Bits Bucket And Craigslist Finds For May 12, 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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Lock your refrigerators and hide your valuables…Bear Stearns files IPO to transfer their CDO risk to retail investors and YOUR pension fund.
“Never underestimate the ability of a Wall Street investment firm to find a new way to pawn off risky assets onto retail investors. The latest example? The initial public offering for Everquest Financial.
Everquest is a fledgling financial-services company that has been buying up equity interests in risky bonds backed by subprime mortgages from hedge funds managed by Bear Stearns (BSC)—one of Wall Street’s biggest underwriters of mortgage-backed securities and other exotic mortgage-related bonds. The deal appears to be an unprecedented attempt by a Wall Street house to dump its mortgage bets.”
BusinessWeek
http://tinyurl.com/2q53ow
Good Find, P’Cola. Fortress Investment Group already did one of these IPO’s with their B piece investments. My understanding is that “friends and family” got all their shares at $15, then the rest went out to the public at $35. (”FIG” at $29.85 close Friday) It imediately dropped into the $25/share range and has settled at $28-$29/share. Want to lose a quick 10-20%? Buy Bear Stearn’s IPO. Then you can sit around and wait for the mortgages to reset and foreclose, losing another 20% of the value.
I suspect that these groups will be trying to sell to the Chinese.
“China’s outstanding resident’s bank deposits hit 17.5 trillion yuan (US$2.28 trillion) at the end of March 2007, according to the quarterly monetary policy report of the People’s Bank of China.”
an incredible amount of savings that every piranha would like to get their jaws into.
P’Cola, what is good for the goose, seems to be good for the gander. Check this out…….they are all doing it now!
WASHINGTON (AP) — Private-equity firm the Carlyle Group LP will for the first time sell shares to the public in one of its investment funds, a person familiar with the matter said Friday.
After a planned initial public offering of stock in June or July, the Carlyle Capital Corp. Ltd. fund, could have up to $1 billion to invest, the source said, speaking on condition of anonymity. The fund, which will focus on mortgage-backed securities, has already raised private capital.
Carlyle plans to list the fund on the Euronext Amsterdam exchange.
The Washington-based firm is following several other private-equity groups in entering the public markets.
Kohlberg, Kravis & Roberts Co. offered shares in a real estate fund it manages in 2005, while Blackstone Group LP said in March that it would seek to raise $4 billion in an IPO of the private equity firm itself. Fortress Investment Group LLC was the first private equity firm to go public when it raised $643.3 million in an IPO.
http://biz.yahoo.com/ap/070512/carlyle_ipo.html?.v=2
Bear Stearns, Carlyle, KKR, Blackstone, FIG…they are all bailing out. Look out below!
Time to put your assets into mellow yellow, quite rightly.
Napoleon’s buttons were made of aluminum, not gold. Ponder that one.
“…made of aluminum,…”
I would guess aluminum was relatively dear to gold in Napoleon’s day compared to in the 21st century, but that is merely a hunch…
http://en.wikipedia.org/wiki/Aluminium
Learn about this formerly rare metal…
The building of The Grand Coulee Dam and it’s enormous ability to supply electricity to produce aluminum, was probably one of the main reasons we were victorious in World War 2.
We were able to produce airplanes in astounding numbers, something neither Germany or Japan could muster.
The buttons of Napoleon army were made from TIN, not aluminum and it was the primary reason for his defeat in Russia. One of the more fascinating chemical studies ever done.
Tin crumbles under sub zero temperatures.
French winter fashion statement?
Pump and dump schemes like this are truly sickening.
Maybe this was the memo passed around about 6 years ago:
The Little Guys have been buying S&P index funds for the past 20 years. They’ve been encroaching on the Big Guys turf and it’s payback time. Load up companies with junk debt, making big fat profits in the early and middle of the company’s lifecycle. Then, as the debt starts to get out of control, take the companies public and get them listed in the S&P 500, Russel 2000 and Total Stock Market Index funds. Now they’re someone else’s problem
Don’t forget to underfund the pension plan by loading it with the highest-risk assets that go up by as much as possible during the boom years. At bust time, when the company folds operations, the PBGC gets to pick up the liability for the curiously underfunded pension plan, as it turns out the value of the high-risk investments in the pension fund tanked about the same time the company went bust.
Who’s going to care more about your money, some guy in Washington or New York or you? Having someone else manage your retirement money is a broken concept.
You have the same insight my grandfather had when the Social Security system was created back in the 1930s.
Look for more bet-dumping activity before MBS ratings downgrades trash the market value of these dogs.
My pension fund (in Australia) has since June 2003 had a managed option (the default) and a cash option, with free all-or-nothing switches possible once or twice a year. Not very flexible, I know, but the government pension “purchased” on retirement is very, very juicy. (And relatively safe. The Oz Federal government has run surpluses every year for the last decade or so.)
The managed option has returned double-digits every year, and 15% so far this Financial Year (2 months to go), but for the first time I amseriously considering switching to cash for a while …
Cleaver
http://www.ajc.com/business/content/business/stories/2007/05/11/0511bizstress.html
I waver between sympathy and outright contempt for my fellow citizens of the “middle-class”. This whiny article says that they are not overspending. Bull$hit. Families have gotten smaller but vehicles have gotten bigger. Does each kid need 24 cubic feet of interior space? Does each kid need his own DVD player in that vehicle? Make the spoiled little brats walk once in a while.
The middle class continues to throw money away on things they don’t need. Check out the vacations that the “middle-class” takes. They are unbelievable. You don’t owe your kids 6 trips to Disney by the time they are 12. You don’t need to take them to Europe. Check out the clothes and electronics their little snots have. I don’t have the stuff they do and I would guess my balance sheet is a lot cleaner.
And now instead of cashing in on the biggest gift ever bestowed upon them the middle-class has flushed it away. The housing mania boosted their primary asset beyond all explainable values. Did they sell it? No. They HELOCed the heck out of it. Many of them doubled down and bought more real estate and shouted out “real estate goes up forever” or “renting is throwing your money away”. Now as it busts, as anybody with some common sense knew it would, they are crying to the government. I believe in the middle-class but I don’t believe it’s their right to have guaranteed jobs, never have to make changes in their life, have everything be as easy as possible for them and act like they are rich without consequences.
All classes, if such things even exist, need to be responsible and accountable. The middle-class joined the lower class and upper class in thinking that wasn’t their gig. That is going to come with a price tag. Buy less. Save more. Be responsible for yourselves and this stuff won’t happen. Oh yeah, and quit electing babboons into office.
Oh yeah, and quit electing babboons into office.
Well Co-ops Kondoze and people with nazi-HOA’s, are too stressed and too tired to run and get elected, because the DO OWE their kids:
You don’t owe your kids 6 trips to Disney by the time they are 12.
“Families have gotten smaller but vehicles have gotten bigger.”
Big cars + big houses = big depreciation costs for the bagholder on overpriced declining value assets.
I used to work with a few professors who specialized in toddler development. The toys they gave their kids were almost always homemade and involved interaction.
As one explained it to me, “pressing a button is not interaction”. They hated the baby Einstien series and anything involving computers to TV at earlier ages. They instead built toys from fabric scraps (different textures and colors) and looked for tradional toys like wooden blocks and toy trains on ebay.
They also brought their children to work often. They were delightful, the toddlers to the teenagers.
From the article:
“The majority of modern middle-income taxpayers are single or single-headed households, he told the Senate Finance Committee.”
Now that surprised me.So Ma and Pa Kettle and kids are no longer the majority of the middle class. So where are they?
Definitely not on the farm…
They were blown out long ago by Korporate Monsters~
Many of us single taxpayers (turning 48 this month, no children that I know of) have realized we could not equal the living standards of our parents when we were toddlers. In those days it was one breadwinner. I always wanted a traditional household where one of the parents would stay home. But these days it’s hard to have it all. Our income tax rates certainly are lower than in our parents’ day. But they took away deductions on credit interest in the 80s. They added more hidden taxes: Here’s the incomplete list: rental car taxes, hotel taxes, airport taxes, utility taxes, gas taxes, social security taxes, medicare taxes, auto registration (tax), hunting license (tax), sales taxes, capital gains taxes, local income taxes, property taxes, and so on. Check out the Beatles’ “Taxman” lyrics for a laugh.
When you add up all the taxes, the average middle class pays more than half his income in taxes. This is the big coverup which prevents competitiveness. The maximum tax rate in 1980 was 70%. The average middle class income tax was probably 25% back then. Despite the Reagan tax cuts of the early 1980s, there are today many countries with lower taxes than the United States. Russia has a flat income tax rate of 13%. Many European countries, for example, do not have capital gains taxes. We are far more socialist than the typical Republican flag waver thinks!
While the income tax rate in Russia is a low13%, the social tax rate is 40% or so. This is to fund pensions, education and health care. It also leads to at least two sets of books as businesses try to avoid paying the 40% on top of salaries.
Daily life in the US is generally easier than in Russia.
“Does each kid need 24 cubic feet of interior space?”
I’ve heard that its tough in New York but Ishould hope that you give your children a bit more space than a 4×4x1.5 feet box to live in. LOL.
Okay. Okay. I see you are talking about automobiles. I thought you were talking about houses. LOL.
“And now instead of cashing in on the biggest gift ever bestowed upon them the middle-class has flushed it away. The housing mania boosted their primary asset beyond all explainable values. Did they sell it? No. They HELOCed the heck out of it.”
Sir, this is exactly what Greenspan and friends had in mind for the middle-class; indirectly steal their wealth. It’ll go down as the largest looting in history.
That is truly a beautiful rant.
I didn’t read the article, don’t want to, because I don’t need the heartburn.
But. I lay the blame on television. Television is a 24/7 subliminal propaganda machine, insidiously biasing everyone who spends any time watching it. And we are seeing now the worst of its affect.
Thank god for the internet and other electronic entertainments - tv is losing (not loosing) its hold over our neighbors.
The housing collapse might actually, by way of the internet, usher in an era of sanity.
this is really ot but with his latest film “sicko” coming soon….
“manufacturing dissent” demystifying Michael Moore (a little bit)
http://immobilienblasen.blogspot.com/
have a nice weekend
I watched the English clip and there was nothing more than blah, blah, blah by the two directors of “Manufacturing Dissent” on Faux News. Nothing negative or revealing about Michale Moore. What a joke.
Yes, “Manufacturing Dissent” might better be applied to the massive effort to malign and marginalize Michael Moore. One of my favorite movie scenes was from “Bowling for Columbine”, where he was in Canada and had heard that Canadians didn’t lock their doors, so he decided to see for himself if that was true. He tried the doorknob of a house or apartment in a neighborhood and sure enough, it just opened, startling the occupants mildly. I cracked up when he said “Just checking” and walked away. Moore is brilliant and has a great sense of the absurd. It’s a testimony to him that the neocon propaganda machine has tried so hard to silence him. That’s how I know he’s onto something.
Palmetto, you surprise me. Moore’s last film turned out to be mostly a hoax, including fake footage of a supposed oil pipeline in Afghanistan. He’s infamous for hiring people to pretend to me distraught parents or crime victims. There are entire web sites, including this one
http://moorewatch.com/
and documentaries devoted to debunking him. Some of his most outspoken critics are not conservatives, but liberals.
I think he’s very funny, and original (though the act is wearing thin), but when one has to lie or engage in slander and libel to score points, the points should not be scored.
Muckrakers aren’t exactly a dime a dozen nowadays and he fills in a much needed void, in my opinion…
Watch this:
http://www.youtube.com/watch?v=Vy9v4k4VX2s&mode=related&search=
He makes movies, for chrissake. But I’ll take Moore’s word over that of the chimperor, rover, gonzo and Fux News any day of the week and twice on Sunday. He doesn’t pretend to be a politician or a journalist, it’s basically entertaining social commentary.
Actually, Incredulous, “Fahrenheit 911″ was even more spot-on than most Moore-sympathetic Murkins realize. (Individual thematic distortions notwithstanding,) Please educate yourself outside of the hack internet sites. (Present blog excluded, of course.)
Actually, ahansen, I think I may know a bit more about Michael Moore than you imagine, so your pompous, self-righteous advice will be ignored.
If you want a list of non “hack” sites (and how presumptuous of you to assume what kinds of sites I visit, or what self-education I require) dealing with Mr. Moore, let me know. I only posted a link to one site, because it’s the one with the easiest name to remember, but it does have internal links that eventually lead to scores of sites, magazine articles, exposes, etc. Christopher Hitchens, no conservative, has taken on Moore big time.
http://slate.msn.com/id/2102723/
If you want to believe Moore, fine, but then I know people who want to believe in L. Ron Hubbard or Sylvia Browne, and will attack everything to the contrary. Some people believe what they choose to believe, and discount what they choose to discount, and nothing can change that. We see it every day on this site, with quotations from realtors who believe, no matter what, that NAR is right and everyone else is retarded. When it comes to Moore, people let their personal political angers and biases decide beforehand whether they will believe him or not (”the enemy of my enemy is my friend”). I am not political, so I took Moore at his word, till I found out he was a malicious liar. If you do a little digging, you might discover what neighbors and former colleagues think of this paragon, whose greatest delights appear to be attracting personal attention, and maligning anyone where profits can be generated.
Incidentally, my original post was to palmetto, or were you so concerned for Mr. Moore that you had jump in with both feet in your mouth?
And by the way, when did the British affection “spot on” (it’s certainly a pseudo-intellectual affection when Americans use it) become the new affection for bubble blogs? Do you spell theater “theatre” and orthopedic “orthopaedic?’ Stupid questions; of course you do.
I can’t type. The word I used was “affectation,” not “affection.”
Touched a nerve, did we?
I looked up the word “creep” in the dictionary and found a picture of Roger Ailes next to the definition.
think the biggest flaw was that he withheld the interview with the gm ceo in “roger and me”.
it was the first big doku (or better film) from moore.
the topic was that he tried to speak to the ceo roger…..
and said that the ceo blocked every attempt to speak to him.
in reality the ceo gave him a 15 minutes interview and he answered every question.
but this interview would have made the film worthless. so he withheld it….
“in reality the ceo gave him a 15 minutes interview and he answered every question.”
Got a link? Anyone see this “interview”?
it is in the german clip whre you can see the footage and you can also see when moores bodygards “push” the makers of the doku out.
start the clip at the 2nd half.
Where is your evidence?
Where is your evidence?
(I think it’s burried under the sand in Syria.)
Pets or Meat?
I don’t see what’s the problem with Moore. His movies are powerful, and anything but “manufactured dissent”. Ask people in this country about Iraq, and I bet they’ll agree with the ideas expressed in F911 - that is as real dissent as you can get.
Buyers dampen house prices
High inventory of homes sparks lowball offers
http://www.jsonline.com/story/index.aspx?id=604604
It’s all the buyers’ fault, isn’t it.
Never mind the idiots who used subprime loans to buy at 10X+ their incomes, or the fraudulent appraisers, or the builders who turned every available flat piece of land within driving distance of a major city into a sprawling McMansion tract home development, or the lenders who abandoned underwriting standards, or (…)
“If your house was worth $300,000 last year, that’s probably what it’s worth today. But buyers may come in with a $280,000 to $285,000 offer. I tell sellers, ‘If that happens, you need to find a way to make the deal work because there’s an awful lot of inventory out there. The buyer will just go find another house,’ ” Dave Schmidt Jr., chairman of Greater Milwaukee Association of Realtors, said Friday.
Urge to kill rising.
They would accept $280,000 but according to Dave Schmidt-For-Brains the house is still worth $300,000. Woo-hoo, instant equity. Somebdoy get me a HELOC.
Well, give him some credit. He did say “probably”. It is just that the probability is 0.
10% under is “low ball”? Here in PHX, 10% under is still…
[does the math]
$260K list but should be $150K.. lowball = $224K… 224-150/150 =
[done with the math]
10% under list is still 50% too high.
Try an offer of 40% under list.
The best part of this article is the last two paragraphs:
“Mark A. Rutkowski, operating manager of R&R Family Properties in Wauwatosa, counts himself among those awaiting better times. An investor, he’s got six properties up for sale, none with a decent offer in sight.
“People would say things like, ‘I don’t like hydronic heating,’ or “It’s a corner lot. I’ll have to snow-blow all that extra sidewalk.’ All these complaints, but no offers,” Rutkowski said. “My wife and I will probably end up holding the properties longer than we planned, being landlords, offering a lease with option to buy. At least we’ll have income flow.”"
I wonder when these idiots are going to realize that the market will not see “better times” for nearly a decade. I bet every city has hundreds of similar “investors” waiting for better times. They’re really going to get slaughtered when their properties drop back to 2001 levels and don’t recover.
I guess I shouldn’t be too critical; I’m one of those idiots who was still holding on to my “investments” in Dot.com stocks in late 2000. I had friends who would send me links to f’edcompany.com (the Dot.com bubble equivalent of HBB) back in 1999 and I didn’t listen. In late 2000, I was till holding my stocks, waiting for “better times.”
“My wife and I will probably end up holding the properties longer than we planned, being landlords, offering a lease with option to buy. At least we’ll have income flow.”
Virtually every one of these “accidental landlords” here in Central Florida begins their leasing adventure with the notion that because they are offering a lease-purchase option, they can command more in rent than an identical house would bring that is just a straight rental. The opposite may be true. I’d much prefer to rent from a landlord who is an investor and not likely to fold his cards and put the property on the market before I’m ready to move out.
Wisconsin is TOAST. Very high rate of Home Equity Withdrawals, No decent paying jobs and somebody left the barn door open and the Cows left with the Horse.
trulia.com is out of beta and has some cool features. You can search by zip and find homes that were recently sold, much like Zillow. Also, if you click details for a house sold, you will see whether the sales price was high, medium or low compared to other recently sold homes.
Be aware that some major RE companies have seats on the board of Trulia.
I’m very suspicious of the likes of Zillow and Trulia and who’s interest they end up serving.
http://www.michaelsaunders.com/AboutMichaelSaunders/NewsAndPress/Article/21.aspx
Testify, Key Lime! I knew Zillow was a waste of time when I watched the value of my former house rise beyond what it sold for at the peak in 2005.
Who owns the new CasaWay.com site being pimped by the local RE Guru in SC?
Phooey — ran two searches — a town in Georgia and a town in central Florida. One showed “12-month appreciation” at 35% and the other 37%. Right. don’t believe I’d have put out even a beta version to the public when it’s that far off.
“The nation’s center of gravity is shifting: Dallas is now larger than San Francisco, Houston is now larger than Detroit, Atlanta is now larger than Boston, Charlotte is now larger than Milwaukee.”
http://www.opinionjournal.com/editorial/feature.html?id=110010045
As prices were rising I can recall people saying things like ‘It makes sense that prices are rising so high and so fast, people have to live somewhere and they’re not building anymore land’. Yes people do have to live somewhere, but they can move to a place with a lower cost of living, where you get more value for your money. How many people know that Huntsville, Alabama is a hub of new jobs and is developing a culture and city life much like Austin Texas?
Actually I’m sure Huntsville is not quite like Austin
But I know friends that work down there and like the economy and lifestyle and it’s an example of people choosing to move where the cost of living is more affordable.
Here is a question to ponder about Moving.
my GF has Never drove a car in her life, she is a NYC girl, how do you move to a city that requires you to have 2 cars, because of poor public transit.
Huge lifestyle change.
Move to Europe, Japan, San Fran or DC.
No, don’t move to SF.
Our public transit sucks. Along with our largest city daily newsrag, they are our two biggest ongoing disgraces.
To use transit in SF effectively, you need to live and work near a top-rated express Muni bus line or BART. Just about everything else is a crapshoot and you might get to work by mid-morning.
If I recall, Keith Olbermann (MSNBC?) refused to move out to the Connecticut ‘burbs during the end of his tenure at ESPN. They wanted him closer and he said “no way” (perhaps with a few expletives mixed in).
He didn’t want to, or couldn’t, drive at all. I think there was a rumor that he had “bad eyes”, and preferred the NYC lifestyle, though I doubt he’s much of a patron of public transit.
or he could have some other condition which precludes driving. A friend of mine has epilepsy and he doesn’t drive. I know someone else with epilepsy who does choose to drive, so I guess it depends on the individual’s medical history.
Or Olberman may have a stash of DUIs and his license is suspended until the year 2017.
Huntsville may be a perfectly great place to live, but affordability isn’t everything. You have to be able to live there. 20/20 did a piece last night on a high school girl drummed out of her school and town in Oklahoma because she declined to participate in group prayer before basketball games. Being labeled a “satanic devil worshipper’ at 14 would make anyplace unliveable.
Sure, but that’s oklahoma.
Huntsville is filled with scientists, not crazy religious people. The worst thing about it is summer.
Yeah, Alabama is well known for its religious tolerance. I understand that the Baptist and Southern Baptist get along quite well.
Wow. Good post.
“The nation’s center of gravity is shifting: Dallas is now larger than San Francisco, Houston is now larger than Detroit, Atlanta is now larger than Boston, Charlotte is now larger than Milwaukee.”
This is quite interesting. Since 1849 or so, the mass of men in the U.S. have migrated steadily westwardly, often stopping only when they reached the California shores. In recent decades, the internal demographic influx to California from the eastern U.S. was greatly augmented by inmigration from south of the Mexican border.
At the present, it looks like the population density has reached a tipping point in terms of the deflationary effect of overabundant cheap labor on the wage, and the inflationary effect of overabundant residential demand on home prices. The huge gap between average household income and home prices has triggered a demographic reflux which is sending the marginal California household back to the more affordable heartland.
Exactly. Think of it like a wave in a contained space. The wave has now hit the wall (the pacific ocean) and now will begin to roll backwards as it search for equalibrium.
When I wrote the above comment, I was actually envisioning demographic wave piling up against the west coast then re-equilibrating due to the entropic effect of financial gravity — exactly the image you described!
By the way, this wave has a very long wave length, suggesting the reflux will may also play out slowly over a very long period of time after the end of the initial tsunami-induced flood…
Read this paper for the evidence on just how slowly the California demographic wave piled in…
Convergence Across States and Regions
Robert J. Barro, Xavier Sala-I-Martin, Olivier Jean Blanchard, Robert E. Hall
Brookings Papers on Economic Activity, Vol. 1991, No. 1 (1991), pp. 107-182
“The huge gap between average household income and home prices has triggered a demographic reflux which is sending the marginal California household back to the more affordable heartland.”
******
This isn’t the first time for this financial wave-equilibrium thing. It happened significantly in the early 1990’s, too.
Californians, native or otherwise, have been fleeing the place for a long time.
–
I have received e-mails from many non-marginal Californians who moved because they were able to sell their homes at outrageous prices and were able to pay cash for bigger homes elsewhere. Not all people are stupid, even in California. Though, we do have more than our fair share.
Jas
Excellent find.
One thing the author didn’t touch on is that in places that had rapid inmigration in 2000 to 2003, many had significantly slowed during 2004 to 2006 as the price pressure and other urban ills from their original destinations followed them to their new locations.
The author seemed to focus on big D states loosing voters and hopefully turning small R states. I’m more interested to see if areas that were big R states begin to shift to little D states. The economic shake out we’ve been experiencing is going to fuel a whole lot of pundit head scratching.
From the piece:
“Domestic inflow was over 200,000 in the Inland Empire, Phoenix, Atlanta, Las Vegas and Orlando. These are economic dynamos that are driving much of America’s growth.”
Aren’t these areas also driving foreclosures thru the roof?
The prices for new homes in those areas were set to reflect “future wages”. In other words, what they hoped the wages would increase to. They assumed the business money would follow the population.
What they got was something different. The businesses didn’t move. Their machinery is slower and they weren’t going to move fast enough to save people with ARM resets.
And now everyone who bought a home based on the those future salaries is going down.
I Live in Sacramento. I see this every day.
Gwynster — I like your analysis.
You also need to consider the *kind* of businesses that *can* move.
Small companies (that generate most new jobs) are seldom in a position to move - they need to be where the right employees live. Of course certain service businesses are an exception.
The only kind of companies that can easily move are those with a largely interchangable work force - think trucking, routine manufacturing, and of course service businesses such as supermarkets and liquor stores.
So it’s not easy for high-value jobs to chase people into the hinterlands.
We were getting lots of good tech jobs here in Phoenix. Lots of companies moving offices here to escape the wage preasure of California and other coastal areas.
They move here, because they can pay less.
But… here’s the rub… It is HOT here. People will move here IF the cost of living makes it worth putting up with 6 months of 100+ temps.. 3 months of 110+ being common.
I’ll live here, if I get to have enough extra cash that I can head to CA once a month or so. I’m not going to live here if I end up with the same disposable income.
So, when people compare the house prices here to CA, they need to adjust for wages, AND they need to add the “It is freakin’ HOT here so I need a better Cost of Living or I’m leaving” incentive.
Did I mention the AC bill, and the cost of that electricity rising at 2-3% the rate of inflation… Actually, at home I just use swamp cooler most of the summer for 1/3rd the cost of AC. Less clothing, ceiling fans, swimming pool….
Some real humid days in August I have to resort to AC.
Which is why I think it should be mandatory for new buildings to be built with full insulation and solar A/C - with older houses given huge subsidies to upgrade. It just seems criminal not to utilise the power of the sun, especially in places like PHX.
It never ceases to amaze me the waste involved in housing - for an initial cost of a few thousand, you reduce the running costs by 10’s of thousands over the lifetime of the property.
Sorry, its a huge irritation to me - rant over
They could also use closed-loop geothermal heat pump systems and take advantage of the cooler temps underground.
The hell with the R and D states! Lets all work together and solve the nation’s problems.
I’m not so sure all those democratic immigrants will stay democrats once they leave the petri dish. That’s not my experience moving from WA to TX.
Maybe it has to do with growing older and with perhaps with paying property taxes in my case. Of course, I remember the days when “senior democratic senators” didn’t wear tennis shoes.
–
“…they’re not building anymore land’
Anyone in need to build more land for housing can contract with me. I know how to do it.
Jas
Volcanic eruption?
While all the little fish ponder how long San Diego’s prices can stay at 5% affordability, some big fish are still paying top dollar for a place near the beach…
———————————————————————————
Home sale in Del Mar could set a record
Beach site price around $50 million
By Roger Showley
STAFF WRITER
May 12, 2007
A Del Mar beachfront compound is set to close escrow at the end of this month and will likely go down as the most expensive home sale in San Diego County history.
Gary E. Jacobs, son of Qualcomm founder Irwin Jacobs, and his wife Jerri-Ann already have closed a $13.15 million escrow on three of the four parcels involved on Ocean Front – including two guest houses, a tennis court, a pool and a greenhouse – according to the county assessor’s office. They own another home one block away.
The fourth parcel includes a 5,204-square-foot home on the beach and is due to close escrow May 30, said the listing agent, Pat Kramer of Prudential California Realty-Rancho Santa Fe Properties.
http://www.signonsandiego.com/uniontrib/20070512/news_1b12record.html
I think this piece of gossip journalism was put on the Business front page this morning to balance the two “negative” articles (subpribe and San Diego most overpriced city).
LEND steals a page out of Fannie Mae’s play book…
——————————————————————————-
Subprime lender in S.D. sees big losses
1,300 jobs slashed, Accredited reports
By Mike Freeman
STAFF WRITER
May 12, 2007
Troubled subprime mort-gage originator Accredited Home Lenders said yesterday that it expects “significant losses” during its first quarter and that it has slashed 1,300 jobs nationwide so far this year.
The San Diego company, which specializes in loans to borrowers with poor credit, revealed the cutbacks and other information in a filing late yesterday with federal securities regulators.
Accredited has not submitted its annual report for 2006 because of the meltdown in the subprime industry and the resignation of its auditor earlier this year.
Yesterday, the company said it would not file its first-quarter earnings report on time, either.
Because it expects heavy losses, Accredited said it has taken steps to cut costs, reducing its work force by 30 percent from 4,200 employees to 2,900 since Dec. 31.
http://www.signonsandiego.com/uniontrib/20070512/news_1b12lend.html
Recovery? My money is that Robert and his buddies will be first in line for the big hedge fund IPOs which are about to be rolled out over the coming months as the hedgies exit the MBS/CDO market (see above).
“Investors who don’t have the guts to buy housing stocks just yet are betting on a U.S. residential rebound before it happens — by buying shares of home- improvement retailers and makers of tools and tape measures.
“It’s our chicken way of playing the housing recovery,” said Robert Hagstrom, manager of the $5 billion Legg Mason Growth Trust in Wayne, Pennsylvania. He bought Home Depot Inc. shares this year.”
Bloomberg
http://tinyurl.com/yqcxf6
Investing is all about guts these days. Check your brain at the entryway to the Wall Street casino.
Are they betting a housing recovery, or are they betting all the cheap crap built in the last few years is going to need a buch of repair?
They are betting the housing gloom is excessive, and already fully priced into the HD shares, so when things turn out better than expected, HD shares will rise.
Idiots made similar mistakes in 2000 during the tech stock bust.
“It’s safe to assume things are stabilizing,” said Sovereign Asset Management’s Sarah Henry. Her firm owns 200,000 shares of Home Depot and has more than $2 billion under management. “The long-term demographic trends still support home improvement.”
In September 1990, four months before U.S. housing starts recovered from half a decade of declines, shares of Towson, Maryland-based Black & Decker began a rally that more than doubled the stock price by 1992. Home Depot tripled in the same period. A growing housing market spurs homeowners to remodel bathrooms, buy appliances and replace kitchen floors.”
Author left out the part about Black and Decker cratering 60% between August 1989 and October 1990 before the stock went up. Azzhole.
Over the past year or so I only a see a temporary 25% pullback in B&D between April 2006 and July 2006 when the whole market did a hiccup as a result of Japan tightening up.
Personally I think it could be a great short opportunity and have added it to my “watch list”.
Been to Home Despot recently? Ours was basically empty Friday afternoon (admittedly a slow time). They didn’t have what I needed so I went down the street to Lowe’s, which actually had shoppers.
OTOH, Wal-Mart was quite busy.
She also fails to mention that Home Depot’s problem is the management or lack of the last few years. So now they have to turn it around during a building slowdown - going to be a long, hard slog for them.
Management must be good. Didn’t the board agree to buy out a huge contract resulting in paying 140 some million dollars for the CEO that left awhile later? My financial advisor once tried to explain to me that the media had exaggerated because it wasn’t all compensation: they had to pay a lot of that to hire him away from his former company.
I’m still not sure why that piece of idiocy was supposed to make their board look like better governors, but I didn’t want to give the CFA an aneurism trying to justify it.
Um… don’t you actually need a recovery before you can play it? The last downturn lasted years, this one has been going on in a noticeable way for maybe six months. And you don’t clean out a bubble of this magnitude in half a year. Even the NASDAQ took longer.
How these idiots are put in charge of billions of dollars is beyond me.
I hope their home depot play is profitable for them. (LOL!). Maybe all those rich foreigners who are going to bail out housing when the dollar tanks are keen on DIY.
I like to call it “Home Despot”
Home Desperate
Forbes: S.D. homes most overpriced
By Roger Showley
STAFF WRITER
May 12, 2007
San Diego County’s high housing prices are no surprise to residents, but now Forbes.com has named the region as the nation’s most overpriced real estate market in a ranking of the country’s 40 largest metro areas.
Most overpriced U.S. home markets
1. San Diego
2. Miami
3. Sacramento
4. San Francisco
5. Washington, D.C.
6. Honolulu
7. New Jersey
8. Los Angeles
9. Boston
10. San Jose
Source: Forbes.com
“Had the weather been included as a statistical measurement, there’s no doubt that San Diego would have avoided our list of the top 10 most overpriced cities – but we didn’t factor in sunshine,” report author Matt Woolsey said.
He added that rankings were based on a complicated mix of a theoretical “price-to-earnings” ratio – attempting to measure the price a homeowner paid for every $1 in return – and housing affordability.
http://www.signonsandiego.com/uniontrib/20070512/news_1b12forbes.html
Where is the complication? P/E ratio = Price / Earnings, where
Price = current market value = amount a willing buyer will pay to purchase the home under current market conditions, and
Earnings = amount you could make by purchasing the home and renting it out, covering all carrying costs.
The main complication I can see there for San Diego is how to properly interpret a negative P/E ratio. If a home priced at $600K has a 5% mortgage + 1% property tax and rents out for $2000/mo (=$24,000/year), then the owner has earnings of -$12,000 / year, before factoring in the effects of negative equity appreciation, insurance, maintenance expenses, gardening fees, HOA dues, etc.
I commented on this in yesterday’s last thread.
They aren’t looking at cost of borrowing the money. Like a stock, they are assuming you’re buying with cash. They are also ignoring HoA, landscaping, etc. saying they assume those costs to be similar across the country.
This isn’t to say whether you should buy or rent. Just to compare one city’s house price to another city’s. If it was a buy vs. rent, then just about every city n the country would be WAY negative for housing right now.
pure out of my arse example for San Diego:
800000 cost/(36000 rent - 2500 insurance - 10000 tax) = 800000/23500 = 34
“Like a stock, they are assuming you’re buying with cash.”
Well then they are making a seriously flawed calculation. Even if you buy with cash, you should figure the opportunity cost of funds (foregone investment return) into the earnings on the home purchase.
Yeah, but you have that same oppertunity cost when buying a particular stock. Buying this stock should be weighed against the other things that money could be used for.
I agree it is a flawed calculation since it does ignore maintenance costs, HoA and such. Sure, they are similar across the country, BUT… Many people aren’t going to look at the details.
Oh, not to mention the HUGE load costs involved in getting in and out of the housing market. Would you buy a mutual fund that cost 3% to get in and 7% to get out?
“Many people aren’t going to look at the details.”
Would these be some of the many people who forgot to look at the details on their I/O ARM mortgage contract?
HOA costs are not similar around the country - maybe for the fools in California. In the Tri Cities of Washington state HOA costs are around $150 PER YEAR, not per month like many places in California, for a single family home. And many areas in the Tri Cities have no HOA fees.
“Would you buy a mutual fund that cost 3% to get in and 7% to get out?”
I heard that the REIC fund always goes up, so it’s a guaranteed no-brainer. I suggest buying extra on margin. This thing is really going to move during the spring buying season, as soon as the weather isn’t too good or too bad, and after Mother’s Day but before Memorial Day.
“Where is the complication? P/E ratio = Price / Earnings, where
Price = current market value = amount a willing buyer will pay to purchase the home under current market conditions, and
Earnings = amount you could make by purchasing the home and renting it out, covering all carrying costs.”
GetStucco:
The complication is that you lost 99.999997654% of the adult American population after the “=” sign in your equation.
As Barbie says: “math is hard”.
Your complicated brain surgery equation doesn’t need to be done, because Suzanne researched this, and WE CAN DO IT!
Again, earnings are negative in just about all markets. Most overpriced = biggest negative? Who is going to publish that? Even for stocks they stop publishing a P/E when it is negative.
http://finance.yahoo.com/q?s=SIX
Stocks are different, because the stock market (unlike the housing market) always goes up
Besides, what whould the P/E on a stock be if you were borrowing the money at 6% to buy the stock.
Sad to say, but I know people that were using HELOC money to play the markets back in ‘98-2000.
Dang, no more HELOC money.
http://louminatti.blogspot.com/2007/05/no-more-heloc-money.html
Have you ever gone into a Tweeter and seen what they want for a home system? My gosh. It was obvious that they were for the, “my house is appreciating so fast that money is no object” crowd. That ain’t me babe. The whole concept of paying $20,000 for a home theater is absurd to me, unless you really can afford that with absolutely no pain.
Yep. The free money spigot has been shut off and I think it’s the main reason Tweeter is about to go BK.
Is this like Ultimate[ly Overpriced] Electronics. Same exact stuff at Wal-Mart for half the price.
I know I’m supposed to hate Wal-Mart and how it kills copetition and mistreats its employees. But when I can get stuff so cheap, I just can’t help myself.
I was at a party last month where some folks were bragging on their neighbor’s home theater. (I thought that was an interesting House Bubble side effect, homeowners boasting of their neighbors’ accoutrements). They went on and on about how they had the leanback theatre seats installed, blah blah blah. There was a time in my life when the only people that had home theaters were in the entertainment industry. What, are we all moguls and starlets now?
I wonder how many home theaters have been paid for with earned money, as opposed to borrowed money.
I know a guy that hasn’t been paid in 6 months, and two months behind on the mortgage. Just waiting for his ship to come in expected any day now - hopefully before the foreclosure notice. But hasn’t sold the $10K theater system, the telescope, the cameras, the $50k gun collection, the big screen… Pity the Lexus and the SUV are leased.
Allstate announced yesterday that they would no longer write homeowner policy s in California. They were concerned about excessive losses from wild fires and earthquakes. I’ll wager that they are also concerned. tho unstated, about FB instigated arson.
Bad drought + arson motive = heightened fire risk
Why do they no longer write policies? Why not just jack up the rates to make it completely outrageous? So you’re covered beyond your statistical tables.
Is there price control by the state?
The insurance companies are cognizant of the risks and decided to get outta dodge…
Isn’t that enough info?
In short yes, CA Dept of Insurance.
Most states regulate insurance companies and their premiums.
I can understand that an insurance company needs to cover its risks and make a profit. In the case of homeowners policies, presumably the risk in almost all cases is limited to replacement of the structure. In California, relative to most places, there is a huge premium for the land, which does not need to be replaced. So, even though the selling price of homes has doubled in a recent period, it doesn’t seem likely at all that the cost to rebuild them has doubled or near it.
But a McEarthquake could ding the value of the land. Wonder if they know something we don’t?
From Wikipedia: “The 1994 Northridge earthquake occurred on January 17, 1994 at 4:30:55 AM Pacific Standard Time in the city of Los Angeles, California, falling on in 1994. The earthquake had a “moderate” moment magnitude of 6.7, but the ground acceleration was the highest ever instrumentally recorded in an urban area in North America[1], and it proved to be the most costly earthquake in United States history.”
We got hammered here in Santa Monica, but it didn’t hurt the land values. An apartment building a few blocks away from me blew up in a gas explosion. Neighboring buildings were missing entire walls, almost no one with a brick chimney had much more than a pile of bricks left, many structures red-tagged, the freeway closed for months while they replaced missing bridges, etc.
What did get hurt was the structures, not the land value. Of course, there were a lot of fraudulant claims for structural damage. That is what I think Allstate is trying to avoid.
They didn’t want to write in Texas either. Serious wimps. (Of course, they did dump me after a few at fault accidents in my youth. It’s not like I carry a grudge or anything.)
Thursday’s bad retail news was terrible for the stock market, but yesterday’s bad retail news was great, as it increased the chances of the Fed showering helicopter drops of liquidity on Wall Street later this year. What gives?
—————————————————————————
CURRENCIES
Dollar drops on retail sales, inflation
Yen selling picks up pace as investors rebuild carry trade
By Wanfeng Zhou, MarketWatch
Last Update: 4:47 PM ET May 11, 2007
NEW YORK (MarketWatch) — The dollar fell against the euro Friday, after government reports showed weaker-than-expected U.S. retail sales and benign core wholesale inflation for April.
The dollar gave up prior-session gains on speculation the interest-rate differential between the U.S. and other parts of the world will narrow soon. Both the European Central Bank and the Bank of England are widely expected to continue hiking interest rates. In contrast, the federal funds futures market is pricing in a rate cut this year.
“Bearish dollar sentiment appears to have taken hold again today after a brief respite earlier this week,” said Michael Woolfolk, senior currency strategist at The Bank of New York. “Interest rate differentials are weighing further against the dollar.”
“Today’s negative core [producer price index] figure adds to the growing body of evidence that the threat to prices stability has passed for now,” he said. “Growth differentials also are weighing further against the dollar this week, with retail sales down and the trade deficit widening.”
Late in New York, the euro traded at $1.3525, compared with $1.3483 late Thursday. The dollar was quoted at 120.12 yen, compared with 119.89.
http://www.marketwatch.com/news/story/currencies-dollar-drops-vs-euro/story.aspx?guid=%7B2D3BA9A4-5877-4A3A-9395-7A4EF663C134%7D&dist=hplatest
When will the fed start printing a two-ply dollar bill so I can at least wipe my a$$ with it when it becomes completely worthless?
When the US government says the dollar is overvalued by 35% to the Yen and is holding congressional hearings on the Dollar/Yen & Dollar/RMB, do you really think that professional money managers are trying to do the “carry trade”? The last time the dollar/yen got so out of skew, the Yen rallied 30% in 3 months. The money managers I know have been trying to unwind from the Yen since March.
The dollar will go down, but remember that for Japan and China a 5% decline/yr in the dollar becomes a real growth in GDP for those countries. Japan and China have every incentive to keep buying dollars.
People who are going to wait out the market to sell will get a big surprise. The market will slowly tumble until it meets the demand, which right now is low. Someone who was asking $500,000 and lowers it to $450,000 may find that when all is said and done it will even out at $300,000. I’ve known lots of people who have turned down deals because they wanted just $10,000 more and ended up later taking a deal at $50-$70,000 less than their original offer, all because of greed.
For buyers, then, greed can be a good thing. It will keep them on the fence longer and get them a better price.
The stock market is way over priced and people keep bidding the prices up on terrible news. The retail sales numbers were not just bad they clearly show people have stopped buying. This is only going to get worse. When will Wall Street figure this out?
Wall Street is currenly myopically focused on rate cut hopes, and happy to ignore the traditional pattern of stock market corrections at the onset of a recession. I guess they must collectively have their downside risks fully hedged.
And the bailout begins: http://milwaukee.bizjournals.com/pittsburgh/stories/2007/05/07/daily41.html
“Members of the Pennsylvania House of Representatives Friday said the state would be starting a rescue fund for problem home mortgages and calling on subprime lenders to agree to a voluntary moratorium on foreclosures.
…
Pennsylvania Housing Finance Agency Executive Director Brian Hudson said the two rescue funds would include a refinance fund that will use taxable bonds to move people from adjustable-rate mortgages to fixed-rate mortgages with PHFA, which will structure and operate the funds.
The second fund, dubbed the “workout fund,” will move people whose remaining principal is greater than the appraised value of the house into fixed-rate mortgages. The fund would use taxable bonds and a $25 million appropriation from the state’s general fund to cushion against some of the losses the fund will absorb.”
People in Pennsylvania, working at honest jobs will be forced to shell out a part of their earnings to pay the interest on bonds, whose purpose is to help pay someone else’s mortgage.
Right is wrong and wrong is right.
“…calling on subprime lenders to agree to a voluntary moratorium on foreclosures.”
I wonder how many lenders will agree to the moratorium, out of consideration for their warmth and fuzziness.
“I wonder how many lenders will agree to the moratorium”
Y’all wake me when they do.
“The Daily Press of Newport News, Va., reported that he put the two-story brick house on the market Wednesday and it sold the same day. John Brooks, an agent with Long & Foster, told the newspaper Friday that Vick was asking $350,000 for the property — less than half its assessed value of $747,000. Brooks would not reveal the sale price.”
What a way to ruin all the other home owners chances of refinancing.
Yahoo sports
http://tinyurl.com/2hsclc
God bless that dope smoking, dog fighting, STD spreading man for killing the comps and speeding this thing along. All I can say to his sale is, “Touchdown”.
I know this is OT - but what has gotten into sports atheletes? So many of them feel that they area above the law.
They always have. It just gets reported a little bit more nowadays. Read some of the old stories about baseball players. The spotlight has just gotten brighter.
Any group who have things repeatedly smoothed out for them feel that way. Why should we expect sportspeople to be any different?
Check out the evidence at the current Conrad Black trial, for example. Or consider the current tales about option backdating.
The difference now is the money……
Didn’t someone just compute that Roger Clemens - should not be injured or shelled every start - will “earn” $9,000 for every pitch he throws for the Yankees this year?
It really is different today at the top level of the major professional sports.
You have to watch this — SNL skit re Vick sneaking weed on a plane:
http://www.youtube.com/watch?v=RjtVnqZCndo
Posted on Thu, May. 10, 2007
Solutions to subprime woes shaping up in Congress
By Kevin G. Hall
McClatchy Newspapers
(MCT)
http://www.fortwayne.com/mld/newssentinel/news/editorial/17207123.htm
Fair enough, and I will leave it to others to comment…
Where do you even start? There is so much meat in that article.
“Subprime loans given to borrowers with little or poor credit histories represent only about 15 percent of all home mortgages. But because subprime default rates are rising fast and expected to soar late this year and next, there are concerns that they could lead to a glut of foreclosed homes just as the slumping housing sector is trying to recover. Housing problems have slowed the U.S. economy this year and could become a worse drag in the months ahead.”
But isn’t subprime already contained? This makes it look like we are just at the beginning.
The sum total of all of these measures will be to lock up the real estate market.
This whole thing gets an 11 on a scale of 1 to 10 on the Assinine Meter. Barney Frank wants to add responsibility back into the process and then remove the 3% down clause and raise the FHA limits in states such as New York and California. Hmmmmm.
IMHO that Congress has taken an interest in the subprime housing woes is probably the best thing to happen. What I think will take 15 years to hit bottom, Congress by its ineptitude can cause to happen in 5 years.
Has anyone ever seen Congress do something constructive? Frankly, with current technology, I do not see why we do not establish a Democracy - it could not be any worse than what we currently have.
From yesterday’s Congressional Quarterly
“The very modest raise the Democrats promised after last November’s election isn’t yet law….Yet it is clear that even a Congress in the hands of the Democratic Party cannot see merit in a big increase in the minimum wage. The very modest raise the Democrats promised after last November’s election isn’t yet law. And, even if it were, it would be phased in over two years. Moreover, if the jump to $7.25 per hour were to take effect tomorrow, it still wouldn’t provide enough yearly income to lift a family of three above last year’s poverty line of roughly $16,000.”
“… a family of three above last year’s poverty line of roughly $16,000.”
Will that be enough to qualify them to buy a $600K California SFR under new FHA rules (0% downpayment, below-market interest rate, increased conformable limit, and govt guaranteed against default)?
“Frankly, with current technology, I do not see why we do not establish a Democracy - it could not be any worse than what we currently have.”
Yea, we could vote on legislation through our t.v. consoles, like American Idol
LOL, but would it be any worse? And think how little would ever be accomplished - that is a good thing.
“What I think will [normally] take 15 years to hit bottom, Congress by its ineptitude can cause to happen in 5 years.”
Good point. Let’s “git ‘er done.”
Hoz,
Mike Gravel, the longshot Dem candidate from Alaska, prosposes exactly that.
“It is important to understand that the National Initiative does not alter the existing structure or powers of representative governments. Rather, it adds an additional Check –– the People –– to our system of Checks and Balances, while setting up a working partnership between the people and their elected representatives.”
What a wimpy solution! Another Checks and Balance is not needed, the idea is to eliminate Congress and its purchased power brokers by placing the trust of the government back in the peoples control.
“…the idea is to eliminate Congress and its purchased power brokers by placing the trust of the government back in the peoples control.”
————————–
It’s way overdue. I’d love to see something like that, Hoz.
So, they’re going to make laws to tighten standards to a level, that the market has already adjusted to. Oh yeah, and to bail out the banks by letting them refi all their existing sub-prime to FHA.
NO!!!!!!! Toughen laws on cash-back at closing, and adjust sale prices to account for all extras, incentive, etc. Don’t let the comps get inflated by gimics.
Darrell,
The trouble with your suggestion is that prices would adjust to affordable levels. Not only would the middle class be able to afford homes again (obviously a problem for the powers that be who want to limit a comfortable existence to the top 1/200 households), but there would first have to be a hard landing.
What’s interesting about all these Washington ’solutions’, whether they are Freddie Mac, Fannie Mae, FHA, PBGC, Social Security, Medicare, Department of Defense and others, is that the people in Washington have no idea how they are going to pay for all this stuff when the baby boomers start to retire.
I guess as long as China and Japan keeps buying depreciating dollars, it’s all good.
Actually, DoD is a good solution ;), but recent ‘adventures’ are not (IMO).
Sorry if this is a repeat …
Rich Toscano (from Piggington’s) May 10th interview on KPBS-TV (NPR, San Diego).
http://www.kpbs.org/tv/full_focus?id=8272
Excellent interview! I love hearing commentators who shoot straight from the hip. I hope David Lereah takes the time to watch this one so he can at least vicariously appreciate what constitutes an unbiased report.
Love Rich, but he obviously soft-pedaled the effects so as not to scare the natives.
“Among the talking points NAR suggests: Realtor associations support all business models and favor none; real estate is a highly competitive business with one in 86 adults now a Realtor;”
Hmmm. One in 86 adults now a R(!)ealtor. One out of 86 homes in the Central Valley now in foreclosure.
Coincidence???
YOU be the judge!
This from the OC Register,
Subprime lenders say FICO failed
Credit scores didn’t predict defaults, loan makers charge. But Fair Isaac says overly aggressive lenders have only themselves to blame.
http://tinyurl.com/2y8gan
“…overly aggressive lenders have only themselves to blame.”
DING-DING-DING!!!
They’ll definitely have a lot of data for “model” improvements after the current exercise.
I can already tell you what the new Fair Isaacs mortgage default model should be:
Ignore the credit of the borrower and instead curve fit the stupidity of the lender. Accuracy will be phenomenal.
Borrowing to Get Ahead, and Behind: The Credit Boom and Bust in Lower-Income Markets
The Brookings Institution, May 11, 2007
Matt Fellowes, Fellow, Metropolitan Policy Program
Mia Mabanta, Senior Research Assistant, Metropolitan Policy Program
http://www.brookings.edu/views/articles/fellowes/20070508.htm
I just went to goldprices.com. They had a headline LOOMING WORLDWIDE FINANCIAL CRISIS.
We are supposed to believe this is a different ploy than the RE: BUY NOW OR BE PRICED OUT FOREVER.
An asset bubble is an asset bubble is an asset bubble.
Actually, a commentator on the mining markets that I like (Doug Casey) is saying that gold prices will probably fall over the summer, and pick back up later this year. He points out that even in an up market, gold is highly volatile, with lots of big corrections along the way.
I don’t see gold’ behavior as an asset bubble, I see it as a reflection of the decline in value of the dollar, as seen through the eyes of the market.
I just predicted $600 gold and $55 oil over at Iacono’s website. I expect both to get dragged down (temporarily) when the stock market tanks. “Go away in May”, you know.
the game is rigged-
PPT controls:
house prices
stock prices
commodities
interest rates
inflation
wages
those Skull & Bones guys never sleep
life would be so much more pleasant without the rich and powerful in constant conspiracy against the common man- it’s impossible to get ahead because the fat cats just won’t let you
Now there’s someone who has sufficient tinfoil in his hat. You go, Brad!
Brad is trying his hardest to be funny again. You can tell this is sarcasm, because even the most extreme tinfoil hat conspiracy theorist realizes that although the govt may try as they wish to control the prices of everything, the invisible hand will eventually trump such efforts.
conspiracy theories are just another way to always blame someone else for failure.
in the old days when something bad happened, you just blame it on a “witch” and burn her at the stake.
modern superstition: we invent conspiracies- the man behind the curtain
I’m actually a firm believer that you should never blame a conspiracy when mass stupidity is equally likely to be responsible for the mess.
That said, sometimes governments do things that are obviously not in line with their stated aims or goals. Is that a conspiracy…?
it’s a conspiracy if you look at everything from “woe is me” tinted glasses.
personal responsibility is the antidote
Brad –
If enough Americans see the light as you have, then future Watergates will take place without scrutiny. I agree with your point about personal responsibility, but I disagree with your assertion that we should ignore any evidence of high level manipulation as prima facie evidence of personal failure, as governments have never engaged in manipulative schemes to benefit the few at the expense of the many.
GS,
No system is perfectly fair, and opportunities are not equal. Nonetheless, a person who makes good choices and works hard can succeed better here than at any other time or place on the planet. The housing bubble was created by millions of individual choices, as well as a lot of unintended consequences of policy decisions. The Fed does not control interest rates. The economy is very hard to steer, like the proverbial supertanker in rough seas near a jagged coast. There’s always going to be winners and losers, and the best and luckiest will position themselves to win. But I think it is a stretch to say that our government purposely takes money out of the pockets of specific groups in order to benefit other specific individuals, with financial gain as the only motive.
Capitalism can be really messy. Markets can be influenced. Governments can try to steer them. But control them? Too big, too many players, too much money, too many forces at work.
Brad,
I agree with pretty much everything you say; I especially doubt the ability of governments to control markets. But some governments do have the hubris to try…
“But I think it is a stretch to say that our government purposely takes money out of the pockets of specific groups in order to benefit other specific individuals, with financial gain as the only motive.”
I also agree with this, if you substitute “given” for “stretch to say”… Have you ever heard of quid pro quos? Or how about campaign contributions?
“mass stupidity is equally likely to be responsible”
Conspiracies are more likely when mass stupidity pervades the populace.
“Never attribute to malice that which can adequately be explained by stupidity.”
If the gods had not intended them to be shorn, they would not have made them sheep. My father told me that the easiest way for me to double my money was for me to fold it over once and put it BACK in my pocket.
PPT controls:
house prices
stock prices
commodities
interest rates
inflation
wages
And you better thank the Lord for this! If it weren’t for the PPT, we’d be headed toward a real “Pound me in the A**” recession.
While perusing the Reset Schedule from Credit Suisse reporting a bit more than 1T resetting in the next 5 years, I realized that Fannie Mae earlier this week reported over 1.1T in Fannie Mae ARMS - all adjusting in the next 3 yrs.
My question does anybody have any reliable figures? Is Credit Suisse reporting Fannie Mae, Freddie Mac , subprime loans or what?
Call for Opec to increase output as US petrol stocks hit 16-year low
“…A plunge in American petrol stocks to a 16-year low has prompted the International Energy Agency (IEA) to call on Opec to open its taps and bring more crude oil to the market before the summer.
The IEA’s warning and continued disruption to Nigerian oil exports pushed the price of Brent crude up almost a dollar to $66.67.
Continued strong petrol demand in America is confounding the oil market and yesterday the Paris-based agency pointed to 930,000 barrel per day (bpd) oil and product stock draw in the first quarter of this year.
That followed an 890,000 bpd stock draw in the fourth quarter of last year. The agency is predicting a 1.6 million bpd seasonal jump in oil product demand next month, requiring a significant increase in supplies that the IEA states “looks unlikely to happen.”…
Reports of an imminent restart of 350,000 bpd of Forcados production seem premature in the current environment,” the IEA said, concluding that it “anticipates a thirsty market in the months ahead”.
May 12
Times on Line
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