Bits Bucket And Craigslist Finds For April 26, 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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ABX/CMBX Alert!
Anybody notice that Markit has distorted/changed their graph scale so its impossible to see the ABX and CMBX activity? The bottom must be about to fall out if this REIC member feels it has to cover-up the data. Look out below because the last time the data was available the trend was definitely not your friend!
Check it out for yourself. Click on an index to see the new and improved transparency of the mortgage market:
http://www.markit.com/information/affiliations/abx
Whoever is maintaining the subpoena list for REIC fraud please add Markit as a potential co-conspirator.
Great find!
No volatility ever again…flat solid market…hahaha…
P’cola: if it’s not too much trouble, could you elaborate on this? I don’t understand the graphs, and this is an opportunity to learn something about how mortgages are sold. Plus I want to understand how this manipulation is occurring.
I am not a fixed income guy but my understanding is that the ABX Index tracks the prices of various classes of mortgage backed securities collateralized by residential property loans (houses). The quality of the securities ranges from AAA to BBB with AAA being the best and BBB the worst. The CMBX Index also tracks mortgage back securities but instead of prices the data is given as the spread between the securities themselves and the underlying loans. CMBX securities are collateralized by commercial property loans. The quality of the securities range from AAA to BB with AAA being the best and BB the worst. Best means that the owner of the security has a higher chance of receiving both principal and interest back on his investment.
Bond prices going down or spreads getting larger are bad for these securities. Prices and spreads associated with these securities have cratered and blown out respectively lately.
Tantra over at Calculated Risk has made some excellent posts about the nuts and bolts of the MBS market over the last week or so:
http://tinyurl.com/b3kq4
Not exactly, it tracks the price of insuring securitized loans, so it’s bond price less cost of insuring=ABX index. When folks got spooked at the end of Feb liquidity in the insurance market dried up and the ABX fell like a rock, although the price of the bonds didn’t move by that much.
You are right I fumbled. Here’s a description of the index as put out by Deutsche Bank:
http://tinyurl.com/26npaa
I have a question about ABX. Reading their prospectus (yawn), I noticed that they had rules that forced them to remove companies from their pool which did not report numbers in a timely fashion, and substitute new CDOs instead. This makes me think that the ABX could rise in a falling market due to survivor bias, i.e. firms that go bankrupt would be removed from the equation to be replaced with firms that are not going under. Is this a correct interpretation? In other words, that pool of CDOs that is being monitored is not completely static, as far as I can tell.
Those indices all start at 100 and the highest any have went is 102.19. The ones that have always performed well (>95) are still scaled to 110. The rest have had their upper scale limits raised in correlation to their lowest performance. The worst performing indice, ABX-HE-BBB- 07-1, whose previous high was 97.47, had it’s upper scale limit raised to 2000! That is 20x it’s highest ever data point.
Its probably a software bug. Or they are hiding data while they dump a position. Or both.
Thanks all of you for the education.
WAMU Offers New All-in-One Mortgage
“SEATTLE (AP) — Washington Mutual Inc. has begun offering a new mortgage and home equity line of credit bundled into a single loan that allows customers to reset interest rates or switch between fixed and adjustable rates up to twice a year without having to refinance.
The Seattle-based thrift said WaMu Mortgage Plus is designed to help consumers take advantage of changes in their financial needs or market conditions without having to bother with mounds of refinancing paperwork or steep fees.
“We constructed this product with an eye toward what we think is a very large group of customers … looking for more control and flexibility,” Steve Rotella, Washington Mutual’s president and chief operating officer, told The Associated Press.”
http://tinyurl.com/2evzvc
strange that they don’t mention the option of taking disadvantage of market conditions …
I don’t doubt there will be loads of other ‘innovative’ mortgage/credit products in the next months to keep the global Ponzi scheme going a little longer.
It does say that the mortgage requires 10% down. If that’s the case then 95% of the market just got removed.
Does anybody think these guys are going down without a fight? The REIC will do whatever it can to keep this thing going. I would say that this is their Battle of the Bulge. What I say to them is, “nuts”.
WaMu Mortgage Plus is not available to subprime consumers, those who pay higher interest rates because of sketchy credit histories or low income.
Well that’s something i suppose.
I just hope it’s not one of those pesky mortgage products where you have to verify your income.
Ohhhh… how retro.
I would say that this is their Battle of the Bulge.
Or in Vietnam parlance, their Debt Offensive
“Wit’s Up!” today.
“designed to help consumers take advantage of changes in their financial needs”
You must admit, they know how to write poetry…..
Settle down people, these are just new product features to help WAMU with customer retention. They want to avoid having the customer re-draw papers, because when their customers have to take that step, it becomes an event where they can consider going with another lender.
Ah, that’s what “taking advantage of changes in their financial needs means”.
I thought it meant “now it’s easier to become a serial re-financer”. Silly me.
Just back from a sweet kayak trip on the Colorado River…
Did anything happen in my absence?
Gold dropped to $27 an ounce.
LOL. ALIS will not think you are funny, since he just joined the “700″. The “27″ club just doesn’t have the same ring.
James Bond: [to Goldfinger, after Oddjob has just decapitated a statue at the golf club] Remarkable… but what does the club secretary have to say?
Auric Goldfinger: Oh, nothing, Mr. Bond… I own the club.
Too funny..
Pussy Galore: My name is Pussy Galore.
[Bond looks away, and smiles.]
Bond: I must be dreaming.
ROFL………
NYCB - Really funny & perfect timing.
Just finished reading “America’s Bubble Economy”. You know what the difference is between reading 150 posts by Aladinsane and buying “America’s Bubble Economy”? About $25 bucks.
I knew I was underpaid.
Did you read the last section? Is it worth the slog?
I read the whole thing. Although anything is possible the book goes off the deep end in my opinion by the last section. I bought it because I had read a number of articles by Janszen over at Itulip which I found interesting however Janszen only contributes one chapter.
It would have been better if the authors had made the case of gold returning as a reserve currency due to the implosion of the USD and the absense of a suitable alternative fiat currency due to either political or economic concerns about potential replacements. The solution proposed by the authors is like man solving overcrowding on Earth by bailing to Mars. Possible in the future–yeah. Probable within my lifetime–no.
What makes the yellow matter, matter is:
It is nature’s form of wealth.
Rare, but not rare enough that it’s an endangered species.
There’s enough to go around for a percent or 2, of us.
England’s boo boo:
http://www.timesonline.co.uk/tol/news/politics/article1655001.ece
Sounds like an anti Goldfinger, to me.
Oh, incidentally….
I’m pretty sure that Billions in the UK are Trillions here.
Can somebody do the math?
What would you say to a friend who has managed to
1) move from a paid for 2700 sqft home ($280K) value, buy another home at $450K and sell at $40K loss because needed a bigger home. Now in a $600K home with big mortgage. 2) over last 5 yrs, went BK after running a gas station and a smoke shop and now 3), the topper - bought a no name donut shop against all recommendations, didn’t read any paperwork, and was subleasing said building. The person she paid skipped, and now building owner wants his rent (she paid to the thief). She is out $200K and counting. She is 60 yrs.
Any recommendations to pass to her.
None that can be printed on this blog.
Ah come on NYCityBoy……you’re amongst friends
Time to make a batch of Kool-Aid?
1: that’s fairly standard behaviour in my country, so what should I say? I know someone who went from a nearly-paid 70K euro (150K Hfl.) home 15 years ago to a nearly-fully mortgaged 500K home a few years ago, with three other homes in between (all thanks to bubble gains). The current home is now on the market for a cool 1 million euro. I don’t doubt that if it sells the next step will be a fully mortgaged 2 million euro home.
In my area some new housing developments were planned with exactly this kind of buyers in mind. They start building at the lowest price level, where even people with low income can buy a home thanks to all kinds of free loans, government insurance etc. Every 2 years or so a new kind of homes it built with a 1.5-2x higher price, just a few blocks away from the old homes. Because of equity gains and ever declining rates, everyone can trade the original starter home for a much bigger home in the next street (with a bigger mortgage, of course). This trick is repeated every 2-3 years. Everybody is happy, and nobody cares about the ballooning mortgage debt. Why worry if home prices keep going up for ever? (they have done so for about 25 years in the Netherlands and are still rising at a healthy pace).
“… still rising at a healthy pace).”
I need a bigger dictionary
As a friend, you should be searching for the quack who preformed the Jack Nicholson-Cucko’s-Nest-Lobotomy on her.
“Any recommendations to pass to her.”
…always look on the bright side of life…
We could introduce her yo my friend who took all the equity out of the family home, sold his two rental properties and withdrew all the money from from his 401K to “invest” in a distributorship for liquid Chinese tea. He got a truckload of the stuff for a little under $500K. The expiration date has passed. The guy who sold it to him has vanished.
I said stuff, but he just looked at me like I didn’t get it.
Mania can be treated but it rarely is!
Hilarious. Everyone wants to get rich quick.
“The guy who sold it to him has vanished.”
Let me guess: The guy’s name was…Skip.
Any recommendations to pass to her? Howz about:
Ya know girl, Nursing Homes are Not as bad as they used to be.
My 98 yo grandmother moved into an assisted living place eventually. She had to sign over all her assets at some point to qualify. Having out lived 5 husbands, she didn’t have many assets remaining, though.
This could be a time saver for your friend ;(
–
One day she might find that may be there is something more about her that is worthwhile than a big home. Until then she is worth less.
Jas
She needs to speak with a CPA and an attorney and get some good advice. She also needs to consult with them before she does anything relating to investing, whether r.e., business or otherwise.
She might also want to consult with a doctor. If this foolish behavior is untypical for her, it might be a symptom of early-onset dementia.
Have her put her assets in a trust and have it managed. She is obviously not capable of making sound financial decisions anymore.
I have this friend of mine, and he is selling this bridge…….
sell the house NOW - then use the proceeds to get brain transplant surgery - sorry, not really funny, maybe needs a doctor to see if still really sane (dementia?) - even in bubble economic times (when everyone’s nuts), her actions were not sound.
If she can find the person who skipped maybe hire a lawyer. Chances are, there is no good outcome though.
Now we know what “real estate scholars” actually do. They think up ways to make debt socially acceptable, and to socialize a new house-buying instrument: “shared equity financing arrangement.” This will make it socially acceptable to mooch of your parents: “But Daa-a-d, Jody’s parents are signing for HER.”
http://finance.yahoo.com/loans/article/102894/Meet-the-Parents-Backed-Mortgage?mod=oneclick
UK REIC types have been flogging parental help mercilessly for months. Here’s a NYT “lifestyle” article on this Newsweek Nano-trend that was posted a year ago.
“The Bank of Mom and Dad”, by Anna Bahney, New York Times, April 20, 2006.
http://tinyurl.com/yptf5y
This UK story from yesterday …
“Graduates rely on bank of mum and dad”, by Marlene Shalton, Western Mail / ICWales, April 25, 2007.
http://tinyurl.com/27fcog
this has been going on in the Netherlands for quite some time already. The other side of the story is that often the parents see the first home for their offspring as an excellent ‘investment opportunity’. Often it already starts when the kids are studying in another city and the more wealthy parents buy a complete student home to rent out, instead of just renting one room. In some university cities we now have student ‘apartments’ (just a little more than a room) that you can buy instead of rent, they even have special mortgages for this. Of course prices are even more ridiculous than for normal homes; instead of one 200K euro POS student home (usually they are in very bad condition) you sell it as 10x 75K euro student rooms. There are profit opportunities everywhere!
I wonder what the county tax assessor is going to think of that, when it comes time to claim homestead.
I always thought “real estate scholar” was a term used to describe a cheap MBA working for some bank or lender or whoever comes up with these crap ideas.
Since yesterdays close 3 HBs have withdrawn prior guidance for the balance of 2007 and, given housing market conditions, will not issue guidance for the full year 2007……NAR data & govt data show steady downward trend in industry fundamentals….price activity should follow transaction volume down with a lag of 12-18 months… adj.rate and Alt-A resets should be kicking in mid-07 forward to increase foreclosure volumes….HBs still building more units than domestic household formations…..in short, the industry has not yet taken its medicine…..my take, prudent / patient HB shorts will be rewarded with further 40-50 % price declines in HBs……of course, if you are a prema-bull - you could hope for Dow 25000 for the same return…..I’ll stay short……
Agree 100% from one short to another … The downward stock price action on some of the HB (like HOV, down almost 2% yesterday in an up market) suggests someone knows a bit a dirt. The fly in the ointment is the !@#$% market keeps going up, if it turns, IMHO all hell will break loose in the HB sector. BZH just reported dismal results ( and withdrew ‘07 guidance ) Hmmm another potential target ?
BZH is slighly up in pre-market.
Golf is a good walk ruined…
Why you probably shouldn’t bring the clubs down Florida way.
From the Drought Impact Reporter:
“Eighty-one golf courses in southern Florida have been fined $500 each for failing to file a weekly pumping report that is required by the area’s drought restrictions. The pumping reports are to verify that water usage has been reduced by 30 %. From Palm Beach to the Florida Keys, 89 of the 176 golf courses have sent their reports since the restrictions became effective March 22. Golf courses can also be fined for exceeding their allowable water use. Some golf courses have closed or have found other sources of water and therefore don’t have to file a report.”
“Eighty-one golf courses in southern Florida have been fined $500 each for failing to file a weekly pumping report”
Is Paris Hilton required to file one of those?
What about Cramer?
Is Paris supposed to reduce her weekly pumping by 30%???
Gosh, you’re high-octane this morning. One too many Venti’s at Sbux?
“…or have found other sources of water…”
I think that workaround won’t last very long. Clearly, the courses are not operating private desalinization plants, so this should mean, in almost all cases, that they dug their own well (and assuming “gray” water is included in measured usage). Local planners, who probably consider golf a prime example of the free society they despise, will find a way to justify restricting well-water usage. “It’s draining the aquifer!” or something like that.
Home sales down in Maine, but prices edge up
Portland Press Herald Report
Thursday, April 26, 2007
Sales of existing single family homes in Maine fell nearly 13 percent in March, compared to a year ago, according to the Maine Real Estate Information System.
Median prices continued to rise, however, edging up more than 2 percent. The median price of a home in March was $193,750, up from $189,000 a year ago.
In February, median prices had gone up nearly 5 percent, while the number of homes sold fell by roughly a percent.
The March sales figures for Maine were in line with broader market conditions.
The National Association of Realtors reported Tuesday that sales fell by 8.4 percent in March, the biggest one-month decline since 1989. In Maine, however, the steep percentage drop masked an increase in the actual number of homes sold in March — 908, compared to 698 in February. Maine’s performance also contrasts in terms of prices: Median prices continue to rise slowly in the state, while they have fallen nationally for eight months. The median sales price indicates that half of the homes were sold for more and half sold for less.
The sales drop in Maine also was tempered by activity in Cumberland County, where 597 homes were sold. That was on par with last March. By comparison, sales were off more than 10 percent in York County and nearly as much in Penobscot, the state’s three most active counties for home sales. Of Maine’s 16 counties, nine saw price gains.
National sales dropped 11.9 percent in March — nearly the same as in Maine. According to the National Association of Realtors (NAR), the national median sales price for existing homes dipped 0.9 percent in the past 12 months to $215,300.
In the Northeast, the association reported a 5.1 percent decrease in sales. The regional median existing home sales price was $268,600, just 0.7 lower than last March.
Juanita Bean-Smith of Bean & Smith Real Estate in Farmington reports, “National media reports have convinced many local sellers that the market is flat and it will take a protracted amount of time to sell their property. I like to advise my sellers that we now enjoy a healthy, balanced market in which correct pricing is crucial.”
Sharon Millet of Coldwell Banker Millet Realty in Auburn agrees that, in her experience, certain media reports have been misleading. “The national media paints a bleak picture of plummeting prices and sales in many of the major metropolitan markets when, in fact, here at home the number of sales are off slightly in many counties, while prices are generally holding their own or increasing slightly from 2006,” she says.
“This reinforces the fact that Maine’s local markets are dependent on the job market and general well being of the community.Ý The markets are also reflective of whether growth in sales in recent years was caused by honest consumer demand for housing, or if it was fueled by speculative investors.”
http://business.mainetoday.com/news/0704260426.html
My mom and sister live in Maine. Like the rest of this country, Maine’s R/E market has been driven up by investors and 2nd, 3rd, 4th home buyers, (the only people that can still afford R/E). MOST of Maine R/E is in the crapper, while waterfront property is still out of reach for most. That would explain the fact that the median price is higher, YOY. I look at R/E listings for Maine often and it’s pretty stagnant, except, as I said, for the good stuff.
I believe Maine has the highest vacation home ownership rate in ther country. A lot of it is wealthy people “from away” but a lot of these homes are little camps on lakes owned by people of very modest means that have been passed on across the generations.
So you’ve got someone with a $40,000 household income with a little shack on a lakeside lot that could go for $250,000. Yet they don’t sell, as long as they can afford the taxes.
In addition to waterfront property still going strong, non-waterfront home prices are still very high in much of Portland and the fancy towns nearby.
I reported this in yesterday’s Bits Bucket. A Massachusetts family that makes less than $100,000 year and has a $5,000 mortgage payment, due to constant refis and home equity extractions was appealing to Governor Patrick to help them stave off foreclosure.
They blew the loot on braces, tutors, fur coats, self portraits and other middle class Brazil America Walmart junk. Now mom has cancer and is dying.
Today, it appears that Ameriquest has buckled under pressure from state banking officials, and will give them until July to catch up on payments. The Herald has an update:
http://tinyurl.com/248tna
I thought that was an advertisement for a new Addams Family sequel but it was just a picture of the family. Now I know why tigers eat their young.
LMAO. There are truely some bigger weeds in that gene mix that aren’t limited to financial werewithall.
What an idiot. What is he building apartments and paying off credit cards with a house? I bet they’ve racked back up the CC’s trying to keep up with house payments.
Just prolonging the inevitable, that family ain’t catching up with anything.
They have a few months to pack and sell/steal anything left in the house.
Looks like this is how the bailout will unfold — special deals for a few people who strip naked before the American Media Gossip Machine. Survival of the shameless.
Is anyone else on the blog old enough to remember the TV show, “Queen for a day?”
Sadly, yes, I remember
Idiot! Now every FB in the land will be placing a call to the governor. Obviously he cannot help them all. Next it will be “Why did you help them and not help me? Blah, blah, blah”.
I sent this to Governor “Coupe” Deval of Massachusetts and the Boston Herald. (Cause the Globe will not care about higher taxes and corruption).
Dear Sir or Madam,
I strongly oppose any aid to those people who have or will be foreclosed upon.
This is corporate welfare disguised as a bailout of homeowners. The main beneficiaries of this bailout will be the mortgage companies which if I remember…..Governor Patrick has a history with them.
This seems like a very big conflict of interest which the citizens of Massachusetts will recognize. This can clearly be shown in the recent stock up-tick of mortgage lenders when the idea of a bailout was proposed.
The people being foreclosed upon are not victims. I really think you are overlooking a huge part of this and need to ask a follow-up question to these people. “Why did you buy more than you can afford? Why did you pull equity out of your home and refinance?” I think you will find the responses to shed light on some peoples feeling of entitlement and victimization. These people feel that they are entitled to a larger house than they can afford or more toys than they can afford. Then, when a problem arises, they are victims of evil mortgage companies.
There are really only 2 ways people signed on the dotted line for these toxic mortgages.
· People who wanted to make a huge profit flipping the house. (Just like on TV because it is easy money)
· Foolish people who did not take the time to understand what they were signing
We cannot privatize profit and socialize losses.
As far as a bailout is concerned, why stop and helping those being foreclosed?
Hey, I bought some Sun Microsystems in 2000 and it tanked and I lost a lot of money. Can the government bail me out for my stupidity?
Hey, I gave my bank account to a Nigerian diplomat so they could wire money to my account and give me $50,000. But they stole my money. Can the government bail me out?
If Real Estate kept rising and they flipped the house would they then give some of their profit to those who did not make a killing?
People must understand that responsible saving and waiting to buy until you can afford is how to become successful. The current state of greed, lack of savings and sheer stupidity that has gotten us to this point where only a drastic reduction in home prices and restrictions on lending standards will bring this market back to reality and stop this real estate Ponzi scheme.
Good letter.
–
Taxachussets has reputation to protect.
Jas
The obvious solution is for these f*tards to move into a cheaper house. But in Pussified America, no one can ever be allowed a decrease in living standards.
In 2002 I sold my house and moved into an apartment 1/3 the size. You know, it just wasn’t all that difficult. Life went on.
Deval Patrick was a director of Ameriquest, took down some 300k for the gig.
I’ve a feeling Ameriquest was “happy” to help these people….and save Deval (and themselves) much, much more scrutiny.
The merits of their case? Meaningless.
http://www.ft.com/cms/s/f5df94a2-f368-11db-9845-000b5df10621.html
Bank fears threat from credit standards
“A surge in cheap corporate lending with looser credit standards “has increased the vulnerability of the [global financial] system”, the Bank of England will warn on Thursday in its strongest comments to date on financial stability.”
“…BUT IT(Bank of England) INSISTS the UK financial system remains highly resilient, underpinned by a benign global economic outlook.”
Yeh, read that yesterday also. If the head of blackrock ,and other leverage players are warning it’s gotta be much worse than we all know.
also ‘lower prices in housing’.Nothing we don’t already know ,but from more to the chorus..
http://tinyurl.com/2bhutj
Massachusetts plan will use taxpayer dollars to bail out liar loans. Mass residents, call the Governor’s office and your Rep today and tell them that you do NOT want your tax dollars used to reward liars and fraudsters.
“The governor also supports giving financial aid to borrowers who are victims of such fraud and are at risk of losing their homes.”
A lot of tough talk from the Governor about cracking down on fraud by lenders. When are we going to crack down on the lies and fraud perpetrated by buyers? Instead, we’re just going to give them more money to blow.
AAAIIIEEEEEEE!!!!
http://tinyurl.com/2l9435
“Patrick said he would soon file legislation to make mortgage fraud a crime”
Excuse me! Wasn’t it already a crime?
I know. I was wondering about that myself. This guy (the Governor) is a mortgage industry insider (former Ameriquest director) who has already been busted doing favors for his former employer. I am sure that any “legislation” will be window dressing and might even actually benefit the industry. We’ll have to read it carefully if it ever actually materializes.
Apparently not if you’re the
borrowervictim.“Apparently not if you’re the
borrower victim”f@cktard.The governor wisely considers such transfer giveaways as an ‘investment.’ If he can keep them in their houses, housing prices will not drop so fast. Propped-up housing prices keep property taxes propped up.
Sure, he is taking money from taxes and giving it back to people so that they keep paying taxes. This is like taking all your winnings from the slots payout and feeding it back into the slots, hoping for a mega-payhout. But all you have left at the end of the day is just enough to pay for the luxury gourmet buffet at Circus Circus. Actually not- just enough for the $.25 hot dog next door at Slots-A-Fun.
“he is taking money from taxes and giving it back to people so that they keep paying taxes”
problem is that the people he is giving this money are not the same as those paying the taxes. It is a sure way to bail out the stupid by taxing the prudent (who still have some money left) a little extra. But it will probably help local government to keep spending too much a little longer. In Europe this has been going on quite some time already, and it’s even worse there because of the huge HMD and other tax incentives in some countries.
Is it a good or bad thing that I am familiar with all your Vegas references?
p.s. You left Silver City out.
AS I’ve mentioned elsewhere, this reminds me of a small town in Utah where the sole economy is people stealing from each other.
correction: large town in Utah (Lost Wages)
There’s a large town in Utah???
No Cal drought news:
“The East Bay Municipal Water District asked its 1.3 million customers to reduce their water use by 15 % in an attempt to conserve water and hopefully prevent more severe restrictions later. People are allowed to water their lawns up to three days per week, but not on consecutive days or during daylight hours. The district gets its water from snowpack around its reservoir. Golf courses, cemeteries, parks and Caltrans are requested to reduce water use by 25 %. The water district anticipates spending $400,000 to $600,000 on a conservation campaign to raise awareness. Many homes already have water-saving devices, such as low-flush toilets, and may struggle to reduce water use by 15 %. Two weeks ago, the San Franciso Public Utility District requested its customers to lower their water use by 10 %.”
When Hetch Hetchy is only 46% full, 15 or 25% reductions are merely window dressing.
San Francisco runs out of water by late summer.
Want to get away?
I know this year has been dry, but I thought last year was extremely wet.
Irony comes cheap nowadays…
John Muir thought as highly of Hetch Hetchy as Yosemite Valley and was devastated when it was turned into SF’s freshwater source.
I imagine i’ll be seeing what he saw, come the fall.
Bubbly:
The 46% was last year’s water. There is no more.
You’ve got months to do something and desalination is expensive, but got a plan b?
Desal uses a lot of juice, so you’ll need to hook them up to a nuke somewhere devilishly close.
Hush… when it comes to population and taxes and jobs all is fair game. After all, what does Yosemite Valley do for the children? Another source of fresh water to preserve our lifestyle is a matter of national security.
Wonder why they don’t just figure out what average usage ought to be and then gradually raise the per-gallon price of the overage, until consumption matches targets? Residential electricity is billed that way in many third-world countries — the rate per Kwh increases, step-by-step, instead of decreasing as in the U.S. It is because the need to conserve exceeds the desire to charge based on marginal cost.
In Sacramento, for instance, the city charter says that water use will be unmetered.
As Sam Clemens said “Whiskey is for dringking, and water is for fighting over.”
“When Hetch Hetchy is only 46% full, 15 or 25% reductions are merely window dressing.
San Francisco runs out of water by late summer.”
*******
Nobody does “alarmist” like you.
SF is definitely not running out of water this summer. Nor next summer. HH can go down to around 20% before things get serious.
You must forget how it rained and snowed for all but (what seemed like) a few days in the winter of 2006. And 2005 was a soaker, too, especially in the southern part of California (250% of normal in places).
In any case, drought scares won’t be meaningful unless we have another relatively dry winter, like this past one.
If it means nothing, why do you suppose the powers that be, tried to hide the story, by sticking it under “Sonoma County” on the Drought Impact Reporter link, when it was for both San Francisco and Sonoma Counties?
And why was Faux tv news in Reno, the source of this information?
Seems like more of a San Francisco style story to me.
It’s only conspiratal, if you can’t connect the dots~
http://www.foxreno.com/news/11621636/detail.html
If anything, i’m being under-alarmist.
The reservoirs can only hold so much water, 2005 and 2006 were fruitful years, this year was bone dry.
To give you an idea of waste, yesterday we were driving in Westwood, near the Veterans Cemetary and @ 3 pm, the sprinklers were going full blast, watering a vast amount of grass.
Why not do it @ 10 pm, instead?
Evaporation Happens.
What you seem to be lacking is an actual historical perspective on this… as if it’s never going to rain or snow again in California.
Go dig around the Mammoth Mountain website and find the data showing snowfall totals since the early 1970’s.
See if you can glean from the data that this year was certainly not “great” in building the snowpack, but also note that it’s going to take more than one “bone dry” winter for reservoirs to be at dangerously low levels.
Could two “bad” winters in a row do it? Maybe - and we may just find out a year from now. In the late 1970’s and again in the late 1980’s, low reservoir levels were common because there were multiple below average seasons. Some of those well below this year’s total.
[If you can find the data, also note that even in "decent" times Hetch Hetchy goes below 50% capacity quite often. Whatever figure you quoted comes at time when two of the biggest winters on record occurred within the last three seasons.]
So my suggestion is that if we have another “dry” winter next season, save your alarm bells for next March/April.
Besides, it will have more impact when it’s believable.
I live in the Sierra Nevada and have backpacked more miles in nature’s realm than you could ever imagine and know weather conditions much more intimately than most…
You seem to think that there is a water genie that will make everything better. The governor of Florida asked that Floridians pray for rain, a few weeks ago.
How much will your house be worth in SF, when you turn on the faucet and nothing comes out?
You are betting everything on next year’s Sierra snowpack.
Might come through.
Might not.
Really? I’m betting on one year of precipitation, you’re some special backpacker and I believe in genie’s?
I’m betting on multiple years snowpack, as those will provide enough water for this summer and next summer, certainly, and probably even the one after that.
If we get absolutely no snowfall or rain over the next 24 months, then “no water out of the faucet” by summer ‘09 could become a reality.
Do you think we’re not going to have any moisture in the meantime?
Because that’s how you sound.
And you should know better, he who spends time in nature.
We get snow in the winter and Mother Nature stores it for us at higher elevations and in the past has doled it out to us in a mannerly fashion, as the summer progresses…
This is how it used to work.
Right.
But one dry winter does not mean one dry summer.
It would take several very dry winters to make faucets go dry.
Look up the definition of reservoir.
[Hint: It's a storage facility]
You have no idea how much water surburbanites can waste and there are many more of you, than there was in 1976-77, the biggest drought year in living memory.
http://cdec.water.ca.gov/cgi-progs/current/PLOT_SWC
What makes this year the cruelest of all, is that much of March, the temps were incredibly high here and what little snow we had, is gone.
I ran into a couple that told me they’d backpacked around 10,000 miles in the Sierra and we to compare notes and we all agreed, this is no ordinary summer.
It’s already browning up quite a bit here…
Just more OT trivia - in Moab, Utah, the snowpack from the nearby mtns slowly trickles down through enormously thick layers of Navajo sandstone, one of the world’s greatest purifiers. The hydrologist I talked to there (probably the only one there, but won’t name names, he works for the forest circus, I mean, service), he says it takes 40 years for that water to hit the springs that water the town.
I love the La Sals…
The youngest mountains in our country~
Just a mere 25 million years old.
me, too. laccolithic, which means they’re different…
I guess you don’t know that two thirds of all water is used for industrial purposes and for agriculture.
Suburbanites don’t use that much, by comparison.
The data from the snowfall amounts I mentioned earlier no doubt show that there have been drier winters than this past one.
And since this winter, as I mentioned earlier, was preceded by two with some of the deepest snowpacks we’ve had in nearly 40 years, I’ll reserve my “alarm” about whether we’ll run out of water until next spring.
How long have you lived in the Sierra?
Speaking of snowpack…My father who lives on Prince of Wales Island in S.E. Alaska, told me that there is still 18 feet of snow pack around Red Bay, which is on the north end. That is unheard of in this temperate rain forest…He hasn’t seen this in 35 years.
You want to see wasteful, come to Phoenix. Lots of people with lawns, in the frickin desert. You pretty much have to water those every day in the summer, when it’s 120 degrees with 0% humidity. Everything just evaporates away.
NO SPILLOVER
auto nation off 13% in FL and bad everywhere else
who needs cars !
Roadtrippings…
Drove around the belly of the beast that is vegas and it’s unbelievable just how many crappyshacks were built and so few are occupied, especially around the henderson area.
Spent a few days in el lay and I was most curious to see what the residualdents are doing about their extreme lack of freshwater.
They are doing next to nothing.
Of course they are doing nothing. In their little minds the lack of water is “someone else’s problem” to solve. It doesn’t matter that there is no solution (other than to consume less).
They are doing next to nothing.
If by “doing nothing” you mean the stupid patch of lawn on my street gets watered every day when the sun is way up and sometimes it leaks for hours on end on to the curb, then I guess you are right. By the way, hi, aladinsane, nice to have you back.
cassiopeia…
Good to be back~
Anyone have an idea why when I call a realtor on a bank REO, they don’t return my calls? I state I want to look at the REO and to have them call me. I have 3 REO’s on my street that I know of. 85 % of stuff on the market since last year hasn’t sold. Must not be starving yet or they don’t want low sales to hit the neighborhood on these reo’s. Any comments?
maybe the bank dude lost his job and is in fact an unperson
No no - their “employment status is slowing its upward trend”
Talking REO?
Heard it from a friend who
Heard it from a friend who
Heard it from another you’ve been foreclosing around
You say you got an REO friend
You’re out late and very weakened
They’re talking about you and you are going down
But I know the neighborhood
And the crappyshacks were cheap and the loans no good
And the tales grow taller on down the line
But i’m telling you, fb
That I think it’s true, fb
And even if it is keep this in mind
You take it on the run, fb
If that’s the way you want it fb
Then I don’t want you around
I don’t believe it
Not for a minute
You’re under the gun, so you take it on the run…
Got recharged out on the river, eh? Nice. (Crossed the Green for about 3 seconds yest. on the freeway bridge)
Wilderness is the best medicine…
More waterfowl than i’ve ever seen on the Colorado.
Commorants, Blue Herons, Canadian Geese, Mallards, et al.
Must have seen a few thousand~
Saw 3 big Desert Bighorn Sheep as well, one of my favorite animals…
OT - what section did you float? I like to go sit on Gold Bar (near Moab) and listen to the ducks quacking - it echoes off the cliffs and they always look surprised, then start another round…
We do the Black Canyon section and put in just below Hoover Dam.
All flatwater for the most part, so you don’t have to think all that much about what you are doing and just enjoy the passing scenery and approx 25 natural hot springs…
All less than 25 miles from the vegas strip.
Feels like 500 miles away.
nice, so nice…
“Wilderness is the best medicine…”
Never floated down the Colorado but hiked down it from South Rim. Nice brown gushing water.
I did this as part of a one-month backpacking-hiking tour of the Southwest Rimrock Country(1995)
Backpacked in the Escalante for 1 week, then split from my group and did the grand SW tour. Zion,Brice,Cap Reef,Glen Canyon,Nat Bridges,Grand Canyon, Grand gulch just a few of the places. All Long Day hikes, a bit of Canyoneering.
Can Spend a lifetime hiking/exploring Just the Utah Canyonlands, but i compressed it all in March, 1995. Still have my heart and soul in the Sierra Nevadas, which unfortunately I have only touched maybe one percent of the SN trails and a miniscule tiny fraction of the entire region in 150+ man-days spend in the Sierras. Gods Country!
BTW: I am simply Amazed how thw Anastasi Build their Mud-brick homes way high up in the Canyons,as much as 500+feet above the Canyon floor into near-vertical cliffs.
Location, location, location! Things are different there!
If they start selling at double digits reductions, they’d have to reduce those numbers in their books also…
…maybe their just buying some time, until the market ‘always goes up again’…
There are lots of reasons.
1) Some servicing departments will only list with agents, so they can claim “impartiality” when the price is pegged and the 1099 is issued to the FB.
2) They are overwhelmed and get 500 calls per day, mostly from agents begging to list.
3) Once the REO is gone, so is the bank employee!
4) They just don’t care, numbed and dumbed by the market.
Just be patient. You don’t want to buy now anyway. You want to buy after all those REO’s have been on the market for 2 years and the auction to sell them off only has 3 bidders for 100 houses. It will happen in 2010. Until then, the market will keep drifting down in a long slow slide. Anything you buy now will be worth 10% less every year for 3 more years.
Jingle makes some good points….thats why banks don’t want to take back property….They get paralyzed in the liquidation process mainly because of Fed auditing…They prefer it goes to auction because they have no decision to make in that process and cannot be held accountable for any failure of due diligence…
Good points Jingle. Ylokeit, you are more than likely way too early in the game.
implode-o-meter now at 63……….not far to go to 69.
Been away from the game for a week…
What’s the most absurd thing that’s happened, housing wise?
In my absence.
NYCityBoy bought three condos
Casey’s pool. Jeff from SDCIA.
Jeff from SDCIA yep that guy takes the cake. I bet he walks from his Florida homes while trying to keep the rest. I bet Florida doesn’t let him and he has to liquidate everything.
And who *didn’t* see this coming? Jeff was just too cocky, even though his plans were entirely based on the predicted actions of others. Which is a factor he cannot control and therefore cannot depend upon. Big blunder there.
By the way, has anyone heard anything further from that Seattle flipper - Eric, I believe his name was. He had a blog documenting his flipping and his eventual move in the RE biz, but it hasn’t been updated since December (snicker).
I vote for Jeff. From Senior Poster to quivering FB jello. How the mighty investors have fallen.
I found the remarks from the other board members a bit interesting. Only a couple of posters suggested he sell the SLC properties and the reason given was to cover the downside on the Cape Coral properties.
Not one poster pointed out that the whole RE sector was turned into a Ponzi Scheme by the investor dolts who attended the Mc Trump seminars and that he ought to get the hell out of ALL his POS before he is obligated to spend the next 100 years paying off all his lost equity!
He just doesn’t “get it” and neither do any of the other geniuses that frequent that site, at least none that I’ve read to date.
“He just doesn’t “get it” and neither do any of the other geniuses that frequent that site, at least none that I’ve read to date.”
The denial is strong over there. I rolled my eyes over them chastising posters who weren’t being ’supportive’ of Jeff. And they were praising him for being honest enough to admit his problems. Well, praise and support isn’t gonna pay his mortgages, nor get him out of the fix he’s in. What he really is needs a strong dose of reality to clear his thought processes. Think of it as Ex-lax to unblock the flipper’s mind.
Someone said Jeff doesnt work. How crazy to think you can live long term off leveraging loans in RE. I mean there are down years at least half the time where it would make sense to work so you dont dip into equity, even a kool laid drinker would have to admit that? Not at that site, they just move to the next ‘hot city’ like San Antonio supposedly.
Yea, he states that he lives off of the MEW’s on his primary residence.
SCARY…
I tried to sign up to post to SDCIA, but for some reason they don’t like me.
I truly don’t get the illogical advice. The obvious solution (to me) is to get rid of the SLC properties ASAP and do what I could to make good use of the proceeds. But of course they’re “up” and he expects them to keep going up.
Pittsburgh was named ‘most livable’ city? Does that count?
WHite House on the market - best offer, apparently Bush has used HELOCS to finance Iraq…
I live in Kansas City and the 85% I was referring to were non reo’s
More Than 430,000 Foreclosure Filings Reported In Q1U.S. Foreclosure Activity Up 27 Percent From Previous Quarter
Nevada, Colorado, Georgia Post Highest Foreclosure Rates
RealtyTrac™
data:
http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=2313&accnt=64847
charts: http://www.recharts.com/foreclosures.htm
(The nation’s quarterly foreclosure rate of one foreclosure filing for every 264 households was the highest quarterly foreclosure rate since RealtyTrac began issuing its report 27 months ago.)
Now there is an entrprenuer with timing.
NOD’s usually do not result in Trustee Sales, but that is still a huge number. It not only indicates softness in pricing, more importantly it indicates how over-stretched all those homeowners are across the nation. I imagine the last thing those 430,000 households are thinking about is how much MEW they can get this year!
“NOD’s usually do not result in Trustee Sales”
But recently as many as 40% has gone to foreclosure in CA. With the end of the equity grave train (see yesterday’s posts) this ratio could go even higher. Conventional wisdom may shift to the point that when a homeowner receives their NOD they’ll understand that the smart thing to do is stop all payments to the bank because it’s a foregone conclusion that they WILL be foreclosed on.
Agreed. Most of these people will figure that they are upside down and conclude “why keep paying”, especially if they are upside down say over $200,000 or have poor credit and/or put down no money. Why keep throwing away money?
Was that 40% of ALL NODs, or 40% of SUBPRIME NOD’s. Of course most NOD’s are probably subprime NOD’s today. But tomorrow??
Is it me or is Zillow still a joke??? These houses here in Loudoun County that sold in the winter to early spring for 575k+ are “valued” in the 620k+?? Is this crazy or am I???
Zillow is becoming antiquated fast. I don’t think it has the speed to keep up with the current marketplace, if its data is based on past comps. Take our neighborhood in Fauquier, for instance. *No sales* for 18 months, yet 15 or so houses have come and gone from the market. So where’s bottom? Which seller is going to take the plunge? “The Shadow Knows.”
I just did a Loudoun update at http://novabubblefallout.blogspot.com/
It’s not faring as poorly as Prince William County, likely because of growth constrictions. But it’s holding its own with lots of foreclosures.
Thanks for the feedback…I knew it couldn’t be as beautiful as zillow made it sound!!
A man I know just bought a TH in Fairfax, VA. This is a cash back deal which inflated the home value about 10%. There is no way that Zillow count this.
You think the Zestimates are bad, check out that new Homes For Sale feature. People are trying to sell for MORE than the zestimates. I also notice that most of the listings are new home — flipper/Heloc.
Don’t go near MakeMeMove unless you have a barf bucket handy.
I just checked one in Arroyo Grande, CA. The owner had it listed for 3m with a zestimate of 900k
And oh yeh, Quicken Loans is STILL advertising a “you decide what pmt you want to make” loan….what the crap??????
Advertizing the loan and actually funding it are two separate things. LOL!. I bet it’s just a foot in the door kind of thing and they’re just trying to fund other less risky loans. Either that, or Intuit is a great short candidate!
rob
Also, the loan officers have to put some loan apps on the board otherwise they get an *ss-kicking from the production managers once a week. They are also in danger of losing their draws against commissions and henceforth, their medical benefits, etc. if they get canned. So most loan officers will throw anything up against the wall at this point, even if it has no hope of closing/funding. That’s why the mortgage app numbers are bogus and always have been. What matters is what closes - which you notice never actually gets reported.
I don’t believe Intuit owns Quicken Loans. It is a private company run out of Livonia, MI
From their Website: “Quicken Loans Inc consists of Quicken Loans, the nation’s largest online retail mortgage lender; Rock Financial, Michigan’s largest mortgage company; and Title Source, a national title and settlement services company.”
Company history on Intuit’s site mentions Quicken software, but not Quicken Loans. Good thing it’s not “Disney Loans” or they’d have been squashed like a bug.
Countrywide Financial earnings down 22%
By Steve Gelsi, MarketWatch
Last Update: 8:55 AM ET Apr 26, 2007
NEW YORK (MarketWatch) –Woes in the subprime market amid the overall housing slowdown subtracted 22% from Countrywide Financial Corp.’s first-quarter earnings, the mortgage giant said Thursday.
Countrywide Financial said earnings drooped to $434 million, or 72 cents a share in the three months ended March 31, from $684 million, or $1.10 a share in the year-ago period. Revenue fell to $2.4 billion from $2.8 billion.
Analysts surveyed by Thomson Financial forecast earnings of 77 cents a share and revenue of $2.58 billion, on average.
The Calabasas, Calif. lender cited adverse subprime and housing market conditions. “While the company’s core operations delivered what was otherwise a strong quarter, earnings were impacted by charges relating to our subprime activities as well as increases to our loss reserves and related asset valuation adjustments stemming from higher delinquencies and softer housing markets” Chairman and Chief Executive Officer Angelo Mozilo said.
Mortgage banking revenue from subprime operations, which include both production and investment activities, declined approximately $400 million from the fourth quarter.
The company has made policy and product guideline changes to reduce exposure to future subprime losses, “and as a result management anticipates that both subprime production and investments will return to profitability in subsequent quarters, absent a material worsening of market conditions.”
We also probably need to review the Cash Flow Statement, as this lowered income may still be high (it probably includes negative am stuff which hasn’t been collected yet, but has been booked as receivables).
Been doing my walks around 250K condo land in eastern suburbs of Saint Paul and dozens of for sale signs. Even more ominous, totally empty homes with no one living in them and not even on the market. Repossessions or foreclosures??….It happened to my former neighbor that they in the middle of the night just decamped and the county, bank and the local police hot on their tale (they were later found out to be running a Pot farm, there).
Lot of high weirdness going on in the suburbs of Oakdale, Woodbury and Maplewood.
Speaking of high weirdness, did you see that Hovnanian is dumping their remaining land in the Legacy Village project over by the Maplewood Mall? Two remaining land parcels in the development have been put up for sale. I’m not at all surprised: nothing is moving over there. No point throwing more money down that rathole. I just wonder the City of Maplewood thinks about it. After all the developer’s promises, the developer bails prematurely. Heh.
My favorite of the newly sanshomes?
Saw a rather newly homeless type in front of a denny’s.
He had a suitcase on wheels, an electric guitar and some sort of small pet in a cardboard box.
He hit me up for moolah without removing a lit cigarette from his mouth, as his hands were full of the above mentioned articles.
It sounded like this:
goooottaaannny chaaaange?
It was worth a Quarter to me.
As predicted on this blog, unemployment in construction is hitting illegals hard, while the Dept. of Labor releases happy numbers on falling unemployment.
… fallout from the U.S. construction industry, which employs 1 in 5 Latino immigrants, is now rippling south of the border. Growth in remittances to Mexico has slowed to a trickle.
After increasing an average of just over 23% a year since 2000, remittances for the first two months of 2007 were just 5.5% ahead of the same period last year, according to Mexico’s central bank. The figure peaked in May at $2.3 billion and has drifted downward ever since….the remittance slowdown has moved virtually in lock step with the stumble in U.S. home building. Housing starts hit their 2006 peak in May before tumbling 50% by year-end.
Mexico isn’t the only country feeling the effect. Growth in money wired to Guatemala, El Salvador, the Dominican Republic and other tin American nations has followed the housing market slowdown.
http://www.latimes.com/business/la-fi-remit26apr26,0,5742980.story?coll=la-home-headlines
Good…this will finally shut down those freeloaders south of the border…..no dinero heading home…..cheap assembly plant heading to China, India and Malaysia….and a social system where corruption has been on top for 80 years….yep, things are just great.
Sounds like recipe for “La Revolution”….if it was not for USA remittances, it would all sink back into Aztecian mud.
The biggest irony is that Mexico now runs a $60 Billion trade surplus with the US, yet their #1 export continues to be uneducated workers.
Add to this the fact that their oil industry, which feeds gov’t the majority of revenues, is in severe contraction (Cantrell in a 15% yoy decline) with no major fields coming online and you have the ingredients for major unrest south of the border in the next few years. Of course it isn’t going to be any fun on this side of the border either but that is a whole nother subject
No inflation there. A quarter was the going rate for Austin dragworms back in the late 80’s.
Speaking of quarters… a pre-1965 quarter is now worth ~$2.50 in silver value. To me that is the face of inflation.
This got me thinking,
When all these homeowers march back into the rental marketplace, there are gonna be a lot of dog inventory in the local animal shelters. I believe the supply/demand imbalance for good ‘ol Fido will be much worse than we have seen in the past.
The real victims of this ‘predatory’ lending will be someone’s pet…
Oh man, all too true and all too sad. People suck.
What timing — about an hour ago I read an article that somewhere the folks are giving you a free or heavily-discounted shelter puppy if you donate a pint of blood. I guess for a quart, you get a free horse.
Oh…I never thought about the animals. I’m not a pet owner myself or even an animal person, but that IS sad.
Animal shelters, you are being too nice. Many animals will wind up in parks and along country roads. The same people who don’t even have enough respect for themselves to get into a mess expecting everyone else to bail them out won’t care enough about an animal to properly house it.
I hope this isn’t true. What may happen instead is that rentals will welcome people with pets if the rental market softens.
I rent, and I have 3 dogs, a cat, and 9 birds. All it took was a $1K pet deposit. Also, the fact that I had been a homeowner previously made a difference to the landlord.
By the way, my landlord much prefers me as a tenant than the ones who are chain smokers.
The flip side of that may be that more people want dogs for security, given rising crime rates and shrinking law enforcement budgets.
Has anyone ever seen this piece from omedia.org? It’s from Israel regarding our economic fall…a must read…
http://www.omedia.org/Show_Article.asp?DynamicContentID=1972&MenuID=726&ThreadID=1014017
“This bleak prophecy is not only the realm of lonely doomsayers. The highly influential book, ‘Empire of Debt’, by Bill Bonner and Addison Wiggin believes that like any other empire in history, the end of the American empire will also arrive. The authors describe how the enormous trade deficit, burgeoning personal and governmental debts, the real estate bubble and enormous military expenditure will ultimately cause the economic crash of the United States. British economist Bruce Porthouse, is gloomier still, and warns that the collapse of the dollar and the consequent global economic crisis, would cause the collapse of Anglo-Saxon society, to the point of famine in the US, Canada, Australia, New-Zealand, and Britain.”
A great, clear and simple read…
Except the American empire isn’t. Name any empires in history and they actually were empires- resources from the conquered provinces flowed to make the central powers wealthier and to expand even more. America’s wars cost her money, they don’t make her money. They eat up the citizen’s wealth, they don’t contribute to it.
America is anti-empire. When it has had a chance to gain posessions after victories, it has instead willingly ceded them.
Bonner’s basic assumption that there is such a thing as an ‘American Empire’ is flawed, in that the the most powerful nation in history is exactly NOT an empire.
Oh, it’s an empire all right — imploding too. The weird bit is being inside the belly of the beast while the collapse is unfolding (ask a fish about water). Should the homeland care to end its military occupations of Puerto Rico, Germany, Japan, Hawaii, and a couple hundred other odds and sods of real estate, it might just get back to being a country. It’s too bad Mustafa Kemal Ataturk is otherwise occupied (being dead), he’d have made a good 2008 Presidential candidate.
You’re right, in a sense. We’ve got the worst of both worlds — we’re protecting the globe and bankrupting ourselves in the process. That makes us even more likely to fall.
Good book.
In a closet sense, it is. Tho the book refers to the 70’s, “Confessions of an Economic Hitman” gives voice to how our transnationals function in the third world, with the weight of the U.S. military backing them, as well as the IMF, et al….. For a similar, but more strictly historical/linear viewpoint, “A Century of War” by William Engdhal develops another facet of the same activities.
Using “empire” in the literal, 19th-century-Britain sense isn’t accurate. We’ve cleverly moved our actions below the radar and don’t maintain colonial governments….but we do control those economies to our benefit and their detriment, ie, as an empire. This is what Bonner is referring to.
The collapse of Anglo-Saxon society? Ha! Sounds like wishful thinking to me.
America can screw up financially just like any person, business or entity. The fact of the matter is that we borrowed too much, built too many and lived a life of excess. We will pay for this.
On the otherhand, we are a country with large numbers of highly educated citizens, minimal restrictions on business (compared to other places in the world), seemingly lower taxes than other socialist countries and a pro-business government and societial mindset (for now at least!). It’s quite difficult to imagine a crash of monumental proportions when there are so many things going in our favor.
You know the saying, “The rich get richer and the poor get poorer?” well, america is rich and will probably get richer, while poor countries around the world keep getting poorer.
You know the saying, “The rich get richer and the poor get poorer?” well, america is rich and will probably get richer, while poor countries around the world keep getting poorer.
*******
You make the mistake of thinking it’s a zero sum game.
The idea that because some “win”, thereby some others have to “lose” is wrong… because while Americans have gotten richer, so have many others.
Legal Eagle, some phrases in Your post look like great jokes:
> … we are a country with large numbers of highly educated citizens,
> … poor countries around the world keep getting poorer.
I would LOL, but I live in this country so it isn’t too funny:
Some comments:
About education:
In terms of high end scientific education we are ages (about 50 years and the gap is GROWING) behind the Eastern European countries. We still keep importing them, but working in American universities is less and less appealing for foreigners.
In terms of proffecional education we are far behind Far East countries (and the gap is growing). That’s why our “proffecionals” are so easily outsourced.
In terms of general mass education we are behind most European countries and many others.
About “… poor countries … keep getting poorer.” - Yea sure, especially China, and India, and Brasil, and Venezuela, and …
Also an interesting point:
> … seemingly lower taxes than other socialist countries …
Here we are. We are a socialist country with *seemingly* lower taxes than some other socialist countries.
The word “seemingly” is very important here. First of all our taxes do not cover our government expences. Printed money do and this is one of the roots of our problems. Secondly, some taxes are recathegorized as Medicare and Social Security payments, but the corresponding systems provide much less than in “other socialist countries” and the services are constantly reduced. And they are doomed to get BK quite soon.
Too put it simple: our taxes per government services are much higher than in most countries.
> minimal restrictions on business
There are many problems in this too. I came to America from Israel about 20+ years ago. It was a different country. Since then most business opportunities were monopolized by hugh corporations’ burocracies. I don’t want to open a whole new can of worms here, but the ways these burocracies work reflect exactly the restrictions on business in so called “planed economies”.
“Until the 1970’s, currency was managed under the Bretton Woods Agreement … [it] decreed that no country would be allowed to print money beyond its gold reserve. This meant that the global economy was on a gold standard. In 1971, France decided to purchase gold from the United States with its excess dollars. In response to the French request, President Nixon agreed to commit in writing that his country would sell gold to any body at 30 dollars an ounce. Soon enough, though, the US gold reserve ran so low that Nixon had to withdraw his commitment unilaterally. The result was that many countries were no longer dependent on gold; all at once, the restraints on printing money were no longer there – each country could print as much money as it liked. This development was especially beneficial to the American government, as its currency enjoyed an international reputation and it could therefore print more and more dollars.”
HAD TO withdraw his commitment? Not so sure about that. CHOSE TO is how I’d describe it.
This is an interesting article. It’s wildly inacurate in details, but is extremely adequate in principle. The main thing, it shows that our client economies (Israel is the major one) may quickly understand what’s up.
Like in any bubble, the early exits are the primary winners. When China or Japan or Russia will recognize this they will rush to the exit from $$$. Others will follow.
About the events that will trigger it, there may be indeed many of them. One is almost sure: the war with Iran. That’s because (as Israel-Hisbollah war demonstrated) in case of war Iran may be able to close the Persian Gulf for monthes causing huge energy crisis in Far East countries that will increase import prises of goods from them. But even a small thing like housing bailout may trigger dumping of American Dollar worldwide.
At any rate this article is symptomatic and thus very interesting though inaccurate in details. But to be accurate about such a big and a century old bubble (an American century) you need to write a whole book not just a short article.
OK, maybe all true (can’t say, haven’t read the book), but what about when all the other countries are undergoing the same thing (witness Spain’s housing crash)?
Thanks for that link Nurse Liz. Not sure if anyone is keeping the links but now it’s Israel, China, Japan, Russia, Turkey (on i-tulip) that have journalists writing about the upcoming American financial Armageddon.
I know some think certain bubbleheads go too far when they speak this way but it’s hardly only Americans that are worried. The “meltdown” concept isn’t even mentioned in our own media. I find that in itself terrifying.
“The “meltdown” concept isn’t even mentioned in our own media. I find that in itself terrifying. ”
I think that is what has me most worried. The more I see people on CNBC and elsewhere flat out lying about the future prospects of the economy, the worse I know the situtation must be getting. SInce all of the Anglo-Saxon countries rely on us basically for stability and military protection, what happens if we fall into civil unrest as a result of a deep recession or mild depression? Lets be honest, England hasn’t whipped anyone since before 1776, and they couldn’t even handle a minor uprising in Grenada (or was it Faulkland Islands). What will Europe do when the Middle East actually attacks or China calls in its chips from the table (printed money from U.S. and Britain)? I say, keep your powder dry…
Because real estate cycles typically last about two years, economist Watkins said he thinks the local market will start to change by late summer. Sales should pick up then, he said, because buyers will realize big price declines are not likely.
Other economists have predicted frustrated sellers will start dropping prices then, but Watkins said he thinks they will still feel no pressure to sell.
“It’s like a game of chicken, right? Watkins said. “Somebody’s got to make the move and I just think because of the lack of selling pressure it’s more likely going to be buyers.”
Used car salesman turned into economist / Realtor. Last time I was in Ventura county it looked like half the residents were over 60.
“Because real estate cycles typically last about two years, economist Watkins said he thinks the local market will start to change by late summer. Sales should pick up then, he said, because buyers will realize big price declines are not likely.”
hahahahahahahahahahahahahahahahahahahahahahahaha!!!
thanks, cactus. I needed a good laugh this morning.
Don’t be silly - he’s totally right. The article just forgot to mention that he was talking in dag years which is 14 years to the rest of us.
dag = dog. No coffee yet.
Does anyone have any information on Cornerstone Mortgage Group. We are in the process of getting a loan from them and have not heard back from the loan officer for a day or two.
Check the mortgage brokers:
http://forum.brokeroutpost.com/
From the Tucson Citizen: Tucson now ‘extreme’ buyer’s market. Maybe so, but not much is selling…
Wow. There is quite the debate going on over there
They have something there I was to late to catch here on Ben’s blog… Bulls!
Entertaining, to say the least
Kern’s foreclosure rate is triple the nation’s
http://www.bakersfield.com/619/story/128027.html
When I was a lad in el lay, every cheesy movie not really worthy, always said at the end of the preview, “Coming soon to Kern County”
This woulda been in the late 60’s to early 70’s…
According to Zillow, my house has gone up 38.4% in value in one year, and 10% in just the last month! So much for any semblance of reality on Zillow.
I live in the Salt Lake area, and while we have seen some healthy appreciation compared to many parts of the country, things are starting to slow down around here. I am seeing lots of for sale signs and more than a few “sale failed” signs. My guess is the financing fell through on most of them. Our unemployment rate right now is about 2.4% & the building frenzy has been going on for the last 5 or 6 years with no signs of slowing down. I’ve read this blog long enough to know it’s just a matter of time before Salt Lake starts to feel the effects of the bubble. In the mean time all I hear is “It’s different here”.
“Sale failed”? Does that mean it fell out of escrow?
Here in Colorado they don’t slap the “Sold” sticker on until it closes. Prior to that they slap on an “Under contract” sticker whena offer comes in.
I wish I could make heads or tails of Zillow. According to that site, the house we rent went up 13% from late ‘04 to late ‘06, with a big spike in the early fall of ‘06, then dropped like a rock in January by 26%, and now has recouped 6% since. Similar for neighbors’ houses and local mini-mansions. I’m guessing (?) that the extreme down-up of connect-the-dot data points doesn’t reflect very much other than the way “median price” can skew the stats. The market value graph comparing our home and zip code with the state and national numbers shows a far less dramatic picture for those last two stats. But if we are still net “down” here with you just laughing at a +38% estimate from zillow where you are, then our local down 17% or so YOY might translate to…nah, *couldn’t* be …but now I’m very curious about recent comps. Also wonder if Zillow could in some cases undershoot, or at least vary in how much it overshoots, depending on the market.
FNMA bailout! Taxpayers are screwed:
http://news.yahoo.com/s/csm/20070426/ts_csm/aloanhelp
“Fannie Mae, America’s leading mortgage lender, says it plans to help as many as 1.5 million “subprime” borrowers – people with low credit ratings – refinance out of high-interest loans.”
Starting to get stinky. Anybody smell a rat?
I smell lots of rats — Demo-rats in the Senate, in fact.
The choppers are ready for take off…
The choppers are already aloft.
where were the do-gooders when it took me 6 months to sell my house and I did not walk off, but paid the 20% difference between my sell price and the principle owed to the title company?
STUPID ME! 1.5 million people will be bailed out. Are there any responsible people left in this nation?
Have you all seen this?! New reality TV show with realtors as the stars (from today’s NY Times; I couldn’t post the URL because it’s part of a slide show):
“HGTV is billing its new reality series, “Bought & Sold,” as a “Dynasty”-style drama, full of calculation and competition, but its pleasures, such as they are, are of a gentler sort. Its characters are real estate brokers at Remax offices in Northern New Jersey, and they seem to be a kindly group, not much given to backstabbing each other or pulling the wool over their clients’ eyes. This Sunday, the first episode, is a day with Vanessa Pollock and Sam Joseph. She is a model/actress-turned-broker; he is a former window display artist, most recently the creative director of Macy’s Herald Square. She has two young couples who want the same Dutch Colonial-style house, and she really, really likes them both; he stumbles a bit, but not too terribly, in his trial tour with the owners of a historic estate, to whom he is pitching himself. As characters, they are mildly appealing; so too is the placid, passive fun of watching a video ramble through a few houses. But it all seems so easy, if your prism is the dark and desperate Manhattan market (or if you have any awareness of the subprime mortgage crisis). Presumably HGTV’s market is nonurban, and the suburbs of New Jersey are comparable to viewers’ own habitats. But what a show they might have made with Manhattan brokers. “Dynasty,” indeed.” PENELOPE GREEN
GIVE ME THE GOOD LEADS!
Has anyone heard from txchick57? Did I miss something? I know I miss her posts.
Hey, txhchick57, where are you? Are you OK?
She had a bad ear infection that was terrible but after she buried a St. Joe statue in her backyard she was miraculously cured.
I thought they’d take out Ben Jones first, but it looks like they were able to find where txchick lived easier. :O
Wolverines!
WSJ p. D1 article today on shrinking levels of HELOCs and home equity loan debt:
Home Equity Stalls
By Ruth Simon
Word Count: 1,180 | Companies Featured in This Article: Wells Fargo, Bank of America, J.P. Morgan Chase, National City, Citigroup
After years of piling debt on their homes, Americans are becoming more cautious about using them as a piggy bank.
A cooling housing market and higher interest rates have made homeowners more reluctant to tap the equity they may have built up in their residences. The amount borrowers owe on their home-equity lines of credit has slipped in the past six months, to $561 billion at the end of March, the first such decline since 1999, according to new data from Equifax Inc. and Moody’s Economy.com Inc. Although that decline was partly offset by a pickup in fixed-rate home-equity loans, …
GS
Don’t know if you saw this but there was an interesting take on the link between US housing financing and the carrytrade in the comment’s section of Russ Winter’s blog yesterday.
“Aggregate Mortgage Debt in the US is not a Short Position on the Dollar. American homeowners did not borrow US Dollars, only to sell the dollars in exchange for, say, British Pounds, Australian Dollars, or Euros, and then denominate their mortgages in those foreign currencies. The practical effect of such a loan swap would mean Americans, who earn dollars, would have to service their mortgages in increasingly expensive currencies. On the contrary, US homeowners borrowed dollars at interest rates increasingly depressed not only by the Federal Reserve, but by the Banks of Japan and China. If anything, US homeowners borrowed Yen, synthetically, as Yen flooded towards US Treasuries in what some have called the great symbiosis, where the US Treasury prints dollars or bonds, and the Banks of Japan, China, Taiwan, and other Central Banks buy those bonds. If there is a massive short position in a global currency, the short position therefore is on the Yen, not the Dollar. The US Housing Market has been flooded with Yen, and other Asian Central Bank buying of US fixed income instruments since 2000. In fact, much of the foreign central bank buying of US fixed income since 2002 has increasingly favored US Housing Agency Bonds, as the Housing Bubble inflated, through 2006. This has only served to make the world’s structural long position in the Dollar even larger.”
http://www.gregor.us/Blog2007.htm
“The US Housing Market has been flooded with Yen, and other Asian Central Bank buying of US fixed income instruments since 2000.”
This is closely related to Bernanke’s assertion that the global imbalance problem is not due to Americans spending more than they earn, but rather due to Asians spending less than they earn, and investing the proceeds in the U.S. debt market. Hopefully this problem will continue for a few centuries.
“The bursting of the US Housing Bubble will cause the Dollar to strengthen.”
This assertion would clearly be true if we truly had a free market economy in the U.S., as a drop in the price of homes and a tightening of lending standards that made it easy for people with no money to nonetheless purchase homes is the mirror image of an increased U.S. dollar in terms of the amount of U.S. housing it can be used to purchase. But because the Fed’s mortal fear is deflation, a War on Savers is underway to offset increases in the value of the dollar as an unoffical means of bailing out the housing market through a stealth inflation tax. This explains why the U.S. dollar goes down while the headline U.S. stock market indexes go ever higher.
Actually Gregor comes to the conclusion the USD will weaken substantially as the long dollar positions are unwound near the end of his article:
“Accordingly, now more indicative of the dollar’s current posture is the taste test the Dollar Strength Syllogism received in February 2007, when it became apparent that US Housing was going to make another leg downward. What happened therefore this February, when it became clear that some Mortgage Lenders would go bust, that Home Inventories would rise, and home prices fall? Did the dollar strengthen? No. Quite the contrary. The Yen strengthened, and strengthened very hard. The Dollar crumpled, and started a new leg down. Why did this happen? Because the world is long dollars. Weakness in US housing, whether measured by Price, Inventory, or Foreclosures didn’t cause anyone to have to “buy dollars to cover their short position in the dollar.” On the contrary, it caused the world’s currency markets to sell the Dollar to price-in future economic weakness, which, in a way, is its own corrective mechanism. The world understands that one way to deal with the debt in the US is through a weaker, not a stronger dollar. Americans are not in control of their currency’s exchange rate.
Meanwhile, the Dollar continues to be printed into oblivion, via government borrowings, and is sucked up every day by central banks, commodity producers, and oil producers. The short position in the dollar is so small and insignificant by comparison, we can say it barely exists. The unwinding of long positions in the dollar could go on for years, and the world would still be long dollars. If there is anyone short dollars, and needs to buy dollars to cover their position, there is an endless line of sellers only too willing to take that trade.”
aladinsane wrote earlier: Been away from the game for a week…
What’s the most absurd thing that’s happened, housing wise?
In my absence.
The dog or something ate my post, so will repost for those of you who didn’t hear:
White House on market, FSBO, best offer. Apparently Bush took out a number of HELOCS to finance Iraq…
Is the current occupant @ 1600 Pennsylvania named Orwell?
Hello sports fans!
http://www.latimes.com/sports/la-sp-oldmike26apr26,0,2709943.story?coll=la-home-headlines
L.A. where you separate the men from the boys with a crowbar. At the very least the writer had guts. Welcome back Tx - hope you are feeling better.
LOL, Well tx you sure did prove the old adage, “Be careful what you wish for…”. I was all eager to read one of your insightful financial links and then … oh my! Ah what the heck, glad to see you’re still with us and on top of your game!
Housing bubble affects Utah State Prison
More anecdotal evidence for how the housing bubble affects other industries:
Many farmers went to tree farming in an effort to improve their lots (no pun intended) as commodity prices went down and housing became huge. In the Four Corners region, many of these farmers buy their rootstock from Utah State Prison (near Point of the Mountain in Salt Lake, called Poin’ de’ Moun’ by the prisoners), who has a large nursery run by felons. According to a salesman there, sales are down at Poin’ de Moun’.
Coup d’gras Poin’ de Moun?
Flip That House … it’s so easy, it’s a no-brainer!
http://www.thestreet.com/pf/funds/realestate/10353156.html
the fact that this crap is being published makes me think we still have a ways to go before we bottom (unlike what the NAR reassures)
There is a water shortage warning in Norther California.
Where will they find water for all these new houses in Arizona, Nevada,
Southern California ?
They can buy dehydrated water - just add water (sorry, old joke).
Let’s see: you liberated some of your equity and bought a monster SUV. You live in Temecula and work in San Diego. In the stop’n'go traffic on I15 you probably do about 13 miles/gallon, so that’s 8 gallons per day, 40 gallons per week, 160 gallons per month. You’re not going to like this:
http://money.cnn.com/2007/04/26/news/economy/gas_prices/index.htm
NEW YORK (CNNMoney.com) — Gasoline prices, already above $3 a gallon in some states, could charge higher this summer and hit $4 a gallon in some locations, according to one industry expert.
Pump prices were supposed to peak below $3 a gallon this May, then drop off before the summer driving season got into full swing, according to the Energy Department’s price forecast.
Well, we’re not even out of April yet, and the nationwide average price for a gallon of unleaded regular has hit $2.87.
“More and more communities are going to see gasoline that approaches or exceeds $4 a gallon,” said John Kilduff, an energy analyst at Man Financial in New York. “Where we’re currently at with prices, that’s a given.”
Five states - California, Hawaii, Oregon, Washington and Nevada - already have average prices above $3 a gallon, according to the motorist organization AAA. In California, the average price of gas has reached $3.35 a gallon.
Kilduff said it will be in those states, and possibly New England and the northern Midwest, where prices have the best chance of hitting $4 a gallon, mostly as a result of localized refinery problems.
I smile and wave every time I pass one of those HELOC-funded 10mpg behemoths on my way to work.
Would anyone care to comment on QID. Essentially an index of shorts I believe? Feel free to give opinions, etc. I realize it isn’t specifically housing related, but given the general view that the stock market is overvalued, I thought I’d give it a shot.
I have been looking at QID as well and would be very interested to hear any opinions.
The End of National Currency
Benn Steil
From Foreign Affairs, May/June 2007
“…But the dollar’s privileged status as today’s global money is not heaven-bestowed. The dollar is ultimately just another money supported only by faith that others will willingly accept it in the future in return for the same sort of valuable things it bought in the past. This puts a great burden on the institutions of the U.S. government to validate that faith. And those institutions, unfortunately, are failing to shoulder that burden. Reckless U.S. fiscal policy is undermining the dollar’s position even as the currency’s role as a global money is expanding….
…The precariousness of the dollar’s position today is similar. The United States can run a chronic balance-of-payments deficit and never feel the effects. Dollars sent abroad immediately come home in the form of loans, as dollars are of no use abroad. “If I had an agreement with my tailor that whatever money I pay him he returns to me the very same day as a loan,” Rueff explained by way of analogy, “I would have no objection at all to ordering more suits from him.”…
…The current account deficit is partially fueled by the budget deficit (a dollar more of the latter yields about 20-50 cents more of the former), which will soar in the next decade in the absence of reforms to curtail federal “entitlement” spending on medical care and retirement benefits for a longer-living population. The United States — and, indeed, its Chinese tailor — must therefore be concerned with the sustainability of what Rueff called an “absurdity.” In the absence of long-term fiscal prudence, the United States risks undermining the faith foreigners have placed in its management of the dollar — that is, their belief that the U.S. government can continue to sustain low inflation without having to resort to growth-crushing interest-rate hikes as a means of ensuring continued high capital inflows….
….As for the United States, it needs to perpetuate the sound money policies of former Federal Reserve Chairs Paul Volcker and Alan Greenspan and return to long-term fiscal discipline. This is the only sure way to keep the United States’ foreign tailors, with their massive and growing holdings of dollar debt, feeling wealthy and secure. It is the market that made the dollar into global money — and what the market giveth, the market can taketh away. If the tailors balk and the dollar fails, the market may privatize money on its own.”
http://tinyurl.com/yssnry
Got gold?
2007 Council on Foreign Relations
China - US Relations
An Affirmative agenda
foreword
“No relationship will be as important to the twenty-first century as the one between the United States, the world’s great power, and China, the world’s rising power. China’s development is directly transforming the lives of one-fifth of the world’s population, and is otherwise influencing billions more. China’s rapid economic growth, expanding regional and global influence, continued military modernization, and uneven human rights record are also shifting the geopolitical terrain and contributing to uncertainty about China’s future course. After thirty-five years of “engagement,” the United States and China have a relationship that was truly unimaginable two generations ago. At the same time, there are some Americans who believe that China’s strategic interests are incompatible with those of the United States.
The Council on Foreign Relations established an Independent Task Force to take stock of the changes under way in China today and to evaluate what these changes mean for China and for the U.S.-China relationship. Based on its careful assessment of the developments in the country and China’s likely future trajectory, the Task Force recommends that the United States pursue a strategy focused on the integration of China into the global community and finds that such an approach will best encourage China to act in a way consistent with U.S. interests and international norms. The Task Force concludes with a series of recommendations aimed to reinforce recent efforts to deepen U.S.-China cooperation. The overall message is that while the United States should not turn a blind eye to the economic, political, and security challenges posed by China’s rise and should be clear that any aggressive behavior on China’s part would be met with strong opposition, U.S. strategy toward China must focus on creating and taking advantage of opportunities to build on common interests in the region and as regards a number of global concerns.”
Caution 131 pg pdf
On one of the first few pages the writers apologize with
“First, China refuses to sit still and be evaluated.”
I hope some of these idiot politicians of all political persuasions in Washington read this report before they vote on “Another cause of the month” syndrome.
http://tinyurl.com/2p2yth
Here’s a solution to the FBs problem - as part of a bailout, the gubmint cvould make them move to little 2-acre plots in places that are dying (Kansas and Nebraska) and grow food. Places far far from malls… and where you HAVE to drive an old pickup. Sort of a mandated back to the earth hippy movement (hey, legalize hemp, make paper with it, tell the Chinese to go to H-E-doublehockeysticks)…
SOrry, the above won’t work, too logical…
Don’t forget eastern Colorado…probably the most depressing place on earth.
GaelicNonSequitur posted up above a story from the Tucson newspaper, Tucson Citizen.
The comment section is a hoot! Bulls!
Get a free account and join the fun!
“Liquidity is a self-reinforcing process; investors are more willing to buy an asset they know they can sell easily. But if liquidity suddenly dries up, some investors might end up owning assets they neither want nor can get rid of. That might make a virtuous circle turn vicious.”
U.S. houses in bubble markets aren’t looking so liquid these days. I am amazed anyone wants to buy a house, given the high cost of catching a falling knife. Are current buyers generally rich, or just mighty ignorant?
http://www.economist.com/finance/displaystory.cfm?story_id=9091342
Here’s a new one for my neighborhood…
A new listing in our price range just showed up. The agent is advertising it as a corporate relocation. Hmmm….
A quick check of the tax records verified my suspicion: it’s a foreclosure that completed about two weeks ago. Realtors lie like dogs.