Yeah, I had to laugh at that as well. Bush is now grand marshal for the annual government spending pride parade.
As subprime lenders go Kaput sellers scramble for easy money. A brief comparison of FHA and subprime loans courtesy of the Imploe-o-meter: FHA steps in to emerging subprime lending void.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/18/REG82OMQTS1.DTL
The FHA stepping up to the plate and helping subprime borrowers refinance themselves out of trouble (with an implicit taxpayer-funded insurance subsidy) appears to be an interim de facto bailout to shore up the subprime sector until a formal bailout proposal can be drafted and passed by Congress. And homebuilders have figured out a clever way to “finance” the 3% downpayment requirement on the loan, which comes in handy for California subprime borrowers who don’t have $15,000+ saved in the bank ready to bring to the closing table for a loan on $500K+ worth of subprime debt.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aCk.OYMSRtDA&refer=home
Credit crunch in Spain! The article is in English (sorry if it has already been posted)
98% of Spanish mortgages have floating rates….lower foreign investors sales….oh! well I have to correct myself, the boom will be end of 2007 (instead of 2008) and the peak was in 2006.
The only figure I don’t agree is the median house price…it is too low if you check the price per square meter in the main cities (where all the population is, the rest of the country is empty), maybe they took also the prices in depressed, empty areas.
Scary numbers, 98% of Spanish mortgages have floating rates
Also have the impression that banks and lenders are getting little worried and are putting pressure on homebuilders and promoters.
Something ’s got to pop soon with over 800.000 housing starts and declining sales.
Not only that, there is no BK for individuals in Spain (only for companies), so if a house is foreclosed by the bank and sell for less than the mortgage balance, the borrower has to pay the difference with assets or via garnishments. It is going to be a blood bath.
Think about all the Brits, Irish, German with 100%LTV, stuck with a property that’s turning negative. And no way they can get enough rental income out of it. As mentioned in all flyers, they mostly count on yearly appreciation of value of at least 10%.
NAM, John, that sounds like a recipe for disaster. Maybe it’s a stupid question, but do the EU laws allow for a lender in, say, Spain to pursue a borrower who bailed out in, say, Germany or England? That could become very, very tricky.
From the LA Times:
More layoffs in sub-prime loan sector
Fremont tells many on staff to expect pink slips. Ameriquest’s name comes off a stadium.
“In other developments:
• Shares of San Diego-based Accredited Home Lenders Holding Co. plunged $1.95 to $8.95 after the firm said Nasdaq might delist its shares because the company had not yet filed its 2006 annual report. Accredited said it would appeal.
• Linda Thomsen, director of enforcement at the Securities and Exchange Commission, told reporters that the agency was conducting a broad investigation of “all the actors and their roles” in the sub-prime industry. She didn’t mention any names.
• U.S. Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), invited executives from five sub-prime mortgage companies to testify at a hearing Thursday, including officials from New Century, Countrywide and WMC Mortgage of Burbank, a General Electric Co. unit.”
Lots of charts and related stories linked from the article as well.
Beat me to it sm…the party’s just gettin’ started!
The stock market seems oblivious to what is about to happen.
Yeah, I’m kind of surprised it’s rebounded so well…we’ll see how long it lasts…
Morningstar has published a commentary on related stocks that might be the survivors:
Real Estate Slowdown, Subprime Meltdown–Now What?
I noticed how the big Wall Street homebuilders’ ads all disappeared from the walls of San Diego’s PetCo park between the 2005 and 2006 baseball seasons. I guess we won’t be looking at many subprime lender ads this year (except for maybe LEND, given they took out an emergency loan at a 13%+ interest rate which they will presumably loan out at around a 6% rate…).
Small lenders feel New Century’s pain (OCR)
Here’s a story of one smaller lender that used to sell subprime loans to New Century Financial of Irvine, before its big implosion. Morgan Brown, chief operating officer and co-owner of New Day Trust Mortgage in Irvine, said his company is bound to lose some money because New Century stopped funding loans earlier this month.
Things worked like this: Brown, 31, borrows money at a high rate, say 10.5%, and then funds a loan with the plan of selling it to New Century within a few days. That worked great, until New Century abruptly stopped buying loans, and he got stuck with one.
That last remaining loan is a refinance to someone in Northern California with a credit score in the mid 500s (pretty low), and the principal equates to about 90% of the property’s value. Brown now expects to sell it at a loss on the “scratch-and-dent” market, considering other lenders are tightening their standards.
“That was a typical loan that New Century would do all day long … so would others,” he said.
Brown said there are probably lots of other smaller lenders out there with loans meant to sell to New Century or another big player in trouble. If those smaller lenders have eight to ten loans like that, they could easily lose a quarter of a million dollars, he said.
“That’s enough to shut the doors of most small businesses,” he said.
If any other smaller lenders in O.C. have a loan that was meant to sell to a subprime lender and now is left in the cold, feel free to email me the details at mapadilla@ocregister.com for an upcoming story.
SoCal rents up 6.7%, CPI says (OCR)
The local Consumer Price Index says that the SoCal cost of renting your primary residence rose at a 6.7 percent annual for February. That’s the fastest pace of rent hikes in two years and is higher than the 5.8 percent average for all of 2006. Local rents have jumped by 5 percent or more every year since 2001.
SoCal’s total housing inflation rate ran at a 5.7% year-over-year rate in February, That’s slightly below last year’s 6 percent gains or the 5.9 percent rise in 2005. SoCal housing CPI last rose at a 5 percent or better for three straight years back in 1984-86.
Among the components of the local housing CPI:
• Household energy was a bright spot, up 0.5 percent a year for February, vs. 17.6 percent for all of 2006.
• Furnishings were up 0.5 percent a year for February, vs. 3.1 percent for all of 2006.
SoCal’s CPI for all goods and services rose at a 3.5 percent annual pace in February, vs. 4.3 percent for 2006. The U.S. overall CPI rose at a 2.4 percent annual pace in February, vs. 3.2 percent for 2006.
Sorry if this has already been posted…I thought it was an interesting take on the issue of increased federal regulation
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/18/AR2007031801054.html
This is the first truly good thing I can remember reading from Robert Kiyosaki
“That means the average investor will need at least a 15 percent annual return on their stocks or mutual funds just to stay ahead of the U.S. dollar’s purchasing power erosion — that is, just to break even.”
http://tinyurl.com/33lrex
I couldn’t have said it better myself.
Many have commented on the Japanese RE collapse over the last 17 years, Bloomberg has a nice article on the Japanese stock market collapse from the same decade.
” Reading, 71, called the Japan of the early 1990s a “hara- kiri economy set to self-destruct” in his book, referring to the ritual suicide method of the samurai class. “Failure to engineer a sustained recovery in share prices, for whatever reasons, will lead directly to a financial collapse.”
Reading was an adviser for Nomura Asset Management Co. in 1992, while Wood was the Tokyo bureau chief of “The Economist” weekly newspaper.
Back then, few were as bearish.
“The troubling fact is that signs of the meltdown Reading describes are hard to discern in Tokyo,” the Financial Times wrote in its June 1992 review of his book. …
… “I was saying there was a major problem with the banks, so at that point that was shocking news,” said Wood. “It was dismissed by all the bureaucrats, the BOJ, the stockbrokers.”
The Nikkei remains 56 percent below its peak of 38,915.87 reached on the last trading day of the 1980s, making it the world’s worst performing major stock market over the period. …”
Just historically interesting.
http://tinyurl.com/2ja6uy
“It was dismissed by all the bureaucrats, the BOJ, the stockbrokers.’’
Flash forward to 2022. I predict the same will be said about U.S. bureaucrats, the Fed and stockbrokers as of 2007.
I read that LEND hadn’t gotten financing yet. do they mean another line of financing in addition to the one they just got or were they lying the other day?
Flyover Country: I went house hunting in STL on Sunday. Many more foreclosures in the undesirable areas but traffic seemed to be stable in the nicer areas and they’re not coming down much on price in the nicer areas. I liked one 2,500 sq ft house on the end of a cul-de-sac that had a contingency contract on it with a 48-hour kick-out, $375k. I’m seeing more of these. Maybe the full subprime blow-up hasn’t worked its way up the food chain yet.
The St. Louis income distribution cannot support many $375K houses without the wedge that subprime loans drive between willingness and ability to pay.
In stats I’ve seen the average household income in this area of west county is over $90k. In the city it’s probably less than half that but wouldn’t want to live there- crime is rampant.
“… in this area of west county is over $90k.”
I am guessing if you counted the number of homes valued at over $375K in the greater St. Louis area and compared it to the number of households earning over $90K, you would detect a problem. Maybe I only suspect this because I recently saw a statistic that suggested subprime lending was occurring at a higher rate in St. Louis than in San Diego. (Wish I had a handy reference, but I do not…)
The St. Louis area tends to be very segregated between the haves and have nots. The homes in this price range tend to work out for the move up buyer (trading in a lower end home and rolling the equity) with a higher income. $375 works out to about $150/ sq ft., more than I feel it’s worth- hoping for a correction- would love to see $100/ sq ft and buy.
“The St. Louis area tends to be very segregated between the haves and have nots.”
This is true. In the city, one can find pockets of truly mansion-sized homes within (long) walking distance of drug war zones. And Ladue is only a 15-minute ride to the west.
But I believe if you did a careful comparison, you would discover (as anyone who did the same comparison for San Diego) that the high end of the market is overbuilt relative to the high end of the income distribution, and that the gap between incomes and home purchase budget is largely explained by the prevalence of subprime loans. I wonder how long it will take for the MSM to grasp this point? (I am guessing about six months — the average time between when we make a point on this blog and when it trickles down to the MSM.)
I agree. It’s just not that much of a stretch though to move up from one overvalued starter home to a mid-range when one rolls the equity. If, however, the subprime meltdown takes out the starter home buyers (no downpayment) the nicer areas should come down as well. It just hasn’t happened yet. One might ask why I care if I’m just springing for the difference? If everything takes a 30% hit the difference will be smaller. This could be my year!
http://quiggleme.com/
Doctors are leaving medicine for the the more lucrative field of mortgage fraud:
“we have an unlicensed individual claiming to be a loan officer financing her sister’s properties using an idle medical license in conjuction with a CPA letter to justify non-existent income for a non-existent medical practice on three properties all supposedly owner-occupied by the same person with a mortgage broker willing to sign off on the 1003’s, appraiser’s willing to represent two rental properties as owner-occupied, lenders who can’t seem to exercise the discipline to say no, and investors willing to incur such risk.”
Huntington Beach condo schemer avoids jail (OCR)
Investor, 82, likely will get 2 years home confinement by paying $1.75 million.
An elderly real estate investor involved in a scam to illegally convert Huntington Beach apartments to condominiums using fraudulent documents has agreed to pay $1.75 million to the court in exchange for avoiding prison time, according to a motion filed Monday in federal court.
A sentencing hearing scheduled Monday for Howard Richey, 82, was postponed until May 21 so he can make the payment before U.S. District Judge David O. Carter decides his sentence. In exchange, prosecutors have recommended that the retired high school teacher be sentenced to two years in home confinement instead of serving time behind bars.
Richey is among eight people indicted by a federal grand jury in December 2004, including former Huntington Beach mayor Pamela Houchen, who resigned after the scam was uncovered.
Houchen and five other defendants were sentenced to federal prison for their roles. Scam mastermind Philip Benson died before he could serve his punishment.
Richey could face up to 40 years in prison, but prosecutors agreed to home confinement because of his age and because he’s waiving his right to appeal, said Assistant U.S. Attorney Andrew Stolper.
A jury in September convicted Richey of 14 counts of mail and wire fraud for signing documents containing falsified signatures, dates and notary stamps to illegally convert apartments to condominiums. He is the final defendant to be sentenced in the scheme, which involved the illegal conversion of more than 120 units.
The condos were sold to unsuspecting buyers who later discovered they could not sell or refinance their units. The city stepped in and brokered a deal with five title companies.
Houses cheaper than cars in Detroit-
http://today.reuters.com/news/articlenews.aspx?type=topNews&storyid=2007-03-19T154818Z_01_N19279978_RTRUKOC_0_US-USA-SUBPRIME-DETROIT.xml&src=rss&rpc=22
wow!
http://www.nypost.com/seven/03202007/business/cramer_reveals_a_bit_too_much_business_roddy_boyd.htm
Cramer reveals too much about rigging markets.
Head & shoulders or W bottom?
http://stockcharts.com/h-sc/ui?s=spy
Tinfoil hat question: Do the big hedges get govt encouragement to “snap up” subprime? Because immediately following a massive crash seems like an odd time to go bottom fishing (although I have noticed the hedges like to take lots of stupid gambles…). Fortress almost sounds like it could be Uncle Sam’s own hedge fund; we are pretty big into the defense sector.
At any rate, I will not be surprised in the least if we eventually read stories about coordinated intervention to shore up LEND and other surviving subprime (otherwise, why all the premature reassurances from on high that subprime will be no big deal to the overall economy?). It seems patently unfair that NEW was allowed to go up in smoke while LEND gets propped up…
———————————————————————————
‘HEDGE FUNDS
Some hedge funds step into subprime
Farallon, Fortress provide financing to troubled mortgage sector
By Alistair Barr, MarketWatch
Last Update: 1:54 PM ET Mar 20, 2007
SAN FRANCISCO (MarketWatch) - Some big hedge fund firms are stepping into the subprime mortgage sector just when other investors are fleeing the business amid a default-fueled credit crunch.
Farallon Capital Management, the fifth-largest U.S. hedge fund firm, lent $200 million to Accredited Home Lenders (LEND : 10.76+1.81+20.22%) on Tuesday, giving the subprime originator time to track down longer term financial backing. See full story.
Newcastle Investment Corp. (NCT : 27.64+0.18+0.66%) , a real estate investment trust managed by hedge fund giant Fortress Investment Group (FIG : 26.50+0.76+2.95%) , said late Friday that it agreed to buy a $1.7 billion portfolio of roughly 7,300 subprime mortgages. See full story.
Subprime loans are sold to poorer home buyers with lower credit scores. The sector is experiencing a credit crunch after interest rates climbed from record lows and house prices stopped rising quickly.
Several subprime mortgage specialists have filed for bankruptcy in recent months and other publicly traded companies in the business, such as New Century Financial (NEWC :1.84-0.33-15.21%) and Accredited, have seen their shares slump as financial backers withdraw support.
However, Farallon and Newcastle, are doing the opposite.
“They see value,” Robert Napoli, an analyst at Piper Jaffray, said. “Forget about the fear in the market and look at the loans being originated now and the cash flows from those assets. The buyers feel those loans are selling at a discount.”‘
http://www.marketwatch.com/news/story/farallon-fortress-ease-subprime-credit/story.aspx?guid=%7B238F4642%2DFDDA%2D49BF%2DB521%2D21DDF9BE6F7F%7D
all of these people didn’t see the housing bubble, how do you think they’d react to this? they see it as an opportunity. of course they also now, after not seeing a housing bubble, see no reason for this to spillover into alt-a and prime…give it 3-6 months.
Embrace the bull. He is coming to your town [for now.] Will ultimately leave nothing but large clumps of manure but that’s tomorrow’s business.
(I’m only partially facetious).
AAAArrrrggghhh! I am about ready to start a flame war with someone in my interest group online concerning real estate. I posted I was looking for a good stock-based retirement plan and the reply was I was gambling because apparently real estate is not a gamble. I think the poster lucked out. They worked 20 years for the government and have a pension now. Good for them, but the cockiness of thinking that real estate is safe and the stock market is a gamble? I can only hope that real estate does pump more egos up. I have been humbled so many times in my life but can see that things are very subjective. Perhaps people are just not seeing the objective thing about real estate momentarily?
Loan City - DONE!!
http://bakersfieldbubble.blogspot.com
Can you all see this? I’m crying, I was laughing so hard (the part at the bottom about Neuticles). Sounds like some FBs could use a pair!
http://www.minyanville.com/articles/index.php?a=12407
Well, I was waiting for someone else to comment…..but it looks like they left you hanging. So to speak.
Toooooo funny chic….Good one….
“Yeah. The Neuticle juggernaut is just too powerful. They’re like the Microsoft (MSFT) of the artificial testicle world.”
Tooooo Funny . . . is it just me, or do some people have Waaaay too much time on their hands??
Why rent when you can owe?
Brilliant Craiglist ad. Is it a funny typo or a statement by a bubblehead?
You decide.
The China Post
SEC investigating a number of subprime mortgage firms
2007/3/21
WASHINGTON, AP
The Securities and Exchange Commission is investigating a number of companies that operate in the troubled market for subprime mortgage loans, the agency’s top enforcement official said Monday.
It has been known that the SEC was examining accounting practices at New Century Financial Corp., the second-largest maker in the U.S. of subprime mortgages — higher-priced home loans for people with tarnished credit or low incomes.
But comments by SEC Enforcement Director Linda Thomsen Monday were the first public acknowledgment that the agency was involved in a broad examination of the subprime sector within the mortgage industry.
“We’re looking at subprime,” Thomsen told reporters following an address to an investment conference. “… As with anything, we’re going to look at all the actors and their roles.”
She declined to provide further details. The SEC as a rule does not comment publicly on current investigations.
The Bush administration’s housing secretary, Alphonso Jackson, disclosed last week that the government was preparing to punish some subprime mortgage lenders that have been under investigation for discriminatory practices. He did not name the companies. HUD’s Office of Fair Housing has brought several cases against mortgage lenders and insurers for predatory practices, and those enforcement efforts are continuing, the department said.
There has been an alarming spike in foreclosures, especially among homeowners who took out subprime loans. In recent weeks, lawmakers and regulators have been voicing concern that many people could lose their homes as mortgage delinquencies mount and distress grows in the market for subprime mortgages.
Also, lawmakers have denounced what they say are abusive practices by some mortgage lenders that target the poor, minorities and the elderly. Senior Democrats are drafting legislation intended to curb abusive lending.
Anxiety that a blowup of subprime mortgage lenders could spill over into the broader economy has roiled the financial markets in recent weeks and played a major role in the swoon on Wall Street that pushed the Dow Jones average to its lowest levels in more than four years.
http://www.chinapost.com.tw/news/archives/business/2007321/105195.htm