Bits Bucket And Craigslist Finds For March 22, 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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WSJ, front page left, bold type — the role of the regulators in the mortgage meltdown. Most of the mortgages are now made by businesses that are not regulated by federal and quasi-federal agencies.
Again, imagine if three years ago the regulators had tried to stop all those mortgages from being issued? The NAR, the Mortgage Bankers, the Builders, etc. would have run to Congress and demanded action to prevent them from cutting off credit to low income borrowers, hurting the economy, stifling free market innovation, discouraging homeownership, etc. etc.
“The NAR, the Mortgage Bankers, the Builders, etc. would have run to Congress and demanded action to prevent them from cutting off credit to low income borrowers, hurting the economy, stifling free market innovation, discouraging homeownership, etc. etc.”
Exactly. But there are always ways for regulators to go about something like that. You can always try to regulate, and then when the whining starts, back down but issue a dire warning and keep issuing that dire warning every now and again. Just to remind people of the consequences of unfettered capitalism. Capitalism is ok, I’m all for it. But it has to be regluated to a certain degree, otherwise you get circumstances like the bubble and other things, like radioactive materials being re-cycled and used in everyday products, as happened during the 1980s.
“Capitalism is ok, I’m all for it. But it has to be regluated to a certain degree,”
But therin lies the rub, it is almost always regulated one way - against the little guy. That’s why so many disdain regulation of any type, because usually it does them no good (in recent decades at least). This housing bailout pooh pooh is a prime example - wrapped in populism it will only wind up burdening the most productive classes.
I’m sorry, but unfettered capitalism has nothing to do with boom-bust cycles. In fact, government intervention in the marketplace is responsible for bubbles as capital resources are misallocated becaouse of government decree resulting in a temporary boom. The bust inevitably follows as the market corrects itself. You really need to read some of the Austrians, particularly Mises or Rothbard.
How you can say we have unfettered capitalism when we have the Fed controlling our money supply is beyond me.
–
Vow, you got it!
Our govt. is controlled ny people who DO cause boom-bust cycles — bankers and financiers. Schumpteter calls it Bankers’ Mischief that causes catastrophes, i.e., depressions.
Jas
Exactly. In a market economy, the consumer is the ultimate regulator. If the consumer decides a product is not desirable, it won’t be bought and will be out of business.
The consumer can’t rob me at gunpoint when his investment goes sour. The government can and does.
Absolutely. All I, as a consumer, want is information….which is difficult to impossible to get with no regulations, and stulifying/unreliable with them. No perfect world, but I’m siding with rational, minimal regulation. Now, how would we achieve that?
fed gov adds in
fnm,fre,hud,community banking bill, stay happy 2003 bill
the bureacrats will get paid either way
imagine a free market
Real estate lobbyists didn’t have to protest anything –they could do whatever they wanted courtesy of a toothless Congress and the self-regulating (bhwahah) banking industry. And so they chose the same footworn path that all the unregulated “free market” industry has chosen: Path of most profits, soonest, by any means necessary, ending in a fall off a cliff.
A free market can only work in a world full of wise men.
A free market can only work in a world full of wise men.
And central planning can work in a world of fools?
Nope - central planning won’t work in a world of geniuses OR fools. It just won’t work.
The problem with free markets, however, is that if there are a class of individuals driven to take an extreme amount of assets and wealth, there are also going to be losers. Competition is great in a society - up to a point. Free markets have spawned great inventions and progress — but it also spawned predatory lending practices, subprime trap mortgages, teaser rates, yield spread premiums, toothless appraisers, blind cheerleading media, etc.
A free market is great - but it also enabled people to make reckless credit decisions.
“but it also spawned predatory lending practices, subprime trap mortgages, teaser rates, yield spread premiums, toothless appraisers, blind cheerleading media, etc.”
a. Fraud is illegal and has been for a long time. If lenders and/or borrowers lied during the mortgage origination process they should be prosecuted under existing statutes. If fraud ran rampant that’s an enforcement issue not a market failure.
b. the term “blind cheerleading media” suggests that no media outlets suggested that there was a bubble. I have news for you: the notion of a “housing bubble” was not spawned in the blogosphere (though this and other blogs are a great resource for bubble info). The Economist did a cover story on the housing bubble in the summer of 2003 and had commented on it for years. The WSJ and other publications also talked about it for years as well. Yes, there was cheerleading in other publications, but people, who are so impressionable as to make big investment decisions based on a flimsy story from the evening news, deserve to be taught a painful lesson.
but it also spawned predatory lending practices, subprime trap mortgages, teaser rates, yield spread premiums, toothless appraisers, blind cheerleading media, etc.
If banks acted independently instead of all acting in collusion - i.e. if there was true competition in the banking industry instead of the gamed system we have in place - the banks that extended credit to people who shouldn’t have it would quickly disappear as a result of their lack of foresight. That would be a true free market.
Yes, some people are inevitably burned in the market; however, that which doesn’t kill you makes you stronger. And wiser. The system we have in place now benefits the very few at the expense of the rest of us.
you think banking isn’t highly regulated?
Banks weren’t making sub prime loans. Countrywide, New, Accredited, Ameriquest, GMAC these are all ILCs or other entities registered at the state level. They aren’t depository institutions as their liquidity came from packaging loans for Wall St.
Banking remains highly regulated, but the free market (as usual) found a way around the regulation. It outcompeted (as it often does) and led to a cycle (as it often does)–the two drivers of financial regulation were to reduce the amplitude of cycles and to limit the risk a failure posed on depositors.
If it weren’t for the government decree to use Fed Reserve Notes, would you continue to put your entire financial future in that bank’s notes? In a bank whose notes are backed by debt? That debt is based on the ability of the ruling class to tax their subjects or cut their entitlements. Only problem is that the ruling class gets voted in by the people they want to tax.
Yes, not going to happen. It will be more inflation, count on it. Enough people just dont’ understand how inflation is a tax, and the elite are banking on that to continue.
While we’re on the subject of a free market, I recently read an article which pointed out that our current system of corporate personhood is a direct intervention in the free market by the government.
By allowing a group of people to use the legal fiction called a corporation to limit their liability if, for example, said corporation produces a product which through gross negligence ends up killing or maiming a bunch of people, you directly interfere with the forces of the free market.
So next time someone whines about about government intervention in the free market, ask them if they favor eliminating the ultimate form of government intervention - the corporation.
Note: My own business is a C corp, so I’m not just talking out of my bottom. I would gladly give up that status though for real corporate law reform - this system is ultimately what will allow many/most of the guilty in this RE/subprime debacle to skate free.
just for the record, the Corporate Veil can be pierced in cases of Gross Negligence, none are free to act in such a manner.
The corporate status must exist to get people to engage in dangerous or otherwise risky business. How do you think you get gas to your gas tank?
The corporate status must exist to get people to engage in dangerous or otherwise risky business. How do you think you get gas to your gas tank?
Utterly false. There would still be some entity to refine and deliver gasoline if the modern corporation did not exist. It’s just that the risk involved in such a venture would be appropriately priced into the end product. If there’s a need in the market, someone will fill it.
You can pierce the corporate veil in all states by acting as an individual instead of acting as an agent of the corporation - in the best interests of the corporation.
Falsifying info on a loan application will make you personally liable. The executives who encouraged you to do so may also be personally liable - especially to a shareholder at a now-bankrupt company.
nice trick, yeah its false, now lets get back to the real world. Your academic debunking of my previous statement is a tool used by Ivory Tower pinheads.
Now come down back to earth, and tell me precisely, why the Corporation exists. Be sure to use words such as “some entity” and “someone”, and lets call that place, Happy Fairy Land.
So nothing dangerous was ever ventured before the corporation? Interesting.
The big problem here is granting rights and protections that belong solely to individuals to groups of people. Eliminate those and corporations will stop poisoning and maiming you for a profit.
of course people engaged in activities that were dangerous prior to the existance of a Corporation, and they didn’t do it for sh*ts and giggles.
I guess its easy to target the corporation, but wouldnt the Happy Fairy Land Prime Movers be piosoning, and maming for profit as well, or are they just gonna do it for fun?
Horray its no longer work for profit, lets call it Happy Fun Play Time, and we can get paid in, oh, how bout, gallons of smurf piss.
Seattle Renter, you make a good case against the corporation. I never thought of that. And I was 100% pro-corporation for as long as I can remember.
Exactly right, Seattle Renter!!!
Also, the whole concept of “intellectual property” — patents & copyrights, etc. — is an intervention in the free market as well.
If you want “free market” you have to allow totally free competition & hold the profiteers personally liable for any wrongdoing.
It’s why I am staunchly pro-union. The corporations have the money and power to do what they want, at the expense of the workers. They make all the profit and take on very little personal risk. The executives often make enough money and guarantee themselves all kinds of perks to weather out most financial storms.
The workers, OTOH, are the biggest losers if the executives make poor decisions. They lose their jobs, healthcare, pensions, etc. and they usually were never paid enought to have a sizable safety net (savings/reserves).
In order to have a successful economy, you need to have polar opposites — a checks & balances system.
As housegeek mentioned the other day, no system of governance (or lack thereof) will work if you don’t take human nature into account.
And the illusion that they were regulated made it all the easier.
People are very wary of used car salesmen.
They should be equally wary of mortgage brokers.
I wonder why they aren’t?
When you understand that issuing a mortgage is just another way of creating more debt-based fiat currency, the way I view this is that the Fed, to a certain degree, has lost control over the creation of money. (Which they should never have had in the first place)
“the Fed, to a certain degree, has lost control over the creation of money. (Which they should never have had in the first place)”
BINGO! Right on, BubbleViewer. In light of the current circumstances, then, we have an excellent opportunity to abolish the Fed and their “thin air” dollars.
The gold window (r.i.p. 1975-2007) will be slammed tightly shut, rather soon…
The gold window (r.i.p. 1975-2007) will be slammed tightly shut, rather soon…
So will the ability to purchase an AR-15 or AK-47, or any ammo clip over 10 rounds.
So get your copy of ShotGun News and fill the closet.
Sorry for my ignorance. What is the “gold window”? Thanks
Since January 1st, 1975, American Citizens can own bullion Gold, in any form your heart desires…
Once it makes a series of strong racheted moves to the upside, (this will be your signal that there are big problems in little china) the realization for those amongst you, that tend to procrastinate, will be oh so clear, and you’ll be quite desperate to trade your one ply green, black and white pieces of toilet paper, for our real wealth.
We won’t be selling you any. This will close the Gold Window…
The only real easy way to buy gold in the usa, is through coin dealers, and there aren’t all that many of us. We tend to all be Goldbugs, of the highest order, so our bias is baked in.
How does it all work?
Let’s say you want to buy 100 1 oz Krugerrands today.
Today, they’d cost you around $685 a coin, or $68,500, in total. More than likely the coin dealer in question, will not have the 100 kr’s on hand. He buys them from a larger bullion concern, of which there are about 25 players, in the country.
When those 2 dozen larger sharks, decide to go out of business, in an “Atlas Shrugged” fashion… (useful members of society that just disappear)
The window closes.
I’m starting to see more and more TV commercials offering us the great opportunity to turn our old gold into cash. A smiling senior citizen can barely contain her excitement to tell us that she got a check for $1000 for all the gold she sent in!!!
The commercials further imply that your “old” gold is worthless and that they’re doing you a favor by offering you cash for it. Act now before this offer runs out!!!
Sorry for my ignorance. What is the “gold window”? Thanks
I believe what is meant is that aladinsane believes that while currently you can go trade your dollars for gold it will soon become impossible. As in, the people that have gold aren’t going to be trading it anymore. At least not trading it for US Dollars, that is.
Please refrain from selling these clowns your gold.
My guess is you’ll receive anywhere from 28%, to 47% of the actual melt value.
TV commercials are hideously expensive to air, all the time.
No, what happens is that the government outlaws gold. Happened before, happen again.
Euro nations are required to maintain a gold reserve equal to 15% of the euro float. Germany is well above the reserve and is supposed to sell some of its gold holdings - Germany cancelled any further sales of gold.
aladinsane, these are dire warnings.
Let’s agree that what you say is true. Why? Why now? What’s your source of information? Is it more reliable than Gary Watts?
Even if we can no longer own the physical, how do they control the other gold related investments, stocks, funds trusts, futures, options. These would go throught the roof.
This is not 1932 where the FBI would be waiting for you when you opened your safe deposit box.
This is so ridiculous. Gold only has value as a means of exchange. If gold becomes the new money, it will be exchanged for goods and services just as any other money has been for millennia. The idea that people are going to buy up all the gold in the world and sit on their pile while the rest of us wander the world in search of scraps of stale bread to eat is absurd.
Would you prefer that we use Yap Stones or Wampum, in lieu of the curiously attractive yellow metal?
The constitution defines a dollar as 371 1/4 grains of silver. Gold was added later at a 15:1 ratio to silver (this caused problems and was probably unwise). The point I am attempting to highlight is that the constitution was never amended to change this fact and therefore I believe that outlawing gold is unconstitutional because it is specifically referenced as the basis for our dollar. Regardless of the fact that the constitution specifically says that gold and silver is to be the basis for our money, isn’t anyone else a bit offended that the “government” feels it has the power to outlaw the holding of gold? This isn’t the same as outlawing a poison or perhaps assault weapons, this is a private holding of wealth. This is telling you that they are threatened by gold as it takes away the ability of gov’t to continually depreciate your earnings through inflation. Can’t have that now, can we?
I’m highly offended that this country has morphed into a bunch of pussies who look to uncle sam for cradle to grave guidance/assistance and don’t even stand up for their rights or think twice about what they are told. Who the fu*k do these asshats think they are to tell anyone what they can own (outside of the public danger issue)?
I mentioned before that I received a letter back from the office of Senator Judd Gregg (NH) that stated that the gov’t now has the ability to take ANY private/personal assets during a “declared emergency”. Two presidential orders were referenced.
I wrote back that I was offended that someone who represented a state whose motto reads “live free or die” would support such a blatantly unconstitutional order without a “give me liberty or give me death” fight. I received notice of an IRS audit a couple of months later for my troubles. I just want to inform the readership here that this ain’t your granddaddy’s country any longer, so stand-by for some very troubling revelations when the SHTF sometime this decade.
How honest was this country @ one point, some you may wonder?
As per Auger-inn’s quote, the rest of the world was at a 16 to 1 ratio, Silver to Gold, and we were a fledgling country and wanted to prove (I guess) how worthy, we truly were.
The end result of this, was that every last USA Gold Coin, struck from 1795 to 1838, actually contained more value in Gold, than the actual face value.
Those that forget history, are condemned to repeat it.
Maybe the window for the nation-state is closing (1648-2008)?
From the Peace of Westphalia to the Great Debt Collapse of 2008.
Around this time is when GetStucco pops in and says “this is a RE discussion” even though this topic also includes “off topic ideas.” If gold is not an off topic Idea, I don’t know what it is.
As for gold, it seems that when it rallies, there are more posts yapping about it. I’ve been buying the shiny stuff over the years, no matter what price, and will continue to do so - until the “gold window closes.” As for the gubment making it “illegal” to own gold, I will just reread my favorite essay by 19th century juror Lysander Spooner “No Treason: The Constitution of No Authority,” and laugh at anyone who claims to be from “the government” and come knocking at my door asking me for my gold.
As this whole housing debacle reverberates through the economy the subject of gold will certainly be coming up more frequently. I believe it’s a valid subject, but it would be nice if we could get these threads going on Ben’s Money & Metals blog.
There are quite a number of us that frequent M&M. Aladinsane, you’d fit right in, and your insider expertise would be highly appreciated.
p.s.: IMO, M&M is the next THBB, and gold is the next big bubble.
Comment by Auger-Inn
You go Boy! Seriously, give ‘em hell! I wish more people thought like you do. We have put FAR too much blind faith in the government in this country. And in things being “official.” A degree more important than actual knowledge, etc.
Start questioning authority people! And remember that as citizens of a (supposedly) free nation, you are the ultimate authority, not any government agency or entity.
front page right, WSJ
Bob Chapman lays it all on the line. Highly recommended reading.
http://news.goldseek.com/InternationalForecaster/1174499046.php
Americans owe over $10 trillion or over $30,000 per household. The banks are legal shylocks just like the Mafia. The credit industry’s policies are not only egregious, but illegal. It lends to people they know cannot repay their debt. It is known as fraudulent inducement and is punishable with fines and imprisonment. This is borne out by millions of pre-approved credit cards sent to those who cannot possibly pay off the balances. Eighty percent of the blame for unpayable credit card debt lies at the feet of the banks not the borrowers. There are many Americans who should never own homes. They do not make the money to afford them. Besides sometimes you are much better off renting. One of those times is right now, whether you know it or not. Over the next few years in the demise of the housing bubble we will also see the end of the credit bubble. Incidentally, some researchers call a home a debtor’s prison. They could be right.
Great article, Dawnal. Should be a must-read for the masses. Thanks for posting.
Free play of the markets, what a joke. Yeah, like there’s free play of the markets on Wall Street. Not.
Right, but there is the opportunity to buy the debt of foreign governments, denominated in foreign currency. Most of you know my favorite (DULL) is Australian govt bonds: probably as little default risk as US Treasury bonds, and perhaps less risk of great inflation, because they have a better balance of payments w/ China & India a/c exporting natural resources to C&I. A couple of months ago I was predicting USD at 1.27 AUD (then) would sink in 6 months to 1.22 AUD, while the holder of Australian govt bonds would be annually paid 5%+ in AUD. This is a very DULL investment strategy, but today the USD buys 1.246 AUD, so things continue to go my way. (Most of my AUD were bought when USD bought 1.3+ AUD.) My Brazil bonds have done much better, but Brazil is not known as a highly safe haven. (!!!) Iceland is another possibility: high-yielding bonds for debt incurred in the construction of a hydrothermal aluminum smelter.
Also,
http://tinyurl.com/2ueh4y
Japan Land Prices Rise for First Time in 16 Years (Update2)
By Finbarr Flynn
March 22 (Bloomberg) — “Land prices in Japan rose for the first time in 16 years as overseas and domestic investors competed to acquire properties in the country’s three biggest cities.
Gains in Tokyo, Osaka and Nagoya compensated for a drop in regional areas. Average commercial land prices in the three cities rose 8.9 percent and residential 2.8 percent in the year ending Dec. 31, the Ministry of Land, Infrastructure and Transport said in report released today.”
Maybe a weekend topic? In say 3-5 years might we go back to the days of the Japanese buying up everything in sight - except this time possibly even moreso than before?
Having lived in Tokyo from 1990 to 2000, I see a key difference. Although there was a real estate bubble in Japan in late ’80s, I don’t think the average Japanese person had access to or did anything like a HELOC. For the most part, during that entire time the real estate market was tanking, Japanese were prodigious savers, adding to their already sizable stockpiles in the Postal Savings System, for which they received less than or about 1% interest, as I recall.
Still true.
When I used to ply my trade in Nippon..
One thing that always amazed me, was the piles of cash, that every Japanese, seemed to have on their person. Credit cards were used rather sparingly, compared to our unique approach towards mutually assured financial destruction.
Mutually Assured Financial Destruction (MAFD)
… and when they did carry plastic, it was always in the form of pre-paid debit cards, IOW plastic cash and not debt. We are soooooo much more screwed.
I’d love to hear more about Japan from someone who’s been there, done that. Were exotic, exploding mortgages available in Japan? Or, did they just use coventional, amortizing loans of very long duration (I have heard of 100-year loans there)?
Also, what is the default mechanism, in a legal sense? If Joe Sixpack-san walks from his mortgage, does the bank take the house and that’s the end of it? Can a Japanese lender go after a deadbeat, legally?
What about the social/cultural aspect - in our country, it is a “tragedy” when someone loses his house to foreclosure. How do the Japanese view this? Is it a “tragedy,” socially, or is it a source of great shame, to be avoided at all costs?
Thanks for any insight - I have heard predictions of a Japan style, multi-year real estate decline in the U.S. I am skeptical (usually this stuff ends with a bang and not a whimper) and want to understand what happened over there.
DC_Too:
As per my message above yours, the Japanese seem like the very model of financial jurisprudence, compared to us, wouldn’t you say?
Indeed. However, their RE bubble was a monster example of levered, financial mania. I am trying to figure out why it took 15 years to unwind. Talk about “sticky prices…”
I remember reading a story about the Australian Consulate, which just happened to be on a rather expensive piece of the Ginza, and when the value went up to a few Billion Dollars, the Aussies decided that it might be a good time to sell and they moved to cheaper digs.
Might have been the only consulate that was sold in a bubble, ever?
Worked in Tokyo 1990-1993.
Japaneses workers are paid monthly, not biweekly or bimonthly. Furthermore, biannual bonuses amount to 2-3 months pay. If you had to live paycheck to paycheck, you had to plan for a month. Working hours are much more than reported. You can’t be spending money when you are working. You had no choice but to be a saver. Consequently, Japan has always been a cash society.
Credit Cards were not accepted then, but are accepted everywhere now.
By “biannual” do you mean every two years or every other year?
I’ve always heard Japanese spend most of their waking hours after the workday in bars, restaurants, strip joints etc with other employees and business contacts. Then they get home at 10-11pm, go to sleep and repeat for 40 years. So “free time” is still work in the sense that you’re spending it with the same people, but you are paying for it.
RE is up about 20% in last 5 years in SWZ- the healthiest economy in the World
The Germanic types have decided to sit this one out…
Nothing happening in Austria, Germany or Switzerland, on the real estate front the past 6 years.
I wonder how things will transpire financially for these brave few countries, after things have run their course?
They would pretty much represent the only holdouts, in a 1st world, that has lost it’s mind…
That’s because German underwriters still look at things like the property’s cap ratio (the inverse of P/E) when deciding when to make a loan. They remember the lessons of their hyperinflationary history.
Austrian and Swiss real estate - I don’t know. In Germany, we still suffer from the echo of the hyperinflations 1923 and 1945-48. With this inflation experience in mind, real estate was seen as the best investment until about 1980 when prices suddenly stalled due to high interest rates (worldwide) - and prices haven’t moved much since. The contracting population hasn’t helped. There are, of course, regional differences, metro areas like Frankfurt and Munich still develop their suburbs.
Below is an article that came in a newsletter from Sage Realty. Total spin. When I read down farther it said they had surveyed mortgage brokers, real estate brokers, appraisers, etc. Figures.
UNIVERSITY OF FLORIDA STUDY
GAINESVILLE, Fla. – March 9, 2007 – According to a University of Florida study released today, hopeful homebuyers in Florida should act now: The price is right as the state’s single-family residential housing market bottoms out. The price is right, so buy now.
“If you’re thinking of buying a house, there’s probably not much to be gained by holding out at this point,” says Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies. “It doesn’t look like prices are going to fall anymore.”
One possible explanation for the housing market turning the corner is a restricted supply of land for residential development, Archer says. The shortage meant there was less overbuilding than there might otherwise have been, he says. [Read more...]
As I read that I groaned.
Who in their right mind would put their name to that…
Florida isn’t just burnt toast. Its in competition with Detroit to be the #1 krispy critter.
I’m actually a bit speechless that UF would publish that.
Neil
ps
no popcorn, anything that is such a blatant marketing lie… ugh.
That’s twice in the past 2 days that I’ve noticed Neil foreswearing popcorn. Maybe that’s why ConAgra (owner of Orville Redenbacher) is down three cents in this morning’s trading?
1) The author, Wayne Archer, gets grant money from the Florida Real Estate Education and Research Foundation.
2) The Dept. of Finance, Insurance and Real Estate at UF (and especially the Center for Real Estate Studies) has a list of 1000 RE alumni/supporters and exists to give degrees such as the MS in Real Estate.
Put these facts together… Real Estate Market Collapse = Center for Real Estate Studies DOA. So, what do you expect them to say?
http://www.itulip.com/forums/showthread.php?t=1108
Thx Chick! Excellent post…
I’m saving this to my harddrive.
Most sobering sentence to me: “In other words, from a European perspective, the recent gains of the Dow have virtually vaporised in currency declines, again, or to put it into this perspective, any recent investment into US shares is not paying really at all, currency-adjusted. ”
I think this downhill train is accelerating.
This comes from Turkey. A place most Americans couldn’t place on the map and if they had any memories of it at all, they’d have probably come from the movie “Midnight Express”…
The U.S. Economy: Dangerously Sick
Normally I devote my column to an in-depth analysis of the Turkish economy in order to inform my readers, mostly foreigners, about the risks and opportunities of our economy. However, it is becoming increasingly obvious that instead of talking about domestic risk factors, we must concentrate on external ones, mainly stemming from the US economy.
Even if economists are, nowadays, talking about Chinese stock market fluctuations and their impact on the rest of the word, I think this is just a pseudo agenda, hiding the most threatening and impending agenda: the American disease.
To refresh your memory, on Jan. 31, 2007 the president of the United States gave his speech on the “State of the Economy” citing strong economic growth, record Dow Jones performance and low unemployment rates. Despite this seemingly rosy picture based on some selective figures, today we are talking about the fundamental deficiencies of the US economy as a major source of global instability in the world economy.
Got Gold?
Chic always posts good material….This was my most sobering sentence;
We describe it as the “Fly around in the fog until you hit something, then cut rates” policy.
In other words, we are going to be reactive instead of proactive so we can’t be blamed for causing the problem…..Fasten the seat belts or should I say, shoulder harness….
I realize this is slightly askew of what you’re talking about, but as I was reading your comments, my wife walked in and said that she was amazed at how many European buyers she’s had recently on her ebay sales. (I’ve challenged her to pay for my daughter’s preschool by selling all my old toys.) Maybe the dollar is a little weak?
The winds of financial change are always blowing~
in 1985, I bought a one way ticket from Gatwick to el lay for 99 quid, from a bucket shop.
It cost me around $95.00 to fly home.
I’ve had a website for nearly 10 years. My international sales have usually run about 10-15% on average. The last couple of months, my sales have been down below normal but my international sales are running about 50% of the total.
This is exactly what I have been saying: The stock market has become an arm of monetary policy, thanks to the Greenspan put (which survived the tenure of its creator).
More and more I’m coming to the realization that it’s a great idea to have a bit of a hedge against disaster.
So…
If a person wanted to have a bank account denominated in a foreign currency, which currency might be the best choice? My current bank is international and I could easily add a Euro account in their office in the Netherlands. But then I was thinking about Switzerland. It appears that you can have a Swiss account in Euros, Dollars, of Swiss Francs. All well and good, but it’s hard to find much info about them, although it looks like if you have your account in Swiss Francs you have to pay a little tax to Switzerland in addition to your taxes on the interest earned here in the States. Thoughts? Comments?
Second, are those gold and silver ETFs really worth owning? If the dollar crashes and gold is important, are these shares actually worth something? What about European ETFs? I say this because my retirement account doesn’t have any options for actual foreign purchases, but I can get any ETF I choose.
Brian,
If you are going to play the metals game, it’s all about physical delivery. It’s a weird concept in our remote control financial world, that we’ve acceded to, but that’s the way you have to play.
aladinsane,
Isn’t a gold EFT, in effect, “true money”? The shares are backed by physical holdings of gold, are they not? Much like the dollar once was.
So, if there is a collapse in the value of the dollar, and the price of gold goes way up, the shares of the EFT go up in kind. I don’t understand why physical delivery is so important (from your perspective). Please enlighten me….
In my 33 years of buying and selling more precious metal than you could shake a stick at…
The 1/2 dozen or so incredibly blatant frauds, perpetrated against the public, all involved companies that would “hold” your metal for you.
Just google “international gold bullion exchange” for the appetiser course, of what can go wrong.
Welcome aboard.
I personally believe the Euro is in a bubble, but the bubble should carry to 1.55 -1.70 range.
The Loonie is good, but Canada’s economy is tied to the US. Personally - I prefer the Scandinavian countries. Most have gotten out of dollars as reserves. Sweden has Kristina Persson, we have Ben Bernanke - I prefer Ms. Persson.
“…For a small country like Sweden that is dependent on foreign trade, an abrupt adjustment of the imbalances could have a severe impact on the economy. A rapid fall in the dollar rate would probably be followed by an upturn in the euro, which could push down European companies’ competitiveness and slow down growth in the euro zone. This would subdue growth in Sweden, which has around 40 per cent of its exports to the euro countries….”
The link is to the Riksbank speeches 2006 most deal with the US Current Account Deficit and US budget deficit and how Sweden can protect itself. An excellent read.
http://tinyurl.com/2lmowv
Sweden is out of dollars.
Oh, those rogue Swedes~
I personally recommend physical gold either held directly or allocated in a secure facility such as goldmoney.com. James Turk, who run goldmoney.com is pretty well respected. You can hear him in the periodic “gold roundtables” on financialsense.com broadcast.
But for trading, the ETFs are great. Just wait for one of the 30% selloffs that happen every year, close your eyes, and push the “buy” button. But easier said than done. You really need to take a long-term view, and it’s best to wait for a big sell-off before buying. They come at least once or twice a year and the downside risk is much less.
For all the people who poo-poo gold and silver, I would simply say that gold and silver have almost always been “the people’s choice” when it comes to money. That is, when allowed to by governments, people naturally gravitate toward using these materials as money.
When you sell them you’ll be paid in dollars by the wheel barrel full.
What really caught my eye:
“… and all eyes on the dollar, as the entire planet is now waiting to see if the U.S. will default on its more than $8 trillion foreign debt via inflation.”
Of course, the US will default on it’s debt via inflation. It’s happening right now.
Ever wonder why your taxes never went up to pay for Katrina, the war(s), etc? The Fed or other central banks essentially bought the bonds with money created out of thin air (ie inflation). The mortgage/credit bubble too, all money created out of nothing, more inflation. The politicians all scream no more taxes, but instead of taxes, the money is just created (inflation).
Down goes the dollar…
I thought the figure was low and went to the treasury
Gross external debt per US Treasury as of Sept 30, 2006
10,303,546 Millions
http://tinyurl.com/2jeatq
Another blurb
Lehman Bros. today issued a research report on the declining U.S. housing market and its implications for the U.S. economy. The report makes its forecast using a Best Case/Housing Shock analysis.
Report highlights
Best case, GDP slows to 2.4% in 2008 (similar to the Goldman forecast)
Housing Shock case (another 4% national decline in housing prices) slows the economy in 2008 to 1.6% “but no recession”
$459 billion in mortgage loans default over the term of these loans, $129 billion in 2008 alone
I think their bad scenario is a bit too mild.
If that’s a “Shock” how would they classify a 10% national decline? Or 20%?
ajh,
100% agree. No historian will refer to the 2006 decline as a shock. they will refer to 2007.
I think we’re already in a recession and its just going to take a bit for the indicators to have enough time under their belt to measure the downturn.
Neil
Being that Lehman has a large vested interest in housing and mortgages (BNC, Aurora, et al.), I’d take their outlook with a ton of salt.
Sting’s “King of Pain” seems highly appropriate, let’s change the words a tad…
Real estate aint’ so fun today
prices are lower than say, yesterday
There’s a condo development in an area, not so hot
and because it’s the i.e., the foreclosures may never stop
I have stood here before, hey I remember 92′, in el lay
when one couldn’t give a house away
I guess i’m always hoping that people aren’t insane
But, let’s face it, your place has the look & feel, of financial pain
there’s a little black spot on the Fed today,
more inflation than yesterday…
There’s a little red spot on the books today
It’s just a bit bigger than yesterday
(Housing Shock case (another 4% national decline in housing prices) slows the economy in 2008 to 1.6% “but no recession”)
It could be more of a shock than that.
According to the NAR, the median existing home price was $170K in 2003, when interest rates were at their lowest. If they had gone up 5% per year, more than inflation, they would have been at $197K in 2006. They were at $222K, and would require a 12.7% decline just to get back to that 5% increase.
But the increase was concentrated in certain markets, where it was much greater, while in other markets there was overbuilding. Bottom line is the real decline has to be 10% or more nationally, more in many bubble areas. The only way to prevent a steep nominal decline is more inflation.
I cannot fathom why Farallon (one of few hedges i truly respect) extended 200M to Accredited unless they are using the loan to prop up the stock (from 3 to 10 it went, down from insanely high value months ago) so that they can unload their long. Anyone care to share an opinion?
Loan? The word on the street is that Farallon is in talks to *BUY* Accredited.
jb
+ still
How’s the Kara Homes case going?
Here is the newest piece out:
http://www.nj.com/news/ledger/index.ssf?/base/news-11/1174541486174490.xml&coll=1
Mark and Debbie File’s dream home is $8,000 from completion.
That includes the two air conditioning units stolen last fall. And the stainless-steel refrigerator and microwave that were ripped from the walls over Labor Day weekend — perhaps, as Mark File suspects, by a contractor angry that the builder, Kara Homes, was behind on payments.
The rest of the development, Horizons at Birch Hill in Old Bridge, is much the same, partially finished and in disarray. The clubhouse that was supposed to open last May is incomplete and cordoned off. The heated pool is just a hole in the ground. The tennis courts and bocce court were never started.
While “No Trespassing” has been spray painted on the boarded-up garage doors of unfinished homes, it has done little to deter vandals. One was so brazen he stole the front door off a unit.
This is what happened after one of New Jersey’s largest homebuilders filed for Chapter 11 bankruptcy protection last October as the housing boom went slack.
The court proceeding halted the development of two dozen Kara communities across the state, leaving homeowners living on half-built streets. It also has stranded some 300 buyers, including the Files, who made down payments on homes but have yet to move in.
Everyone involved has a tale. But those at Birch Hill may be in the toughest jam. Of the 228 units originally planned, only 80 have been completed. Buyers of another 45 units have made down payments but have yet to close. Various liens on the development exceed its appraised value by $12 million, an amount lawyers and others involved with the proceedings said was the biggest gap of any Kara community.
On Friday, Amboy Bank asked U.S. Bankruptcy Court Judge Michael Kaplan for permission to foreclose on Birch Hill, located a half-mile mile from the bank’s headquarters on Route 9. Homeowners said they would be happy if that happened, if for no other reason than it would mean movement on a development that has been brought to a standstill.
This one is even more interesting:
DWEK ALLY PLEADS GUILTY
BROKER: Admits helping in plot to defraud bank of $22M
http://www.app.com/apps/pbcs.dll/article?AID=/20070322/NEWS/703220402
A childhood friend and mortgage broker to embattled real estate tycoon Solomon Dwek pleaded guilty to bank fraud Wednesday, saying he helped Dwek cheat PNC Bank out of more than $20 million.
What’s to buy? They sold their loans. Do they want their office furniture and equipment?
13% loan they are to recieve $26 million anaually on that “loan”
and options on the stock at $10 which are already in the money almost $2 as of yesterdays close
the term band aid on a gunshot wound comes to mind
Dracula making his move on the gunshot victim is what springs to my mind.
I heard Dracula is oh so close to being foreclosed on…
Sad, you’d think this bubble wouldn’t effect immortals?
They got 13% +10m warrants at $11. Undoubtedly there are some fees and some security in terms of mortgage backed securities (MBS) offered as collateral.
If they short 1yr @5% they collect 8% on the note plus they short 10m shares protected by the warrants in the unlikely event that the market re-accelerates.
If LEND gets toe tagged they make $100m on the short + whatever interest they collect + $0.80-0.90 on the MBS since they bought them at $0.40/$1 to begin with.
Plug those into a probability distribution and the expected return is north of 25% on a risk of
I thought it was 3.3m, not 10m.
jb
yes, they get 3.3M warrant so they cannot completely hedge their loan. But they get first lien all the remaining free asset + second lien for everything else pledged for the loan. They are in a no-lose situation. It is more of a reflection of how desperate LEND need money and the fact that they cannot find lender with better term speak volume of how bad their book and business now…
Yeah back in the zany daze of 2000, there were “floorless convertibles” to handle that type of situation. Damn, those were easy pickins!
Noice!
here comes the answer from rodger rafter
Farallon has an interest in keeping LEND afloat. They bought 1,975,000 shares during Q4 of 2006, most of that was probably above $30 as they hit 1,579,349 shares (a 6.3% stake) on November 2nd.
here the link to the full post
http://forum.themarkettraders.com/read-m/36/4739/4739#msg-4739
Nothing like throwing good money after bad. Happens in Vegas all the time.
Vegas is the big open sore in the desert that it is, for 2 simple reasons…
People don’t bet enough when they are winning
People bet too much when they are losing
1 simple reason:
People bet.
Beavis and Butthead become real estate investors
http://www.youtube.com/watch?v=zpv8gzUZemY
http://www.cnbc.com/id/17724506
CNBC opinion poll, is the MTG mess bigger then we think? How concerned are you? Give them a peice of your mind..
I believe that the current mortgage loan debacle and related events have all been carefully thought out by the powers that be, perhaps decades ago. To the extent that the self professed enlightened individuals on this blog are characters in the play, then reading and posting here are a waste of time.
“Never ascribe to a conspiracy that which can be explained by a stuff-up” (French words to that effect)
Napoleon
I thought it went like this:
“Never ascribe to malice, that which can be explained by incompetence.”
The conspiracy comes during the cover-up and assignment of blame.
Also Occam’s Razor:
Entities should not be multiplied beyond necessity.
Daniel -
Speaking of a waste of time: Your comment would insightful if you cited some basis for your beliefs. Most of the posts I read here - yours excepted- are well-reasoned and often cite well-researched statistical analyses to support their positions. You, on the other hand, seem to believe in some unthwartable “powers that be.” Under that hypothesis, all discourse about national an international events are pointless.
Got Thorazine?
Mike
You are right on, Daniel. There are many sources that support your beliefs but I doubt that many on this blog would take the time to look at them.Here are a couple easy ones:
Lou Dobbs touched upon the New World Order agenda here:
http://www.youtube.com:80/watch?v=XdxI0zClV_Y
The effort is discussed in detail here:
http://tinyurl.com/2o97us
The United States is blocking the effort to create a one world government. In order to bring it into line, it is necessary to destroy our economy. The housing bubble will result in massive numbers of foreclosures and bankruptcies, making Americans more susceptible to the North American Union, a key step to One World Government and the loss of our sovereignty. It won’t be long before the dollar collapses and a new currency is proposed…the “Amero.”
Study up on this issue before it is too late.
http://www.augustreview.com/
How to understand Globalization
Follow the money, follow the power
Discern illusion from reality, especially with media outlets
Listen to experts who offer a meaningful critique
Study & verify sources and footnotes
Apply liberal doses of common sense
What is Globalization? It is the collective effect of purposeful and amoral manipulation that seeks to centralize economic, political, technological and societal forces in order to accrue maximum profit and political power to global banks, global corporations and the elitists who run them.
“Free Trade” is the central mantra. Globalization is set against national sovereignty, closed borders, trade tarrifs and anything that would restrict its goals and methods used to achieve them.
Globalization promotes regional and global government, a one-world economic system of trade and a form of fascism where global corporations and their elite control the policies and directives of individual governments.
The original and primary perpetrators of modern-day globalization number only in the 100’s, representative of which, but not exclusively, are members of The Trilateral Commission.
To understand the genesis of the Trilateral Commission, read the transcript of the 1979 radio show between Antony C. Sutton, Patrick M. Wood and George S. Franklin, Jr. — Coordinator of the Trilateral Commission!
that is so deep in so many ways
Personally, I found it very suspicious that people were herded into taking on huge sums of debt at the very time when world petroleum supplies, upon which we depend for economic growth, are peaking. Debt-based monetary systems only work in an environment of increasing energy usage, because the debt must always be repaid with interest (think of money as a symbol for energy). In an environment of declining overall energy, I have serious doubts about the stability of our debt-based monetary system. I have similar doubts about my own ability to repay any long-term loans. John Williams of Shadow Government Statistics has shown that for the past couple of years, we have not been growing our economy; it has basically been a lot of manipulation of statistics by the govt.
” it has basically been a lot of manipulation of statistics by the govt.”
And I’m tired of all the spin from everywhere. It just seems like everyone in the government and financial sectors are lying sacks of feces, with a few rare exceptions. And then the media just trumpets whatever the spin is.
I’m cynical, but I just see the housing bubble, the Wall Street spin and the current government as all part and parcel of the same phenomena that has manifested itself for the past six years. Liar, liar, pants on fire.
Accountability will have it’s day again
Soon.
“people were herded”?
You make good points, but at the same time it is doubtful that any of the BMW & MB drivers who try to run me and my Schwinn off the road nearly everyday were herded into anything. This society rushed headlong into this with open arms.
It’s the Truman Show! My favorite tinfoil hat conspiracy theory!
In order to believe your conspiracy theory, we would have to believe that republicans and democrats are secretly friends, and that they are much, much smarter than we give them credit for.
I can assure you, they are not.
Absolutely, brings to mind the old saw about things being more easily explained by incompetence than conspiracy.
Actually, in the U.S. House and Senate they ARE friends. I’ve noticed this on the state level, too. All their fighting is a show. I once asked a Republican Party organizer, “Who decides which party will take which side on which issue?’ and he laughed, and he explained it in some detail. It’s a game, like football, except for ordinary people, who think the issues are authentic and the political posturing real. With very rare exceptions, politicians couldn’t care less about anything except for their offices, perks, parties (as in celebrations), egos, and winning. With very rare exceptions, they are not in politics because they are visionaries with ethical interests, but because they are NOT visionaries, and have no ethics.
Thanks for your anicdote, you really changed my mind…
As a Washingtonian all my life and having caddied for more than a dozen big time politians (senators, congressmen, a vice president) and about 100 lobbyists and minor politicians, I can tell you first hand that there is NO conspiracy among them. –Now that’s anicdotal evidence.
Yes, they have solid working relationships, but they are not deviously evil people working in cahoots.
Do you really think Leahy/Kennedy and Lott/Warner see eye-to-eye on some sort of plot to defraud and impoverish the American people and are capable of keeping separate public and private personas for years on end?
Re-read my post. I didn’t say there was a conspiracy. I said politicians on the whole are egotistical twits, and that much of what they do is just posturing.
Daniel,
Much much longer than that.
Not a waste as you are able to see that at least a few others on this planet have your same view point. Helps in not diving back into the popular thought view.
AJH:
Napoleon was the chosen “golden boy” placed in power after the French Revolution, which was the result of an orchestrated hyperinflation episode beginning in 1790s. For a short well-regarded assessment of this episode please refer to:
http://www.mises.org/studyguide.aspx?action=author&Id=745
The Napoleon quote you have their is purest misdirection.
Or keep your world view if its working for you, I care not.
You are committing a standard ad hominem fallacy.
It does not matter who said it. The point remains:
“Never ascribe to malice, that which can be explained by incompetence.”
Argue against the proposition not the messenger.
Ah yes, “the powers that be” enrich themselves by (somehow) getting thousands of people to take out stupid loans.
Why go to all that bother? If there are powers that somehow gain by convincing people to do stupid things why don’t they just cut to the chase and just convince the dopes in society to hand their money over directly to them?
If so many people are that stupid and the “powers” are so almighty and clever, why go to all this bother with loans?
Don’t get me wrong; plenty of people are fleeced by all manner of schemes continously (as they have throughout history). But isn’t it a bit hard to concieve of some group of people who can magically incent thousands to make, individually, reckless financial decisions?
What you describe has been done already. Do you have the power to create more Fed Reserve Notes? Only that bank, and it’s members in lending, have the power to create money. That is exactly like them taking your money. It is just a little harder to grasp.
Think about it. When you become enraged after realizing you’ve been had, then you’ll know you understand the game.
Subprime Loan Meltdown Engulfs Even Borrowers With Good Credit
For Some Subprime Borrowers, Few Good Choices
plus 2 videos from schiff and roubini.
if you havn´t seen the clip from roubini make sure you see at least the 2 minutes
quite a surprise …..
http://immobilienblasen.blogspot.com/
http://video.google.com/videoplay?docid=6897935140271687860
6 excellent minutes of the current history lesson, thanks TxChk for your above link also which led me to this
Geez, could’ve done without the robo-cheesy country music though
The Milky Way
http://wallstreetexaminer.com/blogs/winter/?p=548
Russ — I could not find Milky Way in the glossary of Russisms. Can you shed any (star)light on what constitutes this cosmic entity?
(When I put on my tinfoil hat, the Milky Way looks much like the Working Group on Financial Markets…)
Say, Russ
I mentioned Belushi yesterday and there he is on your web page today…
Coincidence, I think not~
ha
Is Milky Way money helping the DJIA hold on to its Fed nonaction gains?
http://www.marketwatch.com/tools/marketsummary/
The problem with so much Fed saber rattling on inflation with no action is that it may actually make inflation worse, as markets may interpret the jawboning as cheap talk with no willingness to back it up with action. Inflation is about expectations to a large degree, and a lack of action in the face of rising signs of core inflation tend to erode a new Fed chair’s reputation.
From the cnn website
Maricopa added more residents to its population in the 12 months ended July 1, 2006, than live in the city of Savannah, Georgia.
Ben and Txchicks states seem to be the winner for population growth, someone needs to tell the realtors here… because they still spout the “thousand people move to florida a day”
People must really hate snow. They are moving to deserts and hurricane zones, and away from rolling green hills and lakes full of fresh water.
I’m from California and I love snow. I really want to move to upstate NY. My husband is from upstate NY and wants to move back to California. Sigh.
I got a real belly laugh this a.m. reading this thread on the SDCIA board. Talk about a confederation of dunces. The Texans will shear these scheep and leave em naked:
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1763981
Here’s what happens to communities when builders go under…
http://www.nj.com/starledger/stories/index.ssf?/base/news-11/1174541486174490.xml&coll=1
Just got back from the Pensacola area. It was amazing the number of billboards and radio ads practically begging for you to do a cash out mortgage to build a “Florida Room”…i have no idea what a Florida room is.
Also, I guess people are still moving to Florida in droves with nothing in their pockets. Almost every rental car at Avis was from out of state. I’ve never seen so many one-way cars in one place.
A “Florida Room”, as I understand it from my years of living in Florida, is basically a patio or screened porch outdoor space converted to a windowed living area under air conditioning, or a sort of indoor/outdoor type room.
I would just call it a den or family room with a lot of windows, screened or otherwise. It’s the room where people watch television–as opposed to the living room, where they do nothing unless company arrives.
You can call it the Texas Room, where everything gets bigger.
Really? Heck I have one of those in Texas. I call it the “home gym” though.
It’s also known as a California room or Arizona room. I would call it a sunroom.
A lot of older couples who own their own homes might want to designate “FB rooms” for their soon-to-be-foreclosed-on offspring.
Florida Room (n) - The first thing to go during a Category 3+ hurricane.
Interesting info on the timing of ARM resets - tried to google for confirmation, but without much luck (admittedly a cursory search). The graph shows $ in ARMs resetting vs. time
link not showing (may be in purgatory) - heres the address
http://www.autodogmatic.com/forum/viewtopic.php?p=1226#1226
P.S. This chart is actually linked in jmf’s link to immobilienblasen, but with some discussion as well
jmf’s Immobilienblasen post with the graph is this one: “For Some Subprime Borrowers, Few Good Choices / NYT” (3/21)
“and with this scare arm graph it is likely that the foreclosures will increase dramatically”
Picking up a small position in index puts, knowing I am probably quite early.
which month? I’m on the fence between April & May index puts.
May/June
Does anyone know what precious metals have returned over the last 30 years? Is it as high as 1% annually? Has it managed to keep up with inflation? Has it done it’s job of protecting purchasing power?
Some good custom graphs if you click on the price links -
http://www.thebulliondesk.com/
Ventura County Star is laying off 22 employees because of lack in advertising.
NY Times on Foreclosures & Divorces.
AFTER 20 years as a lawyer, David Volman has handled enough divorces to know that many marriages collapse under financial strain. So when his practice, in Shelton, began receiving an unusually large number of divorce cases last summer, Mr. Volman took it as an omen. “Divorces go hand in hand with foreclosures and bankruptcies,” he said.
Sure enough, in the first two months of this year, Mr. Volman took on some 50 bankruptcy cases, an “enormous amount,” he said, given that in all of 2006 he handled 19.
Many of the cases involve working-class couples in the Lower Naugatuck Valley who can no longer afford their mortgages. “People are walking into my office and saying: ‘Here are the keys. Do whatever you have to do. I just want to get out of this so I can sleep at night,’ ” he said.
A slower housing market and the proliferation of risky mortgage products continue to drive up foreclosure rates across Connecticut. Preliminary figures for February gathered by RealtyTrac Inc., a national online marketplace for foreclosure properties, show a total of 1,451 foreclosure filings in Connecticut, a 61 percent increase over the corresponding period last year.
That surge followed a steep rise in January as well. The 1,287 foreclosure filings in Connecticut that month represented a 67 percent increase over January 2006, according to the company’s figures.
……
BREAKING NEWS
In remarks prepared for Senate hearing, state regulators say they oppose any bailout of subprime lenders, Reuters reports. More soon.
This “bailout” thing is a nonstarter at this point. Maybe after several years of widespread pain across the economic spectrum. People are such wusses.
Interesting (for me, anyway) piece of trivia I just picked up from a comment at Russ Winter’s blog.
The same Senator Dodd that’s talking government bailouts today was involved in getting Glass-Steagall repealed back in the 90’s.
http://www.ustreas.gov/press/releases/ls241.htm
(Senator Sarbanes speech mentions him by name.)
So Dodd had a direct role in the deregulationary juggernaut that brought us the mortgage mess. What beautiful irony that he is leading the charge to figure out who created it. As a poster suggested here yesterday, somebody ought to hand the guy a mirror.
I agree with the U.S. states. Let Senator Dodd ask his investment bank campaign contributors to pay for the bailout.
http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-03-22T140125Z_01_WBT006708_RTRIDST_0_USA-SUBPRIME-STATES-URGENT.XML
Amazing charts:
http://news.goldseek.com/TacticalInvestor/1174575780.php
Front page SD Union Tribune story on outmigration. I thought everyone wanted to live here? Who will buy all the new McMansions priced at $800K on up, if the only sources of growth are immigrants and births?
———————————————————————————–
Region sees more leave than move here; housing costs blamed
By Lori Weisberg
UNION-TRIBUNE STAFF WRITER
March 22, 2007
For the fourth year in a row, San Diego County saw thousands more people leave for other destinations than relocate here, cementing its position as one of the nation’s top 10 losers in that category, new census figures reveal.
SEAN M. HAFFEY / Union-Tribune
An Atlas Transfer & Storage worker loaded Lois Howard’s belongings yesterday for her move from a mobile home in Santee to a home in the more affordable Desert Hot Springs.
That ranking is all the more stunning given that two of the counties ahead of San Diego – Orleans Parish and St. Bernard Parish in Louisiana – were devastated in 2005 by Hurricane Katrina, which forced hundreds of thousands to relocate, many of them permanently.
Between July 2005 and July 2006, 42,034 more people moved from San Diego County to other places in the country than came here from elsewhere in the nation, according to county population estimates released today by the U.S. Census Bureau. That put San Diego eighth in the nation among counties with high domestic out-migration.
http://www.signonsandiego.com/news/metro/20070322-9999-1n22census.html
I may have mentioned this but back when I lived there (in 1988 etc), the law firm that both my husband and I were at was recruiting at the UT Law School and having good luck getting the Texans to come to San Diego. That was until they saw the housing prices even then! Most stayed 1-2 years at most and then went (unhappily) back to Texas because it was just impossible to buy anything decent in San Diego and have any money left over.
Of course, 1988 was approaching another bubble price peak. The trick to moving from the heartland to buying a piece of California real estate is to keep your powder dry until the point when prices have troughed (1996, 2012, etc.)…
While I don’t doubt that there is a large net out-migration from San Diego County, these numbers are based on US Census estimates. All throughout the 1990s the Census was putting out a lot of estimates that ended up being dead wrong once the 2000 census happened. There’s little reason to believe that the Census has gotten any better at estimating things…
Again, I’m not saying it’s not happening, just that these stats are based on numbers that are, at best, estimates, and could very well be random guesses by folks in Washington.
My guess is that the primary San DIego demographic demographic since 2000 has been outmigration of wealthy white households with displacement by less wealthy Hispanic households ARMed with subprime loans. I cannot speak to the magnitude, but I am 99% confident that this is an accurate qualitative description of the trend.
I’d say you are right, GS.
Another problem San Diego has is that the pay is terrible even for white-collar work. I’ve read numerous articles bemoaning the fact that companies are having a hard time finding analysts (my particular line of work), but then you find out that they only want to pay $30-40k a year. I’m sorry, but for that price the only analysts you are going to find are glorified calculators without any original thoughts in their head. These are the people who can use spreadsheets, but have no comprehension as to why the functions work and heaven forbid the data available changes or these pre-programmed spreadsheets they have been given to plug numbers into break.
Unfortunately SD employers have bought into the “Sun Tax” hype. Orange County doesn’t have this problem, which is why I work there instead.
Hear hear!
You’d think that with the current hiring conditions somehow the employers and collective HR departments would get a clue.
They’re penalizing their own talent pools. Period.
Greeley, Colo.: a front-runner in foreclosures
http://tinyurl.com/3cfg6g
Hot stuff - population growth slowing in DC suburbs. Loudon still growing (albeit slowing some), Fairfax almost flat in 2006. Any other census release stories out there?
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/21/AR2007032102712.html
The galloping growth of Washington’s outer Virginia suburbs is slowing at last, according to Census Bureau estimates to be released today, with high housing costs beginning to dull the appeal of counties that have long been a magnet for newcomers.
Loudoun, the nation’s second-fastest-growing county in 2005, dropped to fourth place largely because only 7,506 people moved in during 2006, compared with 12,002 the previous year.
Fairfax’s growth rate also declined, but for a different reason: Ever more residents are moving out of the county.
Tis true (I live in Loudoun). The population (and subsequent home price) boom was fueled mostly by post-9/11 govt’ spending for military and homeland security. That has leveled off relatively-speaking, so thus also is the population. Still growing some, but just not as fast.
Several developers’ projects are being withdrawn (Greenvest - 15,000 homes) or rejected by planning commissions (e.g. Ridgewater Park - 1,500 homes). I’m sure this is very much driven by the housing bust and the population growth slowdown.
Here’s a gem from that article -
————————————-
In Anne Arundel, where census figures indicate a net loss of 97 people, county demographer Kavi Maddula said he had not yet done a population estimate for 2006. But he said that the county issued more than 2,300 building permits during the year, a figure that suggested to him that the population had grown.
“I haven’t seen this data, but I would be surprised if those numbers were correct,” said Maddula, who said his figures indicated that the county had 513,700 people in 2005. “If it were losing population, I don’t think we would have the kind of activity that we’ve had in residential and nonresidential construction.”
——————————–
LOL - apparently the light in his head hasn’t come on yet.
Out today: No surprise except for January Revision.
March 22 (Bloomberg) — A closely watched gauge of the future direction of the U.S. economy fell by the most in a year last month as consumer sentiment weakened and builders scaled back construction plans.
The Conference Board’s index of leading economic indicators fell 0.5 percent after a 0.3 percent drop in January that was initially reported as a gain, the New York-based group said today. The gauge points to the direction of the economy over the next three to six months.
“It’s suggesting we’ll continue to have a period of slow to moderate growth,” said Kevin Logan, chief economist at Dresdner Kleinwort in New York. “The softness in housing construction will persist for some time.”
A wave of subprime mortgage defaults may further shake the confidence of consumers, whose spending has been a mainstay of the expansion. Continued economic weakness increases the odds of an interest-rate cut after Federal Reserve policy makers yesterday stepped back from their preference for higher borrowing costs. …Seven of the 10 indicators that make up the leading index are known ahead of time: stock prices, jobless claims, consumer expectations, the yield curve, building approvals, supplier delivery times and factory hours. The Conference Board estimates new orders for consumer goods, orders for non-defense capital goods and money supply adjusted for inflation.”
Bloomberg
http://tinyurl.com/348mfg
LOL with 7 out of 10 indicators known the new orders for consumer goods and orders for non defense capital goods really tanked.
Unless this time is different, then we are headed into a recession, like the other seven times out of seven since 1955 when U.S. residential construction took a 25%+ haircut. This looks to me like a direct consequence of flying the airplane straight up into the air thanks to a Fed maneuver to put the interest rate pedal to the medal back in 2002 in order to steer clear of the tech stock bust and 9/11 fallout. I am not sure that there was any obvious alternative remedy for the situation to blowing a credit bubble.
P.S. I did not mean to suggest that I thought the negative FFR in the early 2000s was a good policy. In fact, I think the rampant speculation in real estate, the rise of subprime lending, and overbuilding of McMansions to the point where there is a severe mismatch between the housing stock and the housing needs of a population with a dwindling number of McMillionaires are all a direct consequence of the high rate of housing price inflation that resulted. So if there is one lesson to be taken from this mess for future generations of monetary policymakers, it is that blowing bubbles can be very damaging to the real economy.
KB Homes reported earnings this morning, and it was ugly. No way to spin this one. Got puts?
Okay, someone please take a look at the headline of this article, and then read the article (fairly short) and tell me if it supports the headline?
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070322:MTFH57983_2007-03-22_15-48-44_WEN5690&type=comktNews&rpc=44
The headline says “KB Says Doesn’t See Home Price Pressure Over Next Few Quarters”.
Then I read the quotes in the article and say to myself “WTF”?
I noticed that as well - the headline is incorrect. Pretty major author and editor error there. I’m guessing the editor is a FB - “what, you mean I had to read what I signed??!!”.
KB Homes reported average selling prices by region, 1st quarter 2007 versus 1st quarter 2006 (1st quarter ends Feb 28th):
2007 2006
West Coast: $470,400 $486,500 -3.3%
Southwest: 281,700 321,500 -12.4%
Central: 161,400 157,400 +2.5%
Southeast: 238,200 239,000 -0.3%
France: 241,400 210,000 +15.0%
The interesting thing about the sales prices in France, is that the dollar is about 10% cheaper vs the euro than it was a year ago. So that 15% price gain (in dollars) is actually only about a 5% price gain when expressed in euros.
Porsche dealer - “I got it wrong with the buy one get one free card”.
Written by Jenny Shu
Friday, 23 February 2007
Glen Fergusson - Sales and Marketing manager for a brand new Californian Porsche dealer. Has lost his job and faces possible legal proceedings as the company strives to reclaim the costs of the 18 Porches given away free under Glen’s Opening day “buy one get one free promotion” “I admit I didn’t really do the numbers properly on this one” said Glen who told reporters that he had “seen the concept work really well for coffee stores” and in terms of numbers you could argue that Glen’s campaign worked. As the new Porsche dealer sold 18 Porches in the first hour of the store opening.
It took the head office a full hour to realise what was going on and subsequently shut the store.
Local man Bruce Stepper took out a second mortgage on his home after getting a promotional flyer in his mailbox. “I am ecstatic - I brought a shiny red Porsche today, got another one free and I have sold just sold it on EBay, all up I end up getting a Porsche 911 for $5000″
Jane Cameron was arguably even more entrepreneurial. The local Janitor purchased a Porsche using the dealers “no deposit finance plan for low income earners”, sold both cars, paid off the finance account and walked away with $120,000 profit. The finance plan was another one of Glen’s initiatives that has now been cancelled.
A red faced Glen stated “I have never really been too good at Math and I was sure the whole time we were making money - I was initially blown away by the amount of cars we were selling in that first hour. I had seen the “buy one get one free card” work extremely well for the new coffee shop down the road and thought what a great idea I will try it here.” Gotta lov it!!
(www.stuffed.co.nz/index.php?option=com_content&task=view&id=265&Itemid=29)
Pizzas tend to be a better role model for the 2 for 1 gig.
is this real? lucky bastards
Satiric metaphor for the current housing market.
OT.
If there is a heaven, John Edwards get to get in.
This one got me laughing! Thanks!
This is off topic but I’m hoping one of you knows the answer or can point me to a place to find the the answer. It’s a tax question related to a capital gain.
I sold my house last year.
I previously sold a house in 1989 and had gain. In those days, if you rolled the gain over into a house of equal or higher cost within 2 years, you didn’t have to pay tax on the gain. If I remember correctly, the tax was deferred, not waived. And I think it was deferred until you reached a certain age. I bought another house and rolled the gain over in 1990. Then last year I sold that second house.
My tax accountant is now saying that the $250K exemption on gain from the house I sold last year is reduced by the gain on the house I sold in 1989. Has anyone else experienced this or is familiar with this? I had just turned 55 when I sold the house last year (I vaguely remember that agae 55 was when the taxable gain went away in the old law but I could be wrong about that).
Thanks for any info or pointers. This has to be relatively common situation.
if i’m understanding your question correctly…you need a new accountant. if you lived in your house over 2 years…the 250k is yours.
She agrees with that but she is saying that I have to include the $125K gain from the house I sold in 1989 and rolled into the other house!
Dunno if this is a dup - appears the computer ate my first msg…. If you’re 1/2 of a legal couple, your exemption is 500K…
Dude, you hit the last two tops on the money - you rock!
I owe you a beer, whoever you are.
Classic bubble bust scenario discovered in Discovery Bay:
Need a buyer for a short sale property … I do have realtives that have recently passed and also one who was diagnosed with a mental disease. I was let go from my job, and my husband was laid off. We are now taking care of my mother in law and my two brother in laws. I definetly qualify. If your interested let me know. My house does not need no fixing up. I bought at the peak of the market, and now if I sold my house I would be in a negative loan of about 70k. …
http://sfbay.craigslist.org/eby/rfs/298423955.html
She forgot, the dog needs surgery, baby has no shoes and we had to let the Mercedes go back.
How about ‘the well went dry’.
Thats actually a true one I heard in a foreclosure case back in 1995.
Credit Counselors Overwhelmed by U.S. Mortgage Crisis
http://news.yahoo.com/s/nm/20070322/lf_nm/usa_subprime_counselors_dc
Great job opportunities for highskilled RE agents and Loan Officers!
“…let me see who got you in this mess…”
I had to laugh out loud at your comment. Not sure which was funnier, the “let me see what got you into this mess”, or the “highly skilled RE Agents and Loan Officers” comment….
Maybe Senators Dodd and Clinton could set up a taxpayer-funded credit counseling service as part of their subprime bailout plans?
“All the predatory lending that has gone on, all of the pushing of exotic loans on people of color, female-headed households, families with children, people with disabilities — it’s all coming home to roost,” Smith said.
Did Smith leave anybody out? These “victims” deserve what they get: forclosure
Can you explain this to me? A 3/2 SFH house on a 6000 sq. ft. lot in my parents very nice South OC neighborhood was on short sale for $520K in 1/07. in March ‘07 it went up to $550K, still claiming short sale. Then it went off the market. NOW it’s listed again, still as a short sale, mind you, stating that lenders will entertain offers between $599-648K.
What the eff is going on?
Mind you, I’m not looking to buy until 2009 at the earliest, but this one has me scratching my head. All I can think is that the dude’s got a second and that loan holder wants his share included. Can they LIE about a short sale in the description on ZIP?
Thanks for any light you can shed on this one, guys.
This DC flipper has two properties to unload. One has negative cash flow from a section 8 tenant and no equity (obviously) and the other has no tenant at all and the flipper is in arrears on his mortgage payments (shocker). In exchange for letting you assume these “investments” he wants compensation for his “time and money invested”. What a trip:
http://washingtondc.craigslist.org/doc/rfs/298031684.html
“The Beltsville:
It was bought around June-July last year (2006) for $228,000 so I am sure you can figure out right there that there is no equity in it yet. But it is currently occupied by a Section 8 tenant with a monthly rent of $1,600 while the mortgage plus condo fees amount to $2,100 so I have to come up with $500 monthly to cover the mortgage which I no longer want to do. What I am looking for is someone to take over the condo by assuming the present mortgage and then give me something for my trouble (the time and money I have invested so far – Negotiable). Mortgage is current.It is a 3 Bedroom and 2 Full Bath.”
“The DC:
Bought in December 2006 for $220,000, it already has a $22,000 equity in it because I only financed $198,000, I had to put down 10 percent because of my credit. It is presently vacant but it is a brand new condo conversion with all new appliances and hardwood floor. Mortgage is behind by about $6,000 and in pre-foreclosure. Also, I need someone to assume the mortgage and give me something for the equity (Negotiable).It is a 2 Bedroom and 1 Full Bath with brand new stainless steel appliances, Jacuzzi bath tub and washer and dryer already in unit.”
Dodd railing against the regulators for not doing their is like a mob lawyer railing against the police for not doing their job.
Comical. Had they done their job when they were supposed to, Dodd and like-minded companions would be railing against the regulators. Just like a mob lawyer would rail against the cops.
“I am shocked, shocked to find that gambling is going on in here!” –Renault, Casablanca
“Dodd railing against the regulators for not doing their is like a mob lawyer railing against the police for not doing their job.”
how so?
Dodd was one of the first to call for a real estate bailout. His big contributors hold stakes in getting bailed out. Here is a breakdown of his contributors:
http://www.opensecrets.org/politicians/indus.asp?CID=N00000581&cycle=2002
Dodd was one of the first to call for a bailout. His top contributors - the securities and investments industry - would do well from a bailout.
Reference:
http://www.opensecrets.org/races/indus.asp?ID=CTS2&cycle=2004&special=N
No more easy mortgage financing money — at least until later this year when things get back to normal
Where do financial journalists get this cr@p? Can anyone find a single instance in the history of finance where tighter lending standards were reinstituted, then again abandoned, within the timespan of a few months?
———————————————————————————-
REAL ESTATE
Goodbye easy mortgage money
Subprime woes forcing borrowers to deal with tighter lending standards
By Amy Hoak, MarketWatch
Last Update: 5:01 PM ET Mar 21, 2007
CHICAGO (MarketWatch) — The era of easy mortgage money has disappeared in the wake of problems in loans made to some of the riskiest borrowers at the height of the housing boom, with lenders now asking for more financial documents, bigger down payments and proof of greater credit responsibility from would-be borrowers.
The tougher underwriting standards won’t prevent most mortgage applicants from getting a loan and they aren’t likely to remain in place for long, especially if the housing market regains its footing later this year.
http://www.marketwatch.com/news/story/no-more-easy-mortgage-money/story.aspx?guid=%7B42C8524A%2D6E2F%2D4833%2DA678%2DE66297E1FCF2%7D
Lax lending standards will remain in place as long as people are making money.
All high real estate prices do is ultimately enrich lenders.
New homeowners have to get into hock up to their eyes to get a house. Maximum value will be extracted from them. Existing homeowners, after they trade once and make a profit, will be in the same boat.
Once prices stabilize, it will suppress real estate transactions I think. So I’m not sure it will help RE agents. Even lenders might be negatively impacted if there are reduced transactions.
I suspect house prices are like a bell curve. There is probably an optimal price where you have the most money lent. There’s probably an optimal level where commissions from the transactions are at an optimal level too. Too low, the money drops off, too high, the money drops off.
I think NAR and lenders may conclude this at some point as well. A lot folks in real estate seem to be doing a lot less cheerleading. Lereah is a master salesman, and even he is sounding lukewarm. I’m sure that’s for a reason.
“Lax lending standards will remain in place as long as people are making money.”
I’m not sure what you mean by this. But the evaporation of loose lending is real and ongoing, and I do not concur with Amy Hoak that it will go away by later this year (along with all the other fallout of the bursting bubble).
- For one thing, how many subprime lenders just went up in smoke in the past ten weeks?
- Secondly, “everyone” suddenly sees the folly of loaning money that will never be repaid, and scapegoats are being targeted for tarring and feathering. The stigma which results will not be gone by later this year.
- Third, with a sudden emphasis on traditional prudent lending standards (like income documentation, downpayment requirements and higher rates charged to borrowers with poor credit histories), household home purchase budgets have probably taken a 30% hit (just a conservative ballpark figure based on how much more you can spend when you are allowed to borrow 10X your income w/o a downpayment versus only 5X your income with a downpayment requirement). The resulting drop in household purchase budgets suggests that sellers who keep their homes on the market at 2006 list price levels will not be able to sell, and the only homes that do sell will be sold for lower prices than in 2006.
I am interested in hearing from anyone who has an argument about how all these problems will magically disappear by later in 2007? (Many opinions to this effect have been given in the press with absolutely no logical justification…)
If these kinds of loans truly stop making money for the people funding them, it seems exotic loans will cease.
If there is some sort of surreptitious government bailout to people holding mortgages in some way, then perhaps the exotics will continue.
Hard to say. Part of it sounds like wishful thinking and market cheerleading. Part of it may be hoping that the financial whiz’s come up with a new scheme to obfuscate the risk, and a new market for new products will open up. And part of it is some hope for a government bailout of some sort, which might involve some sort of odd tax scheme.
That’s my speculation.
This DC flipper has two properties to unload. One has negative cash flow from a section 8 tenant and no equity (obviously) and the other has no tenant at all and the flipper is in arrears on his mortgage payments (shocker).
In exchange for letting you assume these “investments” he wants compensation for his “time and money invested”. What a trip:
http://washingtondc.craigslist.org/doc/rfs/298031684.html
“The Beltsville:
It was bought around June-July last year (2006) for $228,000 so I am sure you can figure out right there that there is no equity in it yet. But it is currently occupied by a Section 8 tenant with a monthly rent of $1,600 while the mortgage plus condo fees amount to $2,100 so I have to come up with $500 monthly to cover the mortgage which I no longer want to do. What I am looking for is someone to take over the condo by assuming the present mortgage and then give me something for my trouble (the time and money I have invested so far – Negotiable). Mortgage is current.It is a 3 Bedroom and 2 Full Bath.”
“The DC:
Bought in December 2006 for $220,000, it already has a $22,000 equity in it because I only financed $198,000, I had to put down 10 percent because of my credit. It is presently vacant but it is a brand new condo conversion with all new appliances and hardwood floor. Mortgage is behind by about $6,000 and in pre-foreclosure. Also, I need someone to assume the mortgage and give me something for the equity (Negotiable).It is a 2 Bedroom and 1 Full Bath with brand new stainless steel appliances, Jacuzzi bath tub and washer and dryer already in unit.”
“Also, I need someone to assume the mortgage and give me something for the equity (Negotiable).”
I love these clowns who think the market cares what they “need.” Amazing.
this is not a joke. I nearly fell off my chair when I saw this on CNBC.
ISHRS LEHM MBS FR BD (MBB)
http://finance.yahoo.com/q?s=mbb&x=0&y=0
Mortgage-backed security ETF starts trading
Fri Mar 16, 2007 2:00pm ET
NEW YORK, March 16 (Reuters) - Trading in the first-ever exchange-traded fund based on mortgage-backed securities kicked off on Friday, at a time when concerns are growing that defaults by borrowers with sketchy credit may spread to higher-quality mortgages.
Barclays Global Investors said its iShares Lehman MBS Fixed-Rate Bond Fund began trading on the American Stock Exchange.
The underlying index measures the performance of investment grade fixed-rate mortgage-backed pass-through securities from the Government National Mortgage Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac).
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070316:MTFH19950_2007-03-16_18-00-17_N16475761&type=comktNews&rpc=44
Senator Richard Shelby (R-Alabama) was just on CNBC. Just after coming out of hearings on subprime he stated unequivocally that he wants to make sure that there aren’t any taxpayer-financed bailouts.
didn’t he say “at this point in time.”
I believe (but would have to look up) Sen. Shelby is one of the politicians who’ve been trying to distance the govt from the GSEs & warning about systemic risk & the mortgage market.
Will try to find it…
Today’s history lesson:
Around the turn of the century, (a couple back) gambling was virtually outlawed in this country.
It will be outlawed once again.
Many a poor boy had been a victim, and I know I was one.
Hopelessly addicted from the age of 13, (1st bet on the ponies @ the pomona fair, “Quite a Day” to show, $2.00 ticket paid $8.40) til I was in my mid 20’s, my wreckless years.
Gambling has permeated throughout every level of our life, in my 45 years living in California. Not just casinos in every tom, dick and harry locale, but the internet, as well.
Complete and utter losers (and not gentlemen, make no mistake about it) that had lucky streaks playing poker, were elevated into pop idol status. SICK
The entire housing bubble was built on the strength of gambling.
We must rid ourselves of this scourge.
Funny you should mention that!
http://tinyurl.com/3xday9
Thursday, March 22, 2007
By Glenn Coin Syracuse Post Std Staff writer
“The Oneida Indian Nation should not have to pay - literally - for the mistakes of state officials, nation leader Ray Halbritter said Wednesday.
The federal Department of Interior said last week it will reconsider its 1993 approval of the Oneidas’ Turning Stone casino because state courts have ruled that the agreement allowing the casino to open was never approved by the state Legislature.”
http://www.larouchepub.com/eiw/public/2007/2007_10-19/2007-12/pdf/04-12_712_feat.pdf
Analysis of how the US mortage crisis could trigger a global financial meltdown. Not for the faint of heart!
FYI LaRouche has zero credibility. He’s known as a neo-nazi KKK ‘race war cometh soon’ propagandist.
Even though he might occasionally make sense you should disaccociate from him. I’m mean Hitler loved dogs apparently… you don’t see the human society quoting hitler.
HelloKitty,
I’ve subscribed to EIR and other LaRouche publications for over ten years. I’ve never seen the slightest evidence to back your claim that he’s known [by who?] “as a neo-nazi KKK ‘race war cometh soon’ propagandist.” Quite a large number of his associates have Jewish surnames, or are people of color. Odd company for a “neo-nazi.”
Instead of mindlessly passing on slanders, you should dig a little deeper. LaRouche has stepped on a lot of powerful toes and made some powerful enemies. Since they can’t argue with him on a factual basis, they smear him as an extremist. “Who the Gods would destroy, they must first make mad.”
Please try to produce a single direct quote from LaRouche advocating “neo-Nazi KKK ‘race war cometh’ ideas. Just one. After you fail at that task, pleae try to reduce your ignorance instead of displaying it in here.
I read the article, and I’ll give it two thumbs up. Thanks for posting it…
Casey Serin was mentioned in The Economist today.
http://www.economist.com/finance/displaystory.cfm?story_id=8885853
“CASEY SERIN knows all about the excesses of America’s housing bubble. In 2006 the 24-year old web designer from Sacramento bought seven houses in five months. He lied about his income on “no document” loans and was not asked for anything so old-fashioned as a deposit. Today Mr Serin has debts of $2.2m. Three of his houses have been repossessed; others could share that fate. His website, Iamfacingforeclosure.com, has become a magnet for those whose mortgages are in trouble.
Mr Serin and people like him are Wall Street’s biggest uncertainty just now. How many Americans are saddled with mortgages they cannot afford on houses that are losing value? The answer matters to anyone who bought high-yielding mortgage-backed securities when a booming property market made mortgages look safe. It also matters to investment banks, which packaged the securities and often own subsidiaries that originate mortgages. It may determine whether America’s economy falls into recession. It could even affect the outcome of next year’s elections.”
Excellent! The Economist’s writers read here (I guess this is not news to Ben, but it is to me…)
Casey’s case poses a potential problem for Senator Dodd’s bailout proposal. Will he use taxpayer financing to bail out speculators like Casey? That would seem rather politically egregious, IMO. Perhaps the Senator should first do a study to figure out how many like-minded investors besides Casey bought seven homes using subprime money, before he gets too excited about bailing them out.
If there might be a bailout, it could be something like massive tax breaks for investment companies that lose money on mortgages or some such. Government will still keep spending more, and the deficit grows. And eventually, the taxpayers will pay. And voila! Bailout without anyone much noticing.
“Not only does [Merrill Lynch analyst Guy] Moszkowski expect Goldman Sachs to pick through the subprime rubble to find a bargain, he said once the dust settles he wouldn’t be surprised if the entire subprime mortgage industry was in the hands of Wall Street banks.”
http://biz.yahoo.com/ap/070314/goldman_sachs_ahead_of_the_bell.html?.v=1
Politicians are beholden to those who give them money. Politicians then bask in the power over others that giving them money yields. A circular, symbiotic relationship.
I seriously doubt a bailout would appear as payments to FB’s.
“Bailout without anyone much noticing.”
I think this one is already underway behind the scenes. How else to explain the extreme confidence exuded from top U.S. economic leaders in the face of a market meltdown? If they had no behind-the-scenes social engineering underway, I don’t think they would be that smug.
Maybe Casey Serin will take a page out of Brian Hunter’s book and start a real estate fund:
Trader in Amaranth Failure
Starts New Hedge Fund
By ANN DAVIS
March 22, 2007 3:02 p.m.
Brian Hunter, the energy trader whose risky bets triggered the largest hedge fund failure in history, has formed a new fund only six months after Amaranth Advisors’ dramatic collapse.
Solengo Capital, of Calgary, Alberta, and Greenwich, Conn., is hiring traders and seeking money for “a series of funds across the commodities space,” according to a preliminary marketing document circulating among potential backers.
Mr. Hunter, as leader of the effort, is seeking hundreds of millions of dollars from overseas investors, potentially in Europe and the Middle East, people familiar with the matter say.
Although Amaranth’s recent loss of more than $6 billion makes it unlikely that he can raise capital from U.S. institutions such as pension funds, he could benefit from the willingness of cash-flush investors elsewhere to take risk in the volatile commodities markets.
It looks like the Fed’s and Treasury’s War on Savers continues to be highly successful in discouraging Americans to bother with saving money. Keep up the good work!
———————————————————————————-
Dream on
Many Americans say middle class faces impossible savings task
By MarketWatch
Last Update: 6:59 PM ET Mar 21, 2007
BOSTON (MarketWatch) — Nearly half of Americans believe that saving for retirement is the impossible dream for middle-income families, according to a new survey from Country Insurance & Financial Services.
Worse yet, the survey shows that consumers tend to be their own worst enemy in securing retirement by allowing spending habits to get in the way of saving.
Country’s national survey of 3,000 Americans showed that 47% of the population believes that the typical middle-income household isn’t going to be financially secure in their golden years, with another 17% of the respondents being unsure of whether a secure retirement can be achieved.
“People have to grasp that the burden of responsibility for their future has changed,” said Keith Brannan, director of the financial security office at Country. Brannan, during a radio interview with MarketWatch senior columnist Chuck Jaffe, noted that three-quarters of Americans say that people should start saving for retirement before reaching age 30 but that 62% of the respondents said they had failed to do so in their own life.
http://www.marketwatch.com/news/story/many-americans-say-middle-class/story.aspx?guid=%7BB6CCFB9E%2D6179%2D4C0C%2D9909%2DE10AC69308E9%7D
Check out my dog-fight with a local realtor:
http://people.bakersfield.com/home/Blog/jasonthoele/6780
CNBC: “We are hoping to welcome some of the displaced subprime mortgage professionals into the JoJo’s Pizza family.”
From March 20th EIR Executive Alert Service:
Carbon trading scheduled to be the new bubble.
London has been the pathfinder in promoting the “carbon-emissions-trading” scam as the next bubble, followed obediently by members of the European Union. The March 14 edition of London’s Daily Telegraph reported that Al Gore’s real message is the “booming market in emissions trading.” Economics reporter Tom Stevenson wrote that Gore “can spot a trend,” and “carbon trading is the hottest ticket in town.”
The man slated to replace Prime Minister Tony Blair has also come
out with this perspective.On March 12, British Chancellor of the Exchequer Gordon Brown told the Green Alliance that he aimed at transforming London into the center of a new “global carbon market.” Referring to the sensationalist 2006 report by Sir Nicholas Stern, which raised panic about global warming, Brown said that Britain could lead climate change “initiatives,” “by creating new markets. . . . Today worth just $9 billion, emissions trading could grow to between $50 and $100 billion. So we will now advance this through an international conference hosted in London to discuss how we can link schemes in different countries and enhance trading
with developing nations—to turn this growing system into a global
force for change.” The nations of “China, Brazil, South Africa, India, Mexico and other[s]” will be targets of this attempt at a new “environmental” empire.
Brown made no bones about echoing imperialist themes, when he
quoted former Foreign Secretary George Canning, who claimed, at the beginning of the 19th Century, that “he had called the new world into existence to redress the balance of the old”; Brown called for a “new order” based on globalized interdependence. The entire “post-1945 system of international institutions is urgently in need of reform for a world of 200 states and a global economy which must also now provide global environmental stewardship,” Brown said. “Next month the UK is seeking to place climate change on the agenda of the Security Council,” he added.
The City of London had already embraced “carbon trading” in 2002,
according to the Telegraph, with a 215 million pound prototype carbon trading fund. Thus, as Barclays Capital environmental markets head Louis Redshaw said, “When the European Emissions Trading Scheme (ETS) came along in 2005, they picked up business automatically.” The ETS is involved in more than 60% of the volume of carbon traded around the world, and 80% of its value, the same paper reported. Now it is estimated that this year, 2.4 billion tons of carbon could be traded this year, up from 1.6 billion tons last year and just 799 million tons in 2005. Emissions trades were worth some 20 billion euro last year, and carbon markets are estimated
at about the same amount.
Anyone know what happened to/at Prudent Bear? Haven’t seen a link or post there all week.
Okay,
This was totally hilarious. I don’t have a link, so you’ll have to take my word for it. I was watching the 4:00 news here on a Milwaukee station (WTMJ-4), when an NAR-sponsored news article came on the air (as part of the news). The two anchorwomen cued it by saying “now is a great time to buy a home”, and I thought (oh barf!)
So, they start rolling the piece, and it’s put on by the National Association of Realtors. Set in a Washington DC suburb, it shows a DC couple going around looking at homes, and it proceeds to lay out some tips for buying a home. Some of it was pretty standard stuff. I’ll paraphrase it as:
1. Educate yourself on the market
2. Line up your financing
3. Make a reasonable offer, and be prepared to negotiate. (The Realtor said a reasonable offer would be something like 5% below asking price.)
Just before ending the piece, the Realtor gave one last tip. She said “when you find the right home, be prepared to move fast because if it’s appealing to you, it’s likely to appeal to other buyers, so you want to take it off the market as quickly as possible.”
End of piece. End of story, right? Nope!!
The camera cuts back to the anchorwoman who introduced the piece, and she says “and one more way you can save a lot of money when buying a home, is to buy directly from the homeowner, instead of going through a Realtor.”
YEAH, Baby!!!! That made my day, right there!!!!
:-)!
Fire burns “luxury condo” project in constrution.
http://www.msnbc.msn.com/id/17753914/
Arson? Nah…:)