Bits Bucket And Craigslist Finds For April 18, 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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Many Savers, Few Spenders Leave South China Mall Almost Empty
amazing story about speculative building activity in china
beauty is nothing without brains /
Inflation in Saudi Arabia / Brad Setser
even the bls could learn from the saudis…..
http://immobilienblasen.blogspot.com/
My dad went to China a few years ago on vacation. He said that in the department stores all they had was racks and racks of black pants for men as far as the eye could see. The womens section was was very tiny.
You should both go or wait til the Olympics and go.
From Bloomberg’s article
“Chinese reluctance to spend and eagerness to save is the mirror image of attitudes in the U.S. While China’s savings rate is the highest of all major economies, the U.S. rate is negative. Until spending and savings patterns in China and the U.S. change, trade imbalances will grow worse, officials say.”
“wait til the Olympics and go”
Beijing, during the Olympics, will be a nightmare. Maybe visiting another part of the country……
Hoz,
So true, Asians practice control over their desires as a virtue.
Americans practice conspicuous consumption as a virtue.
Ever seen Asian gamblers?
The most addicted, of all of us human beans~
And gambling is the obvious root, of our current evil.
Come on All these people that bought houses over the last 6 years never thought they were gambling. They believed that RE never goes down.
Stick a fork in vegas…
Sooner, than later.
There would never be a big enough room to fit in all the new members of gamblers anonymous, we’ve created.
And on the other end of the spectrum in vegas and all the satellite vegases we’ve created?
The casino dealers get to count to 26 and stack chips by color, in one of their specialized trade jobs.
Their employers think so highly of them, that they train dozens of cameras on them, partially to counter thieves on the other side of the felt lined line, but also to ward off thieves on their side, the working stiffs that make it all possible.
People lose money on one end, people are rewarded for taking the former’s money, on the other end.
No good comes of this.
As a martial artist I think that the stereotypes of Asians as vice free, patient and prudent people is a lot of hooey.
For instance, it is well known that the World Taekwondo Federation bribed the Korean Olympic committee to grant them the “franchise” of being the Olympic governing body of TKD. General Choi, considered the founder to TKD, was driven into exile into North Korea.
Soon they can soon use these malls as storage space for all the overproduced goods that the west will stop consuming…
Hong Kong:
Early September 1984.
I like Ike~
http://en.wikipedia.org/wiki/Typhoon_Ike
Was there for a trade show when I got to experience my 1st typhoon, from the confines of my Holiday Inn room on the 17th floor, in downtown Kowloon.
It was the equivilent of a cat 4 hurricane~
@ one point, I remember the hotel was shaking, quite a bit and it was oh so weird, being a Californian, used to tremblors and this was a different flavor altogether.
I survived and the next day, bamboo (used extensively in Asia for scaffolding) was scattered about like so many pieces of footlong toothpicks and junks (Asian boats, not most of the current home loans) were inland hundreds of feet and more.
To calm my nerves, I caught a hydro to Macao and what an utter pile it was, El Monte by the sea, with dilapidated buildings of a Portugese/low rent Asian style and casinos with mad Asian gamblers… (still have a picture of the Lisboa casino, in my mind)
I understand the current Macao is going to be larger than vegas, soon.
p.s.: I’m no expert on typhoons, but they retired the name “Ike” from future usage in things hyperwinded, so this one must have been a doozie…
Here’s the short and sweet 1983 trip drama…
Our Korean Air Lines flight to Seoul from el lay, was the very same flight that had been shot down the day before…
KAL 800
Our passage went unchallenged.
I have often wondered what would happen if such a scenario arose. It seems that we have entered into a mutually unhealthy co-depent situation. We need their credit and cheap goods and they need someone to sell it too. The scary thing is that the situation is unsustainable, which is why I think there is such a strong push to expand Nafta into a European Union style body. At some point we’ll need to make our own shoes again someday.
A view into our own future?:
“Eroded Security (From the above Bloomberg link)
“The Chinese save about half their income. Job-cutting at state-owned companies, which once provided lifetime employment and benefits, has eroded income security. An inadequate social safety net requires Chinese to save for retirement, health care and their children’s education.”
I guess turning ourselves back into a nation of terrified savers may have more implications than we’ve considered…..
Won’t happen until something terrifies the spenders… like it did to my mother and father and my grandparents. It was called the Great Depression. Today, frugal people are shunned. I’ll wear that label as a badge of honor.
Rent versus Own
http://www.smartmoney.com/home/living/index.cfm?story=rent
Lower FHA standards for loans will further socialize the risk:
“Prior to the creation of the Federal Housing Authority in 1934 house buyers who borrowed typically put up 40% of the purchase price in cash for a five- to 15-year loan. By insuring mortgages, the FHA permitted terms of up to 20 years and down payments of just 20%. It later expanded the repayment periods to 30 years and reduced down payments to 5%. Today down payments for FHA loans are as low as 3%.”
FHA Proposal:
“Its proposal would eliminate the 3 percent down payment and raise the maximum loan amount. It also would give the FHA flexibility to charge a lower premium for low-risk borrowers and a higher premium to higher-risk consumers.”
http://tinyurl.com/33p2ya
yes, we have similar proposals in Netherlands. Our ‘National Mortgage Insurance’ ceiling will be raised from 250K euro (a little above the average home price) to about 350K euro, so that people can buy a far-above-average home at subsidized rates and with the government assuming all the downside risk. Similar things going on in the UK; I think the government and banker/mortgage mob in these countries learn from each other and probably coordinate their actions to keep the biggest pyramid game ever going.
P.S.: of course those 350K euro subsidized homes will not be above average for long, history shows that the average home price quickly adjusts to the maximum mortgage amount that is available for the average buyer. The only way is up … until the system stops working.
if you can’t lose you can’t win
kill a commie for mommy
what will stop the USA from becomming socialist
That is the opposite direction we need to go. People have to put at least 10% down.
This appears to be an extension to the assumption that Americans will go through their entire lives never saving a dime, just having varying levels of debt.
Socializing risk in itself is not a problem. In essence, that is what insurance does, and it’s why companies raise capital by selling shares instead of using their own money. Human beings, and other social animals, depend on socialization of risk in order to survive. Our species would not have lasted long without socialization of risk.
The problem is socialization of risk when combined with privatization of profit. If the risk is shared, then the profits should be shared as well. What is increasingly common these days is companies that mouth off about the free market while handing out big bonuses and then let the taxpayers clean up their mess when they go bust.
The other problem is that using a governmental monopoly to socialize risk eliminates choice, because in a democratic system the winner takes all. No matter how people on this blog may feel about such practices, if enough FBs and more importantly the suits who’ve lent them money vote for the bailouts, we don’t have an option to opt-out.
I’m looking forward to the later-day Smoot-Hartley antics still to come…
If we give ourselves a pass, financially?
The rest of the world will crap down our throats, and Hello there Hyper-inflation…
Haven’t seen you around these parts since the Confederacy succumbed to your charms~
I think this is a good time and place to re-iterate this excellent video, which clarifies the motives of these kinds of things:
http://tinyurl.com/2esm82
It’s a 45-minute video - but well worth watching.
It was worth every minute of it!! thanks.
Thanks, very interesting.
should be required for anyone who uses money
Here’s the real shocker: Loan Delinquencies are already higher for FHA loans than regular subprime loans.
From an AP article by Page Ivey about foreclosures (in Sunday’s Bellingham Herald):
Loan Delinquecies Q3 2006:
Subprime: 12.56
FHA: 13.33
Loan Delinquencies Q4 2006
Subprime: 12.80
FHA: 13.46
Looks like this is another government agency that’s got to go. Once again, all they are doing is driving up the cost of housing for people of modest means. And driving more people into foreclosure to boot.
Nice article. I posted it on my blog. Thanks!
Radio ad running in California, urging Californians to “invest” in Texas real estate:
http://louminatti.blogspot.com/2007/04/investing-in-texas-real-estate.html
Also, the French housing bubble!
http://www.youtube.com/watch?v=CABGPFV8OwE
This is real quality! I’m still singing!
wunderbar!
And its working Lou;….Several of my sons friends have already purchased rentals….I told my son no !
More Bloated Housing Inventory On The Way
http://wallstreetexaminer.com/blogs/winter/?p=668
http://biz.yahoo.com/ap/070418/earns_jpmorgan_chase.html?.v=1
JP Morgan Chase earnings soar 55%
“In card services, net income was $765 million, up from the fourth quarter but down from the $901 million of a year earlier. The bank said that prior-year results had benefited from significantly lower charge-offs following a change in bankruptcy rules that made it more difficult for consumers to wipe out debts.”
I wonder if it will be just as easy for the consumer to walk away from their Mortgage as it was in the 1990’s?
The return of indentured servitude, with people rushing to sell their futures for the same toys that everyone else has in the present. It’s sick.
Yes, the bankers have to be laughing, well, all the way to the bank! If the old adage is true that a fool and his money are soon parted then we have, no doubt, become a nation of fools.
Bankers used to command respect, but they are the same lackeys nowadays, as most of us…
I’d suspect the ones that “think” they’ve planned their getaway, have goofed things up, just as much as the next ignoramus~
The latest Weekly Mortgage Applications Survey is out.
Purchase Index is 396.5 (4-week MA is down 3% YoY).
Refinance Index is 2008.4 (4-week MA is up 33% YoY) .
http://www.recharts.com/mba/mba.html
how can anyone refi ?
there’s no equity to trade
Squeezing out that last bit of equity for those that bought prior to 2001 would be my guess.
Also, note that this is applications to refinance. Just because they want to doesn’t mean that they can
Exactly.
Foreclosure Filings Rise 47 Percent in March as Slump Persists
By Alan Mirabella
April 18 (Bloomberg) — U.S. foreclosure filings rose 47 percent last month from a year ago as the housing slump continued to take its toll on home owners.
More than 149,000 filings were posted in March, Irvine, California-based RealtyTrac Inc. said today in a statement distributed by e-mail. California filings jumped to 31,434, more than triple the number a year ago. Nevada and Colorado had the largest percentage gains.
“Foreclosure activity shifted into a higher gear in the first two months of 2007, and March’s numbers continued that trend,” said James Saccacio, chief executive officer of RealtyTrac.
Subprime solution: Swap ARMs for fixed-rates
Panel members at a Congressional hearing on the subprime crisis recommend changing the terms of ARM loans to forestall foreclosures.
By Les Christie, CNNMoney.com staff writer
April 18 2007: 8:42 AM EDT
Establish rescue funds for borrowers facing short-term problems caused by illness, layoffs or other one-time events.
Establish a bond fund to pay for switching borrowers out of unaffordable ARMs. Ohio has already started a bond fund to put subprime ARM borrowers into 30-year fixed-rate loans at 6.75 percent interest.
Refinance loans for victims of predatory lending. This would involve working with Fannie Mae, the quasi-governmental corporation.
http://money.cnn.com/2007/04/18/real_estate/foreclosure_bailouts_/index.htm?postversion=2007041808
Why not just ’swap’ to communism at once…
So, we are going to give a bunch of people a 6.75 percent rate even though they could never get that rate with their credit at this time. I wonder how people who are trying to get a loan but can’t get that rate will feel about this?
With that said, I still believe their is a LOT of people out their that can’t afford their payments to have a 6.75% rate. Heck, they can’t even afford their payments at 3 or 4 percent and what about all those HELCOs?
It’s all about credibility!
What signal are they giving in doing so?
Screw up, we will make your neighbour pay for your greed and envy.
Survival of the dumbest!
Please Darwin, come back!
The evangs tried to get rid of the notion of Darwinism @ almost the same inflection point as when the deep understanding of his reasoned principles of life’s ying and yang, will never be in so much demand, shortly.
Irony
Actually, Evangelicals are only opposed to biological Darwinism. When it comes to social Darwinism, I have found that most are disciples.
From what i’ve seen, they didn’t really discriminate…
Equal opportunity dislikers of reasoned thinking.
“Survival of the dumbest!”
Go rent or buy the movie Idiocracy by Mike Judge, for some good American satire along these lines.
If these loans are like government student loans, watch out! True indenured servitude. Foreclosure on your old bank loan is better. You can’t get out of a student loan like you can a bank mortgage.
If the “Emergency Bailout Mortgages” are given the same there-is-no-escape-from-this-debt status as federal student loans have now, I’d actually sorta support them.
Rick
Exactly what I was thinking. It seems they could only afford the payments with the teaser of 1-2%.
Here is a fun graph for you. California foreclosures over at BMIT. Go here: http://bubbletracking.blogspot.com/2007/04/tracking-california-foreclosures.html
Notice the steepness of the curve delineating the accelerating foreclosures. Also, Data Quick indicates 46,760 NOD’s went out last quarter. The latest data indicates about 40% are converting to NOTS (Notice of Trustee Sales), which is a much higher percentage than normal (usually 3-4% in good times?). Maybe it really is “different this time”.
OT, but interesting:
Tunnel connecting Alaska and continental Russia is being proposed
http://tinyurl.com/2bjypz
I doubt it is going to be built.
Are the FB’s the prodigal sons of 2007? Is this a modern day parable? Maybe we are supposed to forgive them and welcome them back with a bailout.
Unforunately we are not God Almighty. He can wipe slates clean, but we cannot.
I think God is a cat, anyway. What would a cat care about a bunch of stupid humans who can’t pay their mortgages? After all, vacant buildings make the most excellent dwellings for stray felines.
About the massacre…
This country first experienced mass murder with guns, aimed at innocents, in 1966 @ a institution of higher learning and now we’ve come full circle, 41 years later, with the very same horrible results.
Time to think differently.
Wasn’t the first time innocents got mass murdered in this country sometime in the 1800’s?
en.wikipedia.org/wiki/Haun’s_Mill_Massacre
or the other side of the coin:
en.wikipedia.org/wiki/Mountain_Meadows_massacre
Mine workers and their families have been murdered, en masse. From wikipedia:
# Lattimer Massacre - September 10, 1897. 19 miners were killed by police in Lattimer, Pennsylvania, during a march in support of unions.
# Ludlow Massacre - April 20, 1914. 20 people, including women and children, killed when police and hired guns broke up a tent colony formed by families of miners who had been evicted from company-owned housing.
# The ‘Redneck War’ - 1920-21. Generally viewed as beginning with the Matewan Massacre, this conflict involved the struggle to unionize the southwestern area of West Virginia.
Uh, I was thinking of those guys who had lived here for a couple of thousand years and didn’t wan’t to give away their land…..
But they didn’t have clear title to the land…
Wink, wink, nod, nod.
And later, when they had been forcibly relocated to worthless properties and oil was discovered there, they didn’t have clear title to the mineral rights. Wink, wink, nod, nod. And then ,after they’d been focibly relocated again out into the desert, they had no water rights, either. Ah, the land of justice and opportunity. Makes my heart swell with pride.
Not.
Although, they get to build casinos. More power to thier elbow, I say.
I’ve got a great idea (mostly thanks to Chris Rock).
Let’s reproduce the Ponzi scheme that the Fed, REIC (with the appropriate wink-wink, nod-nod action of the Federal Government) and FBs created with housing, only this time, we’ll do it with bullets! Soon, only 8% of people will be able to afford them, drastically reducing the chances of a reoccurrence of a killing spree of this magnitude, while still allowing all the gun nuts to have their toys.
And as for those of you who have guns for protection, isn’t $10,000/bullet a small sum to pay for the protection of your nearest and dearest?
; )
These are the flippers that I personally know.
1. Close friend - bought condo in Bay Area and house in NoVa (2005). Interest only. Worried. Can hold out for a year but then must sell.
2. College buddy - refi-ed house in Oakland to buy apartment in Seattle (2005). Supposedly cash flow positive, but the tenants are problematic and the property manager stole several months of rent. Headache.
3. Co-worker - claimed to have done a 6-month flip in Bakersfield for 20K profit in January 2007 (I dont believe it).
4. Landlord - owned the condo I rented in San Diego plus 3 others. Desperate to sell.
5. Acquaintances - about 5 others that I know personally.
——————————
On the other hand the majority of my friends and acquaintences are more conservative financially, have solid incomes, dont spend wildly, have large equity and don’t do real estate speculation.
Two America’s.
One guy at work bought three houses in Queen Creek. Put in landscaping, epoxy on the garage floor, blinds and appliances. Can’t sell them, can’t rent them!
oops……
“epoxy on the garage floor”
AZ,
that’s funny, did he think he was buying in Beverly HIlls or something…
AZgolfer,
Where do you live? Do you know what the market’s like in Tempe/Chandler/Ahwatukee area? Looking casually online, it seems prices have dropped just a little bit.
Thanks,
Bill
One of my techs flipped a house in LV for 70K profit and them let his brother talk him into putting it down on a Mcmansion in the IE. They are upside down and sweating now.
It will be shown IMHO that very very few flippers knew when they had enough.
A fool will very soon be separated from his money, indeed!
Oh yeah, here’s another one I came up with to describe our Hollywood icons:
“Come into the world trash, go out of the world trash”
Mean, I know.
SDMisfit,
the sad thing is that your story will be repeated by all of us here before its all said and done.
There is someplace is Seattle where the rent exceeds the mortgage!?!?!
“…to buy apartment in Seattle (2005). Supposedly cash flow positive, but the tenants are problematic and the property manager stole several months of rent. Headache.”
Call the Guiness Book of World Records!
I’ve recently heard radio ads regarding the “Frog Loan” http://www.frogloan.com and from the ubiquitous Lennox Financial (with the annoying “the biggest no-brainer in the history of earth” tag line) http://www.lenoxfinancial.com - who touts no-fee refis and has also mentioned the loans that “adjust downward” (like the frogloan folks).
What’s the scam/angle/idea/concept with these? They are heavy advertisers on radio in DC area - and, elsewhere, I asssume.
Looks to me like they are trying to win customer “loyalty” by having the borrowers pay a flat fee (??) instead of the points on a regular refi. They modify the refi paperwork so the borrower only signs a couple of pages.
Not sure they are scamming; just trying to keep a consistent customer base.
OT, but, “Blacque Jacques Shellacque”, love that handle, brings back fond memories of Warner Bros. cartoons.
U.S. seeks trustee to run New Century
http://tinyurl.com/2r72rb
When being first with the breaking news, that turns out to not be quite correct, could be worrisome~
http://jamesfallows.com/test/2007/04/17/virginia-tech-shooting-one-american-woman-terrifies-china/
Canadian housing prices set to DOUBLE over the next 20 years.
http://www.cbc.ca/money/story/2007/04/18/houseprices.html
Note how they fail to point out thats a yearly rise of 3.5%, hardly more than inflation.
dee,
I have a dear friend in Ontario that insists our impending DOOM (in the USA) will never touch her safe little piece of the Canadian Shield. I agree that Canada is behind the curve (12 months?), but think it is on the curve. If you have any links discussing a Maple Leaf real estate bubble please post them. Never mind VC, she says that is a seperate world.
She is tempted to buy now because God doesn’t make it anymore and it always goes up and…..you get the picture.
I think the investors are finding out why the government limited margins in the stock market after the 1929 crash. Leverage cuts both ways. In fact in one way it hacks, dices and slices.
This cracked me up - someone wants to tip their lender and real estate agent:
http://ask.metafilter.com/60838/What-to-tip-your-agentlender
My wife and I just closed on our first home. The entire process took us just over 6 months because we looked at about 70 homes before we found “the” one. This being our fist time through the home buying gauntlet we don’t know if we are supposed to give a little more than a thank you and a hand shake to those that helped us.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOeyOPEOdZk8&refer=home
Freddie Mac Offers to Buy $20 Billion in Home Loans, Syron Says
Well if this is true, I just closed my check book and my vote to the Democratic party.
From the link, they announce a 20billion buy of subprime mortgages, but admit they haven’t even discussed the details, where to get the money, or if the regulators will approve.
Business, or what passes for it, as usual at Freddie Mac.
Freddie Mac plans to pursue the program for two to five years, … The company has yet to gain the approval from its regulator for both the amount of capital needed and the new financing mechanisms proposed…
“We have not sat down and talked this through in any substantive detail”
They will probably start this program the week after they submit their annual report. Um, their 2005 annual report…
Remember, the U.S. gov’t does not guarantee the viability of Freddie Mac (’full faith and yadda yadda’)- Ginnie Mae is the only agency that is guaranteed by the government. The former execs of Freddie Mac just got whacked on the pee pees for lousy performance, do you think they want to buy $20 billion of mortgages backed by $10 billion home value? I don’t think so… (gee, can one short CDOs?)
“We have not sat down and talked this through in any substantive detail” with the Office of Federal Housing Enterprise Oversight, Syron said. “This is right in what our mission is.”
He added, “If we absorb these risky loans, we free the Big Bankers from risk and when we become insolvent - cause god knows these loans won’t be paid back in full - we’ll pass the burden of financing these loans to the little guy through a tax bailout”.
…which is sweet because we are already seriously insolvent. (Luckily we aren’t required to tell our investors.)
Hi All:
Here is the e-mail I just sent to my senator. You may recall that I posted her maddening reply to my original e-mail last night. I hope she reads this and has a change of heart, but she probably won’t. Instead, I fully expect her to begin speaking of “distressed young families” while playing the violin, after stringing it up USING THE NERVES FROM MY OWN ARMS. Here it is:
I recently received an e-mail from you stressing that you were highly worried about “predatory lenders” approving debtor’s requests for pay-option adjustable-rate mortgages. That’s why I’m indignant about the fact that Congress is now allowing Freddie Mac and Fannie Mae(notoriously corrupt and ill-run organizations) and Ginnie Mae to begin hooking borrowers into new 40-year loans.
This type of loan is obviously not beneficial to those who receive it, since the total interest paid on such loans is much more than the total principal paid. It’s not beneficial to the American people, since such loans will only allow habitual debtors to hold on to their ill-gained assets even longer, therefore keeping the cost of homeownership artificially high and economically unfeasible.
Furthermore, I am incensed that proposals are seriously being considered to put taxpayers’ money into “emergency funds” that will be raided in order to pay the mortgages of people who can’t afford their houses. We all know that “government” money is really “paycheck” money. Frankly, I see no reason why I shouldn’t go out and buy myself a mansion in the hills. I know I can’t afford it, but who cares? The government will take care of it for me.
In a recent CNN Money poll, 86% of respondents said that they did not think subprime borrowers deserve a bailout. Please listen to your constituency and do not allow these insane bail-out tactics to proceed.
Well said, but you know, I still have a very bad feeling about this, regardless of what 86% of the people (all the non-FBs) say.
86% of voters vs 99% of campaign funds.
The agencies are now dependent on the MBS/CDO business- they want to bundle and sell mortgages. Nobody will want these mortgages unless they are insured against default (PMI, credit swaps, etc.). Who is idiotic enough to insure the principle of upside down real estate loans? I am expecting CDO buyers to go back a decade or so to when investors were a tad bit risk averse. I don’t see how Freddie Mac can unload the CDOs without taking a loss right away.
I can see Ginnie Mae trying this, as they have a gov;t guarantee, so the principle is insured. But we all better stock up on the ‘value buy’ can of vaseline in that case…
http://fortlauderdale.craigslist.org/rfs/313101891.html
http://miami.craigslist.org/rfs/300578822.html
Soon it won’t be just Florida that is this desparate.
Wonder why it got flagged for removal? What did it say?
It is THE END!
and a new beginning…
The bull run in bonds is over. Interest rates going much higher. This will kill housing.
http://www.canada.com/nationalpost/financialpost/story.html?id=60950417-97a3-4ade-b204-7fbd319a817d&k=84897
I have a timshare - the sort where I do not have to stay in one location but have a choice of more than twenty resorts around the U.S., Canada, and Mexico. I used a resort in Kauai last week for the first time. Before arriving at my one week 1 bedroom room, I had doubts about the amenities. Now I am impressed. Sure, I’ll pay $20,000 for a timeshare to use one week out of the year, but that is my usual vacation time anyway. This unit has hardwood kitchen floors, GE appliances, full sized washer and dryer, two sliding glass doors to the lanai, two televisions, a dishwasher, and is right on the coast. I had an ocean view. I was so impressed I bought an upgrade.
My point here (and how I’m tying this into the RE bubble) is
I am now convinced that time shares are far more cost effective than buying vacation homes and leaving them vacant. There are a lot of boomers who bought second and even third homes and now cannot even rent them out to pay the mortgage payments. So they are vacant in many cases. Imagine leaving an asset vacant for 50 weeks out of the year and using it only 2 weeks! The smart people who can afford no more than one month of vacation per year either rent a house for the vacation period or have a timeshare like mine.
Hilton Resorts is one of the big name hotels getting into the timeshare business. The 70s and 80s negative image of timeshares is gone now.
Anyone who still doesn’t believe in the housing bubble, after hearing how time shares are now a better investment than housing, please raise their checkbook!
Commenting on Asia, I live in Korea where they also save high percentages of their income. We are even worse than average: I save over 75% of my gross. Here’s how: First, we bought an affordable (145K) place by borrowing 70K from family and paying them back as fast as possible (3 years) at 0% (plus little gifts, lots of visits, and generally other bonding activities). Next, I teach ESL full time, and took on a part time job editing AND GOT REALLY GOOD AT IT. My pay went from about 2K per month to an average of 8K - and sometimes over 10K. We invest and save. We have no debt as everything is paid for in cash here, including our new car (12K). Buying the apartment was the strangest thing ever: no lawyers, no appraisal, no escrow, no points, fees, etc - nothing! We simply counted out 145K on a table over green tea, handed it to the seller, and she gave us the keys. It took longer to finish the tea than to buy the apartment!! We had to register at a few government offices, and pay a tax of 3K, but that was it. Now we have no payments, and taxes are like $500 per year. Every month my net worth goes up 8K; I wil retire for good (under 50) in less than 10 years doing this - and that only assumes a 6& return on my investments. Last year, I best that by some: 38%! If I was still living in the USA, I’d be buried in debt with a place full of ‘things’. Asia is good training for frugal living.
cool post. I have admired the Asian “frugal” habits for quite a long time. I have a lot of friends who are of Asian descent and they consider me as one of them, even to the point where one forgot I’m caucasian! I’m basically extremely regimented.
“I have admired the Asian “frugal” habits for quite a long time”
Hey Bill,
Here’s why wall street smiles when folks mention China having 1Trill of US old maid cards.
http://news.yahoo.com/s/afp/20070419/ts_afp/hongkongpeoplewang_070419131522