Bits Bucket And Craigslist Finds For July 10, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Building permits hit 8-year low
One big “if” hangs over metro Milwaukee’s new-home market, pushing June’s production numbers to an eight-year low.
People are ready, willing and able to buy, with one contingency - the sale of their existing home. So everything waits until that sale,” Matt Moroney, executive director of Metropolitan Builders Association
http://www.jsonline.com/story/index.aspx?id=630074
County properties worth $1T
The assessed value of properties in Los Angeles County has topped $1 trillion - the first county in the nation to reach the 13-figure milestone that paves the way for better services and fatter reserves.
Despite a decline in real-estate prices elsewhere in the state, L.A. County’s home prices - which have doubled since 2000 - continue rising and beefing up tax rolls.
The city of Los Angeles saw its property values jump 10 percent to $384 billion, while Long Beach experienced a 9 percent increase to $42 billion.
http://www.presstelegram.com/news/ci_6336931
To bad Prop 13 prevents homeowners from being assessed at the current value of the home meaning the City, County, and State see little additional tax revenue while experiencing a greater demand on resources due to rising population.
It’s how you get places like Santa Clara County, the heart of Silicon Valley, cutting city services despite rising home values.
oh. my. god.
over half an hour since this post and there aren’t 100 responses supporting Prop 13?
everyone must be on vacation.
b_d_b I’m with you. rapid deterioration of quality of life in California in last 3 decades practically directly attributable to Prop 13 passed in 1978.
Proposition H
over half an hour since this post and there aren’t 100 responses supporting Prop 13?
I am just happy that for nearly 30 years Prop 13 has made your life miserable.
Prop 13 is problematic indeed, but the main reason for the budget crunch in Santa Clara County at this time is the State of California sucking up all of the money it can including much that used to go to counties while at the same time pushing responsibility for all kinds of enforcement back to the county level. This is what happens when the state budget is balanced by bleeding localities dry.
In theory I can wait a few years, then buy a house for 40% off peak in CA then wait 10 more years and THEN maybe I can brag about my ‘low tax basis’ and go around bragging how “I could never afford my own house if I had to buy it today”. Im pretty sick of that one. Damn u boomers!
The party’s over in Arizona, tax revenues way down
“The budget report notes that individual income-tax collections this May fell 27 percent from May 2006, a drop of $114 million from what was forecast. Money from the corporate income tax dropped 10 percent. And sales-tax collections are at their lowest point in four years, falling $35 million below the predictions on which the current budget is based.”
http://www.azcentral.com/arizonarepublic/local/articles/0710budget0710.html
Good find…this is the TRUE state of the economy. I am amazed that the fools look to be buying HD with what they had to say this morning…but hey…they are buying back stock. Screwing shareholders to keep the stock price up. Pathetic…
Oh my who could have known that HD and Sears would have falling profits because of the housing bubble burst.
Don’t worry subprime is contained.
Buying back stock has always worked in the past in running up the price, top management with options sell, stock falls and shareholders none the wiser. Since when are shareholders “smarter” than home buyers? All fall for fast profits and the fools keep buying.
Hey, all you guys must be missing DL by now……….if he were still craping on about RE always goes up………just imagine the fun we all could be having right now.
Fun Yuns is just as much a hoot for RE.
Fundies? The incredible, edible underwear?
FunYun…. what a hoot.
2 words for ya … Lawrence Yun
Lawrence Yun ?………in Aussie speak that translates to “Hu flung dung”…….
He’s the new NAR spokesweasel.
Looks like Goldman Sachs got some inside running on Home Depot. They downgrade yesterday; HD lowers 2007 estimates today.
I have a relative who manages one of the HD’s, they are happy with results in his store, but I do see that side of my family is pulling their their horns financially.
The HD’s around here are not as busy from my looking but the Menards and Mills Fleet Farms are doing good.
Maybe HD’s playing footsie with LaRaza (the Mexican nazi party) and the immigration/amnesty thing is effecting it in some places around country?
When Bloomberg Radio some weeks ago was popping off about that the illegals would be buying in living in all that excess RE sitting there empty, I knew corporate America was smokin’ rope.
I’ll give you the Lowe down. Home Depots first mover advantage has disappeared.
Category killers can only rule the killing fields for so long. Ask Toys-R-Us.
Lowes in northern Ca seems to be doing ok while HD is getting hammered which backs up your observation.
Lately HD has been putting crap on the shelves but Lowes seems to stock a more forward selection so that could well be part of the shift.
Lowes is a little more upscale looking to get ideas from, plus they’ll beat competitors prices, and give you an extra 10% off if they’re not the lowest. May be why HD is slowing down.
Home Despot went in the tank when they hired a bean-counter CEO from GE who brought in a cadre of ex-military officers who gutted staffing levels and shafted employees to save pennies. Many employees left in disgust as HD’s reputation for service dropped to KMart levels and the customers soon followed them out the door. Stock languished for years, CEO then parachuted out with $200+ million severance. Classic corporate America at its most short-sighted and ignorant.
I’ve heard they are trying to undo some of their past mistakes now, but they have an uphill battle in a difficult retail environment.
what ticks me off with home depot all the time is that at least half of the items i came over to look for is out of stock. go to another one and i get the same problem but with different items. to complete, i usually have to go to at least a couple. lowe’s is so much better even if prices are generally a bit higher.
There has been a distinct change in my local HD. I see more employees on the floors and lots of signs directing you on how to request help. I’m not saying they are turning around, though.
We went to a Home Depot the other day and it was very quiet. We saw three empoyees standing around. One finally helped us. Three blocks away, Lowes is building a new store. They will both be hurting substantially for years, as the housing construction in the area has tanked.
This is exactly what happened in Loveland, CO. There was already a low traffic Home Depot, and lo and behold a Lowed popped out of the ground just a mile or so down the road. Both are ghost towns, even on Saturday afternoons.
Same in Santa Clara, CA - hardly any customers…and HD out of stock of several items.
What a difference a day makes! From yesterday’s bits bucket:
——————————————————————————-
Home Depot, Lowe’s Cos’ estimates trimmed by Goldman
By Andria Cheng
Last Update: 8:56 AM ET Jul 9, 2007
NEW YORK (MarketWatch) — Goldman, Sachs & Co. on Monday trimmed estimates on both Home Depot Inc. [s:HD] and Lowe’s Cos. [s:LOW], the two largest U.S. home improvement retailers, as the subprime mortgate fallout pressures the housing market. It upgraded Home Depot to “buy,” citing factors including changes in management and business mix.
http://www.marketwatch.com/news/story/home-depot-lowes-cos-estimates/story.aspx?guid=%7B56F224D4%2DCAC8%2D4742%2D9083%2D00B752C6062F%7D
Of course they did they had to get out of the stock before the news hit.
went up today. why complain.
Don’t think it takes much to put two and two together.
If your brand new low end home is now worth less than the mortgage, you don’t throw good money after bad to fix it up.
“Honey, we just lost 10% of our mortgage equity in 9 months, lets build a gazebo deck with a jacuzzi!!!!!!”
Dollar a little stressed?
http://finance.yahoo.com/charts#chart4:symbol=usdeur=x;range=1d;indicator=volume;charttype=line;crosshair=on;logscale=on;source=undefined
Sure looks like the $US wants to sell off. Is there anything the PPT can do to stop its fall?
Yes, announce some terror alert somewhere…in Europe!
Sad isn’t it? Talk about having the general public by the short-hairs with this terrorism panic.
here is the dollar index, approaching the deadly 80 level again:
http://tinyurl.com/24hp46
Break 80 and all bets are off.
Well, if Wall Street currency cargo cultists are superstitious about the dollar crossing a level of 80, then I guess the dollar’s value will be contained at a level above 80.
That’s the Japanese Yen index ($XJY).
Australian dollar up a couple of percent against the Euro in the past 30 days, much more if you look back 6-12 months.
I’m not advocating anything in particular, I don’t know how long I can profit from the AUD joy ride.
comments from the NZ National Bank, situation a bit similar to Oz but probably even more risky:
http://www.nationalbank.co.nz/economics/forecasts/summary.htm
they expect a significant drop of the Kiwi dollar within the next few months. Of course, some of their earlier predictions were way off so who knows … I guess the BOJ hols the key to what will happen down under.
There was quite a big move upwards by the Chinese Yuan in today’s Asian trading day (= overnight US time). 0.35%, which for a daily move is huge.
Most likely caused by China’s June trade surplus being a record.
wonder why China’s setting a new “trade surplus” records EVERY MONTH?
They are preparing for the olympics…
From AP @ 11:39am ET
“The dollar is a basket case,” said Peter Schiff, president of Euro Pacific Capital Inc. “We are going to pay the piper for years of having the underlying fundamentals of our economy disintegrate beneath our feet.”
Given the state of the U.S. economy, he said, the dollar could continue to fall in the coming years against the euro to $2.50 or even $3.”
I enjoy Mr. Schiff’s writing immensely, but I disagree with his analysis of the Euro. If Mr. Schiff is correct then the Yen would soar. The US worries about its current account deficit with China, Europe worries about its current account deficit with Japan.
Europe would like to see the Yen appreciate by 30%+, The Yen/Euro may be the most under priced currency trade. As long as Japan is willing to finance the US debts with low interest rates - party on.
The Euro is in a bubble market. It may not burst for a while, but there is no economic reason that justifies 1.37 let alone 2.50. At some time, the party will come to an end. My only hesitation in being short the euro is “The dollar is a basket case”. The Euro’s main endorsement is that it is marginally backed by gold. (each Euro country must maintain 15% of its underlying Euro currency in gold reserves).
“(China’s) surplus with the United States reached $14 billion in June, while (China’s surplus) with the European Union hit $11 billion.
http://www.nytimes.com/2007/07/10/world/asia/10cnd-trade.html?_r=1&hp&oref=slogin
“Japan’s current account surplus widened at the fastest pace in three years in April as exports rose and a weaker yen increased the value of investments abroad.
The surplus expanded 50.3 percent to 1.99 trillion yen ($16 billion) from a year earlier, the Ministry of Finance…. The yen was 11.7 percent weaker against the euro in April from a year earlier and 1.5 percent cheaper versus the dollar, according to the ministry.
Growth in exports to Asia and Europe helped offset a decline in shipments to the U.S. in April. The trade balance climbed 34.7 percent to 1.03 trillion yen, today’s report showed. …”
Bloomberg
What most government and US economists forget is that China only accounts for 28% of the current account deficit. Why single out China?
Japan reports its current account surplus later tonight. Look for another large jump.
Japan is terrified of sending the US into a recession. That’s why they are printing Yen like there’s no tomorrow.
Funny how it’s similar to your average FB. Why not take the hit today, instead of a much bigger hit later? The crash of the US$ is inevitable.
The crash of the Euro is also inevitable. And based on past history, it is more likely to happen as soon as Japan raises rates.
Everybody Hates the Yen
RANDALL W. FORSYTH
“…Were these yen-carry trades have to be reversed, these effective yen short sales would have to be covered, meaning yen would have to be bought. “Call loans expended by Japanese banks to their foreign counterparts, a proxy for carry trade financing, have surged over the past year,” BCA Research Daily Insights points out. That amounts to heavy short interest in the yen.
A flight from risk could touch off an unwinding of yen-carry trades, which would result in covering of short yen positions. Short-covering rallies can be quick and violent.
Indeed, in the event of a sharp sell-off in risk assets — which can consist of anything from Shanghai A shares to junk bonds — the yen could assume the traditional role of gold. As speculators scramble to repay yen loans, they may sell gold instead of buying it (as they usually do in times of market turbulence) to buy back yen.
Currency futures and options offer leveraged plays on yen moves. A simpler way for individual investors to bet is through the CurrencyShares Japanese Yen Trust, an exchange-traded fund that changes hands on the New York Stock Exchange under the ticker FXY.
One investment veteran sees 20% upside in FXY in the event of market correction, which may be optimistic. But with sentiment so overwhelmingly bearish on the currency, and fundamentals such as a record Japanese current-account surplus bullish, it’s hard to see the yen going much lower.”
Barrons Online
July 6 2007
Toast…
“The dollar is a basket case,” said Peter Schiff, president of Euro Pacific Capital Inc. “We are going to pay the piper for years of having the underlying fundamentals of our economy disintegrate beneath our feet.”
Given the state of the U.S. economy, he said, the dollar could continue to fall in the coming years against the euro to $2.50 or even $3.
BTW- Does anybody know what color underwear Paris Hilton has on today?
All hail Wal-Mart Nation.
Yeah, sure it is…
“In an odd fashion, it’s a good thing,” Afshar said. “If the exponential growth had continued at another year, it would have had no choice but to crash. This is a soft landing, if you will.”
http://www.nj.com/business/expresstimes/index.ssf?/base/business-1/1184041037175750.xml&coll=2
That was my attitude in 2003. Unfortunately, prices kept rocketing up for two plus more years.
I worked for a socio-economic research group for 6 yrs. We said the same thing because we kept looking at affordability models in 2002. Then it kept going which surprised us all. No one seemed to have a handle on the cheap credit gambling that was going on.
We were looking at northern CA only at the time, prepping for a new NIH study.
Absolutely. We were looking at homes in 2003 (So Cal, San Diego area) & the talk of the day was how prices got so out of hand — this only from people who had been around a while.
Had realtors actually telling me they were getting scared by the price movements.
In San Diego, the major price increases were between 2001 and late 2004, with the “mania” movement in spring 2004.
Any thinking economist “knew” that affordability had hit a brick wall by 2003. But few if any correctly gauged the long and variable lagged effect on prices of a protracted period of negative Fed Funds rates, total abandonment of mortgage lending standards and introduction of subprime lending products to help GFs buy houses they could not afford.
Economists are no different than the general populance. I was suprised to find that the professors in my program denied existence of a housing bubble and spouted lines from the NAR. Bottom line - economists have specialities like macro, micro, health, etc. My declared speciality is macroeconomics but I tend to be interested in consumer preferences.
That’s amazing….
Yup, mortgage rates hit their nadir in the Summer of 2003. With payrolls stagnant for most workers, the only thing that has enabled appreciation since then is looser credit conditions.
Seems a big gamble to me at this point in time. Guess builders are in denial, too.
Supervisors said Monday they prefer a plan for a 75-home development to an earlier one that called for building only 24 homes.
Now, a Warrington developer will work up fully engineered plans in the hope of winning final approval in the coming months to demolish a manufacturing plant on Station Road in Richland and to build 75 homes and townhouses.
The 30 homes figure to sell for around $400,000, the 45 townhouses for about $350,000.
http://www.phillyburbs.com/pb-dyn/news/113-07102007-1375526.html
S&P May Cut Ratings on $12 Billion of Subprime Mortgage Bonds
By Emma Moody
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSxd8EdM_qyc&refer=home
Sheesh! Why didn’t they warn us before we bet the house on these high-risk bonds?!
IT’S NOT FAIR!!!
They promised us that they were not going to rate these bonds below market value!
Interestingly, Guy Who Made Fortune Shorting Enron is now shorting Moody’s. Ratings agencies culpable? Oooo, that’s juicy. They sure are going to get sued, either way.
That’s 2.1% of the total rated in 2006. I expect 100% of the bonds issued that year, and the year before, to have higher defaults than planned for. The drip, drip, drip means the Washington and Wall Street post will be full for years.
Warning to stupid rich guys: If subprime investments sink your wealth, you will lack legal recourse. Neither your Wall Street broker, nor your favorite credit ratings firm, nor your top economic leaders who incessantly bleat “Subprime is contained” will be there to save you when you lose your shirts by gambling in risky mortgage debt.
———————————————————————————-
HEARD ON THE STREET
Moody’s Faces the Storm
Shares Could Come
Under Fire as Ratings
Are Questioned Anew
By KAREN RICHARDSON and SERENA NG
July 10, 2007; Page C1
Short sellers love to target companies heading into financial turmoil.
Now, some of those investors who bet on a stock’s decline are targeting a company that is paid to spot financial problems before they occur: Moody’s Corp.
But unlike some of the blowups in the recent past that the New York-based credit-ratings firm and its main rivals caught too late, such as WorldCom Inc. and Enron Corp., its profitability and cash flows remain strong. That makes it a tough stock to bet against.
Still, Moody’s and other credit-rating firms are again taking heat for the meltdown in the subprime-mortgage market.
“I think they did a bad job, but they’ve weathered reputational storms before,” says Glenn Tongue, managing partner at T2 Partners LLC, a hedge fund in New York that manages about $170 million. “There might be a black eye on the franchise associated with subprime-mortgage securitizations, but the business flow, and probably the liability, will be contained.”
…
In past lawsuits that involved corporate debt ratings, judges have ruled that such rankings are opinions, like newspaper editorials, and are protected under the First Amendment.
…
Moody’s says it can’t be held responsible for drops in market value of certain assets. “Our ratings predict the probability of default. We do not offer views on market pricing and valuation,” says Linda Huber, chief financial officer of Moody’s. “People enter the market and trade these securities at their own risk.”
http://online.wsj.com/article/SB118403059118261648.html?mod=hps_us_at_glance_markets
Chanos ahead of the curve again. Love that guy, also Mark Roberts at Off Wall Street.
I can’t help it. I’m a permabear.
“I’m a permabear.”
Maybe. But be careful to judge yourself based on the context. We live in very bullish times!
Completely OT, but here’s a good Chanos article.
Hedge Fund Managers Fight Over Actual Hedge
“Two millionaire financiers, with adjacent homes on one of the most expensive streets in the United States, are bickering over a row of hedges that line a path down to the beach in the tony town of East Hampton, N.Y.”
Moody’s says it can’t be held responsible for drops in market value of certain assets. “Our ratings predict the probability of default. We do not offer views on market pricing and valuation,” says Linda Huber, chief financial officer of Moody’s. “People enter the market and trade these securities at their own risk.”
Bhwawawawa……….sounds like Moody’s and Realtors have a lot in common.
Funny, you’d think they have to make some models and assumptions to compute those probabilities, and I don’t hear them mentioning those things… these guys are so… sued…
it was mentioned recently that one of the basic assumptions of their models is that home prices will rise forever (or at least significantly more than inflation). That’s all you need to know, these guys and gals are SOOO smart!
More bad news from the WSJ to stupid rich guys:
Why a Billionaire Lost on Wall Street
By RANDALL SMITH
July 10, 2007; Page C1
The billionaire co-founder of Subway, the fast-food chain known for promoting the slimming effects of its sandwiches, charged that the brokerage house of UBS AG slimmed down his bankroll by more than $190 million because of a big bet on tech stocks after the stock-market bubble burst.
But in a decision that recently became public, a three-person National Association of Securities Dealers arbitration panel rejected Fred DeLuca’s 2005 claims that UBS mismanaged trusts created for him, which he argued resulted in big losses. The trusts were heavily invested in technology and telecommunications stocks that fell to earth after soaring in value during the dot-com stock bubble.
[Frederick Deluca]
The case opens a rare window into arbitration claims by wealthy individuals against their brokers, showing how difficult it can be for them to recover losses from Wall Street brokerages. As is often the case with arbitration awards, the panel didn’t give reasons for its decision. But rich people have a tough time winning claims, because they tend to know a lot about how the stock market works and as a result don’t get a lot of sympathy when they do cry foul. And while the decisions in these cases are made public, the tangled mesh of trusts that some wealthy people use to invest their money can make it hard to determine who filed the arbitration claim.
The decision also underscores how hard it has been for investors to recoup bubble-era losses despite widespread allegations that Wall Street hyped stocks for its own benefit and sold clients unsuitable investments. Investors have had trouble prevailing, as they are usually required to prove that they relied on Wall Street’s advice or that the investments were unsuitable in the first place.
http://online.wsj.com/article/SB118403161695061480.html?mod=hps_us_at_glance_markets
“Glenn Tongue, managing partner at T2 Partners LLC, a hedge fund in New York that manages about $170 million.”
Hey !!! You’re not supposed to pick on that guy. I hired him to manage 20% of my retirement savings… Now I feel like an idiot.
I’m not kidding. T2 also runs a microscopic “My Mom’s not an accredited investor and got mad at me for refusing to let her join my hedge fund, so I made a mutual fund for her (and my other miserable poor friends) but I don’t tell many people about it”. TILFX / TILDX.
Rick
good morning from ny
i just wanted to share this little nugget
my wife and i are renting a 3 bed 2 bath 1500 sq ft place for $1700 a month in a nice quiet clean tree lined street very close to midtown manhattan as well (yes they do exist in queens ny) well anyway a house we looked at over 15 months ago priced at $509k which is a 2 bed 1 bath with a basement 1/2 bath 1200sq ft
16ft wide!!! no backyard just a slab to park your car.
it is still on the market (surprise surprise) and i see the “owner”
griping every morrning about the dirty “renters” (which im sure at this point he wished he was one of) and how the re sales people are not doing enough to sell his castle. well i checked on property sharkand this dingbat is financed 100% from 2004 purchase
i belive my friend is underwater without a paddle
i love being a low down bitter dirty renter
i will admit there are brief moments when i would like to own a home but not in nyc area. i will wait until my wife finally agrees it is time to get out of dodge and we can take our money where it may get us something nice. i was at a friends house on long island this weekend and it is gorgeous but they bought in 1996 and he makes major bank working on wall street. it must cost 3-4 a month to run this house a month and that does not include mortage and taxes. strictly upkeep and maint.
that is when i am glad i rent
Hey, when I figure out what my rowhouse is worth in Brooklyn I assume $3,200+ or so for three bedrooms, 1 1/2 baths and 1,500 square feet. True, you get a 850 sf semi-finished basement and a small yard.
Even with that assumption, I get a “value” that is little more than half what other identical houses have sold for recently, though a reasonable return up from what I actually paid back in 1994. But people tell me Brooklyn is different.
(Well anyway a house we looked at over 15 months ago priced at $509k which is a 2 bed 1 bath with a basement 1/2 bath 1200sq ft. 16ft wide!!! no backyard just a slab to park your car.)
Queens is affordable. My house is 17 feet wide, and while you do get a backyard, you park on the street. Recent sales prices $1 million. And every house sold in Brooklyn needs rehab work. Moreover, while Downtown is closer than for western Queens Midtown is farther away.
It’s a great place to live, and a wonderful, modest house. The price is just too damn high.
Any thoughts on the Manhattan market? Seems its “hot” and prices are rising still. So annoying. The difference here compared to what I read here about other parts of the country, is that rent has fallen in other areas due to over development, but in Manhattan rents have risen compared to 3 years ago when I moved here. One bedrooms in nice buildings are going for $3400-3700 per month. It is ridiculous, it costs almost as much to rent as to buy a one bedroom. From what I have read on this blog, people suggest buying when rent and buying costs are similar. It seems they are. The only way I can explain the increased development, increase in rents, and rising house prices all together for Manhattan is there must be significant demand. Any thoughts?
Manhattan, West LA, SF proper, those are tough nuts to crack. Not only is there high demand from high salaried locals, but you’ve got international demand to contend with. While prices seem absolutely absurd, they’re actually cheaper than many international markets. They’ll be the last dominos to fall, IMO. I’d hate to be bubble sitting there. Good luck!
There is another nice thing about renting. Thats knowing when real estate hits bottom. You know the knifes are done falling. When you make your rent check out to Countrywide.
Credit card debt took a big jump in May:
http://www.boston.com/business/personalfinance/articles/2007/07/10/consumer_borrowing_jumps_on_credit_card_debt/
Maybe folks are putting food, gas, clothes etc. on the plastic so that they can pay the mortgage?
It’s all good! An increase in credit card debt is a sign of growing consumer confidence that the recent non-recession is ending! Look for another Wall Street bull run on the record headline stock index levels later on today in celebration. (Did you ever notice how Wall Street bulls have more reasons to party than your friendly neighborhood alcoholic? Somebody must be spiking their punch bowl with strong liquor!)
For the past year or so, Wall Street has yet to find a piece of bad economic news or data that it couldn’t “shrug off.” I’m getting a little tired of these jokers on CNBC. Everytime there’s bad news to announce, some moron tell us the bad news “was already priced in” and resumes his cheerleading. But whenever some company announces earnings that beat artificially low estimates by even a tiny margin, the market treats it as a reason to par-tay! The disconnect is sickening, really.
– Judge Smales
“You’ll get nothing and like it!”
We are to the point where people are robbing Peter to pay Paul…
Some are robbing Peter and Paul to pay Freddie and Osama.
Via Paypal?
Peter was home equity, we’ve been robbing him for years and now he’s got nothing. Now we’re borrowing from that nice boy down the street, you know…Guido, so that we can pay Paul. It’ll all work out OK as soon as Peter gets back on his feet. Guido seems like a good guy, I’m sure he’ll wait for his money.
Wasn’t it the the American Express crime syndicate that recently allows FB’s to charge their mortgage?
Saw a promo that Nightline will feature the implosion of the Miami condo market. I think tonight, but I can’t seem to find a listing to confirm this.
http://abcnews.go.com/Nightline/story?id=3362215&page=1
Thank you. It is like internet porn to me. Ahh…
PLUNGE PROTECTION ALERT!
http://www.marketwatch.com/tools/marketsummary/
No problems………they are having the morning off helping with the ftse in London.
http://finance.yahoo.com/q/bc?s=%5EFTSE&t=1d
Interesting how the l-t T-bond inflation risk premium is getting pounded twice as hard as any of the headline stock indexes. The flight-to-quality is looking more these days like a flight-to-liquidity-injections…
The T-bond yield curve is going through some remarkable contortions today. My reading of the tea leaves:
- High probability of recession over the next three years
- High probability of high inflation thereafter
Scroll down to see the contortionistic yield curve…
http://www.bloomberg.com/markets/rates/index.html
The US stock market is killing foreign investors. There are so few stocks keeping pace with the dollars decline that a 10% rise in the stock market is needed just to make up the losses from the US currency decline.
OOOH… THOSE BUTTERFLIES DANCING IN MY STOMACH ARE MAKING ME WANT TO HEAVE…
Isn’t it about time for the after-lunch PPT stock index rally to begin? Gentlemen, get your call options in the ready position…
They are nowhere to be found.
TxChick — Whatcha think about this sage advice?
Faced with unaffordable mortgage payments?
Maybe an attorney would be a better call than your lender
By Gail Liberman and Alan Lavine
Last Update: 7:38 PM ET Jul 9, 2007
PALM BEACH GARDENS, Fla. (MarketWatch) — Are you among the adjustable-rate mortgage borrowers getting notice of a high unaffordable loan payment? Although lenders, regulators and credit counselors urge you to contact your lender, a phone call to an attorney in your state might better clarify options.
If it’s a payment you can’t afford, you may have an action in court based on state and federal predatory lending laws, believes Philadelphia attorney Brian Mildenberg, who specializes in predatory-lending cases. A lawsuit, taken on contingency, could get your mortgage wiped out and attorney bills picked up by your lender. To find a predatory loan attorney in your state, go to http://www.naca.net.
On the other hand, William Bronchick, Denver attorney and author of “Defensive Real Estate Investing,” says the worst solution for your credit is a foreclosure. He says that, based on practical experience, talking to a lender often helps.
Whichever route you decide to take, don’t panic.!!!
http://www.marketwatch.com/news/story/mortgage-payment-pinch-talk-your-lender/story.aspx?guid=%7B0B5B0D3B%2D0630%2D460D%2D9F5B%2D5E3F20693614%7D
It’s more fun to watch the FB’ers panic.
After a week or two of computer malfunction, I can read regularly again, and was stunned at last night’s revelation that Bantering Bear is buying a house. I forgive him because it’s not in Calif, it’s under $150K, and as he said, many of us will jump ship some time.
I won’t be jumping ship anytime soon. Still building up T-bills, savings bonds, international stocks, and dividend stocks. Notice how some industries are drifting downward? Utilities, such as PNW. Bancks, such as BAC. On the other hand their yields are going up. If any of you out there thinks Bank of America will croak because of the crisis du jour, think again. That monster has been around for decades. If that dies, you should also have a garage full of ammo.
How does one go about choosing international and dividend stocks? Can anybody refer me to a book? I read Crash Proof but the advise seemed a bit out of my income/savings level. I’ve managed to save a down payment for a house (if prices ever fall to 2.5x my income) and about six months expenses and now would like to invest my monthly savings in stocks but I’m not sure how.
Read John T. Bogle’s “Common Sense for Investors.”
Hobo,
For dividend stocks, I go for large companies that have been around for a long time with steady increasing dividends over time. I also mix these with high paying dividends from oil drilling companies such as PGH. I am convinced oil prices will go very high, based on reading Matthew Simmons’ “Twilight in the Desert.” But I prefer steady value stocks that do not grow fast. For international stocks, I mainly get them in my mutual funds. I held Unilever once and did well. I will consider buying UL in the future. It’s one international stock and a huge company. I tend to go for low Price to Earnings ratios. The PE’s depend on the industry though.
If you want to buy a house in five years, you are better off in T-bills.
However I think you’re doing exactly the right thing by saving for the down payment on a house (hopefully in money market funds or CDs.) I am also pleased you saved 6 months of expenses. Very smart move!
Bank of America? Don’t you mean Bank of Mexico?
Rather The Bank of The Vatican….
Exactly what caliber would you recommmend, and should I ask the landlord to add on to the garage?
Can the cost of guns and ammo be financed on the mortgage note?
az_lender:
It’s not a done deal yet. Still a few wrinkles we are working through. The bottom line, it’s no more expensive than renting, and the fact that it can double as my business location as well is like $1200-$1500 in the bank each month. I’m surprised by some posters hostility towards me. I can understand if I were some FB lining up to overpay, contributing to the hyperinflation in prices, but the bottom line is, this sale will drive down comps in the area.
There’s always houses out there that are going to be hot deals among the thousands that are overpriced. Anyone who jumps on it is looking out for his own personal finances. If it’s right for you, go for it. It’s not like you’re going into it blind, if you’re posting on this blog.
Bantering,
I didn’t get to read yesterday’s post, but hope your transaction goes well.
You already know everything we’d say here, so I’ll spare you the “wait & rent, don’t be an FB speech.”
Good luck!
Moody’s in Sydney issues a warning of potential collapse on New Zealand real estate…
http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10450622
But………Real Estate always goes up………..
Yes, but down under, down is up…
Guess it’s all good………contained…….and priced in.
that probably means NZ real estate will rise even further in the months ahead … brave Kiwi’s, even 10%+ mortgage rates cannot stop them from playing the housing bubble game.
P.S.: when did Moody warn for a collapse of US real estate?
Amazing! The average price in Kiwiland is 300K US. What is tha average household income? I’m guessing its 30-40K US. And mortgage rates are 9.5%. That would be $2500 per month (assuming a 30 year loan).
current Kiwi household income is higher, around NZ$65K or US $50K.
Is their mortgage interest tax deductible? Otherwise that $2500 per month nut is 60% of gross (not take home) pay.
no, not tax deductible - so I agree this price level is not sustainable (and certainly not when many rates reset in 1-2 years). The high prices reflect players with big pockets, mostly wealthy immigrants and speculators from Asia and Europe (UK, of course).
Does anyone have the skinny on tomorrow’s luv fest between Congress, hedgies and the PPT?
UPDATE 2-US hearings to eye private equity, hedge funds
Thu Jul 5, 2007 6:49PM EDT
By Kevin Drawbaugh
WASHINGTON, July 5 (Reuters) - Three U.S. congressional panels plan to examine private equity firms and hedge funds at separate hearings next Wednesday, turning a spotlight on an industry that some lawmakers think should pay sharply higher taxes.
The vast wealth amassed in recent years by private equity and hedge fund managers is drawing lawmakers’ attention like never before, with the Senate Finance Committee set to look into raising taxes on managers’ “carried interest” pay.
The finance committee will hold a hearing on Wednesday morning, while at the same time the House of Representatives Financial Services Committee holds a hearing on systemic risks to the economy and the financial system posed by hedge funds.
Later that same day, the House subcommittee on domestic policy will hold a hearing on whether small investors should be exposed to hedge fund risk such as the $4.13 billion initial public offering of private equity firm Blackstone Group (BX.N: Quote, Profile, Research).
The House domestic policy subcommittee is chaired by Ohio Democrat Dennis Kucinich, who called on regulators last month to delay the Blackstone flotation.
The hearings come as Congress considers legislation that would raise the taxes of alternative asset managers, who wield growing power on Wall Street, while also questioning whether the Bush administration is doing enough to regulate them.
House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, said his hearing will feature testimony from senior officials of the Federal Reserve, the Treasury Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Frank intends to focus on efforts to monitor hedge fund risk being made by members of the President’s Working Group on Financial Markets, an inter-agency Bush administration panel.
http://www.reuters.com/article/mergersNews/idUSN0537361720070705
Turn on DC mode. Click.
The following is not for attribution:
Don’t count on the Senate Finance Committee being a love fest. There are people there who care about tax fairness. Hedge fund managers paying 15% on fees they receive for managing money is not fair.
Given the subject of the House hearings and who is going to be testifying, I wouldn’t count on hearing anything new or exciting. Standard party line all the way.
Turn off DC mode. Click.
Signed,
a federal employee with no direct knowledge of what is going to happen
I myself am expecting the grand Kabuki dance of the blame game.
http://www.amphi.com/~psteffen/fmf/kabuki.html
http://www.azcentral.com/community/mesa/articles/0710mr-fire0711.html
Hmmm…Ten homes under construction go up in flames in Mesa. Fire of suspicious origin. I would bet the builder had lots o’ insurance
Happened today. I also put up a link last week of two similar fires last week of homes under contruction in phx.
On further reading, today’s fire was at the same site where the fire July 5th was, that destroyed 4 units under construction.
Things that make a bubble watcher go “hmmm…”
Can someone do a burn-o-meter?
I wonder if the insurance industry is going to start jacking up rates for houses whose value is underwater, and development sites whose estimated finished cost is less than projected sales prices. Or if they will just jack up rates for us all.
“Or if they will just jack up rates for us all”
Insurance rates are contained
Insurance companies are really just charitable corporations
Insurance companies look out for your interest first
Find fear…and their will be a policy waiting for you…
lol good idea. Maybe I’ll start one
D.R. Horton (DHI) expects to post a third-quarter loss, pointing to hefty writedowns and a 47% drop in sales.
The Fort Worth, Texas, homebuilder said sales orders for the quarter ended June 30 fell to $2 billion from $3.8 billion a year earlier. The third-quarter cancellation rate was 38%.
“Market conditions for new-home sales declined in our June quarter as inventory levels of both new and existing homes remained high, and we expect the housing environment to remain challenging,” said CEO Donald Horton. “We adjusted our sales prices as selling conditions deteriorated, and we continue to react quickly to market dynamics. We expect to report a profit from operations before impairments for the June 30, 2007, quarter. However, as a result of the factors mentioned above, we will realize significant asset impairments, which will result in a loss for both the quarter and the nine months ended June 30, 2007.”
When DHI stock sells for around $9 per share, could be a good buy. It will yield 6%
I agree, if DHI survives and the stock goes from $1 up to $9, it could be a buy. Confucius say “He who picks bottoms ends up with stinky fingers.”
Coinfucious say computer blips sink financial ships…
Hey GS, another “platform” for an emergency landing by the PPT helicopter.
Got Oil?
USS Enterprise deploys to Gulf, 3 US carrier groups now to operate
http://www.earthtimes.org/articles/show/81119.html
Good thing BB’s printing press is still in good working order…
According to the US Navy the Enterprise CSG will execute a wide range of operations and exercise its full capabilities, including anti-submarine warfare, anti-surface warfare, anti-mine warfare, air defence, airstrike capability and missile defence.
I consider that good news, because politically I am very anti-surface. Although I prefer the term Pro-vapor.
Don’t know if anybody saw the Today show segment this morning on how to “save” money by buying a condo for your college student to live in instead of paying for a room on campus. It had Al Roker (isn’t he a weatherman???) and some random lady who was extolling the virtues of the “investment”, quoting anecdotes from people who bought for a student in 2004 and by 2007 they had ridiculous gains. Well, of course they did. An obligatory blurb about “the past doesn’t predict the future”, another about “do your homework” (which to her constituted finding out what it costs per month to live in the dorm), and then she was off to the races, breathlessly selling the equity gain upside. Never mind that her numbers didn’t quite work out… how are you going to put 6 students (5 plus your own spawn) in a place that costs only $200,000? Maybe if they are in school in the stick somewhere….
It was all I could do to hold down my breakfast.
Though Al Roker apparently knows next to nothing about weather, I would bet he knows even less about real estate.
And that would stop him how?
Roidy
I knew the owners of a condo conversion near my place (near San Diego State) were getting desperate last year when they started marketing the places to parents as a better deal than having their kids live on campus. I notice there are no longer any “for sale” signs. Just “for rent.”
Yikes, I have friends in Silicon Valley that just did exactly this. Bought a house for $200K in Walla Walla, WA where their kid is in college. The kid isn’t even going to live there for another year. I suggested they wait at least one year, but…
All kids should live in the dorms for the 1st two years for socialization reasons. All of the fun stuff occurs in or near campus, and if you’re living on campus, you’ll meet an order of magnitude more people than you would living off-campus in daddy’s condo.
Very true. My closest friends in life to this day are mostly people I met in the dorms freshman year.
A year and a half ago I had people trying to convince me to buy a house near ASU if my kid decided to go to school there. Get a couple room mates for her, and you’ll be rolling in the dough.
3/2 houses near campus were running $300K. Rooms rent for $300 a month(master about $400), at best. So I can get $1000 a month to cover a $2500 a month hit?
Oh, says the guy, the tax savings will make up for it.
$15K a year interest at 25% rate means I save $3700 on taxes. I lose $1500 a month for $3700 a year tax savings?
Oh, says the guy, appreciation is where you’ll make the money. Prices are up 100% in the last 3 years.
3 years ago I’d be spending $1200 a month, renting for $1000 and saving $2K on taxes. Still a bad deal, but not horrid if reasonable appreciation is factored in.
So, as house prices doubled, a “reasonable” deal turned into a truely horrid deal. Now you want me to buy a truely horrid deal because a few years from now someone else will come along and buy a TRULEY, impossibly, disgustingly, disasterously horrid deal?
Someone will come along willing to pay $4500 a month for a place that can be rented for $1000?
This was a MAJOR awakining for me in just how much of a bubble we were in. Upto that point I was drinking the kool-aide that PHX was below value and was just adjusting to a reasonable level. Once I looked at rents to cost of owning, I woke up from the lie.
and that doesn’t even take into consideration:
1) Daddy — the toilet/ac/dishwasher/etc. isn’t working? can you get it fixed?
2) Daddy — my housemate Brenda has: a) flunked out after a semester - b) decided to live with her boyfriend - and I can’t find anyone to take over the room.
3) Well, we had a party, and a few guys got drunk, and they decided to throw a keg/couch/etc/ through the window …..
We call them Daddy houses in Davis, Ca. The proud parents who bought in 2004 are now underwater and renting them out. Our vacancy rate is heading up and we’re seeing more MFRs on the market.
Actually I just read an article somewhere about buying a house versus housing your student in a dorm. It used to be the was to go, however now they say it’s much cheaper to put them in the dorm.
What has been will be again, what has been done will be done again; there is nothing new under the sun.
(Ecclesiastes 1:9-14 NIV)
This weekend I read a deeply-disturbing passage from one of my favorite current reads, Economics in One Lesson by Henry Hazlitt (1979 edition!), which everyone should heed as Congress tries to sneak a measure to morph the FHA into a government-sponsored replacement for the collapsing private subprime sector under the political radar screen:
“The case against government-guaranteed loans and mortgages to private businesses and persons is almost as strong as, though less obvious than, the case against direct government loans and mortgages. The advocates of government-guaranteed mortgages also forget that what is being lent is ultimately real capital, which is limited in supply, and that they are helping identified B at the expense of some unidentified A. Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to “buy” houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment.
GO CONGRESS!
strange … most of this applies to the Netherlands where all this has been reality for many years already, leading to one of the biggest housing bubbles (by % of appreciation) worldwide. Definitely agree about encouraging malinvestment (how about getting a luxury lap pool or a new garden, all paid by the tax office? move to the Netherlands and you can have it too).
They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building,
but this is certainly NOT happening in the Netherlands, on the contrary … maybe there is an oversupply of expensive houses, but certainly not of housing in general and especially not for small/cheap homes. Guess they found a twist over here to raise prices and builder profits even more. Amazing what you can achieve when government gets its sticky fingers in the economy.
“They temporarily overstimulate building,…but this is certainly NOT happening in the Netherlands…”
And with the number of homes on the U.S. market somewhere around 5m and growing, it most certainly IS happening here…
Great quote, and great book. It’s on my bookshelf as well.
In economist speak, the housing bubble is all about turning high value inputs into low value outputs, or in simpler words, a welfare loss to society.
“…a welfare loss to society…”
More like a welfare gain to the REIC constituents and the politicians whose campaigns they fund.
And a welfare loss to society as a whole. When someone is made rich, another person is made poor (a version of the law of thermodynamics).
Oops I mistated my point. Both people are made better off, but one is generally more better off.
Hey all… I host a radio show for the Antelope Valley (Palmcaster) and was just checking to see if there are any homeowners in the area that would be willing to come on the show and talk about their experiences regarding the bubble. Drop me an email at ch240 at yahoo.com. Thanks!!
Florida: Pinellas County releases the hit-list for possible school closures due to declining enrollment.
http://tinyurl.com/2mpkd8
June Northern VA Numbers out today:
Arlington County 2007, 2006
Total Sold Dollar Volume: $124,224,993; $128,651,569 -3.44%
Median Sold Price: $485,000; $459,900 +5.46%
Total Units Sold: 228, 232 -1.72%
Alexandria City 2007, 2006
Total Sold Dollar Volume: -13.28%
Median Sold Price: $469,000; $479,900 -2.27%
Total Units Sold: 205, 233 -12.02%
Fairfax County 2007, 2006
Total Sold Dollar Volume: $818,138,371; $965,704,240 -15.28%
Median Sold Price: $490,000 $500,000 -2.00%
Total Units Sold: 1,423; 1,680 -15.30%
Loudoun County 2007, 2006
Total Sold Dollar Volume: $234,832,912; $273,832,384 -14.24%
Median Sold Price: $435,000; $485,000 -10.31%
Total Units Sold: 466, 515 -9.51%
Prince William County 2007, 2006
Total Sold Dollar Volume: $205,437,880; $349,617,968 -41.24 %
Median Sold Price: $375,000; $390,000 -3.85%
Total Units Sold: 511, 816 -37.38 %
10-year charts here.
The sales volume and volume ratio in the charts says a lot. This is without significant numbers of REO properties on the market. I expect in 2008 that the sales volume will stay about the same, but the volume ratio will go up more and the median will go down a significant amount.
Lots of Alexandria properties just sitting on the market.
Fairfax County was the most surprising for me, with fewer sales this year and last year than the MRIS record-keeping goes back to, which was 1998.
There was a professor at George Mason University who commented after a Washington Post article about how much he disrespected the “Center for Regional Analysis” there at GMU. That’s about the only organization the Post interviews for “economic forecasts” for our area.
You would think that with their “population explosion” and “everyone wants to/has to live here” mantras that Fairfax County would have had at least as many sales as in 1998!
How do these numbers coorelate to the 10 year numbers? (In other words, why are the June 2006 and 2007 numbers on the 10 year charts different from the ones above? In the 10 year charts, Alexandria looks to be up in June 2007 vs. June 2006, for example. I realize I must be reading something wrong here.
Also — are thes NVAR numbers? just curious. thanks as always.
NVAR (supposedly) uses MRIS for their numbers.
@zeropointzero,
Those numbers are WRONG. I cut and pasted them from the MRIS website this morning, and now they’ve been changed.
I’m updating my site with the current numbers, and I’ll post here when available.
The MRIS was late for posting the data; perhaps they’re having problems.
Here’s the correct edition. Arlington and Alexandria were wrong.
Arlington County 2007, 2006
Total Sold Dollar Volume: $176,287,481; $185,571,387 -5.00%
Median Sold Price: $499,500; $535,000 -6.64 %
Total Units Sold: 308, 300 +2.67%
Alexandria City 2007, 2006
Total Sold Dollar Volume: $124,224,993; $128,651,569 -3.44%
Median Sold Price: $485,000; $459,900 +5.46%
Total Units Sold: 228, 232 -1.72 %
Fairfax County 2007, 2006
Total Sold Dollar Volume: $818,138,371; $965,704,240 -15.28%
Median Sold Price: $490,000 $500,000 -2.00%
Total Units Sold: 1,423; 1,680 -15.30%
Loudoun County 2007, 2006
Total Sold Dollar Volume: $234,832,912; $273,832,384 -14.24%
Median Sold Price: $435,000; $485,000 -10.31%
Total Units Sold: 466, 515 -9.51%
Prince William County 2007, 2006
Total Sold Dollar Volume: $205,437,880; $349,617,968 -41.24 %
Median Sold Price: $375,000; $390,000 -3.85%
Total Units Sold: 511, 816 -37.38 %
NOVA is explained in this Business Week article from 2005 titled “Living too large in Exurbia”, one of my favorite articles of all time.
http://www.businessweek.com/magazine/content/05_42/b3955060.htm?chan=search
BTW, is subprime still contained?
S&P may downgrade $12 bln of subprime securities
Subprime mortgage-backed securities losses may keep rising, agency warns
By Alistair Barr, MarketWatch
Last Update: 12:34 PM ET Jul 10, 2007
SAN FRANCISCO (MarketWatch) — Influential rating agency Standard & Poor’s said on Tuesday that it may downgrade $12 billion of subprime mortgage-backed securities because losses in this low-end part of the home-loan market have increased and will probably get worse.
Credit ratings on 612 classes of residential mortgage-backed securities (RMBS) backed by U.S. subprime collateral have been put on CreditWatch with negative implications, S&P said. Beginning in the next few days, the agency said most of these classes will be downgraded.
http://www.marketwatch.com/news/story/sp-may-downgrade-12-bln/story.aspx?guid=%7BCB3BF07B%2DBCAA%2D4F55%2DAEF5%2DF9C22E5D4570%7D
http://www.markit.com/information/affiliations/abx
Holy Cow! Take a look at this chart ABX AA 7-1
Is the “High” column for the 52-week high? Anything with three B’s in it is getting pounded into the pavement. Home prices cannot be far to follow.
Luckily your Fed president only has 2 B’s…
I don’t know why Casagrand is quoting San Diego May numbers when the June numbers are out, but it always refreshing when a Realtor doesn’t see the market through rosy-red clouds:
http://realtytimes.com/rtmcrcond/California~San_Diego~bobcasagrand
“ay 2007: San Diego Housing Market: single family attached and detached homes; The headline is simple, house sales decline further. Sales for May were 2,255, down almost 30% from May 06 and down 43% from May 05. Year-to-date sales of 11,181 are down 16% from the same period last year. We are seeing a progression in declining sales during a time when we should be in the peak selling season this does not bode well for the balance of the year. Pending sales for May totaled 2,616 which is an indicator that June performance will be similar to May.
Inventory was 20,904, over 9 months supply. The supply range for inventory varies by size of home with the lowest being 8 months and the high being 12 months. The supply is up 17% from last year and almost 100% from this time in 2005. Year-to-date listings totaled 34,431 which is inline with last years listing number but up 40% from the same period in 2005. Expired, cancelled and withdrawn listings totaled 17,382 up 224% from last years 7,763 and 525% from 2005. These numbers indicate how many times a home is re-listed before it sells or the sellers give up trying to sell.”
“The San Diego market continues to be in accelerating decline and I am not sure where the leveling off point will be. The continuing problems of more restrictive lending practices and affordability are keeping buyers out of the market in large numbers.”
An “accelerating decline”! I think his peers will beat him up for that. He should know it’s called “prices are softening” or “the market is stabilizing”.
Prices will drop 50 %/60% in San Diego to get any smart buyer attention as that area was the top bubble award for the nation. Prices must get back to 1998 levels for a lender to approve a buyer with good credit and down payment of his “own”. Reality has set in regardless of those who will try and spin,rationalize.
Turn on CNBC on listen to Bernanke. This guy is one nervous Nellie. He looks just like he did his first day - scared and not in good health. I don’t like him (and I’m one of the outliers on the blog who thinks Greenspan was OK). This guy’s a one-termer.
Poor BB gets to clean up the mess AG made. You are mistaken to miss this passing of the trash.
from his speech on why CPI does not include oil and food
“For example, we know from historical experience that the prices of some types of goods and services tend to be quite volatile, including not only (as is well known) the prices of energy and some types of food but also some “core” prices such as airfares, apparel prices, and hotel rates. The monthly autocorrelations of price changes in these categories tend to be low or even negative.”
I like that food and oil are negative components in inflation and would lower the CPI.
I’d be nervous if I had to say this.
Bernanke’s speech July 10 2007
http://tinyurl.com/2q9kdk
One-way volatility tends to get a bit inflationary after a while…
P.S. One might accuse the Fed of confusing the statistical concepts of variance and bias.
I’m not missing that. I’m just pointing out that BB is woefully lacking in leadership ability and the ability to inspire confidence. Up until now he has had a honeymoon, but he still looks like the interim manager he did on his first day.
He’s an academic. The put him there to do things like crank rates up and keep them there, like he has so far. Leadership ability and confidence inspiration are not part of that package. You are probably one of the people who don’t understand why the products you demand are not quickly supplied at low cost and high quality, too.
“You are probably one of the people who don’t understand why the products you demand are not quickly supplied at low cost and high quality, too.”
And, Mr. Non Sequitur, your evidence for that is. . .?
Lets hope they raise rates to 12%. Then I will loooooove BB.
They don’t have to go all the way to 12%. But they do need to send a clearer signal that they have no intention of respiking the punch bowl than they have sent thus far.
Even Wall Street didn’t buy it:
http://money.cnn.com/2007/07/10/markets/markets_130/index.htm
“NEW YORK (CNNMoney.com) — Wall Street failed to find any solace in a speech by Federal Reserve Chairman Ben Bernanke as stocks remained lower, as a handful of earnings warnings weighed on stocks and despite the dollar falling to a record low against the euro.”
“Investors appeared to largely overlook a speech on inflation by Federal Reserve Chairman Ben Bernanke, who said energy price spikes have not led to persistent inflation or a recession in recent years.”
Moin from Germany,
more “contained” news
DR Horton Orders down 40%! Canrate 37%
Sears is cutting the estimate by almost 50%
Home Depot is warning the third time since February…
Party on……
here’s the Sears warning (ouch):
http://biz.yahoo.com/ap/070710/sears_outlook.html?.v=1
here’s the Home Depot warning:
http://biz.yahoo.com/ap/070710/home_depot_outlook.html?.v=8
didnt somebody upgrade home depot to ‘buy’ yesterday? hmmm
Anyone actually been in a Sears lately? I had the misfortune of having to go there to buy vacuum bags this past weekend. I honestly can’t understand how these stores are still in business. Ugly, depressing and full of junk, and the “employees” look like they are all on a work release from the state pen. Not the same company that revolutionized American retailing 50-70 years ago. It’s been dragged, kicking and screaming and barely alive, into cost-cutting offshore junkworld. It’s not going to survive this recession.
Sounds like one of the K-Mart/Sears conversions.
I don’t think it was meant to survive. Eddie Lempert has been milking this poor old cow for a few years now and it should be ready to drop dead soon.
A brilliant hedge fund operator, but when the crap hits the fan brilliance and buffoons will go the way of the dodo bird.
Sears has been behind the curve from the time way back in the 70s when for 10 years or more they stubbornly refused to take any credit cards but their own (which since morphed into the Discover card). Like I really care about the convenience of a lifetime guarantee on a wrench!
But, alas, none of that matters. Much like the old fake stationery storefronts on 8th Ave. between W. 14th and W. 16th Sts. that housed the numbers and fencing rackets (remember those, any old time NYers, before the yuppification of lower Chelsea?), these shoddy old Sears stores are just a smokescreen for Lengendary Financial Genius Eddie Lampert’s recreation of Berkshire Hathaway - just ask Cramer!
Third and Fourth quarter ‘07 results and profits or lack of said will be telling. A lousy Xmas and First quarter ‘08 results whould be the final nail in it. I figure we are already in recession but the big boys are not saying while they head for the exits.
Gasoline just took a 30 cent jump in week and half here. Taking a trip this summer and see America, may be the last time you will be able to do it without walking or riding a horse when it gets to 5 bucks a gallon by end of ‘08, or earlier when Iran blows up.
HD to buy back 11 billion shares - with what ?
1% decline in sales- sure
With all this reporting of above and below estimates, I can’t figure out if sales are up or down, or up or down relative to inflation.
As for the builders, when Sears and Home Depot start reporting losses, rather than lower profits, we’ll know we are in a recession. Profits can’t be such a high share of national income forever; otherwise no one but rich stockholders and retirees will be able to afford to buy anything. Profits are going to have to fall relative to the economy, bubble or no bubble, recession or no recession.
When the s__t really hit the fan, the HBs had to show losses.
Thanks jmf for the “Eindämmung” news.
Yes……it’s all good
@luvs
@flattplan
They will issue $12 billion new debt
How much of GM’s pension fund is invested in hedge funds, I know they were talking them up a few years ago as a great place to invest the pension fund in and could potential hedge fund loses hurt them?
I was listening to Bernanke on Bloomberg and he does sound incredibly nervous. Clearly he knows the real deal and is trying to head fake the public.
“THE FED
Bernanke sticks to academic discussion of inflation
Text of remarks does not address current economy, rate policy
By Greg Robb, MarketWatch
Last Update: 1:49 PM ET Jul 10, 2007″
Academic economists typically pride themselves on their sanguine ignorance of the current economic situation.
http://www.marketwatch.com/news/story/bernanke-sticks-academic-discussion-inflation/story.aspx?guid=%7B951C092A%2D796E%2D4DF8%2D8D79%2DA7F490212C96%7D
Fear and Loathing in High Finance: A savage journey to the heart of the American dream
China opens the gold window to the hoi polloi…
http://www.financialsense.com/editorials/phillips/2007/0710.html
Whoa! Look for gold to provide a clearer signal of where inflation is headed from here on out…
Hedge fund hearing set
House panel to hear if funds pose risk to economy and financial system.
July 5 2007: 4:51 PM EDT
WASHINGTON (Reuters) — The U.S. House Financial Services Committee said Thursday it will hold a July 11 hearing into systemic risks to the economy and the financial system posed by hedge funds.
Chairman Barney Frank, a Massachusetts Democrat, said in a statement that senior officials from the Federal Reserve, the Treasury Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are scheduled to testify.
The hearing will focus on efforts to monitor hedge fund risk being carried out by members of the President’s Working Group on Financial Markets, an inter-agency committee within the Bush administration.
http://money.cnn.com/2007/07/05/news/hedge_hearing.reut/?postversion=2007070516
CATCH THE PLAY-BY-PLAY ON STREAMING MEDIA:
http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr0705074.shtml
US mortgage problem fears spark sell-off
By Michael Mackenzie and Saskia Scholtes in New York
Published: July 10 2007 20:55 | Last updated: July 10 2007 23:48
Fears of further problems in the US mortgage industry and the broader economy flared on Tuesday, triggering a sell-off in credit markets as investors sought safe havens.
Markets were rattled when Standard & Poor’s, the ratings agency, threatened to downgrade the credit ratings on some $12bn of bonds backed by US subprime home loans. This raised concerns of a broader repricing of risk in credit markets, leading to heavy losses for some investors, particularly in derivative markets.
http://www.ft.com/cms/s/343aca72-2f1a-11dc-b9b7-0000779fd2ac.html