Bits Bucket And Craigslist Finds For July 16 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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Name:Ben Jones
Location:Northern Arizona, United States
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Ben, Have you been editing your own threads and not been getting thru? I thought that only happened to me. LOL
I thought it only happened to me, as I have been known to post “more than once every 15 seconds”
gotta be a 12-step group for you somewhere
Stucco, I have sometimes thought you must have a personal staff assisting you with research and posting. I thoroughly enjoy your posts!
No personal staff — just too much education…
“No personal staff — just too much education…”
Hmmmm, and I was thinking just too much time!
Remember, the first step is admitting you have a problem.
Having a talent is not enough: one must also have your permission to have it—isn’t that so, my friends?
– Friederich Nietzsche –
Story in Orlando Sentinel yesterday about how you can donate your house to charity for the tax breaks….
http://www.orlandosentinel.com/classified/realestate/orl-lewsell1507jul15,0,5143207.story
Speaking of which…has anyone else been approached multiple times lately concerning donating your home in return for an annuity? Why now?
No.
Wonder if anyone will be willing to trade an annuity for my lease?
No “slow down, cowboy” messages today…
I haven’t heard for sure, but apparently no.
O.K., you lost me on this one. I was on and off the board yesterday- did I miss something good or was the server having emotional issues or ???
It was a bizarre message that many were getting and I haven’t heard back from the host about what was causing it.
The only place I’ve ever seen that is /. I wonder if the software is built on slashcode. Slow down cowboy is put in to prevent very short comments on /. If you type your post in under 20s (usually only for short single lines) it makes you wait to post.
Yeah, but that’s never been a problem before.
could be a setting that got flipped by the host or something? Odd that it just showed up I’ve never seen it outside of /.
It’s what I used to say to my Oklahoman boyfriend.
Ben, I’ve gotten the slow down cowboy msg before, several times in the past, but I was trying to post the same msg twice. now I get a diff. msg when I do that (something like “you already posted that msg”).
Ben, we’ve talked about this before.
It happens when the time on the WordPress server is off well into the future. When you go to post a comment it checks your PC’s time against the time of your last entry (set by the server), and if the difference is 15 seconds or less — i.e., negative against future times — it won’t let you post.
Cool. I feel better now. I’ve heard that same comment from my wife a couple of times and I couldn’t see how it would be used in the same context here on the board…
Did she say something about “more than once every 15 seconds?” (I think I have heard that complaint from my wife, too…)
Heartburn? How can that be? I didn’t think the cost of food or energy had anything to do with inflation.
http://www.bloomberg.com/apps/news?pid=20601068&sid=aWThE05v9VmU&refer=economy
Maybe someone could direct Bernanke to a supermarket or a gas station. Reality is such a surprise to him. From the link…
“They acknowledge they’ve been surprised by the persistent increase in energy prices during the last few years…
The danger for the Fed is that food prices, too, are on course for a multiyear advance. The futures markets that Fed officials monitor aren’t forecasting such a rise; these markets also didn’t anticipate the continued increase in oil.”
I heard the live broadcast of this report this morning. I can’t help but wonder if the confluence of spiraling inflation, cheap money for overpriced housing and the bankruptcy act of 2005 is contrived. If it is, I don’t at all understand the animosity and contempt this government has for us.
A little tidbit from this month’s “golden jackass” report.
My distrust of the USGovt and USFed is steady, magnified, and sure to continue. Some degree of planned destruction of the USEconomy has become my conclusion in the last few years. Ever since Greenspan caved in to ‘Irrational Exuberance’ and fed the fires, followed by standing idly by during the heist of the US gold treasury, then final abandonment of the manufacturing base, a change in corporate tax rules to encourage the process, a change in bankruptcy tax rules to create homestead serfs, some degree of confirmation has come to mind. Amy Gluckman is an editor of “Dollars & Sense” for financial and political coverage. In the November/December 2006 issue, she wrote: “During the Clinton Administration, Greenspan was relatively ‘unembedded,’ averaging only one meeting per month at the White House… But when George W Bush moved into 1600 Pennsylvania Ave, Greenspan’s behavior changed. During 2001, he averaged 3.3 White House visits a month, more than triple his rate under Clinton and much more often with high-level officials like Vice President Cheney. His visits rose to 4.6 a month in 2002 and 5.7 in 2003… Whatever White House officials were whispering in Greenspan’s ear, it worked: Greenspan abruptly changed his tune on tax cuts, lending critical support to Bush’s massive 2001 and 2003 tax giveaways, and he loosened the reins by cutting Fed-controlled interest rates repeatedly beginning in January 2001, a gift to the Republicans in power.” Whether the objective was to keep the USEconomy rolling before its derailment, to enable Wall Street bond issuance with hefty fees, or to facilitate the destruction of the Republic, one can only imagine. Housing prices inflated drastically, touted as economic ‘growth.’ Periodicals like Barrons persistently distort by claiming that this inflation boosted American’s ‘wealth.’ Attitudes toward inflation are deliberately distorted and maligned, as the entire US system undergoes chronic tragic dismantlement.
And the war on the middle class is merely a figment of Lou Dobbs imagination too….. There comes a point where the panderers and excuse-makers can no longer spew denial… unless they prefer to be hung from light poles that is..
A little “tin foil” to start the week. Perhaps someone in the Palmdale area can confirm this report (link)? Seems too big a secret to keep this long but I know the contract is real as it was reported in the MSM (google KBR and “detention facilities”).
Another “golden Jackass” excerpt:
“See some chilling evidence, peruse the concentration camps for a start, in the inevitable advent of martial law. The FEMA & Rex 84 program highlights 600 prison camps already completed in the United States, to house almost 10 million people! One giant psychiatric facility in Alaska will contain two million people. They are fully operational and prepared for inmates. An executive decree signed last month readies the plan, to engage upon a simple order. Halliburton managed the construction, again under a No-Bid contract worth $380 million. My activity primarily pieces things together, just an observer, not a gatherer of hard evidence.” http://www.abovetopsecret.com/pages/camps.html
Note: KBR is a subsidiary of Haliburton.
It is a “free country” our government does what ever it likes!
Some folks have minds that must have gone haywire somewhere along the line. Maybe it was the drug use in the past finally catching up to them.
Drug use, willfull ignorance, the failed promise of trickledown, delusion induced credit lines etc.
That’s only $633,000 per camp, and each camp would house 16,000. Couldn’t be done, even assuming Toll Brothers makes $600,000 profit on a $633,000 home.
Tin Foil Hat. Big time. Even the locals knew something was up with the Manhattan Proejct, with the primary sarcastic rumor being to flat submarines down the Rio Grande (clearly a rumor due to the dams and the non-existent depth of the river). Most individuals in the area knew something big was going on, just not what “it” was.
Why did the state of California pass a bill late one day, allowing for almost $8 Billion to be spent on new prison construction?
http://www.sacbee.com/111/story/166239.html
KBR is now a separate company trading under the symbols “KBR”.
Tent camps for FBs and flopped flippers would probably be a prudent step right about now, to prevent social unrest.
LMAFO! Look, the value of the dollar is dropping on the international markets. This is well known. Oil is priced in dollars. Therefore, the price per barrel of oil increases. This is all simple enough. Couple the dollar’s decreasing value with the increasing demand for oil, and you get increasing price of oil. Just google decreasing dollar.
How can they not understand or misinterpret this?
Roidy
“Look, the value of the dollar is dropping on the international markets.”
Burgeoning demand from CH + IN coupled w/ a falling $US and $US-denominated oil prices =
‘This is a mathematical certainty at this point.’
The Oil problem can be solved. Call or Email your Congressman today
Beginning this week, (July 16) the House of Representatives is expected to consider
the comprehensive energy bill combining the work of 11 different committees
over the last few weeks. The bill includes a number of provisions similar to
the DRIVE Act, as well as a variety of
other measures aimed at energy conservation, creation of renewable and
conservation-related jobs, expansion of alternative vehicles, and updating
the electricity grid. Unfortunately, the bill’s original language does not
mandate an increase in Corporate Average Fuel Economy (CAFE) standards for
future vehicle manufacturing,
As you know, in late June, we applauded the Senate for overwhelmingly
approving an increase in CAFE standards to 35 miles per gallon (mpg) by
2020. In the House, Representatives Edwards Markey (D-MA) and Todd Platts
(R-PA) introduced a companion measure, the Fuel Economy Reform Act
(H.R.1506), to mandate fleet-wide fuel economy of 35 mpg by 2018. We
support the bipartisan legislation that would save an estimated 2.2 billion
barrels of petroleum per day, enough to offset imports from the Persian
Gulf.
The Fuel Economy Reform Act may be offered as an amendment to the
comprehensive energy bill next week. In addition, alternative approaches to
CAFE may be offered. we believe are weaker alternatives mandating lower or less aggressive
CAFE standards. One such example is H.R.2729, a measure introduced by
Representatives Baron Hill (D-IN) and Lee Terry (R-NE) that would set a fuel
economy target of just 32 miles per gallon in model year 2022 - a level
achieved by the Senate-passed bill nearly 6 years earlier. It would also cap
future standards at no more than 35 miles per gallon in 2022 and expand a
loophole in the CAFE law that would allow automakers to make less
fuel-efficient vehicles than required by the standard.
“CAFE standards” = social engineering. Lots more on the way if Billary gets elected.
“if Billary gets elected.” Is that like saying “if there is a housing bubble” or “if the main street media reports the real estate news accurately”
Not “if” but “when”
Do you really believe that social engineering (in the http://en.wikipedia.org/wiki/Social_engineering_%28political_science%29 sense) is inherently wrong? The creation and enforcement of law is a form of it just as is the tax code. We create incentives for desirable behavior (and disincentives for undesirable behavior) because we recognize that there are failures in certain markets (typically the result of unaccounted-for externalities, principal agent problems, etc.).
Laws and taxes can be good or bad, depending on how they are used.
FWIW, there are plenty of features that we take for granted today in modern cars that wouldn’t be there had the gov’t not dragged the automakers kicking and screaming into the future.
Seatbelts, airbags, antilock brakes, traction control, tire warning systems, fuel injection, collapsible steering columns, side turn signals, disc brakes —- just to name a few
The carmakers can easliy do 35 MPG. It just means no more 260-HP V6 that can go 0-60 in 6.5 seconds and top out at 120 MPH, even though the speed limit on most roads is no greater than 70 MPH.
The irony of driving on freeways in the city of angles, is…
Seeing Porsche 930’s hopelessly stuck in traffic, just like any old 1984 Yugo, going nowhere, fast.
The carmakers can easliy do 35 MPG.
Very easily. My 3.8 liter V6 gets 30 MPG on the highway. This is a 40 year old push rod design. I’ld guess that it could easily get 40 mpg with a hybrid drive train.
What I laugh about is increasing the MPG of vehicles isn’t going to do anything about oil imports. Simply because the number of cars on the road is also going to increase. What they need to do is increase the tax on a per gallon basis in high density areas (we can tie it to the amount of air pollution in a particular area) and use the increase income in that area to support public transportation.
Only when it becomes more expensive for consumers will it change their habits.
Simply because the number of cars on the road is also going to increase.
As long as we continuee with our open borders policy this will be true. After all, illegal immigrants aren’t coming here for the recycling opportunities!
I can drive any vehicle on the road and improve its mileage/gallon by simply slowing down. Hard to comprehend for most folks.
Sorry, but my time is worth more than the cost difference in mileage.
I’m with you in the slow lane, LIU…along with those drivers yakking on cell phones, as well as drunks and illegals trying to avoid arrest! It’s no big deal to start out 5-10 minutes earlier AND I save a lot at the pump!
Thank God you people are smart. I was trying to explain the price of oil going up to a friend the other day due to the weakening value of the dollar (dollar being the reserve currency for oil) … he couldn’t grasp the concept.
Bernanke’s limo driver and personal chef are obviously mum on the subject.
Bernanke’s conundrum?
“Nothing affects consumer inflation expectations more than food,” says Richard Yamarone, chief economist at Argus Research in New York. “Not everybody has to drive to work, but everybody wakes up and has breakfast.”
The Bank of England suggested in its last quarterly bulletin that price changes on “highly visible” items such as food may play a big role in shaping consumer attitudes about rising prices.
Bernanke has repeatedly highlighted the importance of those attitudes in carrying out monetary policy. “The state of inflation expectations greatly influences actual inflation,” he said in a July 10 speech in Cambridge, Massachusetts.
Yeah right. In other words, inflation is only imagined, never real until one imagines it. A$$holes.
That is not actually the point I was trying to make. Rather, as BB’s own words suggest, a broad perception that inflation is heating up can lead to behaviors (such as hording of stocks, commodities and houses) which heat up inflation. Hence the need to report CPI as low and under control. (Sadly, evidence from burgeoning prices of houses, stocks and commodities (esp. food and energy) suggest the under-reporting of CPI is not keeping inflation expectations under control!)
And BTW, as stocks are the price of corporate assets, I don’t buy the party line that increasing stock prices are not evidence of higher inflation.
Kind of an “orwellian” concept, don’t you think? The FED shoves several trillion dollars into the world economy and prices are supposed to stay contained? Oh, that’s right, if folks only would keep their “expectations” of inflation in check then all will be well, regardless of monetary infusions. Ya couldn’t make this stuff up.
And we are divided into two groups
Group 1) Everything is fine. The economy is great.(What this really means is “I’ve got mine, the rest of you can starve while we stand here and do nothing”)
Group 2) “Did you see the price of produce has tripled?”, “I don’t know how I’m going to procure health insurance for my family”…
Group 2 will hang group 1. Look out….
“Ya couldn’t make this stuff up.”
I had to clean my key board. If it were a fiction story I doubt a publisher would buy it. Their denial comments would read not possible, not real.
“If you live in the United States, most of what you buy with your dollars is either imported or has imported components. So as foreign currencies surge, the price you pay for foreign goods must go up accordingly, eroding the purchasing power of your money.
Last year, for example, the United States imported $217 billion worth of crude oil, a whopping six times more than the total value of imported computers, flooding into the U.S. by the millions.
And just this past Friday, the price of crude oil exploded again, thanks to the many factors… but also due, in large measure, to the sinking dollar.
+ Light sweet crude surged to $74 in New York …
+ Brent North Sea crude leapt to $77.68 in London, and …
+ Gas prices at the pump are likely to jump as well.
But that’s just the beginning. Because of the surging cost of the euro and other foreign currencies, price hikes on thousands of other imported goods are already in the pipeline.”
From Martin Weiss, Money and Markets
Stucco, not trying to start an argument or anything, but I remember you saying in previous posts you expect a bear stock market. How do you envision this if stock prices are being driven up by fundamental inflation in corporate assets?
Like all assets price bubbles, the one currently running amok on the stock market has an unpredictable duration. But as Malkiel points out in his classic book A Random Walk on Wall Street (supported by a massive preponderance of empirical evidence), stock prices eventually revert to line up with fundamentals. If I could predict this timing, I would not be wasting my time explaining this.
Is there not cake for them to eat?
“…stock prices are being driven up…”
It is also important to distinguish between real and nominal price increases. (See my calculation below which shows average U.S. gas prices have increased at a 41% annualized rate over the past three weeks…)
On the lighter side, Blackstone (BX) went down again today, to $29.69!
England has to import much more food that the US does. maybe thats why its uses food and we don’t. After all if you pay $3.59 for a pound of tomatoes, but I get them from my garden what is the real average price of tomatoes? Just an example.
“… but I get them from my garden …”
Your personal “price” is the opportunity cost of your labor + pecuniary expenses for the cost of growing the tomatoes, offset by the nonmarket benefit derived from the pleasure of growing your own tomatoes, not to mention the value of a potential quality premium in your own fresh produce versus the second-rate stuff available at the supermarket.
So what is the average cost?
Your average cost is pretty near (since we’re all estimating that will probably do) your opportunity cost. Since you are eating them it must be above that price. Hit a farmers market and check the price of tomatoes sometime, call that your cost of tomatoes. Then calculate a volume weighted average price.
If you do it the hard way, don’t forget to include the cost of land in your tomato pricing study.
An excellent reason why calculations for GDP should be revamped. The falling standard of living over the last 50 years has been masked by artificial GDP inclusions. e.g. In the 1950s the predominant worker was the husband. The wife stayed at home and cleaned, cooked and washed. The wifes contribution to GDP was excluded. Approximately 12% of the growth in GDP can be attributed to “service industry replacement” of the spouse from house cleaning to lawn services.
if I look at just the yearly cost of professional child care in the Netherlands (in the same range as the minimum wage, a large part of it paid for by government = taxpayers) the contribution must be far higher than 12% …
Probably! I was just referring to gdp growth e.g. instead of 3% real growth would be 2.6%.
BTW, a $0.06 increase off a $3 base over three weeks’ time represents an annualized rate of increase of
[(3.06/3)^(52/3)-1] X 100% = 41%.
Note that this is a national average rate of increase, and hence has direct implications for the (correctly calculated) CPI.
But not to worry, since energy prices are highly volatile (as the Fed keeps assuring us!).
“Associated Press
Survey: U.S. Gas Prices Rise Six Cents
Associated Press 07.15.07, 5:12 PM ET
CAMARILLO, Calif. -
U.S. gas prices on average rose about six cents in the last three weeks, according to a national survey released Sunday.
Regular gas prices averaged $3.06 a gallon, mid-grade was $3.17 and premium was $3.29, said oil industry analyst Trilby Lundberg.”
http://www.forbes.com/feeds/ap/2007/07/15/ap3915156.html
I tried your formula 3 times (I also teach math) and it comes out to 16.7% which is high, but nowhere near 41%.
It seems the math error is treating a base of $3.00 as base of $1.00. If there is a 2% increase in price every 3 weeks, the annual inflation is hyper.
I was using the article’s mention of a $0.06 increase in three week’s time, to a new national average level of $3.06. So I guess the base is $3.00, and the increase was 2% over three week’s time. Am I missing something obvious here?
Nope! I was of the opinion that you and Waman were using straight imputation of $0.06 vs 2% inflation/3wks. I was too lazy to calculate and came up with a rough figure of greater than 40% - ergo I wrote Hyper. LOL
“I was too lazy to calculate…”
He who refuses to do arithmetic is doomed to talk nonsense.
http://www-formal.stanford.edu/jmc/sayings.html
(On the other hand, some times a guesstimate is good enough — “over 40%” is pretty much the same as “41%”
)
“A declining institution often experiences survival of the unfittest.”
jmc
LOL
Since we both teach math, we both know that even math teachers some times make calculation errors
Let me break down the steps of my calculation to see if we can agree on it:
3.06 / 3 = 1.02 (2% inflation gas price inflation on a national average basis over 3 weeks time!!!)
52 / 3 = 17 1/3 3-week periods in one-year’s time
1.02^(17 1/3) = 1.02^17.333333… = 1.41 (gross annualized inflation of 41%)
(1.41 - 1) X 100% = 41% (net annualized gas price inflation at rate over the last three weeks)
[(3.06/3)^(52/3)-1] X 100% = 41%.
3.06/3 = 1.02 52/3 = 17.33 1.02*17.33 = 17.676 -1 = 16.676 x 100% = 16.676
If I am not mistaken, GS is compounding the inflation and WAMan is not.
“1.02*17.33″
WAman —
in Colorado is right. You want to use an exponent (’^’ in standard computer syntax) where you multiplied (’*').
P.S. 16.676 x 100% = 1,667.6% (Weimar Republic inflation!)
If the fed raises rates there is no doubt we will be in a national recession sooner if not later.
From the Daily Reckoning…
The final blowout of cheap oil is now ending, and the suburban juggernaut is entering its death throes… There will be no more suburban subdivisions (or the accessories and furnishings of them - the strip malls, Big Box pods, and fried-food out-parcels)…We will be inhabiting the terrain differently from now on. Whatever intact farmland remains will have to be reserved for feeding ourselves, and the “countryside” that has been regarded as having only scenic or recreational value for so many decades, will have to be both productive and carefully tended by human hands..
LOL. The writer is wishing and calling it a forecast.
Bill,
None of the oil fields on this earth will get thoroughly depleted. However we will run out of cheap oil. Big difference. There are many retired oil wells that have done a good job in their youths, but are now capped. It is too economically unfeasible to squeeze the remaining oil out of them. This will happen sooner or later to Ghawar - the world’s largest oil field, and the four other big fields in Saudi Arabia. Cantarell in Mexico is past peak.
The wishful thinking is on the Pollyannas who laugh at “peak oil.” They think oil is a renewable resource.
It is a renewable resource 100 millions of years or so.
Hoz, that’s fine. We’ll just patiently wait for 100 million years and we can start again to use oil as if it goes out of style!
We are using oil at a faster rate than it is being produced. Our illustrious VP Mr. Cheney said the rate of consumption is growing 3% annually while the rate of production is growing 2% annually.
“We’ll just patiently wait for 100 million years and we can start again to use oil as if it goes out of style!”
Nah — we’ll cook up a better energy regime far sooner…
Bill and GS - too funny
“Illustrious… Cheney”
“better energy regime”
As fine an example of oxymorons as “military intelligence” or “postal service”
LOL
Anyone heard of Thomas Gold and his book ‘The Deep Hot Biosphere’? It’s about abiogenic petroleum:
http://en.wikipedia.org/wiki/Abiogenic_petroleum_origin
I just ordered a copy from half.com. The reviews on Amazon didn’t indicate that a tin foil hat was required equipment for reading it.
Junk,
I read some pretty boring shit, but you have taken the cake with that crap!
Different strokes for diff folks, but your boat is going in circles =)
Kunstler is such a joke. Before he was into “peak oil”, he was predicting the end with Y2K. http://peakoildebunked.blogspot.com/2006/05/305-kunstler-thought-y2k-was-end-of.html
Look up Matthew Simmons and Richard Rainwater on google. They are far more credible to Kuntsler. I don’t pay much attention to Kuntsler.
Kunstler is an end point…an extreme. But he is thought provoking.
However, there are a lot more mainstream people in geology (Ken Duffreys (sic)) and investment banking (Matt Simmons) who recognize we have a problem. But it is not peak oil that is the biggest problem for the US….it is peak exports! And whether current exporters will continue to take bits in a computer that represent green paper with dead US presidents on it for their remaining oil. Or are we going to sell the Russians and Arabs Chevy Tahoes and Britney CDs (well they can steal her music on the web already)?
The US may be in deep doodoo by 2010-12 on this score even while Asia / Russia continue to prosper (or at least be able to drive to work). Heck, if what many here on this blog predict about the US $ comes true, we won’t be buying oil for much less than $200, $300, $500+ per barrel and rationing gasoline to non-essential personnel anyway.
A thought exercise…how will you live if you are rationed 10 gallons of gasoline per month starting in 2010 or 2012 at $10+ / gallon? And when you realize your current car is a problem, plug-in hybrids cost $100K+ due to overwhelming demand (bubble ? :-))?
Bicycle.
No seriously, not only will keeping active help keep one out of the wretched “freer” helathcare system that will soon be thrust upon us - it greatly widens one’s commuting options too.
I’m guessing that if you try to put everyone in the U.S. on bicycles, half of those over 50 will be dead/disabled within 6 months, due to heart attacks, heat strokes, accidents, etc. (myself included)……kill off a good percentage of the population, and all the problems take care of themselves….
What’s really sad about this blog, is that there are some individuals here that (I suspect) think that this would be a good idea.
Bloomberg Radio reported this morning that BIS or IMF indicated that food inflation has run 25% over the previous 18 months and the FED vastly understates inflation by reporting only the core. The report is obvious but at least some of us here are vindicated.
Fed is full of crap when it comes to inflation. Computers and flat screens are the only thing i know is cheaper. everything else has gone up. They say inflation is only up 2-3% - dream on…
it’s not just the FED, in Europe the situation is exactly the same. M3 growth has been at double-digit rates since the start of the ECB, while official CPI is 1-2% for most EU countries. But mandatory costs like healthcare, education, energy, local taxes etc. have been going up at 7-10% yoy for at least the last 5 years. The only exception is food prices in Netherlands because of a supermarket war; food prices officially declined in the last years, but even that is mostly a result of ’substitution’ and other statistical tricks. I just wonder when the FED starts using declining home prices to keep the CPI down? This trick has been discussed by Eurostat several times and probably will be used as soon as average EU homeprices stop rising.
yeah, but you are small compared to the US, yet you are the third largest, in terms of value, agricultural exporter.
well, i guess you just have to buy a flat screen every 3 weeks to offset the increases in food prices.
“The demand, triggered in part by the increasing use of agricultural commodities to make ethanol and other substitutes for crude oil, may keep prices high for years. We are sitting on structural changes that will affect agricultural prices for a long time to come.”
It isn’t volitility if it only goes in one direction. As discussed here in the past, instead of excluding food and energy from “core” inflation BLS should produce an index the puts those products in some kind of moving average to smooth out temporary increases and decreases.
The necessities are food, energy, and medical care. These continue to increase in price, rapidly. You could put housing on that list, except that in recent years it has been overconsumed.
“You could put housing on that list, except that in recent years it has been overconsumed.”
I would add that not only has it been overconsumed, but it has consequently been overpriced and overproduced, which brings us up to the moment when we see 5m homes for sale in a nation with 114m households.
GEEZ does anybody in the BIS go shopping?
hamburger is up 50% in a year i see lots of product downsizing, milk ice cream is up, and fruits, so why can’t this be included in the statistics?
Brings to mind the story of GHWB’s surprise at discovering electronic scanners at the supermarket…
Yes - me too - that was classic!
We have a nice room for you aNYCdj. Sit back, drink the koolade….. you’re feeling very sleepy now.
We have a very nice room for you aNYCdj. Sit back, drink your koolade…. you’re feeling very sleepy…
Where do you folks live? Milk is $2.49 per gallon, I get a fantastic porterhouse steak (prime) for $9.59 per pound, fresh Alaskan salmon (not that lousy farmed stuff) for $7.99 per pound, extra lean hamburger $3.49 per pound. I could go on.
The real question is, what did all those items cost a year ago? Depending on where you live in the country certain items may be cheaper than other places. But, the main point is, how much more do those items cost you this year compared to last year?
Milk (at Sam’s Club) is approaching $3 a gallon. It was about $2 a couple of years ago.
Steak is about $10/lb, was about $7/lb 2 years ago.
I have observed the same pattern for other items like Salmon, ground beef etc.
Oh I forgot one thing that goes with the steak- a fantastic red wine - Columbia Crest 2003 Grand Estate Cabernet Sauvignon for $8.06 a bottle!
If you all are worried about food inflation, invest in companies in the food industry.
The problem is that high inflation is already an open secret, which means it is already priced in to food industry stock prices (ditto for oil industry prices…).
I disagree about energy prices being priced in. Many models use an oil price of $60 or less, and many energy stocks trade with a PE ratio of 10 or so. Still cheap.
Maybe they are pricing the future unraveling of current inflation hedges (gets too confusing for me at this point!).
You can’t eat a stock certificate. Get real.
Even if the hedge is perfect, you’re still tying up capital and foregoing a real return on that capital. Inflation still has costs.
The latest photo in the HBB Photo Gallery is a For Rent (or Rent to Own) for a condo in Corona! It looks like the sign is taped to the rear window of a hummer. The meltdown is in full swing. They should just drop the condo and live in the hummer, as it will be harder to reposses, compared to foreclosing the condo.
On my way to play in a golf tourney at The Retreat in Corona. The tourney is a fund raiser for the local High School’s football team of which my nephew is a part of. Just found out over the weekend that the clubhouse is still not finished (about 10 months behind schedule) and the whole after golf shindig will take place in a friggin tent…. Flipper hell has this “elite” club dying for cash because of the lack of support from the local community…
I’ve never seen the words “elite” and Corona, in the same paragraph.
The hummer is no harder to repossess - it is equally as hard to sell as a condo (no buyers at any price).
BB & BLS will get a break on inflation as rents are falling now in popped markets w lots of new build condos and townhomes =
inflation solved
Manhattan rents are suffering a version of the dot com rent squeeze which drove SF Bay Area rents through the roof before the tech stock bubble collapse. I hope the hedgies enjoy their industry’s version of the gold rush while it lasts.
Associated Press
Manhattan Rents Skyrocket
By VERENA DOBNIK 07.13.07, 1:07 PM ET
NEW YORK -
The average rent for a Manhattan studio is around $2,000, and a one-bedroom in New York’s most expensive borough goes for more than $2,700.
That’s according to a report released Friday, which reflects that “we’re the center of everything,” said Christopher Dente, spokesman for Citi Habitats, a Manhattan rental brokerage firm. “There’s a lot of relocation - thousands of people are coming in.”
http://www.forbes.com/feeds/ap/2007/07/13/ap3912760.html
The Sarasota Herald Tribune has been pretty good about reporting the housing bust. Here’s the latest.
http://www.heraldtribune.com/article/20070716/REALESTATE/707160455
This excerpt is pretty blunt: “Ignoring the laws of supply and demand, those builders churned out far more homes than were needed during the boom…”
The article talks about this downturn having three phases. The last is the foreclosure phase, after which the market can return to normal. “But that will take YEARS…”
Another Herald Tribune article, this one about declining rents due to all the unintentional landlord FBs.
http://www.heraldtribune.com/article/20070716/REALESTATE/707160433/1438
I have a friend who is one of thoes. The tenant stopped paying rent three months ago, and they are trying to figure out the eviction process. They think they are going to put the house on the market again, once they clean up the mold.
There is no need to endlessly fret about subprime, as it is contained! And besides that, the stock market always goes up, in the long run.
What Could Topple Bulls’ ‘Wall of Worry’?
By E.S. Browning
Word Count: 919 | Companies Featured in This Article: Bear Stearns
The stock market is again living up to one of Wall Street’s oldest sayings. It is “climbing a wall of worry” — rising to record heights despite deep worries that any one of several risks could send it tumbling.
The “wall of worry” idea is that stocks can still flourish when people are nervous. Skeptics hold money on the sidelines. As their fears are alleviated, they put money into stocks, pushing the market higher.
The market keeps climbing only if worries are held in check. Here are some of the main concerns and what it could take for them to knock the stock market down.
High-risk investments. The biggest fear now is that some risky corner of the market could blow up.
Since two hedge funds run by Bear Stearns got into trouble, the main worry has centered on the kinds of investments those funds made: securities tied to subprime mortgages, which are mortgages taken by borrowers with below-average prospects of repaying. Other money managers bought such securities because of their high yields, and investors fear more blowups.
Bulls note that subprime mortgages are a small part of the mortgage market and haven’t infected the economy more broadly. So far that reassuring view has prevailed.
Skeptics respond that other high-risk securities, such as corporate junk bonds, corporate loans, or developing-country bonds, also could face trouble. Several junk-bond deals have been sidelined in the last few weeks as investors reassess their riskiness.
http://online.wsj.com/article/SB118454728960567186.html?mod=todays_us_nonsub_money_and_investing
So, I posted a couple of weeks ago that I was concerned about the financial stability of my landlady. She purchased approx. 10 houses at peak prices in 2005-06 to rent them out, with no possiblility of positive cash flow for years, from my crunching of the numbers.
I started getting foreclosure relief offers in May, then I got a notice of lapse of her homeowner’s insurance, a notice of default from her second mortgage-holder, and I checked the tax collector’s website, and she hadn’t paid last year’s taxes on my house (totalling nearly $6K - I pay $1350/mo rent on a 1400sf 3/2 - and she paid $310K for the house, so you can see where she’d be in the red.)
Anyways, for the last month I’ve been searching craigslist and the paper for a new place to live, and about a week ago, I get a call from my landlady’s assistant, who is also another tenant. My landlady committed suicide. She couldn’t have been more than 35 years old. I felt really awful, because I’d been calling her a flake and worrying about my deposit. I know she was in real financial trouble, and maybe there were other things in her life that drove her to do that, but it has put a very real face on what is happening here in FL and everywhere else.
My husband and I have been watching the market collapse unfold since we moved to FL in 2005, awaiting the time when prices come back in line with incomes and the fundamentals start looking sound enough to buy. And for all that I despise these stupid people who caused this whole mess, I may wish them financial ruin, but I sure wouldn’t wish death on any of them.
I see rents crashing in FL now- pay to an escrowe account ?
that’s ugly/scary
A lot of people who were ruined financially in the 1930’s ended it by jumping off buildings. Will epidemiologists see another rise in suicide rates this time around?
Well, that sure puts things into perspective… I feel this is only the beginning of the carnage. A little civility is warranted.
“My landlady committed suicide”
woah! i spend too much time wishing my LL would do that same dirty deed. after reading tampa’s post i still want him to expire before my lease does. ok, well BK might be cleaner!
Oh, dear. Gives a new meaning to the title of the website “Housing Bubble Casualty”.
I worry about my serial flipper neighbor,
who has young children,
who just refinanced the last of her home equity
to buy a swamp lot in SC
and to put in new granite countertops.
Holy crap, how awful! I’m sure there were other mitigating factors, but still..
Gosh, that is terrible. I agree, I don’t want to see anyone commit suicide over this, it’s only money.
:I don’t want to see anyone commit suicide over this, it’s only money
That’s our p.o.v but for many others, it’s a demarcation of a life which is out of control. And for many, being out of control is worse than being out of the body.
Oy vey. Well, s–t. That’s truly horrible. If there is a g-d, may s/he/it have mercy on her.
I fear she was not the first and will not be the last life lost (can you say accidental victim of spreading arson fire?) to the bubble. And for those who say the evil of this never killed anybody, I humbly disagree.
I think you will see more of this than anyone is expecting.
Not so much from the weasels and crooks, but from the basically honest people who feel obligated to pay off their debts. Especially if their pay is declining or stagnant, and they are several hundred thousand dollars upside down. with the bank, and are looking at being that far in the hole for the rest of their lives.
If not for the “Law of Unintended Consequences”, I could easily see myself being in the same fix. As it is, I’m currently worth more to my kids dead than alive. I can easily see people asking themselves, “Would it be worth giving up 10-15 years of a miserable existence to insure that your kids have the best chance of surviving or getting ahead??” That’s what a lot of people may be looking forward to.
What Pi**es me off the most is that the mover-and-shaker a-holes that have been sucking the lifeblood out of this country’s economy with their “creative financial instruments” will be able to walk with the cash, and not look back. I thought that the Enron fiasco might be the tipping point for some people to end up getting shot (especially since it was in Texas)…..but even after all the misery they caused, only Ken Lay is looking at the grass from the wrong direction.
If there is an afterlife, justice must be there……..it sure isn’t around here anymore.
Don’t feel bad about your landlady. She probably had more issues than money. It’s not your fault,,, period! You are doing the right thing waiting out this bubble. Stay the course, you will get your own home soon. Best of luck to you.
Volatility is also contained…
Rising Volatility Risks Strangling Liquidity Flow
By Justin Lahart
Word Count: 529
Investors spend a lot of time worrying about big jolts to financial markets. But a rising frequency of little tremors could be the more important concern.
For the past several years, financial-market volatility has been strikingly low. But that could be changing. Last week, there were two days when the Dow Jones Industrial Average moved more than 1% in one session — one up and one down — bringing the number of 1% days this year to 15. That compares with 24 such days in all of last year.
http://online.wsj.com/article/SB118455084708667199.html?mod=todays_us_nonsub_money_and_investing
Volatility containment is not so much about the frequency of large 1-day movements on the stock market, but rather about the magnitude of such movements, which are contained to 1% or so…
There is a change of regime in terms of frequency in the number of large-1-day moves in U.S. stocks that goes back to Fall 2003 or so (can’t remember the exact date, but anyone who is curious and who can access CRSP data is free to check). Containing volatility is a great way to pump up stock prices, as there is less perceived risk (but more systemic risk
) as a result.
http://www.library.hbs.edu/helpsheets/wrdscrsp.html
This is a short sale:
MLS #: FX6473372
8138 NORWOOD DR Alexandria, 22309
List Price: $399,000
Prior Sales:
03/01/2007 $549,000 HASHMI SYEDA N NASEEM MOHAMMAD
04/10/2000 $160,000 HASHMI SYEDA N
12/20/1994 $155,000 JALEEL MOHAMMED
The property gained a whopping $5K in 6 years, then added another $389K in the next 7 years, then suddenly dropped $150K in 4 months.
“suddenly dropped $150K in 4 months”
Breathtaking…
Is having one of the same names on the 2000 and 2007 “purchases” somehow an indicator of fraud? My guess is not that the property hasn’t “lost” 150k — but rather, that the supposed gains in the 549k purchase are illuosory and fraudulent. Prolly a first payment default, too.
Mohammed is a pretty common name. I do think the 549K purchase was illusory. But it’s a “short sale”, so someone’s taking it on the chin.
I found an early precedent for the use of helicopter drops (coupled with T-bond risk premium “containment”) to offset economic collapse:
Eccles was a convinced and outspoken fiscalist. He argued that the Great Depression, then in full force, was the result of inadequate aggregate spending. Total spending in the private sector, he noted, was greatly reduced from its 1929 levels and nowhere near enough to promote full employment in spite of what everyone regarded as a loose and easy monetary environment. The fiscalist solution was for federal and state governments to undertake expanded spending programs that would propel the U.S. economy into a full employment mode. The principal role of monetary policy, Eccles argued, was to serve as a catalyst for this expansionary fiscal policy. By keeping interest rates “low,” monetary policy would enable the Treasury to borrow cheaply and finance expediently the various government spending programs. Such a spending-and-interest-rate philosophy was music to the ears of Treasury officials. A monetary policy that enhanced fiscal policy was just what they wanted for their big-spending programs.
http://www.minneapolisfed.org/pubs/region/99-06/martin.cfm
1931? fed raise rates 300 bpoints to stop gold from moving out after UK dumped the gold standard- that’s what iced it
Eccles came in 1935 to clean up the mess left behind from the early days of the Great Depression (1929-1935). My guess is that BB is trying his hardest to skip to the chase (i.e., avoid repeating the earlier part of the Depression and go straight to the recovery phase). This is reminiscent of recent financial press articles that are hoping the economy recovers soon from the recent non-recession.
Problem is we need to get money into the hands of the working and middleclass, not more money in elite hands. The elites won’t buy all of the houses, products, services, etc… available. Hence we could see deflation anyway as there are not enough buyers regardless of the rate of M3 growth.
That’s my thought exactly, though I must confess my amazement at how full the mall parking lots are around San Diego despite the apparent absence of home equity gains these days…
credit cards?
“China has suspended the import of tainted meat products from seven US companies, including Tyson Foods Inc, the world’s largest meat processor.
The products that included the main ingredients of some Chinese delicacies such as pig ears and chicken feet contained salmonella, feed additives and veterinary drugs, says the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) website (www.aqsiq.gov.cn).
The other US companies on the ban list are Sanderson Farms Inc, Intervision Foods, AJC International Inc, Cargill Meat Solutions Corp, Van Luin Foods USA Inc and “Thumph Foods”, which most likely is Missouri-based Triumph Foods….”
Bloomberg
and also a milk by product
The amount of selenium in Jarrow’s Whey Protein Vanilla and Whey Protein Chocolate supplements exceeded Chinese health levels, the General Administration of Quality Supervision, Inspection and Quarantine said today on its Web site, citing a July 13 inspection by the agency’s Shanxi bureau.
Chinese inspectors, who’ve criticized U.S. media outlets for exaggerating the severity of China’s export quality, are hitting back at import bans by the U.S., Europe and Japan, calling them unfair trade practices. China has halted or destroyed shipments of at least nine U.S. import brands for safety violations since early June.
“Some foreign media, especially those based in the U.S., have wantonly reported on so-called unsafe Chinese products,” the Chinese inspection agency’s head Li Changjiang said, according to a report today by state-run newspaper China Daily. “They are turning white to black.”
China DAily
Ok Aladin Sane and other aspiring poets, ‘Tis time to write the words to the new song.
“We’re having a trade war. a wonderful trade war
the prices are rising, inflation is flying
and …
Fine by me if they stop buying our food. Maybe prices increases will level off. There’s nothing like bidding against 1 billion Chinese who have fists full of dollars and who want to buy our food.
If this is the “trade war”, it won’t stop at food.
Just think of it as mutually assured economic destruction. We buy a lot more from China than they from us. But if we do not buy from them they have rising unemployment which means riots.
Shooting wars have been waged over smaller things.
Ah the Dems are raising gobs of money and the Republicans cannot even raise half of what many Democrats have raised. One Republican candidate has quit and there will soon be more. It seems that the people are fed up with Republicans. The pendulum has swung too far to the right. I think we will now have 20 to 30 golden years of Democratic presidents. And yes that is wishful thinking!
I think we’ll be lucky to not end up Communist after this debt bubble breaks.
“Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters… They that give up essential liberty to obtain a little temporary safety deserve neither liberty or safety… Our new Constitution is now established, and has an appearance that promises permanency; but in the world nothing can be said to be certain except death and taxes.” — Benjamin Franklin, separate sayings joined
i don’t think they will go down without a *big fight*.
“i don’t think they will go down without a *big fight*”…
…in Iran.
I think we will now have 20 to 30 golden years of Democratic presidents.
After the last 12 years or so, I’ve come to the conclusion that we (the people) are best off when one party controls congress and the other has the white house.
Then they spend all their time fighting each other rather than ganging up on us and what legislation they do manage to produce is somewhat balanced.
Stock Market Correction Imminent?
Apologies if this was previously posted over the weeked:
“Bets in the options market against the Standard & Poor’s 500 Index have exceeded wagers it will rise by a 2-to-1 margin for a month, the longest since Bloomberg began compiling the data in 1995.
That’s seen as a warning sign the market is due for a decline of 5 to 10 percent after the S&P 500 rose to two records last week, say managers of almost $1 trillion at Morgan Stanley Global Wealth Management, National City Private Client Group and Russell Investment Group. The Leuthold Group, whose flagship fund has beaten 99 percent of similar funds over the last five years, expects the S&P 500 to slide as much as 19 percent by the end of the year.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaqZ8.eQix_k&refer=home
“Bets in the options market against the Standard & Poor’s 500 Index have exceeded wagers it will rise by a 2-to-1 margin for a month, the longest since Bloomberg began compiling the data in 1995.”
Short squeeze is imminent
Does this mean that the market could rally ?
It means the market could continue to rally (did you notice the DJIA hit two consecutive records — both last Thursday and Friday?).
A short sqeeze implies a rally on a particular equity as traders who are ‘”short” cover their position. Not sure what GS meant…
I meant lots of short squeezes all happening at the same time could hit the whole market with a surprise rally… (this can happen when correlation gets conundrumishly high…)
An overall market rally is a good way to squeeze a lot of shorts at one time.
Not sure a short squeeze works in the options market. Options don’t have an infinite downside…
… and trading in options (e.g. selling if they are falling sharply due to the market rally) does not affect the price of shares, unlike covering short positions.
Writing calls can have an unlimited downside if prices go up sharply.
good point
There’s two sides to all those options the retails buy. (Professionals who trade options are mostly short options). They also buy and sell the underlying to manage their exposure to changes in the its price. So big moves in the option market generally do have an impact on the underlying price.
P’cola popper,
Did you attend a real estate auction in Pensacola this weekend, I thought I saw from a comment this weekend that you were going to attend? If so, what did you see? I apoligize if you posted somewhere else, I did not see it. BTW, I was in PC over the 4th, I have a friend that has a home on Meadson Way out on Perdido Bay. I could not believe all the houses for sale in the area.
Thanks
I attended the auction and posted up a report in this past weekend’s “Local Observations” thread. Sorry for the late reply.
I posted up a report in this past weekend’s “Local Observations” thread. Sorry for the late reply.
Not sure if this was mentioned over the weekend, but there was an article in the Phila Inquirer’s RE section essentially promoting people to buy second homes. With the subprimes blowing up and credit standards toughening, it seems that the new tact of the RE industry is to go after the folks who have money and good credit ratings and have them overcommit themselves.
saw the same article mikey. the RE’s are trying like a mofo to get anything going on the sales side of the equation. NOTHING is moving.
My parents live outside of Philadelphia, and they would agree with Daniel’s assessment of the local real estate market.
However, my mother and father probably missed yesterday’s article. Reason? They refuse to read the Inquirer’s RE section. (They think it’s a bunch of useless BS.)
the RE’s are trying like a mofo to get anything going on the sales side of the equation. NOTHING is moving.
What these bozo’s keep forgetting is that a house is not an impulse purchase (unless one is a sub-prime borrower). Its not like getting a raise or bonus and running out to buy that convertible you’ve been wanting for a while.
Same thing in the Washington Post Magazine that came out Saturday.
Better late than never…
RealtyTrac’s Foreclosure Activity for June’07 in charts:
http://www.recharts.com/foreclosures.htm
Those numbers are wacky and aren’t even remotely accurate. Zero notice of defaults in Florida in June ‘07? I don’t think so.
they do look wacky. is there any other/better source of foreclosure data?
Dunno if they are any better, but there’s http://www.foreclosure.com and http://realestate.yahoo.com.
I heard an excellent explanation as to why the U.S. Stock markets may continue to rally — from an interview on CNBC. The Oil producing nations (Not just OPEC, e.g. Russia, etc) have about $3 Trillion of reserves from the increased demand in oil, and run up in oil prices. The U.S. Stock Market @ 15x-16x earnings looks cheap to these countries, and with so much $$$ they’re trying to find places to put it! This might help explain why the markets can continue to rise while U.S./retailers, etc. are not looking so good!
The most bogus reason I can imagine for countries that are trying to divest from dollars.
There are approximately 8T dollars overseas. $3T in OPEC alone. 1.2 T in China, 800B in Japan, 408B Russia, 214B India, 1B the rest of Asia (S. Korea, Thailand, Vietnam, Malaysia, Taiwan, Philippines, etc.) and don’t forget our good buddies like France and Germany - 500B in Europe.
It is doubtful that a foreign entity is going to be buying stocks in the US after what happened to China’s attempt to buy Unocal and Dubai’s attempt to purchase the ports.
The US stock market despite its apparent growth is the 56th best market world wide in which to have any moneys. Maybe it can go from worst to first. I would rather have my moneys in the China stock market trading at a PE of 50 than in a US stock market trading at a PE of 16. China’s average earnings growth this year has been 45%, The US is running at 8%. A 45% rate of growth justifies a high PE. A PE of 16 is 2X the historical average for S & P 500 companies.
The quality of the US earnings is also very suspect, liquidation of depreciated assets, sale - lease backs, negative investment in equipment and all fueled by the tapped out American consumer.
Well then…what is your explanation of the relentless rise?
Carry Trade
borrow money in Japan convert to Euros buy Gilts and use gilts to margin purchase of US fund equities.
If all works out OK: APY ~11% incl US stock dividends.
I do not like this web site very much, but it has decent graphs of the Euro/Yen and a decent graph of the S & P 500. This graph is the USDYEn vs S & P 500. I could not find the graph of EuroYen vs S P 500. The dollarYen is 0.85 correlation.
The Euro Yen correlation is +0.94, is it causal - we will not know until the Yen rallies. But using Sharpe’s ratios the carry trade is 1.25 this morning calculating for an 8% return. 1.25 is very high generally implying safety.
http://tinyurl.com/3bg2tt
Duh, Yahoo’s finance link.
Some might argue that its the transparency of US markets, at least when compared to places like China.
True, that would justify trading with a higher PE than 8. But a PE of 16? For earnings growth happening by share buybacks. Not
“For earnings growth happening by share buybacks.”
There’s the rub. It is not just whether share prices are growing but why!
The Dow is hitting a new record high. But compare the Dow to the other indexes…. this is the most clear cut example that I have ever seen of manipulation of the markets by a manipulation of the Dow.
The DJIA is the one which gets reported on all international news reports as the barometer of the U.S. economy.
“craigslist finds”
Yesterday’s craigslist Phila offers “$99000 investor special, $1076 monthly gross” — whaddaya know, a return to normal ratios, monthly rent more than 1% of the asking price. Section 8 tenant. Guess it’s only us High End tenants that are hard to find. Let’s live it up and enjoy our status as rare birds.
median income in philly = 32K. absent of the funky financing, how’s anyone gonna pony up $200/sq ft for a house in s.philly rowhouse ‘hood? let the bloodbath begin.
On a submarine, there is a certain depth the ship can go to, and no further.
On a subprime fueled Wall Street, there surely must be a certain height the $hip can go to, and no further?
Air$hip, that is.
“IHOP buying Applebees for 2.1 billion”
“As consumers worry about a soft housing market and rising gas prices, they are less willing to pay for a night out, analysts say. Meanwhile, the cost of everything from milk to beef steadily climbed.”
The real problem is that people have wised up to paying $9 for the same sandwich they could make at home for $3. Further consolidation/bankruptcies coming in the casual dining sector. There are way too many restaurants serving the same crap.
Covered appb this morning on the news, did OK but was expecting a much greater fall. This M&A stuff is really getting on my nerves, it’s a great cover-up… instead of flawed companies taking their bruises they are put under another’s wing and sheltered from the sh*tstorm. Interesting IHOP is up so much on the news. I wouldn’t be surprised if this runs into some snags later on.
DOW 14k here we come!
There are way too many restaurants serving the same crap.
Amen! We went out to eat last night to a mom and pop steakhouse in our town. It was empty, no more than 20% occupancy at 6:00 PM! I was expecting a short wait.
I think they all came to NY. My h on business in Albany had to wait about an hour to get served earlier in the week. I was out this weekend and every restaurant I drove past was packed at usual.
I however seemed to notice a spike in fast food. Since it takes 1/2 an hour just to get to stores I often do all my “town” errands at the same time. Meaning at some point I have to feed my kids. Earlier this year when I realized McDonalds was charging me $7/ per child was when I told them we’re bringing snacks from now on. Subways still not bad and more nutritional.
Anyone else thinking of ditching processed foods? I don’t buy anything that isn’t fresh, and I just bought my last box of mass-market cereal. I’m even considering stopping milk purchases even though I only buy all natural milk. I’m just not sure there is a good scientific case for milk consumption.
I’ve been reducing my processed food consumption. No more mass market cereal in a box, frozen dinners, or any foods processed with artificial sugar. This includes sucrose, fructose, and corn syrup, and I havent touched any of the diet sweeteners (nutrasweet, etc) in years as they tend to make me sick. Hell, just eliminating corn syrup, fructose, sucrose in my diet has been an interesting challenge…almost every prepared food bought in the grocery has these ingredients in them! And buying anything with real, unprocessed sugar in it is much more expensive (and usually has to be found in a health food store/organic section).
As an interesting side effect, my allergies (and allergy attacks) have gone down by about 75%. Also, after you stop eating things with fake sugar in them for awhile, those items will have almost no taste to them when you do try to eat them again. (Regular coke, pepsi, no flavor whatsoever. Might as well drink water).
Tonight for supper I had toasted pita bread, Amish cheese, carrots, a glass of red wine, and about 3 oz of smoked turkey. Trying to eat simple, healthy food in moderate quantities.
Here’s a good case for milk consumption - avoiding osteoporosis.
I am an appraiser in Orlando. I starved during the runup as I did not believe the so called values etc. I am loathe to work for brokers and refuse to cut fees for the management companies so they can take half my hard earned fees. So I was was pretty much screwed this past 4-5 years.
Now I am working for large law firms in the area in fraud investigation. It is nothing short of amazing. I will be giving seminars on fraud investigation to the bar association throughout the state beginning in the fall. As a part of this effort I need to compile the types of fraud evident in real estate now and in the future.
There are greater minds than mine on this board and I would greatly appreciate your help in putting this list and detail together. In the end it will benefit all of us as we clean out this rats nest.
Please send any and all scams you have heard about along with details to my email at jconnor3@gmail.com
I will keep it confidential in all cases.
Your help is appreciated and I will post data here as it comes to me.
nice to hear you are working!
Paladin’s side kick. Nince!
Let’s say a 6.8 earthquake hits Japan and shakes up the largest nuke plant in the world, along with starting a small fire in said plant?
http://www.alertnet.org/thenews/newsdesk/N16378965.htm
This could shake up the carry trade?
Radiation is contained.
AFX News Limited
Fire at nuclear reactor after Japan quake; no risk of radiation leak - officials
07.16.07, 12:25 AM ET
http://www.forbes.com/business/feeds/afx/2007/07/15/afx3915425.html
Sad about Japan, but you aren’t far off that nuclear can shake up the carry trade. A large number of hedge funds over the last few years have been hedging by playing the Uranium market/ Oil spread (corr 0.21) . This market is coming unhinged today.
I think a few hedgies are in trouble.
Watching cnn trying to see what’s happening with the quake in Japan and they are concentrating on a car chase in ft lauderdale, as their lead story…
Here’s some early data on June sales in Southeast FL, courtesy of a local real estate brokerage:
* Sales plunged 69% from a year earlier — to 710 units in June 2007 from 2,294 in the same month of 2006. That was also down ever so slightly from the May 2007 reading of 720.
* For-sale inventory rose 11.9% YOY to 24,830 from 22,194 a year ago. That’s down a few units from the cycle peak of 24,852 in May 2007. At the current sales pace, that’s good for 35 months worth of inventory. No surprise, then, that …
* Median home prices dropped 4.3% YOY to $292,000 from $305,000.
More details in this write-up, if you’re interested …
http://tinyurl.com/2dtuqm
ABX subprime index near record lows
By Leslie Wines
Last Update: 1:16 PM ET Jul 16, 2007
NEW YORK (MarketWatch) - The ABX “BBB” 07-1 index, which gauges risk in the subprime mortgage lending industry, sank to near-record lows Monday, amid persistent worries about deteriorating loans in that industry. The index measures the performance of loans made dueing the second half of 2007, when many home purchase loans were made to buyers with shaky credit standings. The index traded around 44, nearly its weakest level ever. “The BBB- 07-1 vintage tracks loans that were originated at the end of 2006, a period where losses on subprime loans have been particularly steep,” said Tony Cresenzi, fixed-income analyst at Miller Tabak.
Dang… that’s about 5 points in one day… I wonder how the other grades are doing - this hasn’t updated yet:
http://www.markit.com/information/affiliations/abx/history
ABX-HE-AA 07-1 = going over Niagra Falls in a barrel (gulp!) –
and that is just through Friday 13th.
Those charts are updated for today - it’s a major bloodbath! Look at the A traunch in particular - it’s at 88 now down from 98-99 just a couple of weeks ago.
Right — plunging nearly straight down with no bottom in site (although I guess these all have a hard floor of 0?).
…when your dog is named fico
When your dog ate your credit report…
Are wealthy consumers getting tired of overpaying for overpriced coffee?
http://www.marketwatch.com/quotes/peet
Nope. The great irony of this decade (aside from housing) is going to Starbucks and watching people pay $4.99 for a 16-oz coffee drink, sit in the drive-thru for 10 minutes in an idling Ford Expedition, then complain about not being able to afford $3/gallon gas.
Maybe if gas gets too expensive, they will figure out how to make cars run with Peets or Starbucks in the engine (but we are a long way from that point, as Peets coffee costs far more than $3/gallon at this point…).
Starbucks is $29/gallon. Gas is $3/gallon. People are complaining they can’t afford gas but no one complains about starbucks. Pathetic.
In the Alt-A Bay Area, some of these are also the same people with outrageous driving commutes, who have “No War For Oil” stickers on their vehicles.
[Alt-A Bay = San Francisco Bay]
What ever happened to Paladin? Is he in a concentration camp?
He posted about a month ago. With the meltdown of the sub prime lenders, half his work was done. The other half, working with authorities on fraud, is best done at a low profile level. He mentioned he is keeping a journal and will publish his most fascinating stories sometime in mid 2008. I think the FBI asked him to not blog while they fry some fraudsters.
test
http://www.investorsinsight.com/thoughts_print.aspx
John Mauldin exposing the Emperors New Numbers:
“The Birth/Death Ratio
To start with, let’s dissect the employment numbers. The official headline number for June was 132,000 new jobs. Since we need about 150,000 new jobs just to stay even with population growth, that is hardly a robust number, but not too far off from what would be a good number. Except that there are some problems with the headline number. ”
“Last month, the BLS estimated that there were 156,000 new jobs in the birth/death ratio category, which was 24,000 more jobs than they estimated were created for the month. OK, maybe no problem. Looking back over five years, the economy has created about that many new jobs during the month.
Except that they estimated 26,000 new small-business construction jobs. With home construction dropping, do we really think that the same number of new jobs was created in construction as in June of 2006 and 2005? Or that 153,000 new jobs in small-business construction have been created this year? Really? ”
“Retail Sales? Let’s Hear it for Inflation!
Wal-Mart sales were up a higher than expected 2.4%. They noted that home goods and apparel sales were weak but that grocery sales surged. No kidding. With food inflation at almost 7%, grocery sales are clearly going to increase if we just eat the same food (although most of the country could stand to eat a lot less), and Wal-Mart is probably increasing market share because of its lower food costs. As Bill King notes, food inflation boosted June sales at other chains like Costco, where food sales are a large component of overall sales.
Retail sales in general dropped 0.9% last month, the worst drop in almost two years. Home Depot and Sears reported sharply lower earnings estimates on the back of a weak housing market. Same-store Home Depot sales may be down mid-single digits.
Disposable income has been falling for the last three months. Credit card debt continues to grow even as mortgage equity withdrawals are slowing rapidly. The consumer is clearly under pressure.
In fact, however you slice it, retails sales did not keep up with inflation on a year-over-year basis. And if you factor out increased gasoline and energy expenditures, they are downright punk.”
http://www.investorsinsight.com/thoughts_print.aspx
And this:
“Asking the Chinese to Buy Our Mortgages?
This all amusingly contrasts with the following news item today from Bloomberg, in the you can’t make stuff like this up category. US Department of Housing and Urban Development Secretary Alphonso Jackson is in Beijing. He is meeting with various Chinese banking authorities, asking them to buy US mortgage-backed securities. Evidently he is doing this with a straight face. The same story goes on to talk about the collapse of the subprime market.
On the one hand we have US Congressional leaders demanding that China let the dollar drop another 20% or so against their currency, and then another government official asking them to buy more US debt, which will drop 20% when they do allow their currency to rise. And they call the Chinese inscrutable?
Has it come to this, that we have to have government officials going to China to ask (some would impolitely say beg) them to buy our debt? You do have to appreciate the irony. Then again, maybe they think it is their punishment for selling us bad pet food and toothpaste. You sell us unsafe products and you have to buy our mortgages.
“Evidently he is doing this with a straight face.”
I seriously doubt he grasps the absurdity of the sales pitch.
I’d never enter negotiations without at least a few of these in me…
Alfonso
Sugar Cube
2 Dashes of Angostura Bitters
1.0 fl. oz. of Dubonnet
Champagne
Suggested Garnish
Twist of Lemon
Mixing Procedure
Place Sugar Cube in a champagne flute and soak with Angostura Bitters until absorbed, add Dubonnet, top with Champagne, stir, garnish with a Twist of Lemon.
“…to ask (some would impolitely say beg) them to buy our debt.”
Perhaps the term you were searching for was ‘to convince.’ Because as some posters here have periodically pointed out, if our economy seriously tanks and we stop buying their manufactures, they may end up facing a serious shortage of demand with potential implications for labor unrest. In short, they face a similar problem in the question of whether to continue financing the U.S. housing market to the one faced by The Donald’s banker in deciding whether to fund yet another highly speculative real estate venture.
And since they have been discarding female babies in preference for male, the 20-30 year old generation is imbalanced with males….full of testosterone….ready to take on the world….sort of like the 60’s unrest in the USA….it will be interesting.
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Apparently mortgage brokers are having a much harder time finding GFs these days, and we all know greed is the molesting stepfather of invention…
An investor paid $2.2 million for a 3 bedroom, 3 bath apartment last year in my building. It was recently listed at $2.85 million, which is up 30% in one year. Anyone have an opinion on how well it sells?
Lost, here. Appraisal done today, closing the 26th. Six, S-I-X, grueling hours of inspections (in three stages), but that went through. (Geezlouise are they picky.)
Taking bets on whether the buyers get the financing. Praying like those hedgies in NY probably are this very moment, having a religious experience as they watch their funds deflate.
Closing the 26th. Then I send Ben a donation and party, party, party (buy the dogs steaks).
Update then, which will include a link to my new book, “How to Sell your House FAST by Pricing it RIGHT and by Staying Tuned to Ben’s Incredible Blog.”
“Praying like those hedgies in NY probably are this very moment, having a religious experience as they watch their funds deflate.”
Awesome comment!
Hey DC, here is an article from the Washington post talking about Montgomery County Maryland Foreclosures.
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/16/AR2007071600987.html