Bits Bucket And Craigslist Finds For May 31, 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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Come on guys………buy…….buy……..buy!!!!!
http://news.ninemsn.com.au/article.aspx?id=60274
“US housing hurting world economy: UN
Thursday May 31 07:35 AEST
A weakening US housing market is dragging down the world economy, with growth in world gross product, or WGP, expected to fall to 3.4 per cent in 2007 from four per cent last year, the United Nations says.”
Interesting how the U.S. housing market could drag down world economic growth to a lower but still unsustainable level…
“But growth is expected to pick up a little next year to 3.6 per cent, says the UN’s mid-year “World Economic Situation and Prospects 2007.”
I guess WGP always goes up? With zero trade deficit to boot?
Along these same lines, I need you guys to HELP me debunk Ken Fisher’s thinking. He argues that the US savings rate is large and positive — because (I guess?) the official savings rate doesn’t count stock and bond purchases (?!) — and that the global economy is doing very well (yup, WGP always goes up), and pooh-poohs any mortgage problems by noting that option ARMs are only 1% of all outstanding mortgages on US RE. He looks for continued new highs in stocks, based on the fact that companies are repurchasing shares and thus reducing the supply of equity shares - not interpreting this as an absence of actual business opportunity for the companies so doing.
Of course, I don’t HAVE to sign up for Fisher’s investment advice - nor do I plan to - but I need resuscitation after reading what looks to me like an evil promotion of continued bubblicious markets ad infinitum. HELP!
From my understanding, he is actually correct in some regards in reference to the Savings Rate being wrong. Savings Rate only includes deposits, not 401K contributions or purchasing stock or even my T-Bill purchases. In someways, the govt does have its reasoning correct in that most of that is a zero sum game - someone plunks down 1K and buys a credit card receivable, he saved 1K (presuming he collects), another borrows 1K for a CC company and buys a plasma. Zero net savings. You contribute 6 percent to your 401K and your company matches with 6? Savings = 0. Money is just being added to a market and someone is either entering to finance their startup or someone is exiting with an asset inflation / capital gain.
But don’t forget that it’s not money until you can eat it. Besides, I think the only real reason why “savings” is important to the gubment is because it represents money that is available for investment by banks.
“…the official savings rate doesn’t count stock and bond purchases…”
Ken Fisher (not to mention the Fed) does not subtract the debt used to finance asset purchases from the nominal gains in asset prices (a version of the “Broken Window Fallacy”). He also most likely forgets to measure the value of U.S. asset prices in terms of a basket of other world currencies, which just might matter in a world with very little capital controls across borders.
There is something to savings rate point. My wife and I max out our 401Ks and our Roths, but actually do not keep much cash sitting around in savings accounts. We have done this for several reasons–one of our accounts has several years of living expenses in it that would be available to us without the penalty–and we figure the emergency that would require its use would involve no incomes for us–so the tax hit would be a problem; but if I understand correctly–retirement accounts are less risk of making one a lawsuit target. So for the statistics–we would look like low savers (but deep equity homeowners with no debt.)
This crazy asset inflation will continue until risk is priced into the debt it takes to create this money. This could go on for some time–or end this afternoon.
tax hit would NOT be the problem
I consider my 401k and IRA contributions part of my savings. Also my non-retirement equities purchases, my precious metals purchases, and so on - all savings.
More on the ever fascinating subject of the Plunge Protection Team:
http://tinyurl.com/3cbavv
SHINE A LIGHT ON THE PLUNGE PROTECTION TEAM May 27, 2007 — Dear John: Although I admire your quest to get information on the Plunge Protection Team, I’m not sure why you are doing so. Seems to me, if you consider it OK - in the public interest, as you say, - for the PPT to intervene in some emergencies, then you essentially consider it OK to intervene at all times. Because who determines what a real emergency is? Where do you draw the line? You either believe in a free market or you don’t. I.G. Dear I.G.: I’ve wrestled with this question, and I don’t think I’ve come up with a perfect answer - but perhaps a satisfactory one. If outside forces are threatening our financial stability, then I think it’s okay for the government to intervene in the markets. Thus I believe it was right for Washington to stabilize the stock market - as I think it did - after 9/11. Or, if some sort of financial terrorism was being waged against the U.S. -then that, too, would be adequate reason for a temporary response. The Plunge Protection Team is really called the President’s Working Group on Financial Markets and - while it acts in secret - I think it was chartered to come to Wall Street’s rescue. But I believe there is the real possibility that a group like this will be abused. You make a good point: Who gets to decide when there’s an emergency? Is there one, for instance, if a stock market decline threatens an incumbent president’s chances of staying in the White House? That is why I believe the actions of the Working Group need to have a light shone on them.
They stabilized the market after 9/11? LOL! I was sitting there at 6 a.m. waiting for island to open on 9/17, the day the market opened after that, and I have never seen such an avalanche before or since. Unless I’m totally gone senile, as I recall, the market never had an uptick for another week after that. They were powerless.
I think what is going on now is much worse. I’m not even participating any more and this is my livelihood.
I think what is going on now is much worse. I’m not even participating any more and this is my livelihood.
wow. i hadn’t realized it was that bad. good luck.
I eagerly await the return to a sane market that has at least some underlying fundamentals.
“I eagerly await the return to a sane market that has at least some underlying fundamentals.”
For that to happen, I think there’s going to have to be a major bloodletting, meltdown or something. And I’m not talking about this little pissant housing bubble burst. I’m talking something nuclear.
Again, I think of the cartoon of the two vultures sitting on a tree branch, where one says to the other “Patience, hell, I’m gonna kill something.”
That’s the way I feel. I stopped shorting 300 points ago on the Dow. Got some September puts, that’s it.
I really can’t remember anything like this. Even in late 1999 - early 2000 the market corrected in between manias.
palmetto,
It is going to happen. The fall will be slow and agonizing but it will happen. I consider raw land as a leading indicator of where values are headed.
Down here in Port Charlotte during the run up bare lots were selling for 35-60k all the time. I have noticed that in the last month or so a few lots have had sale pending on the RE sites. The current price…9k… Ouch,that is gonna leave a mark. Before the big runup lots were 5-7k.
I had a appraiser tell me a few weeks ago Adams Homes unloaded a package of 400 lots for a average of 20k per lot in the Deep Creek development. He mentioned some of the water lots in this package were selling for 250k at the high point.
Oh you’ll love this. Around the corner from my place are 2 houses that look done from the outside. Peer in the windows and NOTHING is done inside. No electric/plumbing/drywall/flooring/freakin nothin. According to the neighbors the builder ran out of cash to finish at this time. Nice…….
Chris
So what are the prospects for buying a house that is not finished on the inside really cheap? I wouldn’t mind doing alot of the interior work myself.
No you wouldn’t, trust me. Been there, done that. Unless you can take a 3 month vacation from your day job, buy a house that’s completed…..3-5 years from now of course.
And us poor people are forced to preface an explanation of our current 100 percent short duration cash allocations with the explanation that we have risk references equivalent to a 90 year old’s, and obfuscate with “I just don’t believe the current risk return trade off falls within my tolerance levels.” Can’t wait till sanity returns.
references = preferences
“The Trend is Your Friend”. made me and saved me a bubdle over the last 30 years. No matter how I feel about the economy, and no matter how much my research says the market is due for a correction, I let the
charts speak for themselves. I am cautious, but this ride has been profitable
When is the margin call coming? It just keeps dragging on and every time you think its coming, nope..it drags out even more. I had to shift back to my regular business because people keep buying, I thought it would die down with higher gas prices, but not at all. I have been on this for almost two years and nothing has really changed although fundamentals would suggest otherwise.
I’d appreciate some insight into what you think is going on if you have some time.
Thanks!
http://www.minyanville.com/articles/S%26P-Shanghai-China-US-/index/a/12979
“I’d appreciate some insight into what you think is going on if you have some time.
Thanks!”
probably a confluence of things.
1. Most important: monetary inflation. All of the major world governments/central banks are printing more money every year. Thus, more money chases the same amount of goods. Thus the prices of those goods rise. This is why we’re seeing record (or near record) highs in: The Dow, the S&P, gold, many of the precious metals, uranium, Treasury prices (high prices leads to low yield, and Treasuries have a low yield right now), Real Estate (although this is changing), Oil, and many commodities.
in fact, if you look at the INFLATION adjusted prices for the Dow and S&P, you will discover they are now priced LOWER than they were during the late 90’s. (even if you use the cooked inflation we get from the govt).
2. Flight from RE. RE is no longer the “never can go down” investment. It is still pulling a lot of money, no doubt, but some of that is leaving RE and going into stocks.
3. Record earnings. Obviously our economy is sick, however, that does not negate the fact that many companies have very good earnings growth. They do this by using cheaper labor, cutting costs, and not by organic growth… however it is still earnings growth.
4. LBO mania. The LBO is taking a lot of companies private. the money that the previous stockholders got from the LBO has to go somewhere, so it’s going into other stocks. In addition, the LBO craze means that many faltering companies have stock that won’t fall, because they may be an LBO candidate. So their ineptitude actually makes the stock go HIGHER.
5. recent returns. The stock market is beating most other investments Year To Date. Many/most investors have the memory of a gnat. Thus, they look and say “hmm… what’s making the most money? Stocks!” so they plow into stocks.
6. The past. People remember the meteoric rise of the stock market in the late 90’s. they SHOULD remember the ensuing fall. But instead they remember “hey, the stock market can go way way up! I’m going to ride it, and this time I’ll get out in time!”
7. General mix of stock investors. The average person owns a home. Thus home ownership can be used as a proxy in many ways for how the average joe is doing. The equities market is a different matter. Stock ownership is heavily tilted towards the more affluent. the affluent are doing well in this “recovery”, and thus have money to spend. it is not unlike the Chinese Stock Market, where most average folk don’t own equities. There, you saw the Shanghai stock exchange FALL while GDP went way up in the early 2000’s.
8. Govt manipulation. Despite others on this blog, I do NOT think that the govt or fed is directly intervening in this runup. They probably did a little bit around end-February when we had our correction, but not now. The market is too big to manipulate for so long of a time. there are honestly too many bulls out there looking for a reason to let the market go up.
9. bubble. stocks are probably going to be the next bubble. The reason: we have a bubble economy now. We will go from bubble to bubble to bubble. We went from Stock bubble to RE bubble, and now people feel burned about RE so will avoid it some. And stocks are the only other easily-accessible-to-the-masses investment. There is likely also a gold and oil bubble forming (not yet.). yes, gold and oil have fundamental reasons for rising over the LONG term, but I beleive there is significant speculation in those areas as well… and they’ve gone up too fast for too long. There is also a uranium rise, possibly bubble.
anyway, just a few thoughts
“I do NOT think that the govt or fed is directly intervening in this runup.”
I do. But, phrased differently, Goldman Suchs is intervening using the gov (Hank) as its proxy. And now, with another Suchser about to head the World Bank, the fun should REALLY begin.
Oh, I forgot another 2 reasons:
1) dollar depreciation.
Dollar is cheap right now relative to other currencies. Thus, our exports are more attractive to other countries. This is why we saw the DOW rise before the S&P, because most of the Dow components are international companies with a heavy international presence. As the dollar fell, their dollar denominated earnings rose.
2) belief in the Greenspan put. There is a belief in the markets that the Fed will save them. Thus, if the economy is booming, stocks are rising because people say “the economy is rising”. If the economy is faltering, then the stocks still rise because people say “the Fed will drop interest rates”
It’s twisted logic, and shows the lack of fundamental reasoning. But remember how dependent the US is on cheap debt… thus it’s not all that crazy.
as long as the economy can show some MINIMAL growth (even 0.1%) with low “inflation” (easy, since we can just cook the CPI) then the party goes on.
“The market is too big to manipulate for so long of a time.”
Your reasoning is flawed (perhaps deliberately so). If you don’t understand why, take a trip to AU and watch a shepherd and his sheep dog move an flock of sheep which appears too big to manipulate at first glance.
“The market is too big to manipulate…”
And if you are interested in learning the eventual outcome of manipulation, read an account of the attempt to steer the Exxon Valdez away from the rocks…
Again, GS, this is where you and I will have to agree to disagree.
I have no doubt that there is attempted manipulation, but that manipulation can not be controlled well and the size of the markets is just too big … If there was controllable manipulation, then there would have been no stock market implosion from 2001 to 2003 (it would have simply been prevented).
I think of the fed more like a fire hose that’s held by a child. It can spray lots of water (cash) all over, but has a hard time controlling where that water (cash) actually goes so it goes all over the place, then runs where it will by gravity (speculation).
Thus, when the equities bubble burst, they tried to prop it up, but to no avail, the money simply went to RE. Now RE is popping, and they’re trying to prop that up, and the money is moving to stocks and LBOs and gold and oil and commodities.
If, by manipulation, you simply mean the US govt and the fed are causing severe stealth inflation then I’m all in agreement. But the money flows where it will.
just watch CNBC for 1 hour. I know we all (yes, me too) think they’re shills, but they are a BETTER indicator of market psychology than we here on a bubble blog. And like it or not, the markets are mainly psychology-driven with a little bit of fundamentals and also some uncontrollable manipulation.
“And if you are interested in learning the eventual outcome of manipulation, read an account of the attempt to steer the Exxon Valdez away from the rocks… ”
Exactly. which is why I feel this runup is not manipulation. if it were simply manipulation, we would have run around by now. This bull run has been going strong for some time now, at LEAST a year since you told me it was due for a fall. I’m sorry but I don’t believe that manipulation could have held this market together for so long (unless of course you are simply referring to inflation as manipulation… I was thinking more along the lines of PPT direct intervention by buying equities in the marketplace).
Instead, we have small spats of manipulation, with secondary increased confidence in the markets with psychology shift towards equity ownership, which feeds upon itself.
“run around” should be “run AGROUND”
equity markets / debt markets / housing market are all driven by psychology. being surrounded on all sides by various traders, analysts and portfolio managers, I’m the odd duck out and read here for the occassional dose of sanity.
“If there was controllable manipulation, then there would have been no stock market implosion from 2001 to 2003 (it would have simply been prevented).”
Inspector, sorry to sound harsh, but here is yet another logical flaw in your argument. You implicitly assume that if there were manipulation, it would be effective 100% of the time. I would counter that efforts to control asset price movements may work very well at some points, and fail miserably at others, and there is a very complicated underlying stochastic process which governs at what point the ability to steer the economy through financial engineering measures suddenly fails.
You can find many similar examples in the natural world. The levees around New Orleans seemed to do a very good job of “controlling” the waters surrounding the city until the weekend in fall 2005 when Katrina paid a visit.
The problem with economic stabilization (as noted in so many words by no lesser authority than Alan Greenspan) is that its very success can plant the seeds of its own destruction. The more successful policy measures are in stabilizing economic fluctuations, the more convinced decision makers become that risky propositions with little compensating return have morphed into sure bets, which amounts to systemic risk in its worst possible (endogenous) form that fosters unproductive bubble-bust cycles in asset prices. At that point you have a conundrum, where the force of economic entropy has leveled risk premiums, and yield-chasing risk lovers start making bets that look very stupid in retrospect when they blow up.
“unless of course you are simply referring to inflation as manipulation… I was thinking more along the lines of PPT direct intervention by buying equities in the marketplace”
Actually, assuming the PPT had a way to “buy equities” unnoticed (maybe through Wall Street investment bank allies — the same group involved in the bond market purchases and sales used to control the Fed Funds rate) and also to create “higher-than-expected-and-unreported” inflation, why would they not engage in both activities? Two policy instruments pack more punch than one, and both measures would constitute with a respiking of the stock market’s punch bowl, and keep the financial news media busy with reports about the booming stock market that crowd out the other reports about the subprime collapse that is underway out of sight and out of mind.
txchick,
I know it’s bad - my flipper neighbor just cashed-out the remaining equity in her house to buy swampfront lots in SC (she says she’ll double her money in a year).
But she’s getting restless. So this weekend she’s attending a 3-day seminar to learn “stock trading”.
They’re back.
Unbelieveable. It’s like they never learned a thing.
I cashed out of everything and rolled into cash equivalents at the end of November. I got burned badly in March 2000 and I don’t have the time to make up lost ground again.
But, generally, I’ve been feeling like a doofus as everything in the market skyrockets.
These comments make me feel somewhat less of a dope.
“But, generally, I’ve been feeling like a doofus as everything in the market skyrockets.”
Nah, spike, you can never go wrong by taking a profit. Might be a smaller profit, but it is still a profit. How can you know what a bunch of financial parsites are going to do?
“But, generally, I’ve been feeling like a doofus as everything in the market skyrockets.”
Don’t feel bad, history puts you in brilliant company. Sir Isaac Newton was feeling like a doofus when he cashed out of the South Sea Bubble and it began reflating. Subsequently, he jumped back in and lost a fortune.
I recommend you invest some of the profits you took off the table in one of these cool T-shirts (no doubt Made in China)…
I can calculate the movement of the stars, but not the madness of men.
http://www.apress.com/ecommerce/tshirt.html#9
Cripes, I’ve gotten 2 flyers in the mail this past week to buy property in the Carolinas. Someone must be getting desperate down there to send out cold flyers.
Good Morning TX Chic;
what i don’t understand is why are so many companies buying other companies for cash at a market peak? I understand buying with your high PE stock….. but Debt? (cash)?
If you look at the charts of these companies lots of them were 1/2 price just 2 years ago……Even Buffet and Burlington was in the 50’s in ‘05 now its 91
http://www.opinionjournal.com/editorial/feature.html?id=110008343
Back in 1967, when Mr. Koch was in his early 30s, he became the reluctant president of the family business, then a $177 million, medium-sized oil firm. He recalls: “My father threatened that he was going to sell the company if I wouldn’t come back home to Kansas from the East Coast and run it.”
Nearly four decades later, that family company is a global conglomerate with net annual sales that exceed the GDP of many small nations, and it includes a diverse range of businesses supplying everything from jet fuel to plastic, asphalt to beef, toilet paper to lumber. It owns many familiar brand names such as Dixie cups, Stainmaster carpet and Brawny paper towels. The firm’s financial performance numbers have been positively gaudy, with a rate of return on investment that has outpaced the Standard & Poor’s 500 at least tenfold under Mr. Koch’s stewardship.
“We couldn’t have achieved the profitability we have,” Mr. Koch insists, “if we had been a public company. No investor would have been patient enough to allow us to build a firm oriented toward long-term growth and profits.” This is one of Mr. Koch’s bugaboos regarding the deficiencies of modern corporate management. He notes, “The short-term infatuation with quarterly earnings on Wall Street restricts the earnings potential of Fortune 500 publicly traded firms. Public firms are also feeding grounds for lawyers and lawsuits.”
He then confidently predicts: “Regulatory laws like Sarbanes-Oxley will only increase the earnings advantages of private firms.
TxChick –
I am thinking about joining the army of GFs who are currently shorting the U.S. headline indexes at the highest level since the early 1930s. When the last bear throws in the towel is usually a good time to go short (and I am assuming you are close to the last one)…
I haven’t thrown in the towel. I’m just giving up on the top picking and waiting for a change of character.
I can’t put into words how much I hate this market right now.
Why can’t you just make the trend your friend?
Why short the market right now if the trend is up. You don’t have to agree with it but why fight it? If it’s you’re livelihood you could just cautiously rent positions from the long side until it turns.
I made a very nice amount being short going into Feb 27 and then correctly playing the W bottom there. I anticipated a double top after that but was wrong there. I can’t stomach playing the long side so I just watch and wait. It looks like a lot of people anticipated a selloff yesterday after the China market dumped. I tried shorting the gap fill yesterday a.m. but got stopped out. It’s just not worth messing with.
There ARE still companies out in the market with sane P/E, across a broad sector of many of the markets. Many of them even pay dividends. Buffet has always said, buy undervalued companies and let them do their thing. With even simple tools like the yahoo finance P/E and dividend return calculators I can quickly find companies with low P/E ratios that pay a dividend, then do a small amount of extra research reading their balance sheet. They DO exist. Get into these guys, and keep an eye on them. If the P/E becomes outrageous just take your profit and move on to the next best company you can find. I don’t care if there is a nuclear holocaust; someone will be selling radiation suits. In a potential down economy food does well. There is always a counter cyclical industry to be in, but it takes work. Just my 2 cents.
“They stabilized the market after 9/11? LOL!”
I think it is fairly safe to say stabilization occurred in the wake of 9/11, based solely on the well-documented existence of the Working Group on Financial assets and its stated purpose. You cannot judge from the empirical evidence, as you have no information on the counterfactual situation which would have ensued w/o stabilization.
“If outside forces are threatening our financial stability, then I think it’s okay for the government to intervene in the markets. Thus I believe it was right for Washington to stabilize the stock market - as I think it did - after 9/11.”
Rant on:
CHRISALLMIGHTY!!! How in the name of sweet BEJAYSUS did it ever come to this? What’s the matter with us? Why do we have to have this unholy mass agreement that Wall Street, the City and other financial markets control what happens on Main Street? They’re just pushing bottons, shoving paper and numbers around, that’s all they’re doing. They’re not saving the world, or performing brain surgery or doing anything useful, just effing with people’s lives. Why does everyone fart when Wall Street gets indigestion? We still have to go to work, care for our families, eat, enjoy life or grieve for loved ones. We still have to go about our daily lives. What REALLY changes when financial markets screw up their casinos? Who made them the big Mega-Mega? Why should we give two s**ts in a bucket what Kuntlow or Cramer or any of the talking heads say?
Rant off.
Got anger management?
LOL. You should seriously consider decaf.
Hey, let him go off. Blogs like this are good therapy. Why do you think therapists recommend journaling? Writing can be a healthy outlet. Besides, I find sarcastic freak-out posts very humorous. Bring it on!
of course outside forces are threatening the US financial markets: those stupid foreigners (especially the Asians) are causing a savings glut that is scaring the hell out of Wall Street. If they cannot be teached enlightenment by Hank Paulson and his gang - and start moving all their savings into US stocks or Treasuries - the only option left to combat this terrorism is continous market support by the PPT. All perfectly legal because the very existence of the US finance economy is at stake
http://www.larouchepub.com/pr/2007/070529hongkong_crash.html
Hong Kong Monetary Chief Fears US Dollar Collapse, Hedge Fund Disruption.
It makes me worried when Larouche reporting seems at least as plausible as MSM accounts.
LaRouche warned of both the Bubble.com collapse and the housing bubble long before the so-called experts. Go verify that for yourself. The mainstream media has tarred him as a “political extremist and conspiracy theorist” since, unlike them, he’s not beholden to corporate interests and isn’t afraid to speak truth to power.
http://finance.yahoo.com/real-estate/article/103038/Best-and-Worst-U.S.-Housing-Markets
Albany, NY supposedly is up according to this article which is interesting since even the NYSAR numbers have April 06 to 07 as flat.
http://www.nysar.com/consumers/stats.asp
Pdf links at top of page
My county outside Syracuse is down but only by 4 sales…probably not statistically significant. I’d call it flat.
After mending my spendy ways, I’ve been faithfully maxing out my 401k, through Fidelity (along with outside saving). Trouble is, there is no “safe” option offered on my company’s plan, like straight-up Treasury notes - the “conservative” investments are, you guessed it, quite MBSed-up.
If you savvy investors were to want to shift money out of the S&P, which of these sounds like a better option:
“Stable Value”: FIDELITY MIP II CL 3 - mostly US Treasuries, but the fact that “FNMA ARM”, “Morgan Stanley MTN” and “US Bank MTN” show up in the top 10 components of the fund does not inspire confidence.
“Income”: FID GINNIE MAE - 80%+ “MBS Passthrough” (?), 16%+ “CMO” (???), trace other components
“Growth”: Fidelity Diversified International Fund - mostly Western Europe and Japan (currently have about 20% of my account in this fund already) - doing gangbusters due to the rather mediocre recent performance of the USD
I’m in my late 20’s, so this is not money I plan on touching anytime in the next 30-40 years. If I put it in something very conservative to ride out the storm, I’ll start going back into the stock market later.
I informally help friends and relatives with 401ks, getting in and out, etc. Are those your only choices? Do you not have a self-directing option? I wouldn’t put new money into any of those.
Not even gold?
Tex,
you’re in a pickle. nothing there looks great. If I had to choose something, I guess I’d choose the Stable Value Fund. find out what % are US Treasuries… it may not be as much Fannie as you think. Besides, if any company is too big to fail, it is Fannie. (in fact, I’ve spoken before how I think Fannie IS too big to fail, and is undergoing a silent bailout as we speak, hence no financials coming out of that company, and still not delisted)
otherwise, you can always call your benefits administrator and ask them to have different choices for your 401k.
Most people don’t look at their 401k, even fewer complain about it.
I was upset at the choices in my 401k so I called the benefits manager and voiced my concerns in a professional educated way. About 1 year later, my choice was in the 401k.
I wouldn’t say that Fannie is too big to fail.
I would say that it’s not even a company. It’s just a front for the government bailout of everyone else. Fannie will suck in everybodies paper at high prices and the money to do it will just magically appear.
TESTIFY, Brothah diemos! Right on.
Fannie already has failed. It hasn’t filed any audited financials in years, and you should consider it bankrupt.
I consider Fannie to be a black hole in the U.S. financial universe. The Fed’s repeated warnings that Fannie should be reined in are comical, as it is rather useful to have a black hole with no accountability to offer a counterbalance to the collapsing housing market.
Great to hear that yo’re starting to save for retirement - you’re way ahead of most of your peers. Most people don’t honestly consdier retirement until their late 30’s.
I’m very afraid that even 30 or 40 years may not be enough time. There are serious headwinds building that could very easily lead to a new “Dark Age”. Demographics are not in your favor, peak oil combined with global over population and central governments hell bent on spending all of your future income 10 times over doesn’t for a happy picture make.
Tax advantaged plans can have their tax advantage stripped away overnight when the government runs out of income sources - which they are all going to face in a major way very soon.
I’m 51 and have absolutely no faith that at the official retirement age that almost anything I do now will yield the expected results. Cash is a position and I would prefer to pay the known taxes now rather than gamble on what the governments in the cornered rat stage will do in the future. I also believe a little heavy metal insurance in hand is prudent.
I feel very sorry for the generations behind me. The ones in front of me and the soon to retire boomers have left a real mess that someone will have to pay for.
“Tax advantaged plans can have their tax advantage stripped away overnight when the government runs out of income sources”
Agree. My sis convinced me to never put money into a Roth IRA. Sure, they SAY the growth will be tax free. But, they’re going to need more revenue, and that is an obviously tappable source.
EVERYTHING will be means tested to ensure that no one gets ahead. Roths will be taxed if you have too much saved and other means of confiscation will occur to make sure your efforts are sent up the food chain to the masters.
Darrell -
Do you put savings in any tax advantaged account at all? I put money into Roth IRAs using this line of thinking: since 401(k)s and IRAs are not taxed the very first thing they would do is raise taxes on income coming from those accounts. Since income going into Roth IRAs has already been taxed once it is probably the 2nd line of retirement savings to be taxed.
In the end, I think the government is going to tap every last source imaginable when it runs out of cheap money.
It think it far more likely that they will stop allowing contributions–rather than renege completely on the savings already in the program.
Agree that a modest store of portable, non-traceable assets is a wise precaution. If you have a self-directed 401-K, I like Hussman.
My other fall-back asset is a law degree. I went back to school in my late thirties because I figured out I would probably have to keep working until I die or become too incompetent to care. Plus I have as much protection as possible for my own personal civil rights. If the rest of the country wants to give up their civil rights to fight a permanent war on “turr’ism” I don’t much care any more.
Unless some sort of cataclysm sends us back into a truly dark age, we will be fine. There will be short term pain, but if you observe the exponential increase in technological advance it will far outweigh the idiocy of current fiscal policy. I’m as negative as they come short term, but I don’t think you can really make the case the things will be bad long term unless you go the Bill Joy Gray Goo route.
That’s an easy one. Ginnie Mae is the only one of the federal mortgage lenders to have an actual Treasury guarantee. (Fannie and Freddie have nominal “credit lines”, you are really relying on “too big to fail” with their paper). I would stay away from the Stable Value funds always, they are usually full of insurance company garbage. Probably allocating a piece to the international fund would not be a bad idea, in part as a hedge against the dollar tanking.
About 50% of my stock investments are European companies (but in USD). I live here and anticipate continuing to live in Germany quite awhile.
I plan to let the initial principle in my Roth “season,” then pull it into my ordinary taxable. The gains, of course, will stay right where they are. I rolled over an old 401k to Roth, paid the piddling tax (thank you Foreign Earned Income exemption!), and have a five year wait until I can pull the initial rollover amount to ordinarily taxable.
I’m saving like a madwoman, knowing that it is quite likely going to be a rough ride for my generation. At least we grew up with the idea that we weren’t going to get a pension and can’t say we weren’t warned…
Oh, and I’m glad that in late 2004, I moved to a country where 15% down is routinely considered to be a MINIMUM down payment on a house, being 35 and not (yet) owning a home is considered normal, and many major retailers (not to mention many smaller ones) still do not take credit cards.
Yeah, same with our Fidelity 401k. I wrote and bitched about it to the people in our company that are responsible for setting the plan and choices up. Fidelity has this catch-all POS MM-type fund that is our only option there.
I’d love it if they had a plain ole Treasury fund where we could park cash while deciding (and still get to collect any match our companies might give).
Up until a couple of years ago, we were limited to investing 401k monies into a limited set of mutual funds as you describe. A lot of people here requested the addition of a self directed brokerage account option & low & behold they gave it to us. I have all my money in that option as you can buy anything you want. Vanguard Prime Money Market is where I put my cash assets. It has low expenses & a good return for a money market.
I have 401k money in FDIVX, the Fidelity International fund. I figure it will go up as the dollar gets creamed. So far, so good.
Hey, Ben. Your old hood is no.1 on the foreclosure hit parade:
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-foreclose_31bus.ART0.State.Edition1.36d5c91.html
I am beginning to see stress around here. A house down the street from us was “vacated” 3 months ago. The front of the house has a busted window. It’s been like that a few weeks now. I am sure there’s a beehive in there by now, or maybe some bats.
Seen any green pools?
I’ve got a short sale across the street from me now and this is a high-desire neighborhood.
“Seen any green pools?”
Dip the stuff out, let it dry in the sun and market it as high nutrient blue-green algae health food. LOL! Soylant Green, if anyone remembers the movie.
Soylant Green- yup! How about ‘Logan’s Run’?
Soylent Green is People!! (or F.B. if you prefer)
But….”Soylant Green is PEOPLE!!”
If I recall correctly, the answer to that was “Stranger in a Strange Land.” Not bad in a nice broth…
Funny, you bring that one up. I just searched for Soylant Green on the net yesterday but haven’t seen it in years.
I remember the scene where a crowd of people are rioting. The crowd control consists of scooping the people up in payloaders & dumping them into garbage trucks to be carted away. Interesting movie.
Soylent Green is now out on a cheapo DVD I think….5 to 7 bucks….very prescient 70’s movie…..bunch of others like “Westworld”, “Network” and other came out with good stories that ring truer and truer everyday.
The people around me are finally getting it. At least some of them are getting it. Yesterday I had a co-worker talking about her brother trying to sell a house in Long Island. He is discouraged because it is obvious that wishing prices are dead. The news is out on the Island. I also have a co-worker that has relatives with a home on Cape Cod. It is very bad on the Cape. This is anecdotal evidence and I am smiling more and more.
But there are still a lot of stupid people that think the minor drops so far make it a great time to buy. Why stop being wrong now?
We may see a “dead cat”, last chance to buy,dippers bounce - which if my guess is right will really only be a temporary flattening of the down trend before a rather quick (for housing) and brutal resumption of the down trend.
“But there are still a lot of stupid people that think the minor drops so far make it a great time to buy.”
The important question is whether they are qualified. With 76 lenders gone kaput this year, the number of people with boxes of money and buckets of stupid is down considerably.
I thought the saying was buckets of money & boxes of stupidity. Same meaning in the end;)!!
The buckets are running empty w/o subprime.
Uncured:
http://wallstreetexaminer.com/blogs/winter/?p=804
“This commentary discusses the prospect that Switzerland might raise rates by 50 bps at their next meeting in June. Swiss CPI is reported Friday at 1:45 AM EST. As mentioned this weekend, speculators are heavily short.”
Do you mean ’short Swiss stocks’?
the swiss currency
Why doesn’t the prospect of a 50 bps hike in rates make investors go long the Swiss currency? Won’t that have the effect of reducing, not increasing, inflationary pressures?
The housing bubble is now interfering with my dating life. I met a man recently who seems nice and smart. He’s a single dad who volunteers at an animal refuge shelter. Things seemed to appear pretty good - compatibility factor seemed high. And then…the subject of real estate came up.
Turns out this 44 year old man lives with 2 other guys who he bought a house with because he couldn’t afford to buy it on his own 3.5 years ago. They paid $330K for it (claiming it was $100K below market at the time) and he says it’s now “worth” $579K. Now he’s looking at investment properties in Philly and “doesn’t really care where the market is as long as the numbers work for a positive cashflow.”
His father lives in New Orleans and works construction (primarily does gingerbread restoration work in the French Quarter). He’s trying to get his son to come down and renovate some homes. He doesn’t want to move there, but is “considering taking two crews down and knocking out four or five houses for a quick flip.”
Finally, he recently started his own general contracting company with investing and flipping being his “ulterior motive is in starting the business.” Now how can someone like me date someone like that? His life is based around everything I’m against! (And, of course, there’s the fact that he’s a dad to 2 teenage girls and yet lives with 2 other men. Maybe I’m in the minority on this, but I find that kind of inappropriate and immature.)
Ugh.
Me too. That sucks but after what you’ve told me, I wouldn’t even give this one a second date.
I’ve met the most guys and some really quality ones in the stock market/investing area. Like everywhere else, there’s some weeding to do but I’ve made some lifelong male friends through that, and “met” a lot of them online. It’s weird but I’ve developed some good relationships that way, one is over 12 years old.
That is, one relationship is over 12 years old.
It might be worthwhile to get into stock stuff some. Maybe an online investment club or something.
I’m Chris Hanson with Dateline NBC.
ROFLMAO.
I did not even consider the other reading of “is over 12 years old” until I saw your correction. However, after reading it again; it does sound pretty darn funny!
I even have one teenager who will be my friend! So HA!
“one is over 12 years old.”
Yeah its so damned hard to tell who you’re talking to online. But at least you’ve moved past the pre-schoolers. LOL
On the internet no one knows you’re a dog.
“doesn’t really care where the market is as long as the numbers work for a positive cashflow.”
That’s actually the right idea.
“He’s a single dad who volunteers at an animal refuge shelter.”
Good cred.
“he’s a dad to 2 teenage girls and yet lives with 2 other men”
Would you rather he lived with his mother? Hang onto him.
I agree that he could just be doing the rich-dad thing. Not enough info to judge him fairly i would say.
I avoid religion, politics & RE topics on a date. They always kill the conversation because they turn into a minefield.
“…he’s a dad to 2 teenage girls and yet lives with 2 other men. Maybe I’m in the minority on this, but I find that kind of inappropriate…”
And a bit creepy.
Eastcoaster
Hey maybe we should start a support group! I recently started dating at 44 a couple years ago. I would say that half of the women I have dated have some sort of real estate or credit problem. I’m a nice guy but have realized that I can’t save the world so a 1% teaser ARM with a $15,000 PPP is a deal killer. Not that finances are more important than love, its just that love is difficult to blossom in an environment of oppressive debt and future BK.
Unlike most of the posters here who seem to be heartless pricks when it comes to others problem, I really feel for a lot of these women. Most are single mothers trying to keep the house for the kids and they are extremely susceptible to toxic loans. And I don’t blame them for not having a lot of financial prowess as others are wont to do. While its not something I would do (borrow beyond means), I can see how they got into their mess.
Maybe I need to start a singles group for renters who pay their credit cards monthly. Man that would be a small group
who needs GDP
take GOV transfer “buying” out and we’re way negative folks
just don’t co-mingle your finances with his any time soon. what’s the big deal about him having roommates and daughters, as long as he’s known them for a very long time and they aren’t creepy and leering, and as long as the daughters feel safe. alternative living situations should be more widely supported in society.
could be gay…
could be gay
I was thinking the same thing. Not just the guy roommates, but several of my gay friends are very into having dogs and volunteering for various causes, often animal-related, like the zoo.
http://tinyurl.com/24p8z9
City lets nonprofits buy house for $1
Thursday, May 31, 2007
By Greg Munno Staff writer
“Syracuse has more than 1,200 vacant properties.
If you’re a nonprofit agency, one can be yours for a buck - one U.S. dollar.
The city is starting a program of selling vacant, tax-delinquent homes for $1 to nonprofit agencies that pledge to fix up the properties within two years of the sale.”
I’m sure the mortgage holders just love that plan and will happily increase lending in that area.
Well, these aren’t newly built McMansions. They’re probably 50-100 year old homes that were glorious in their heyday but as of late have been abandoned and/or deteriorating for years. The safety issues alone mean these rehabs aren’t going to be cheap. In certain Syracuse neighborhoods, you can only spend about $50-$70k before you’ve priced yourself out of the neighborhood.
If mortgage lenders are in those neighborhoods, this program would only be protecting their interests. With an economic downturn on the way, I’m sure Syracuse leaders (including lenders) are fearing a spread of this cancer in their already weakened city economy.
South Bend, IN just announced a similar plan. Most of the housing stock within the city limits is 50+ years old. Some of it remains in excellent shape, but in some formerly working class areas, the combined effects of a lost industial base, suburban flight, absentee landlords, the infiltration of a gang and drug culture, and tax legislation that made it nearly impossible for older folks to hang onto their houses has led to several foreclosures and abandoned properties.
No doubt a desire to revitalize these neighborhoods is present. It also does not hurt that the mayor is running for re-election and for the first time in over 35 years, there may be a serious challenger from the republican side. In that environment, it never hurts to be seen as “doing something”, whatever that may be.
PITI it may be worth less than $1 after carrying costs and negative appreciation are factored in to the equation…
From marketwatch…
U.S. first-quarter economic growth rate lowered to 0.6%
Goldilocks not looking so good.
But that is good news for stocks, as tepid economic growth gives the Fed more room to lower interest rates. I expect new highs today on the headline U.S. indexes in response to weak GDP numbers…
and as usual it was also good news for European stocks, many of them are at or near a 5-year high today. Can’t find the logic but who cares …
Goldilocks is gonna start freezing her tits off with summer right around the corner.
I am still (in my day-to-day activities) being very quiet about the bubble. There are some people that just can’t embrace the reality. My in-laws just took their house off the market because they, get ready, didn’t think their “realtor was working hard enough.”
It’s a large house and the carrying costs are huge thanks to taxes and heating oil; it needs tons of work and the price does not reflect that. The worst part is that my brother-in-law got mad when the house went up for less than he thought was appropriate. They also blamed the weather.
This whole thing is a mess. But at least I have a small corner of the virtual world to shout, BRING IT ON.
Muggy:
This could be a GREAT Thing for you…….just tell them to stop beeitching and lower the house 20% and it will sell…Your honesty will offend them so much, they will leave you alone…….WOO HOO
No In-laws to bother and pester you and complain how you are treating their precious child… You wont be invited to functions ….. man what a GIFT!
—————————————–
There are some people that just can’t embrace the reality.
Muggy,
I am actually suprised at the number of people i work with who see the bubble. The deniers are still out in full force though here in Sarasota. One thing i have noticed…a lot of the new cars have left the parking lot and are replaced with older used cars…hmmmmmmmm.
Chris
I should clarify: I am in Pinellas County and I am starting to see an increase in bubble-talk and pre-hysteria. The house I referred to above is in Central New York.
I should tell them the City of Syracuse is selling homes for a buck.
Did Zillow stop listing comps? I can’t seem to find them today.
Not sure if this has been posted before, but what the heck:
http://www.youtube.com/watch?v=oouQbcXdyH0&eurl=http%3A%2F%2Fhousingpanic%2Eblogspot%2Ecom%2F
Let’s say you cashed out of the housing market, and you won’t be buying for another two years. Where would you park your money?
ING Direct?
Treasury bills?
MBS/CDO fund (just kidding!)?
swz,pid, and div paying foriegn funds
ING Direct: do you know that the parent company is heavily invested in one of the most overvalued RE markets in the world? Once RE markets in Europe stop expanding, watch out below…
I’ve been trying to find out what ING Direct was invested in, but to no evail.
parent company is Dutch ING group.
Any bank that is Headquartered in America’s third world country (Wilmington Delawhere) is one to avoid. They tout ARM mortgages and other toxic loans as well.
Go with presidential.com based in Bethesda, MD 5.25% savings 4.5% checking.
try treasurydirect.com to invest directly in T bills w/o paying a middleman/broker & to earn tax exempt income.
I think you mean treasurydirect.gov
What about Capital One High-yield money market account? I’m a little hesitant, because I see their commericals on TV all of the time (which makes me nervous), but they have the highest rating on Bankrate.com, higher than Presidential.
. They [ING] tout ARM mortgages and other toxic loans as well.
Nothing wrong with their mortgages. I actually have one, so I know it first hand. Yes, it is adjustable, but the rate is fair, and the margin over 1-year treasury is a reasonable +2.5%. Definitely not “toxic”. Their closing costs were low, low, low. No complaints about the mortgage. However, their interest rates on savings are a bit low right now, hence best to keep cash elsewhere.
As for Wilmington, DE, what’s the problem? Loads of firms are incorporated there (keeping in mind ING’s parent is Dutch).
As for what ING Direct is “invested in”, it’s a savings account, not a mutual fund. Does any bank tell you where your savings money is being put? And anyway, there’s little reason to worry as long as you’re within the FDIC insured limit (and aren’t a tin foil hat type).
I guess you forgot to mention this about presidential.com: “Pays a 5.25% APY on balances up to $35,000, 3.00% APY on balances in excess of $35,000* Minimum to open $5000.”
Emigrantdirect.com pays 5.05% regardless of the balance above or below that figure. HSBC typically pays even more, but I just refuse to lend the subslime any money…
Stearns & Foster
Vanguard MMR Prime
A lot of other banks give MUCH higher interest than ING direct. Check out http://www.consumerismcommentary.com for a list of the highest-paying online savings account.
Also, if you have at least $50,000, check out Countrywide Bank. I know, I know. They’re an RE lender. But they’re also paying 5.4% APY and it’s FDIC insured.
One more thing. Go to http://www.Emigrantdirect.com. They have a savings account that can be linked to a credit card that will give you 1.5% cash back on all purchases with no limit as long as you keep at least $10,000 average balance in your savings account.
These are EXCELLENT ways to keep your $$ safe over a 2-3 year period.
i use statefarm bank money market. very good rates.
Look into Euro Pacific, foreign stocks in non USD
I’ve been thinking this has been coming for a long long time, just didn’t realize the extent to which the housing market could fall. Which scares me as we’re in the process of trying to purchase a property from family in the Philly Burbs and I’m scared about how we could get stuck holding the bag in a very negative way. But the house is dreamy: 1500 sqft, 1.89 acres. Still trying to work out financing with the ‘rents. Almost scared too after reading these sites, heh.
If the monthly payment is easily manageable, and you plan to be there for many years, and the property is “dreamy” (yikes, that’s a red flag that you might let your guard down), then no big problem.
On the other hand, if you borrow loads of money to buy it, have hefty payments, and might get job-transferred away in a couple of years, then yes, it could be quite a risk.
Dreamy, schmeamy. You have to let go of the emotion. There are lots of dreamy houses out there. This sounds like a stretch for you, and you seem to be young, without kids, and subject to changing job situations in the near future. What’s your hurry to buy? You can save money by renting for awhile and when prices come down, you’ll be able to afford a lot more house with what you’ve saved. Don’t fall for the old “renting is throwing money away” line.
If you’re borrowing the $$ from your parents, then it will stay in the family, so there’s no need to freak out TOO much about it, is there?
Yesterday I noted how news that San Diego and Detroit received top mention in the list of cities with the largest YOY home price declines in the S&P Case/Shiller survey was buried in an article on p. C4 of the SD Union Tribune Business section. Here is the kind of news that makes it to the front page of the Business Section (also on the front edge of the UT’s web site). I guess this “proves” the bubble is over and the SD housing market is recovering?
———————————————————————————
More Business news
$35 million home sale crushes record
Del Mar site part of $48.15 million deals
By Roger Showley
UNION-TRIBUNE STAFF WRITER
May 31, 2007
http://www.signonsandiego.com/news/business/20070531-9999-1b31sale.html
To my best recollection, that home was on the market for a very long period of time. The new top San Diego trophy home listing price on ziprealty.com has now dropped down to a relatively affordable $29.9m.
BUSINESS TICKER: INSIDER TRADING
‘Unusual trading’ leads CNBC to probe own contest
Reuters
May 31, 2007
U.S. financial news network CNBC may not have to look far for its next insider trading feature.
The cable network said yesterday that it is investigating whether entrants in its CNBC Million Dollar Portfolio Challenge contest engaged in illicit trading to boost their results.
“CNBC has been contacted by several contestants alleging unusual trading in violation of contest rules among some of the 20 finalists,” the cable news network said.
“Once these questions were raised, CNBC immediately launched a thorough investigation to determine who may have violated the rules,” it added.
The probe was looking into “unusual trading” and “potential irregularities,” CNBC said.
http://www.theglobeandmail.com/servlet/story/LAC.20070531.RTICKER31INSIDER/TPStory/Business
Economy Has Worst Growth Since 2002
http://biz.yahoo.com/ap/070531/economy.html?.v=11
“The main culprits for the downgrade: the bloated trade deficit and businesses cutting investment in supplies of the goods they hold in inventories.”
Because housing has collapsed and nobody has the money to buy any of the MEW financed crap for their overpriced homes. What f**king morons!!
Looks like rate cuts are on the way — I think I can already hear the helicopters reving up their engines. Time to throw caution to the wind and catch some of that new-alltime-high action on Wall Street…
Another random bit of Socal / Playa Del Rey news. LA Times published the Zip Code prices / YOY changes a week ago for March sales, and my wife jumped all over it as justification of the ’see, we’re different’. The listed price was actually UP 5% or so from March 2006.
Until I pointed to the number next to it - # of transactions. 1.
NIce liquid investment…you might be able to turn over 1 unit per month during the rampup of the big selling season!! Oh yeah, we can’t blame weather down here for the lower volume of sales…I can remember even last summer where the # of houses sold could reach double digits (small community here) and just found it staggering that the sum total of the start to the grand spring selling season netted 1 transaction. What a drop. Can’t wait for April #’s (non-scientific guess indicates it will be close to that again).
F-in Dopes.
Gimme that damn popcorn Neil. I brought a beer for you.
FYI — the latest OFHEO house price data for Q1 was just released. Here’s a write-up on what the numbers show …
The Office of Federal Housing Enterprise Oversight, or OFHEO, just released its report on house prices in the first quarter. We’ve seen outright DECLINES in other price measures — such as those put out by the Census Bureau (new homes), the National Association of Realtors (existing homes) and S&P/Case-Shiller (existing homes). How did this one differ?
* OFHEO said home prices DID appreciate nationwide in the first quarter. But the 0.45% gain from the fourth quarter was the smallest QOQ gain since Q3 1996 (0.39%) — and down significantly from the 2.23% rate of appreciation in Q1 2006.
* Measured from a year ago, home prices were reportedly up 4.25%. That’s down from a 12.61% gain in Q1 2007. It’s also the lowest YOY rate of appreciation since Q3 1997 (4.12%).
* The highest rates of appreciation occurred in Pacific Northwest and Mountain cities, such as Wenatchee, WA (+25.6%), Salt Lake City, UT (+19.12%), and Grand Junction, CO (+16.82%). The cities that performed the worst were spread throughout high-speculation states like California, Nevada, and Florida (Punta Gorda, FL at -4.57%, Sacramento, CA at -4.41%, Modesto, CA at -4.38%, and Reno-Sparks, NV -3.97%, e.g.) A few cities in Michigan, which has been hit hard by job losses related to the auto industry downturn, also made the list.
All told, 237 of 285 cities tracked by OFHEO showed price gains, while 46 had price declines, and two showed no change in prices. A quarter earlier, OFHEO tracked 282 cities. 256 of those showed price gains, while only 25 had price declines, and one showed no change.
My take: The OFHEO numbers confirm what we’re seeing in other home price indices. Price appreciation rates are coming down fast, with outright declines showing up in more and more areas. I expect OFHEO’s second-quarter figures to look even more subdued, with the first negative quarterly reading since Q4 1994 (which came in at -0.25%).
Two types of housing markets are getting hit the hardest, price-wise:
1) Areas with the most speculation during the boom — These metropolitan areas are suffering because they have tons of speculators who are trying to unload losing investments. That’s sending for-sale inventories through the roof, forcing sellers to cut prices to generate sales. Home price gains in those regions also exceeded income gains by a wide margin. That has left homes largely unaffordable for area residents.
2) Areas with the worst economic fundamentals — They’re experiencing a more “traditional” housing downturn — one driven by rising unemployment, plant closings, increasing foreclosures, and more. If economic growth remains lackluster, we’ll see more metros fall into this category over time.
If you’re interested, here’s a chart showing the fluctuation in YOY home price appreciation rates over the past couple of decades:
http://tinyurl.com/2lytcy
You are the Mike Larson that I heard speak on Gold Radio a while back?
The OFHEO proving how irrelevant they are just a few days after the much more accurate Case-Shiller Home Price Index shows a nation wide drop…..
http://www.cnyhomes.com/Listing/Search/more_photos.cgi?mlnum=173070
$3mil in CNY? w/$49k a year in taxes? These people are soft! Does anyone else find this property that impressive? I know I didn’t.
Skaneateles is somewhat different (I know, I know…). A lot of people that have properties there do not derive heir income from the local economy. I think that house is over-priced, but it will still command a premium compared to the rest of CNY.
The market in Skaneateles is dead just like everywhere else. However, Skaneateles had a premium before the bubble and it will have a premium after the bubble.
I’m just sayin’…
http://itulip.com/forums/showthread.php?t=1399
Cramer = older, louder, Casey Serin
http://www.dailyherald.com/news/cookstory.asp?id=318281&cc=c&tc=&t=
Revising home value caps
A soon-to-expire tax break designed to help put a lid on skyrocketing Cook County property values and therefore taxes may gain a new but noticeably different life.
Despite early criticism directed at the new version, the Illinois House approved the deal early Thursday.
At issue is a revised version of a state law currently capping increases in property assessments at 7 percent for a maximum exemption of $20,000. House members voted overwhelmingly to replace that plan with one that initially provides up to a $30,000 exemption the first year. The exemption would drop to $24,000 the second year and $18,000 the third year, when the law would again expire.
Cook County Assessor Jim Houlihan blasted the new deal as a sham that would devastate homeowners with high taxes.
“It takes people to the cliff the first year, pushes them off the second,” said Houlihan spokesman Lucio Guerrero.
He also said the initial plan was confusing enough, but the new version is incomprehensible.
“The only people who understand this are tax attorneys,” Guerrero said, echoing his boss, Houlihan, who in the past has taken a veiled shot at House Speaker Mike Madigan, a Chicago Democrat and a tax attorney. “It’s just convoluted, confusing and disingenuous.”
Houlihan was behind the original law, which expires this year for the city and next year for the North and Northwest suburbs. The law was designed to moderate exploding real estate values that led to double- or triple-digit percentage increases in tax bills for those in hot neighborhoods.
Some lawmakers wanted the law renewed with the maximum exemption raised to $60,000. But those proposals failed to advance and were criticized as helping wealthy homeowners.
A study done by the Illinois Department of Revenue and University of Illinois found that the 7 percent cap merely shifted the tax burden onto businesses and property in neighborhoods where values weren’t experiencing dramatic property value increases.
This is eyebrow-raising for sure. (I know we all know that GMU Center for Regional Analysis is supported by builders.)
http://www.wtop.com/?nid=25&sid=1153917
“WASHINGTON — The forecast for the future of the region’s housing market is in — and it looks outrageous.
If current trends continue, by 2057, the average home in the D.C. area is likely to cost more than $14 million, says Stephen Fuller, director of the Center for Regional Analysis at George Mason University’s School of Public Policy.”
What a stupid ass-hat. What’s the point in even making such a statement without framing it. Is that in today’s dollars? What does he project the average salary will be in 2057? Will new houses come with their own nuclear reactors and we’ll all be commuting by monorail?
http://www.youtube.com/watch?v=zlCHu93PpOA
Stephen Fuller is acting completely irresponsibly when making such statements. First, he knows the general public doesn’t understand inflation nor how to put that figure into real (inflation-adjusted dollars). Second, his forecasted 7% rate of appreciation for the next 50 years is based on the historical rate of appreciation INCLUDING the last 5 bubble years. Back out the last 5 bubble years, and the historical rate of appreciation is significantly lower.
The only reason he is resorting to quoting such “shocking” figures is that he is on his last leg. He claimed house prices in the DC area would continue to climb and completely missed the current correction. This is his last effort on behalf of the housing industry that pays his keep to prop up the local market (which is sagging significantly right now). It won’t work. Fuller should be embarrassed of his actions.
The hits keep coming in the retail sector. Sears/Kmart sales are down 2.5%, including 3.9% in same-store sales. Stock is down 2% today.
http://tinyurl.com/26qkeu
It’s incredible how the overall stock market is simply overlooking the economic downturn. Dow & S&P once again are hitting record numbers.
Big Lots did fine. What does that tell us?
I love that store btw.
Yeah - I’ve been moving most of my retail stock into discount / auction-based retail things like Priceline and eBay. I figure they’ll do OK during a big downturn as well. I wish Craigslist was public. I didn’t think about Big Lots though. They’re getting hammered for some reason today, on what appears to me to be good numbers. May have to scoop some up…
I would like to buy Aldi stock too but believe they are privately owned.
if that is the same as the EU Aldi retail chain: yes, privately owned. And I have the impression they are not doing as well now as they did over the last years.
Was at Big Lots for the first time last weekend…
I too am feeling the Big Lots love.
Totally OT: $1M gold bathtub stolen from hotel.
http://news.yahoo.com/s/ap/20070530/ap_on_re_as/odd_gold_tub_stolen;_ylt=AprOHvAYUkfHbWlIQ6k1DNxbbBAF
Dutch newspapers report that thieves are going after 50K euro luxure beds … (they are heavy as well, but at least the thieves can sleep well if they get away with the stuff).
As mentioned, we like these as shorts.
http://www.eetimes.com/news/latest/showArticle.jhtml;jsessionid=KRDF5CGKUXR4YQSNDLRCKH0CJUNN2JVN;?articleID=199703354
From the article - But a moderate recovery is expected in the second half of 2007, it said. Industry participants are eyeing a recovery in demand for microprocessors for back-to-school and year-end demand.
There’s a supply glut in all major sub-sectors in semiconductors, and even if there’s some volume growth, profits arent going up anytime soon.
Problem I have with shorting them is the overall market buoying the sector.
SMH ain’t looking too healthy.
I know talk of this fool is beneath all of us, but watching his demise was sort of akin to having the occasional candy bar:
iamfacingforeclosure.com has an official RIP notice up. Just when he was starting to monetize it, as well. Wonder if it was the wife or Johnny Law that forced its end…
(Heh heh, ya beat me to it)
He’ll be back. I’m sure this is some new scheme.
maybe if he figures out and convinces his gullible wife to be leased out herself
Looks like Casey has thrown in the towel:
IamFacingForeclosure.com is over. It will never return.
Advertisers: Feel free to cancel your PayPal subscription. I will be issuing pro-rated refunds this week.
Everybody: I’m very sorry to end like this.
You may contact me here.
– Casey Serin
Gotta go to the source
At 9:18 AM, Benoit™ said…
Unless he shoved his PDA up his butt.
Special Agent: Serin, we’ve had you on our radar for months. Now before you’re escorted to your cell, we’ll be doing a full body cavity search.
Casey: Itsallgood, Nigel and I have been doing similar stuff.
Special Agent: … umm, care to explain why your ass is beeping?
An article with a very significant point:
http://www.sptimes.com/2007/05/30/State/Renters__too__face_mo.shtml
I personally thought to move to a better rented place but stopped because the place looked like flipper owned. This made me thinking, what if they loose their property and I need to move out urgently.
I think we the renters should come up with a different standards while renting from small lendlords. For example, we may need to run a credit check on them. Security deposits should be real bank deposits made by both the renter and the landlord withdrawable if the other party breaks the terms of the lease, etc. We live in the world of financially sound renters dealing with unreliable owners after all.
serin is done website is closed
This is OT, but I need some sane balanced advice. I’m really wanting to buy a Toyota Tundra and put a nice self-contained camper on it and live in it for the next year or two instead of renting, cause then I could move around and also have something to show for the money. I’m a writer and it’s just me and a couple of dogs, so a camper would work fine (I’m in W. Colo and E. Utah, lots of free camping). The whole outfit would cost around 30 to 40k. Renting for the next 2 years will cost around 30k.
Am I crazy? Is this just a way to satisfy my desire to buy a house (dang, I wanna house…). Will the rig be worth anything in two years with the price of gas going up? right now, I’m living in a tent, with short stays with friends. I have 200k in the bank and a very limited income. Any comments appreciated.
Sold my house and have been doing this tent thing for only a month and am already burned out by it…though the dogs love it.
Have you considered the cost of renting the campsites (you’ll have to rotate to get around the maximum stay limits)? You’ll also have to book the sites in advance during the busy summer season. Make sure that all places have hot water in the showers, unless you don’t mind being “kinda clean” all the time. Also, you will probably spend a lot of money on restaraunt food since you won’t have a fridge and cooking over an open fire is difficult.
Oh yeah. I don’t mean to sound paranoid, but you should also get a gun to protect yourself against bears as well as people. Maybe you can get a tranquilizer gun.
I wouldn’t be in paid campsites, there are tons of free places out here, way out in the middle of nowhere. The camper I want is self-contained, bathroom, water, refrigerator and stove, it’s almost like a studio apt. I could stay out for a week to 10 days before hacveing to resupply, and there’s no danger from wildlife, as I’m usually out in the desert. No people around either.
Well, that sounds like a good life for someone who needs to be isolated. Why not do it? You don’t have to worry about your rent going up, you certainly don’t have to worry about RE going up in the meanwhile, and you have everything you need. Just get a cell phone and P.O. Box. No problem.
Thanks for your comments - I already have cell and PO box - all I need now is to get hooked up to satellite internet, which can be done! I can live w/o all but the HBB!
Dell laying of 8,800. Some background: Back in 2001, we were driving past Dell’s Round Rock Texas HQ when people were being escorted out by security. This was Dell’s first layoff and only 500 or so were let go but the damage to Dell and Round Rock’s psyches was apparent. About a month after that, we noticed Round Rock’s house market tanking. The damage was primarily in the bigger homes in the golf course developments but there hundreds of vacant homes all over town.
Now that they’ve announced 8,800 layoffs, even if only a quarter of those are in Round Rock then the pain will be quite palpable. Round Rock’s housing market has done well primarily because of Californians buying “cheap” real estate and Dell getting back on track. Now that the market in North Austin/RR has already slowed down, this will push the wagon towards the cliff much more quickly. For those of you unfamiliar with Round Rock Texas, it is Dell’s private company town and when Dell gets a cold, RR gets the plague.
I’ve wanted to move back there for 4 years so now my search will begin in earnest. Txchick, any thoughts?
Getting laid off can be devastating. I used to be a systems analyst, the tech people worked in a self-managed office a good 1500 miles from the main office in Boston, I was good friends w/ the secretary to the owner and she called me to give me a heads-up that the owner was coming out to lay us all off and close down the R&D office. We were offered relocation, but nobody wanted to move. I had the honor of telling everyone so they’d be prepared when the owner arrived. If you’ve never been through this kind of thing, it’s beyond what logic says it should be, it’s very personal. Some people took it very hard and ended up losing their houses. I was fortunate to get another good job offer the next week. Very stressful. Makes one realize how much you’re truly a slave to your job, even if you have a good savings account (which few do anymore). Made me understand how debt equals slavery.
Lost,
here’s a mini-home, trailer-style designed to be completely off the grid…though it costs 100k. Check out it’s website.
Also, take a look at fabprefab.com. Has very cool, but pricey prefabs, but a great section on housing using shipping containers.
May give you some ideas.
http://www.sustain.ca/wpblog/
And, if you find a cheap place to settle down, check out these…delivered out to western states.
http://www.sherpacabins.com/index.html
Thanks Spike - both look interesting and I love the cabin. Part of my concern is spending the cash on a camper/truck when maybe I should be going for some land w/ one of the above type houses, but I know land’s going to come down. W. Colo is just too expensive. Have looked into yurts, too, but they only last a decade or so.
lost,
while I was walking the dog, i was thinking, shouldn’t a lot of secondhand RVs be showing up on craigslist soon…especially from south florida or even around vegas. maybe you could ask some of the posters here their thoughts on FB toys being sold…ask palmetto.
i don’t know if you were planning to buy new/or used, but there have to be some distressed sellers who will give you a great deal…
Also, Scott Burns, who writes for the Dallas paper, has done a bunch of columns on the RV lifestyle, or geriatric gypsies.
He’s figured out costs and ways to save, and a lot of great sites to visit…try reading these…
http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/readers/stories/122805dnbusburnsrv.212d9e25.html
thanks again… much appreciated
OT, but some good realtor bashing going on over at Newsday. Check out the comments: http://www.newsday.com/news/local/longisland/ny-lirent0531,0,6695210.story?coll=ny-top-headlines&track=mostemailedlink
Basically Islip, LI has decided to hold realtors responsible for any illegal apartments they rent. West Islip is often called “White Islip” because they’ve managed to keep out every other color. Of course, trash is often White, also. Most of Islip is dumpy.
The latest graph of Maricopa County Trustee’s Sale Notices can be found here.