This Is The Beginning Of The Flood
It’s Friday desk clearing time for this blogger. “The real estate slowdown, continuing nationwide according to the latest figures from the National Association of Realtors, is also having an impact on home sales and construction in Southeast Missouri. ‘It is a lot slower than it was last year,’ said Sheila King of Realty Executives, president of the Cape Girardeau Board of Realtors. ‘But the media blows it out of proportion here. What happens in California isn’t what is going on here, but it is a buyer’s market.’”
“‘There are still homes being built, and there are still spec homes being built, but they are not turning as fast as they were in the last three to five years,’ said Ann Brookman, president of the Southeast Missouri Homebuilders Association.”
“The difference now, said Brookman, is that interest rates have risen and priced some people out of the market. ‘Three to five years ago, everything was selling and selling quickly,’ she said. ‘The question was, how low can the interest rates go? People would get in and sell quickly.’”
“The fallout nationally from the collapse of the subprime mortgage loan market is being felt in Mississippi and the Pine Belt, officials say. In a market that averages 200 home sales per month, said real estate agent Chip Grenn, 45 foreclosed homes on the market is significant but not cause for alarm.”
“Grenn doubts that the high rate of foreclosures will slow any time soon. ‘I gather that we’ve not even scratched the surface,’ he said. ‘I don’t see the foreclosure rate dropping for several years.’”
“Foreclosures have hit the condominium market at the Gulf. Foreclosures are on the rise in Mobile and Baldwin counties, and no price range is untouched, according to Realtors. From a manufactured home in Wilmer to an upscale condo unit in The Beach Club on Fort Morgan, owners are calling it quits and letting the property go back to the bank.”
“With more than 3,000 condo units on the market in Gulf Shores and Orange Beach, some lenders aren’t listing the condo units with Realtors but are turning instead to auction companies for a quick sale.”
“‘This is the beginning of the flood,’ said Jason Haynes of Coastal Auction Co. ‘The banks theory is ‘get it off our backs.’ As soon as the auction method takes hold, you’ll actually find the bottom of the market and the market will come back up. The buying community can name their price.’”
“There is less speculative froth in Greater Vancouver’s housing markets, according to one market researcher. Projects are pre-selling about 75-per-cent of their units at launch instead of selling out, Jennifer Podmore said.”
“‘We’ve really been in a ‘build it and they will come’ market for the last couple of years,’ Podmore, said. In the last six months, however, after a period of rapid price escalation, ‘we have reached a saturation point [and] a lot of investors just don’t have the ability to to be taking on units the way they were.’”
“MPC Intelligence counted 4,508 pre-sale units in projects that were available for sale as of June 30, with another 15,583 units in development to be pre-sold. With buyers in Greater Vancouver taking up about 1,400 units per month, Podmore said that’s between 15 to 19-months supply.”
“‘We don’t see any evidence of oversupply so far,’ said Robyn Adamache, senior analyst with Canada Mortgage and Housing Corp.”
“The price of houses in the €1m bracket are set to fall by a further €100,000, or 10 per cent, in the coming weeks, according to estate agents and market experts. One house in Rathdrum, Co Wicklow went on the market at an asking price of €3.75m but had dropped by €1m at the time of sale.”
“Another house on Kill Lane, Foxrock was put on the market at €1.3 but sold for little more than €900,000, a drop of over 25 per cent. And another house in Sandycove which was guiding at €4.25m just months ago now has a price tag of €3.75m.”
“Officially, estate agents are reluctant to talk down the situation, but many confirm that the market is ‘very tricky’ and buyers are being ‘a lot more cautious’ than they were 12 months ago.”
“The real estate business is having a party in Panama. As of last week, 380 tower projects were under way or announced, representing more than 40,000 condos and apartments. A year ago, it was 11,000 units.”
“The builders say Americans looking for the urban high life in retirement will snap up these buildings in a new Miami that’s half the price of the real Miami.”
“‘The BABY BOOMERS, simply put,’” wrote Roger Khafif, builder of the Trump Ocean Club in the Punta Pacifica shoreline neighborhood, in an e-mail about his target buyers. ‘Without them, Panama’s real estate boom would bust.’”
“Two years ago, when the housing market was roaring along, I called a mortgage broker on the West Coast and…told him that I wanted to interview some recent home buyers who had taken out an adjustable-rate mortgage, one of the big drivers of the boom, and he was nice enough to pass along a short list of names.”
“One of the buyers…told me about her charming new house and the fact that she expected it to be a good investment, even if it had cost a bit more than she wanted to spend. Then I asked about her adjustable-rate mortgage.”
“‘I don’t have an adjustable rate,’ she said.”
“Confused, I called the broker again to see what was going on. A little while later, I got a sheepish e-mail message from him explaining that her loan did, in fact, have an adjustable rate. She just hadn’t realized it.”
“Federal Reserve policymakers have said housing is the biggest risk to the six-year economic expansion. The link with the property market is inextricable as housing and related industries account for almost 25 percent of gross domestic product, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Mass.”
“‘Clearly it’s having an impact,’ said Nicolas Retsinas, director of the Harvard center, referring to housing. ‘How much of an impact, at this point, is easier to understate than overstate.’”
“Observers in the Matanuska-Susitna Borough and in Anchorage report scores of home foreclosures that began late last year and aren’t expected to taper off soon. Before last winter, Realtor Uli Johnson was handling one or two foreclosures a year as broker at Wasilla’s Double Eagle Real Estate. Right now, she’s dealing with 14.”
“‘As of 10 days ago, we had 600 foreclosures in the state; another 300 are in the pipeline,’ Johnson said. ‘And we expect another 300 before the end of the year.’”
“Appraisals coming in below the purchase price is ‘not an epidemic, but it’s just something that’s started to pop up a little,’ said Rod Jackson, Alaska area manager for Wells Fargo Home Mortgage in Anchorage. ‘We’ve had a very, very aggressive market over the last few years… I don’t think it’s anything glaring anyone needs to worry about.’”
“Bottom line, the agents said: Don’t let yourself be talked into more house than you can afford. ‘It’s just as bad to put somebody in a property they can’t handle as to never get them there,’ said Amanda Salmon, a Realtor in Wasilla. ‘I’d rather be a renter than have a foreclosure under my belt.’”
“Residential real estate prices are falling, and the selection of homes to choose from has never been better. There seem to be good deals out there, so should you buy now or wait for the market to get even better? In other words, when is the best time to buy real estate?”
“The sellers and most Realtors I talked to were more focused on the present. They stated that ‘today is the best time to buy.’ They defended their position by stating that prices are way down from their peak (some even felt they had bottomed) and interest rates are still attractive. The Baby Boomers are coming, so get while the getting is good.”
“But is there a better answer, one that does not matter which side of the real estate fence you are on? Try this. The best time to buy is when sellers’ fear that tomorrow will be worse than today. Real estate agents should memorize this answer because it is not self-serving and its 100 percent true.”
“When fear motivates, sellers will entertain offers, conditions and contingencies that they wouldn’t under normal circumstances. This ‘fear of tomorrow’ is a buyer’s friend. As long as they have that ally, they have bargaining power.”
Another great week! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Great week…NAH! This was the Super Bowl. 2 years of Bubble Blogging explodes on Wall Street
David,
I agree. Now if Clouseau would post that he’s ok,we can all enjoy the weekend.
“Bond market turmoil sending investors fleeing from risk may be a worse predicament than the 1980s stock market fall and Internet bubble burst, Bear Stearns Chief Financial Officer Sam Molinaro said on Friday. ”
I wonder if someone will repeat the old matra from the RE boom that “Internet bubble and housing market are different”.
Amazing week indeed… I would say this past week or two was a very pivotal point in the housing market.
Ben should’ve titled this post simply “VINDICATION!”.
Everything we’ve discussed here for years is now coming true, exactly as we expected it to. “Karma” time.
I have seen the world turn over the last month. My line of work (Appliance repair) takes me to the neighborhoods and home of over 100 people per month. I meet many people, retired, blind FBs, flippers, rock price sellers, and my favorite the blind heloc holders. The retired folks dont care its the 40 year old live at home kid that looks like a calf going to slaughter. The blind FBs are valley people “like its OK I got 20% in equity when I bought, DUH”. Flippers and rock sellers just want to show me how special there property is. And the Helocs are too drunk on money. My gut says we are headed to “Lord of the Flies” but my heart says “Grapes of Wrath”. I think that no matter what happens the biggest losers are the children. Just hope its not “Thunderdome” because I cant see Tina Turner leading the country.
“House-price fall hitting homes worth over €1m
Sunday July 29 2007
DANIEL McCONNELL
THE price of houses in the €1m bracket are set to fall by a further €100,000 - or 10 per cent - in the coming weeks, according to estate agents and market experts.
Prices at the top end of the market are dropping on average by €10,000 a month and experts are warning sellers to “significantly lower expectations” in the short-term.
…
The slump is set to continue until at least the end of the year and into 2008. The market itself, which slowed because of stamp duty uncertainty and rises in interest rates, is still very sluggish.”
A ten percent drop in a few weeks is not a slump. It is a crash. Why can’t journalists call a spade a spade?
Yes, I’m now thinking a 20% re-pricing over the remainder of the year in most of the U.S., beginning as of about a week ago. The sharpest downdraft of this whole grinding bear market is now upon us, the part where we’ve let loose of the railings on the playground slide and take the big slide.
Paul — Note that the currency is Euros, and I believe the country in question is Ireland. 10% declines over a matter of weeks cannot happen in the U.S.A., because all real estate is local.
And as far as Dodd and other Congress members who are still trying to figure out how to bail out the lending industry, do they plan to extend the bailout provisions to places like Ireland, where the lenders are apparently also in a pickle (w/ prices expected to drop 10% over a few weeks)?
In the Ravenna neighborhood of Seattle, on my way to my favorite coffee joint I walk by two houses which have been on the market for the past month or so. One dropped from 639 to 599 last week, the other from 839 to 759 this week. A nice little drop, but I’m waiting for bigger discounts. Much, much bigger.
like numbers that represent some realm in reality
599, pphhhtt
you can have em at 300
Let’s see 639 to 599, that’s 40K. 839 to 759, that 80K. How much is a year’s worth of rent in Seattle? Seems to me homeowners are just throwing money away. I’m sick of these bitter home “owners” and their whining to the media.
20%…..This market needs to subside 50%. I make relatively good money and cannot afford a house at 200k. Someone’s making money off this scam. Please tell me who?
Whenever I hear the word “slump”, I think of a movie character slumping over the steering wheel of a moving car after he’s been shot…I guess the slump precedes the inevitable crash.
Everywhere is special (not). The implosion is only beginning in one of the most historically illiquid asset classes known and this same illiquid asset class has been blown exponentially higher and higher globally than probably any time in history. Looks like Calgreedy (Calgary) has finally blown off, even though there still is economic momentum that also is extremely likely to shortly implode. The number of listed houses has risen to over 9,000 now from 4 or 5 thousand a few months ago and this is just starting. Asshandings will be everywhere in short order and there defintely is not a big enough hole in the fence at the slaughterhouse to let many of the greased pigs out before the slaughter begins. I’ve never ever ever seen such greed and ignorance there in my life and just deserts will be the well earned order of the day. From an overall perspective this is a global mania fuelled by manic credit and i won’t be at all surprised to see an implosion of truly historical proportions going forward. 1929 anyone ??
When the indexes closed .5% higher yesturday than where they opened they called said ‘markets sore!’ I don’t get it either
you make money ON the volatility.
“‘Clearly it’s having an impact,’ said Nicolas Retsinas, director of the Harvard center, referring to housing. ‘How much of an impact, at this point, is easier to understate than overstate.’”
Translation: Most folks (even fairly smart and well educated ones) have no clue about how bad the situation has become. In fact, I have given up trying to explain it to people, other than to throw out a few devastating statistics and let them figure the situation out for themselves if they are sufficiently bright to do so…
I too have gone mute. I give the stats and the history from 70-90’s here in so-cal…. no one thinks their house is going to lose money or that their jobs/investments are at risk.
Its Surreal
Isn’t Harvard the university that lost $350 million when the Sowood hedge fund blew up this week? No offense to Harvard but they don’t have much credibility to discuss economics right now.
Harvard is also home to the Ivy version of David Learah, REIC poodle Nicholas Retsinas, Director of Harvard University’s Joint Center for Housing Studies. A sampling …
The new homeowners
By Nicholas P. Retsinas July 8, 2007
CONGRESS, presidential candidates, and lots of Americans may be giving a tepid welcome to the immigrants settling into America’s neighborhoods — some illegally, most legally. But the housing industry should be sending a welcome wagon. And every baby boomer hoping to sell his home in the next decade should be embracing these newcomers, for they will constitute an increasing segment of the home-buying, apartment-renting market. According to University of Southern California demographer Dowell Myers, immigrants and baby boomers must “forge a new social contract.”
If they’re anything like the illegal immigrants taking up residence in Tucson, I’m not forging anything.
Harvard is also home to the Harvard Economic Club circa 1929…
We should all know what happened in 1929 and study some of the comments from the higher educated of our times. John Maynard Keynes in 1927. ” We will not have any more chrashes in our time.”
Irving Fisher,leading U.S. Economist,New York Times Sept. 5th 1929. “There may be a recession in stock prices,but not anything in the nature of a crash”.
Stocks in no small part, are a confidence game.
Without confidence, no one would buy.
So confidence men are required to build confidence in stocks.
Hence the reason that so few with any exposure in the market will every say anything bad about it.
why is the market selling on friday on a regular basis?
why should I buy the dips?
why is the market selling on friday on a regular basis?Noone wants to hold over the weekend. Potential gap-down on Monday.
This is fine except who wants to live in a neighborhood where homes designed to hold 4 or 5 have 20 instead? These type of buyers don’t enhance property values.
Why should I care about the housing industry now. They’ve shown no interest in producing housing that suits my needs at a price I can afford. If that changes, maybe I’ll care.
I certainly would not want to live in a neighborhood where a house designed for a single family is housing multiple families instead. I have a better class of neighbors in my apartment complex. I think to insure against such trashy neighborhoods, I would have to buy logs of acreage where there are very few jobs way up north, such as in Alaska!
“logs” - I mean “lots” - I should buy property with timber though!
Harvard? Credibility? These Harvard grads are who got us into this situation. We’re toast.
There are few select people to whom I have explain what I know from this blog. Mention “bubble” and people either a)panic and/or b)look at you like you are insane.
We’ve discovered that most people are okay with this explanation: “Prices are very high right now and it’s cheaper per month to rent. Housing prices go up and they go down. We’re waiting until housing prices go down. ”
People seem to accept that without much emotion. They may think that we’re foolish by not staying on the band wagon but the conversation does stop dead, require lengthy explanations about CDOs and MBSs, or have implicit predictions that scare the be-jee-bists out of people.
Any references I’ve ever made to the existance of a bubble have promptly been deleted from my local real estate discussion forum. Instead of a “discussion forum” I suppose its another shill site in disguise.
“Oh! But it’s different here!”
(That’s what I here in Sunnyvale, CA where I live about half the time, where people talk about house prices. Three bedroom 1700 sq/ft ranch houses routinely sell for $1Million. See http://www.zillow.com/search/Search.htm?addrstrthood=Point+Claire+Ct&citystatezip=94087&GOButton=GO
for instance)
I tell them that I expect house prices to drop 50%. And it’s not “renters schadenfreude”. I own a house in this neighborhood, 100% paid for, and I’d welcome a 50% drop in price. That’s where prices should be if you expect values to track wages over the long term. Historically, over the past 125 years in the US, that’s exactly what they’ve done.
(House prices are interesting in that you can get accurate data for HUNDREDS of years past! R-E transactions have been carefully tracked for a long time.)
Hit Play. Cramer, the FED, and Housing Armageddon:
http://www.cnbc.com/id/15840232?video=452808336
Carnage is King
Cramer is a baboon. He thinks that the Fed lowering rates will solve all problems. He and Kudlow should be walked out to Battery Park and flogged.
It’s pure bovine panic.
Booyah!
that idiot helped me more today than steve jobs ever did.
You should of seen him, today on CNBC.
Scared!
But then he was on NBC Nightly News w/Brian Williams acting chastised. He made some vague reference that perhaps Benanke would lower rates but it was very timid. I had just shown hubby the above linked video so we were laughing hysterically….some one must’ve said shape up or you’re out.
Flogged? Naaaah, aluminum baseball bats ’cause they sound cool!
BoooYaaaaaaaaaa!
sell sell sell
“Waaariors…come out to play
..WAAAARRIORS…come out to playaaa”
“Waaariors…come out to play
..WAAAARRIORS…come out to playaaa”
I was just thinking the same thing…
Wow, that old 80’s movie set in NY.
I know, I find it bizarre that he consistently says this, that the Fed’s got to lower rates and all will be better…is there some link or quote that would explain *why* he thinks this? What does he think lowering rates will do–create another scene where people look at those rates, say wow they’re sooo low better buy RE at any price? How can he simultaneously claim that people need to stay away from equities even that float by buying expansions or time, and say that lowered interest rates will solve everything?!
I don’t get it, not even as a short-term ‘fix’ notion. Does he just think lowered rates will signal some sort of muscle-memory reflex to big-money investors that one can feel okay about buying stuff again?!
When you are the largest debtor nation in history, have the reserve currency of the world, have been using that status (along with military might) to tax the rest of the world for your consumption, you can’t lower rates. Well, you can, but the result will be devastating. You can raise to save your currency, but that will ultimately cause devastation.
Our monetary situation has been established for 38 years. In the grand scheme of things, it is amazing it has lasted that long. Sure, the Fed can lower rates. That won’t allow people who can’t pay their bills to suddenly have more wealth. Sure, they may be able to afford more debt, but that won’t solve the long term problem.
To solve the long term problem, we need to increase the exchangeable value of the goods we can trade with the rest of the world. We have built up the huge deficits because we’ve had willing participants accepting the thing we (at least the government and a private bank-in the form of Treasury debt and Fed notes to buy them)create-Federal Reserve Notes. Apparently, more than a few folks don’t want them.
Is lowering the rate/value of those notes going to make people want them? I don’t think so. Is increasing the worth of the notes going to help those folks in debt pay their bills? Negative. There is no good solution, other than producing some other good that people want elsewhere.
great post.
“There is no good solution, other than producing some other good that people want elsewhere.”
If Cramer and other market shills were suspended like pinatas above the trading floor and investors were allowed goes at them for, say, reasonable rates, one such solution might emerge.
If they suspended Cramer and the other shills like pinatas I suspect the next financial bubble will be in baseball bats. I’d buy ten.
That becomes a challenge when goods are made offshore with child/slave labor, no environmental concerns for factory byproducts, and WalMart forcing US companies to make things offshore to lower unit cost.
Add in unions, who are the cinder block around the ankles of sinking US corporations.
He’s saying that because the Fed as “lender of last resort” would allow the banks to borrow all they need to prop up their failing inventories of cash caused by having to hold onto the I.O.Us they’ve been getting (mortgages) instead of being able to sell the I.O.Us to investors as “mortgage backed securities”, you know, mortgages cut up into bonds and sold and thus getting their operating cash back.
In other words, keep the same scam running. Free money for the banks to throw away on losers, getting us into even worse trouble.
Psychology was a big factor inflating this bubble. Sorry, but it will be a big factor making it crash even faster. People have emotions. You can’t pretend they don’t.
These lower rates punish responsible savers. Little Old Ladies who carefully saved up a million or so with a lifetime of frugality can’t get enough interest and dividend income to live on.
There shouldn’t be a “war on saving”. But it’s the responsible citizens who will be reamed up their @sses as a result of the housing bubble. The irresponsible Harry Howmuchamonths and their hedge-fund-investor Dealers will walk away from this while you and I pay.
Nope! I say send Kudlow to Castro in San Francisco. It will be the greatest story never told.
Because the gay community is tolerant of freaks or because you have creepy sex fantasies regarding those you criticize?
Did anyone else see the last 4 seconds of Kudlow’s show today — when he thought he was off camera? Very, very strange facial and body contortions. Kinda scary. Got coke?
I think I have it figured out. He wants to help the financials dump their current holdings onto bond purchesers (bag holders). Get the crud that built up over the last 2 months of buyouts out of stock companies onto bagholders.
Get us out of treasuries and buy the garbage corp bonds from the investment banks.
That is ALL that droping gates could possibly do at this point.
Cramer seems a bit distressed. Pretty funny to watch….burn baby burn!
I noticed the same thing - I haven’t watched him pop veins in a while, but he looks wounded.
Naw, he just ran out of Valium.
Cramer is too painful to watch…and listen to. Does a day go buy that he doesn’t remind everyone we worked at Goldman? Or that he ran a hedge fund?
Sheesh. Reminds me of myself when I used to visit my grandpa - “It’s your grandson..from Califirnia…yes, I’m Bobby’s son…”
Only thing is that he had Altzheimers, but we DON’T
Well, that routine is certainly not going to calm the markets!
He was almost in tears and screaming at once…ohmygod it was scary.
One thing everyone needs to grasp about TV network’s businiess model: you, the viewer, are NOT the customer - the advertisers are! You are THE PRODUCT being sold to their customers, in the form of ad buy-rates. The trick is to keep as many rubes as possible tuned to the station for the commercials - by any means necessary.
Over the past several years, that as the number of such talking-head channels increased (i.e. competition) so have the nuanced attempts to appeal to the lowest-common denominator (i.e. unwashed masses / general dumbasses). More and more distractions cluttering the screen like scrolling text, wavy flags, hi-tech studio backgrounds with bright purty colors everywhere, etc… They’ve obviously learned much from the casino industry’s tactics of mass confusion.
I’ll call it the “Chebacca Defense Corollary”
Brian : You a right. It is “there is only one thing worse than being talked about. That is NOT being talked about”… Oscar Wilde.
now i get the rolled up sleeves. Wifey hates spittle stained cuffs.
I don’t think it’s just the Fed that’s asleep. Too many policy makers seem to have no idea what’s happening or about to happen. While their options appear to be limited, going in blind isn’t likely to prove helpful. This could get very bad very fast. It’s too late for housing, but how far will the damage spread and how long will it last?
For those of you who’d like to see the whole segment on youtube:
http://www.youtube.com/watch?v=rOVXh4xM-Ww
(The CNBC link doesn’t work for me because I use Linux.) Also, I noticed the youtube video seems to have the whole encounter between Cramer and whats-her-face.
It looks like Cramer’s gonna blow a gasket!
This is just another cracker(Carmer) in the nut house. He got a good look at the real world and couldn’t handle it. Needs stronger koolaid and a cookie. He says the fed can save us, But Bush/Ben cant/wont let them lower rates. Why, well he needs more money and knows that he cant get it at lower rates. So the big idea that got us out of the real big mess (depression) is the reason why we are here. Currency has no fixed equity, loans have no fixed equity, and the empire has no clothes. But the big question is what is equity, its not cash, gold, land, or food. Its the old standby of “get-r-done”. Read or watch “Grapes of Wrath”. Thats were we are headed and thats the big reset that THE MAN want’s us to have.
Well, gollee,Surprise, Surprise. Harvard has finally figured out that there is trouble in the housing market. Retsinas and his Harvard pals have been downplaying the impact of a housing bust for months, now that everyone and his dog is aware, without missing a beat, Retsinas comes on like he predicted it all along.
Of course these schmucks just watched their endowment take a 800m hit when Sowood blew up–maybe that was their first clue. Dumbazzes.
“The link with the property market is inextricable as housing and related industries account for almost 25 percent of gross domestic product, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Mass.”
“‘Clearly it’s having an impact,’ said Nicolas Retsinas, director of the Harvard center, referring to housing. ‘How much of an impact, at this point, is easier to understate than overstate.’”
Sorry for the repeat post from the previous thread, but Cramer is damned near acting like someone had to sedate him earlier…
Watching Kudlow last hour, something profound occurred to me (or at least profound on my planet) - for years the pro-capitalism, pro-corporation mantra has been “how many jobs have these guys created? See, they MUST be good so don’t tax them to death”… I’ve never disagreed until recently and can only now explain my hedging: that was all well and good back when these U.S. corps were creating AMERICAN jobs… Sure they’re still creating tons of jobs, but they’re CHINESE jobs, INDIAN jobs, etc…
{slapping myself on the forehead}
Where did I hear recently that some big group…it wasn’t apple was it?!…had outsourced *marketing* jobs to india. Somehow that really hit home, marketing to *whom*, americans, or just asian markets? Either way, it just felt like the next step in the outsourcing not just of manufacturing jobs, not just of bench science jobs, not just of call-center service jobs, but of jobs that require some finger on the pulse of how to sell stuff…wow. Hairdressing never seemed like such an attractive career! They can’t do that via the internet or phone yet, right?!
Maybe 20 years ago some guy tried outsourcing the hairstyling industry to the household vacuum… Remember the FloBee© ?
Oh my yes, and there are some people in this adjusted-rate mortgage environment who might return to that as a way to save money on haircuts. The poor children who will suffer the Flobee or its as-seen-on-tv successors…
LOL. I remember watching the infomercial for that thing 10 years ago at 3:00 am in the morning after a long night of celebration at a friends wedding. We were all sitting around watching it, drunk as skunks, and I laughed for what seem like a 1/2 hr straight. I got my moneys worth and I didn’t even have to buy anything!
You want outsourcing try this one out for size:”Orange County’s Superior Court contracts with a company that uses workers in Nogales, Mexico, to do the data entry of traffic tickets, a revelation on Thursday that outraged many who fear personal information is leaving the country.
The court has contracted since March 2006 with Cal Coast Data Entry, Inc., a Cerritos company that has a facility in Nogales. Information from tickets – including drivers’ license numbers, car license numbers, birth dates and addresses – are scanned at the Cerritos facility and sent electronically to the Mexican facility.
In a statement issued Thursday evening, court officials defended use of the company, saying transfer of ticket information was by electronic encryption and the company has state-of-the-art security.
“The company and the staff they employ are dedicated to keeping the public’s data secure and safe,” the statement said. “The court wants to ensure the public that private data is safe.”
Court officials refused to release the cost of the contract and said they would continue using the company. Cal Coast officials wouldn’t comment, citing client confidentiality.” In addition to the electronic security, an independent company audits Cal Coast to ensure compliance, the Nogales facility has 24/7 security and the staff are required to undergo a national felony background check. Nogales employees are also certified by the Sonoran State Police, the courts statement said.”
Sure, you information is safe, no one down there would ever think of using your identity to buy a house, car, or whatever!!!
http://www.ocregister.com/news/court-company-information-1788465-courts-data
John and Ken on KFI 640 radio started talking about this last week and had listeners call the people responsible for placing the contract with that company. As a result, the company stated that they would do all processing of OC tickets somewhere in Southern Cal instead of in Mexico.
The question remains though, how many other governmental agencies (Federal or state) are outsourcing sensitive info to this company and other offshore entities.
Lots of identity theft coming our way…
Don’t worry - the foreigners know that Americans are broke.
Indiana sent ther state tax returns and UNEMPLOYMENT processing to India. The new gov. stopped it. The state put people out of work thru outsourcing and then paid them benefits. Losing money in the process (contract cost, lost income taxes, increased benefit payouts)
Hey, they can sell the info to illegals that are going to cross the border. Talk about maximizing revenue.
Except fewer and fewer are bothering to come. Take away the jobs and they go home on their own.
What do people think “outsourcing” means? It means all your personal financial information (Lehman, Goldman, Bear Stearns, CitiGroup, JPMorganChase), bank account information (Wachovia, Bank of America), most valuable personal information (Social Security #, mother’s maiden name) is shipped to third-world countries such as India.
It’s a real joke that people get their panties in a bunch about US “privacy laws” as sensitive data is shipped en masse out of the country, to places where there are no privacy laws.
And it’s not only data exported to the third-world, it’s business process know-how — the proprietary information that makes a company great. We’re exporting everything to India and elsewhere on a mass scale.
Any short term profits from this insane activity will be dwarfed by the long term hit this activity will cause…
Check an outfit called Gavekal. They laud “platform companies” as the saviors of the future. Whose future? Wave goodbye to the American middle class…. Fun while it lasted
Off topic but I had to share it since I am in the midst of a lot of the big stuff. I was talking to a hedge fund guy today. He oversees a $10 billion portfolio. He said that he is not leveraged and they hedge everything they do. Okay, I didn’t believe it either.
Here is the key part. I asked him if his hedge fund buddies are nervous. He replied, “everybody’s nervous”. I asked if they were nervous at this time last year. He didn’t hesitate to say, “no”. This was before DOW and NASDAQ meltdown this afternoon.
I have said it before that Manhattan real estate has been held up by the myth that Wall Street bonuses make us all rich. Those bonuses are toast this year. I think New York holds up a lot of other markets psychologically. This is getting interesting at warp speed.
We are heading to Stone Street, the Wall Street hangout, for dinner. I am hoping to see some crying.
Do report. I’m curious as to the buzz. If the restaurants are empty… you know the attempts to negotiate a “back room deal” are at a furious pace.
This actually is scary… too early (shouldn’t be happening until October). Cest la vie.
Got popcorn?
Neil
On Oakland KTVU TV news this afternoon, they were showing
a group of people demonstrating, with music from guitar band.
They were complaining about the foreclosures caused by predatory lending. A spokesman for the group wants Bear Stearns to put
up 1 Billion to stop the foreclosure.
Quite an entertainment.
More popcorn !
You are cool. Go pat them on the back and then ask them to pay for you tab on their company expense accounts.
Yeah, I don’t want to sound like a gloom and doomer, but the future is looking pretty gloomy… and I’m pretty sure we’re all doomed.
IndyMac or Countrywide? That is the question.
“…and I’m pretty sure we’re all doomed.”
How can your optimism withstand all the carnage on Wall Street?
still time for another dead cat bounce - sort of like the hanged man twitching on the gallows …
Indy first then Countrywide gets bought out. Angelo Mozillo goes to jail for insider trading.
tan men look good in orange
I don’t think he’s going to jail. All his trades were properly registered. No “odd” movement in the stock.
Yes, but he kept pumping the stocks while selling. Shae buy backs.
Orangzilo will suffer the same fate as Nacchio from Qwest.
From what I have heard, Indymac will selectively fund some nonconforming loans and hold them on their portfolio for now. Apparently they feel they can do this for maybe a year until the secondary market clears up. My guess is it won’t, as the problems in the jumbo and alt-a category are likely to snowball in the months and years ahead.
sub-prime
alt-a
jumbo
next up….
AAA paper?
Bonds are not the way to go, volatility is pointing directly at individual stocks. With most of the money in large institutions, I believe small ranges through short run long exposure is the money move.
The alt-A category has me worried. That paper is just as bad as “subprime” in my view.
Also, can’t forget WaMu and Wachovia. They’re not going to fail, but they are both booking massive make-believe money on POAs. Wachovia’s Golden West purchase will turn in to GMAC when all that crap unwinds.
How does that work when it goes REO? I heard they can still value it at the full balance of the loan and don’t have to write it down til they sell it? Surely auditors aren’t that dumb.
I got stung early this year trying to short Countrywide. I did much better on the others. Countrywide is the anointed survivor. If any non GSE mortgage company survives, it will. But that’s optimistic. Hey, did Fanny Mae even get their accounting straight? Is this another collapse waiting to happen?
We are just beginning to see the end of housing and the mortgage lenders are just the first to go. They are the future of housing. Soon, the present will start to collapse, foreclosures and dropping house values. Then, when the mortgage contracts are found to be riddled with borrower fraud, the past will collapse and lenders will attempt to undo what has already happened. This is called an unwinding.
When the music’s over, turn out the lights.
“The real estate business is having a party in Panama. As of last week, 380 tower projects were under way or announced, representing more than 40,000 condos and apartments. A year ago, it was 11,000 units.”
“The builders say Americans looking for the urban high life in retirement will snap up these buildings in a new Miami that’s half the price of the real Miami.”
“‘The BABY BOOMERS, simply put,’” wrote Roger Khafif, builder of the Trump Ocean Club in the Punta Pacifica shoreline neighborhood, in an e-mail about his target buyers. ‘Without them, Panama’s real estate boom would bust.’”
Where is Greenlander? PANAMA CONDOS FOR EVERYONE?
I’m betting Panama condos remain at half the price of Miami condos. We all *know* that Miami condo prices only go up.
But I know quite a few people retiring to South America. None to Panama, but quite a few to Costa Rica. I’m thinking that its a one way street… Not that they are bad areas today. Just not somewhere I’d want to be during “the Great Recession.”
Got popcorn?
Neil
‘Roger Khafif, builder of the Trump Ocean Club ‘
- I just recieved a Request for Quote from Trump National Golf Club. This is one of Don’s ‘pet project’ … a home in Beverly Hills with about 340 lineal feet of cabinets. I won’t give the address, but I will zillow the house and report back. I bid the original model homes for the golf course and someone won’?’ the bid by underpricing everyone by about 30-35%. He lost his as* I am sure.
“snap up”… “BABY BOOMERS”…
He missed “rich foreigners” and “Googleaires”.
And… “Its different here.”
What’s sad, it most J6P’s don’t know about this. Not a hint. Not even a clue. A coworker was discussing how the stock market dropped today and was asking “why?” When I pointed out that it was because more money has been lost in bonds in the last 3 weeks than the dotcom meltdown and a Bear Stearns CFO had pointed this out… it took them 5 minutes to stop going “he shouldn’t have said anything.”
I walked away… (Trying to shut up about the bubble… but its hard not to warn people…)
Got popcorn?
Neil
It’s just so scary when people start claiming that CFOs “shouldn’t have” uttered true things about money.
when apparently the whole works depends on pyramid-scheme mentality.
popcorn and antacids. or popcorn and xanax. it’s not the fed cramer should be yelling at it’s the DEA, telling them to de-schedule the tranquilizers he and everyone else will be needing man…
dude, your still gonna go get your slurpee at 7-11
or should I say Icee from Apuh
its called a slushee
say it in sing song
Actually, from Apu Nahasapeemapetilon it’s called a squishee.
boomers flocking to Panama..
Noriega’s eligible for parole this Sept and has likely plunked down a deposit.. only 39,999 left, so do not delay.. do it today.
I know someone who was planning on doing such a thing, but when she and her spouse got down there, turns out the water gave him such GI issues that they had to scrap the plans!
Maybe all those condo-buyers should give it a test run before they commit, get down and see if they can actually live there. It’s not all superwealthy boomers buying them is my guess, and living on evian might be a bit out of reach.
I’ve been following this market a bit for the last 18 months and condo/sq. ft. have gone up about 50% in Panama City. At the rate they are rising and U.S. is falling, they should pass Florida this year (and no currency translation issues either)!
Don’t underestimate demand though:
Some of them are running from lovers, leaving no forward address
Some are running tons of ganja, some are running from the IRS
“Down to the Banana Republics,” Jimmy Buffett, c. 1972
We need to clarify “Baby-Boomer”. Seems to me that the world’s poorest “foreign baby-boomers” have been flocking to the US for decades…
and they are driving trucks, most are Canadian nationals.
“Just not somewhere I’d want to be during “the Great Recession.”
No sh*t. LMAO
Long time reader. First time poster. I just had to comment re: upcoming Panama condo debacle. In May 2006, my spouse and I spent one week visiting Panama City. While there, we encountered numerous American ‘wannabe’ investors running around our hotel bragging about the deals they were getting. One afternoon we decided to go and see what the fuss was about. We visited one of the very few completed condo towers we could find (they were in the process of preselling other towers which were under construction). While there we encountered yet another youngish American specuvestor who indicated that he was interested in purchasing multiple units which were priced in the $400-$500K range. We toured several model units which were spacious (up to about 4000 sq. ft.). After the tour, we spoke with the salesman who stated that the condos would be an excellent investment since Panama was booming and that in 5 years we could sell for a huge profit and buy in coastal California. As we left I turned to my spouse and suggested that we wait 5 years until the prices drop in coastal Ca. and cut out the middle man.
Great story, black swan. And a rousing Housing Bubble Blog welcome to you. Hope to see you post more.
Very interesting story black swan.
Welcome aboard.
I wonder what Panamanian BK laws are like… That could be an interesting experience… anyone know?
Got popcorn?
Neil
Probably something like…..
Senior, this is a machette and these are your cahones. I really think you should come up with some money.
Ok. I take half payment now and you keep one nut. Si.
Nice one.
ROTFL
Ok, I know nowone will backtrack to this old thread… but that amused me this morning.
Got popcorn and both cahones?
(No disrespect to the ladies, just too funny!)
Neil
“The real estate slowdown, continuing nationwide according to the latest figures from the National Association of Realtors,..”
Slowdown?. How about MELTDOWN !.
Any statements regarding the current RE outlook made by the NAR remind me -as a history buff- of the statements made by the Nazi leadership during the final days of their regime, when they were still talking about ‘turning the war around’ despite the fact that the war -for them- was WAY beyond lost already.
Talk about denial.
Be careful Dan, The NAR shoots defeatists.
Now here is your Panzerfaust and a bicycle. Go do your duty. Reload? Real estate only goes up!
LLLOOOOOEEEEESSSSS!!! Herr Neil.
A few potato mashers over the wall toward the Bear Stearns hedgies would be a nice touch.
I have a funny feeling this week with the start of the bridge collapse and ending in a market meltdown is the leitmotif of our age.
This will not end well.
Crapburner,
Considering all of the “pier loans,” a bridge collapse (no disrespect to St. Paul) is an appropriate analogy. This won’t end well. The debate is just how bad will it be…
Next week could be interesting… could be another non-event.
But soon the credit crunch will matter. Its almost too late.
Got popcorn?
Neil
Neil,
Yes, time will tell. Infrastructure collapse is a stirring symbol of our age. A hollowed out infrastructure and a hollowed out economy.
Just in my small field of view, parts and service of certain things are harder to get or find or it is too much “small beer” for them.
Could be a non-event next week or a slow motion collapse.
The Fed could lower interest rates to 1% but think it will not save us. No matter how fast the Federal Government operates (which at most times is pretty slow), that the masses of garbage, bad loans, CDOs, MBSs, will-o-the-wisp derivatives, will be so overwhelming that its mass will just cause the whole system to keel over like the bridge in Minneapolis.
I think events will outrun anything some would be “saviors” will try to do.
Or Bagdad Bob saying that the American troops are being beaten back.
“‘We’ve really been in a ‘build it and they will come’ market for the last couple of years,’ ”
Yes. Right now we’re in the ‘Build it and they will laugh’ stage.
Build it and it and watch it sit.
build it and watch it burn.
“They defended their position by stating that prices are way down from their peak (some even felt they had bottomed) and interest rates are still attractive.”
In my neighborhood, many sellers are just coming to the acceptance that they won’t be making a PROFIT if they bought in 2005-2006.
A local property that went off-market a month ago, wih no takers at 849K, just came back on at 739K -exactly what they (over)paid for it in ‘05. With interest rates jumping up in the last few days, and the general public coming to an understanding of the situation…some of these sellers might as well be waiting for Prince Charming to deliver a slipper…
Sing it, Giacomo!
There’s a lady up the street who moved into this neighborhood in early ‘05. Well, seems that she’s going to take another job out of state right after the first of the year. It’s a good job, but the scuttlebutt is that she’ll probably have to sell at a loss to get out of her Tucson house.
The folks who told me this also think she overpaid when she bought the place. That was a common occurrence during ‘04 and ‘05. Makes me even happier that I bought less house than I could afford.
I live outside of Prince William County and blog about Northern VA. If a person purchased in 2005-2006, the likelihood that if they sell now they’ll sell at a 25% loss is growing. The worst cases are between 30-40%.
In our neighborhood of new identical houses (we rent), the last sale went through in early 2006 for $735K. This year came another sale (although 14 houses had tried in that time frame to sell). The sales price was $540K. (It was purchased in 2003 for $500,000, and the county has a tax assessment of $700K). It was an identical house to the $735K house. The prior owners moved out before they lowered the price, though. There’s a lot of anger here about those sellers who “bring down property values”.
The other story on the $500K to $540K house is that the young owners had an interest-only loan. For three years, they paid exhorbitantly over renting, and ended up with nearly nothing after commissions.
Get a cane, rap them on the head and say, “Hello! McFly! You’re going to lose 50% of your equity unless you sell yesterday. Hello!”
“The Baby Boomers are coming”
God bless.
To Panama. $$$ out of the country.
whenever they parrot the mantra “Baby Boomers”, you know they don’t have a clue what’s going to happen.
OK the panic is underway. It’s perhaps a little late for a weekend topic suggestion, but here is the question. Is there a credit crunch, or do normal credit conditions FELL like a credit crunch to those with easy money?
Cramer says only the rich can get loans. Can people with 20% down and 30% of their income for the mortgage get loans, or not?
yep
Credit *will* overcorrect. Standards will be tougher than they were pre-boom, because they have to cover themselves for falling prices. Heck, rates went up big across the board for prime jumbos!
I don’t see much of a distinction between a “crunch” and a return to normalcy. It’s all relative. Although the price may rise a bit as things even out, banks still must sell their product (money).
The change I see is easy money will be available only to those to whom it’s supposed to be available.. the highest quality borrowers who present the lowest risk.
The easiest money was lavished on the very worst borrowers during the past couple years.. as if the market didn’t know what must happen when the music stops.
I hold firm to my belief we are have been in the early recession stage, headed for a depression.
Based on simple observations about 2 years ago, I mentioned this & other economic facts to an ex neighbor in my old apt building.
Now mind you, he was a decent guy, education, etc. Worked as a standby emergency on-call tech for Comcast, and his wife for USAA, so they werent a couple of turnips, but he just couldnt wrap his mind around anything beyond established concepts.
I warned him gas would rise, just based on Chindians increased consumption … so of course, worried about his status with his fellow co-workers, he runs out & buys a new Tahoe. Then a month later when gas hit $2.50 he was like a deer in the headlights.
You can lead some jackasses to water, but . .. . !!
Aquis,
Interesting. I’ve been blogging that this will be the worst *recession* of my life. Recently I’ve started to call it the “great recession.” I do not believe it will be a true all out depression. Lots of churning? Yes. 10% to 15% unemployment? Sure. Depression? I don’t see those factors yet.
But if I’m wrong, we can debate it in the bread line.
Got popcorn?
Neil
ps
They won’t listen…
I *laugh* my A$$ off every time I commute into work past large trucks/SUV’s. My car is no Prius… but it gets almost twice the fuel economy of a Tahoe.
Hey there Neil
Yeah, I hear you loud n clear on the vehicle size observation. I bought a used Geo Metro years ago because I knew the 1.0 Liter engine gets over 50mpg but HOLY CRAP do all the intimidating Dale Earnhardt wannabee’s tailgate so close yer afraid to haul the family around.
I know I was.
Sold it for a little larger Corolla which is also a great car. Still have the tailgaters but not as bad.
I’ve said for a long time I wish the gas prices would just rise faster to force all these idiots into smaller cars. Hey, nothing against & everything FOR the SUV/Truck crowd who need them for practical purposes, I also own an Isuzu Rodeo & Toyotoa Previa myself, but I use them to run the kids around town & haul things.
When I’m solo its the Corolla.
Hope we don’t get to depression stage but if so I’ll save a few old aluminum tin cups from the BSA camping days for you in the soup line!
” Brother , Can You Spare A Dime “
Best car I ever owned was a ‘97 Geo Metro. That’s exactly the type of new car I would buy, but no one is making anything like that, super compact, simple. I’m sure because there’s not as much profit as the Tahoes and Suburbans.
Mini?
Husband has a Mini S - its a lovely, lovely car.
Once my 1997 Nissan Sentra goes to the great Scrapyard in the Sky I’m verrry tempted by the Mini Clubman (station wagon) coming out in 2010.
xA
Honda Go, Scion, Toyota Matrix (I have a black Matrix with black window tinting. People love it.)
Wow… I feel like I have the gashog in the group with a six cylinder.
Had a colt and a Tercel. Great cars Cold driven to the “great scrapyard of the sky.” Tercel? I decided to get a car that was more interesting to dates.
(Now married, car is getting old.)
Got popcorn?
Neil
“Hope we don’t get to depression stage but if so I’ll save a few old aluminum tin cups from the BSA camping days for you in the soup line!”
Another eagle scout?
OK, as long as were bragging here, I’ve been driving used, moderately priced motorcycles as my exclusive form of transportation for over 25 years now. Sure, sometimes I get wet, sometimes its real hot or cold, but I get where I’m going faster, get the best parking spaces when I get there, and the vehicle/insurance/fuel savings over that time have been huge. Like buy a house at 2005 prices huge. Gas is $4 a gallon? So what!
PS- Safety Nazis need not respond. You don’t rack up the kind of miles I have with out being highly trained and highly skilled. So please save it for some sandal and shorts wearing, no helmet 20 something who’s first bike is a 100+ horsepower sport bike.
BOY do I miss motorcycle riding !!!!!!
From the Honda 250XL , CB125, and Kawasaki enduro to the Yahama 650 midnight special (there went the college loan $$ ). Loved ‘em all / ultimate MPG & FUN !
Have kids now . keep repeating to myself to be practical, responsible, shave & shower daily, etc ….
No kidding - I see people riding on the freeway wearing nothing more than shorts, t-shirt and tennis shoes - my first thought is ‘how large a percentage of your skin are you going to lose when you come off at 65 mph? Have you any clue how disabling it is to have to replace skin tissue those kinds of amounts? You’ll never look the same again, once they’ve had to replace your kneecaps with artificial ones…”
But then, I worked as a motorcycle (and occasionally a bicycle) messenger in London for 5 years (which paid for college, thankyewverymuch) - I’ve seen more accidents than I’ve had hot dinners.
Funny how people always think it will happen to someone else….
Yah, I sold my Honda VFR last year after accepting that statistics might actually apply to me. Also, I was hitting 125+ mph too often on the highway. Maybe I’ll buy a scooter instead, as I seem to have poor impulse control when the power’s there.
I’m envious of motorcycling. Looks cool. Everyone looks at who is on the motorcycle.
But anecdotes stick in my craw. A friend of mine was hanging out with his friends at UCLA when a showoff on a motorcycle was attempting to guide himself between two cement posts at high speed. As expected, the poor sap must have caught a handlebar on one post. He was thrown off. He lost skin. Someone lifted up his head and the dead sucker had no face. All peeled off and just bloody tissue. He suffocated to death. I’ve seen a couple accidents myself. One minor. The other one - a helmetless guy was bleeding from his ears.
I’ll stick to 4 wheels. The problem I have is not carelessness of motorcyclists, but carelessness of other motorists who do not see them. You may be right and the car that hits you may be wrong, but you would still be dead.
My older sister used to work as an X-ray technician in a hospital emergency room. When I was fifteen she sat me down and said, “Honey, I need to ask you for something. It’s the only thing I’m ever going to ask you for in your life. Aside from this I’m perfectly happy for you to live your life however you want. It’s this, when you’re in the car always wear your seatbelt and never get on a motorcycle.”
I had a very good friend and an aquaintance who were riding one motorcycle back from a party late at night. They ran right into a lightpole. One lost his head, literally, and the other died as well. Everyone I know who are excellent riders have all had at least one accident, through no fault of their own. Its hard enough keeping alive in a car with all of the idiots out there, but bikes are even more dangerous. I would love to have one but the risks are high, especially being a parent.
I live up in the mountains near San Bernardino. Motorcycle riding kids race up the winding roads heedless of obvious danger.
You don’t have to wonder what those big red splotches are on the road. Johnny or Tyler no doubt. Squirrels don’t leave that big a patch.
I think they mostly get creamed when they turn a long wind in the road next to the center divider and a car coming the over way veers slightly over the line and takes them out. The big red splotches are always on those areas.
I’m with you. XL1200R to work and back, 40 miles a day, 45mpg and lots of fun. The toyota truck generally sits unless we need to make a big shopping run. Good man!!!
I’ll stick to 4 wheels. The problem I have is not carelessness of motorcyclists, but carelessness of other motorists who do not see them. You may be right and the car that hits you may be wrong, but you would still be dead.
Absoloutely, Bill - which is why its imperative to don Kevlar-enforced leathers, boots and a full-face helmet, and ride like a paranoid coward with eyes in the back of your head.
In 99% of the RTAs I’ve seen, the fault is with the car - either because the driver didn’t ’see’ the bike, or because there’s a small minority of truly psycopathic idiots who think that a bike is ‘fair game’, and has no right to be able to get ahead of them in the bumper-to-bumper gridlock, that is most Western cities on a weekday.
In any case, even when driving my car, I still treat other drivers as ADHD-suffering, blind, morons. Sadly, in L.A, this is often the case.
Interestingly, the nicer the car, the worse the driving - high-end Lexus owners, take note
I believe even expensive cars come equipped with signals…..
It will not be a depression because never again will anything be called a depression.
Depression was originally a mild term for the previous use of a bad economic downturn, ‘panic.’ Nothing was ever called a panic again.
Likewise, the word Recession, after the next big one, will no longer be used. All guesses on what the next term will be.
“You can lead some jackasses to water, but . .. . !!”
…but you can’t beat the stupid out of ‘em!
Ben,
The housing market is pulling down the economy.
Watch Jim Cramer freak out. OMG, he went berzerk.
http://www.cnbc.com/id/15840232?video=452808336
he is yelling at the FED saying we need you to cut rates because it is Armageddon. I don’t think Cramer understands that low rates is what caused this problem.
How come it is bad to have a recession? Shouldn’t we let corrections happen within reason? No, I guess it is a travesty when investors lose money after making billions over the previous 6 years in the bull run.
“I don’t think Cramer understands that low rates is what caused this problem.”
Worse yet, he doesn’t understand that low rates won’t fix it. Lower rates will not suffice to wipe away the massive, unrepayable principle obligation facing ARM holders with resets coming up over the next four years. It’s the principle, stupid, not the interest!
Low rates will make it worse. We will get hyperinflation and still people won’t want to lend at 0% because they still will be losing money. When you pay them back inflation defeats any earnings if there any. If the FED goes to zero and it doesn’t work as I suspect, then we will have worse than Japan.
But Cramer predicted the Dow will hit 14,500 by the end of the year and he’s sticking to it - isn’t that the objective Bernanke should be focused on? B-B-B-Booya!
Japan went to zero and got 17 or so years of deflation in return…
The Bank of Japan gave the Japanese Economy an inch, and it didn’t take it.
If the FED gives Wall Street and inch they will take a mile.
Savers vs Spenders.
Big difference.
The FED intervention at best would bail out the banks only.
Most people are already in a debt death spiral. They will just run up even more bad debt and default. if we don’t suddenly have more income than its all useless.
If the FED pumps money into the banks it just ufcks the old people, poor people and helps out GS, MER investors. That is it.
We would be FAR better off having the Treasury PRINT THE MONEY and hire people to do work.
Banks only supply more debt. IF the INFLATION OF THE MONEY SUPPLY COMES FROM INCOMES THEN THERE IS A CHANCE THAT WE CAN SAVE SOME PEOPLE OUT THERE.
It will also ufck the investment banks a bit. The inflation will also help balance out some of the trade deficits. All in all people will struggle but that is the only thing that can alieviate the disaster.
I am not even sure that would work.
It’s slightly hilarious… If trickle-down actually did work, it would result in higher wages and be “inflationary”. But as long as we can shore up all that extra “wealth” in hedge funds and illiquid real estate, lots more people can think they are rich without having massive inflation! (uhhh…. seriously, just because it didn’t come from wages.)
Wow, a miracle! People producing nothing are getting good Real returns, while people actually producing are Warriors of Inflation.
It’s like Sheeple 101.
Exactly. Even if the FED intervened (they shouldn’t) it wouldn’t help enough. The problem is that much of the run-up was based upon inflated values for real-estate, which turn out to been a fiction created by speculation.
My guess: Cramer will be off the air within 6 months, retired comfortably.
I’d say less than a month, and not of his own choosing. Things are happening fast now. And Cramer will never be comfortable - that’s his cross to bear.
He’s out soon! There’s no way he can watch things around him fall apart and still waive pom-poms and run that noise board he loves so much!
He survived dot.bomb. He’ll survive the greater depression.
“Worse yet, he doesn’t understand that low rates won’t fix it.”
And let’s not forget about lending getting tighter, as Wall St. is rapidly losing its appetite for mortgage junk. It doesn’t matter if the rates are 4% or 2%. Very few buyers will qualify under the tighter standards….5% down, document your income, etc.
Even Wells Fargo is pulling back from the AltA loans. Pretty soon, low or no doc loans may be a thing of the past.
It’s like Japan….their rates went to 0% and it didn’t save their housing market.
If they refuse to lend, the mortgages they do have will continue to be reduced in value. Why? housing prices will have to drop. As they drop, they won’t want to lend. Catch 22.
I must be old-school because anything
cramer is all about, solve this with this
sell this
im a buyer of this
he is helping me….
confusion and volatility….theres money in that
seems as though he’s mad as hell and just can’t can’t it anymore.
I don’t think he is exactly calming the markets. He’s probably one of the resaons the DOW dropped today. Reverse Psychology?
do you actually think that a blowhard like “Kramer” influences the market…he’s a complete idiot
Actually, from what i understand, he does, in a big way. Hteres a Cramer effect, anything he pushes on his show bumps up or down for a day or two.
screwed that up..
“mad as hell and just won’t take it anymore”
me thinks cramer has had his 15 minutes of fame and a pink slip is not far off. That little exhibition was disgusting.
Seemed to me that he took it personally. Wonder how leveraged he is in personal investments.
Listen to who he says “is hainvg it bad”. THE INVESTMENT BANKS. Yeah, he’s worried about 7 million people losing their homes, but ONLY because of how it effects his banker pals. He doesn’t give a crap about the people. He’s worried abou this buddies!
Lower rates, get all of us out of treasuries to buy corp bonds and other CDOs type crap to save hs buddies that promised all this cash to the buyout binge that they can’t cover.
Lowering rates tanks the dollar even more, causing increased INFLATION, because as we all know not much is made in the USA anymore.
…. so please, tell me… how does lowering rates help?
“Confused, I called the broker again to see what was going on. A little while later, I got a sheepish e-mail message from him explaining that her loan did, in fact, have an adjustable rate. She just hadn’t realized it.”
…because Suzanne researched it and told her “you guys can do this”.
If you read the article you also learn she was a business consultant. I wonder what business wisdom someone who can’t read a truth-in-lending disclosure can impart to a client.
oh - 2nd part to the story; he had to relocate to Phoenix when his wifes employer, USAA, closed their Sacramento office. He was excited to finally be buying a house for his family(3 teen kid also), but I didnt bother to try to warn him that the crazy price run-up in progress might warrant renting for awhile. (this was 2005)
Alawys wondered how he made out … he had a long Pacific Island’er last name I never learned, so almost impossible to locate him.
usaa closed in Sactown?
“‘There are still homes being built, and there are still spec homes being built, but they are not turning as fast as they were in the last three to five years,”
What she should be saying is “‘There are still homes being built, and there are still spec homes being built, AND they are not turning as fast as they were in the last three to five years,”.
that is more correct.
“Residential real estate prices are falling, and the selection of homes to choose from has never been better. There seem to be good deals out there, so should you buy now or wait for the market to get even better? In other words, when is the best time to buy real estate?”
The best time to buy real estate would not seem to be when we are reading the first reports of prices dropping by 10% over a matter of weeks.
Oh c’mon, it’s on sale! It’s like the bridal gown sale at Filene’s Basement! Just put it on your credit card!
The best time? About 10 years ago.
The best time to buy is when it’s to the buyer’s advantage, . . .
not the realtors
not the banks
nor appraiser
title co.
govt tax depts
harpy spouse
miss any?
Nice…I like the Harpy Spouse part…
God how many times did I see that on HGTV …
God dont you hate that… what a liability!
Should add … Front cover of Time Magazine…
Death of US Housing Market…
Real Estate has left a bad taste in everyones mouth…
You hear people say… RE is the worst investment anyone can make… OK… than your lucky Mr Seller to get 50 cents on the dollar.
You don’t know how much I’m waiting for the time magazine cover on housing.
This won’t end pretty. I cannot be the only one with a bit of dread as to how this will play out.
Got popcorn?
Neil
We fear what the future may hold because it’s unknown.. My advice is don’t dwell on it, but instead act on what is already known, and act on new information as it becomes known.
Divination is the realm of the fortune tellers, who survive only because they get paid up front.
I’m telling you the cover will be this (they should hire me).
It will show a late 20’s something family standing together facing front, father on left, with mom holding swaddling babe, small male toddler holding Daddy’s hand, house and SUV in background. The people will all be sad and the cover will be something like, if not exactly “The End of the American Dream”.
Tell me I’m wrong.
I think it will be the “Foreclosure of the American dream”.
Credit debate rages on extent of emerging ‘crunch’
Is an economic Katrina poised to overtake the financial system’s levees?
So it’s all contained eh?
http://www.marketwatch.com/news/story/story.aspx?guid=%7B2C57B7C4%2DAAEC%2D490A%2DAE79%2DB65E9F5FBCBC%7D
“Of the more than 50 economists surveyed by the Blue Chip Economic Indicators, (many of whom have been warning about the housing bubble for years), none predict even one quarter of negative U.S. growth over the next two years.”
They say they believe in rational expectations, but their behavior is classic adaptive expectations, just like your local pig farmer or nurseryman.
Since you all seem to be on the lead edge of this blooming housing bubble, what kinds of investments do you recommend for the coming recession? After reading this blog for the past couple months and seeing how accurate it is, I believe the economic carnage will be severe. I have recommended this blog to my doubting friends who think the current “correction” is just a burp in the meak of upward DOW profits. There are so few who think this is anything worth worrying about. As others have mentioned, even bringing up the possibility of a recession occuring and real estate tanking is looked at with scorn and complete disbelief. I thank you all for your insight and knowledgeable opinions. Maybe the investment aspect could be a good weekend topic?
Before, the FED could control the market with interest rates. If you recall Greenspans conundrum, it was with mortgage rates (yes we know later on that he said to push these creative product on people and encouraged it, to which he retracts today). When he raised rates, interest rates stayed low because people were buying our debt and loaning it out. hedge Funds in Germany, Europe etc…
We also have the carry trades.
So here is where the FED is and why they REALLY have no control. People talk about the global economy, well here it is.
Suppose the FED lowers rates to help. It will help. but it will really screw people who borrowed from Japan and lent here if the Yen rises versus the dollar. Also, what is to stop borrowers abroad from getting money here at cheap rates and lending it elsewhere? It floods the market with dollars globally so they all wont be used here. The dollar collapses. Not what they FED wants (well it’s what they shouldn’t want according to what they say, we know Jim Cramer wants this, in fact he screamed for it today.)
What if Bernanke raises rates? Then people (investment banks, hedge funds etc) borrow money abroad (say Japan at 1%) and invests it here. Well that pumps money into the system, but foreign money. Could help to stabilize things here and the dollar. Now if the economy slows, people default, companies default, some companies take some serious hits. Sorry BOJ, we couldn’t pay you back.
So if #2 happens (which I think is happening), and Ben goes to lower, that kills the dollar and makes the carry trade that much harder to pay back.
Conclusion
it does not matter what he does, we’re screwed. He’s better off doing nothing and letting this clean itself up, but you know what will happen, they will ask for government bail outs. Your tax dollars to bail these greedy investors out to preserve the broken system. They end up with millions in bonuses and you are the bag holder. You and your kids and grandkids and their kids will have to pay for this. All while American companies ship your jobs offshore. Where the cost of a gallon of gas is expensive because the gov’t lets free markets work (if they are making money) but bailing them out when they aren’t. You get screwed no matter what. Where you will be lucky if you have health insurance : )…
Ok, off my soapbox now LOL.
I just hate it when I wanted to say something simple and ideas keep popping into my head.
LOL! Happens to me constantly.
on the ABX indexes it looks like the AAA finally may reach 90. seems like they were stuck abouve 95 for awhile. my question is, why aren’t there more hedge fund losses? methinks as of right now they are safely hidden until they can’t be hidden any more.
http://www.markit.com/information/affiliations/abx/history
Someone mentioned that hedge funds are sending out statements for July, with loss from last month downgrades and forced market pricing.
Redemption wave should start next week.
August 15 to be exact.
That Cramer video is sad. What a phony ass he is. He didn’t lose a dime today, I’m sure. And all this horseshit about people on WS losing jobs?
And the Dow is still 1000 points higher than it was in MARCH of this year?
Give me a freaking break.
Been on vacation with no PC, I missed one hell of a week!
VIVA BEARS!!!!!!!!!!!
I think we’ve been in a recession since 2001. The boat is sinking by the stern (manufacturing) but because the bow (housing) rose out of the water, people saw that as he ship staying afloat. Now that the lenders are pulling back, there is less air in the ballast tanks (liquidity) so the bow is coming down, and since the wood is rotten (toxic CDOs, I/Os, ARMs, etc) the bow will go beneath the waves and pull th e rest of the boat down with it. In the past the boat would survive because the engine in the stern (manufacturing) could power us to safety. Now with the engine gone, all we got left is the stewards, chefs, etc(service industry). The just drown when the boat go down.
I would say we’ve been in a recession far longer than that. When two incomes have to support a household and that’s the norm, that’s a recession!
‘It’s just as bad to put somebody in a property they can’t handle as to never get them there,’ said Amanda Salmon, a Realtor in Wasilla. ‘I’d rather be a renter than have a foreclosure under my belt.’”
No it is much much worse. Ruined credit is hard to live with. Everything is more difficult and more expensive. Never mind having to spend 10 years working cash jobs because the IRS is hot on your tail, or worse being prosecuted for loan fraud.
Jim Rogers, the Beeland Interests Inc. chairman who predicted the launch of the commodities boom in 1999, is convinced the nation has yet to see the worst of the housing decline.
“This is the only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment,” he said. “So this bubble is the worst we’ve had in housing.”
Guess that pretty well sums it up.
http://cms.ibj.com/ASPXPages/6iframes/FrontEndArticlesDetailPage.aspx?ArticleID=03442&NoFrame=1
Years ago, the phrase was one bad apple could spoil the bushel. That changed with all the supposedly smart ivy league MBAs who thoughht you could bury the one bad apple in a nicely decorted fruit basket (CDOs, CLO’s, different tranches, etc). Well guess what? As any body with an 8th grade education can tell you, one bad apple does spoil the bunch, no matter how pretty the packaging.
How many mortgage companies haven’t updated their websites?
I don’t think these products are available any more.
http://goldenrulemortgage.com/
Getting your first home is easy. Call us today about
100% Financing
0 Down Payment Loans
Low Closing costs
and other flexible programs
bait and switch
What effect will the bust have on internet advertising? Seems every site has ads from mortgage brokers, realtors, etc.
Time to short Google?
I was wondering this exact same thing. I will miss all the dancing stupid things when I check cnn’s homepage and yahoo finance while at work. Well not really since none of it ever made sense.
These booksmart Ivy League MBAs with their CDOs., and ttranches and all that are finding out fast that yes one bad apple does spoil the whole bushel. No matter how fancy the wrapping (AAA rated paper) the one bad apple (sub prime toxic waste) does spoil the whole bunch(major loss of liquidity) and every one refuses to buy apples being afraid of gettinng a bad one. Net result, hedge funds goinng under, sub prime loans being eliminated altogether and even top rated borrowers being denied loans or seeing MUCH higher rates.
test
Wachovia goes to 8% rate for 30 year fixed on Monday morning. This will another nail to the CA bubble coffin that Ben has reported on for so long. Just think how many people thought it could not happen.
I kept hearing all these experts on CNBC say there is nothing to worry about in Subprime, that the overall economy is doing fine. I think these people let their guards down. They took on too much risk thinking there was nothing to worry about. Now it is all blowing up in their face and they want a bailout.
The experts on business T.V. shows were talking about the dreaded bail-out subject today . The talking heads were also talking about the re-pricing of risk that was now taking place in the credit markets , (lenders raising rates ,tighter underwriting ,etc.)
It’s such a shame that the industry kept the party going for another 2 years, by making really bad loans ,when it was clear that in late 2005 that the party was over .
If Cramer wasn’t so self-serving ,he would know that the RE market can’t be saved at this point ,by at least the private sector being willing to give cheap easy money at this point .
There’s a great graph at one of the WSJ blogs today.
http://blogs.wsj.com/economics/2007/08/02/the-2006-vintage-was-not-a-good-one/
BrokerOutpost
http://forum.brokeroutpost.com/loans/forum/2/149124.htm
quote:
——————————————————————————–
we even had an excellent realtor, but the stupid appraiser did not give us what we needed…. so, we had to order another report… . I will never ever send him more business and my office feel the same way after what he did…..
What spoiled brats . This feeling of entitlement to get “hit the mark”,appraisals has got to stop . In the old days of lending when realtors or loan agents didn’t get the appraisal they wanted ,they either had to prove that it was a mistake ,or they had to re-sell the deal on different terms .The appraisal system has to change now because the system is to corrupt now . Total overhaul is warranted .
Why even have a appraisal if this was the standard business practice of the people in the industry in recent years ?No wonder it was so easy for fraud and cash back deals to take place .
Thats ok, I have been reading so many bear sites that I figured I would read some bullish sites such as brokeroutpost. I couldn’t believe that I was actually reading very scared bearish posts in there. I think thats about the time those slower to see whats going on start to realize there are some problems.
BTW I have noticed a lot of vacant commercial sites lately. And 2 things that bothered me. The guy who washes cars in our parking garage is normally very full and has a lot of empty spots blocked off on thursdays and works the entire day washing cars. Either he isn’t coming in anymore or he is only washing a couple of cars and I never see him. The other is that we have a deli that is always packed in our building at lunch time and pretty busy at break times. Well I started just walking down there just to see lately and noticed there is maybe 1 or 2 people at the busiest points of lunch and no one is there during the afternoon break. I think the recession stuff is already playing out without the stock market crashing each day. I work in Pasadena, CA btw.
I think I know what caused Wall Street to miss the bubble bust.
It’s the same thing that makes bubble home owners think they are still rich.
Lack of “mark to market”. In other words, no one was/is really testing what their asset is worth by trying to sell it.
In Wall Street there was a vested interest in not doing this. The holders of the mortgages were using them as assets for other things like collateral. They had no incentive to test what they were worth. They could only lose value if tested. The rating agencies were complicit or ignorant so these mortgage backed assets maintained AAA ratings even though no one really knew what they were worth.
Now, if a few mortgage banks are collapsing because some of their assets are hollow shells, not worth nearly what they thought they were worth, what do you think is going to happen when 20 million home owners find out their houses are worth 50% what they thought? Hmmm?
Remember this word. You heard it hear first in a modern context: Guillotines.
I probably dash off 4-5 letters a a week to newspapers and magazines accusing them of bias for treating falling home prices as a negative thing. Since when was the price of a necessity rising faster than inflation a “good thing?” And why are values returning to normal a “bad thing?”
Unfortunately, nobody…from the _Economist_ to the _New York Times_…gets it right.