Bits Bucket And Craigslist Finds For September 5, 2007
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Gasoline on the fire…
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=675&Itemid=35
Globalization. THE WORST. IDEA. EVER. Can anyone doubt it after reading this article? We’ve all been tagged with the “Bush Brand” which = spoiled brat. Pull the dang rug. NO MORE AID to any countries anywhere. No more poisonous Chinese crap. No more FED. No more illegals grinning and spitting in our communities. Isn’t it great to be lectured by the world?
You are correct IMO, but we’ll elect a new/old pack of fools that will keep steering us on the same course. They have no concern for the long term health of our Country regardless of what they say. It’s all about money,power &control.
How can the leaders care about the long-term care of our country when the people electing them don’t care about the long-term health of our country. Ask 100 of your neighbors if they would rather have short-term gain with the potential for great pain in the future or short-term pain with the potential for long-term gain in the future. I bet 99 would take the short-term gain.
That was a great article. I would have to say that the people on this blog are the leaders in their own personal little circles. And we are the ones that get laughed at or told to keep quiet. Until we can speak the truth freely, the nation is doomed.
“Until we can speak the truth freely, the nation is doomed.”
I have no problem with speaking the truth freely; my problem is I can’t get anyone to listen.
NYC, you are so right. The average member of the public has to take some blame here. So many examples, but i’ll give you a couple:
The people of New Jersey elect Robert Menendez as Senator, even although he is known to be corrupt and he is running against a squeaky-clean Tom Kean (Jr.).
Ever tried starting a conversation at work about a substantive issue (I smell a weekend topic coming on here…)? I work for an IB in NYC, I have tried starting conversations on the topic of the Fed, fractional banking, IRS, even great historical events (pretty politically neutral), but no luck. However, a gay senator foottaps a cop in a public bathroom and they can’t get enough of it!! Paris and Britney?? Don’t worry, we got that well covered. Derek Jeter at a book signing in mid-town? Relax, we have people here who can give you a blow-by-blow report.
Now, leave me alone, I’m off on a mindless shopping spree to buy huge amounts of clothes and accessories that I can’t possibly need or want.
I have no problem with speaking the truth freely; my problem is I can’t get anyone to listen.
One of the hardest aspects of leadership is to cause people to listen, especially about things that they don’t want to hear.
listening….
I too have to agree that most people really do not want to face the facts about the course this once fine country is on. Most people see the building taking place and see money, all I see is debt, empty boxes stuffed with unnecessary asian imported crap, and lousy jobs that nobody wants.
The American public for the most part is pathetically uninformed and worse doesn’t seem to car. I had lunch with my daughter and one of her friends, both teachers. Her friend teaches American History. She had no idea which President dropped the A-Bomb on Japan and was surprised that the US had at one time been at war with Italy. She’s teaching your kid’s. Her excuse was that she focused on early American history. I decided not to go there.
They know the NASCAR standings, or how their favorite team is doing, what’s new with Paris and Lindsey Lohan, who’s ahead on American Idol.
What to someone inexperienced, is a complicated process on the surface, buying a house, can be understood with a little effort. Apparently, a lot of people did not want to trouble themselves so now they find themselves in a situation with few options. People plan a vacation more carefully than they do their future.
The Public is for the most part responsible for this train wreck.
Ever tried starting a conversation at work about a substantive issue ??
Englishman, I remember realizing something was wrong in this country when you couldn’t start a conversation about Irak during the runup to the war. I remember sitting with my husband at some fancy gala where no one even mentioned the coming war. My husband had warned me, so I shut up, but I knew there and then that something was deeply wrong.
I find it moderately difficult to get people to listen, though not impossible. The most successful technique has been to listen to what they have to say about current problems and look for an event or trend they can relate to. That way it’s their narrative and I’m just a commentator. With folks over 40, it seems that the change to EZ credit is good opener. Most of them can still remember what rational mortgage lending looks like and contrast it to the current madness. Credit cards and the aggressive marketing of same are another good topic. Most older folks can recall when you had to apply for one instead of being innundated with “pre-approved” offers.
Her friend teaches American History. She had no idea which President dropped the A-Bomb on Japan and was surprised that the US had at one time been at war with Italy.
Ouch, that’s worrisome. Sure, she might focus on other aspects of American history, but she seems to have completely missed the biggest event of the 1900’s.
The worrisome thing is that with such ignorance of the relatively recent past, how can you expect someone to have any idea how to put current events in scale? The double worrisome thing is that she’s supposed to be educated in history. I hope my doctor didn’t go to a school like that.
I work with recent B.S.’s and M.A.’s, and not one of them has a clue what’s in the Constitution, that graduating from college on Sunday doesn’t mean they should sign mortgage papers on Monday, not to mention the political or economic machinations of the planet.
Doesn’t interest them. Yet they can have heartfelt discussions of concern about tv characters!
Makes me want to weep, and move to Europe (but my husband refuses)
They have no concern for the long term health of our Country regardless of what they say. It’s all about money,power &control.
Can you name a time when this wasn’t the case? How about a country where this wasn’t the case?
“Can you name a time when this wasn’t the case? ”
How about when George Washington decided not to run for president after two terms, ‘abdicating’ the monarchy that he could have had? He wrote the Farewell Address at that time. He gave up power so as to show that the country was something bigger than one person. (A good book on the subject is Founding Brothers, IMHO).
Some (historians) say that the voluntary retirement on Washington’s part was one of the greatest things that he gave to this country.
How about 1776?
1775 was cooler
Historically, what we call “globalization” today comes in cycles (so does piracy, what we call “terrorism” today, by some definitions also “mafia” a few decades ago).
The US could survive without globalization, but it would have to radically restructure its organization of space, land-use, and transportation policies based on available energy supplies (which could be the basis for the currency system).
In such a system, the country may have a lower population, a lower level of goods and services, and a less efficient distribution system continent-wide, while it seeks economically viable alternative supplies of energy to hydrocarbons, but indeed the quality of life for those who remain in real human communities might actually be better by some measures.
Chances are, though, that such a scenario will not materialize unless there is a tangibly disastrous outcome to one of the ongoing or near-future energy wars. Hopefully we won’t see.
‘….available energy supplies (which could be the basis for the currency system).’
Interesting comment there. I often think of the analogy of ATP (adenosine triphosphate) for money. That we could create a currency system around energy credits has something. Energy has to be fungible. How could you counterfeit energy?
We all produce energy. Which we trade for paper.
The problem arises when someone finally comes up with an ambient temperature super conductor, which makes that energy capacity essentially infinite– and rules the planet. Once the production and delivery system is personalized (handheld generators?) there goes your “currency.” Nifty concept, though.
“The problem arises when someone finally comes up with an ambient temperature super conductor, which makes that energy capacity essentially infinite– and rules the planet. ”
You get the same problem when someone finally comes up with a way to print money out of thin air, making “money printing capacity” essentially infinite - and ruling the planet. Sounds a bit familiar….
How about a currency backed by all the goods and services in existence. Think of a dollar bill as a sort of coupon that can be traded for a dollars worth of goods/services. When more goods and services are created then more dollars can be created to facilitate trade for these goods and services.
What a concept!
and no more poisonous US crap (like the output of the US financialy industry) for the rest of the world too, please …
That’s an easy one, just don’t buy it. But countries seem to be buying each other’s crap. Listen, nothing would make me happier than to see the EU or whatever censure the US. If we won’t isolate ourselves, maybe other countries need to give us a hand with that.
Hi Palmetto. I just read yesterday that 80% of the world’s toys come from China. Today there is yet another huge recall.
http://service.mattel.com/us/recall.asp
Mattel (sp?) has been furiously trying to monitor its manufacturers in China. Here’s an idea: Open a plant here, and stop dealing with Chinese manufacturers. The poison pet food thing really disturbed me. Why would a Canadian pet food manufacturer be buying wheat gluten from China, when the wheat belt is right here? To save a penny per pound or something? Corporate greed is without morals or ethics, and I blame the ordinary people who buy stocks in companies without even bothering to find out what they make (and how) and sell. Child slave labor, lead paint, poisoned food? Most stockholders couldn’t care less as long as the stock goes up.
I don’t see any way out of this. Greed is infectious, and the most outwardly religious people on Earth turn a blind eye to the source of ill-gotten gains. Hell, one of the bigger denominations–either the Presbyterians or Methodists (I can’t remember) owned, or still owns, a chain of abortion clinics (I guess to show how THEY can’t be controlled by the Vatican), and I know devout Christians who spend fortunes in casinos, despite the fact that the same companies that own the casinos own most of the major on-line porno sites.
Globalization is stupid, but money always wins. Starting today, Mexican truckers have nearly free access to U.S. highways. So much for guarding the borders. Heaven knows we all need cheap vegetables from Mexico.
I agree Bush is a disaster; so were his opponents in the last two elections. But people keep electing boobs while expecting different outcomes, which, I guess, means the majority of voters are insane.
“Corporate greed is without morals or ethics, and I blame the ordinary people who buy stocks in companies without even bothering to find out what they make (and how) and sell. Child slave labor, lead paint, poisoned food? Most stockholders couldn’t care less as long as the stock goes up.”
As I understand it, aren’t the corporate bosses of publicly-traded companies legally obligated to be “greedy”? They are beholden to their shareholders. So, it’s “whatever it takes”. The corporate DNA is programmed by law to screw the customer, pollute the environment, outsource labor, set-up corporate HQs in off-shore tax havens, and engage in mafia bookkeeping . . . just to prop up share prices from quarter to quarter.
Politically speaking: I feel sorry for these well-intentioned boobs who work tirelessly for Candidate X. You know, the one who’s “really going to make a difference this time”. These are the same glassy-eyed fools who pass the hat at work and go on WalkaThons for [insert disease name here].
Meet the new boss
Same as the old boss …
Thanks for making me laugh. The walkathons so unoriginal, no wonder they’re so popular.
Until recently, I worked with several mothers who were also Child Development Ph.Ds. They highly favored toys they made at home. They would let their children crawl on the floors, didn’t worry about germs to the paranoid level some mothers go, and hated any computerized game for early development. They would state that just pushing a button wasn’t really reacting with the toy. There needed to be levels of action and consquence at very really stages.
I’d save them weird boxes which they’d use to build play areas like a pizza kitchen or a post office. The kids got more enjoyment helping to build the strusture then they did playing in it. I think parents buy toys because they don’t know what else to do.
Parents would also bring their children in to work with them all the time, pets too. I miss working there very very much.
If Congress would require US companies who import goods from crappy countries to pay for their own FDA/Dept of Health inspector to inspect incoming shipments, then the cost benefit AND health concerns of said importation would be simultaneously ablated. End of problem.
We’re all one big WTO family now, so (China just did appoint a new overseer of health stuff) anyone can whine to them that they’re being discriminated against if folk won’t import their debris…..you know, sort of how we scream and rail at the E.U. for not wanting our GMO corn and stuff..
‘ No more illegals grinning and spitting in our communities’
- You better be careful mentioning ‘illegals’. Some folks on the blog think that it is racist. Here in So Cal, we are up to our eyeballs with illegals. Some people must think that it doesn’t exist or matter. When they were allowed to buy homes for zero down - it only compounds the problem, then there kids need special ed at the public school, then….
We’re up to our eyeballs in illegals here in AZ. There. I said it — the I-word.
Palmetto, this is something I don’t agree with you on. The alternative to globalization, assuming we even have a choice, is xenophobia and more wars, because we tend to dehumanize people we have no contact with. Of course there are problems when cultures mix, but mixing is better than clashing. And in the long run it’s economically more advantageous for the world as a whole to allow specialization amongst countries, rather than forcing them each to be an economic island (again, assuming we even could control this).
And as for being lectured by foreigners — if anything, we Americans are the kings of lecturing others.
Finally.
A voice of reason on this subject.
FutureVulture’s voice - to be clear.
“mixing is better than clashing”
Tell it to LaRaza.
The planet is clearly not ready for globalization. Man is just not that far advanced. Maybe in the future, even the not too distant future, but my God, can’t you see that it is not working out? Under globalization, is exactly what you are talking about, wars, xenophobia, etc. Meanwhile, countries sell each other crap, ours included. This is globalization? I’ll pass, thank you. Cultures are not mixing and indeed, they are clashing, with disastrous results, and should not be forced on each other. I think people should have the right to their own cultures: in their own countries. There is no specialization that you speak of, just a rabid free-for-all as to who can do what the cheapest with the lowest quality.
As to American lecturing others, speak for yourself. I have NO desire to tell China, the EU, the Middle East, South America or any other part of the world what to do, except to stay out of our business (as I so desperately wish our corps and gubmin would stay out of theirs), don’t ask us for money or aid, and have a nice day.
Agreed. The choice is not globalization vs. isolation. Or integration vs. alienation. It is a given that people of different types must be nominally separated. Your eyes tell you this. History tells you this. A recent study finds that diversity causes reduced trust and civic participation.
No, the real choice is who controls the social power structure: Corporations (globalization/diversity), or the People, in their various incarnations. (Nationalism/borders/sovereignty)
Amen, Palmetto!!!
When Palmetto discusses globalization, I think he’s referring to the changes in trade policy that have been instituted over the past decade or so. He’s talking about tariffs, corporate taxes, enforcement of immigration/labor laws, stuff like that.
Xenophobia…we state that as if there is no doubt as to the “rightness” or “wrongness” of it.
While it’s certainly beneficial to all if a country that can most easily grow corn is able to distribute that corn to countries that need it (and can’t grow their own, or better, corn).
OTOH, it is WRONG to have developed nations — with higher environmental, economic, health and labor standards — compete with countries that couldn’t give a rat’s ass about its workers, environment or long-term consequences of its actions.
Trade? Yes…but we should hold all our trading partners to certain minimum standards. This would benefit all of us far more than if we all race to the bottom of the “free-trade” barrel.
That article nails it, as well as our man Schiff, and as long as the MSM keep up their stupidity, like this reporter badgering him like she’s on a witch hunt, the louder the voices of reason will become.
http://www.youtube.com/watch?v=-cuRdIYrKE0
Am I interpreting Willis’ argument correctly? If you do not support a government bailout, rising foreclosure is your fault.
THNX, meant to watch that Sat and missed it. His radio show is tonight, but the last one was so aggravating, couldn’t stick it out; the on-air rant about his show production was too embarrassing. Wish he’d suck it up and stay on topic.
Is it just me or does anyone else want to rip the reporter a new one?
Schiff could have really brought all his points home with a few simple charts and data talking points. It would have been beautiful to see.
“At the first sign of nervousness on Wall Street — relatively small falls in asset prices which might threaten oversized bonuses — Bernanke was quick to offer cheap money from the Federal Reserve for banks that lacked the credit standing to borrow in the marketplace. All this is done in the name of financial sector stability, code words for bailing out greedy and incompetent financial market players.
Next up was President Bush, kindly offering government-supported relief for vast numbers of sub-prime borrowers who are unable, or soon will be, to pay rising interest rates on their loans. This was presented not only as a way of helping distressed, lower-income home-owners but of preventing mortgage problems from having a knock-on effect on the wider economy. Of course, it is also another way of bailing out those who persuaded borrowers to take out unaffordable loans in the first place – Wall Street.”
nice to see someone call it like it is.
my daughter, who is intelligent, hard-working, and well-educated, says I’m being negative when I talk about the housing market and this country’s financial future.
My whole family used to say I was too negative. Now they claim they saw “the problem from the begining”.
BP, that doesn’t seem fair. The least they can do is give you the satisfaction of acknowledging you were right. I had a friend call me last night. She said that she was watching the Countrywide mess unfold in Cali and immediately thought of me. “This is what XXX has been saying would happen”. Priceless.
Perhaps all that is happening will be the catalyst to bring needed changes.
We need to bring our jobs home from China and Mexico and stop coddling illegals. We need strict lending laws that are enforced. We need to stop giving the wealthy a free ride on taxes.
I have no problem with products from New Zealand, Australia , Germany, and many other European countries because they have the same or better quality controls as we do.
However, it is time we start putting America and the American people first.
Now how to we wake up the couch potatoes?
Carefully place these topics in soap operas?
Danger: Steep drop ahead
Even if the credit crunch passes without a major catastrophe, the prices of stocks, bonds and real estate have a long way to fall.
http://money.cnn.com/magazines/fortune/fortune_archive/2007/09/17/100250262/index.htm?postversion=2007090505
A very good, fast, simple summary that I agree with entirely. Asset prices are too high relative to the income that supports them, meaning future returns will be low.
Prices have instead been supported solely by the expectation of selling to someone else for more money, or having to buy in later at a higher price. As a result, stupidly, as prices fall demand for assets will fall also as the speculative price goes away, until the fundamental price is reached.
In stocks, the MSM was reporting that prices were cheap relative to earnings, bu the earnings are at peak levels and likely to fall. And I think we can all agree where the fall is likely to be: financials.
http://www.thestreet.com/s/kass-nine-reasons-the-feds-cant-save-stocks/markets/activetraderupdate/10377640.html
Not to mention that the spread between the LIBOR (the index for many ARMs) and the Fed rate is diverging. A cut in the Fed rate is likely to be regarded as inflationary and increase the spread. IMHO there is simply little that the Fed can DO to ease this crisis.
The Fed is urging lenders to offer forbearance (which beats asking the taxpayer to bail out FBs!)…
P.S. Just in case I ever decide to become a homeowner again, what exactly is a “deserving borrower?” Because that sounds like the kind I would prefer to be…
Fed urges loan companies to help borrowers
As default dangers escalate, mortgage servicers asked to pitch in
Updated: 3:26 p.m. PT Sept 4, 2007
WASHINGTON - The Federal Reserve and other banking regulators issued special guidance Tuesday urging loan service companies to work with borrowers in danger of defaulting on their home mortgages.
The guidelines are not mandatory, but the regulators expressed hope that companies that collect payments on mortgages would heed the advice.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., said mortgage collectors have the authority under existing accounting and tax rules to help deserving borrowers.
http://www.msnbc.msn.com/id/20587894/
The LIBOR Fed Funds is a credit spread, we’d have to be Zimbabwae to have inflation risk that could cause that sort of divergence. The spread means huge banks (especially European banks) don’t trust each other, they’re expecting more cards to fall before the sub-prime imbruglio is over and they aren’t making loans to each other until a few more have.
“The spread means huge banks (especially European banks) don’t trust each other,…”
That is where a widespread prevalence of Enron-style accounting will get you.
as professor stucco once said, we are in EXPECTATIONS MANAGEMENT MODE:
The Fed is gonna cut, based on nothing more than expectations, they know it wont help, but it might curtail the bleeding for a short time.
“EXPECTATIONS MANAGEMENT MODE”
A fool’s money and his expectations for it are soon parted.
HeliBen should cut his wrists inste/ad of rates. Who here would like to see a Fed Wrist-Cut?
“HeliBen should cut his wrists inste/ad of rates. Who here would like to see a Fed Wrist-Cut?”
That is sick.
With the exception of the ultra-sneaky move of cutting the discount rate on options expiration eve, I don’t really have a problem with “HeliBen” so far.
That’s a big exception.
And a massive wink and nod to some, unfortunately.
“NEW YORK, Sept 5 (Reuters) - U.S. stocks added to losses on Wednesday after the Federal Reserve’s Beige Book summary of economic conditions suggested continued strength in the economy, reducing expectations for an interest rate cut.”
better get those expectations under control.
beige book my @ss, its grey at best……charcoal no-less.
tell ya what ajas,
next time a suprise move is on the way, as long as Im in the loop for ill-gotten gains….Im all for the FED cuts, otherwise…….its just a shell game.
Exactly.
“U.S. stocks added to losses on Wednesday after the Federal Reserve’s Beige Book summary of economic conditions suggested continued strength in the economy, reducing expectations for an interest rate cut.”
That makes sense. If the economy is good, then stocks should go down. This has nothing to do with the MASSIVE BLEEDING IN CREDIT MARKETS. No. It’s just because of something Bernanke said this morning over coffee.
“First, house prices may move on euphoria in the short term, but long term they depend on family income - the ability to pay mortgages and rent. At levels well above the normal four times family income, the market gradually loses first-time buyers until prices break and fall back to affordable levels.”
Ahhhhh, there we have it. Affordability mentioned in the MSM. We’re getting somewhere now, folks!
“…the market gradually loses first-time buyers until prices break and fall back to affordable levels.”
Seems simple enough to me…why didn’t I think of that,… boy those msnbc people are sharp I tell ya, giv’em a pay raise…we could use some wage inflation right about now.
Here’s a little more good news. I guess the DOW will shoot right up to 15,000 again.
http://biz.yahoo.com/rb/070905/usa_economy_jobs_challenger.html?.v=1
No kidding! More cheap money, more funds to the discount window and that means cheaper risk, so DOW goes to 15000.
sense of growing crisis in Europe:
As bankers have returned to their desks this week after the summer break, they have been searching frantically for signs that the markets are gaining a semblance of calm after the August turmoil.
However, the money markets are notably failing to offer any reassurance. While the tone of equity markets has calmed, the sense of crisis in the interbank markets actually appears to be growing – especially in London.
http://tinyurl.com/ytxt4f
Looks like Europe is facing a real liquidity squeeze.
My understanding is that French, Italian, and Spanish banks are not directly exposed to US subprime-related financial instruments, unlike some of their German counterparts.
Nevertheless, they also have debt-laden populations and bankers there, generally more conservative than their US counterparts, are starting to question the wisdom of their own lending practices, like consumer loans to buy cellphones.
Like in the US, average incomes in Europe have not kept up with the “real” rate of inflation and consumption is propped up through debt.
These are some of the consequences of letting go low/medium-level manufacturing to cheaper competition from far away, even as we enter the point of diminishing returns in our main source of energy.
Please use one set of screen name/log-in info only.
“My understanding is that French, Italian, and Spanish banks are not directly exposed to US subprime-related financial instruments”
Then what the hell happened to BNP Paribas?
You’re right. I should have been more precise: the majority of banks from such countries have only marginal direct exposure to US subprime, if any, though, as the original poster mentioning Europe pointed out, the indirect effects are quite tangible.
in fact, most of the effects in Europe up to now were indirect and not from the banks or institutions where you would start looking for trouble.
I think the large direct exposure of German banks is related to the fact that they are the only EU country without a native housing boom, causing more direct housing speculation abroad. Most EU banks have huge exposure to the international housing market, either through direct loans to homeowners (usually for the smaller or more nationally oriented banks) or through their investment business (funds, hedgies etc.) and investment in commercial real estate. Even if EU banks only engage in loans to citizens of their own country, they are still exposed to the international market because many EU buyers speculate abroad with their first home as collateral for the second (or third) mortgage.
And Spanish banks have their own identical problems with or without US junk-paper. The real estate boom in Spain has turned to a bust and their entire economy is heading towards the precipice.
Yes, and another parallel with the US is the high current account deficit: along with energy imports, consumption of manufactures no longer produced in the domestic economy.
please be accurate when reporting such things … there is NO housing bust in Spain; it might happen in the near future, but average prices are still rising (like in almost every other EU country, usually at 5-10% yoy). And with some more low rate help from the ECB on the way, prices might be levitating for another few months of even years. The end of the EU housing bubble has been called for at least six years now and all those calls have been proven wrong.
Bloomberg reported there was on the coasts.
“The end of the EU housing bubble has been called for at least six years now and all those calls have been proven wrong.”
I predict this stopped-clock prediction will prove highly accurate within the next 12 months. Now that the U.S. bubble has popped, the EU bubble is soon to follow.
if the EU bubble tops/pops it should become apparent before the end of this year; if it survives the current credit turmoil (especially if it survives thanks to billions of bailout money from the ECB) players will assume this bubble can survive anything (too big to fail) and place their bets accordingly.
Bubbles that suffer near-death experiences often go on to tragic final highs as the participants come to believe the asset class or market has become bulletproof. Stocks after the successive Latin, Russian and Asian crises would be one example.
On the previous thread, people were suggesting how an FB could come up with $406 to make up their new monthly nut. At least for me, that would be 2 extra visits to a local casino. Now I must explain that means I am going in there to evaluate them and then send in a report about the experience. It does not mean to go in and carte blanche gamble. I must do a small amount of that to do the evaluation. It is fun. It is profitable. It is real. It is also a lot of work. It would be akin to a 2nd job. Maybe the FBers could find such an assignment in their area (no, I don’t want to give away my secret sources). I can truly say that I am going into a casino and guarenteeing I will make money at it. Great gig - to get paid to eat and gamble. Doesn’t work for everyone.
There’s a fool in every market.
If you don’t know who the fool is, it’s probably you.
ADP employment report weakest since June 2003
ADP Aug. private-sector employment up 38,000
Employment in the U.S. private sector grew by 38,000 in August, the weakest in four years, according to the ADP employment report released Wednesday. The ADP report suggests nonfarm payrolls may have grown much slower than the 123,000 anticipated by economists ahead of the report. Adding in some 27,000 government jobs typically added but not covered by the ADP report, it suggests nonfarm payrolls grew by about 65,000.
The link………………
ADP shows weakest hiring in four years in private sector
http://www.marketwatch.com/news/story/adp-survey-private-sector-payrolls-shows/story.aspx?guid=%7B7925CC06%2DAAC6%2D4852%2D8FCD%2DB963BA62933F%7D&siteid=bnb
Could anyone give me info on what’s happening with the real estate market in Princeton, NJ? What about the rental market? Older duplexes for 500K seems excessive. How much do you think they will come down?
Check over at njrereport.com. NJ isn’t as bad as FL or CA, but it’s slowly catching up.
A dumba$$ where I work just bought a condo in Princeton. He tells me that “it is different” there. I wish I could help more but that is all I know. Oh, and I know it is an excruciating commute from the City. The entirety of New Jersey will get hammered, IMHO.
Ok, I’ll tackle this one. I don’t know Princeton really well, just visit on business on occasion. I have never seen a more overblown, overpriced, overrated town in my life! (And I’ve lived in Irvine, CA!!). The people are pathetically pompous, superior types who overspend on everything, and I mean everything. From houses/condos in the town center, to shops of all kinds that are outlandishly overpriced. Hundreds of little bric-a-brac shops that think they are cool and avent-garde selling pointless “gift shop” type guff at 500% markups.
Stay away, it’s hideous.
Oh, and when the housing price crash finally hits NJ, look out Princeton, you are going to be devastated!!
My husband just got a job at the university, so we kind of have to move there. We thought about staying in NYC, but the commute would be absurd. Maybe we should forget about buying for a while and just rent faculty housing. I hope you are right about the price crash.
Friends of mine opted to move across the river to Pennsylvania. Lower taxes there. You can probably negotiate a better deal there than in Princeton. There was a lot of overbuilding that took place in Bucks County - I’d bet there are lots of bargains (realtively, I’m sure you understand) available. Certainly some hurting sellers.
I live in Bucks County and north near the border with Jersey has been hella built up over the past few years and you have a shorter commute to the Uni. I’d look there if your planning to buy but then again I’m of the “rent and wait to buy” mindset.
Citibank has 100B of exposure to SIVs (25% of that off balance sheet) - WSJ
Hey chick,
Just curious re: what someone else said about you…what do you do with your time besides confuse the crap out of most of us with puts, calls, TICK and TRIN, etc.?? Do you work full time somewhere, or rescue animals, people or something like that?? Not trying to be nosy, just curious.
I work for myself as an idependent trader and have since 1997. That gives me free time to do what I like during the rest of the day. I do dog and cat rescue, yes, work out, cook, normal stuff.
Thank you!! That’s awesome.
I’m thankful for the confusion. It’s taught me a lot as I un-confused myself.
Same here. I’ve learned more in the last month or so from txchick, Hoz, NYCityBoy and Co. about housing, markets and finance than I ever have. So much more to learn, and I’m looking forward to it.
add Prof bear (Get Stucco), Palmetto, NHZ, and lots of others to that list - thanks, everyone
Absolutely!!!
Yes, thank you TX Chick. I’m still waiting for you to recommend a book for me, but I realize you need to protect your secrets.
More off-the-books, off-shore crap financing. Just amazing …
I’m loving those LEAP puts I bought on XLF. Citibank is the largest component of XLF. The financial stocks have a long way to go…
Could one of our more astute bloggers explain something to me?
The FED infuses 100Bil into the financial system with 1,3,7,14 day payback terms. The stock market surges, all problems resolved? Why isn’t there an inverse reaction when the funds are paid back? Is there documented proof that they were paid back?
I’ll bet that those loans get rolled over.
It’s all good as long as you can make the minimum payment.
so now add more pain to the pile with more interest rates to pay on top of depreciating assets and defaults
In theory, this can work.
Assumptions:
Asset A is relatively illuiqid. I hold Asset A.
I wish to sell my Asset A and procur Asset B.
Presume in order to buy Asset B, I would need to sell
my entire stock of Asset A. However, in order to sell
my entire position in Asset A, I would have to severely discount
it as that volume only trades over 3 days.
Instead of discounting it severely (liquidating), I could
sell 1/3 in the spot, use 1/3 for a 2 day repo and 1/3 for a 1 day repo and then sell each of those 1/3s in their respective spots
as they are returned to me. In this case, I can perhaps prevent
a severe discount/liquidation without affecting overall demand.
OK, so in this case, Asset A is CDOs, but what is Asset B?
Per the WSJ, the housing bust is hitting state and local budgets.
Public sector finance is one area where I have a great deal of expertise, and the assumption of some that lots of spending can go away without affecting the quality of life is false.
Much of the spending growth is actually debts and pensions from the past whose cost was shifted to today. More and more of the national health care burden is being shifted from the private sector (and thus the cost of consumer goods and services) to the public sector. And the cost of caring for Grandma and Grandpa has also shifted to the government over the past 50 years.
Some fast growing states and cities, whose past pensions have yet to catch up with them, have been spending more on other things as well. Most have been spending less. When you are talking about goverment spending, you are talking about income and health care for senior citizens, not the poor (at least not anymore), not the immigrants, not “waste fraud and abuse, although there is certainly some of that, and not general services. It is general services that get squeezed.
The article is about falling tax revenues, but given that more and more of our taxes go to public employees who are NOT working not those who are, a decline in pension assets will also hurt.
Link to leader on referenced article:
Housing Slump Strains Budgets Of States, Cities
By Amy Merrick
Word Count: 1,718
Tremors from the housing market’s slump are straining the budgets of state and local governments from coast to coast, sending officials scrambling to plug gaps.
http://online.wsj.com/article/SB118895953516217811.html?mod=hpp_us_whats_news
Thanks for the analysis. I’ve thought for a while that relying on a pension would put a lot of people in trouble. I only see that problem increasing.
And then there’s this article I linked yesterday about Pension funds investing in the equity tranch of CDOs.
——————————————————————————–
Banks are selling the riskiest CDO portions, known as toxic waste, to public pensions and state trust funds.
Seven percent of all the equity tranches sold in the U.S. in the past decade were purchased by pension funds, endowments and religious organizations, Fleischhacker says.
Public pension funds have bought more than $500 million in CDO equity tranches in the past five years, according to data from public records requests. The New Mexico State Investment Council, which funds education and government services for children, has $222.5 million invested in equity tranches. The council decided in April to buy an additional $300 million of them. That investment would be 2 percent of the $15 billion it manages. The General Retirement System of Detroit holds three equity tranches it bought for $38.8 million. The Teachers Retirement System of Texas owns $62.8 million of them. The Missouri State Employees’ Retirement System owns a $25 million equity tranche.
“known as toxic waste”
LOL, I always wondered what the technical term was.
What’s funny is no one I know (myself, others or any stru fin person) calls it the “equity tranche” except when meeting with clients.
In the case of New Mexico, much of that was Bear Stearns CDO toxic waste that they tried to sell off to pension funds. When they still had a bunch left they tried to dump it onto the public through the since-cancelled Everquest IPO. Of course this was all BEFORE the hedge funds went belly up.
This (pension funds in totally inappropriate investments) is the result of the Fed keeping rates too low for too long. Everybody **had** to chase yields and move into riskier and riskier investments.
The pension funds I’m aware of were fully funded just a few years ago (maybe more), but the low-rate environment cause them to buy junk in order to keep up with their forecasts (income & expenses).
Poor decisions all around.
Commercial real estate prices to fall 15%, per Bloomberg.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6CPQun5.3bQ&refer=home#
Somehow in the professional market there isn’t as much blarney.
Good post WT Economist.
Once the B/S is removed the true facts are exposed.
Very hardy to ignore the fact that the US has lost two things since Bush became President. Credibility and her status as world leader. It’s going to be interesting to see how this financial tsunami, a.k.a the liquidity sqeeze, plays out. The old axiom of “When America catches a cold the world catches the flu,” might still apply because these kinds of financial disruptions take years to work through and unless people like Mr. Magoo Greenspan, Helicopter Ben or Godfather Paulson come up with some mind shattering solution, we are going to see just how much infulence the spoiled child of the world (America) has on places like Europe and Asia.
Btw, this comes from Ronald Reagan’s diary: “A moment I have been dreading. George (Bush Snr.) brought his n’er do-well son around this morning and asked me to find the kid a job. He’s not the political one in Florida. This is the one who hangs around here all the time looking shiftless. This so-called kid is already 40 and has never had a real job. Maybe I’ll call Kinsley over at The New Republic and see if they will hire him as a contributing editor or something. That looks easy work…..
All you need is a rich dad to get you a job in name only and also get you into the Texas Air Guard so you don’t have to go and risk your life in Vietnam like those who don’t have rich fathers. Ronald Reagan seems to have had great perception.
Wow….. Do you have a link to validate that Reagan quote?
http://www.globalresearch.ca/index.php?context=va&aid=6580
Ronald Reagan was a good father and a the kind emperor. What we got after that was Commodus.
You guys see that down below he didn’t really say that, right??
It seems to be that there is a direct correlation between the quality of a president and the strength of the dollar.
Reagan - good president, strong dollar. GW, Nixon, Carter - bad presidents, weak dollars.
Many bad things happen when the dollar is weak.
Hopefully, there is a special place in Hell for those who post lies on an online forum. Dumb opinions I can tolerate, but it’s stuff like this that really, really bothers me. Especially on this blog where I really respect most of the posters.
The contents in the alleged quote is quite factual irrespective that he did or didn’t say it.
Then why not use a real quote to point it out? You just don’t get it do you. The people on this blog are about the TRUTH. If you hold onto the truth then you have something real you can work with. That is the basis for the facts about this housing bubble. As soon as people start using MSM tactics of out of context quotes, distortions, and outright LIES, they lose all credibility here.
testify!
What is this, CBS?
Mike, credibility is hard to obtain and very easy to lose.
So how is the dem congress working out?
America is still the richest, most powerful nation in the world BY FAR.
I doubt that Deloitte et.al. would agree to try and prove it, at least this week.
A. “Richest”. We don’t know how much money we are in the process of discovering we have already lost in our housing market.
B. “Most Powerful”. Our Air Force is flying nuclear bombs around BY MISTAKE, with the flight crew not knowing they were carrying them.
Good points, but I think the same stupidity is going in other countries too. I didn’t say we were SMARTER than everyone else, after all. That’s probably universal.
You are correct……so far. Given we spend almost as much as the rest of the world combined for our military, we doggone best be the most powerful - or find a better place to invest those tax dollars.
Oh - wait - That’d mean “our” corporations would have to compete in the world markets on competitive economic/fair basis. That won’t do.
What “we” created was magnificent….until recently. Today our corporate-dominated government is of, by, and for the corporation - commodifying everything short of the air itself.
Value of a commons? Any corporate responsibility to communities? Yes, I know the alleged duty of the entity, but oddly they did it before, and paid their CEOs a considerably smaller portion of profits, and grew value handsomely.
But it’s different now….Not only can we not stop history, we wouldn’t want to. It’s just that along the way our compass started swinging toward a heading that’s landed us here….midst big box stores, platform companies, outsourcing, Carl’s Jr, devolving into a society where wages are the enemy….and that enemy is being decimated.
So how do we propose to regain/maintain that magnificent lead? Without a complete rethinking of priorities, it ain’t gonna happen, and stats like the WHOs rating the U.S. as 34th in medical care….with France as first place….
Then we have infant mortality higher than much of the developed world, an education system which doesn’t educate, we’re fatter, shorter, with no independent national news system.
I’m riveted, watching this drama evolve….
got an ARM tied to LIBOR?
LONDON, Sept 5 (Reuters) - London interbank offered rates for overnight euro rates hit a six-year high on Wednesday, as stress in money markets intensified a day ahead of the European Central Bank’s latest interest rate decision.
Three-month euro rates also hit a new six-year peak while three-month sterling rates rose for a sixth straight day to a new 8-1/2 year peak.
http://tinyurl.com/2nun8o
up to now the credit stress is strictly limited to the EU banks themselves, and nothing of it is visible in rates for mortgages or savings accounts
at least I got offered a 0.1% higher rate on my 2-month term deposits last week …
Can you comment on Euro mortgages? Are they tied to LIBOR?
I don’t know any official details, can only see that mortgage rates in Netherlands remain stubbornly low despite the ECB rate increases. Only about 1/4th of official increases is passed on to the consumer (both for mortgages and rates on savings accounts). If this is normal market action or plain manipulation, who knows … Rates here are still within 0.5% from the lowest in 400 years.
Same story in some other countries like UK; however in Spain and probably some other markets, rates have risen more, mostly tracking ECB rates (first cracks in euro currency). Maybe Spanish rates are tied to LIBOR?
RE: dodge the consequences of a generation’s belief that the world owes them a living.
As a 54YO taxed to death boomer, payin’ out a 15.3% self employed SS levy, I’ll be damned if I’m gonna take the rap for the current Fed government debt crisis.
You can go blame the SS, SSI, Medicare, Medicare, HUD, VA and various out welfare/non worker check receipients, who’ve paid in a fraction of what they’ve drawn out thru the “let’s give somebody a free ride” systems set up under FDR and LBJ.
This federal transfer payment Ponzi scheme has been borne on the backs of the 80 million boomers who have had to literally throw their wives and children into working system in order to maintain a normal standard of living.
50% of this country’s inhabitants don’t do squat to contribute to the economic pie.
It’s always more money to support the weakest links;
who in any other historical period of time could count themselves amoung the Darwinian dead.
My empathy tank is runnin’ on empty.
“This federal transfer payment Ponzi scheme has been borne on the backs of the 80 million boomers who have had to literally throw their wives and children into working system in order to maintain a normal standard of living.”
Sorry, I don’t agree. These boomers you talk about didn’t have to buy houses that were too expensive, HELOC themselves to the hilt, go on perpetual spending sprees to buy rubbish they don’t need. You might not have done this, but your Boomer brethern did. They bought into the whole idea of living beyond ther means and sending the wives out to help finance it instead of staying at home and raising the children.
Oh how our sociery is already suffering because of this, and it will get much, much worse.
Boomers chose their own fate. Nobody put a gun to their heads.
i know alot of people that bought into the whole flipping craze. not one of them is above fifty.
anecdotal i know.
My anecdotal evidence concurs with yours.
The Boomers (and above) that I know did not participate in flipping, and most did not HELOC themselves to death. None of them has taken on debt which they cannot repay, nor have they used “exotic financing”.
Observations from a Gen-X’er…
Yea, but how many of the purchasing decisions were based on the wife’s materialistic desires? Wife + Suzanne get together and it’s all over. Husband signs on the line to squelch the nagging.
Yet one more “Boomers are to blame for all the evil in the world” quote.
hd74man - who was it that voted to keep the US Congress Democrat for 40 years up until 1994? You know, the party that is (and always has been) all about increasing public spending, welfare, SS, Medicare, etc? Seems to me that if you were born in ‘54, you should have voted in 72 onward. For all I know you did vote for old-style smaller gov’t conservatives, but most of your boomer compatriots didn’t. Now both parties are all about maximum government spending, and I still don’t see the boomers doing anything about it - in fact they just want more, more, more - notice Nancy Pelosi as speaker of the House?
Save your pennies - Gen X and Y will not be paying for your greens fees during retirement.
Bingo. The only reason I wasn’t dealing with a levy is they couldn’t find anything. Asset protection 101.
Where does one find the textbook for this “asset protection 101″, for those of use who were not there?
“As a 54YO taxed to death boomer, payin’ out a 15.3% self employed SS levy, I’ll be damned if I’m gonna take the rap for the current Fed government debt crisis.”
Bingo. I think we may have reached the SHTF moment for the ongoing policy of taxing future generations for current generation excesses (including high deficit spending coupled with the R-can guarantee of “no new taxes”).
It’s always more money to support the weakest links;
who in any other historical period of time could count themselves amoung the Darwinian dead.
A loved one of mine can be considered one of this society’s “weakest links”. He went on SSI fourteen years after the onset of his disability. Some of our fellow citizens are sick and/or disabled through no fault of their own.
I’m very happy that he is not counted among the Darwinian dead.
If his SSI entitlement was one of the factors that allowed him to continue his life on this planet, more power to SSI.
Yes, but 95% of the people on SSI are fraudsters. I know, I unfortunately used to work for the Title 16 program at SSA (back in College).
I’m aware that there are individuals who fraudulently collect SSI. I’d like to see some data to support your claim that 95% are bogus.
It is unfortunate that the malfeasance of those who know how to game the system delegitimizes the needs of citizens who are truly disabled.
I know 2 people on SSD (disability) - one is legit, has reumatoid arthritis, still tries to work at age 64 (music teacher), hates being dependent on the gubmint, gets about $450/month, can barely get herself around because of the disease.
The other is a male, age 45, very obese, drinks hard alcohol and abuses everyone he knows, got a disability attorney and gets 1200 month. Spends his time terrorizing his family, does meth, would be fine if he’d lose weight and clean up.
Anecdotal, I know, but proves the system can be gamed and the honest are penalized. OT, except the second lives in subsidized housing, the first doesn’t.
Yep, have a sister in the same SSI boat. She was used to a much better standard of living while working and would again if she had the ability. Living in TX, the Dr. mills continually push to get her get back to work but do not provide a viable solution to her disability.
I work in a non profit enviroment, usually vote conservative (that’s a dichotomy!) and I see people in serious financial distress daily. Most are legit at this point in their life, others, maybe not so much.
A problem of our wonderous (?) and foolish government officials and elected representatives is the transfer of the legal liability of their pronouncements onto the private sector (read: “reasonable person” and other B$ word choices)
I need to hunt up the link but the census bureau did a 65+ study recently and if you want to see pretty graphs of the ugly truth, give it a quick read.
This excessive love of debt is going to pull the US and world down for a long time to come.
50% of this country’s inhabitants don’t do squat to contribute to the economic pie.
If that is so, count the richest 1% first among them.
Bingo, ET!!!
The New Money Pit.
It started with subprime mortgages. Now owners of McMansions are defaulting, and the effects of the housing bust are beginning to ripple through the economy.
http://www.msnbc.msn.com/id/20546324/site/newsweek/
Oh, will you relax please. It’s all contained.
Globely ?
mmmmm……good question. Not sure about that, maybe Mr. Bernanke can help us with this one.
Classic:
The demand for mortgage brokers in Las Vegas was so strong that “every stripper, waiter and bartender on the Strip had a broker’s license,” says Boyd Nyborg, a former mortgage broker who now tends bar at the Tao Las Vegas.
I’d like a HELOC and a Lap Dance. In that order please. You wanna get paid don’t ya?
LMAO!
I saw the too. Another candidate for the hall of fame? (The quote, not the bar tender. He just doesn’t have the impact of Classy Realtor and the $600K Condotel)
Got attached product?
Newsweek writers to Fed chiefs: It ain’t looking so contained any more these days.
“You know nothing Prof Bear…NOTHING!”…Cramas$
It’s …”normalized”, it’s…”stabilized”, and it’s…”contained” …
Don’t you wish Cramer would post here?
His next book should be ‘Down and Out in Cramerica’
He doesn’t have the balls.
I’d be more impressed with Newsweek if their biz reporters had looked at the numbers/lending standards/housing affordability issues two years ago, along about the moment that Time put a cartoon on it’s cover called “Why We Love Our Houses”.
Even news organizations that once prided themselves on investigative journalism have been asleep at the wheel for years.
Now, they’re just also-rans to a story everyone knows.
Ben Jones…light years ahead of the big “news” organizations.
How much was the MSM asleep? Could we quantify it? I wish it were possible, though perhaps the depth of this cycle’s unwinding will provide a way to approximate such.
For whatever (I realize debatable) responsibilities the MSM might have, one of them could be to inform the masses about the actual facts of any situation.
And on this one, the housing bubble, they were nearly all in some fantasy land until just about the moment it hit them over the head.
I say (with, of course, appropriate derision and sarcasm all mixed together):
“Thanks for keeping us all informed MSM!”
Employee confidence lowest since Hurricane Katrina.
WASHINGTON (MarketWatch) — Employee confidence plunged in August, falling to the lowest level since Hurricane Katrina hit, according to the Hudson employment index released Wednesday. The Hudson index fell by 6.6 points (the most ever) to 99.2.
http://www.marketwatch.com/news/story/employee-confidence-lowest-since-hurricane/story.aspx?guid=%7B2DEB265D%2DA7E0%2D4956%2DB25D%2DAC19E210F1F7%7D
I am probably still feeling the after effects of strolling for a day amongst the ruins of Birchenau and other trips to less well known sites commerating mankinds ability to “share the love.”
If you have read about the “Great Depression” you might want to read the next book in the series, “World War.”
Today is going to be an ugly day and the start of an ugly week for the US economy.
“You might not have done this, but your Boomer brethern did.”
There was an article about baby boomer retirement many years ago in the New York Times which I kept.
It was titled “You Saved, But They Didn’t, So Now What?”
Now what indeed. My fear is that the ’60s generation of baby boomers will stick it to the ’70s generation of baby boomers, and/or the spenders will stick it to the savers (ie. gee, you have savings, so you are “rich” and don’t need Social Security).
I mentioned something along these lines a few days ago. This will be the next crisis that requires a bail out.
What kills me is that I know SO MANY people with great incomes who REFUSE to save a dime. Heaven forbid they give up their Turbo Diesel Dooley or Lexus/Beamer/Benz. When I ask them how they plan to retire they just shrug and say something like “I’ll work till I drop dead”.
Of course we know that won’t happen. They will get old and feeble and won’t be able to work, and then they will scream for more than the $2000 maximum SS benefit (you have to work until you are 70 to get that, and have made the maximum SS contributions).
Of course, there will be no money for any kind of bail out by then. I suppose that when they spend their golden years in a trailer park they will be able to reminice (sp?) about when they drove luxury cars and lived in McMansions.
You know I think alot of people choose to live in the now and enjoy the now rather than save for retirement. Also ,its harder to save when the “war on savers “(low interest yields on safe-haven accounts ) has been present for a decade now .The lower interest rates was part of the problem why investors sought after the higher high risk yields that were not even rated proper on risk .Look at Germany ,who didn’t have a housing boom in their own Country ,yet the Germans were big investors in American higher yield MB”S and CDO’s.
Not only were baby boomers tempted to go for asset investments ,like real estate ,during the last decade ,but so was the younger generations .Had the Feds raised the rates higher ,earlier, and faulty lending been stopped before it gained a foot hold ,we would of had less of a crash potential.
I remember talking to someone in 2003 about the fact that the interest rates on saving accounts were so low that it was a joke .The person I was talking to said ,”Mortgage interest rates should be around 9 or 10% and saving rates/CD’s ,etc. should be between 6 to 8%.
Anyway ,now people are in so much debt that potential savings money will need to go toward debt .Not very good for a baby boomer that needs to retire who was counting on equity in real estate as their savings plan ,or anybody else that had that plan .
Yeah, I’m hoping (although I know that it won’t happen) that any kind of “means testing” doesn’t just constitute “the war on savings II.”
This is very true. My mother was forced to take early retirement due to her lupus. Fortunately, my father was a very prudent saver, so it didn’t really impact their retirement much. My mother was also shrewd enough to file (and fight for) her disability claim. However, my mother was planning on working for a few more years, she spent the early part of her 60’s sitting around the house by herself - it wasn’t the best thing for her mentally.
What kills me is that I know SO MANY people with great incomes who REFUSE to save a dime….
No doubt about it. I just don’t understand the mindset.
Last week, here at the office, I got berated by someone
who was upset that my number 1 priority is to save
and invest. Quite a loud and emotional argument, BTW.
His position was that I should be out “having fun”.
(back story: This person pissed away his 401(k) to buy
a hot car which he no longer owns. Now, he doesn’t have
a dime in savings and CANNOT retire at age 62. Boy
that is some expensive fun.)
What these folks don’t realize (or care) is that the
ball and chain of financial slavery tightens with
every passing day.
Welcome to the new Sharecropper Society.
X who hasn’t been paid for 5 months now was amazed at how he has been able to live on less than half his former monthly outgo (since his credit cards hit the limits).
Light Bulb Glows Dimly: Gosh, I could have been investing a lot of that much all these years.
Did anyone read that story about those hapless girls who fell into a mine shaft a couple of days ago? Because today it looks as though the headline stock market indexes are following their path:
http://www.marketwatch.com/tools/marketsummary/
Is the Bernanke put targeted to a strike price of 1% off on the DJIA index?
Pending house sales due out at 10am. I can’t wait to hear the latest (fun)Yun.
Who is buying now?
Mortgage applications up 1.3% last week: MBA
By Amy Hoak, MarketWatch
Last Update: 8:31 AM ET Sep 5, 2007
CHICAGO (MarketWatch) — The number of mortgage applications filed last week ticked up a seasonally adjusted 1.3% while mortgage interest rates barely moved, the Mortgage Bankers Association said Wednesday.
The volume of applications for all loans in the week ended Aug. 31 was up 10% on an unadjusted basis compared with the same week in 2006, the MBA’s latest survey showed. The survey encompasses about half of all U.S. retail residential mortgage originations.
http://www.marketwatch.com/news/story/mortgage-applications-up-13-last/story.aspx?guid=%7B400E23F0%2DC4CF%2D4CD9%2D8BEF%2D372AF1B0E4A1%7D
BULLETIN>> PENDING U.S. HOME SALES SEE STEEPEST MONTHLY DECLINE SINCE 2001
“President Push insisted on Friday that the economy was strong and could weather the market turbulence.”
President Push: “Economy…you doin’ a hecka of a job!”
LOL!!!
Needless to say (except perhaps to enlighten theory-oriented economists), the July drop in pending home sales does not reflect the impact of the August credit crunch.
July pending home sales index falls 12.2%
By Ruth Mantell
Last Update: 10:00 AM ET Sep 5, 2007
WASHINGTON (MarketWatch) — Contract signings on existing homes fell by 12.2% in July — the largest drop since the pending homes sales index started in 2001, the National Association of Realtors reported Wednesday. The index hit its lowest level since September 2001. The index had gained 5% in June. Pending sales are 16.1% below July 2006. A decrease in pending home sales was seen in all four major regions of the United States, the group said. In July, pending sales fell 13.1% in the Midwest and 6.6% in the South. Pending sales fell 20.8% in the West and 12.2% in the Northeast.
http://www.marketwatch.com/news/story/july-pending-home-sales-index/story.aspx?guid=%7BEA3069D8%2D882D%2D4500%2DB516%2D3478FDF5ADF2%7D
WEEEEEEE!!!!! Stucco reports with glee!!!! The west coast drop was a whopper….. It ought to give the HBB folks out there something to be happy about.
Meanwhile, the NPR morning news from Tucson brings this gem. I’m paraphrasing, but here’s the gist of what was said:
If your house isn’t selling, you can rent it out. Turn it into a cash machine. And get tax benefits.
Reaction from the Arizona Slim Ranch: My breakfast almost got hurled across the living room.
Wow, can’t sell it, then rent it out? Just like that? Cash machine? Ha ha ha! I’m with you, Slim.
I just noticed something in the UK (where I lived before here) about Buy-to-Let landlords now getting a gross yield of just 4% on their “investments”. They are anticipating making their profits off of appreciation later, it seems, especially since the 4% is well below what they could get otherwise.
So think about it, a $300k house (for example), and you gross $1k/month. Even ignoring maintenance and empty time, you’re not even close to paying your mortage. Some cash machine! But that’s the UK, where things are well-poised for a fall.
Admittedly, much of the US is not in quite so bad a spot as that, but still not good. Here are some friends’ houses I know of that are currently rented, along with rough current house value:
$425k house gets $1750/mo = 4.94% gr.yield
$95k gets $500/mo = 6.32%
$120k gets $550/mo = 5.5%
$300k gets $1700/mo = 6.8%
$565k gets $2495/mo = 5.3%
Cash machines? Hardly! Certainly not on the ones listed above which are mortgaged.
Either rents need to go up, or prices down, which has all been hashed over before on this board. I seem to remember that for years you would tolerate a 10% gross yield as a SFH/TH landlord but expect and push for 12%. I just have to wonder when those days will return, and how it will get there, via rent inflation (watch out, Bernanke) or asset depreciation.
FYI:
Mortgage *applications* are just that — applications and not actually closed mortgages. A rise in applications can be attributed to a rise in refilings of the same application as the first/second/third get rejected.
In other words, this is a dubious number to hang your hat on.
Or perhaps an attempt to get started on getting rid of that ARM that will be resetting shortly??
No kidding, how many stories haven’t we read here in the last three weeks telling of individual applicants being rejected numerous times? Oh, how I pine for the day when virtually every gov’t or industry statistic is met with widespread howls of derision (outside the HBB). Seriously all you pols/hack prof./shills/MSM dupes - you think you’re so clever with your statisitcal moving targets right now - but all you’re doing is undermining the last remnants of your professed creditibility.
I’d like to here personal anecdotal evidence from small business owners regarding:
1.employees seeking/working second jobs to make ends meet
2.receiavables slowing
3.budget cutting looking forward to reccession.
Personally, my biz has two emploeyees (out of 14)working two jobs (they aint getting a raise, as my opinion is they are less productive), recievable are slowing significantly (Ive has to reduce credit on multiple companies due to slow paying), slashing the budget gettign ready for recession.
My wife works part time at the library. She took on more hours to help cover inflation. You know, to covers things that aren’t officially going up in price. like food.
Not an owner, but I’ve been looking for part time anything after work for months. No luck. Most of the guys out in the shop (about a dozen) have resume’s out and/or look for anything to do on the side. Most of them have no luck either.
I handle receivables and payables, and we have one slow pay customer, and one vendor just asked for about the 3rd or 4th time this year for an early pay of invoices to which we ask for a 2% discount. We’re just a tiny company, with no debt, in the auto industry in Michigan, and things seem ok, at least for us. Lots of others we hear, not so much.
As a SW Engineer, I remember the days when it was easy to get some work on the side, after hours. I would say that the spigot pretty much shut off about 10 years ago. Now employers just make the salaried staff work tons of unpaid overtime. Why hire part time contractors when the staff will do if for free?
“In Colorado.” That was me in the mid-80’s, in Aspen. Loved it. Came back to Michigan for a woman. Both Michigan and the woman ended up being a waste of time.
There was a very interesting article the last week in one
of the industry rags. (eweek maybe?). Anyway, the essence
of the article was that is very difficult for S/W people to
find part time work for that very reason. Anyone with
a cell phone or blackberry is essentially on call 24*7.
Welcome to the Sharecropper Society.
I am letting someone go at my company in an effort to reduce expenses. I gave them 2 months notice and am allowing them to take time off to interview. We decided to cut back on investment into a new Web 2.0 application we were hoping to launch. We were hoping advertising revenue would pay off, but that type of business seems much to risky going forward.
I get like 40% of applications for jobs our university office posts from real-estate agents; of course they are almost always utterly unqualified. Gwynster will affirm the same. My UC campus will be okay this year, but I fear for the next budget cycle. I’d like to keep my job. Maybe kids will actually go to school rather than join the real-estate workforce in the coming recession. I’ve always heard enrollments were countercyclical with the economy. The real question is whether CA will be able to fully fund our enrollments.
Small business owner Slim here. I’m noticing more problems with collecting receivables.
Getting new business has also been more of a challenge. People are taking longer to decide, and I have to call, call, call them more than ever.
I’ve also been at war with useless costs in my business. In the past year, I’ve pared the expenses quite a bit, and that has allowed me to remain profitable.
Here you go Slim!!! Another way to stay profitable right now would be to sell Appalachian State gear to folks in Ohio:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20070905/UPDATE/709050442/1004
I’m sorry, I’m still laughing!!!!
“unprecedented”, “major dislocations”
jousing market woes? nah.
Ap State Slays Wloverines in the big house…….luvin it…never gonna get that off yer back.
Maybe you read this somewhere else I posted it, but Sunday I had someone at church actually say Michigan could still go 11-1 and have a shot at the national championship. Couldn’t believe my ears. The 2nd time he said it I felt the need to “speak the truth in love” and tell him he was full of s**t. Nicely of course.
Frankly, I hope they have a losing season and get beat 59-0 by Ohio State.
Best we can hope for: Carr, Henne, Hart, and the rest of the Wolverines take this past Saturday’s loss to heart and step it up for the rest of the season. If they do that, they MAY have a chance of going 11-1.
I’m a sole owner so not really much on the hiring front. Also business is booming since most of it is risk management and economic analysis so there’s not much cutting back either. But I can comment on a drastic change in credit conditions for small biz. A year ago housing was going down but everybody thought it was an anomaly. As mortgage demand started to fall along with speculation, banks started to push hard to make other loans. I got offers in the mail from many typical lenders for pre-approved LOC equal to 50% of my prior ANNUAL REVENUE. I have a biz checking account with BofA and they offered all kinds of EZ business credit. That started to slow down in the spring as housing got worse and it became clear the problem was spreading. They have nearly stopped since July.
Advice please!???
I’ve been a bubble sitter for 5 years now here on long island, New York. My brother, sister and I are about to inherit a family home in a good neighborhood. Unforatunately, it needs tons of work. I mentioned i would like to buy both of them out. My brother thinks its worth $400k. I’ve looked and houses in that area at that price are in renovated/clean shape. Ive told them 300k. Even though the house could appraise at $400k but trying to get someone to buy it is a different story. i think at 300k its top dollar but since i am inheriting 1/3 of it i can afford to fix it up.
do i go ahead and push for my offer or let it sit for a year. or Hope someone buys it for more and WAIT for the market to crash?
thanks - liz
Put it on the market. If you really want it offer to match the best offer.
Offer to sell him your share for $125 if he thinks it is worth $400.
Or better yet, tell him to set the price, and you will then decide to either “buy” or “sell”, either of which he must abide by.
Assume you’re right, its worth 300k. You spend, what? 50k to fix it up so that its in line with the $400k neighborhood.
Unfortunately, by the time you’ve finished the work (what? six months? a year?) the market will likely be down at least another 10%.
300+50= 350………400 less 10% is 360. Unless you can a) do the needed work really cheap, really fast and b) get the CURRENT value of the property you’re looking at, tops some $40k. That would be a nice return on $200,000 in a year (20%) but that’s betting that just about everything goes all right….near perfectly.
Unless you are a contractor or you have VERY close friends who are GREAT contractors you will be taking a very large risk IMHO.
If neither of the above apply just ask around of people’s experiences doing renovations. They NEVER come in on time or on budget. While you should be able to hire better contractors in this market, if you don’t have experience with this stuff you’re simply betting on dumb luck to pull you through.
Washington Post business columnist Steven Pearlstein will be online Wednesday, Sept. 5 at 11 a.m. ET to discuss Carlyle Group’s rescue of one of its publicly traded hedge funds, and what it says about the credit bubble.
Anyone can ask a question. Go here:
http://www.washingtonpost.com/wp-dyn/content/discussion/2007/09/04/DI2007090400873.html
to submit a question. There is also a link there to the column on this topic.
does the curent turmoil in the credit markets pose a threat to the closing of the manorcare acquistion?
“…whether the government doesn’t have some role in trying to stabilize things on the down side to prevent a vicious downward spiral that causes economic harm well beyond the people involved in the bad decisions.”
Where oh Where…art thy oh Death Spiral?
Heard on WTOP News Radio this morning: Poultry (Pulte) Homes is advertising big price incentives for anyone who can close by 12/31/07. Nothing on the website about it, but the ad sounded of desperation to salvage something before year-end.
IIRC, One or more of them did that last year. The next week they slashed prices and got hit by complaints from December’s down-payers.
OT, but interesting:
http://www.armytimes.com/news/2007/09/marine_nuclear_B52_070904w/
Bernanke AKA ‘Strangeglove” is escalating helicopter dollars drops to B52s dropping nukes to solve the surplus Mcmansion problems.
The dollar just took a big drop. No word on why yet.
Rumor is out that the Fed will drop the discount rate again.
Also, the odds of a 50 basis point rate cut stand at 74% now based on the weak housing numbers.
Why do you think all these negative reports are falling from the heaven’s…the FED is “drying” the powder…won’t matter…the “Good-Ship-Lollipop” has some internal “structural issues”…firing a few shots out of the cannon just makes for a lot of noise…also distracts the “crew” while the Capt’s slip away amongst all the smoke and confusion.
LIke the Titanic, we have bulkheads between each section… that don’t reach all the way to the “ceiling”.
and tomorrow we have the ECB rate decision, where Trichet can show if he is an independent banker (rates up) of just a sleazy EU burocrat (rates down).
Beige book just came out and said that market turmoil is having a limited impact on the economy. Great, they can lay off the FF rate and let us get on with this correction!
DP
Boston Equities Exchange shut down today
BOSTON, September 5, 2007—The Boston Stock Exchange (BSE), a mutual organization that manages or regulates multiple ventures, announced that it has discontinued the operations of the Boston Equities Exchange (BeX), effective today. BeX, launched in August 2005, is an electronic stock exchange.
The BSE will continue to be active in the marketplace and will support the Company’s remaining ventures including the regulation of the Boston Options Exchange (BOX). BeX is one of several ventures launched by the BSE over the past three years. While this venture struggled to gain market share in large part due to the overall strength of market incumbents, the other ventures have continued to be successful. In fact, LeveL, a dark-book alternative trading system, which was originally incubated by the BSE, is experiencing dramatic growth and plans to expand its operations.
“We are disappointed that BeX was not able to become competitive in today’s marketplace and perform as well as other ventures of the Boston Stock Exchange, but we want to emphasize that the BSE remains a committed member of the National Market System,” said Boston Stock Exchange Chairman and CEO, Michael Curran.
The Boston Stock Exchange and the various ventures in which it participates, has a total of approximately 100 employees. This cessation will affect approximately forty employees. Of those, some will be reassigned to other ventures, some will remain on through the transition and those whose positions were eliminated will receive severance packages.
“I would like to personally thank all the employees who worked so diligently on this venture over the past two years,” said C. Thomas Richardson, President of the BeX. “Their dedication, teamwork and spirit of entrepreneurship is greatly appreciated.”
Record planned financial sector layoffs in August:
http://www.msnbc.msn.com/id/20604957/
Of course NYC housing prices are bound to keep soaring. It’s different here.
Right. Yes, it seems that the mortgage brokerage industry seems to locate exclusively in the suburbs, but the securitization happens right here in Emerald City.
Ah, college football season is upon us, how do spell relief?: U.C.L.A.
The Fed: “We got the spirit…yes we do…we got the spirit…how ’bout you?”
Prof Bear & Co.: “Push’em back, push’em back….waaaaaaaaaaaaaay Back!”
Like Appalachian State did to Michigan…….hahahahaha!!!!!!!!
You must be a Michigan State fan.
Actually, no, always liked U-M, but I might change to State this year. Or maybe Central. The U-M fan base arrogance has just gotten to be too much for me. Amazingly, it’s gotten worse IMHO after the ASU game.
“Stocks fall on housing, jobs concerns”
Will somebody please do some “corrective” surgery on this “beast”
The pushmi-pullyu
(pronounced “push-me-pull-you”) is a fictional creature in the Doctor Dolittle stories. It is a llama which has two heads at opposite ends of the body. When it tries to move, both heads try to go in opposite directions.
http://en.wikipedia.org/wiki/Doctor_Dolittle
He shoulda used the…. Saudi / Carlye / Halliburton model for profits $$$$$$$$$$
Got Oil?
“…found the program was corrupted by some 2,200 companies in 66 countries who paid $1.8 billion in kickbacks to Iraqi officials to secure supply contracts.
Texas oil tycoon Wyatt in legal fight of his life
http://www.reuters.com/article/reutersEdge/idUSN0443697320070905?src=090507_1255_INVESTING_feature%3A_oscar_wyatt&pageNumber=2
Live Barney Frank Hearings:
http://boss.streamos.com/wmedia-live/financialserv/16489/300_financialserv-qwertyuiop_070131.asx
Just some preaching for the choir:
http://www.gazette.com/articles/foreclosures_26883___article.html/foreclosure_year.html
(sorry about the popups and propaganda, only paper in town)
Good thing the collapse won’t hit those areas that the boom (mostly) bypassed…
McBoarding Houses:
A report from Maryland:
OMG, this was so predicted on the HBB a year or two ago! This was one of the predictions I wasn’t sure I fully bought into, but it looks like the HBB was right on the money again!
how to make money from a housing downturn - rent - shows the numbers
http://tinyurl.com/2me5dm
DIdn’t see this here yet. Canadian equivalent of WSJ reporting that losses in canuck commercial paper could reach 50 cents on the dollar. I guess they shouldn’t have levered up to buy derivatives. LOL
http://www.canada.com/nationalpost/financialpost/story.html?id=95b0a712-122c-4d01-a1bb-8aa44eb746ff
Reading the notices of trustees’ sales in Washington Times (DC): one in Fairfax County; one in Prince William County, debtors are a couple, man and woman. Same names in each sale — names reversed in other sale — his name first on one, her name first on the other. One deed of trust ($412,000) was dated 3/14/05, and the other ($535,200) was dated 3/25/05.
http://www.youtube.com/watch?v=hMenB9Ywh2Q
http://www.suburbanchicagonews.com/heraldnews/news/542134,4_1_JO05_MADIGAN_S1.article