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I know this has been posted before, but does anyone really care about our national debt? It can not be paid back so what difference does it make? It will have to be repudiated at some point in time. What a nice thing to pass on to our kids and theirs.
http://www.usatoday.com/printedition/news/20070529/1a_lede29.art.htm
didn’t Greenspin once threaten to raise rates if congress couldn’t get their spending spinckter shut ?
He minced away ,but it was a sugestion. BB doesn’t even hint at it.
YEs, when it was a democratic government. But once the Republicans came in and started loading up on pork, tax cuts for the wealthy, a war or two, the pharma welfare bill (also known as the Medicare drug benefit), homeland security and massive deficit spending… Ol’ uncle Al was remarkably quiet.
“What a nice thing to pass on to our kids and theirs.”
I hate to sound unpatriotic, but if the numbers don’t add up my kids won’t be here.
The numbers don’t add up.
No the don’t. That’s why we may have the same loyalty to contries that we now have to companies. Zero.
Well, they certainly haven’t shown loyalty to me. Abusing and trampling on my civil liberties, sending my peers to fight a war for their business interests, feathering their nests while children lack access to an adequate education and job opportunities when they graduate.
F*** ‘em. The grass was greener on this side of the pond for a long-ass time, but it’s looking greener on that side … except for the Muslim problem. We don’t have a “Muslim problem” here, probably because we don’t treat ‘em like s*** the way they do over there, well, I mean we don’t treat them any worse than any other immigrants–you know, make fun of their lousy English skills, put them through INS hell, and tell them to go home if they don’t like it here while we shoplift in their stores. All in good fun, really.
True story: walked into a Doner kebab house in Germany. Old guys at the counter looking at me REAL suspiciously. I was hesitant because I didn’t know the name of what I wanted to order in German. As soon as I open my mouth and they hear my Ami accent, they relax and turn friendly.
Germans are total jerks to the Turks, and wouldn’t ya know, the feeling is mutual. Incidently, it was the best damn falafel sandwich I’ve ever had in my life.
RE: Numbers…
Fed government is nothin’ more than a giant Ponzi scheme started by FDR with confiscatory laws for income and assets backed by people with guns.
Only ones makin’ out are parasitic government workers with their lavish inflation COLA driven pensions bein’ drawn @ 50YO’s old and lifetime health care.
Imagine… becomin’ a multi-millionaire off a government pension.
How fookin’ dumb is the US taxpayer to have let this it all evolve anyone?
Such is life in Wal-Mart Nation.
‘Fed government is nothin’ more than a giant Ponzi scheme started by FDR with confiscatory laws for income and assets backed by people with guns.’
You misspelled ‘Woodrow Wilson’.
You misspelled ‘Woodrow Wilson’.
More like Gilgamesh.
I bring this up, because different generations will have different points of view.
My dad is retired with a pension from the government, whereas I have a 401K and my generation (X) don’t expect to get squat from the government. Our loyalties, from a financial point of view, are very different.
His retirement is dependent on a country’s solvency, mine is not.
Do you think that if the country becomes insolvent, 401k’s and the stock market will hold up?
A 401k doesn’t have to be invested solely in stocks, and it doesn’t have to be invested solely in the United States. Not only that, but if you quit your job, you can roll your 401k into a traditional IRA, which allows you to buy gold bullion as long as it’s physically held by someone else. Of course you have to trust that entity, which may be a problem.
It’s the entity trust that I wonder about. While I think most here have some beefs with our govt here, I think that we do in fact provide a lot of aid/food to other places in the world. If the US became insolvent, I wonder what would happen to those countries and how it would shape the large political landscape. As for foreign 401k investments aren’t you still investing with dollars, or do some institutions have ways around that? Considering that I have more than 40 years ahead of me before retirement, I find this interesting, even if it’s just academic speculation at this point.
Do you think that if the country becomes insolvent, 401k’s and the stock market will hold up?
This is why people need to buy Euro. For the love of god, people, balance out your portfolio with some foreign cash. If the US goes down, it will hurt the Euro as well, but not nearly as much as it will destroy the dollar.
Bought Euro stock market instead. Unlike the 2-euro coins I have sitting on my desk, VEURX pays a dividend.
Its worse than that. What assurance do you have that a major chunk of your 401(k) won’t be confiscated (beyond regular taxation) when the gov’t becomes insolvent? For those with short memories Bubba Clinton wanted to slice 10% off everyone’s 401(k)/IRA at one time.
Buy the Euro? No thanks. It’s a make-believe currency whose “strength” is magnified by the dollar’s weakness. Swiss Francs or bullion make a lot more sense.
As a fellow Xer, there darn well better be something left in SS. People will not take that sitting down, especially after 30-40 years of paying into the government mandated retirement fund.
Agreed that the overall loyalties are different, however. Looking at what I’m stashing away on my own vs what SS could pay me–it’s not even close. I guess this means I do need to start buying more things, maybe starting smoking so the large caps keep going up in value…
I’ve said for five years now (I’m 35) that if the gubmint told me that everything I put into SS I wouldn’t see but that starting today I wouldn’t have to contribute anymore I would do backflips.
Jane, get me off this crazy thing!
totally agree, tragically will never happen. We’re starting peak earning years, they need our dough. Mr. Sprocket and his peers are starting to retire.
What if, just what if, everyone refused to pay taxes? Not local or even state taxes, which, even if mismanaged, go to schools and roads and such, but federal taxes? No, I’m not part of a militia, but what if we all owned our houses outright (try something simple, 600 square feet, energy efficient, low taxes) and worked at jobs we half enjoyed instead of having to chase the big bucks - our federal taxes would be low, thus we wouldn’t be breaking any laws, but yet we’d contribute less to big government.
Having said that, let me add that I’ve worked at high-paying jobs all my life (have advanced degrees) and have paid my share of taxes.
Can’t wait to hear your responses, just don’t use too scratchy a rope when you lynch me…
lost, I think it’s a good idea (aren’t you tenting it right now?) However, I don’t think that a lot of people will go for it, beyond debt=wealth, a lot of people have been sold on wealth=happiness. If you have a six-figure income and live in the biggest McMansion on the block you must be happy because you are wealthy right? Even though you work 70-hour weeks and spend your free time maintaining your ride and researching your next gadget purchase on CNET cause you need to upgrade.
The happiest people I’ve ever met lived in simple homes (and even trailers). They were completely content with their life and got pleasure in small things.
The most unhappy people I’ve met lived in McMansions, read all the home magazines, spent weekends at Home Depot, drove large SUVs, and strategized on how to get the next gadget between working 75 hrs a week and taking the kids to soccer practice.
Was just in Office Depot, the salesman told me they get new gadgets in every week, often just newer versions of the same old thing. He said people will buy all kinds of junk because they have to have the latest. Of course, this isn’t news, but upgrades every week?
The happiest person I ever knew was my dad, who could care less what his house looked like, he spent all his time tinkering with electronic inventions or visiting relatives. One of the unhappiest was my mom, who pined away for a nice house (she was raised with $, my dad wasn’t). Yep, I’m still tenting it, pining away for a house - don’t know how long I can hold out (we’ll see if I got my mom’s or dad’s housing-genes).
>
Of course there will be “something”, after all, no one expects the payroll tax to be repealed. Just expect to only get a fraction of what is being promised in those nice SS “statements” they mail out every year.
I wouldn’t worry about sounding “unpatriotic”. As of late, patriotism seems only to be expected from “the little people”. I’ve come to think of it as a term bandied about when herding sheeple…..a concept meant to make us hesitate while they’re hoarding up our portion of the resources.
Exactly right, Carrie Ann.
Seems that there’s been a recent awakening in the U.S. The whole idea of “patriotism” is being questioned. More and more people are openly questioning their desire to remain in the U.S. and remain U.S. citizens.
To whom or what are we supposed to be patriotic? The govt. that works tirelessly to keep us in debt so their corporate interests can suck us dry?
The “free-traders” who are forcing the middle-class to race to the bottom of the wage/QOL barrel — all fed to us with some happy horsesh*t about how lower costs will be a benefit to us (never mentioning how lower wages will more than offset the savings from “lower costs”)?
How about the politicians who constantly refuse to listen to their constituents — our votes repeatedly overturned by the courts whenever we try to protect the interests of the working-class?
We don’t even have a national language or identity anymore.
Corporations are allowed to use cheap offshore (or illegal, onshore) labor, to the detriment of the U.S. middle class.
Our healthcare system is controlled almost entirely by for-profit entities that profit only when people are sick.
To whom or what are we supposed to be patriotic?
As more and more people begin to ask these questions, the ability of the U.S. to maintain its “world power” status (and the dollar’s ability to maintain major international reserve currency status) begins to diminsh rapidly, IMHO.
“The White House and the Congressional Budget Office oppose the change, arguing that the programs are not true liabilities because government can cancel or cut them.”
If your government takes away Social Security and Medicare (after you have spent 20 years contributing to it), is it unpatriotic to move to a country with affordable healthcare and lower taxes?
It’s only a matter of time before they do, so you’d better get packing.
I am just waiting for Alaska to actually secede. I’ll miss Florida, but would run to their freedom.
Alaska to actually secede.??
I sure wish California would…..
“I sure wish California would…..”
me, too. I’d like to go back for a visit some day. Love the ocean there.
California and Florida… and allow no repatriotization, maybe we’d solve the SS issue
C’mon — you guys are being too hard on gummint. Look, just today the FDA put out an advisory that we not buy Chinese toothpaste. Where would this advisory have been without our tax dollars? Heck, I was looking all week for sales on Chinese toothpaste, so I could load up on it before hurricane season, and now the gummint has saved me from myself.
Do you mean is it disloyal to an entity that holds your precious citizenship and residency at such low value that it is willing to give it out freely to all just to keep itself propped up?
Do you mean is it disloyal to question an entity that shows so little loyalty to you and your children?
Don’t get me started. But you did, so here goes:
Government debt is a massive issue. As I’ve said, I’m not the sharpest tool in the shed when it comes to these issues, but I know a dead rat when I smell it. The propaganda that seems to be working its way through the system is that “entitlement” programs like Social Security and Medicare are to blame. And the propaganda is clearly working, because people are eating it up with, not a spoon, but a shovel. Hell, they are eating it up with a backhoe. Well, I call BS on it.
If, indeed, Social Security and Medicare and other such programs were really the problem, then why are we letting illegal immigrants, for example, spoink out kids and then giving those kids immediate benefits? One of the local post offices here is jammed every week with illegal baby machines looking for the Social Security checks for their brood.
And here’s a little rant I received via email from a friend regarding the benefits that CONgress receives. Interesting:
“Our Senators and Congresswomen DO NOT pay into Social Security and, of course, they do not collect from it. You see, Social Security benefits were not suitable for persons of their rare elevation in society. They felt they should have a special plan for themselves. So, many years ago they voted in their own benefit plan.
In more recent years, no congressperson has felt the need to change it. After all, it is a great plan. For all practical purposes their plan works like this:
When they retire, they continue to draw the same pay until they die. Except it may increase from time to time for cost of living adjustments.. For example, Senator Byrd and Congressman White and their wives may expect to draw $7,800,000.00 (that’s Seven Million, Eight-Hundred Thousand Dollars), with their wives drawing $275, 000.00 during the last years of their lives. This is calculated on an average life span for each of those two Dignitaries. Younger Dignitaries who retire at an early age, will receive much more during the rest of their lives.
Their cost for this excellent plan is $0.00. NADA..! ZILCH.. This little perk they voted for themselves is free to them. You and I pick up the tab for this plan. The funds for this fine retirement plan come directly from the General Funds; “OUR TAX DOLLARS AT WORK “!
From our own Social Security Plan, which you and I pay (or have paid) into, every payday until we retire (which amount is matched by our employer).We can expect to get an average of $1,000 per month after retirement. Or, in other words, we would have to collect our average of $1,000 monthly benefits for another 68 years and one (1) month to equal Senator! Bill Bradley’s benefits! Social Security could be very good if only one small change were made.
That change would be to: Jerk the Golden Fleece Retirement Plan from under the Senators and Congressmen. Put them into the Social Security plan with the rest of us Then sit back…..
And see how fast they would fix it.”
I don’t know how to verify this. But it sounds true to me. Anyone know?
Not true. Details here…
http://www.snopes.com/politics/taxes/pensions.asp
Actually, just before you posted the link, I was doing my own research and found that to answer my own question. I’m a sucker for that sort of thing, being very suspicious of CONgress. However, I know, from a staffer who works for one of my reps, that their health plan beats the snot out of anything I can get.
Boy, this going global has everyones underwear in a bind.
It’s hard to see the forest thru the trees.
“…underwear in a bind.”
Can’t speak for all here, but my view is the global wedgie is more closely related to the printing war going on between the world’s CBs, than to “globalization” per se. It’s no fun to see your income inflated away before your very eyes, while the superrich keep raking in the big gambling winnings on Wall Street.
That’s how you get the playing field equalized. All countries will someday have the same currency. There will be winners and losers while were getting there. Without the issuance of massive global credit you would still have strong sense of nationalism in this country. They never could have shipped so many good jobs off shore without credit. Under employed Americans while giving up high paying mfg. jobs were given lower paying service jobs and lots of credit. Joe six pack kept his perceived standard of living only substituting credit for wages. We’ve still have a long way to go.
This is all way, way off. First, the vast bulk of the potential payoff from being in Congress comes from lobbying or other private sector deals. What you are pointing at is unfortunate, but scarcely more than a tiny drop in a very big pool. Second, the lack of balance with Medicare and Social Security has to do with how much is charged for what benefits get disbursed. The current thinking is that even though the number of workers supporting each recipient has gone down by an order of magnitude and their incomes have stagnated, it makes sense to crank up the benefits to an increasingly large number of people. The numbers in this case are in the hundreds of millions of people, so even with things being skewed to Congress that group of less than one thousand hardly matters at all. Third, the issue of immigration is not closely related. Numbers of immigrants who could potentially participate even with maximum corruption do not compare to numbers of citizens already participating. Furthermore, the rate of participation in these programs is extremely low for immigrants.
How the debt issues interact with the housing bubble and other economic issues would make an appropriate subject for discussion, but these specific points that you make are not valid.
” First, the vast bulk of the potential payoff from being in Congress comes from lobbying or other private sector deals.”
Agreed. I wasn’t sure if it was true, as noted in my last sentence.
“hundreds of millions of people,” That would be three. Three hundreds of millions.
“Furthermore, the rate of participation in these programs is extremely low for immigrants.”
For immigrants, maybe. For ILLEGAL immigrants, they’re participating in getting those checks for their children around here. And they make no bones about it.
The illegals in the PHL area are so straining the medical facilities that many area hospitals no longer offer OB-GYN services. They can no longer pay the medicaid freight. So if you’re a citizen by birth or naturalization and you use Medical Assistance, too bad for you.
You may be looking at a midnight 20-mile car ride to get to a facility that will take you.
“many area hospitals no longer offer OB-GYN services”——–that also has to do with outrageous malpractice insurance in phili as everyone and their cousin are suing obgyn docs.
“many area hospitals no longer offer OB-GYN services”
the major factor is the extremely high malpractice insurance for Obgyn as everyone and their cousin are suing Obgyn docs for things that happened many years ago. Here in socal were Illegal imigs are the majority (or seems like it) you can go to LA county general where up to 80% of women giving birth are illegals, but the emergency rooms are the one that are closing.
Yes, the med mal situation in PHL is critical. MDs within the city limits get hit harder with premiums, for Philadelphia juries tend to decide for higher awards than those in the suburban counties.
However, the illegal alien drain on the system is also a big factor. The staff at my state representative’s recent Town Hall meeting apprised us of the illegal alien’s impact on the welfare system in general, not just on hospital services. I’ve also heard discussion about the problem from RN friends, and the Philadelphia Business Journal just published an article about the crisis.
It’s not just illegals. A girl I graduated with is a physical therapist in Alexandria, VA, who does a lot of work with medicare patients. She said at least a third of her workload consists of geriatric immigrants, mostly from the Middle East or Asia, who were sponsored by family members to come to the US. The family members promise to care for their elderly relatives, but of course once they get here, they plead poverty (since a lot of their income is undocumented) and the US taxpayer gets stuck with the tab. Considering that something like 75% of medicare funds are spent on patients in the last 90 days of their lives, this gets very, very expensive. It chaps me that these people didn’t pay a dime in taxes, yet they get a full free ride courtesy of your tax dollars and mine.
Once again, with feeling: Thank You, Republicrats!
wow, I left Philly in 03, now that I think of it, I dont rememeber dealing with many illegals during my 3 years, have things changed lately?
My roommate’s boyfriend is an illegal who is currently doing jail time for his second DUI. At the end of his sentence he is going to be deported back to Mexico. The reason he is being repatriated is that this area has seen an explosion of injuries and fatalities due to illegal Mexican DUIs.
My friends in the city live just south of Washington Street.
They are regulary awakened by illegal Mexicans creating disturbances in the middle of the night. 9th Street - the “Italian” Market, is now peppered with bodegas and Mexican type establishments, not to mention the surrounding streets seeing businesses catering to santeria and all that fun south of the border stuff.
I guess the answer to your question is, umm…YES
Both parties stink. What do we do about it?
The federal goverment keeps getting bigger, international entaglements are expanding, companies continue to consolidate. I feel like we are slipping towards
a Sovietan American empire.Jefferson said revolution:
“That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”
WHO’S WITH ME?!?
“it is the Right of the People to alter or to abolish it”
Actually, doesn’t that give legal ground to FDR’s new deal? Life, liberty and the pursuit of happiness is pretty broad.
“WHO’S WITH ME?!?”
I am. How do we get started?
Jefferson said revolution
My guess is there is another “Alamo” brewing right now down in the Southwest.
You’ll see your revolution, which will evolve after the race war necessary protect our border sovereignty due to the incompetance and impotency of the Federal government to do their Constitutional duty.
Be careful what you wish for…
Your statement appears to be true. War coming to Tuscon.
http://azbiz.com/lionel_waxman/
“which will evolve after the race war necessary protect our border sovereignty”
WTF? I’m sure not with you on that!
Unfortunately the people stood by (or enough of them, anyway) while the government took away both their rights and their arms, and armed itself to the teeth - while many people do feel, in all seriousness, that violent revolution would be justified at this point (how is it I’m paying 40% of my income in income taxes and another 20%+ in taxes on and built into the goods I buy?!), we wouldn’t last a day. No, the key is just to figure out how to get permanent resident status somewhere else.
Actually, doesn’t that give legal ground to FDR’s new deal? Life, liberty and the pursuit of happiness is pretty broad.
It’s the pursuit of happiness part that causes problems. If only Jefferson had left John Locke’s ‘Life, Liberty, and Property‘ alone, we wouldn’t be in half the mess we are.
“If only Jefferson had left John Locke’s ‘Life, Liberty, and Property‘ alone, we wouldn’t be in half the mess we are.”
Well, then, that’s where we can start when we re-organize.
“Actually, doesn’t that give legal ground to FDR’s new deal?”
No — the right is that which is of the people, not of a politician.
The American empire is in serious decay. Our economic base is eroding, our infrastructure is in need of updating/repair, our middle class is becoming financially disenfranchised, our military adventurism is a failing enterprise, our government has been co-opted by multinational corporate interests, our civil rights are under assault, and we are drowning in deficits.
Other than that, things are okey doke.
Sounds like the future can only get better from here…
You know, that is actually a very good way of looking at it, GS. I applaud this.
What amazes me is how few people really seem aware of all this and really DO think everything’s just fine, even though they’re aware their paychecks don’t go very far anymore…
“What amazes me is how few people really seem aware of all this and really DO think everything’s just fine”
Ya know, Lost, I think on some level they know. Not the details. But doesn’t the gut/intuition tell us when something is terribly wrong?
IMHO, the problem is its really an overwhelming concept and too many of us just are not equipped to look head on at that kind of dark place. It also means standing up and making hard choices. Yikes! When was the last time Americans were asked to do something like that (except for our soldiers of course)
It’s easier to work VERY HARD at denial…ya know, “just keep swimming, just keep swimming, swimming, swimming” It’s what I see around me: people working very hard not to notice.
Palmetto:
I don’t think ANY OF YOU realize how much the non-smoking campaigns have to do with extending life a few years and multiply that by tens of millions of people, taking out more SS and pension money
When they wont raise the age to Collect SS to 70, and eliminate all 20 and 25 year full pension agreements…
Most pensions actuaries have assumed far more people would have died early from lung cancer …….
Just re-locate everyone to NY and breathe the post 9/11 air.
Actually, declining infant mortality rates have done more to increase lifespan than anything else.
Byrd’s like 99 years old, I doubt he will be getting that retirement for long.
Debt is good, because it keeps unemployment low and productivity high. Why do you think the economy is still humming (sort of) despite an underreported two-year-old housing bust?
——————————————————————————
BUSINESS BRIEFING
Growth far short of estimates
June 1, 2007
Economic growth skidded to a near halt in the first quarter, with the worst showing in more than four years raising concerns about how long the country’s sluggish spell will last. The Commerce Department reported that gross domestic product increased by just a 0.6 percent pace in the January-through-March period, much weaker than estimated a month ago. Government statisticians slashed by more than half their first estimate of a 1.3 percent growth rate for the quarter.
http://www.signonsandiego.com/uniontrib/20070601/news_1b1bizbrfs.html
From p. C9 of today’s WSJ:
Market Still Hungers for Debt
Money Flows Freely Despite Shrinking of Risk Premium
By Cynthia Koons
This may sound like an ad for mortgage financing from last summer, but there’s never been a better time than now to borrow money in the credit markets.
Companies, as well as the private-equity firms that are buying them, have found a reliable, and cheap source of financing in the debt markets where investor demand continues unabated, no matter how risky the borrower.
Though buyers have grumbled over individual debt deals, and even secured some protective provisions in a handful of cases, there is little sign that the accommodative debt markets will suddenly become more discerning when it comes to financing the currency frenzy of leveraged buyouts.
The premium investors charge companies to compensate them for default risk has sunk to near or record lows in May, even though the new debt raised is being used to finance activities that typically bode poorly for bondholders: stock buybacks and leveraged buyouts.
What is this so-called accommodative debt and where does it come from? Is it some mysterious form of recently-discovered economic dark matter? And does having plenty more of it really make the economy work better?
Who gets to pick up the tab for all of the current “activities that bode poorly for bondholders?” Will it be “contained” to the idiots who bought the toxic paper, or will some kind of bailout measure be used to share the pain when all these stupid “investments” blow up en masse?
I think China is going to use their massive dollar reserves in buying public companies and taking them private. China has partnered with Blackstone Group. This will cause the stock market to rise as too many dollars will chase to few assets.
I think thats called inflation?
I think that’s called a respiking of the punch bowl, and an abdication of the Fed’s duty to keep inflation “contained.”
Isn’t it possible that China’s CB (and other FCBs) are behind quite a bit of the private equity deals? Not sure how strictly PE and hedge funds are regulated (not), but there seems to be a never-ending flood of money looking to get out of currencies — any currencies — and into businesses (stocks).
I’m beginning to feel like the U.S. govt is about to default on its debt, and everyone else is aware of it but us.
Theories?
I think topics just on the debt and credit crises are timely. The housing bubble is only a piece of the bigger issue: not handling debt well.
“…not handling debt well.”
It is very confusing to handle debt well when the economy is being managed by flooding it with liquidity.
The dam is breaking but we’re seing public service ads about the importance of more irrigation projects.
I think we should talk about other buying opportunities that bubble-sitters could benefit from. For example, should I be looking to score my ideal vehicle in the next few years at a bank auction?
Is it time to pick up a small boat? Large boat? Mega-yacht?
I wold like to explore the other opportunities that may present themselves in the next few years.
yes, but not artsy fartsy stuff
there’s a next bubble for you
Virtually all 2nd tier expensive items of your heart’s desire, will be available for purchase, used, for i’d guess 10 to 25 Cents on the Dollar, versus their current value, within a year or 2, as the scramble to sell everything not nailed down, to keep afloat financially, gets going in earnest…
Don’t be eager when the prices drop to around 50%, as there will be no ground floor to stop perceived values from falling furthur.
I’m waiting for a nice baby grand piano. Prices on Craigslist are dropping lower and lower. Right now used ones in great shape seem to be selling for around 25% of retail price, and that’s after several $500 markdowns for most of them when sellers don’t get their wishing prices. Next year, I’m anticipating the fire sales.
Going to brush up on your Chopin?
I’m more of a Beethoven guy.
Toast, I hope you’re not planning on moving in the near future after you get that thing. I have a Steinway upright and it weighs a ton. Kind of an albatross when you’re not so settled, can’t store it unless it’s climate controlled storage.
I’m a homedebtor, but my mortgage is much lower than comparable rents. Not planning on moving again (isn’t that always the case?). I’m about as settled as anyone can be who is not independently wealthy.
Cool, just set aside a small trust fund to pay the movers if you ever do move - having said that, a grand would be awesome (if only I could play…)!
“I’m waiting for a nice baby grand piano. Prices on Craigslist are dropping lower and lower.”
Falling prices of expensive musical instruments is a core deflation indicator that I have been expecting for some time.
There is a ridiculous amount of competition as well. On the Phoenix Craigslist page, I see about five new grands added daily, and we’re talking nice ones like Steinways with original ivory keytops advertised for around $10K. I do not believe there are enough people interested in having a grand piano to justify so many on the market. I’m sure many of these were HELOC’d pieces of furniture that were rarely, if ever, played.
It’s a good time to be a buyer!
Also, I forgot to mention that the majority of these are being sold in outlying, bubbly areas like Surprise, Queen Creek, Cave Creek, etc. That’s further evidence these were purchased using the home ATM/credit card.
“It’s a good time to be a buyer!”
A buyer’s market for Steinways! Who’d have thunk?
I am thinking maybe we will trade in our Yamaha grand for a Steinway once the grand piano market bottoms out. LOL!
Shouldn’t you sell the Yamaha and rent for a while?
I wonder if any of these belong to stagers who no longer have enough business to justify them.
Agreed - I’ve noticed some great deals on pianos and furniture on craigslist. I’ve got my eye on a nice popup camper; now that summer is here the buying season is over. Maybe I’ll get a newer Chevy pickup too. I can probably buy both from the same FB fool.
Furniture is DIRT cheap right now. Seems to be a lot of people moving around here (out of state?)
I have a feeling a bubble that might pop will be the muscle car craze. I am a car dude from way back and i cant believe what morons are paying for some of the stuff at say Barret Jackson. Now i can see paying a premium for a truly rare/limited car but for something like a basic big block car…no way. I watched the Ferrari bubble unwind in the early 90’s and i have this strange feeling this will end up the same…
Chris
Might? Yes, I’ve been thinking 1990 Ferrari market for a while now. I don’t follow too closely because even though I have a soft spot for muscle cars I have no intention of buying one, but what I see when I do happen to click past an auction or one of the “Flip that Car” sorts of shows it looks like nothin’ but bubble to me. On the street I’m also seeing way fewer toys than I did a couple of years ago.
Everyone blames the horror of the mid-70s on insurance and emissions but it would be interesting to go back and compare against macro economics and gas prices instead and see if there isn’t more correlation there. Automotively it feels an awful lot like 1974 to me…muscle cars getting fat and ugly and economy cars getting all the attention. But the horsepower numbers are better than ever so maybe 72 is a better comparison.
“Everyone blames the horror of the mid-70s on insurance and emissions but it would be interesting to go back and compare against macro economics and gas prices instead and see if there isn’t more correlation there. Automotively it feels an awful lot like 1974 to me…muscle cars getting fat and ugly and economy cars getting all the attention. But the horsepower numbers are better than ever so maybe 72 is a better comparison.”
Gas prices certainly were the nail in the coffin, but changing consumer tastes were the primary drivers of the muscle car demise. The beginning of the muscle car phase was around 1956 and it was running on fumes by 1971.
Case in point, look at todays’ full-size SUVs. There are still some people buying them, but to a majority of Americans they are ugly albatrosses. (1988-2005) Conversion vans were popular in 1980s, and they had their best year ever in 1991, well after the minivan crazy was here. SUV sales topped out in 2003 (full size models). Within 5 years, SUV sales will be a fraction of the 2003 sales.
So no reason to build a marco-economic model, it’s much more appropriate to build a case about marketing, fads, and changing consumer tastes.
I’ll agree with you this week too. In 5 years you will have to pay someone to take those junkers off your hands. Remember the Model-T crazy about 1990? Yip lots of them around now for pennies on the dollar as the old crumudgeons died off and left them to their kids who don’t care. I’m a Gen-Y, and I have no connection with any muscle car from childhood. Plus, why would I want a poorly made piece of junk with a big engine, when I can go to Ford and buy a 2007 Mustang that is safer, comfy, and will whip the pants off 99% of those old junkers.
Car bubbles are SOOOOO stupid, even worse than housing bubbles.
Is it time to pick up a small boat? Large boat? Mega-yacht
I would have nothing to do with anything requiring prodigious amounts of fossil fuels to run.
Personally, I am expanding my collection of Colt handguns.
Ya gotta know what your lookin’ for, but from my perspective at the moment lot of financially pressed people are sellin’ out to gun shops.
I said that in jest. However, I wouldn’t pass judgment on whatever someone is looking to purchase at a discount. We sat the mania out, it will be our time for a few years. Do we agree?
I’m wanting a Toyota Tundra (as I mentioned in yest. post) with a camper to live in for two years and wait out the housing bust. but I’m having the same qualms about the gas thing - it’s 3.52 today here in Glenwood Springs, Colorado, and GTundras get 15 to 20 mpg. Ouch.
I’ll be looking to pick up a nice J100.
Racing sailboat. Small hp engine when you’re in the doldrums is all that’s needed.
How about something fun… most outrageous thing told to you by a realtor or strangest thing seen at an open house.
I read about this one on the HGTV forum. Tough to top this:
‘The strangest thing I ever saw at an open house was a man in bed talking on the phone. I ask the agent point blank, “what’s up with the guy in bed?”. She said she couldn’t get him to leave or even get out of bed, (he was not sick). The agent was very distressed and it showed.’
…
‘Yes, in the bed with the covers up to his waist, no shirt, talking on the phone. When we walked into the bedroom he gave us a “what the @#*% are you looking at” look. When we left the house we were almost hysterical with laughter. Why that poor real estate agent didn’t cancel the open house I’ll never know.’
http://boards.hgtv.com/eve/forums/a/tpc/f/9384011632/m/9261028023
Could be the “getting divorced and wife gets half the money when the house is sold” problem…
I don’t know if you can call this strange, but here it is:
A couple months ago I visited an Open House in my TH community . The only attendees were a younger couple, and me. As I was signing the register, I saw the wife handing a biz card to the Realtor. She was spieling him. Turns out she was a newly-minted agent, and was trying to recruit him to her company!
She wasn’t there as a buyer or even to look at the property.
One 30+ year old house I saw had been poorly redone by a flipper. A couple of load bearing interior walls had been removed to make it look bigger inside. I remarked to the realtor that most of the other walls had been recently retaped and painted to try to hide large cracks that were already showing again. The realtor’s reply was “Well, all houses settle a little bit. You can’t expect a house not to have some cracks in the walls.”
Absolutely hilarious. what idiot removes a load-bearing wall?
Not one with a permit.
Here is another idea… I’m not sure this have been given much thought, or if too many people care, but I’d like to explore how the bubble steamrolled the arts. For example:
1. NYC, 2001, the Wetlands (one of my former indie rock mainstays) goes condo. (http://en.wikipedia.org/wiki/The_Wetlands_Preserve)
2. SF, 2000, hundreds of bands lose practice space (http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2000/09/19/DD79266.DTL)
3. SF, early 2000, Cacophony society splinters (http://en.wikipedia.org/wiki/Cacophony_Society)
Does “irrational exuberance” refocus some of our great creative minds toward financial ends? Does J6P put down the weekend guitar and pick up a Kyosaki book? The arts scene, especially in dense cities, has SUCKED for about 5-10 years and I partially blame the bubble.
Did the Guerrilla Girls trade flash mobs for real estate seminars? Let’s discuss…
Well there is always Philadelphia, where the murder rate is soaring, and schools and infrastructure are collapsing, just like New York in the 1970s. The solution? Let’s get some artists in here!
http://www.nysun.com/article/52160
“The solution? Let’s get some artists in here!”
I guess you are being sarcastic, but that statement is probably truer than you realize. Ideas DO trump armies and artists throughout the ages have had very beneficial effects on populations. (PS: I don’t consider American Idol to have much to do with art, but I’ll bet just about every gang member out there would lay down their guns and wet their pants for a chance to be on the show)
I tried to discuss this at Patrick as well. I understand that financially responsible artists are a rare breed, but I’m surprised people aren’t piqued by the “soft” side of the bubble.
Fine, forget the arts. Let’s get back to chartsengrafs!
Hey, Muggy, I feel your pain. Like I said, I like HARM and respect Mr. Killilea. But I don’t care much for threads that look like a Neo-Nazi euthanasia support group. Besides, if the chart says the upty-gup is forming a W 2/3 of the way at the bottom 1/6 of the top and the flibberty gib M-65 looks like it is declining when the bell rings, the air outside will turn green according to SJ-307, Jahwhol, Herr Kommandant!
Yeah, I got yer chartsengrafs right here. Fat lot of good chartsengrafs do when the system is totally gamed. One thing you can say for true artists, they know BS when they see it. Which is why all totalitarian/fascist societies either suborn them or silence them.
LOL - Palmy, you could teach a creative writing course today! Now THAT’S writing/art…
Funny, Palmetto!
Never gave any thought to the “banished arts” aspect of totalitarian govts, but you are right…it’s certainly not uncommon for these forms of govt to outlaw art (or certain types of art).
Like you said, probably because artists can see BS a mile away. They tend to be independent thinkers.
Have to admit, though I absolutely hate rap music, there are some songs/artists who really make some compelling arguments and, after taking the “music” out of it, the lyrics are surprisingly intelligent.
I am an artist who left SoHo in NYC in 2003 because I couldn’t afford to pay $1.2M (average cost) to move up to a 2 Bdrm apt. SoHo was changing from a largely artistic community to a trendy, expensive boutiquey neighborhood not conducive for making art. One by one, artists, film makers, writers, and editors in my small building were moving out and being replaced by people working in the financial sector, dentists, and other high income individuals with neither the time nor interest in art or ideas. The entire tenor changed from casual spontaneity and open broad ranging discussions to narrow practical concerns relating to daily living and material things. Plus people just seemed to have less and less time to do anything due to working very long hours. This was happening all over the city.
Artists have traditionally been urban pioneers. The neighborhoods where artists in Philadelphia settled were rundown until the creative energy of the new residents revitalized and restored the place. Then as property values increase, and professionals (and anyone with disposable bucks) discover the “artsy” neighborhood, the designer boutiques and restaurants arrive. So the ones who “fixed” the neighborhood are usually pushed out.
In Philly the artist-fixed neighborhoods are usually nicer than the boom-generated gentrification that occurred the past six years.
You make an excellent point, phillygal and Virtual. Artists are the TRUE improvers of society. This is evidenced by the fact that when artists move into an area, there is immediate improvement and vitality. Then they are vultured out by financial interests, after doing all the hard work.
This is happening throughout NYC. It’s hard to see how the it can remain the US arts capital with artists leaving in droves.
I remember reading an article in the NYT a year or so ago, complaining that NYC is suffering in the arts because it’s just too expensive to be a starving artist in NYC. I believe it was suggesting that NYC wasn’t even the best place for the arts anymore, which is quite a statement for the NYT to be making.
“Does “irrational exuberance” refocus some of our great creative minds toward financial ends? Does J6P put down the weekend guitar and pick up a Kyosaki book?”
Odd that this would come up, I’ve been thinking about it lately. I was a full-time musician in the late 80s, but concentrated on tech and an MBA since the early 90s. Just this year I’ve started doing some playing again after basically laying off that entire time. It just feels right again.
Could simply be a life phase thing, but I suspect there’s more to it. Obviously there’s a wide range between “serious artist” and J6P, but I suspect that when it appears that there’s an opportunity to make a lot of money and/or pull yourself and your family up a rung or two on the social ladder it’s natural for many people’s creative energy to flow that direction.
However, when you’re in a situation where it doesn’t appear that extra effort expended on a career is going to make any difference, you’re more likely to become more reflective and look around for other creative outlets???
All too true. Started out wanting to write, went into high tech and engineering (degree in both computers and civil eng.), then an MA, went the career route, made money (spent most of it) and wrote on the side. Now my daughter is grown, am on my own, and back to writing. Seems like the creative “lurker” never goes away, it just lurks until you give up and start feeding it again. Mine is happy to be fed about anything, even ramen, and happily and innocently asks me each morning where I’ve been for so long (I’m a nature writer, which is a hard row to hoe financially but very rewarding in every other way).
i take pictures around carlsbad in san diego to show hbb’s what i see thru my lens. unfortunately, ben’s filters won’t let me post my pics.
but i did go to a snazzy opening at a loft style building in oceanside. priced 500k to 2mill. the mayor was there, the paper was there and so were the realtors. ocean views, blah blah blah.
im still hating my LL and hoping he defaults soon.
“HOA Board President Tonja Brooks quickly discovered that her builders didn’t seem to want anything to do with the people who’d purchased homes from them once the homeowner had taken possession of the house.”
“She eventually had to form a petition with representative signatures from each of the forty-eight houses around hers, before the builders would take Kingsview residents seriously. Only after the petition did K Hovnanian Homes actually fix the items they were responsible for fixing in the homes they’d sold.”
http://www.thebaynet.com/news/index.cfm/fa/viewstory/story_ID/5998
Patch, I like the idea of a discussion of HOAs, pros and cons, HOA conflicts with builders. I’ve lived in a HOA development and also outside of one. I don’t mind renting in one, but I’m leery of buying in one.
I was totally against HOA’s, I mean, who wants someone telling them what they can do or not do with their own property right? Well, have living in the DC metro area, I have definitely changed my attitude. Imagine yourself buying a 500k townhome just to have the townhome next door housing 3 full familys, with 7 cars. This is very common in this area.
Maybe if we discuss HOAs then we might touch on CC&Rs. What you dislike are CC&Rs, as they are the only thing that can result in you being told what to do with your property. In my neighborhood there is an all volunteer HOA that does things like plant trees and organize clean up days. Newcomers to the community with HOA issues frequently threaten to sue only to find that this entity has no real obligations or responsibilities or money, though if they go to town with their lawyers they might be able to stop a clean up day. It is extremely revealing that for so many there is absolutely no context in which they can imagine an HOA except the usual extortion for unwanted services and restrictions game.
CC & Rs are nothing more than Covenants and Restrictions, with By-Laws added in for extra spice. When I lived, the HOA was responsible for carrying out and enforcing the Covenants, Restrictions and By-Laws, through the Board. I read every last word of the documents and wouldn’t go to closing until I had done so. The realtor expressed shock. “No one ever reads those”. Therein lies much of the problem and the confusion people have with HOAs and Boards.
Imagine living someplace where they fine you for leaving your garage door open and where they patrol the neighborhood to make sure you don’t break any other rules. That’s livin’.
Florida is in a serious drought. My coworker today said the HOA left a letter on his door to replace brown sod in his yard. Unbelievable. I suggested that he buy a junker and park it over the brown sod instead.
No can do. Junker parked out front violates Rule 3, Paragraph 5, Section II:
“No homoaner shall situate a tired looking POS vehicle in front or adjacent to overpriced POS house.”
Or something to that effect
HOA we were looking at had to ok home colors, fence options (only 3 versions were appropriate), tree choice and locations, window choices, roof shingle choices….it went on and on…..
We are in a former fixer upper where neighbors come up to us and thank us for what we’ve done to improve the property. H’s current improvement has people driving by slowing down and giving him thumb’s up. Neighbor said she was sending her husband down to take notes. This is not a man who is going to wait for others to green light his ideas.
palmetto,
After 4 years in the Marines and all the petty b.s. you deal with you could not pay me to live in hoa area. I would go nuts with some board telling me how/what/when to do things to my residence. I personally would live next door to the hillbillys with cars on blocks and be allowed to do what i want within local zoning codes that deal with some of the hoa horror stories i hear from people i work with here in sarasota…
Whats really funny is my brother who was in the Army 12 years and my sister who also did 4 years in the Corps both steadfastly refuse to have anything to do with a HOA neighborhood or building…It also might run in the family from growing up on a farm…
Chris
Hey, Chris, I’m with you. I tried it once. I actually served as President of the Board and actually, nobody hassled me much. All the residents cared about was that the security gate worked, the place looked nice, the garbage was picked up and the pool was clean. They just wanted somebody to do it for them and minded their own business. But I quickly found out that you end up being sort of a non-paid employee. There was no time to be on a power trip, I can tell you that. Plus, you’re bound to have at least one resident criminal (we had two) that you have to deal with. The people who seem to scream the most about their “rights” are criminals. Unfortunately, their most important “right” (to them) is the right to make life miserable for everyone else.
When I left the board the fecal matter hit the fan. The next Pres and his merry band were a very confused bunch. No clue as to the many details that have to be covered in running an association, so the criminals gained the upper hand very quickly. I sold as fast as I could before noticeable deterioration of the entire development set in.
I’m not fond of HOAs myself. Adds another layer of unwanted government.
Your comment reminds me of my own military experiences of watching old Sergeant Major’s riding around in the military housing during the day and writing people up for leaving their porch lights on (can’t be wasting that electricity just because we called you into work at 4 A.M for a piss test)…
We’re renting in a rural area, and inside a gated community with a HOA and CC&Rs. Inside: smaller lots (av 1 acre), smooth pavement, clean properties, cable TV and some DSL, piped water, some bickering over fees (does it need to go up 40 bucks to pay for the new “clubhouse”?); outside: bigger lots (av 5 acres>), rough/broken pavement, every tenth property is a mini-junkyard. poor broadband availability, water from your own well, no rules except the county’s.
It’s a tough option. I’ve started to notice, though, that the people who complain loudest about HOAs seem to have the houses you’d rather not buy …or buy next to.
“It’s a tough option.”
Very true. Cuts both ways, that’s why I like it as a discussion topic.
I’m sort of with Cobradriver on this, though. I’d rather deal with a next door neighbor with cars up on blocks than an association. Much easier to try to reason with an individual than a group.
I’d rather deal with a next door neighbor with cars up on blocks than an association.
just plant some tall trees or build a high fence.
What I’ve seen and heard about HOAs does not inspire too much of my confidence.
I agree, it’s a good topic.
“Much easier to try to reason with an individual than a group.”
Maybe, maybe not. If an individual doesn’t want to reason or compromise, the options are limited. You might be stuck living next to someone with whom you have a personal feud, with no recourse except legal action - not a pleasant circumstance.
“just plant some tall trees or build a high fence.”
Neither of which may protect you from noise, odours…or the financial loss you may suffer when you go to sell your house. When there’s a junkyard next door- or even on your street - a significant number of potential buyers will balk. This would be true even if the junkyard property belonged a nice old lady who kept to herself.
I’m interested to learn: what is it about CC&Rs that people hate so much? Isn’t it just an additional layer of rules that a community agrees to, to promote a common good? If someone doesn’t like the restrictions, they are free not to buy there; if they buy there and agree to the restrictions, why get upset when there is enforcement? (I not arguing a position here, I’m asking)
I owned a SF for 10 years and a condo for 9. I would NEVER buy another condo or have a HOA.
Did you ever try to get 50 + people to agree on anything? Endless meetings and arguments over the smallest details, right down to what type of annual plants to plant this year.
Or, So and so cooks with too much garlic and the odor creeps in to the common hall way. One suggetion was , we need to send a notice to everyone that if you cook foods with pungent odors you must open all windows and run several fans in your unit so you don’t annoy your neighbors.
It was awful
like the idea of a discussion of HOAs, pros and cons ???
I can likely add something to that discussion..I have formed many of them….
scdave, I’d love to hear your comments on this, since you’ve formed a number of HOAs. I’m assuming that you are a real estate attorney? No flames here, just looking for input. I have observed that real estate attorneys in this area are most frustrated by the pettiness of the people they have to deal with in HOAs.
Developer…..
It seems to me that most of the issues people have with HOAs can be mitigated by creating a very limited HOA in the first place. The HOA bylaws limit the scope and ability to amend the bylaws right? Why not set very strict limits and prevent the HOA from growing into a monster?
Of course the developer probably has zero incentive to do this, right?
Most cities have certain ordinances that restrict the most offensive behaviors like parking cars on the front lawn (usually dirt).
There are definitely two sides to the HOA debate. Some people actually like the “cookie-cutter” neighborhoods where every house has to be painted the same color, cars can’t be parked in the driveway or street, etc.
Others like having the freedom to do what they want with **their own** house. Personally, HOAs make a community feel more like an apartment complex — gotta get the approval of “the boss” before you can do anything with your “unit”.
Hopefully, we can continue to build developments where the residents can choose what kind of governance they prefer.
What I’m opposed to is the trend of almost all new developments having HOAs. We need to be able to choose, IMO.
Ben, I’m locked!
How about a topic on where it is still good to buy. For instance, someone looking to buy some land for retirement. Where are some places, other then the frozen tundra, which haven’t been hit buy the greed boom?
There is a global credit-fueled greed bubble. But in light of global warming concerns, I recommend Greenland, Iceland or Scandinavian real estate. In fifty years, enough of the polar ice cap may have permanently melted to reveal beautiful mountain landscapes in these places.
I think you’re joking, I hope you’re joking, but in all seriousness this type of “future pricing” and speculation is part of the problem. Land should be bought and sold based on it’s current use value… I think… I dunno…
What if you are worried about the steady drain of high future fiat currency inflation on your “savings?” Isn’t land a good long-term inflation hedge (unless everyone else has already inflation-hedged its price stratospherically high)?
See I can’t even think like that. My head asplode. I’ll just keep on rentin’ on!
“I recommend Greenland, Iceland or Scandinavian real estate.”
I am no scientist, but I am hanging on here in Fla partially because of global warming. Now, that may sound funny, but one scientific scenario I’ve read poses the theory that global warming could bring about a reversal of the flow of the Gulf Stream and other moderating currents, or some such thing. In which case, it would get really cold in those areas. And in places like England, Ireland, etc. Most likely New England, the Maritimes, etc, too. In a way, makes sense. Almost like a self-correcting mechanism in the system of physics here on planet Earth. On the other hand, just like financial markets are being gamed, I think there’s something to this chemtrail business as a means of population and weather control.
“…one scientific scenario I’ve read poses the theory that global warming could bring about a reversal of the flow of the Gulf Stream and other moderating currents, or some such thing.”
Are you sure you did not see that ’scientific scenario’ in a movie?
http://www.foxhome.com/dayaftertomorrow/
Anyways, this article might interest you…
———————————————————————–
Is Global Warming Making Hurricanes Worse?
John Roach
for National Geographic News
August 4, 2005
Hurricanes bring winds and slashing rains that flood streets, flatten homes, and leave survivors struggling to pick up the pieces. But has global warming given the storms an added punch, making the aftereffects more dreadful?
According to hurricane historian Jay Barnes of Pine Knoll Shores, North Carolina, ocean heat is the key ingredient for hurricane formation. More heat could “generate more storms and more intense hurricanes,” he said.
http://news.nationalgeographic.com/news/2005/08/0804_050804_hurricanewarming.html
GS, while I saw the movie, that’s not where I first heard about the phenomenon. It was in a Vanity Fair article some time back where Queen Elizabeth of England was expressing concerns about global warming. Something about England getting very warm and then plunging into a frigid period if the Labrador? (I think that was the current) reversed.
Good action movie, a little over the top, though.
Palmetto - are you talking about the North Atlantic Convection Current?
‘Day After Tomorrow’ sort of explained it (in the silliest Hollywood way possible) but there is a theory around that - if the warmer waters from the Tropics broke the convection cycle, Northwest Europe and Northeast Canada/US would lose the Gulf Stream and hence be much colder.
They make dire predictions …’a new ice-age!!’…etc, but with most of the arctic/antarctic heating up faster than any other parts of the planet, in a few years most of the UK will sink under the waves and you’ll still be able to grow grapes south of London…on the land that’s left
In other words, no one really knows what’s going to happpen when tempratures rise 1C, on average per decade, or when several thousand cubic kilometres of fresh meltwater hit the oceans…
West Virginia, in areas unaffected by that new “Corridor H” interstate that will screw up a lot of the r-e-a-l-l-y down-home character of the area.
We’ve all talked about the impact on those who are foreclosed. How about the impact of purchasing at bubble prices of those who hang in there?
I believe the weak economic recovery in the NYC area in the early 1990s was due to extreme house-poverty. Those who sold high and bought high were unaffected, but there was a big transfer of wealth in the late 1980s from first time buyers to last time sellers, who retired to Florida. Those buyers, and I knew many personally, had no discretionary income to spend FOR YEARS. That money was spent by others, in Florida and elsewhere.
Could this be true of the whole U.S. this time? And have the winners already blown the money.
That’s how I see it. The bubble resulted in a large transfer of wealth (actually just IOUs) but unfortunately it was all blown on consumables. If it had been invested in means of production or efficiency improvements we wouldn’t be that bad off. Instead it was all pissed away at Starbucks, the SUV dealership plus a quick stop at the 20″ wheel store, Applebees, Walmart, and Home Depot.
We have nothing to show for it but debt, sewage, rapidly depreciating shiny objects, and homes we can’t afford to heat/cool/commute to/pay the interest on. All that’s left is for the holders of the IOUs to decide whether to write it off or send Guido over to discuss the matter further. There’s no point in kneecapping people if they have nothing to give you and never will…but hey, what if you could just enslave them for the rest of their lives? That’s gotta be worth something…and something’s better than nothing.
There is talk about recovery from the “slow down” before the economy has officially recessed. Is this likely? Or will the NBER tell us in two years that we were already in a recession in the first half of 2007 which they only could see clearly through the rear-view mirror? Because it seems like a disproportionate share of statistical revisions are downwards these days — “worse than expected” is the new moniker.
————————————————————————————
U.S. Nonfarm Payrolls Grow by 157,000 Jobs
By Brian Blackstone and Jeff Bater
Word Count: 838
WASHINGTON — U.S. employment posted a solid increase last month led by health-care, business-services and leisure industries, providing more evidence that the economy is on the rebound after a lackluster first quarter.
Meanwhile, the income of Americans fell for the first time in nearly two years during April, but they managed to boost their spending, while a key inflation gauge slipped.
The data also suggest the Federal Reserve will stay on the sidelines for the next several months at least as the economy conforms to its forecast of steady recovery. Are they talking about recovery from the nonrecession? Or from the non-housing-bust?
http://online.wsj.com/article/SB118070038617621351.html?mod=home_whats_news_us
“it seems like a disproportionate share of statistical revisions are downwards these days”
Actually Roubini talks about that very issue in today’s blog. THe reason for this is that the initial estimates rely heavily on empirical models to fill the in the gaps of missing data. The models lag changes so on the way up an economic cycle they always underpredict new business growth, etc… and on the way down they overpredict.
http://www.rgemonitor.com/blog/roubini/
Will home sellers finally get their list prices down from the quasi-permanently-high plateau reached in 2005, now that burgeoning l-t interest rates are headed up? Because higher interest rates and lower housing prices go hand-in-hand, as the pool of qualified buyers shrinks, and any individual buyer can afford to pay for less house as more of his monthly nut goes to paying interest and less to paying principle (aka the value of the seller’s retirement). And then there are those pesky rising food and energy prices — who can afford to buy a home when you can barely even afford to put gasoline into your car’s tank anymore?
Sell now, or you’ll be priced in forever.
———————————————————————————-
30-year rates hit 8-month high
Rates on 30-year mortgages rose for a third straight week, hitting the highest level in eight months. Freddie Mac said its nationwide survey showed that 30-year, fixed-rate mortgages rose to 6.42 percent this week from 6.37 percent last week.
http://www.signonsandiego.com/uniontrib/20070601/news_1b1bizbrfs.html
“Sell now, or you’ll be priced in forever.”
I like that, as a topic. Wish the REIC would take it to heart and begin to repeat it.
Will the subprime implosion lead to class warfare between the top and bottom of the U.S. income distribution?
———————————————————————————————————-———–
Funds attack banks’ aid for subprime borrowers
By Saskia Scholtes in New York
Published: May 31 2007 22:10 | Last updated: May 31 2007 22:10
Hedge funds are attacking bank decisions that help delinquent US mortgage borrowers remain in their homes in a move that pits some of the country’s richest people against its least well-off.
The dispute centres on derivatives contracts that pay money to investors when bonds backed by subprime mortgage loans – extended to people with past credit problems – run into trouble. The $1,200bn (€890bn) US subprime mortgage bond market has been hit recently by rapidly growing defaults, and hedge funds have profited from the crisis by buying such derivatives.
Some hedge funds say they are concerned that banks that both sell the derivatives contracts and handle mortgage payments could be involved in a form of market manipulation. The funds fear that banks are making concessions on the underlying mortgages to avoid making good on derivatives contracts that pay off in cases of default.
The controversy pits hedge fund interests against those of stretched US mortgage borrowers and politicians who want to help them keep their homes, underscoring the political dilemmas created by the growth of the mortgage bond market.
A group of more than 25 funds has asked the International Swaps and Derivatives Association, the derivatives industry body, to act on their concerns, according to a letter seen by the Financial Times.
http://www.ft.com/cms/s/3ae806a2-0fa6-11dc-a66f-000b5df10621.html
“Will the subprime implosion lead to class warfare between the top and bottom of the U.S. income distribution?”
Ya mean a modern day Shay’s Rebellion?
“Shays’ Rebellion or Shays’s Rebellion was an armed uprising in western Massachusetts from 1786 to 1787. The rebels, led by Daniel Shays and known as Shaysites (or “Regulators”), were mostly small farmers angered by crushing debt and taxes. Failure to repay such debts often resulted in imprisonment in debtor’s prisons. A rebellion started on August 29, 1786. A Massachusetts militia that had been raised as a private army defeated the main Shaysite force on February 3, 1787. There was a lack of an institutional response to the uprising, which energized calls to reevaluate the Articles of Confederation and gave strong impetus to the Constitutional Convention which began in May 1787.” from Wikipedia
“Sell now, or you’ll be priced in forever.”
LOL. My how times have changed.
I’m curious as to what types of jobs people think might hold up well during the implosion? I was thinking that mechanics might do well, since more people will be holding onto their cars now that the ATMs are running low on “free money”.
Software security. Goverments and companies are going to need people to protect the networks and systems. Imagine if malicious users were able to take down or corupt the data at Fidelity or Vanguard.
“I’m curious as to what types of jobs people think might hold up well during the implosion?”
Mortician?
Thinking of switching from IP to criminal law here… Implosions and crime typically go hand in hand… plus all the schemers will need defense once the authorities start catching up with those of them still at it…
Hahahah. I know you’re joking.
criminal law is a growth industry….Even if your not a criminal you will be treated like one sooner or later…I just got shook down by some “punk” cop while rideing my bike…Stopped me because I was rideing my bike on the sidewalk….
Yea but IP to criminal . . . . hard to buy.
“I was thinking that mechanics might do well, since more people will be holding onto their cars now that the ATMs are running low on “free money”. ”
There is a coming problem with mechanics. Nobody is staying/entering this area of employment. This is good for me because i have seen my wages double in 15 years. Bad for normal people because it drives up prices. Nationwide the average age for a mechanic is almost 57 years old. My company has already come out and said they have no idea where the future wrench turners will come from. Its just as bad or worse finding aircraft mechanics also…
Chris
P.S.-There is a huge difference in pay between a good ASE master tech and a dumb parts changer and yes i work with a few parts changers.(o.k.,a lot)
I have heard that modern cars are more electrically vulnerable and therefore less repair friendly. Electrical parts are exchanged, not repaired. That perspective might turn off some prospective auto mechanics.
I thought about that recently, and could see some mechanically inclined tech-types switching over if/when that’s where the jobs are. The future wrench-turners will be there as soon as that’s their best option. In the late 90s, as soon as tech employers got desperate enough to pay a decent wage to anybody that could do the job rather than requiring all the correct bullet points on the resume, people came out of the woodwork. I don’t have any ASE qualifications, but I can follow a shop manual as well as most people and can diagnose sensor/ECU issues better than most, so I may look that direction as a backup plan if anybody were willing to hire me without me having to go get a bunch of certifications first.
Anything related to health care.
Bingo….!!!
Funeral industry
Not yet…..20 years too early…..
My point is that it will be a growth industry for the next thirty years, not that it is necessarily at a permanently high plateau already like the home construction industry.
Not for me. Can’t speak for Palmetto.
Bankruptcy attorneys.
As discussed previously on these threads, pawn shop workers.
Consumer credit counselors.
Divorce attorneys.
Debt collectors.
IRS Agents.
“We buy ugly houses” scumbags.
Anything in the entertainment industry.
Its no accident that Hollywood took off with a vengance just about the time of the Great Depression.
No matter how poor people are, they still want entertainment. Heck, they want more entertainment to get thier minds off of real problems.
I always remember the fact that Fuller Brush did well during the GP. Women still wanted to look good. Maybe more than ever!
As for entertainment, watch for the resurrection of comedy clubs. People need escapism and reconnecting with crowds when things get tough.
That’s true — entertainment and women’s beauty products are recession-proof. I suppose Charmin is, too — it sure is for me.
Remember that ad where the frat boy’s card keeps getting declined in the supermarket checkout and he removes every item until it’s a choice between toilet paper and beer?
It’s a beer ad, so he chooses beer, but we all know what he would really choose… lol.
They say the old Sears catalog was the poor man’s tp, but you can’t get one of those any more.
Produce grower - organic, fresh, local
Short bait, or how to fall almost every day yet never drop below $29/share…
http://www.marketwatch.com/quotes/tol
To see proof of how this can happen, take a close look at the descending monks in this Escher print…
http://library.thinkquest.org/25459/learning/escher/ascendingdescending.html
You were early, GS. It’s below $29/share at close.
As always i’d like to hear local market reports
I went in to a mortgage office and the broker told me “Why would you want to pay down the principal, all it is is type of savings account”
I was the president of a cluster in Reston, a (in)famous HOA. I’ve heard stories of board members walking around an writing up homeowners for the wrong style of screen door. But that was years ago.
I became the president after spending 400k on a townhouse. My neighbor never mowed her lawn in 4 months, and she lived there the whole time. Another 2-br had 6 adults, 4 children, 3 dogs, and 2 cats living in it. It caused parking issues when they refused to acknowledge that the parking spaces with my house number in front were my spots, regardless of who was unemployed at the time. I thought spanish used the same numbers?
I understand that there are difficulties with HOAs, but in townhome communities, your neighbors’ inability to keep up their home, their yard, parking issues, dog crap on the sidewalk; this tends to be more difficult to ignore than normal SFH stuff.
I love my HOA, I wish they could do MORE about rentors, absentee landlords, and enforcement of what was once called “common courtesy.”
“Another 2-br had 6 adults, 4 children, 3 dogs, and 2 cats living in it. It caused parking issues when they refused to acknowledge that the parking spaces with my house number in front were my spots, regardless of who was unemployed at the time. I thought spanish used the same numbers?”
LOL! My best buddy lives next door to a Hispanic family, from the looks of it, partly legal and partly illegal, one of those extended family dealies. They have modest cars that they keep very nice and they are constantly cleaning them, almost frantically as if they want to set a good example. Especially when I drive over and park my beat-up, (but paid for) POS vehicle. They start cleaning their own car, even if it doesn’t need it, to send me a message. I get it, but I’m not doing squat until love-bug season is over. My car looks like it has grown a beard right now.
There is a huge disconnect between the view of the housing bust that can be had on this blog versus what is set before the populace in MSM outlets. The blog is consistently bearish, while the MSM gives a “balanced view.”
Are we overly pessimistic? Could the housing market actually turn around and take off again by year-end 2007?
The thought has occurred to me on many occasions. Even people all around me have a more balanced view. They all have finally agreed that it’s a changing market, but most believe the worst is over or will be this summer (just this morning someone said - with absolute conviction - that prices will bottom at the end of the summer).
I want “us” to be right, but is it possible we are too pessimistic?
I’ve wondered that myself. but it’s not worth losing sleep over. First, just look at the ARM reset chart when you start feeling anxious. And so what if we’re wrong? We’ll know in time to make a correction and get into a house. Just having written that last sentence makes me feel dishonest, it won’t ever happen, the eviodence is all over the place that this blog is right on.
“…but most believe the worst is over or will be this summer…”
Do such beliefs come from an independent examination of the evidence? Can you mention a single arguement based on available evidence that supports these beliefs? Because this to me much more like a repeat of the REIC propaganda than anything based on a plausible analysis of the facts on the ground.
“this sounds to me”
Do such beliefs come from an independent examination of the evidence? Can you mention a single arguement based on available evidence that supports these beliefs?
No, these beliefs come strictly thru what they think or read and/or are told by their friends who are realtors. If I try to bring up facts/evidence, they just brush me off. Which is fine - I still believe that the evidence speaks for itself. And if I didn’t fall for the ol’ “buy now or be priced out forever” I certainly won’t fall for “we’ve reached bottom now that prices are a measley few %s below peak”. But if I were to avoid this blog for any length of time and just listen to those around me, I’d start to feel like maybe I’m wrong. Thus, why I check in regularly.
Yep. This blog is my daily “sanity check”.
OTOH, houses in our area (middle-high area in coastal San Diego county), are selling rather rapidly this year, after an almost three-year period of flat prices and sliding sales, which leads me to question our logic.
Was challenged on Carlsbad Jim’s blog the other day about affordability. A bull there tried to convince me that a $100K earner could definitely afford a $700K house. Other people seemed to agree with him/her.
Sometimes, it’s tempting to think we’re too cautious and want to live too comfortably (read: stay out of debt, enjoy activities not related to housing ,and actually have money in the bank).
In the meantime, can’t fight this feeling that our money is rapidly losing purchasing power and that inflation is gathering steam — and nobody is willing or able to stop it.
Are we overly pessimistic? Could the housing market actually turn around and take off again by year-end 2007?
Sometimes I think that, then I look at current income to price ratios, read about $300k home subdivisions in Kansas, and read an article about a lender collapse or massive private company layoffs; then I think, it’s going to be much worse. For some reason, that happened to me yesterday: I’ve been reading Ben’s post almost daily for over a year, but yesterday seem to have everything: from prime/alt-A first payment defaults, to a number of non-housing layoffs, to renters losing homes to foreclosure.
Does it really matter? If home prices shoot up again later this year, but the fundamentals favor renting over buying then we should simply continue to rent.
To be honest, though, unless there is massive inflation I don’t see how the housing market will even manage much of a small dead cat bounce.
I wonder that when I drive down the street and see all the sold signs. But then I read the following Bloomberg piece and realize its only a matter of time:
“When the turn does come, it will be unlike anything we have ever seen before,” said Iain Burnett, 43, managing director of Morgan Stanley’s special situations unit in London. “The scale of it could be considerable because of the size of some of these leveraged deals”
….”People have been forecasting a meltdown in credit in the next 12 to 18 months,” said Michael Gibbons, head of the special situations desk at Paris-based BNP Paribas. “We tend to crash when we least expect it, rather than when we forecast it.”’
“Are we overly pessimistic?”
Heck, no — Ben’s blog and the posters here have, in the aggregate, been spot on in their predictions and general timing. My bet stays on this horse.
Do subprime kingpins invest directly in residential RE? One possible ploy: Buy homes in bubble zones, arm buyers w/subprime loans so they can purchase homes they cannot afford, then package the toxic debt into MBS and sell it to yield-chasing risk loves armed with freshly-printed cash. Where is the downside?
“U.S. nonfarm payrolls expand by a greater-than-forecast 157,000.”
Is the Phillips curve dead or dormant? I believe the latter, since so far as I know, the laws of economics have not been repealed for the 21st century. Consequently, the Fed is probably already “behind the curve” on containing inflation. Or perhaps the intention is to create sufficiently high wage inflation to let wages catch up with housing prices?
http://en.wikipedia.org/wiki/Phillips_curve
> Is the Phillips curve dead or dormant?
I think it was thouroughly discredited in the stagflation of the 70s: government can NOT decrease unemployment by accepting slightly higher inflation. As soon as inflation expectations shift, unemployment goes up again. The Phillips Curve is no law of economics.
Au contraire — the 1970s were an anomaly (like the one we are currently experiencing) when the Fed was trying to inflate away all its problems. The Phillips curve relationship held up for decades in the UK pre-1960; go read the paper and find out for yourself.
Commodity Fetishism and the housing bubble: Is this a symptom of “late capitalism”? Will the exploding asset bubbles give birth to new social movements?
—————————-
In Marxist theory, commodity fetishism is a state of social relations, said to arise in complex capitalist market systems, in which social relationships center around the values placed on commodities. The term is introduced in the opening chapter of Karl Marx’s main work of political economy, Capital, of 1867 .
http://en.wikipedia.org/wiki/Commodity_fetishism
Not sure this is the right blog for that one, comrade. We tend to swing both ways in politics here, but generally not that far. Me? — if I had to pick a fetish — it would be gold.
when my friend asked me if i was dem or repub….i said i’m a housing bear. thats my party!
I think that would be an interesting topic, but would also stir up a hornet’s nest around here.
How about the rapidly appreciating Canadian dollar? People make a big deal about the trade deficit with China but isn’t it true that Canada is the biggest trading partner of the US? Having the Canadian dollar appreciate 10% in just a month or two is bound to have some kind of inflationary effect.
You are the first to mention this and it sent me looking at the numbers. It’s really stunning how fast the loonie is moving.
Good topic. Has a lot of Canucks worried.
I’d like to hear what things set off alarms for you that buyers are starting to get desperate.
For example:
open houses during the week
15 flags outside the house
signs on every corner for 8 blocks advertising the open house
for sale/rent on the lawn
pathetic, pleading craigslist ads
ridiculous offers of vacations and cars with purchase
etc
When they start putting the toilet lids down for the internet photos - not to be crude, but I’m amazed at how tacky some of those shots can be.
“Bank Owned” appended to the “For Sale” sign
- Signs twirled by human directionals showing severe signs of wear and tear
- Big red balloons with “Condos for Sale” or “Homes for Sale” printed on them which show literal signs that some of the air has leaked out
- Small hand-written signs along the side of the road offering life lines to FBs (”Trouble Making Mortgage Payments?”)
*absolutely* GetStucco! I’ve seen all 3 of those lately and get excited, kinda like playing slugbug on a car trip when I was a kid.
Well not the ‘i can save you from foreclosure’ signs unless they’re in a really unlikely neighborhood. There’s just so damn many of them.
I did see a HUGE red baloon over some condos in west LA that was kinda neat.
I also went to the Playa Vista condo development today. I’ve been working practically across the street from the new development and never even realized it. I thought they were building a mall or who knows what, I didn’t realize that’s *all* going to be condos. Just crazy. I went to the completed section and saw for sale signs in windows and lots of empty units. I can only imagine what traffic is going to be like over there when it’s filled up.
playa del rey is too noisy - too many LAX jumbo jets taking off over your head - horrible
Ben, I am surprised that you didn’t put up the latest OFHEO numbers for discussion. There was only one mentioning in the bits bucket by Mike Larson. OFHEO numbers show still appreciation nationally, contrary to the Case&Shiller index and the NAR median. I don’t know how much housing bulls refer to the positive OFHEO number (”look, the housing bust is only local”). I wonder if the slower response of the OFHEO statistics to changed market conditions will make them irrelevant in the future, especially if better (= faster) measures are around.
Everyone has probably seen the book on how bubbles are beneficial since although some go bankrupt the infrastructure left promotes future innovation in services. Sure a lot of fiber companies went bankrupt but they left behind a lot of what is now making bandwith so affordable.
My question is just what innovation might come from the overbuilding in housing? Best I can come up with is perhaps someone will open up a string of brothels across the country. I think the problem is that housing is not a productive asset like a railroad or a fiber trunk.
Anybody got ideas as to how the excessive housing will be re-utilized to bring increases in productivity as railroads and communications fibers have?
“Best I can come up with is perhaps someone will open up a string of brothels across the country.”
LOL. The best consensus here that I recall is that illegals and perhaps bankrupts will cohabitate, often in violation of unenforced local codes. Not a good time to be on the HOA board. My wife disagrees with em about the issue of brothels.
Topic: Will the conventional wisdom become “RE is a poor investment” in the MSM. See e.g. this article found in finance.yahoo.com:
http://biz.yahoo.com/fool/070518/117951154741.html?.v=1&.pf=real-estate