How Did They Not See This Coming?
Some housing bubble news from Wall Street and Washington. “Meritage Homes Corp. said on Friday it expects second-quarter revenue to be down about 37 percent from a year ago and to record more than $100 million in charges as it struggles in a weak U.S. housing market. The home builder said it has been particularly hard hit in the area of Fort Myers and Naples, along Florida’s Gulf coast.”
“‘Weak demand and high inventory levels have increased competition among home builders, pressuring margins,’ said Steven Hilton, CEO of the Scottsdale, Arizona-based company, in a statement.”
“Cancellations rose to about 37 percent of gross orders, up from 32 percent a year ago.”
“Meritage expects pretax charges of $75 million to $80 million for inventory impairments and to write off land options, plus another $28 million in pretax charges related to goodwill impairment for its Fort Myers and Naples operations.”
From CNN Money. “Management expects the homebuilding market in southwest Florida will continue to be severely depressed for the foreseeable future.”
“‘Southwest Florida has been experiencing some of the most difficult housing market conditions in the country. While our 2006 home closings there represented only approximately 2% of our Company-wide closings, our year-to-date 2007 home closings in Ft. Myers/Naples are down more than 70% from the level a year ago,’ said Mr. Hilton. ‘We have been unable to renegotiate acceptable terms for existing lot options, which led us to terminate all of our existing option contracts, and we have been unable to acquire new lots at prices that reflect today’s market values.’”
From CNBC. “Today Meritage Homes reported preliminary sales, closings and backlog for the second quarter, and honey, it ain’t pretty. Sales down 37%, closings down 28% and backlog down 39% from a year ago.”
“The trouble for Meritage in particular is their exposure to Florida, which Hilton admits will ‘continue to be depressed for the foreseeable future.’”
“It’s Florida, it’s Arizona, it’s Nevada, it’s California; frankly it’s wherever the homebuilders went nuts with their nuts and bolts.”
“Daryl in Tucson writes that a friend of his purchased a home from a builder there, and the builder lowered the price after the contract was signed. And Jeff writes from Central Valley, CA: ‘KB Homes has been building the same 8 houses for months now to make them look active and they also put ’sold’ signs in a few homes, problem is nobody ever moves in!’”
“I remember the clamor of demand, demand, demand. I reported on the new trend to the ‘ex-urbs’…that were supposedly the wave of the future. And I drove out to all the ‘adult active communities’ under construction, where all those baby boomers, desperate not to end up in the nursing home, would ‘age-in-place.’ I drank the ‘Kool-Aid;’ I’ll give you that.”
“But how could the builders–who’ve seen far more housing cycles in their company histories than I have in my reporting history– how did they not see this coming?”
From Reuters. “Heavy redemptions from investors concerned about their holdings of subprime mortgage securities claimed Braddock Financial Corp.’s Galena Street Fund as the latest hedge fund victim.”
“Braddock, a top-performing bond hedge fund manager, on Thursday said it will liquidate the $300 million fund after redemptions slashed its assets by a quarter since 2006, CEO Harvey Allon said.”
“Reports that losses in subprime mortgages were wreaking havoc with hedge funds, especially last month, ‘just made investors nervous about being invested in the subprime market at all,’ Allon said.”
“Galena investors will receive 20 percent of their balances by early next week, and then probably ‘more frequently than quarterly,’ he said.”
From Bloomberg. “UBS AG, buffeted by three quarters of declining earnings and losses at one of its hedge funds, replaced Peter Wuffli as CEO of the world’s biggest money manager.”
“‘Boards and CEOs normally don’t split in this way, it’s extraordinarily rare,’ said Richard Bove, an analyst who covers U.S. financial companies for Punk Ziegel & Co. ‘There was an issue with earnings.’”
“UBS said in May it was shutting the Dillon Read unit that had been championed by Wuffli after the hedge fund lost 150 million francs in the first quarter because of wrong-way bets on U.S. The losses from Dillon Read echoed the damage caused by Long-Term Capital Management LP, whose 1998 collapse cost UBS $700 million.”
The Associated Press. “Analysts, surprised by Wuffli’s sudden departure, voiced new concerns over expected losses from failed in-house hedge fund Dillon Read Capital Management, which is being shut down.”
“‘It remains to be seen whether all of the subprime hit was kitchen-sinked last quarter, or if there is more marked-to-market in second quarter,’ said Kinner Lakhani, London-based analyst with ABN Amro.”
The Financial Times. “Investment banks are demanding more capital to back loans to hedge funds investing in US subprime mortgage-linked debt, as they try to head off a repeat of the near-collapse of two Bear Stearns hedge funds.”
“The ‘haircut,’ or margin requirement, on financing provided to buy collateralised debt obligations (CDOs) backed by subprime mortgage bonds has been increasing sharply, in many cases doubling, according to hedge funds, bank executives and prime brokers.”
“One New York structured product specialist and hedge fund manager said margin requirements had rise by about 5-10 percentage points for single-A and AA-rated CDO securities investing in mortgage-backed securities.”
“Matt King, analyst at Citi, estimated in a note this week that margins for BBB-rated bonds from such CDOs went from 10-20 per cent to 50 per cent, with smaller increases for higher-rated bonds.”
“The world’s biggest bondholders have had their fill of leveraged buyouts, convinced that increasing mortgage delinquencies will drag down the U.S. economy and drive debt-laden companies into default.”
“‘There are some very scary analogies between high yield and the mortgage market,’ said Kevin Lorenz, a managing director who oversees $2.5 billion of high-yield assets at TIAA- CREF in New York. ‘You cannot do fundamental analysis and believe that those are creditworthy companies.’”
“The combination of the worst slump in home prices since the Great Depression and the slowest U.S. economic growth in four years during the first quarter is driving investors away from riskier debt.”
“‘Demand has spiraled out of control,’ said bond fund analyst Sukrita Sethi, who helps oversee $2 billion at an affiliate of Fidelity Investments. ‘We think the market is overpriced. There’s a little bit more scope for spreads to tighten, but a lot more scope for widening.’”
“Goldman Sachs has put two German property portfolios valued at up to €3bn ($4bn) up for sale in the latest sign of international investors exiting the market.”
“News of the two deals is likely to raise questions over whether other foreign investors in German property are heading for the door.”
“New Century Financial Corp., a collapsed subprime lender that is liquidating in bankruptcy, said on Thursday the U.S. Securities and Exchange Commission has elevated its investigation of the company to formal status. A formal probe gives the SEC subpoena power.”
“Irvine, California-based New Century was the largest independent U.S. provider of home loans to people with poor credit before filing for Chapter 11 protection on April 2 amid mounting customer defaults.”
“It shut down its lending business, is selling other major assets and has replaced most top executives.”
The LA Times. “The SEC began looking into New Century after Wall Street cut off the lender’s funding, several states revoked its licenses and it disclosed a federal criminal investigation of its accounting, which had failed to acknowledge a rising tide of loan defaults.”
“In April, New Century sought bankruptcy protection from creditors, chiefly the Wall Street firms that had provided the money that New Century lent to its mortgage customers. The Wall Street firms also purchased the company’s loans and pooled them to create bonds backed by mortgage payments.”
More hedge fund dominos falling? That’s odd, considering that subprime problems are ‘contained’. Repeat after Bernanke; all is well, all is well…
they saw it and sold their stock
we saw it and got short
me , I shorted and became impatient and made a few scheckles
I’ve been saying for about a year now that you’ll know the hedge fund / private equity party is over once they start selling shares to the general public. And look what happened. Insiders found this to be a very convenient way to cash out and dump the inevitable losses on the gullible bagholder investors.
“Goldman Sachs has put two German property portfolios valued at up to €3bn ($4bn) up for sale in the latest sign of international investors exiting the market.”
Wow, more and more, it’s like watching the same themes happen on both Wall Street and Main Street. Both are trying to unload real estate “holdings”. Ratings companies acting similar to shill appraisers. Everything for sale, but very few takers, unless at deep discounts.
For years, the argument for making the wealthy wealthier has been “trickle down” economics. It hasn’t worked that way, that’s for sure. And, talk about the markets defying gravity. Well, what I find interesting, is that Main Street seems to be defying gravity, too, by “trickling up” its problems to Wall Street. How’s that “trickling up” working out for ya, Boyz?
BTW, I know a couple of fellows at hedge funds. Miserable examples of humanity, too. Just as morally bankrupt as the Enron traders that were recorded on the phone laughing over the hikes in energy prices in Cali some years back. They tend to have a seething, sneering contempt for those who don’t have as much money as they do. I can guarantee you, the anger they harbor right now toward defaulting homeowners is probably nuclear.
As they like to say, never mistake brains for a bull market…. If they survive, then all the power to them, otherwise I see a painful journey down the halls of shame, as they where unable to forsee that their livelihood depended on lies told at every turn….
Oh, I’d bet most of them realized that they were lying for a living. They were just so full of themselves that they couldn’t concieve of a day when other would stop believing their lies.
“BTW, I know a couple of fellows at hedge funds. Miserable examples of humanity, too. Just as morally bankrupt as the Enron traders that were recorded on the phone laughing over the hikes in energy prices in Cali some years back.”
Yep, these people are human rubbish. I bet they had their flags flying on the 4th too. Patriotic to whom?
Themselves. Screw everyone else.
palmetto:
trickle down economics is a FACT.
Give the corporations and the rich and the connected people OCEANS of money, and the TEENIEST TINIEST bit of money will trickle through their tight sphincters to the masses.
I guess they need astronaut diapers, then.
For years the argument for high marginal tax brackets, was based on the notion that the government elites could spend such a windfall in an economically productive fashion and raise the level of general financial “equality”. However, since no one spends OTHER PEOPLES MONEY as thoughtfully as their own, this theory of superior government money management has never “worked out” in practice, has it?
The “rich”, people with “excess” wealth can only do four things with it; give it away (helping others) spend it on goods and services for themselves and their families (creating jobs), invest it (creating jobs by lowering the cost of capital) or save it (increasing the supply and lowering the price of borrowing for EVERYONE). Oh, they can buy gold (or land) and just pile it up but if they don’t do something with the land they’ll simply pay taxes on it and holding “stuff” like gold sometimes works out but not always (see “Hunt Brothers”).
Now what would “the rich” do if taxes become more confiscatory? In today’s world they’ll easily shift it out of any country that proposes a confiscatory scheme. They won’t spend, save, give or invest as much where their wealth is subject to seizure. And that result will benefit a society, how?
Many surveys have been taken of what people think should be the highest marginal tax rate. The consensus is always around 25% and it holds through every demographic group.
Finally, people assume “the rich” is some sort of block of stagnant, never changing, people. The reality is there is mobility of income up AND DOWN the scale, continously. Ask the Hunt Brothers how cornering the market in silver worked out back in the 80s (they were among the richest people in the world at the time). Ask Bill Clinton….when he moved into the White House his worth was probably less than than a few hundred thousand. His wealth is now estimated at $50 million. Ask the author of “Harry Potter” about mobility of income. J.B. Hunt, a sharecroppers son, died a billionaire; “He carried a wad of $100 bills in a gold money clip and regularly handed them to people who he thought needed the money. “I was hungry once. And once you’re hungry, you’re different,” he told Forbes magazine in 1992.”
Anyone want to bet on how long it will take for Brittany Spears to go bankrupt? Michael Jackson (if he isn’t already)? How many pro atheletes will retain even a portion of their twenty million dollar incomes in the next decade?
Making money is one thing, keeping it (much less growing it after tax and inflation), quite another. Check out the Forbes list of the top 400. I’ve followed it for 20 years and the changes in it, up and down, have often been dramatic. Very, very few “old money” families remain on the list today. Virtually all are fortunes EARNED in the last 20 years by entrepreneurs of one sort or another. How much of their success is rightfully yours or “the governments” to take?
Had you “capped” Michael Dell, Bill Gates or some other tech wizard’s wealth would the industry have grown as much, as fast? Maybe. Maybe not, no? Making Dell or Gates “expunge” the first 100 million of their “excess” wealth might have put a crimp on things, no?
There is a reason why envy isn’t a virtue. It, quite literally, isn’t healthy either for an individual or a society.
jag, I’ve said this before and I’ll repeat it: I have no beef with wealthy people, heck, I’d like to be one. I have nothing but utmost respect for those who have “built a better mousetrap” and contributed to society a product or service that is useful and enhances life. Those who have done so deserve to make a mint and they are better folks than I am. And incidentally, those are the folks who usually provide employement in their communities, etc.
So, your point is taken, “the wealthy” is too broad a target. Where I have a beef is with folks who do nothing but play games with other people’s money and hold their massive profits out of the system or impose their massive losses on the system. Hedge funds, for example, tend to be huge financial parasites. They offer very little in the way of employment, usually requiring a minimum of personnel. They don’t offer much of a product, except to a select few, and even then, those select few are finding out it is not much of a product.
Preach it, Palmetto! I couldn’t-a said it better myself.
Agreed. If capital were being invested in infrastructure (factories, roads) then we would all be cheering on the sidelines. When it’s leveraged up into funny money in order to facilitate hostile takeovers of good companies, which are then leveraged out the wazoo and sucked dry for cash, creating even bigger piles of funny money …
Well, this is how they earned the term ‘pig men’.
There is nothing right or wrong with wealthy folks. The problem is an ideology spawned in the greedy minds of the wealthy call “trickle down” economics. Ben Bernanke, under oath and in front of Congress stated “there is absolutely no evidence that tax cuts increase revenue”. Now Mr. Paulson conceded the same thing albeit reluctantly. This utter foolishness that manufacturing, deficits and good paying jobs don’t matter is all a part of that ideology.
“There is nothing right or wrong with wealthy folks.”
Ooooh, great weekend topic actually. exeter, I hope you don’t mind if I copy your post over there.
I won’t defend the compensation of hedge fund managers. I think its outrageous but it is an outgrowth of what is going around in many areas of the business world. Rowling has made a billion off some books (and films and toys etc). Could she have done that 20 years ago? Tiger is halfway to (I think deserved) billionaire status. If he was a Jack Nicklaus type would he have made as much? I doubt it but he’d still have made far, far more than just a few decades ago. Basketball, baseball and even hockey players rake in 5 million plus annually. Why? People (and advertisers) are willing to pay fortunes to see or associate themselves with these guys one way or another.
I think its just a function of the growth of the world wide market for SOME people. Today, yeah, a “star” mutual fund manager can leave and attract a billion OVER NIGHT for his hedge fund which, because of the ease of technology, can be set up and running in a month with a couple of dozen people.
Yeah, one guy can run $10 billion (leveraged or unleveraged) and net hundreds of MILLIONS because of the way things have changed. Is this “good” or “bad”? How are you going to stop some bright guy from doing this and stop some (apparently) bright, rich, people from funding them?
I don’t think, in a free society, you can or should. However, the profligate use of LEVERAGE adds a twist to this whole process and THAT, I believe, is worthy of regulation, limitation and deep scrutiny because threats do arise to the system that are unacceptible because of that factor.
The problem is that these leveraged conditions have developed rapidly, largely unpredictibly and no one seems to know what a “reasonable” solution might be. Limit the leverage? I don’t see how anyone can reasonably disagree. How much? No leverage at all? Under all or just some conditions? I don’t know the answers and, unfortunately, as in the past with things financial, we may have to get to an extreme (now?) to get attention and action if not just to clearly define the problem (much less deal with it productively).
Don’t get me wrong. Even as a political “conservative” I have little doubt that the excesses of these guys will not make them politically popular fellows to defend. Should a business like theirs get taxed at a higher rate? I see it as politically inevitable but, then again, they can do what they do anywhere in the world, no?
“Stars” in whatever endeavor will get their money in today’s largely global, largely “free” world. That is part of the deal with freedom.
Not being too savvy in the hedge fund realm let me just through some things out. As I understand it the funds invest in riskier investments and as a result the yields are higher. Now that’s all well and good because the investment capital is at risk. Now we add the leverage to the mix and like you said that is where things go awry. Now isn’t this similar to what was one of the issues that triggered the 1929 meltdown, margin plays? If the markets demand leverage what kind of mechanism can be used to direct that risk back to the risk takers or are the sources of the leveraged capital also incurring the risk for higher yields? Much like a margin call where the investor has to scramble to cover it isn’t this similar? Or is it the scale that makes it different? Is it so large that covering the loss may have wider impacts than on just the investors in the fund or those who provided the leverage?
I apologize if I missed the mark on this, just trying to understand.
“Ask Bill Clinton….when he moved into the White House his worth was probably less than than a few hundred thousand.”
Do you have any resources to back this up? This contradicts what I’ve read.
I don’t have any numbers, but it doesn’t strike me as impossible. The Arkansas guv’s salary was the lowest in the nation throughout the 80s/early 90s, and if I recall was something around $30K/yr although free housing was provided. I don’t think he had much in the way of outside income sources, ‘cept of course what the wife brought home from her job.
What have you read?
See:
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/22/AR2007022202189.html
Jag,
Thanks! You are spot on.
I agree with all you said Jag. I draw the line with this generational wealth that creates dynasties. I am all for abolishing the family trusts around the country. That money should be chopped up among heirs and taxed till it exist no more. I see a big differance between leaving your children ample money that they never have to work and hundreds of millions in family trust that create royalty here in America. In my eyes the Kenedie’s (and all other bloated rich families both dem and repub) and their ilk are exactly what the founding fathers were afraid of when they wanted no royatly here.
My take is if you don’t want the gov to take 950mill of your billion (saving a paltry 50mill for your kids) you should follow the lead of Gates and Buffett and give it away to causes you support. These Kennedy compounds piss me off as a hard working American that hasn’t had anything handed to me. K, if you made it big and want your kids to have the ability to slouch and not contribute fine, but these perpetual family trust that ensure continuing generations the ability to just leech off the system are crap.
Spend it today (propelling the economies), give it to chairity or let the gov waste it. I know it sounds commie, but thats the way I see it.
If you are in the top 1%, your comments make sense. If not, get real, rich people mis-allocate and squander financial and productive resources all the time. Govt provides services universally that the private sector won’t and needs money to do so. This is not envy, it is social necessity. Life isn’t just about iPods and 100 types of breakfast cereal.
‘…the argument for making the wealthy wealthier has been “trickle down” economics…’
Too bad the only thing that trickled down was excrement.
On the upside, when this is all said and done, a lot more people will understand the Federal Reserve, fractional reserve banking, the US monetary and fiscal systems, and the compatibility of these systems with liberty, individualism, and capitalism.
I am not making value judgements, simply attempting to point out the compatibility of these systems.
Probably not such a bad thing in the long run.
the compatibility of these systems with liberty, individualism, and capitalism.
Incompatibility with numbers one and two, anyway.
I would say all three. Socialism is a central agency that plans the production and distribution of goods. Capitialism is basically the opposite, where the production and distribution is done privately.
If you look at the Fed and the fiscal policy combined, we have two large agencies (FED and Congress) that attempt to manage the economy (how we got here is a great topic) through monetary and fiscal policy. The Congress created one part of the housing bubble with their fiscal policies, and the Fed the other with the very cheap money. That is why the definitions and current policies make us a socialist state more than a capitalist state.
Larry Kudlow can yell for hours every week that we are capitalist and it makes us great, but he needs to define the terms capitalism, us, and great. Creating money doesn’t make you great. Never has, and never will. Creating goods, and saving a portion of those goods for the formation of future factors of production (capital), does.
We don’t save (consume less than our income), and based on our trade deficits, don’t produce enough goods (other than notes from the Fed) to offset our consumption at home. We did build a lot of houses though. Unfortuantely, we can’t trade those for oil, or any other import. I suppose we can sell them off piece by piece, but then we’d be serfs/peons on the very terrain we call home.
Kerk:
the only problem is this:
The Fed is a PRIVATE bank.
Even without congress, it is possible and even likely that a Fed-like institution would have been created… it would look slightly different, but the end result would likely be the same- control of the economy by a monopolistic entity.
I agree that we live in a hybrid ecoonomy, a little to the capitalist side of socialism. That said, the Fed could exist without gov’t help. (even though they were formed using govt assistance, they could easily have been created through other means)
when the SHTF, people will clamor for MORE socialism, not less by the way. They will want someone to “protect” them from Enron and from Bear Stearns etc…
“when the SHTF, people will clamor for MORE socialism, not less by the way.”
Yep, exactly right. Just like the folks sitting in the wreckage after the Florida hurricanes, waiting for the water trucks to roll in.
“when the SHTF, people will clamor for MORE socialism, not less by the way. They will want someone to “protect” them from Enron and from Bear Stearns etc”
At that time, it’s when my money is in a freer country so that the irresponsible do not get it.
What the heck, Bill, unless you’ve found a way to pay no taxes, the irresponsible have their hands all over your money and mine, too.
And, much as we may like to, we can’t all be rugged individualists. As Bob Dylan said “You’ve got to serve somebody”. That, after all, is the true measure of a person’s worth, his ability to be of some service to others in some way, whether that be in his/her work, in a family, in the community, etc.
I’m not a sacrificial animal.
I agree to the comments above. If someone wants to produce something to compete with anything, it is generally good for that society by producing more goods at a lower price (ultimately).
If a bank wants to establish itself as reputable, they shouldn’t need the forceful backing of government laws. The consumer ultimately will determine the rules by either continuing to use or discontinue using.
Legal tender laws certainly facilitate trade to some extent. The portion often left out of the discussion is who benefits the most. That is the person who has the authority to create those notes. The subsequent, extremely powerful influence, that the institution acquires can be very dangerous to the original sovereign, whoever that happened to be.
“I’m not a sacrificial animal.”
Who said you were? Service is what the point of work is, though. You provide a service, brainpower, labor, skills, whatever and in return, are compensated for it.
I’m just not sure how valuable the service provided by the hedgies is. I’m sure those who invested money with them might have some thoughts on this.
Well Palmetto, if you put it that way, then yes, I am a servant. I think Dylan meant it in the derogatory sense, which is self-sacrifice. I would not be a servant without the compensation that i (emphasis on “i”) agree upon.
I hope and wish that it is true (that “when this is all said and done, a lot more people will understand the Federal Reserve, fractional reserve banking, the US monetary and fiscal systems, and the compatibility of these systems with liberty, individualism, and capitalism”). Unfortunately, I don’t think that most of the sheeple will learn anything about them. About the only lesson that I think they will learn is that real estate does not always go up. Other than that, I think they will just feel like victims.
I’m not sure if I’m being pessimistic, realistic, or both. I fear it is both.
The only lesson they will learn is that RE is a horrible investment that never makes you money and is nothing more than a den of thieves. This will be as prevalent as those that felt it was a sure thing on the way up, the pendulum shaw swing just as far south as it did to the north. Take heart folks, RE will be much cheaper to buy than rent…my guess is the long sideways bottom (3-5yrs) will be in place around 2012 after the next big pile of suicide loans resets in 11′.
Realistic.
Unlikely, considering people got hoodwinked during the depression and then again in the 1970s. People are stupid, don’t give them so much credit.
Roger that. Hopefully, the internet hasn’t become as regulated now as print had become during the depression (long time after the printing press). I don’t mean governmental regulation, but consolidation by those with power and money furthering their personal agenda. The internet may just provide the freedom of ideas at the time of the financial problems that can affect the result. We’ll see.
“On the upside, when this is all said and done, a lot more people will understand the Federal Reserve, fractional reserve banking, the US monetary and fiscal systems, and the compatibility of these systems with liberty, individualism, and capitalism. ”
God kerk93, I sure hope you’re right! I can’t get one sentence into these subject matters w/o people’s eyes glazing over. I’m hoping that it’s just the age group(s) I’m dealing with and that the youth will save us. (seriously)
“I can’t get one sentence into these subject matters w/o people’s eyes glazing over.”
Ditto, unfortunately.
“I’m hoping that it’s just the age group(s) I’m dealing with and that the youth will save us.”
I get the glazed look from all age groups — even the young. I suppose that results from fear in the old and optimism in the young.
“But how could the builders–who’ve seen far more housing cycles in their company histories than I have in my reporting history– how did they not see this coming?”
Most did see it coming. Just look at the insider sales of their stock from the summer of 2005, especially Bob Toll. But there are also many companies with upper level executives who have only been around for 10 years or less, so they’ve never seen a downturn. Even those who saw this coming just decided to get as much as they could while the getting was good (after all, it’s pretty hard to predict with certainty when a bubble will burst), and then deal with the downturn when it happens.
For whom the house Tolls…
As Buffet has pointed out, everyone wants to leave the market at the top. THe problem is that when everyone tries to leave at the same time, the exits aren’t big enough for everyone to get out.
Buffets got the boys at Berkshire/Hathaway plugging slices of CDO garbage into the ENIGMA machine AND finding slivers of value at pennies on the dollar…….money will be made, as hedge fund blow-ups garner WSJ/CNN/CNBC–Headlines.
Wouldnt suprise me a bit to see one of the BIG BOY Builders get gobbled up by a Blackstone in the coming months….as an injection of capital is needed to stave off impending BK.
Last year, or the year before, somebody posted something like the following:
Student: How do you make money in the market?
Teacher: Buy low and sell high.
Student: But everyone knows that.
Teacher: But what everyone tries to do is buy lowest and sell highest.
They saw it coming, but it is hard to carry out pump-and-dump operations and simultaneously announce that the ship is about to sink.
Some housing bubble news from Wall Street and Washington. “Meritage Homes Corp. said on Friday it expects second-quarter revenue to be down about 37 percent from a year ago and to record more than $100 million in charges as it struggles in a weak U.S. housing market. The home builder said it has been particularly hard hit in the area of Fort Myers and Naples, along Florida’s Gulf coast.”
“‘Weak demand and high inventory levels have increased competition among home builders, pressuring margins,’ said Steven Hilton, CEO of the Scottsdale, Arizona-based company, in a statement.”
“Cancellations rose to about 37 percent of gross orders, up from 32 percent a year ago.”
“Meritage expects pretax charges of $75 million to $80 million for inventory impairments and to write off land options, plus another $28 million in pretax charges related to goodwill impairment for its Fort Myers and Naples operations.”
———————–
So - despite this their stock is up over 2%, as is most other homebuilders’ stocks today.
It’s rarely goes straight down and it’s had one hell of a drop. Probably exhausted the current selling wave and thus is oversold on technicals. On practical side, I’d imagine there a quite a few short sellers out there and there are market gamers who will try to force a panic covering.
I ‘almost’ bought LEN for a trade early. Decided i could’t stomach it so bought PAL (North American Palladium) instead.
How Did They Not See This Coming?
Maybe they were as smart as this guy:
“I think it’s safe to say the economy isn’t going to weaken any further,” said Mark Zandi, an economist with Moody’s Economy.com”
http://www.signonsandiego.com/uniontrib/20070706/news_1b6economy.html
I have that friend who bought 5 houses in Cape Coral in 2005 for about $356,000 each and sold these same flip quick deals to everyone in her family and their church after taking a bunch of real estate seminars. Talked to her yesterday and the houses are now selling for $200,000 if they sell at all. I asked how things were going with her friends and family who also bought a bunch of these houses. Her mom bought 4. She said it is getting “uncomfortable” at gatherings and each house with a renter is still upside down $2000 a month. Then I asked her what she was going to do about her houses. She said she was going to borrow as much money as she can on credit to BUY MORE HOUSES in Cape Coral! Then she said her and her speculator friends are trying to by up these houses thinking they will go back up to $356,000 by next year. There is no saving people like this. I mentioned the year and half supply of houses already on the market and she said she didn’t know anything about that. I told her about this blog and she said she was not interested in any negative real estate news. And she tells people that she is a full time “real estate investor” but I know she is now in debt almost 1.7 million! I’m stocking up on popcorn
Many thanks to Alan Greenspan and the “Do Nothing” Fed.
Note to Mr. Bernanke (of the “Do Nothing” Fed):
“‘Do the Volcker’ and drain the liquidity cesspool before we all drown!”
“drain the liquidity cesspool before we all drown!”
“When you’re up to your ass in alligators, it is difficult to remember that your objective was to drain the swamp.”
I forget who said that.
Nice! I’ll have to remember that one.
She should cut out the middleman and just burn a pile of (borrowed) money on her front lawn.
moral hazard…..burning anything near one of those investments may induce risk related behavior that, well… you know the rest of the story.
She sold houses to her friends, family, and members of her church. If she wants to not be completely ostracized, she has to make sure she suffers the most, and spectacularly. She probably does not consciously admit this, but this is what she is doing.
I live in Salt Lake City. While I am not Mormon, it is clear that it is a very close knit and trusting community (of other Mormons). Utah also has one of the highest rates of confidence fraud and mortgage fraud in the country.
And I seem to recall that Utah is a major headquarters for natural products companies that rely on the MLM sales model. What a perfect place for them to be. Just hook those trusting Mormons, then they’re off to the races…
Jim Jones
Who was actually from Indiana, along with Charles Manson. There’s definitely something in the water here . . .
The biggest danger to the wealth of the elderly comes from inside the church - pooled investments and can’t-miss stupidity like the above, absurdly overpriced assisted living arrangements (all of which tout their Christian values), and so on. I am sure there is a correlation between church attendance and losing your estate/retirement money.
I posted the other day about the correlation between living in a retirement community and losing your retirement money. Happens all the time in Florida. Peer pressure among the group. It’s not just churches, but any sort of group where people put pressure on each other.
Absolutely unbelieveable.
The good news for her is that she probably won’t be able to borrow much money for her “plan”. She’ll whine and moan about how the banks aren’t lending her any money for several months, and then realize that they did her a favor.
I really don’t think that it makes much difference as far as she’s concerned. There’s really not much difference between being down $1M and being down $1.7M. Like Casey, she’ll never pay her creditors the money she owes them. Even the government won’t be able to collect for all those 1099s. You can’t get blood from stucco.
Actually her mother signed for some of the houses in Cape Coral. Dad died in 2001 and left a mini real estate empire in the Bay Area after buying up houses one by one working as an electrician. Most of the properties went his many children (2 familes) when he died but the mom still owns a few apartment buildings and houses. So her mom will have to cover some of the losses too I think. I hope these deals do not bankrupt her whole family by the time all is said and done
Short sleeves to short sleeves in two generations?
They mustn’t have been paying attention. I’m sure he bought houses when he could fix them up, rent them out, and have positive cash flow.
“said she was not interested in any negative real estate news. And she tells people that she is a full time “real estate investor””
All I can do is smile and shake my head…
Reminds me of the “full time day traders” I knew that had quit their jobs in 1999 to pursue day trading full time. They had little to no understanding of the fundamentals of business (things like “profit” and “loss”), yet they were buying and selling shares of businesses. Oh well.
OK, you have to PROMISE US that you will update this story at every turn! What a friggin dolt!
I think I mentioned that my friends down there finally off loaded one of their properties that they bought a few years back and had to bring over 90K to the close. This gal is absolute TOAST and if I were her I’d start seriously considering a second identity. Perhaps after a few years on the lamb she can find herself a family that will allow her to eat along side them without spitting on her or giving her the ole “golden shower while she naps” routine?
How would you like to be responsible for the brainstorm that bankrupted your entire network of family and friends? Holy smokes, this is great stuff!
don’t waste time directing her to housing blog… too late
direct instead to travelocity website…. time to move
My friend believes in “The Secret” way of getting things - it was a movie, author went on Oprah and the book is on the NYT bestseller list. This is all about magnetizing what you want by believing it will come (action on your part not stressed in this belief system).
The reason my friend called me was because her mom’s best friend died last night and she is going to have to spend the next week with all her of friends, family and church - now in financial peril because of her. She is almost out of cash and needs 12k a month to cover mortages. She has 2 other houses in Vegas upside down and a 200k 3/4 acre of jungle 7miles from beach with no roads in Costa Rica. She does not work - she’s a real estate investor FULL TIME.
Last month she took a 12k trip to Peru and spent 8k on hypnotherapy where she realized real estate was not her “thing” and that she wants to be an artist! But she said she is not worried because she has had TWO different psychics tell her in recent months that she is coming into a lot of money….yeah 1.7 million in debt!
Godspeed you idiot!
“3/4 acre of jungle 7miles from beach with no roads in Costa Rica”
this known has stuck in the deep doo-doo jungle without macheté….
“My friend believes in “The Secret” way of getting things - it was a movie, author went on Oprah and the book is on the NYT bestseller list. This is all about magnetizing what you want by believing it will come (action on your part not stressed in this belief system).”
See, here’s the problem with “The Secret” and other pop psych stuff: It’s like putting pretty wallpaper over a moldy wall, without cleaning up the mold first. The mold just spreads under the wallpaper. It’s like telling someone “Don’t think of the color green” and then all they can do is think of the color green.
So someone reads “The Secret” or goes to one of these seminars and says “OK, I’ll just think happy thoughts”. Well, they are broke in fact, but try to tell themselves they are wealthy. Under the facade sits the empty bank account. So, while they are affirming “I am wealthy, I am wealthy” the bank account is saying “You are broke, you are broke, see, it says so right here”. Person goes “That’s negative. I am wealthy, I am wealthy”. They get a collection call “you’re a deadbeat”. Person goes “That’s negative. I am wealthy, I am wealthy”.
“So someone reads “The Secret” or goes to one of these seminars and says “OK, I’ll just think happy thoughts”.”
Can do the same thing with porno and it’s cheaper.
Cool! This is the primacy of consciousness at its finest (anyone read Ayn Rand here?)! Ha! Maybe I could use that to bend the road my way so I could save miles off of my commute. I will also “will” that gorgeous young hussy on the second floor where I work to “treat me right.”
“anyone read Ayn Rand here”
Yes, I did: Atlas Shrugged, The Fountainhead and Anthem.
Anthem was my fave. Describes England today, if I’m not mistaken. We’re getting awfully close to that scenario here in the US, too.
As I recall, Greenspan was a fan of Ayn Rand. Wha hoppen?
Please visit this website : God wants you to be Rich!!!!!
http://www.revike.org/
“So, while they are affirming “I am wealthy, I am wealthy” the bank account is saying “You are broke, you are broke, see, it says so right here”.”
Thanks, Palmetto — that gave me a really good laugh, just when I needed one.
As I recall, Greenspan was a fan of Ayn Rand. Wha hoppen?
Palmetto, I’ve been wondering why myself. One hint is through some of the Randian scholars I’ve been reading. One of them was saying it is immoral to break a law, no matter how unjust it is. Contrast that to the first paragraph of the Declaration of Independence. Funny that Ayn Rand admired the founding fathers of the USA.
The point is, it appears the “end justifies the means” to the Ayn Rand inner circle. I hold the first paragraph of the D of I as my justification when I realize I did not follow a law.
BTW: a couple of decades ago I read that there are 20,000 laws in the books in the USA. There is no way you can function as an American if you follow all the laws. You break several laws a day easily. The most obvious? Traffic laws.
Anyhow I think Greenspan is still a gold bug and stands by his words in “Capitalism: The Unknown Ideal.” However his staunch status quo conservatism makes him fear the necessary changes he advocated. I think A.G. thinks we are not ready for a gold standard. I think we need a gold standard NOW.
This is too rich - it should be its own headline topic! Swindled in Vegas, Costa Rica, and Peru, too! It’s a like a “How to Commit the 10 Stupidest Real Estate Blunders” - all at once! Hey, if you need 12K a month to cover mortgages, what’s a 12K trip to Peru!
Yes, definitely, we gotta hear what happens post-funeral. Or, I sense it now, a sudden illness is going to prevent her from attending?
This kind of thing makes me say:
Bring on the depression.
Maybe her church can pray for greater fools to take those five houses out of their hands. Sell them to heathens who don’t know better. I’m a heathen who knows better though.
…Perhaps after a few years on the lamb …
Poor lamb.
Yeah, LOL, I was gonna tease Auger about that one, too — I think it’s illegal everywhere but Texas.
People like that see the storm brewing in the ocean ,go on a boat, and say, “let’s go out a little further..” You can’t help them even as they go into the storm…I have a friend like that who has over 3 million “invested” in real estate and keeps equity lining it out to cover..problem is there isn’t anything left to equity out..better get ready to throw her a life preserver….
There’s not a life preserver made that will provide enough flotation for the multiple houses tied around her neck.
but I know she is now in debt almost 1.7 million! I’m stocking up on popcorn
1.7 million… That’s Incredible. How long do you think she can keep paying her “nugget?” It sounds like every single investor wants to be in denial until the day the Sheriff come to evict.
And rents everywhere but a few locations are dropping… My complex has dropped to 90% occupied. The local papers brag how we’ve never had more apartments under construction in “greater LA.” Yet what we lack is low income housing… (Not what they’re intending to build…)
Got popcorn?
Neil
Neil, when we do truely achieve the goldilocks economy where everything is peaches and cream (after the collapse) you will be a hollow shell wishing for more bread and circus!!!
Your post are great, keep it up till we reach utopia! Go easy on the salt.
Rich
Funny how so many of these FB stories buying multiple houses seem to have a religious undertone to ‘em.
In a few years the pendulum may swing back to stories of multi level marketing of weight loss products and their religious undertones. Have not heard one of those lately.
Got 10% down?
“she said she was not interested in any negative real estate news”
OH, GAWD, NOOOO! NOT one of those “think happy thoughts” folks, puhleeze! Look, I believe in focusing on positive things when possible, but if someone has a leg blown off, sitting in the blood and thinking happy thoughts doesn’t make it grow back.
Sheesh, I’m sure pop psychology has had a hand in some of this.
I think you’re right Palmetto. Look at how the REIC industry relies on motivational speakers at its conventions. And a lot of these motivational speakers are nothing more than purveyors of…
…pop psychology.
The reason these tightly knit religious organizations can be so susceptible to these peddlers of confidence schemes is because of the lack of “outside people” with a different perspective to serve as a check and balance on these scamsters/playahs. Thus, negative feedback never plays out (because these people would be “heretics”); only positive feedback (because these people are “believers”). In a cult-like setting all you have to do is project the dogma, vocabulary, voice inflection/speaking/shouting patterns of the group and you can sell anything.
So it makes no difference if this woman is a status seeker within the confines of the pop psychology flavor that sells books at any given time, a mentally balanced but genuinely dumb assed person, a high IQ psychotic with illusions of grandeur with some undiagnosed bi-polar and schizophrenia to boot, or whatever. The results are the same: ruined lives for some in the cult.
Got 10% down?
I hope Implode-O Meter starts a new counter for failed hedge funds. Someone needs to keep track of that mess.
Saw this the other day for the first time. As of today, the number stands at 11.
“Hedge fund Failometer”:
http://wasatchecon.blogspot.com/2007/06/hedge-fund-failometer.html
Hasn’t been updated, though … and the avalanche is getting ready to speak.
“The avalanche has spoken. It is too late for the pebbles to vote.” - J. Michael Straczynski
Emporer : How will this end?
Kosh: IN FIRE.
OMG,
One of my favorite sci-fi tv shows.
I think it’s time to buy into the Hussman funds … he’s been bearish for a while, and I think I smell cratering.
Trouble is, Charles Schwab wants a f#@k!ng $50 fee for buying into the fund (minimum of $2500, which is not what it says on the Hussman website). I don’t recall a fee for any other funds through Schwab. This is bulls***.
Anybody know a good broker?
Why don’t you buy direct from the fund? Cut out the middleman.
I think I will, it’s just a PITA. I either have to pay a bank wire fee or wait to get a check cut, as my only checking account right now is Electric Orange.
*sigh* I’m not paying $100 ($50 to buy or sell) for convenience.
I’m telling ya . . . this rush to get PE and hedge fund IPOs out the door is reminiscent of the IPOs of things like Corvis and Avici in 1999 and 2000, and you know what happened after that.
And this morning I was thinking similarly about some of the M&A moves lately.
Maybe credit is actually drying up so fast they can smell it.
http://money.cnn.com/2007/07/06/news/companies/goldman/index.htm?cnn=yes
“The FBI is investigating letters sent to newspapers nationwide that say “Goldman Sachs. Hundreds will die. We are inside. You cannot stop us,” the bureau said Friday.”
Frankly, I’d take those warnings seriously if I were them. It reminds me of the priest or whoever who got the cryptic warning about the recent British terror attacks “Those who cure you will kill you”.
Looks like folks in Austin are still drinking the Kool-Aide…
http://austin.bizjournals.com/austin/highlights/2007/07/09/story1.html
Condo project slated for East Austin
Austin Business Journal - July 9, 2007 by A.J. MistrettaABJ Staff
A zoning change is all that stands in the way of a $25 million East Austin condo project.
Local techie turned real estate developer Jason Reese says he and a group of investment partners already own 3.6 acres at 12th and Hargrave streets and are trying to secure another 2 acres. Plans for the roughly 233,000-square-foot Hargrave Lofts project include at least 150 condo units and about 33,000 square feet of retail and office space.
A techie turned real estate developer? Uh oh. I think that Jason is going to learn a very painful lesson. I’ll summarize it for you:
Success in one field doesn’t easily carry over into another.
That’s not true. I can think of one shining example: Just look at our president who was a very successful governor, speaker, businessman, oil speculator, military man, academic and ladies man.
Hmmm….all the CEO’s of the home builders sold off all their stock last year and that screamed of the storm to come….but nooo they did it because they like to lose money and they thought the housing market would continue to climb….right. Friggen Kool Aiders cant even follow the money to get to the truth, and still think they can flip houses and it wont decline. Btw….new season of property ladder is coming up….should be interesting!
I also saw this, people we are at the crest of the roller coaster in OC, no where to go but down.
“O.C. home sales down 29.5%, prices flat”
POW!
My fiancee wasn’t getting what was goin on with the hedge funds, so I came up with this example.
Her sis was a bankruptcy on her credit report, so can’t get a loan for under 9%. I can get a loan at 6%. So, lets say I take $25K as a 10% down on her $250K house and borrow $225K from the bank at 6%. I then resell the loan to her sister for $250K at 8%. I’m paying 225K x . 06 = $13500 a year interest to the bank. I’m collecting 250K x . 08 from here sis = $20,000. I’m making $6500 a year interest on my $25K = 26%. SWEET.
But it is all based on being able to sell the sis’s house for $250K should she stop making payments to me. OOOPSSSSS… Can’t sell her house for $200K. Now I’ve lost my full $25K, and the bank is going to take another $25K loss. EVERYONE loses.
My daugher asked why they were lending money to people that can’t afford to pay it back. That is the ONLY way it could possible work!!! I can’t make money borrowing for 6%, and then lending for 6.25%. I need to find someone who has no choice but to pay 2% more than I can borrow the money for.
excellent example.
Ditto.
I’m going to borrow it. Maybe some sheeple will listen? Naaa
Got popcorn?
Neil
I like the fact that the kid understood the underlying rot. Classic.
“A banker is a man who will lend you an umbrella when the sun is shining and ask for it back when it starts to rain”. Probably not an exact quote but pretty close. I think it is from Mark Twain. I always liked it.
My daugher asked why they were lending money to people that can’t afford to pay it back.
Credit card companies have been doing that for years.
“Credit card companies have been doing that for years.”
its the steady stream of income that they’re interested in…
“The ‘haircut,’ or margin requirement, on financing provided to buy collateralised debt obligations (CDOs) backed by subprime mortgage bonds has been increasing sharply, in many cases doubling, according to hedge funds, bank executives and prime brokers.”
This is going to be a massive liquidity drain. In normal market conditions when the haircut is raised, it is generally easier to liquidate positions. With Bear showing lack of liquidity in CDO, the only option is to raise capital. Not a very easy thing in a falling market. This is, for the financial gamers, the same as the raise in requirements for subprime mortgages - prove you can pay me back. If a “true” hedge fund had margin requirements (haircut) of 10% and the haircut is raised to 15% the fund has to come up with a lot of moneys. As other funds fail the haircut will continue to be raised. A potential for massive margin calls.
Hey!
All you hedgie and banker Pig Men: “How’s your model looking today!”
Personally, Ican’t wait for these guys to start jumping out of thier office buildings.
I do not wish that…
But when the Chinese stock market really tanks, we’ll see it.
What I want is the shot of the young broker, foot on his Massarati, begging someone to buy it a la that famous 1930’s photo. Oh wait, that would be leveraged too…
Got popcorn?
Neil
LOL
Kinda makes a $400 haircut seem reasonable…
“Some of the worst mistakes of my life have been haircuts.”
Jim Morrison
“She said she was going to borrow as much money as she can on credit to BUY MORE HOUSES in Cape Coral!”
Excellent idea! Lose a little on each one and make it up on volume.
If you owe the bank $100k, that’s your problem. If you owe the bank $100M, that’s their problem. She might be onto something…
Got popcorn?
Neil
Like Saturday Night Live’s National Change Bank.
“We’re realistic. If you come in with $100, we’re not going to give you 2,000 nickels, unless that meets you’re specific change needs. You know, alot of people ask us how we make money. Simple. Volume.”
LOL. Classic!
http://youtube.com/watch?v=m8nU-q5YPRQ
One of my favorite SNL clips. Truly a classic.
lol http://www.msnbc.msn.com/ (while it lasts)
Strong jobs report. Look at the sign in the window for the help wanted. Dunkin donuts WITH EXPERIENCE!! Is that supposed to be a joke MSNBC?
Wow! Dunkin Donuts?
The economy is just booming!
MSNBC = just another Govt. propaganda agency.
Bernake needs an excuse, however fabricated, to raise those rates.
Wait….so you guys are saying I wasted my money on that Donut Engineer program at ITT?
In el lay, the Cambodians have a stranglehold on the independant donut biz…
Dang! So not even the Realtors (TM) and loan pitchmen will have jobs they are qualified for in the near future? Is anybody doing $2,000 half day training seminars for dunkin’ donuts?
They did see it coming. A better question is: Why do we consistently allow people to get away with not caring?
Let’s rewind the tape: We wrapped up the 90’s boom with the dot com bust, followed shortly thereafter by the Enron scandal. When the rocks were overturned after that nightmare we found a shocking disregard for regulatory procedure, management that was fully aware and complicit in concealing losses, hilarious conflicts of interest (like analysts recommending securities that their own banks underwrote), and a “get rich quick, and screw the little guy” mentality that was shared almost universally by management.
So we swore to never make that mistake again.
LOL.
What we have here is a case of “same story, different bubble”. All those dollars flooded into real estate. And the mentality stayed exactly the same. “Why care when the getting is good”?
And now we’re overturning the ‘rocks’ of the housing market and we can see all the rot and wrongdoing. Meanwhile, on the other side of the market, the hedge funds are booming. Private equity is the only industry that people want to work in. The new “secret sauce” is called “leverage” and its shortsighted strategy is: “why bet 100% of your money when you can bet 10000%”? Seems to be working great so far… why worry?
Will there be a massive crash? LOL. Duh.
Will there be finger pointing and promises to “never make that mistake again”? Uh.. yeah.
Will we do it again?
Let’s just say “here comes alternative energy”…
– Peace
“here comes alternative energy”
Exactly what I was thinking would be the next bubble!
Scams have gone on since some peddler sold magic elixir off the back of his cart.
“Og, I’ll trade you a deer that I’ve left on the other side of that rock for the rabbit in your hand. I just don’t feel like lugging it back to the cave.”
This came out yesterday, and I’ve been pressed for time, so I don’t know if it’s already been mentioned. More credit lines are being stripped from lenders. H&R Block lost a $1.5 bn line, which leaves Option One in peril.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aN78ple3_EI8&refer=home
Not good for the blog. Whose ads will google place here when RE firms and mortgage companies go out of business?
Repo firms and bankruptcy lawyers.
Why is Quicken Laons pimping their negative-am loans SOOOOO hard? They keep running ads for secure advange loan that promises $150K mortgage for $450 a month… about half the cost of a traditional mortgage.
Are they in deep crud and need to show transaction fees to cover their mass losses??? Why would they be SOOOOO desperate to get in line to take billion in losses?
I just saw Quicken Loan ads on TV the other night. I wondered how they could still advertise that with the tightening of sub prime loans.
churn baby churn….
you gotta extend, and extend and extend…
According to Henry Paulson, I thought Housing was at the bottom? Of course, 6 mos ago he said the same thing, 3 mos before that he called the bottom. How much longer until the Mainstream Media calls him on it? Does anyone have the balls to do it to his face?
Since most things are connected on one way or another, isn’t it possible that when the housing tanks further the rest of the societal construct will also deteriorate as well. Like infrastructure and our just in time inventory system might also be affected or not work at all. These changes would necessarily indicate that things will change big time. Waiting for the prices to fall and assuming that nothing else will change seems to be focusing on one small piece of this puzzle and not on the overall decline that might occur when the finances get really strained. So my point is this, things aren’t going to be the same in any sector of our society in two to three years will they?
When the economy was tanking and housing was booming the economists and analysts said housing was the only thing that was keeping the economy afloat. So when housing tanks it has to bring the economy down with it. You can’t have it both ways.
Bet your ass it will. People aren’t nearly as self-sufficient as they were in the 30’s. Think Katrina writ national.
“Peak Oil” (and natural gas, for that matter) will also pose huge challenges, too.
The world’s a changin’.
“But how could the builders–who’ve seen far more housing cycles in their company histories than I have in my reporting history– how did they not see this coming?”
Simple Answer: GREEDY SENIOR MANAGEMENT!
They did see this coming. They just wanted to get away with it as much as possible. They make $1, lose $.50…still worth it to them.
They all knew what was happening. Oh, sure - many of them won’t get out in time, and many of the lower end suckers and managers may have bought into the lies, but rest assured that the ones who have been running this game from the beginning knew EXACTLY how this was going to play out. The time-line may have been off a bit, and it looks like some of the big-wigs may even be caught up in the fallout, but this was all done with forethought and malice.
Why? Many possible reasons woven together into a fabric of lies:
- To destroy the middle class. This is a key part of any strategy dreamed up by the ultra-rich and powerful. They hate the middle class with a passion since they are not poor enough to be manipulated all the time and used like slaves or human cattle. But at the same time, they are not part of the “game” that the rich play - they are an unpredictable element, and thus pose a danger to those in power. So, they must be destroyed. Destroy their savings with the War on Savers. Teach them to consume beyond their means and that “debt is wealth.” Then, nail them with new bankruptcy laws once they buy into the wonders of debt. Make housing unaffordable for them - maybe if they don’t procreate, there won’t be a middle class in the future. Give them loans they cannot possibly pay off. Outsource their jobs or give them away to illegals. Tell lie after lie that “all is well” “subprime is contained” “inflation is not a problem” and so on until they believe it. Take everything from them until America, like much of the rest of the world - particuarly nations where the ultra-rich and powerful run amok - has no middle class. Just wage slaves and their masters.
- To destroy America. Not that the soulless monsters that run this game hate this nation in particular, but they hate any place where laws are enforced and with a large middle class. By messing up the system so badly with every form of financial disaster, they can make the laws meaningless and impossible to enforce. Toss in the illegal alien absurdities and you’ll rapidly disrupt the rule of law across the land. What then? The rule of man, of course, where the whims of the ultra rich and powerful are law. Just like the kings of old, or the landed nobility. The rest of us will be wage slaves - modern serfs, of course.
- To get rich and make somebody else miserable. A key point to remember about the empty, inhuman shells that are running the game is that they not only want to be incredibly rich and powerful, but they want everyone else to be poor and miserable. If they get paid some insanely high salary per year, but think that ruining your livelihood would make them more money, they’ll fire you in a heartbeat without a second thought even if they would never notice the extra money they’d save by ruining you. Heck, some of them would probably sell their employees organs if they could get away with it. Being on top of the world is not enough for them - they have to have their iron heel on the throat of everyone else.
Soulless monsters one and all…
got fired today, eh?
Good rip, Joey!
Oh the wealthy people are murderers, rapists, theives! LOL.
i know the feelin’ .. ya load 16 tons, and what do you get?