Bits Bucket And Craigslist Finds For May 4, 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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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Awash in Liquidity / comstock
peter shiff on cnbc / what record high….?
Asian investments ” the dark side” / economist
UK Housing: Watch Out For The Cracks / Economist
http://immobilienblasen.blogspot.com/
UK
wo years ago the long boom seemed to be petering out. House prices rose by only 2% in the 12 months to August 2005. But following an interest-rate reduction that month, the market revived. House prices are now rising by 10% a year, close to the average growth of 12% in the past decade. In London and Scotland they have surged by around 15% since early 2006.
Here is another article while we wait for the first FL article from Ben
http://www.safehaven.com/article-7484.htm
a-i:
Powerful Article.
Thanks~
New ITULIP article on the bust!
http://www.itulip.com/forums/showthread.php?t=1295
“The top forty percent of all income earners pay 99% of all taxes. The top 1% pays 35% of all taxes with that set to rise to 40% with current legislation in Congress. Capital gains Taxes are slated to rise to 31% from the current rate of 15%, further discouraging investment and risk taking in funding Capital and business creation.”
That is because they (we) are the ones with all the money!!!
We can’t raise the taxes on the poor or middle class, because they have NO savings, any cut in their takehome is a cut in their spending.
70% of the economy is based on those 60% of people that pay 1% of taxes spending every penny they can get thier hands on.
If we raise the taxes on them, it kills the economy, and that 1% that pays 35% of taxes, won’t be paying as much taxes, because their income will plummit.
I used to be a big… So cut spending, person. Then I took a long and hard look at the budget. Okay, could slice $100 billion out of defense and let the military industrial comples die. Maybe another $50 billion if we cut everything else to the bone.
That leaves us with a $100-200 billion dollar national debt, which still means we can’t cut taxes on the rich.
Look, it pi$$es me off that my fiancee and I (getting married this year) will be paying $20K federal income tax, $5K state tax, $3K property tax, $24K to social security and medicare counting the employeer match. Add sales tax since they get us coming and going. 30%+ taxation rate. Come on!!
But, what are the choices?
Tax people that can’t afford it, sucking the guts out of the economy, causing me to lose my huge paying job that is dependant on them spending, and making me take a much lower paying one? Make the poor people demand more wages to pay their taxes, sucking the profitability out of business, sucking the income out of the riche people’s paycheck?
Pull a Ronnie Regan, W style tax cut and explode the deficit again. Making ever more and more of each revenue dollar go to paying interest on the debt?
Stop paying interest on the debt, or turn off Social Security, or cancel benifits to veterans, or turn off Medicare, or let everyone out of jail and stop prosecuting crime, or cancel the armed forces, or stop any highway maintenance?
This article claims there is a problem, and its only solution os to slice the pork. Sorry, but that pork is hundreds of millions, not the hundreds of billions that would be needed to give any meaningful tax relief.
So, if not tax the rich, then WHOM do we tax? In not tax the rich, then what do we cut?
We will cut the dollar until the endgame.
D in PHX;…….Who do you consider Rich ?? The Person making $200,000. in NYC or the person making $200,000. in Billings Mont. ?? Are you going to Tax both @ the same rate ?? One is MUCH richer than the other based on income…Are you going to Tax them at the same rate as a person making 5 mil a year ?? Flat tax with a value added componet to catch the cheaters is the only way IMO…
Well said, Darrell!
have updated a quick rundown on the jobs data
Dead M.V. couple investigated for R.E. Fraud.
http://www.ocregister.com/ocregister/homepage/abox/article_1680350.php
I read this one last week. At first I thought it was desperation murder-suicide out of shame for their crimes. Actually, she was crazy and the cops had to shoot her. Contrition and conscience are lacking in RE fraudsters.
From the Charlotte, NC Craigslist.
Loan officer from Countrywide looks for subprime borrowers:
http://charlotte.craigslist.org/rfs/324116039.html
Whatever it takes to stem the layoffs. Countrywide has a lot of space in an office building down the street. Saw an armed security guard hanging around outside the lobby a week ago. Guess the cutbacks are starting there. Another friend told me his lending firm just cut 43% of staff, including an underwriter will 11 years at the company. Alt-A and A paper. No subprime.
“The Subprime Home Sick Blues”
As per Bobby Z…
Johnny’s in the loan department
mixing up the financial medicine
Many will be out on the pavement
Thinking how they can get saved by the government?
The man in the security guard outfit
Badge out, laid off
Says you got a bad debt
You need to get it paid off
Look out kid
It’s something you did
You know when
and you’ll not be doing it again
You better duck down the alley way
Looking to mooch off a new friend
The man in the coon-skin cap
In the big pen
Wants $327K
You only got ten ($10.00)
Don’t need a realtor to know which way the prices go….
That post is gone. Probably best to copy and paste the text of really good Craigslist ads, since it seems that every single one that makes its way onto this blog gets flagged and deleted.
Nobody pooped themselves on the 3 train today. That usually means a big up day for Wall Street.
BWAHAHAHAHA! Eff Wall Street.
That must be quite an event in the high heat/humidity of August!
Ew.
Got Lysol?
neW Yawk……whata town. Only there does the shat factor on the train elevate the mood for impending bull session on street of Wall.
Front page article in the Houston Barnacle about the local market slowing down:
http://www.chron.com/disp/story.mpl/front/4774311.html
Houston-area builders rein in construction:
http://www.chron.com/disp/story.mpl/business/4774120.html
it would be better if they gave the worst year for comparison
Well, to sum things up:
Strong local economy + growing population + cheap housing + overbuilding - easy money = declining market.
The worst year was 1987 or so when we were in a localized economic depression.
points to the difference this time
all in 2001 all out 2005
last time decline was in stages
85 oil patch
86 tax change
etc…….
For many it would be hard to acertain a “worst year” in the greater houston area…
For many it would be hard to acertain a “worst year” in the greater houston area…
Yes, but unlike California’s hellholes I don’t have to spend $500,000 for a tract house two hours from the office.
Parts of California are indeed hellholes, but it’s a dry heat.
The only real difference between a hellhole in TX and a Hellhole in CA is that 300k, prop 13, and a shorter commute.
Houston Barnacle. That’s a good one, Lou.
Here in Tucson, our leading local paper, the Arizona Daily Star, is often referred to as the Red Star.
My sis lives in Tucson and I always look forward to reading the red star when i’m there…
Kinda a mix between the Weekly World News and standard a/p reporting.
Hovnanian Enterprises Inc. said Friday its fiscal second-quarter loss will be wider than previously forecast after selling fewer homes amid still-tepid demand in the housing market.
http://www.forbes.com/feeds/ap/2007/05/04/ap3685812.html
Look for their stock to be up 5% today.
Packman: You are so right. This stock market stymies me. I’ve started questioning whether I should start buying again.
They must be anticipating bad weather in May and June. Isn’t that the reason why houses don’t sell?
Also, the baseball All Star Game is July 10, so there goes that month.
Mother’s Day and Father’s Day are good whipping girls and boys as well…
There’s a couple of months we can blame things on.
Can we blame high school and college graduations too? And what about all of those weddings in June? They suck up a lot of time that could otherwise be spent at open houses.
I’ve heard that lot’s of people have birthdays during that time frame.
What the HB knob bonnets don’t seem to get is that there is interest just not at their price point. I don’t understand why that single point is so incomprehensible to them.
Lower the Fing price and your $hit will sell.
Last night a friend called me with news of her brother who is three months late on his mortgage. She asked me if I knew how foreclosures happen.
All I could relate was that once I was 48 hours late with my mortgage payment, the lender was sending me all kinds of opportunities for “loss mitigation” - and my check really was in the mail!
Background on her brother- he is last on the list for foreclosure sympathy. He hasn’t worked in, oh…forever. The last time he had any serious money, from a land development deal about 7 years ago, he blew it all by investing in - you guessed it - tech stocks. Since then he has ridden the RE boom home equity extraction train. As his house appraised higher, he kept ”releasing” more money.
He drives an Audi, dines at the best restaurants and shops at Whole Foods and gourmet supermarkets only. He also supports his girlfriend, well did until the house ATM stopped spitting out bucks.
The word must be out already about the Massachusetts foreclosure moratorium, because his sister made mention to me of some kind of “foreclosure forgiveness” she’d heard about. But she didn’t realize it was only in MA, and she also doesn’t know that it’s a phony cardboard dummy kind of “relief”.
I don’t think FBs realize how $hiatty lenders can be when they hold the note on your house and you ain’t comin’ up with the scratch. A lot of folks are in for a rude awakening.
BTW, friend’s brother’s house is in one of those areas in which you’d never expect a foreclosure to occur.
I expect a foreclosure to happen in ALL of those areas where foreclosures never occur.
Here in Florida, they’re a-occurrin’.
Yep… its just a year away in some areas…
I finally convinced my fiancee that waiting on my time frame is smart (previously, it had been only a hold until March of 2008). What did it take to convince her? Enough friends scared for their jobs (she’s in the 401k side of banking).
I’ve seen foreclosures in 90274/90275 before. It will happen again. Last time prices dropped ~40% in 90275 (less in 90274). This time? Wait and see…
Got popcorn?
Neil
Tell your Friends Deadbeat Bro, he’d better RENT an apartment with a 2 year lease By Next week………..because once the No payments and Foreclosure gets on his credit report No landlord will rent to him….
Time is of the essence, he has to get out of that house ASAP
Hey, dj, I found you a gig. I’m serious. Go to yesterday’s California thread and read about the strawberry picker suing the realtor. Check out my comments. I’m thinking of doing this myself for some extra cash. There’s money to be made in finding FBs who bought from realtors with deep pockets. They have O&E insurance, so it would sort of work like personal injury. Looks like an excellent paralegal opportunity.l
Thanks man……..i needed a good laugh today…
But why not? with all the Mortgage fraud, there has to be some ” financially responsible” Brokers who have deep pockets…..they all couldn’t have “drunk the kool-aid” and be in debt to their eyeballs..
dj, I’m actually somewhat serious about this. Those of us like you and me who became “unemployable” according to corporate standards for personal and professional reasons (outsourcing, family leave, self-employed,etc.) have to make our own jobs. Since there’s insurance involved, attorneys are more likely to take these cases on the come, because they can usually just make a couple of blowhard demands and then settle. Bring in the business and take a cut. Heck, I bet if you put a small classifed ad in the local paper or on the net, you’d get a ton of response. Craigslist would probably work. Just find a good RE or even PI attorney who is hungry and wants the business. You qualify the FBs. The major qualification would be the RE brokerage they did business with. If that firm has E&O insurance, (errors and omissions), you’re off to the races.
You may also want to inform your friends DB Bro that it’s kindas hard to get a rental without a job. Walmart is always hiring, as they are always losing workers to Target.
Got 10% down?
Nothing irks me more than people who live beyond their means, except for those who do it knowing that they can always count on a family safety net. Sometimes I think these people have it right: get what you want and figure out how to pay for it later. Personally, I couldn’t sleep at night; but these people probably sleep fine, losing sleep only when they can’t get what they want.
Sometimes I think these people have it right: get what you want and figure out how to pay for it later.
Ha! ain’t that the truth…from time to time I have envied friend’s bro for that very reason . Until she called me last nite I was under the impression he was still trying to get a drive-by appraisal so he could squeeze more cash out of the abode! I guess that well finally ran dry.
No tears for dat boy, though…he’s cute and charming enough to find some lady to support him. That’s how he got the $$$ for the 1999 land deal…a lady.
Know the type. They can sometimes be desprate when cornered and they discover that charm that has served them so well in the past impresses noteholders and the sherriffs they send very little.
They’re called “narcissists”.
Charming liars who care only about themselves.
Wait - there’s more!
He didn’t even buy the house…his mom signed it over to him. You are so right about him caring only for himself. The only ones who care about the mom getting evicted are the sisters, one of whom has an in-law suite ready for mom.
Can you imagine this type of operator getting any kind of foreclosure “forgiveness”?
He’ll lose the house. Since his sister asked for your advice, I would urge her not to throw away any of her money to help him - even if he ends up on the street. These narcissists will waste anything given to them - what a shame that his mother gave him a house. Every family has at least one of these characters, including mine. And if they end up homeless and you want to help, the smartest thing to do is pay a landlord directly to keep them housed. Never give them money directly.
They can sometimes be desperate when cornered
Sometimes they don’t even have to be cornered.
http://www.smh.com.au/news/national/inquest-links-husband-to-wifes-death/2007/04/30/1177788029271.html
The MA foreclosure moratorium will be struck down by a judge in no time at all. The state has no authority to tell lenders that can’t take their properties back, and most of the buyers were beyond stupid if they thought they could borrow a seven hundred thousand dollars for thirty-five cents a month for the next thirty years. To rescue them as victims, when many were victimizers themselves, hoping to flip for massive profits, is laughable. I give this one less than a week.
“tell lenders THEY can’t . . .” Sorry
The state has no authority to tell lenders that can’t take their properties back
Man, you have a lot more faith in the judiciary than I do. From what I have seen, states can do whatever they want to as long as they can find a legally sustainable reason. In this case, they seem to be claiming criminal activity on the part of the lenders - I’d guess that would be enough to uphold the moratorium, at least until the lenders can arrange to pay off the judges.
They cannot make such a blanket assumption on the part of all lenders concerning all loans. In order to be legal, laws of this kind have to be narrowly defined and crafted, and even then can be challenged. I suspect this ridiculous attempt to buy minority votes in MA (since only minorities are mentioned in the sob stories quoted by politicians) will be overturned pronto. Or modified in such a way as to pull the rug out from all the deadbeats and crooks hoping to be rescued at taxpayers’ expense.
From your mouth the the judges’ ears, I hope. It always seems that the deep pockets (the lenders) take the hit in these cases; and Joe Greed goes for the ride with the disenfranchised class.
Even if they get away with the laws, they know that there are consequences. Who will buy MA paper, knowing the precendent set by the state?
Not so quick to assume judges will overule the government. For some reason we commonly forget that judges be de facto and de jure are as much a part of the government as are legislatures.
Will the government overrule the government? Maybe…
If you go back and re-read that article that was posted it said that the state (after being called by FB) would call the lender and “ASK” them to rework or give a grace period (my wording) for the loan.
I don’t think that the state can arbitrarily void a legal contract without some sort of court proceeding. The article sounded like the lender’s decision was totally voluntary (with some prodding from the state). That was my take on it at any rate.
A foreclosure moratorium would send this market into true freefall. If it stands, lenders would REALLY tighten up their lending standards as they could truly lose their investment if the foreclosure environment gets bad enough.
The financiers hire the top lawyers from the most prestigious firms. They have the money to do so. I’m thinking the lenders will get their way.
There is nothing in the MA “moratorium” that has any legal bearing at all.
The state will “ask” lenders to do…something. That’s it. All the lender has to do is say NO.
This is not a law or a mandate or anything. Its vapor to create the illusion of “doing something”. I give Deval Patrick credit; its a pretty cleverly disguised piece of nothing.
That’s what I think, too. They make a show and pretend they have some kind of authority, but if they try to enforce the moratorium, they’re doomed. Note, the moratorium is separate from the asking lenders to modify agreement part of the equation. First the freeze, then the begging. But, the freeze is too broad to withstand a challenge.
Nevertheless, I am glad I have done almost all my lending in a right-wing state whose bread is buttered mostly on the side of being a better place for business than CA.
There is part of this that has legal bearing: That is the part that will appropriate additonal funds to create a new permanent department, rent office space and hire more, in order to ‘help’ people. They will help you with the same customer service skills all state employees so proudly display.
How about the fun clauses that state that after you are late, at some point they can ask for the entire loan to be paid off. I can imagine people that think that in the end, after being 2 months late they’ll just sell some bling every month to make another couple of monthly payments (staying 2 months late) until their lottery winnings come in…
Perp Walk
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20070504/NEWS/705040306
The one time I lived in a HOA, we had a fellow do some work for us. We kept him on a tight, supervised schedule, and the work got done, because the major payoff was at the back end. He actually did a good job. Then, the HOA, seeing what he did for us, decided to hire him to do some work for the association. They gave him a deposit up front and he disappeared. Never just hand over money to a contractor. It has to be doled out tightly and then the guy has to be supervised. These people are hosed. This sort of thing happens over and over, TV stations and newspapers do stories about it, and people STILL hand over money to creeps like this. Go figure.
jobs report
service and gov = BS
construction losses way uinder reported
there isn’t a legal in construction no where ,dude
88,000 new jobs and only(25,000) or 31% of them were government. We need to contact our representatives and demand more.
After all this is our childrens future.
So every new real employee is supporting 1/2 of a new government employee.
No wonder people are in debt.
Not to mention the gov’t (which in the end is us).
You forgot to add that of the remaining 63K over 21K went to work for not-for-profit corporations. Leaving 42K to support their families as well as the not-for-profits families and the government workers families.
Some interesting UK personal debt statistics….
“Average outstanding mortgage for the 11.6m households who currently have mortgages is £95,170 ($ 190.000)
Average interest paid by each household on their total debt is approximately £3,525 ($7,000)each year.
Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,550($9,000) per average UK adult at the end of March 2007. ”
http://www.creditaction.org.uk/debtstats.htm
Travel agent:
So let me understand this? You are looking to buy a one way ticket and the parameters are that you don’t care where you go, as long as the country in question doesn’t have an extradition treaty, with the U.S.?
Take this bus to Cuba! -monty python
My husband and I rent a condo from a woman who bought a few years back and couldn’t sell it (or she was hoping to sell it for more later). The building has never sold out and yesterday we learned that the developer is dropping the price of the other unsold units from 325,000 to 290,000.
Our LL paid 320,000 several years ago. And she recently tried to sell it for 308,000.
Ouch.
Make sure she Didn’t spend your deposit, and get a years lease it will protect you a lot more then a month to month…..and the Lease goes with the sale of the house
so you could get the new owner to pay all your moving expenses if they want to break your lease.
Yes a lease works both ways.
We have a 2 year lease. The deposit is in escrow. And we’ll have been here for 4 years by the time we leave so she’ll have trouble taking off for “wear and tear.” And I have nothing but time, double damages and small claims court here I come (we’re in PA, it’s double after 30 days)!
We looked up her house on Zillow she paid 780,000 in NJ. The real estate taxes must be killing her. Just got married, baby on the way.
It kills me, we make 250,000 a year and spend 2000 in rent. She’s a nurse and her husband is an engineer, maybe they make enough to cover it. Still wouldn’t want to be paying her mortgage.
/fiscally conservative
IIRC you’re in Phila.
Just curious…is the condo you rent in Manayunk?
I’ve said too much already.
LOL I hear you -
have you read my posts today?
I’m living in fear that my friend (with DB bro) or any of her kin will be reading this blog for the first time in their lives… :-/
Poodle: You are smart, not just fiscally conservative. It would have never occurred to me to put a rental deposit in escrow - I just wrote it off mentally. What will you do with all your money?
When I had rental units, PA landlord-tenant law stipulated that security deposits had to be held in escrow. Not everybody does it though. Poodle sounds like a savvy tenant.
Vanguard index fund:) We have savings in e-trade at 5.05% and we plan to start investing in index funds. US, global and emerging markets. We max out the Roth IRA and that’s it. No stocks for us. Figure you can’t beat the street. This is the first time in our lives out of college where we’ve had money so we’re rather not be idiots about it.
That and we like good wine. Now I can buy a $50 bottle and not wince. Just enjoy how good it tastes. I worry about inflation destroying the American dollar. And I can’t be smug about not buying when we did. We made a lowball offer for a place in the city (Phila) and it was roundly rejected. Someone else’s greed saved us from our own stupidity. We just didn’t compound our error by making more offers.
How can you possibly be eligible for Roth IRA with that kind of income (250K)? I would like to know, for I want Roth IRA too…
Long story. You’re right we won’t qualify for one next year but we went from 50,000 to the above figure within a year.
Poodle, We rent in Sacramento for $2,000/mon. Out of town flipper bought the house in 2006. Paid $740,000. The wife was complaining the other day she has to add $3,500 to our rent to cover the PITI, bonds, HOA, etc. The same model recently sold for $540,000 with $54,000 cash back to the buyer!
And, yes, it was mortgage fraud, w/ 100% LTV 80/20 loan. I just don’t know how these brokers coming up with these stupid lenders. There are still a few out there. Hello, Option One. Check your underwriters’ bank accounts. The only thing I can figure is the payolla goes all the way up the chain. Amazing. Amazingly stupid.
I don’t understand how people live that way. For a while we “only” had 10,000 in the bank. And we worried every day. “What if something goes wrong, what if one of us gets into a car accident and dies…what, what, what.” We wouldn’t have had enough money to hang on for very long.
Of course I also have extra food and water “just in case.” Thank you crazy Mormon relatives — apparently it’s genetic!
/not Mormon
If I may hop on the schadenfreude express…
In the DC area, wife and I rent a 2/2.5 condo across the street from metro for just less than $2k per month. The owner bought it last April for over $500K. PITI alone (assuming the most conservative 30 year w. 20% down) is, I think, about 3500 per month. That does not include the approx. $400 monthly HOA and the special assessments for ongoing litigation, which most recently was $800.
Similar units now selling for approx. $400k. Crazy…
Honestly, wife and I are treating our deposit as sunk cost at this point. I don’t know how she will be able to hold this place until the end of our lease. We will be willing to move for 2 month’s rent and moving expenses, or the bank can buy us out.
It’s great to reach a point in life where you have enough saved to cover all of life’s exigencies. Then you can loosen up and have a little fun. Those who get there are lucky.
Poodle^2 play EQ? /commands are a sure sign!
EverCrack? Goodness no. But I spend a fair amount of time on the net. Way too much time.
I have trouble thinking of usernames and I don’t like to use the same ones for different sites because that’s just stalker fodder. I looked over at my dog and there was my username:)
Old yellow’s up $4.20…
Smoke Signals?
Up more than that now; it’s not smoke signals, just burning the economy for heat. Pay it no mind.
my white stuff is taking a nap
San Antonio, Texas market slow down.
http://www.mysanantonio.com/business/realestate/stories/MYSA050407.01A.BuildersSlow.359f7cc.html
This was in the OKC paper this morning:
[Oklahoma] bucks trend; strength projected in home building
Double-digit growth in several [OKC] suburbs spells continued long-term strength for housing construction in the Oklahoma City metro area.
That’s according to several sets of numbers presented to home builders Wednesday at the Home Builders Economic Roundtable organized and sponsored by First Commercial Bank in Edmond at Quail Creek Country Club.
Last year’s construction slowdown notwithstanding, Edmond, Choctaw, Newcastle, Moore, Mustang, Tuttle, Blanchard and Piedmont each saw population growth of 10 percent or more from 2000 to 2005, said Monty Evans, manager of research and information services for the Greater Oklahoma City Chamber of Commerce.
The five fastest-growing cities were Piedmont and Blanchard, each with 28 percent, followed by Tuttle with 25 percent, Mustang with 21 percent and Moore with 16 percent, Evans said.
The 2006 slowdown in home building has cast little shadow on 2007 because it was the first decline in five years and came after three years in a row of record-breaking construction as reflected by single-family building permits, he said.
The 10-county area represented by the Greater Oklahoma City Chamber saw peak permitting in 2005 with 7,642 permits issued, Evans said.
Home building was off statewide last year — with permits totaling 15,702 units, down 14.2 percent — but the number of permits issued in February, 1,285, was the highest of any February since 2004, according to the Oklahoma Department of Commerce.
That’s a sign that Oklahoma is bucking the national trend, said Deidre Myers, director of research and economic analysis for the agency.
Myers pointed to another positive in Oklahoma’s housing numbers: 88.1. That’s the proportion of housing units permitted here last year that were single-family.
She said that’s a sign of stability since families usually occupy single-family dwellings. It makes Oklahoma fifth in the nation in rankings ranging from a low of 37.2 percent in New York to a high of 95.5 percent in West Virginia, she said.
http://www.newsok.com/article/3048891/?sp=1
In the 1930’s in the midst of the dustbowl, Okies came to the Central Valley of California in vast hordes and soon perhaps, the 4th generation of said Oklahoman/Californians, might be headed back…
Ngas
same in LA + katrina money flowing from your pocket to deadbeats in NO LA
Money Magazine is running an elaborate spread today:
For sale: Scenes from a bubble
Wondering how home prices got so high - and why they now have to fall? Here’s the story of what hit you: an amorality play in four acts. Money Magazine reports.
(URL in case the anchor tag doesn’t work: http://money.cnn.com/magazines/moneymag/realestatebubble/2007/index.html?cnn=yes )
Surreal scenario: Money Magazine is in competition with Ben Jones’ Housing Bubble Blog!
——————————————————————————
For sale: Scenes from a bubble
Money Magazine reports.
The buyers: The Quams and the too-good-to-be-true mortgage
Stretched by their loan, the newlyweds rented out their second bedroom to pay the bills. (more)
The brokers: Would you get your mortgage from this man?
One broker calls the industry “a disaster,” and he’ll tell you so on the radio. (more)
The appraisers: Price estimates made to order
A homeowner doubts he can sells his house for what it was appraised for, and now he’s stuck there. (more)
The investors: How to get rich trading “idiot” loans
Investors have made a fortune trading bonds backed by mortgages. (more)
I just wanted to say thank you to all those who replied to my question re: Charlotte, North Carolina yesterday. The comments were incredibly helpful, and I very much appreciate them. I especially appreciate the level of detail; that will be really, really useful.
I will keep everyone posted. Thank you once again! It’s nice to be able to count on one’s fellow bubble bloggers!
You are welcome.
If you are trying to figure out where to park your down payment money, then you do realize the world is awash in cash (interest rates suck, stock market is too risky for short term money). It’s pretty much treasuries.
“It’s pretty much treasuries.”
Treasuries = a fixed series of future cash payments denominated in $US.
Members of the developed countries’ CB cartel are playing a dangerous game which could easily turn today’s cash tsunami into tomorrow’s inflation, with much higher treasury yields accompanying a bond market crash. “Risk free investments” are no longer risk free anymore when M3 is hidden from view.
Maybe this’ll help you out?
GLOBAL MONEY SUPPLY
as of 05/03/07 Country
YOY %
Russian Fed. M2 42.29
China M2 17.78
India M3 16.79
Australia M3 14.34
Brazil M2 13.75
Denmark M3 13.36
United Kingdom M4 12.61
Mexico M4 11.03
Korea M3 9.79
Canada M3 7.81
OECD Total M3 7.35
United States M2 6.40
Germany M3 6.16
Switzerland M3 3.65
France M3 2.72
Japan M4 2.63
Spain M2 1.98
It appears that lots of countries have the printing presses fired up on full bore.
Should home debtors who accidentally caught themselves brand new falling knives be entitled to break their purchase contracts? These FBs are like a guy who rides to the top of the biggest hill on the roller coaster with a smug grin on his face, but then demands the ride operator let him off just after the car starts heading down hill.
An article at the top center of p. A1 of today’s WSJ print edition discusses this latest manifestation of the housing bust.
———————————————————————————–
As Market Cools, Home Buyers Seek a Way Out
By Michael Corkery and Ruth Simon
Word Count: 1,328 | Companies Featured in This Article: Hovnanian Enterprises
In the latest fallout from the housing market’s decline, disputes are breaking out between builders and buyers who signed contracts for new homes and condos when the market was hot — and now want to get out of them.
Even as many of the new buildings are completed, buyers are filing lawsuits claiming they were duped into purchases they couldn’t afford, or victimized through fraudulent investment schemes. Some are scrutinizing their contracts looking for loopholes, or searching out tiny flaws in finished homes that might allow them to back out without losing their deposits.
For some builders, the disputes are contributing to cancellation rates as high as 30% and writedowns in some markets. “People will go to great lengths to get out of a legally binding transaction,” said Larry Sorsby, chief financial officer of Hovnanian Enterprises Inc. “They were willing to ride the real-estate boom on the way up, but some are not willing to ride it on the way down.”
http://online.wsj.com/article/SB117824625742291888.html?mod=home_whats_news_us
I stopped my quotation at least one paragraph short:
“Newly constructed homes make up only about 15% of total home sales. But a wave of building helped fuel the run-up in housing prices during the real-estate boom, especially in Florida and California. As the market started turning last year, prices on new homes and condos quickly stalled, then began dropping. That gave skittish buyers time to get cold feet.”
Could someone who understands the laws of economics better than I do please explain how a residential construction mania in FL and CA could help create a run-up in housing prices? Because every economics book I have ever opened has assumed that a rapid exogenous increase in supply would result in prices that were dropping, not “running-up.” That suggests some “other factor” led to the price run-up, not a building mania.
Of course you are correct, GS. You would think that Wall Street Journal writers would write more accurately. And the “other factors” you refer to have been well documented on this blog.
“Because every economics book I have ever opened has assumed that a rapid exogenous increase in supply would result in prices that were dropping, not “running-up.””
Stucco, don’t buy into the “free market” packaging that we’re spoon fed daily by those who insulate themselves with socialist guarantees.
I don’t buy into it. In fact, I believe capitalism would work far better without so many socialist guarantees. When the economic history of the U.S.A. from 1940-2010 is written (the post-Roosevelt era which was largely defined by govt social insurance programs), I expect it will have much to say about the destructive effect of subsidized socialized insurance on the national wealth.
“I don’t buy into it.”
In the early eighties I was a high rise window cleaner. one year, I was handed a 400% increase in my insurance premiums…in one fell swoop. The talking heads informed me that higher insurance rates and more lawsuits would lead to safer working conditions. Today, the job is still the same, and the same risks exist. What did change forever was my net income.
Stucco,
It is a perfect example of modern market analysis. When two things happen at the same time, it is assumed by “analysts” that one caused the other.
analyst….anal, coincidence?
For that matter… how can an increase in supply of a commodity ‘help fuel’ an increase in their price? Shouldn’t it be the other wa around?
I would argue that prices currently are dropping, and the cause is a rapid increase in supply of McMansions fueled by crazy loans and speculative purchases, which is currently coming to terms with a dearth of end-user demand.
“or searching out tiny flaws in finished homes that might allow them to back out without losing their deposits.”
Tiny flaws? TINY flaws? BWAHAHAHAHAHA! Most of the houses built during the boom probably have MAJOR, easily detectable flaws. All they need is a good, bulldog home inspector (business should be booming for these guys). Also, if the homes are in southern climates, (Florida, Texas, Louisian, Mississippi) get a health inspector who can ferret out the Chagas bug. Kind of like a termite inspection, only in this case, Chagas causes serious health conditions. They’ve found them in homes in Louisiana. Just about anywhere guest workers have been, they’ll probably find Chagas bugs in the house.
Sorsby is up on his hind legs braying about “legally binding”. BWAHAHAHAHAHA! The rule of law in the US is shot, a**wipe. And you and your kind contributed to its demise.
Ruth Simon should receive some kind of Housing Bubble journalism award for her excellent and witty articles on the subject of the collapsing bubble. The article linked above has a subtitle “Builders Face Lawsuits, a Rash of Complaints; the $266,000 Refund.”
This is elaborated in the article as follows:
“Dennis Freeman, an attorney in Aventura, Fla., said he is representing a family who bought a roughly $1.6m condo in a waterfront high rise, expecting a private entrance. But, he said, the family has now learned that the door to the garbage chute, which is shared with neighbors, cannot be locked. “The privacy of my client’s apartment has been lost,” said Mr. Freedman. He is suing to rescind the contract.
Mr. Freeman recently settled another case in which the developer agreed to return a $266,000 deposit to a condo buyer who claimed that the size of the pool deck and gym were smaller than the developer promised. Mr. Freeman said he was surprised by the settlement. “To me, it’s a reach,” he said.
Let’s hope the whole article trickles down to the syndicated press by Sunday!
The SD Union Tribune Business section has an AP article that hints at a plan to use the S&P 500 to reflate the bubble. Didn’t this same plan fail in the early 2000s, “accidently” leaving many Main Street investors as the proud owners of falling knives?
——————————————————————————-
S&P hits key mark, a big deal to Wall St.
Index should mean more on Main St.
ASSOCIATED PRESS
May 4, 2007
NEW YORK – Sometimes 1,500 is bigger than 13,000.
The Standard & Poor’s 500 index’s move above 1,500 after seven years marks a psychological milestone for the index, which most investors should care about more than the oft-cited Dow Jones industrial average.
Although the Dow grabs the headlines, the S&P 500 is the one that millions of investors are making money on – it’s the basis for many widely held mutual funds.
The S&P’s climb puts it within range of its March 2000 closing high of 1,527.46 – when stocks were inflated by the dot-com boom – but observers say the index’s push into its current range is more justified on this return trip.”
SAME STORY, DIFFERENT GFs
http://www.signonsandiego.com/uniontrib/20070504/news_1b4sp.html
This may be the current run-up’s “Jump the Shark” moment.
And that’s a shame. Those that have been in the market for the past four years have made very good money. Now, based on all the extreme pessimism out there, the market has 1-3 good months yet to go at minimum, perhaps 12-24 months more. All will depend on valuations and how quickly those who swore off the stock market become entralled and confident with stocks once again. If it happens quickly, the end will come sooner.
Either way, now that the trend chasers are beginning to reappear, things could get interesting. And unstable. Trend chasers are those who bought into the market in 1998/1999, lost a boatload of money, ’swore off stocks forever’ and are now, FINALLY, dipping their toes in once again.
What I’ve seen blossom on this very board during the past two weeks is amazing. Why all the sudden interest in stocks?
“Why all the sudden interest in stocks?”
It gets interesting when the headline indexes are hitting new highs on a daily basis against the backdrop of tepid to gloomy economic news from Main Street. At some point, the divergence between Wall Street’s euphoria and Main Street’s pain will end.
This is precisely why don’t watch much television or have cable. I’ve learned over the years that the talking heads found there know little about macro-level events, which are by far the most important to individual investors. Very few can see the forest for the trees.
They never examine population trends/growth rates. For example, they don’t note how our rapidly growing population (30 million more people every 10 years in the USA) will render all this doomsday talk about what will happen when the 76 baby boomers retire. (Answer: Not Much. Population growth will counter their departure, as will huge population growth overseas).
They never discuss the flow of money from country to country. They do not examine how the psychology of investors as markets change. They don’t examine the behavior of bears and bulls and explain why those who subscribe to either often make poor decisions.
They don’t discuss the available of cheap weaponry and what it means to the stability of governments - all governments - worldwide. They don’t talk about how incredibly lucky the world has been during the past 125 years to have one superpower (the USA) follow in the footsteps of another superpower (Great Britain) that not only spoke the same language but also had very similar ideas of how life should be led.
They don’t note how having illegal immigrants from Mexico is much better than another alternative: illegal immigrants arriving from Islamic countries. Most of us here don’t like illegal immigrants crossing our borders (I don’t), but would you rather have jihadists entering or Mexicans?
I’d opt for the latter, thanks. Mexicans not only share our work ethic, but our religious ethic as well. Mexicans are Christians. Has any talking head even mentioned how crucially important that is to our long-term economic well being? To have two countries with the same religious beliefs on both side of the border? Doubtful.
We had better find a workable solution that benefits both the USA and Mexico (and Canada). I’ve often wondered how Mexicans would react if we made a direct appeal to them and their government to peacefully absorb their country into the United States - one province at a time - over a period of 100 years.
GS, in my not-so-humble opinion, it’s the above stuff that truly matters, not the panic-laden, spur-of-the-moment ‘discussions’ polluting cable television outlets.
I’d opt for the latter, thanks. Mexicans not only share our work ethic, but our religious ethic as well. Mexicans are Christians.
Quite a few of these good mexican christians are causing deaths on PA highways due to their propensity for drinking Corona la cerveza mas fina before getting behind the wheels of their vehicles.
To the extent that the INS has actually noticed and is starting to deport them.
I’ve posted enough about this subject the past few days. I’m over it.
Adios Jose* arrivederci Giuseppe *au revoir Jean-Marc *Auf Wiedersehen Dieter *good-bye Joe6P…handoff to palmetto or spike666…
I’ve often wondered how Mexicans would react if we made a direct appeal to them and their government to peacefully absorb their country into the United States - one province at a time - over a period of 100 years.
Its already in the works:
http://en.wikipedia.org/wiki/Security_and_Prosperity_Partnership_of_North_America
Can you say North American Union?
Wow! — I had no idea. Thanks, In Colorado.
Care to offer any opinions of your own? I’m interested. (I have no opinions, of course, as I know very little about the attached.)
You know, this board is great. It’s neat how so many people try to come through for one another.
To Phillygal- Yeah, the whole subject is exasperating and mind-numbing. But it’s not so just for us…it’s for Mexicans here and back home as well. Remember that all most of them want to do is to become like us, to contribute to an ideal we hold near and dear. That in itself is a wonderful thing.
All of us here and there (Americans, Mexicans, Canadians) have to remain focused on how best to accomplish what needs to get done. Deporting Mexicans is not addressing the problem. Nor is giving them amnesty or citizenship. Both detract our attention and energy away from determining whatever the solution actually is.
Why are more Mexicans fleeing their country than ever before? What can be done to make living in Mexico more appealing? How do we help Mexicans build and ensure a freedom-loving, prosperous country across our southern border? And do so without spending money?
I want a strong Mexico, not a third-world Mexico.
Why are more Mexicans fleeing their country than ever before? What can be done to make living in Mexico more appealing? How do we help Mexicans build and ensure a freedom-loving, prosperous country across our southern border? And do so without spending money?
Hmmm…I dunno. Maybe their President and ruling legislative body might have a clue…? Maybe you can ask President whoever happens to be their comandante-en-jefe of the moment…
Remember that all most of them want to do is to become like us, to contribute to an ideal we hold near and dear.
Never hear of
La Reconquista?
“Uncle Sam Stole Our Land!”
illegal alien apologists = boring. ZZZZZZZZZZZZ…
Yes, I’ve heard of both. If people think that most Mexicans share in this line of thought, they are mistaken.
“…illegal alien apologists = boring. ZZZZZZZZZZZZ…”
> Are you under the impression that I’m an apologist? I am most definitely not. I just recognize that shipping illegals back to Mexico without addressing the issues at hand will solve absolutely nothing.
Should illegals be in this country making money and using taxpayer paid services? Absolutely not.
FWIW, I spent a few years in Mexico City when I was school aged. Mexican school children are taught that the US stole the SW from Mexico.
Demonstrating/Rioting on “May Day”, carrying signs written in Spanish… a certain lack of empathy to the local culture is shown.
I want a strong Mexico, not a third-world Mexico.
In aggregate Mexico is not a poor nation. The problem is the distribution of wealth.
Quite a few of these good mexican christians are causing deaths on PA highways due to their propensity for drinking Corona la cerveza mas fina before getting behind the wheels of their vehicles.
Boozing is a major component of Mexican macho culture. Granted this is not unique to Mexico, but part of the problem too is that the people we get from Mexico are her least educated citizens. Mexico basically dumps her dregs on the US.
“Are you under the impression that I’m an apologist? I am most definitely not.”
Are you under the impression that Orwellian doublespeak cannot be translated here? Troll alert.
“Either way, now that the trend chasers are beginning to reappear, things could get interesting. And unstable. Trend chasers are those who bought into the market in 1998/1999, lost a boatload of money, ’swore off stocks forever’ and are now, FINALLY, dipping their toes in once again.”
EXACTLY. Same as it ever was.
“What I’ve seen blossom on this very board during the past two weeks is amazing. Why all the sudden interest in stocks?”
See above…you just explained why.
Indeed. And so it goes.
It’s been said many times over that it takes three manias before trend chasers finally get the message through their thick heads that chasing trends is a sure-fire way to lose your shirt.
I wonder what the third and final mania of this current once-every-100/200-years set will be? I’m not at all sure it will be stocks. Too much recent pain in the memory banks for most chasers.
I’m thinking it will be something surprisingly innocuous and seemingly non-threatening - like coins, gasoline-powered ‘antique’ cars, etc. Maybe even celebrity pimping.
Eudemon, in my case, I bought in 2002 and recently sold individual stocks and converted US stock mutual funds in my retirement accounts to cash, bonds, and international mutual funds. I’m wondering if I did it too soon, and you would say that I did.
No, actually I wouldn’t. In fact, I’d say ‘Congrats!’ and mean every word of it. And I do.
You may miss out on some of the domestic stock market run-up (2-25% - no one knows exactly), but who cares. You’ve likely doubled your money since 2002, you just secured much of your gain, and you’ve avoided getting creamed. Sounds pretty damn good to me! Nice work. 95% of all people out there would love to do what you just accomplished. Your discipline has paid off.
Incidentally, by ‘cash’ I hope you mean that you’ve a money market account or a CD paying you 5-6%. If it’s in a savings account, move it to a cash instrument that will earn you more than 1-2%. Otherwise, you’ll be sacrificing your hard-earned stock gains to inflation. Don’t let all your discipline of the past five years go to waste now! Those extra 2-3% that you might be letting slip by now are valuable as hell.
WATCH YOUR FEES! Don’t ever pay brokers or banks commissions or high fees (> 0.50%) to manage your cash on your behalf. Brokers and banks may spent 1/10 of one second annually to ‘manage’ your cash. Why pay them $10 a year to do it? (I’d say something about such people right about now, but I’d likely get banned for saying it….)
“U.S. economic growth is a fairy tale! When such gains are measured against the gains in the price of just about anything people buy, or in just about any foreign currency, it’s a whole different story. For example; measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum….
…In January of 2000, the U.S. accounted for a staggering 31% of global GDP. While that percentage is still an impressive 28% today, it will likely fall to 20% over the next several years. This will certainly be true if Asian currencies, particularly the yuan, are allowed to rise to more realistic levels. Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose.”
Euro Pacific Capital
May 4, 2007
http://tinyurl.com/3atsrr
Once the bottom really drops out of the dollar, I expect U.S. GDP to fall below 10% of global GDP. By then the world will surely have realized that the U.S. economy has not been the locomotive of global growth, but rather the caboose.”
That’s what happens when we allow our economy to be based upon producing non exportable goods (like houses) and services.
“That’s what happens when we allow our economy to be based upon producing non exportable goods (like houses) and services.”
That’s also what happens when our economic policy encourages gambling on negative-sum games (like purchasing homes one cannot afford) instead of productive activities.
The average investor in the US stock market the last 4 years broke even at best! If you converted Euros into the US market you lost money, the price of gold has increased 250%, the 500% increase in cobalt, the 150% increase in food and after all this rally you still have to pay taxes on it. A 50% rally in the stock market with a 30% decline in the dollar counts for squat. That is why the US ranks #56 as the best place to invest your money in the world. If the US government has its way with a further devaluation of the dollar, then the 50% gain over the last 4 years goes to ZERO. But you have the privilege of paying Uncle Sam for losing your money.
Since you appear to be a US centric investor this will mean little to you, but for others “the best-case scenario is that the dollar loses only half its value in the next few years,” says Peter Schiff, president of Euro Pacific Capital Inc.
That is why I and others are bearish on the US stock markets. Why would any reasonable investor throw good moneys after bad?
This is depressing. I truly hope this isn’t you or anyone else on this board.
“The average investor in the US stock market the last 4 years broke even at best!”
>If that’s the case, then something is seriously wrong with how the average investor thinks about and approaches investing in general. Read on.
“If you converted Euros into the US market you lost money,”
>Currency trading isn’t investing. Converting currency from another country or region’s denomination to U.S. dollars and back again is not investing. Nor is converting pesos into yuan, or yen into Euros. Currency trading is best-guess gambling at best. In some cases the odds are in your favor, most of the time they are not. It has nothing to do with buying shares of ownership in for-profit companies (which is what you do when you buy stocks). When you trade currency, you own nothing but the currency itself. Currency trading is risky as hell. It’s fast and furious. Speed of transactions these days is literally in nanoseconds.
“…the price of gold has increased 250%”
>Gold also is not an investment. Gold is something called a hedge. You purchase a hedge as a practical means of insurance/defense against national doomsday scenarios. You invest in gold so that you have something left to your name if the communist Chinese storm the U.S. Capitol, a meteorite vaporizes Asia, or if terrorists drop hydrogen bombs on DC, NYC, Philly, Miami, Atlanta, Chicago, Houston, Denver, San Diego, Los Angeles, San Francisco and Seattle. You don’t buy gold in order to grow your asset base. If you do, you won’t get anywhere over the long term. (An ounce of gold in 1981 was $800. Today it is $700. Now figure the value of that $700 after 20 years of inflation. Would you say gold is an investment now?)
“…the 500% increase in cobalt”
>While cobalt is an investment, it is part of an asset class called commodities. Commodities are risky as hell. Investors better have years of commodity experience under their belts before investing any substantial sums of money. I have 16 years of investing under my belt and I don’t go near commodities. Uh-uh. No way. I want to keep my money.
“A 50% rally in the stock market with a 30% decline in the dollar counts for squat.”
> I guess that’s true if you’re into trading currency. Otherwise, any effects are negligible. If the bulk your stock market money is invested in companies that conduct business worldwide, the effects on stock price are minimal. Now, for consumers who travel overseas for business or pleasure, you will pay for more products you purchase overseas. Conversely, you’ll pay less for goods sold here, especially if they are manufactured here. If you are worried about what the decline in the valuation of the dollar means to your pocketbook, buy American-made products!
… Since you appear to be a US-centric investor this will mean little to you…”
> Incorrect. I have 17% of my stock market holdings invested overseas. I’ve kept it within two to three points of that figure since 2003. In reality, though, the fact that I have that 17% overseas really doesn’t matter much. And it will mean even less going forward. Since most U.S. companies now generate significant portions of their sales and profit overseas, being a “U.S.-centric” investor is very hard to do, if not implausible. Those investing overseas should watch out for geo-political risk. This is something that those who invest in U.S.-based companies not need to think about as much. The odds that North Korea will seize the headquarters of a company based in the USA is pretty small. The chance that they may seize the headquarters based in South Korea is somewhat larger. Ditto Mainland China taking over companies headquartered in Taiwan.
“That is why I and others are bearish on the US stock markets.”
>If I invested in the manner above, I’d be bearish, too.
“Why would any reasonable investor throw good moneys after bad?”
>A reasonable investor wouldn’t. They’d take the time to become educated and invest money on their own. They wouldn’t base their investment choices on what brokers, friends and talking heads on TV say. They would recognize that no one cares as much about their investments as they themselves do, and act accordingly.
AND — all any investor had to do to make money in the stock market (domestic or international) during the past four years was to invest in index funds. There are index funds that very closely parallel the Dow, NASDAQ and S&P 500. If an investor put money in the market in November 2002 (after all the trend chasers had made their exists) here’s what they would have made:
10/9, 2002 5/4, 2007 Gain (excl. dividends)
Dow: 7286 13264 82 %
NASDAQ 1114 2572 131 %
S&P 500 776 1505 94 %
Each of the returns is about 10% higher than above if the investor reinvested dividends.
Each of the returns is periodically reduced by the investor’s tax rate (on capital gains and dividends). For most investors, the tax rate is 15%. For people who have their stock assets in retirement accounts, they defer paying any tax until they remove assets from the retirement account itself. They do not pay taxes now if they shift retirement assets from stocks into bonds, stocks into money market funds, bonds into stocks, etc. Folks in this category have at minimum doubled their money if they were invested in index funds tracking the Dow, NASDAQ or S&P 500.
And that is that.
Just FYI…Hoz is a former commodities trader. He knows well what he’s talking about.
Lemme see if I got this right.
Lost money on Flip = Victim
Made money on flip = Shrewd investor
Is that about it?
Yup.
In a nutshell, that’s it.
Also, don’t forget: “Privatize the profits, socialize the losses”
Front page above the fold in the paper WSJ:
As Market Cools, Home Buyers Seek a Way Out
Lawsuits Galore.
This is where people like me will have NO SYMPATHY for the stupid Moron “homeowner” and will be the most vocal.
A REAL MAN or WOMAN would walk away from the deposit, and then hope the Greedy Low life Home Builder will sue…..THEN the tables turn and the “home buyer” will get lots of sympathy.
But this is “THE MORON GENERATION”. enough said.
=========================
Some are scrutinizing their contracts looking for loopholes, or searching out tiny flaws in finished homes that might allow them to back out without losing their deposits.
Some are scrutinizing their contracts looking for loopholes, or searching out tiny flaws in finished homes that might allow them to back out without losing their deposits.
NOW they read the contracts. I say bring back debtors prisons.
What peak oil?
——————————————
PetroChina Shares Jump After Bohai Bay Oil Discovery (Update7)
By Michele Batchelor
May 4 (Bloomberg) — Shares of PetroChina Co., the nation’s top oil producer, surged after the company announced China’s biggest discovery in half a century.
The stock climbed 14 percent, pushing the market value to HK$1.82 trillion ($233 billion) and overtaking OAO Gazprom and BP Plc to become the world’s No. 3 oil company after Exxon Mobil Corp. and Royal Dutch Shell Plc. The deposit in Bohai Bay has about 7.5 billion barrels of oil equivalent, according to Beijing-based PetroChina’s statement yesterday.
China has stepped up oil exploration to meet increased demand in the world’s fastest-growing major economy and reduce reliance on imports. PetroChina, Asia’s most valuable company, expects to outspend Exxon and Shell this year as it drills deeper and further offshore to make up for declining output at Daqing, China’s biggest and oldest field.
“The potential net asset value boost from the Jidong discovery is too big to ignore,” said Gordon Kwan, research director of China oil and gas at CLSA Ltd. in Hong Kong. Subject to “stringent U.S. Securities and Exchange Commission reserves classification, the discovery size could exceed sibling rival Cnooc’s entire reserve base.” Kwan advised clients to buy the stock “aggressively.”
7.5 billion barrels x 50% recovery = about 6 week’s worldwide consumption.
oil equivalent? WTH???
Just a random piece of info for the Bits and Buckets crew.
Went to the Home Depot down in the Playa Vista area last night at 8pm to pickup something to fix the mess the kids yet again created and was really stunned by how few people were there. When I had made similar journies say a year or two ago, it was just a mob scene at the same times, and I had thought the opposite - ‘who the f^$#^ spends to much time and $ at this place 24/7′? (I do love when I have those types of thoughts and I’m also there doing the same action).
Read one of these threads yesterday and saw horrible results posted by one of the ‘one-off’ companies that are becoming affected (effected??? I hate English…press 2 for my language) and that came to mind when I entered the parking lot, and was checked out with only one person in front of me at what I consider to be the mecca of MEW funding expenditures.
Wonder how the Top Roman Noodle line is looking nowadays as strapped Americans migrate from Bristol Farms to the $.99 store.
SoCalRugger
I’ve noticed the same dearth of home improvement store customers here in Tucson. They’ve seemed like my own private big boxes since last fall.
I had the same experience at Lowe’s on Velencia(Tucson). There was one person in front of me and a clerk talking to another employee opened a register to check me out. Maybe just for somehting to do.
desertfox
Fox, if you really want the “private big box” experience, journey up to the Lowe’s on Oracle Rd. at Limberlost. I’m also noticing much less traffic (as compared to ‘05) at the El Con Mall Home Depot.
To affect something is to influence it or change it. To effect something is to make it happen. So your first version was right.
Been noticing this in the big box stores of old and new vintage locally. Walmart at all hours here is empty. Kmart even worse and the new 3 month old Target 1-1/2 from me is a ghost town. Do not even see how they keep the lights on.
The local Menards and Fleet Farms are also strangely empty.
People should be getting their tax checks for refunds back but do not see much spending. I walk into the local hobby shop chain (Hobbytown) and the place is deserted.
This is all anecdotal but is the recession here now? This is the upper Midwest.
Bummer…
For homeowners around the country who are seriously delinquent on their mortgages and hoping for relief, the IRS has bad news: If your lender agrees to modify your loan and forgive any part of your debt, you could owe federal income taxes on the amount forgiven.
http://tinyurl.com/2hc5qu
Catch 1099
I apologize if any of these articles were previously posted, but this blog is just too big anymore to read everything so I’m sure I miss a lot.
The stock market cheerleaders are ooooing and ahhing the Dow’s climb to 13,000, but it’s all a sham. Wall Street is just enjoying the last wisps of Greenspan’s low interest helium swirling into the largest credit bubble in history. But there are big changes on the way. In fact, the storm clouds have already formed over the housing market. The subprime albatross has lashed itself to everything in the economy — dragging down consumer confidence, GDP and (eventually) the stock market, too. The real damage is just beginning to materialize.
http://tinyurl.com/yvfg8l
Talk about too little, too late…
Here are six very common mistakes made during the new loan process. Avoiding these can help you avoid foreclosure and save a bundle.
http://tinyurl.com/yvvtt3
“Xuzhou Anying was not the original producer of the tainted wheat gluten, according to the FDA, which said the company may have purchased the wheat gluten from up to 25 different suppliers.”
“The identities of those suppliers remained a mystery. All calls by The Associated Press to listed numbers for Xuzhou Anying on Thursday rang unanswered.”
Rewrite:
“GMAC” was not the original producer of the tainted ARM loans, according to the FBI, which said the company may have purchased the toxic loans from up to 25 different suppliers.
“The identities of those suppliers no longer remained a mystery. They are list at: Implode-a meter…All calls by new loan applicants to listed numbers for “New Century” on Thursday rang unanswered.”
… Experts explains that these “additives” are often used to mimic earnings, as they look like them to common tests.
FBI probes claims of real estate fraud involving dead couple
Tip draws FBI into investigation of Mission Viejo couple shot in confrontation with Laguna Beach police.
http://tinyurl.com/3bvkm5
Does being a realtor in good standing go on your permanent record?
Here’s one from Craigslist:
Brand new 3/2 @ $825/mo, plus one month free, which makes average of about $750/mo on a 1 year lease. Far cheaper than buying anything in the area.
http://phoenix.craigslist.org/apa/323025086.html
Just as we all expected: Those Cadiclack Escalades and Ford Intimidators were not paid for with moeny from a paycheck:
http://www.voiceofsandiego.org/articles/2007/05/04/survival/774wealth.txt
“Automakers Missing ‘Wealth Effect’
In 2005, the peak of the nation’s housing market, Americans pulled out $1 trillion from their homes through refinancing, profits on sales, and borrowing from their equity, said Mark Zandi of Moody’s Economy.com in an LA Times story today.
But now: The annual rate through the first quarter of this year, he said, “has fallen very sharply, to less than $500 billion, and that’s going to weaken further as home prices continue to fall.”
The economy is starting to see the opposite of what was known as the “wealth effect” — the ramped-up consumer spending on big-ticket items stemming from homeowners withdrawing equity from their homes. And the auto industry is among the first to feel it, the Times reported.
Another economist interviewed, Bob Schnorbus of Michigan-based J.D. Power and Associaties, estimated that 10 percent of the equity withdrawn from homes in HELOCs (home-equity lines of credit) went straight into the car market.
And about 14 percent of auto sales are cash sales, which usually indicates home equity funds. Schnorbus expects that as shoppers have less equity cash to use, those who can still afford a new car will be more inclined to purchase the smaller, less expensive cars and trucks that deliver smaller profits to dealers and automakers.”
How dumb is this? Nuke your home equity to buy something that depreciates (in this case, an SUV), then have to pay back the loan. Plus interest.
I think it could be even dumber: Use your HELOC to pay for gas for your 13mpg SUV. Either directly or by “consolidating” your credit card debt. The latter is one of the greatest scams/illusions in my opinion. How many people actually cut up their credit card after they pay it off with a cash-out mortgage? None. So 4 months later they are maxed out on their credit line again, …great financial strategy.
I have a friend who listened to too many of these ads. He sobered up when the bank explained to him that in Texas, HELOC are limited to 80% LTV. (He might have 10% equity after 6 years. Pity the $50,000 sports car is a bit depreciated…)
Some interesting data (at least it’s new to me):
http://www.investorsinsight.com/thoughts_print.aspx
“A study by the Pew Hispanic Center highlights an interesting set of facts, and I think may also give us an idea as to why the unemployment index has not risen.
“According to Pew, our 19.6 million Hispanic workers constitute 13.6% of total employment. In 2006 Hispanic employment was up by about 1 million, or 36.7% of the nationwide employment increase of 2.7 million. In the construction sector, Hispanic workers, mostly foreign born, garnered two-thirds of the 550,000 new jobs created in 2006. Our 2.9 million Hispanic construction workers held 25% of our 11.8 million construction jobs in 2006, and 2.2 million of those workers were foreign-born, many recent arrivals at that.” (TLR)
There has been a significant gap between the Non-Farm Payrolls (NFP) and the Household Survey, with the NFP having to be adjusted upward to account for a very strong Household Survey. TLR speculates (and with good reason) that part of the anomaly may be caused by these foreign-born workers, many (though not all) of them undocumented. But they are also not on the official rolls as unemployed, so when they lose their jobs they do not count toward unemployment. Lately, we have seen the gap between the two estimates of employment close.
There is reason to believe the drop in employment among foreign-born workers is severe. Lately there has been a large fall-off in the growth of the amount of money sent back home to Mexico. It rose a stunning 23% a year between 2000 and 2006. Banco de Mexico data through February of 2007 shows it dropping 26% from the peak last May of 2006. This suggests that the recent drop of 27,000 residential construction jobs in the BLS data does not reflect the true picture.”
There’s some more data on housing, fx: the homebuilder cancellation rate has apparently been running at 39% for that last few months.
Now that the foreign remittances are drying up, will Mexico FINALLY get around to developing its economy?
OB: what we have suspected is actually happening. Thanks for the information. A very slow train wreck.
MSM up to speed finally.
http://money.cnn.com/magazines/moneymag/realestatebubble/2007/index.html?cnn=yes
I’m not claiming to be the most knowledgable investor, but I’m keeping an eye on homebuilder stocks. Most of them seem to be up over the last few wks. I was thinking of buying put options on them, but I’ve never bought options before. Anyone here willing to share some insights into how to make some money on popping bubble?
Talk to the Chick……
Forget speculative options, either puts or calls (hedging is another matter). The guys who make a living writing options know how to price them (implied volatility) so they are more than compensated for their risk. Most puts and calls expire out-of-the-money (worthless). If you want to play the homebuilders stick to the index ETF symbol XHB. BTW this index has a knack for moving higher on bad news.
I don’t know crap about investing. but I bought shorts of CTX and KBH about 18 months ago when the stock was at $65/share and sold at $43/share recently.
I invested only $1000 but I made like a 24% profit.
It was kind of fun but from what I understand from knowledgeable investors, very stupid. Just my $0.02 take it for what it’s worth.
Mina
“Most of them seem to be up over the last few wks.”
Some of us bet against these stocks and won; others bet and lost.
The puzzlement is how they often seem to be dropping in value, but then repeatedly manage to bob back up to the same level where they were before — rather like treading water in a very stormy sea. Take Toll Bros for instance — off by 50% from the peak, but then it mysteriously began rising from the crypt about the time that Hank Paulson allegedly revitalized the Working Group on Financial Assets’ (Plunge Protection Team’s) market involvement (June 2006 — after a very rough May 2006 for the stock market overall). This water-treading action has played out against repeated assurances from top members of the Plunge Protection Team (Bernanke and Paulson) that “subprime is contained” and a never-ending barrage of worse-than-expected news on the status of the homebuilding industry. I expect TOL and friends will eventually join NEW and pets.com in the graveyard of defunct companies, but I have no confidence in how many months or years this will take.
Not to mention that there has been roughly a 40% drop in residential construction. Unless this time is different, we are headed into a recession, just like the other seven times out of seven since 1955 that there was a greater-than-25% drop off in residential construction. Given the degree of concentration in the media these days, don’t expect to read about any recession in the paper until the divergence between news from Main Street and from the newspapers risks a complete loss of MSM credibility.
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=TOL&time=9&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Somehow I get the feeling a year or two ago they were touting what great features these are.
http://money.cnn.com/galleries/2007/real_estate/0704/gallery.renovations.moneymag/index.html
Meanwhile, for all those folks out there who think their “investments” are perfectly safe in banks, observe this:
http://www.wtop.com/?nid=389&sid=1026466
Chavez is threatening to nationalize the banks because he does not think they should be able “to speculate and produce huge profits.”
Countdown to the bolivar crash commencing in five… four…
As long as he can bring in more hard currency than he spends he will be OK, but of not….watch out! This happened to Mexico in the early 80’s, when oil prices collapsed. Within a few months the peso went from 22 per dollar to 150 pesos to a dollar, and the matching hyper inflation was not far behind.
http://tinyurl.com/2wwxo2
Sales tactics - reduce price 5K a week. Good luck to this seller.
Per the article it has “Duel Pain” windows. Ouch, how paneful for the seller.
I’m from NE Ohio. I’ve noticed the same thing here at Home Depot and Lowe’s. Few cars in the parking lot and no lines at the checkout. However the Wal Mart is packed all the time during the day. There’s always 3 or 4 people with overloaded carts in front of me and they are always calling for more cashiers. When cash gets tight Wal Mart is the place everyone will shop. I was at the mall today and I have never seen such overloaded racks and aisles crowded with merchandise. Sales signs on top of almost every rack and no one in the check out lines.
All those imported goods in Walmart will push US deeper into (forecast) recession.
Anyone want to purchase a San Diego estate at a $6.6m discount price?
———————————————————————————
Price Reduced: 05/03/07 — $36,500,000 to $29,900,000
15651 PUERTA DEL SOL, Rancho Santa Fe, CA 92067
Bedrooms: 6
Full Baths: 12
Partial Baths: 0
Square Feet: N/A
Lot Size: 8.0 Acres
Year Built: 1999
Listing Date: 02/06/07
On Market: 87 days
Type: SFR
Status: ACTIVE
MLS #: 071010805