Bits Bucket And Craigslist Finds For September 16, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Local observation finally shows up in print.
““They say all construction has stopped,” Morffin said in Spanish.”
“Unable to find jobs, construction workers are leaving the area to find work in areas like North Carolina, Tennessee and Las Vegas.”
“Employers who are hiring now want people who can speak English, said Reyna Pino, who runs the Catholic Charities refugee program.”
“Wal-Mart, for example, used to hire workers who don’t speak English, Pino said. But now, Wal-Mart is turning away applicants who don’t speak English.”
http://www.naplesnews.com/news/2007/sep/15/lean_job_market_sends_immigrant_laborers_elsewhere/?
Look at that house in Dix Hills, Long Island! Over a cool million for that POS and yet people still say …oh we’re not that over priced because Long Island has all those workers from the city so things are always going to be more expensive than the rest of the country.
Dix Hills is no Hamptons. It’s near Deer Park and Wyandanch for cryin out loud !!!!!
No bubble here, move along.
For some reason this posted on the wrong thread….see below please
Rookie!
LOL
Perhaps I need to take my angst down a level and pay attention to where I’m posting.
Great article, walt. Thanks for posting. Behind every cloud is a silver lining.
And here’s my contribution from West Central Florida. The phenomenon of foreclosure glut has hit our local weekly fishwrap.
http://www.observernews.net/artman2/publish/Top_Stories/Foreclosure_Disclosure.shtml
Get a clue, Palmetto. My buddy always tells me, “you can’t go wrong buying on water.” Could he possibly be wrong?
LMAO, NYCityBoy, you should have seen the rush for waterfront property around here during the boom, it was like the gold rush, being the last “undeveloped” waterfront area of Tampa Bay.
Personally, I like living around here, but I would never buy on the waterfront, either the bay or the river, if only because being evacuated in the event of a hurricane is a real pain in the a$$ and not worth it, IMHO. I’d rather be a few miles inland and hunker down in my concret block bunker. I’ve seen computer models of what would happen if a Cat 4 or even Cat 3 came up the a$$ of Tampa Bay and it ain’t pretty.
Palmetto I was told that one of the benefits of buying at or near the water is that you do not get the ’skeeters, but you do get them when you are inland. Any truth to that?
Got 10% down?
tcm, as a long time Floridian, as far as skeeters go, it depends where you are located. Generally true, but it depends upon what water you are located near. Along the beach areas, no skeeters. But if you live in an inland higher elevation, like Zephyrhills in Pasco, where there is breeze, no skeeters either. If you live along the river, you may not have skeeters, but the no-see-ums are a bitch. If you live near the beach but have a retention pond on or near your property, don’t go out after twilight, skeeters will getcha. I lived at an apartment complex not all that far from the shore, but it had two retention ponds and low lying areas that collected water after rain, and it was awful. I moved a mile away, where there was better drainage, and didn’t see many mosquitoes. I don’t know if anyone else in the Tampa Bay area has noticed, but this year, mosquitoes seem to be markedly lower. Drier weather.
Okie-dokie. Thanx.
From the article, looks like Florida is a recourse state, they CAN come after you & raid your saving / garnish your wages OUCH! if ya try walking away. Next phase will be debtor’s prison?
Hahahaha! But you’d better keep them seperate from the rest of the jail population. Otherwise we’ll have a wave a fraud that will make previous frauds in Florida look like cupcakes. It’ll be like “Ocean’s 11″ in there!
The ACLU WILL be filing a huge lawsuit against this….especially here in So Cal. If you don’t speak english and only spanish you go to the front of the line!
How can a person prove that they only speak Spanish? Will the judge really believe them when they walk up going “no comprende”?
We had debated some time ago which housing types and portions of metro areas would sink in value most.
According to the NY Times, in the NY area suburbs father from Manhattan and without direct rail links there are taking the biggest hit
http://www.nytimes.com/2007/09/16/realestate/16cov.html
Other articles have said within the city house and condo prices are falling faster in less affluent fringe gentrification areas farther away from Manhattan.
So for Manhattan and areas with close links to it, “it’s different here.” Until, perhaps, the mortgage losses from elsewhere roll in, and Manhattan finance-linked jobs and bonuses are cut.
When you see that homes that are ready to fall down in places like Queens, Brooklyn, Bronx, Jersey City, etc. are going for top dollar, you know something is wrong. My wife’s aunt owns a house in Harrison, NJ, also known as Harris-slum. Two summers ago she could have gotten $300,000 - $350,000. Somebody would have probably torn it down and built a multi-family home on the spot. Today, it would take a huge GF to give her $200,000. I think she bought the place for $80,000 in the early ’90s. That house should not sell for more than $100,000. I don’t care how close to a PATH station, or New York it is. I would still be afraid to have my wife walking on those streets alone after dark.
There is a lot of stupidity that has to get cleaned out of the system. The New York area has some of the most acute stupidity. I would still love for people to stop by so I could show you the Be@William development the Corcoran Group is offering. It sums up the entire Housing Mania. We would laugh our a$$es off together.
Post pix!
Good idea. I will get over there and try to get some out there.
Yeah, you’ve been talking about that for quite a while, and us west coasters would like to see that shills bubble dream.
That’s where the Red Bulls’ soccer stadium will be built.
According to the NY Times, in the NY area suburbs father from Manhattan and without direct rail links there are taking the biggest hit
Well, duh … last to inflate, first to deflate.
I always love data like this when people go all NIMBY on rail.
Hey Watertown, Mass, how do you like the diesel fumes? I hear Belmont is “the new Cambridge” with that quaint little commuter rail station that your town fathers turned down … Mmm, 20 years of rail starvation deflation, then fake boom funny money, then–soon–accepting that you are as sucky and washed up as Dedham. (Dedham also kicked out rail and has to watch former mudhole Needham become a desireable suburb while they circle the drain.)
Karma’s a bitch.
RE: Hey Watertown, Mass, how do you like the diesel fumes? I hear Belmont is “the new Cambridge” with that quaint little commuter rail station that your town fathers turned down … Mmm, 20 years of rail starvation deflation, then fake boom funny money, then–soon–accepting that you are as sucky and washed up as Dedham. (Dedham also kicked out rail and has to watch former mudhole Needham become a desireable suburb while they circle the drain.)
Karma’s a bitch.
LMAO…NAG.
You should be the “on the street comment editor” for the Blobe RE section!
what I see in Bowery area in Manhattan all those tasteless glass and steel condo boxes are largely unoccupied. On some I see “Rentals”.
They are trying so hard to gentrify those areas of eastern Manhattan. It’s a joke. You see buildings that are tenements, in neighborhoods that are still seedy, and then you see this brand-spanking new high-rise condo building. Yeah, that doesn’t look out of place at all. The Eastern part of lower Manhattan is still not the greatest place in the world. I always ask myself, “would I want my wife walking around alone after dark in this neighborhood?” The answer is still, “hell no” to a lot of those areas and they are putting in condos starting at $700,000. Good luck with that plan.
Poor ‘ol long departed Robert Moses, sounds as if his dreams for the Lower East Side never did come to pass - not even with all the horsepower of the largest RE boom in world history.
I went back to that area for my HS reunion a few years back and I could not believe what they’ve done to SOHO. Rows of old tenement buildings morphed with occasional flat basal cleavages of S&G growing in between.
Very weird looking.
Got 10% down?
And even if you bought a cheap car to drive to the train station, most are FULL…no parking except on weekends and holidays…so you need the wife to drop you off and pick you up…not a great idea.
=====================================
without direct rail links there are taking the biggest hit
Good thing the US has not been on a major borrowing binge, we are a major manufacturing power, and subprime problems are contained…
City economists warned that a decade-long borrowing binge had left the UK economy dangerously exposed to the fallout from the credit crunch. ‘I think the UK is extremely vulnerable to this,’ said Danny Gabay, director of consultants Fathom. ‘The UK has a double vulnerability. We are vulnerable because of our hugely over extended consumer sector, and because of our large financial services sector.
“As the Federal Reserve prepares to cut interest rates - perhaps by as much as a half percentage point - to restore confidence in financial markets, Darling and Paulson will discuss proposals for better transparency, to prevent a recurrence of the ‘contagion’ that has spread the impact of bad loans in the US housing market around the world.”
The Guardian
http://tinyurl.com/382aw7
It’s too bad Paulson wasn’t flying to Thailand in a heavy rain storm. These guys just want to keep this scam going. They are all anti-American, anti-decency buffoons. This country needs a revolution of ideas and decency. We need to sweep away the greed machine that Bu$h, and all other politicians, are working to protect.
They are all anti-American, anti-decency buffoons. This country needs a revolution of ideas and decency.
Amen to that!
“As the Federal Reserve prepares to cut interest rates”
Ooops, not so fast. I had a realization about Greenspan this AM as I was reading excerpts from his book and interview. They called him the “Maestro”. LMAO! Easy AL was in fact like one of those explorer folks who happens upon a primitive tribe and knows that a solar eclipse is about to take place. So he “predicts” it, it comes true, and everyone goes “Oooh-ah”. And calls him “Maestro”. Feh. Pretty easy to make predictions when you’re the person who manipulates those predictions into reality. Having said that, here’s a “prediction” from Easy Al:
“He also predicts interest rates will reach double digits in the coming years in order to thwart inflation.”
Could he be talking to Bernanke? Also, this:
“Former Federal Reserve Chairman Alan Greenspan , in his new book, bashes President Bush for not responsibly handling the nation’s spending and racking up big budget deficits.”
I don’t disagree, but really now, isn’t this like someone in a glass house throwing stones? And this:
“I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.”
Whoa. Someone finally said it. The chimperor has no clothes.
Conserve oil: ride your local bus or trolley!
<beg>
Hey gator, I liked your post earlier on how rail has affected the fortunes of certain NYC-area communities. Proximity to transit may just mitigate the ravages of this bust for some folks (location, location, location)
BTW, I ride the bus - not for “green” reasons - but for common sense as cars are a huge waste of money in a big city.
Greenspan also said “We were all wrong” about the surplus. Here’s an article about that:
http://www.washingtonpost.com/wp-dyn/articles/A36514-2005Mar15.html
“But Greenspan, testifying at a congressional hearing, also said “we were all wrong” in early 2001, when he and other government economists forecast huge federal budget surpluses for years to come.”
This is the same crap they are doing with the “Housing Mania”. Use phrases like, “worse than anybody expected”, “nobody could have foreseen”, “it surprised everyone”. This is an attempt to get out of taking any responsibility. I have been on the HBB long enough to know we “ALL” didn’t get it wrong. The system is broken.
Yeah, trying to get that collective guilt going in order to excuse their own stupidity.
Yeah, trying to get that collective guilt going in order to excuse their own culpability.
Exactly, spike. Watched the McLaughlin Report on Friday night and the hawkish dude from the Washington Times nearly blew a gasket about people calling the Iraq debacle “Bush’s War”. He was shouting that it is “our war, the American people’s war and we’re all responsible for it”. What a load of crap.
Hey palmetto, what could be more predictable from the Bush crowd…
1)privatize the profits, socialize the costs
2) it’s Bush’s game when he’s winning, it’s ours when he’s losing.
This guy has run every business his dad or his dad’s friends gave him to run into the ground…and he has done the same to the whole country. And he’s happy to leave the whole mess to the next prez to deal with…with Petreas the front man for questions and insults til bush can make his speedy getaway from DC. I guess playing the “Decider” is a game he’s tired of, he’s even stopped wearing his military costumes.
Greedspin is a tool of the aristocracy. I would love to pull a Soros on them and stick my foot up their collective a$$e$. These people have sold out our country to the Chinese and Saudis. May the corporate whoremasters burn in perpetuity.
/class warfare off
idiot. I wasn’t wrong about the surplus, and I’ll bet no one else here was, either.
Exactly, chilidoggg.
When Bush was “giving away” those $600 “tax-cut” checks, I told my husband that it was one of the dumbest things a President could do. No wonder we have such huge deficits — with a government that doesn’t believe in saving for a rainy day, and always seems to be searching for new ways to spend money and cut income at the same time. Gee…wonder why that didn’t work out, huh?
‘Easy AL was in fact like one of those explorer folks who happens upon a primitive tribe and knows that a solar eclipse is about to take place. So he “predicts” it, it comes true, and everyone goes “Oooh-ah”.’
I predict cargo drops of cash out of helicopters.
http://en.wikipedia.org/wiki/Cargo_cult
Better that then turkeys although I know a few(actually more then a few) turkeys who I would gladly push…
It isn’t about oil, per se, but what currency will be used to trade it. Do folks think that making notes from the Fed Reserve legal tender give that bank an advantage? Of course they do. It automatically creates a massive amount of demand for their notes. When they have the legal justification to create them, it is a tremendous source of profit for them.
When it comes to oil being traded in their notes, which are legal tender in this country, it would almost be like one could say deficits don’t matter. Mr. G. still used a little “Greenspeak,” but he is getting close. It allows us to tax the rest of the world through inflation. Now that countries are changing that, the rules have changed, and there is no stopping it.
“It isn’t about oil, per se, but what currency will be used to trade it.”
As I mentioned in yesterday’s bits bucket, I did some research this weekend to recession-proof our portfolio. One of the things I have wanted to do for a long time is trade currencies. For those who are interested, you can check out the following stock symbols:
Australian dollar= FXA
British Pound = FXB
Canadian Dollar= FXC
Mexican Peso= FXM
Swedish Krona= FXS
Swiss Franc= FXC
Euro= FXE
Japanese Yen = FXY
“I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.”
WTF…This is a revelation?
Anybody with half a brain shoulda known the score the minute the F-14’s and tanks rolled 6 years ago.
Personally, I think Bush ought to pull everybody out immediately and see how Pelosi and company deals with $9.50 per gallon gaz.
“Darling and Paulson will discuss proposals for better transparency, to prevent a recurrence of the ‘contagion’ that has spread the impact of bad loans in the US housing market around the world.”
Barn door open — horses have all run away —
Farmer Jones: “Quick, Mabel, slam the barn door shut!”
“Investigators say the couple masterminded a kind of Ponzi scheme at Gulf Coast Title Closings and Escrow Services, funneling funds held in escrow for real estate closings into a business operating account, then spent the cash on a lavish lifestyle.”
http://www.sptimes.com/2007/09/14/Northpinellas/Lavish_life_over__pai.shtml
What, they couldn’t afford a gym membership?
Northern Rock (honestly thought it meant Canadian musicians, initially)
Doled out $1 Billion, to participants in their “Run for the Needy” and because we’re talking pounds here, 500 Million of them were tellered out the window & through the door and under somebody’s mattress they must go?
This was not a small Bank Run by any means…
I sure hope my $68.92 is safe in the bank.
More on Northern Rock — “People with accounts at the Northern Rock have withdrawn almost £2bn since Friday, the BBC’s business editor Robert Peston has learned.
And the firm, is bracing itself for more withdrawals in the coming days.
It is also understood that the Northern Rock was close to being sold to one of two UK banks before it sought emergency funding from the Bank of England.
However, these deals fell through because of the difficulty of borrowing money in the current financial climate…Northern Rock’s realisation that selling the bank had become impossible in current market conditions, persuaded the board to approach the Bank of England and ask for access to emergency loans, Mr Peston said.
“Plainly, a takeover would have been a less humiliating option. But it just couldn’t be done.” “
Why would a UK bank buy Northern Rock? Just wait a couple more days and said bank will get a good percentage of the deposits for free.
wrapping up the banking failures in “buy-outs” is newspeak for consolidation of the industries low hanging fruit.
Get ready for Black Monday. The rate cut comes tomorrow.
HEADLINES:
GLOBAL RATE CUT.
SYSTEMIC FEARS GRIP THE GLOBE.
AMERICA’S FINANCIAL MELTDOWN
latest messages already talk about a possible takeover on monday by government, and dividing the assets among other British banks (and without a doubt, dividing the losses among NR savers and British taxpayers). EU politicians and banksters have discussed similar action for bank failures on the mainland yesterday. They said there is no firm agreement yet, but it seems clear that troubled banks will be bailed out with EU taxpayer money; the major matter of disagreement is how the losses will be spread among taxpayers of the various EU countries (as most banks are now operating cross-borders). We already knew that Trichet is giving carte blanche to the big speculators …
ING is doing a big promotion for “new money” (as in depositor’s money).
I’m not pulling out yet as we do have FDIC … I hope … but I am considering paying off some of my student loan with ING savings if ING starts to crack (and it did sell a lot of bubblelicious ARMs in the US, never mind what it’s been up to in Europe). Frankly, that remaining loan is on course to inflating away to nothing, but risk is more important than nominal interest rates. (It’s a Stafford loan at 2.75%, no basically no risk on that side … the risk is now on the ING side b/c who wants their money frozen during a bank bailout?)
in Europe FDIC is only 10-20K euro. I have been telling a good friend to get out of ING for several months (he has about 10% of his capital in that one stock) and he still hasn’t acted. ING is one of the big RE speculators in Europe; they are still buying lots of RE here (mostly commercial properties), near the top of a 15 year bullmarket. If the EU housing bubble starts to crack, watch out below.
Oh yes, there are lots of promotions for savings accounts in Europe at the moment, offering rates up to 18% (while the most you can get on a normal internet savings account is about 3.2%). Most of these promotions are of no value when you want to park some cash, they are only used to lure new customers and have them stick to the company for as long as possible.
It’s great to get your comments on the European scene, nhz - much appreciated!
It’s great to get your comments on the European scene, nhz - much appreciated!
after yanking $ out that’s in excess of FDIC deposit insurance last week, i got a letter in the mail from ING explaining how easy it is to deposit/withdraw money and deposit insurance. not sure if they sent it out because i pulled money out or if they did it as a pre-emptive measure given the state of affairs in the banking world. it didn’t elicit panicky feelings reading it, but it was good information to know.
I received a notice from Morgan Stanley in April informing me that essentially they wouldn’t be responsible for the loss of the precious metals they were holding for me, should they go belly up…
Caveat, my friends
yes, that is something I’m fearing as well for goldfunds /stocks; I read something similar regarding the ML World Gold Fund and remember last year when Rogers’ RICI nearly went down as a side effect of the Amaranth disaster. I don’t think there are a lot of gold bugs that are holding their stocks directly … One can be sure that there will never be a government bailout for Gold Funds/Stocks that go belly up.
We do have gold accounts in the Netherlands that can be converted to physical for a +/- 1% fee, but the question is if they are really going to honour that promise when the whole banking sector is in disarray. The banks might close down before you can really get your gold.
In the UK, a billion is (or was) a million million, whereas here it is a thousand million. A british billion is (or was) the equivalent of one thousand American billion; i.e., a trillion. This is going out of fashion in the UK favor of the American meaning, so who knows what the actual figures are? One British commentator’s billion may be a billion, another’s may be a trillion.
All I know is that anybody sounds thin weighed in Stones…
That stone thing when its comes to a person’s weight always throws me and its only used in regards to a person’s weight.
While not wishing to downplay the seriousness of the NR situation, you can rest assured that all these reporters use billion = thousand million.
Yeah, the UK hasn’t really used the ‘US trillion = UK billion’ for a couple of decades now, largely because of the confusion. Especially in a financial/international context.
You’ll still get some scientific old duffers who will use it to make a point, and moan about the ‘Americanisation’ of the UK number system as they do so - but unless you read the more highbrow scientific journals, you won’t see “1 billion = 1 million million’ used anywhere else.
To prove your point, the Journal for Applied Anthropology in Policy and Practice style guide (for writers submitting articles), states the following:
“If you use a billion, make it clear whether it is a British or American billion
(Br. million million; Amer. thousand million).”
From the Telegraph:
Adam Applegarth, the chief executive of Northern Rock, has made a direct appeal for a white knight takeover bid…. He also acknowledged that the company’s business model was no longer viable, due to the bank’s over-reliance on wholesale funding.
It is understood that if the bank’s shares continue to dive in response to the crisis, when the market opens again tomorrow Applegarth will launch a fire sale of its assets.
A statement from Northern Rock issued last week revealed that its treasury operations have a £275m exposure to US sub-prime mortgages. It also has a £325m position in structured investment vehicles, the controversial bank finance instruments that have become embroiled in the global liquidity crunch.
http://tinyurl.com/25crgw
Adam Applegarth obviously doesn’t have much of a tan.
BOE/FSA blocked takeover. TimesOnline:
LLOYDS TSB was asked by Northern Rock to mount an eleventh-hour rescue takeover of the troubled Newcastle-based mortgage lender. The two banks held detailed talks, but the Lloyds deal was ultimately blocked by the Bank of England and the Financial Services Authority.
There were concerns among Bank officials that a takeover would cause greater consternation in financial markets….
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2459583.ece
NORTHERN ROCK … could see as much as £12 billion - nearly half of its deposits - withdrawn by worried savers, experts say.
The run on the bank continued yesterday as police were called in to keep the peace when angry and desperate customers besieged branches across the country….
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2461206.ece
at the current pace we will know within a week if it is going to be less or more than £12 billion
In addition to defending King’s actions, the Guardian explains Lender of last resort:
It is not the same as the Bank’s regular standing facility which allows all participating banks to borrow overnight funds at a penalty rate of one percentage point above the Bank rate which is currently 5.75%.
The LOLR facility with the Northern Rock is for longer periods and is unlimited as long as Northern Rock can put up collateral. As the country’s fifth largest mortgage lender, it has £113bn of mortgages. That is a big asset pile generating millions of pounds of income every month and was strong enough to persuade the Bank to open the funding lifeline.
Bank Governor Mervyn King made clear earlier in the week that the central bank would lend in this way…. The Bank took the decision because while it is not responsible for any individual financial institution, it was concerned that the collapse of Northern Rock would cause wider damage to the banking system and the economy.
http://business.guardian.co.uk/story/0,,2169563,00.html
“It is not the same as the Bank’s regular standing facility which allows all participating banks to borrow overnight funds at a penalty rate of one percentage point above the Bank rate which is currently 5.75%.”
Sounds strikingly like the Fed’s recent use of the discount window rather than lower FFR in an attempt to lean against the credit crunch. Are members of the central banking cartel colluding on their policy response?
According to the Guardian, “US Treasury Secretary Hank “it’s contained” Paulson flies in to London tomorrow to discuss the worsening global credit crisis with Chancellor Alistair Darling, as fears intensify that the lending squeeze could be the last straw for Britain’s buy-now-pay-later economy.”
http://tinyurl.com/382aw7
Financial advice seems to be a leading U.S. export product these days.
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/15/AR2007091501480.html?hpid=topnews
‘Sunbelt City in Grasp of Housing Undertow’
A pretty typical article about the collapse of the rea;l estate market in Florida, but what really struck me was the graph on the side of page 2 that shows the % of disposal income that came from home equity withdrawl in the last few years. If that 15% +/- is accurate, as I suspect it is, there is going to be some real pain as people both adjust their spendig habits and adjust to paying that inflated mortgage payment.
“We are in a real estate recession,” said Laurance Baer, manager of the Fort Myers-based Baer’s Furniture chain, where sales are plummeting. “And we have an economy that’s much more tied to real estate than anyone realized.”
What is this “anyone” crap they keep using? Let’s do a survey.
Hey, Palmetto, did you think the Florida economy was highly dependent upon real estate? What about you, Professor Bear? TXChick57? AZ_Lender? Ben Jones? P’cola Popper? Walt? Flatffplan? Who did I miss?
Let me ask it this way. “Is there anybody on this blog that didn’t think the Florida economy was incredibly dependent on real estate gains in recent years? Buehler??????? Buehler???????”
GAAAAHHHH!! Quote from the article:
“The Cape Coral-Fort Myers metropolitan area, home to about 570,000 people on the Gulf of Mexico halfway between Miami and Tampa, started bustling in the late 19th century as a winter home for northerners. Later families moved here, drawn by jobs in tourism and health care.”
Whadiditellya? The base of Florida’s economy, without real estate, is health care and resort/tourism, with some agriculture, aquaculture, port city services and a little military (Jax and MacDill AFB, etc.) mixed in. Generally low wage, but offset by low cost of living, until this stupid bubble.
Businesses that were here for years WITHOUT the bubble are all of a sudden taking a dump BECAUSE of the bubble. One of the reasons being that state and local govs went rabid on their assessments on commercial/business property and on snowbird residential. Yep, one thing Florida knows how to do is kill the geese that lay the golden eggs. Bullet, meet foot.
RE: The base of Florida’s economy, without real estate, is health care and resort/tourism, with some agriculture, aquaculture, port city services and a little military (Jax and MacDill AFB, etc.) mixed in. Generally low wage, but offset by low cost of living, until this stupid bubble.
Exactly the same up here in the north country.
Government parastic jobs and massive hospital complexes to take care of legions of the elderly, butt smokers, and the obese are about it here in Vacationland for sustained employment.
3 buck gaz and a proliferation of people who can’t function in outdoor recreational environments have largely trashed the tourism trade. It’s now a 6-week economy. July 4th to the 3rd week of August.
Pondering Scumer’s recent $200 million assistance for FB counseling I came up with what I believe is a much more cost effective and efficient counseling plan:
1. Pay Ben Jones $50 million for unlimited access to the HBB archives;
2. Require any FB in need of counseling to read the entire compiled archives;
3. Administer a simple ten question exam compiled and agreed by HBBers requiring 100% correct answers to insure that the FB read the material;
4. FB completes a public gauntlet composed of 20 HBBers (choosen by lottery) with ten on each side armed with 20 pound trouts;
5. Upon successful completion of the exam and the gauntlet the FB receives a short sale on the primary with the write down being non-taxable to said FB and a 30 year loan at the going 30 year T Bond rate for 50% of any Second or Heloc again with the write down being tax free to the FB.
I know many will consider the above to be too lenient but we have to be realistic and move to a practical solution.
No joshua trees?
Due to the shortage of Joshua Trees they are strictly reserved for the top management and decision makers in the financial institutions and other critical bubble enabler entities.
Well done. Now we have a workable plan.
Palmetto for President!
The only way I would agree to your proposed bailout is if 1/2 of the proceeds to the blog went toward subsidizing HBBer’s new houses, which we will buy when the market bottoms out. Ony for HBBers who posted at least once any time before Jan 1, 2007. And no trolls, either.
It’s come to the point where borrowed money can be defined as disposable income.. this is sad.
…and that graph is for Washington DC metro, not Florida. For those who can’t see it, the percentage of disposable income that came from HELOCs and such went from 2% in 2001 to 14% in 2004-2006.
Cut out those HELOCs, and disposable spending goes down to 85-90% of it’s high during 2004-2006. That can’t be good on the local economy.
I guess it’s not “different here”.
“You could make a lot of mistakes and still make money,” Valenti said. “People thought it would always be that way.”
This is true of all business boom cycles, not just REIC cycles. When things go bust all of the free spending idiots who do not know what they are doing get flushed out. The survivors are almost always the folks who are both wise and careful, and always understood that all midnight parties come to an end.
Unfortunately, those who are on permanent Economic Outpatient Care (from their parents) will never learn, and they can always count on getting funded for their next losing enterprise.
Got 10% down?
anyone close to the big homebuilder HOV etc sales ?
there’s one 15 miles from me- on the tube saturday
wow, thats going to kill the comps
I just wanted to say this:
I have been reading this blog for some time (I’m from Florida) and I have read some of what seems to be almost hate towards real state agents, … I, having not dealt with one, naively thought this noticeable anger seemed excessive…. Ill tell you something, I now think those people that wipe the floor with these ‘agents’ and call them scum must be the nicest borderline-saints people on earth. Ive dealt with 2 offices/ companies so far talked around to at least 4 agents its been horrible, the attitute is so rotten.. I get better service in a burger king located in a very bad neighborhood…. And I’m pre-approved! (with a crappy mort broker, true, and probably wont use him anyway but with a pre-approved letter none the less).
Screw these people my offers just got even lower-ballish.
rant out
Welcome to a little place I like to call, “Reality”. You don’t have to worry about crowds, here.
I just finished watching a segment on Good Morning America that discussed the “slashing” of prices by HBs. They repeated over and over the discounts being offered (e.g. $75K incentives), but of course never mention the actual prices. The housing woes were blamed on the “subprime mess” with absolutely no discussion on fundamentals or any analysis of whether prices were still lofty or not. They did mention at one point that in some cases the HBs are selling for less than cost. Who knows if that’s true or not (they didn’t give any specifics), but they certainaly did’nt bother to look into the possibility that the HBs paid more for land, building materials, etc. than they would if they started over today.
When a $200,000 property has been marked up to $600,000 over the span of a couple years an attention grabbing $75,000 or $100,000 is meaningless. Very irritating.
I’ve watched similar stuff on NBC evening news…featuring their “housing expert” Diane something…and the coverage is pitched to an elementary school audience. Zero analysis, zero attention to fundamentals, zero mention of affordability or stagnant wages, zero mention of cooked appraisals or lending fraud via stated or no doc loans. In short, it’s all video of for-sale signs, some distressed FB with a 2 sentence moan, and a little wrap-up that intones “this may even get worse”. The demographics of folks watching network evening news is supposed to be 35+ and somewhat educated–but in truth they assume the audience is innumerate, financially naive, and with a very short attention span. There’s almost no content in the “news”.
CNBC has a closing bell countdown clock that ticks off hundredths of a second. I like to watch it. It goes really fast! Or sometimes I just find something shiny to play with. U…S…A! U…S…A!
Thats why I watch the Newshour on PBS.
This could work in our favor. With no data or understanding to go by, most viewers won’t be able to use their own brains to come up with ways to argue against the new sense of impending doom. It should be easier to get them to panic. As long as none of them know that I happen to have any money at all, then I can more easily take over amongst the fracas.
I’ve got a new topic for everybody - gold. Yes, I know we’ve gone over this before. One of the arguments on this blog, against gold, is the fact that it is difficult to exchange. I see things like, “you can’t buy a gallon of milk with gold”.
Reading Peter Schiff’s book he brings up an interesting idea. He figures that some company will be smart enough to offer a credit/debit card based on gold. You will give the company four ounces of gold and they will then give you a card that allows you to pay in gold. His reasoning is that the same technology that allows American credit cards to pay in euros, when in Europe, would allow people to pay in gold. It would work off of a commonly accepted exchange rate.
Would this not be a de-facto gold standard? It would basically say, “hey, you can’t inflate this away a–holes”. This would definitely increase the demand for, and usability of gold. You gold bugs (like Aladinsane) wouldn’t need any more Viagra if they did this one. What do you think?
Central banks and other financial authorities (like IMF, World Bank etc.) will block any initiative that threatens their current position/authority and their massive profit streams from inflating the currency.
gold seems kinda volatile for a currency substitute.. after all, it’s just another commodity, like copper or corn.
As a grocer, might I find myself “trading” a gallon of milk for 9G (gold units) today, 10G next week, and 6.5G next month, depending on gold futures?
In otherwords, won’t such a scheme put everyone into the gold futures market?
Ne Plus Ultra will never be a de facto currency, not enough of it around…
“gold seems kinda volatile for a currency substitute.. after all, it’s just another commodity, like copper or corn.”
I don’t know if I buy that one. Have you ever given your wife a necklace made out of corn?
hehe.. no.. but it does bring up another point. If a wife wants platinum, gold has no value.
Notice that since about 2001, gold price has closely paralleled bubbling real estate prices? I fear gold will continue to follow RE, or i might buy some.
gold price only more-or-less paralleled real estate in the US; in Europe the first (major) surge up of RE happened while the gold price was still declining.
Yeah, Joey, that’s my thing too. I’m just afraid the current rise in gold prices is really being fueled by the credit bubble, as opposed to be fueled by inflation (although the two go hand-in-hand).
It is starting to appear, however, that aladinsane and hoz have been right. Well, we’ll see what the Fed does anyway. Hope they don’t cut.
“One of the arguments on this blog, against gold, is the fact that it is difficult to exchange.”
That, and the price of gold could easily be manipulated by the CBs if it were to get so high that it threatens confidence in the value of the fiat currencies. Also, history tells us that the Federal government can and will confiscate gold from private parties at a discount price.
The federal government will also conficate your home, your guns, and your savings accounts.
Gold will maintain value over the long term. You may not be able to use it *durring* the crisis, but once things stablize again you will still have your value.
Central banks have a lot of power, but don’t think they have unlimited power. They can keep gold low by shorting it, but sooner or later they will end up in a short squeeze.
I too have thought that gold may be inflated based upon realestate, but perhapse it inflated with realestate because of the people that saw the coming crash as a result of the real estate bubble.
I can see the exchange mechanism working very easily. Basically each country could retain their fiat currency but the “gold savers” base currency is gold. The price volatility of gold would be the “gold savers” risk. This is very similar to what I witnessed in Russia in the 90’s–everyone had their savings and overnight money in USD but transactions were done in rubles.
My thought on gold is that it will shine in the absence of a universally acceptable fiat reserve currency i.e. if people lose their faith in the USD and EURO and due to political or other risks were not ready to embrace the Yuan or Yen.
Check out http://www.goldmoney.com
James Turk runs it, very legit and also offers silver.
It’s good, but when I get to the part where I actually fund my account, I always balk. 1.) I’m better off for now waiting for my entry point in Hong Kong. USD inflation will be like “putting a turbo-charger on a Ferrari” 2.) GoldMoney wants to ensure they can prove due diligence that you’re not laundering money through them and I just hate the way they word their questions. 3.) I’ll never be a goldbug. Junk silver is probably my limit.
there’s a link below where you can get fruit juice $39 a quart.
????, didn’t see what you are referring too?
From goldmoney…It’s all contained.
The Baltimore Sun reports: “Checks sent out by the troubled American Home Mortgage Investment Corp. to pay the property taxes of more than 70 homeowners in the Baltimore metropolitan area have bounced”, which puts those properties at risk if the homeowners cannot manage to pay the taxes themselves. It goes on to quote one observer who “suspects that some lenders short on cash have dipped into escrow funds [held to pay taxes] to cover operating expenses.” Clearly, the housing collapse is beginning to deepen.
Wow. Didn’t Countrywide have a taxing authority decline taking their checks — that they had to pay by money order or something?
This is going to get very interesting.
Reading and watching all this play out I keep visualizing Sadam’s hanging. I think the hood has just been put over our collective heads. Now we just wait for the inevitable drop.
dime, how’s it going? Any more appraisal adventures to report? If so, do tell. I love hearing about your experiences from the trenches of Florida’s housing bust.
dime, if you see this, post over in the Florida thread.
the end times have arrived….
Pensacola, FL
All the real estate postings on Pensacola’s craigslist this morning (8:30 Central) are realtor MLS listings.
About 8500 MLS listings for Pensacola and surrounding area. Many FSBO classifieds and street signs.
My wife, 8 year old son, and myself went to the beach yesterday. On the way back, we drove through many older, newer, and brand new neighborhoods. For sale and for rent signs everywhere. Several “Absolute Auction” signs.
IMO, sellers in the Pensacola area are still desperately clinging to outrageous prices. In the meantime, listings are increasing, demand is decreasing, and easy credit has evaporated.
Pensacola, Florida
The PNJ has a typical HBB infuriating RE article today:
1. Lead says “Home Sales Stabilizing”;
2. Quotes local university REIC shill economist concerning “stabilization” with no supporting data;
3. Quotes the guy (Metro Trends) that actually compiles the local real estate data as saying “steady decline in sales” and “no signs of stabilization”;
4. Closes with “Boomers will save the local housing market”.
I have said it before and I will say it again there must be some sort of standard REIC approved playbook that is given out to the MSM.
PNJ
http://tinyurl.com/2kkxjy
“IMO, sellers in the Pensacola area are still desperately clinging to outrageous prices. In the meantime, listings are increasing, demand is decreasing, and easy credit has evaporated.”
I’m convinced that most properties will have to go back to the banks, before any kind of reasonable deals will be available.
If you could mark all of the for sale houses in your area in a bird’s eye view of a map, would it look like a bottle of absolute vodka?
Got 10% down?
You can. Just go to Zillow.com (although I don’t think the foreclosures show up there).
On the morning of Aug. 16, Charles Whitman checked his BlackBerry before leaving for work, only to find out he no longer had a job.
His former employer, First Magnus Financial Corp., a Tucson, Ariz.-based mortgage lender, notified many of its workers in an e-mail that they were being laid off.
http://www.chron.com/disp/story.mpl/front/5136933.html
Whitman’s Mom and Dad had a twisted sense of humor, I think.
Isn’t Charles Whitman the name of Texas Tower shooter?
How stupid. They actually notified people by email that they were laid off? The first thing you do with a person that is being axed is lock them out of every system you can think of. You don’t tell them they are laid off by email and then let them grab every email they can find and mess with every file and folder they can access. These companies just get stupider and stupider.
I had a friend that worked for NEC that found out he was layed off when he tried to check his voice mail while he was on vacation.
Meh. Depends on the people and the company. Best layoffs i had were from small comapnies who basically said, you’ve got 6 weeks, one month till layoffs, and 2 weeks severance. No problems there. Again, they were small companies.
All those people calling me a conspiracy nut all this years, I knew Whitman didn’t get taken down by those Austin policemen. The CIA takes care of their own!
In my local area some of these realtors (TM) and mortgage brokers are now pushing MLM, and some church groups are pushing it as well. This was not true just a few years ago, so this is a sure sign that RE is not doing very well in my area. (In spite of how RE is still being reported by the Bowling Green Park City News, and the Glasgow Daily News.) A concoction of a “proprietary blend” of fruit juices seems to be the MLM product de jour at the moment in this area. Some even collect the 6% sales tax, (”Give to Ceasar what belongs to Ceasar…”) but I doubt they are passing this along to Ceasar since MLM operates without a business license.
Last Friday I paid my auto insurance renewal but the agency held me captive for 1/2 hour, trying to get me hooked on some “proprietary blend” of fruit juices. The owner of the agency and his entire staff have gone MLM berzerk. Trying to get these people to understand the dangers of MLM is like trying to get people to switch religions, so I did not bother. My new insurance carrier is willing to do auto insurance for a term of one full year, so I only have to go through this BS once a year.
http://www.mlmwatch.org/
Oddly enough, I really like the taste of the product. (But not enough to cause me to buy fruit juice for $39.95 a quart.) In a few years something similar will be available in health food stores, but at high prices. In a few years after that the grocery stores will have a similar product for sale at a much lower price, and in a few years after that there will be cases and cases of similar product stacked up to the ceiling at Costco and Sams, as the MLM product cycle winds down and completes its full circle.
But in the meantime, DOLE (TM) strawberry-bananana-orange juice for $3 a half gallon is good enough for me
I wonder if the REIC is pushing MLM in other areas?
Got 10% down?
Why not have a pyramid scheme built out of pyramids, instead of besmirching fruit juice?
why not just switch to Geico?
LOL!
Somebody with GEICO insurance hit me at a red light. I needed a new rear bumper replaced for about $450, but the GEICO idiot cut me a check for $100. (My car was one year old at the time.) Geico’s recommended repair shop was aiding and abetting the Geico idiots. (Geico is prolly giving their recommended shops a kickback for false repair estimates, would not surprise me at all.)
And now we all know how Mr. Buffet makes his money on insurance.
Got 10% down?
Another Craigslist beggar asking for a free car since she has four children, three of them “special needs” - IDIOCRACY marches on.
http://cosprings.craigslist.org/car/423703232.html
HELP ME PLEASE
——————————————————————————–
Reply to: sale-423703232@craigslist.org
Date: 2007-09-15, 11:50PM MDT
I AM LOOKING FOR SOME TO GIVE ME A CAR OR SOMEONE TO WORK WITH ME ON PAYMENTS I HAVE 4 KIDS AND 3 OF THEM ARE SPECIAL NEEDS AND I NEED TO GET THEM BACK AND FORTH TO APPTS. I RECENTLY HAD TO TAKE ALL OUR MONEY TO MOVE CAUSE SOME THING HAPPEND TO ONE OF THEM HAD TO PROTECT HER
This item has been posted by-owner.
Location: N.CAREFREE
it’s ok to contact this poster with services or other commercial interests
PostingID: 423703232
What does N.CAREFREE mean?
sugarless
Trigger aint just a dead horse.
I have a sinking feeling that a lookback on the Northern Rock run will be called the trigger leading to the black swan event that nobody in the Top Brass saw coming.
The exits are gonna be really crowded. Into the breach once more, dear friends.
CRISIS MANAGMENT 101:
What information was released, how, why, and when?
Why is the information material?
Is any of the information already public?
Are any securities or loan obligations affected and, if publicly traded, where are they traded?
To whom and how widely was the information released?
To what extent was the information conveyed beyond the original recipients?
Has the information been posted on a website?
What was the original plan and timing for disclosing the information
LOL:
http://www.prudentbear.com/index.php?option=com_content&view=article&id=4763&Itemid=56
“Nigerian subprime scam” — excellent!!!
Related story:
FTC warns that some mortgage ads may violate law
REUTERS
September 16, 2007
WASHINGTON – The U.S. Federal Trade Commission said recently that some advertisements for home mortgages might be deceptive and even violate the law.
The FTC said it had warned mortgage brokers and lenders, as well as media outlets carrying the advertisements, that the claims appearing on Web sites and in newspapers, magazines, direct mail, e-mail and faxes might be unlawful.
Warning letters were sent to more than 200 advertisers and media outlets.
http://www.signonsandiego.com/uniontrib/20070916/news_1h16ads.html
Ron Pebbles stuff is always good!
Who would fall for that? First of all, the guy has “Oregano” as one of this names. Secondly, he doesn’t always spell his first name the same way. Third, the language used is just weird. I’ve never heard anyone talk that way. Seems weird that the people at the Prudent Bear would even bother writing about this.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Mark Twain
I read somewhere that realtors cannot get unemployment benefits since they are independent commissioned sales persons. Is that correct and if so what recourse do they have other than get another job?
Obviously some of these realtors quit decent (median pay) jobs to become sixpercenters (or three?). Due to the slow down in the economy can they get back to their old jobs/ field?
Persuasively Jane pleaded with the next customer, to add french fires to their order…
Her Realtor skills really paid off, in the end.
french fires, like they are used in the banlieu? Sounds like the situation in the US is indeed getting a bit out of control
LOL!
Yes the ones that were grocery store clerks can indeed go back to those jobs (they can also: English - you speak it…?) But I’m talking about the ones that quit jobs in accounting, engineering and middle level government clerical jobs?
“But I’m talking about the ones that quit jobs in accounting, engineering and middle level government clerical jobs?”
Oh you mean the smart ones that were going to get rich and retire. LOL
Prime candidate for next bubble: foreclosure scams
Credit crunch attracts a wave of opportunism
Foreclosure consulting scams target struggling homeowners
By Emmet Pierce and Lori Weisberg
STAFF WRITERS
September 16, 2007
* Seminars promise quick cash in foreclosures
The first time Sandra Barranon heard that her home in Potrero had been foreclosed on and sold in a courthouse auction was when the new owner came to her door and told her she and her children had two weeks to vacate.
Behind in her mortgage payments, Barranon had been working with First Gov, an El Segundo-based foreclosure consulting firm recently censured with an “F” rating by the Better Business Bureau of the Southland. She said she was contacted by First Gov in March with a promise to restructure the debt on her house.
Barranon, who recently lost her job at Home Depot, said she paid First Gov $2,000 and was told to ignore foreclosure warnings from her lender. Her faith in First Gov remained unshaken until Labor Day, when she learned that her home had been sold. She had purchased the house in late 2000 for just under $100,000.
EARNIE GRAFTON / Union-Tribune
Sandra Barranon is losing her Potrero home to foreclosure, though she said she paid a consulting firm $2,000 to renegotiate her home loan.
“I feel so stupid because I never felt people could actually do this to me,” said Barranon, a 47-year-old single mom. “I have always been a good person. I believed God would make things right no matter what. . . . I am lost.”
http://www.signonsandiego.com/uniontrib/20070916/news_1n16losthome.html
One commentator suggests AG’s easy money was instrumental in blowing the bubble, and further, that helicopter drops will not do much towards fixing things. I love the wild, frank language of this hard-hitting piece, a scarce commodity in the MSM.
DEAN CALBREATH
Let’s point fingers at subprime’s real villains
September 16, 2007
Denial, anger, bargaining, depression and acceptance. Those are touted as the five stages of grief. But somewhere between denial and anger there is an important but rarely mentioned sixth stage: finger-pointing.
…
Although there are many culprits to blame for this mess, topping the list is the Federal Reserve. Not Ben Bernanke’s Fed, which has been stuck with cleaning it up. But the Fed of Alan Greenspan. Guru of the GDP. Maestro of the marketplace. Inscrutable sage of the interest rate. Saint Alan, as some still call him on Wall Street.
After the dot-com stock market bubble burst in 2000, Saint Alan steadily lowered the federal funds rate, flooding the global market with cheap and easy money. “It was our job to unfreeze the American banking system if we wanted the economy to function,” he told CBS reporter Leslie Stahl last week. “This required that we keep rates modestly low.”
Modestly low? That’s like saying the electric chair is modestly dangerous. The federal funds was just 1 percent from mid-2003 to mid-2004, its lowest point since 1958. Considering that the official inflation rate was around 2.25 percent during that period, the Fed was essentially paying people to take money off its hands.
And there were plenty of takers.
http://www.signonsandiego.com/uniontrib/20070916/news_1b16dean.html
Harney just does not get it. The largest effect of the foreclosure crisis will not be the direct effect on the families who lose their homes, but the indirect effect of forced sales into the perfect storm of a housing glut accompanied by a credit crunch. Because housing is a thinly-traded asset relative to the size of the housing stock, a few foreclosure sales at fire-sale prices can royally screw up the comps, and massively devalue many local residential housing markets which formerly seemed a bit frothy.
And BTW, not more than a couple of days ago, I was refuting some other MSM writer’s claim that the foreclosure crisis would not be very serious, as it primarily concerned FL, NV, CA and AZ. So it strikes me as quite ominous than none of those states are mentioned on Harney’s list of problem states, which instead includes Ohio, Michigan and Indiana. Is the foreclosure crisis really limited to a narrow group of U.S. states? (I personally doubt it, as all housing finance is global.)
NATION’S HOUSING KENNETH HARNEY
Data show mortage mess not so grave
September 16, 2007
WASHINGTON – Just how bad is the foreclosure situation? If you caught summaries of the latest delinquency and foreclosure numbers released by the Mortgage Bankers Association of America, you could only conclude: Yikes, it is getting scary out there:
The rate of American home loans entering the foreclosure process last quarter hit the highest it’s been in the history of the survey, which dates back to 1953.
In some states, the mortgage crisis is particularly severe. In Ohio, 5.2 percent of all home loans are now either three months past due or somewhere in the process of foreclosure. Michigan and Indiana are not far behind. In Michigan alone, one of every 100 houses saw foreclosure actions initiated in the three-month period covered by the survey.
http://www.signonsandiego.com/uniontrib/20070916/news_1h16harn-jmp.html
This list of sage suggestions to first time buyers omitted an important one: DON’T TRY AND CATCH YOURSELF A FALLING KNIFE.
Beginners’ guide to home buying
First-timers must be especially cautious
By Marshall Loeb
MARKETWATCH
September 16, 2007
http://www.signonsandiego.com/uniontrib/20070916/news_1h16tips.html
Housing ATM, we hardly knew thee.
Second mortgages vanishing at rapid rate
Loans suddenly appear too risky
By Bob Tedeschi
NEW YORK TIMES NEWS SERVICE
September 16, 2007
Think it’s tough to find a loan for a new house? Try getting a second mortgage on the house you already own.
Such loans seem to be an endangered species, professionals say. “They’re disappearing as we speak,” said Andre L. Mitchell, the executive vice president of Lynx Mortgage Bank in Westbury, N.Y.
Mitchell says lenders are balking at most second mortgages, also known as home-equity loans, because they suddenly appear too risky for most investors who would be candidates to buy packages of these loans. “When someone runs into financial trouble, the first thing they’re not going to pay is the second mortgage,” he said. “And if you’re second in line as a lender, good luck trying to foreclose.”
http://www.signonsandiego.com/uniontrib/20070916/news_1h16second.html
The front porch
News and notes about real estate and our built environment
September 16, 2007
QUOTABLE
“There’s not a single neighborhood in this city or in the entire region that is immune to this. They were making loans to anyone that had a pulse. They thought this was a party that would go on forever – well, party’s over.”
– Cuyahoga County, Ohio, Treasurer Jim Rokais on the impact of the subprime lending crisis on the Cleveland area
http://www.signonsandiego.com/uniontrib/20070916/news_lz1h16porch.html
Good thing Big Hank is headed across the pond to assure the Brits that “U.S. subprime problems are all contained.”
Northern Rock could mark watershed for Brown
Sun Sep 16, 2007 1:59pm BST
By Sumeet Desai - Analysis
LONDON (Reuters) - Exactly 15 years after Black Wednesday, when Britain’s then Conservative government lost voters’ trust on the economy, Prime Minister Gordon Brown must be hoping his Labour Party is not about to do the same.
Panicked savers have been queuing in droves around the country to withdraw their money from Northern Rock, Britain’s fifth-biggest mortgage lender, after the cash-strapped bank had to get an emergency funding line from the Bank of England.
Regulators say Northern Rock is solvent, but has fallen foul of a credit crunch in global financial markets as banks, unsure which, if any, among them is over-exposed to defaulting U.S. mortgages, have become reluctant to lend to each other.
But fears are growing of an old-fashioned bank run when tills reopen on Monday, after estimates that 1.5 billion pounds, or 6 percent of Northern Rock’s deposits, had already been taken out over Friday and Saturday.
http://uk.reuters.com/article/domesticNews/idUKL157747420070916
“Gordon Brown has promised more affordable housing. He may deliver sooner than he thought.”
LOL!
Great closing line!
North Rock is a Hard Sell
“Bankers tell me that Northern Rock spent a good deal of the summer exploring whether any big bank was prepared to acquire it lock, stock and online accounts. It had appointed the leading investment bank, Merrill Lynch, to sound out possible buyers.
There was, I am told, interest in a possible deal from substantial international banks.
But – and here’s the important point – the seizing up of interbank markets proved an insuperable obstacle.
No other bank wanted to take on the responsibility for financing Northern Rock’s total assets of more than £100bn at a time when it is very hard and very expensive to obtain funds from the money markets and banks.
So it was the realisation on the part of Northern Rock’s board last week that selling the bank had become impossible in current market conditions which actually persuaded the board to approach the Bank of England and ask for access to emergency loans.
Plainly, a takeover would have been a less humiliating option. But it just couldn’t be done.”
BBC
http://tinyurl.com/34qevg
it’s also a general sign of the times: today management from Dutch ABNAMRO bank said in a press conference that the takeover bid from Barclays is unlikely to win, because Barclays stock has declined about 20% over the last months (mostly as a result of the subprime/credit troubles). As a result their bid for ABNAMRO, financed with their own stock, is now far below the other takeover bid (which is mostly in cash). It remains to be seen if the other banks that are bidding will come up with the promised cash, as they also seem to be having trouble. We will likely see more problems like these appear in the banking sector within the next weeks.
I have a mindnumbingly simple proposal for Congress to end the mortgage lending liquidity crisis: Block the Dymocrit proposal to raise the GSE conforming loan limit north of $417,000. I predict that the sellers who are currently holding out for prices at which their homes will never sell would come down off that ledge of illiquidity far more quickly if they were not deluded into the hope that this rescue measure will somehow fabricate nonexistent buyers.
Prof:
Do you think the bill has a chance of passing? Very few people are in favor of it, so I don’t know why a few pols seem so married to it.
One group who would be further injured by legislation to make bubble-zone housing still less affordable: priced out renters.
Thousands of renters can’t afford cost of housing
Many have little left after paying for a place
By David Crary and Rachel Konrad
ASSOCIATED PRESS
September 16, 2007
(Simon and Jennifer Morris, with children Ethan, 3, and Layla, 7 months, outside their apartment at St. Luke’s LifeWorks in Stamford, Conn.)
STAMFORD, Conn. – This isn’t how Simon and Jennifer Morris envisioned married life – sharing a charity-subsidized suite with four other hard-up families, abiding by a curfew and other rules that make them feel they are back in high school.
But for a working-class couple with two small children, trying to stick it out in their pricey hometown, housing options are few.
They abandoned their previous one-bedroom apartment when the rent rose from $1,200 to $1,425. Public housing has long waiting lists, so they moved into a shelter for dislocated families in a converted YMCA. The goal: Save enough money to move south and buy a home where costs are lower.
Around them, southwestern Connecticut’s Fairfield County is booming, due partly to an influx of investment banks. New housing projects routinely cater to the affluent.
“But everybody forgets the poor guy – the one who pumps your gas, who builds your hotel, who bags your groceries,” said Simon Morris, a 35-year-old carpenter. “The cost of living is driving us out.”
http://www.signonsandiego.com/uniontrib/20070916/news_1b16renters.html
I remember when carpenters supported their families with lower middle-class lifestyles.
Japanese housewives take bubbly bath. NY Times:
TOKYO, Sept. 15 — Since the credit crisis started shaking the world financial markets this summer, many professional traders have taken big losses. Another, less likely group of investors has, too: middle-class Japanese homemakers who moonlight as amateur currency speculators.
Ms. Itoh is one of them. Ms. Itoh, a homemaker in the central city of Nagoya, did not want her full name used because her husband still does not know. After cleaning the dinner dishes, she would spend her evenings buying and selling British pounds and Australian dollars.
http://tinyurl.com/3cv8cs
judging from what I see in the currency markets, the Yen carry trade is still far from over; so this is only the beginning.
I took a drive in the Valley of the Sun last week, out past the building fields of Surprise. I stopped to look at Casa Grande, a four story house abandoned some 600 years ago. I couldn’t pass on the opportunity to see a 600+ year old house in N. America. It was supposedly the crowing jewel of a 1000 year old culture and was abruptly abandoned about 50 years after it was built. They farmed with irrigation canals from the Gila river. Their Black Swan was a flood. Can you imagine the Valley of the Sun flooding?
There isn’t a drop of water today in that Gila River, and the water table has dropped from 12 feet to 100. Lots of dead mesquite trees. Plenty of green lawns in Surprise though.
So my landlord came to my house at around 11 AM (he told me he’d be there at 8:30) with his alcoholic handyman yesterday to supposedly fix our plumbing. LL concluded that he can’t snake the pipes because they’re so old and brittle that the might break. Told us HM “might’ come by on Monday to pour some enzymes down the drains. See if that works. Of course, they completely “forgot” about the other problems they were supposed to fix.
This was all after LL explained to my hubby that the house is eating him alive and wouldn’t we like to buy it from him. Sure thing there, slick.
Funny thing is his teaser rate won’t run out ’till 2009, but I guess it’s been slowy adjusting over the last 3 years and even those tiny adjustments are enough to kill the guy. What a shame.
“This was all after LL explained to my hubby that the house is eating him alive and wouldn’t we like to buy it from him.”
Sounds like a great sales pitch: It’s eating me alive, wouldn’t you like to have it eat you alive instead.
test
Trying again:
My landlord bought this place in 2004 with no inspection. The house is 80 years old. Now the plumbing’s backed up and he’s afraid to snake the pipes because they’re brittle and might break. He says this house is already eating him alive (even though his loan doesn’t resent ’till 2009, although it’s been adjusting gradually), and wouldn’t we like to buy it from him?
No. I need all my money for elephant food. Sorry.
Atlanta ad in Chicago? Not a bad deal if it’s the house in the pics.
http://chicago.craigslist.org/wcl/rfs/423991533.html
Not bad if you don’t mind living in a suburb in the middle of nowhere. It’s half-an-hour from Atlanta if there’s no traffic and seeing as there are no jobs out that way, your commute would likely be at least 45 minutes to an hour at best if you worked downtown. If you worked in other areas of Atlanta, the commute would be more like 1.5 - 2.5 hours.
It’s like living in the Chicago ‘burbs, you would pay about 200k for a house like that. (with much higher taxes)
I’ve seen the same ad on Long Island Craigslist. They must be posting it all over the country.
Holy mother of shoe drops. Greenspan spills all the beans and a couple shoes too. From the FT:
US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market.
Mr Greenspan said he would expect “as a minimum, large single-digit” percentage declines in US house prices from peak to trough and added that he would not be surprised if the fall was “in double digits”.
The former chairman said the current turmoil in financial markets was “an accident waiting to happen”.
He said the price of risk had fallen to unsustainably low levels beforehand, with investors addicted to asset-backed securities that offered some additional yield over Treasury bonds as if they were “cocaine”. Mr Greenspan said this demand induced the big increase in the origination of subprime mortgages by mortgage brokers.
Mr Greenspan said the off-balance sheet investment vehicles that issued much of the asset-backed commercial paper represented a “savings and loans disaster waiting to happen” because of the mismatch between their assets and liabilities. Mr Greenspan thought the issuance of asset-backed commercial paper ”is probably not going to get back to where it was.”
http://tinyurl.com/2jtlym
He fails to say that it was the Fed’s intention to make T-Bills undesirable, by lowering rates. Forcing fixed income investors to chase yield elsewhere. Wayne Angel, a former Fed official, is on Larry Kudlows show, almost every day, saying the same thing. Make rates low and T-Bills unattractive. To try and force fixed income investors back into asset backed securities. I don’t think it will work this time, it all about preservation of capital, now. Fool me once, shame on you. Fool me twice, shame on me.
Does anyone still believe he doesn’t get it?
“He fails to say that it was the Fed’s intention to make T-Bills undesirable, by lowering rates.”
Stay the course in the War on Savers, Fed!
I am shocked and awed by this announcement. DON’T BUY YET!
Greenspan alert on US house prices
By Krishna Guha in Washington
Published: September 16 2007 19:40 | Last updated: September 16 2007 21:09
US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market.
In an interview ahead of the release on Monday of his widely-anticipated memoirs, the former chairman of the Federal Reserve said the decline in house prices “is going to be larger than most people expect”.
It’s over for Northern Rock. Shares are expected to plunge like, well, a rock. From the FT:
Northern Rock and its regulators are this week expected to try again to sell the mortgage lender after it was bailed out by the Bank of England….
[T]he central bank yesterday indicated that the credit line it had provided to Northern Rock would not be removed in the event of a sale. “We have agreed that any bidder would be able to take on the facility for any unexpired term left,” a spokesman said….
If no buyers come forward, it seems likely Northern Rock’s business will be gradually wound down, effectively leaving it with a shrinking mortgage book as loans are repaid. Its advisers are thought to have calculated that, in this situation, it would be worth about 180p a share. On Friday they closed at 438p.
The Bank of England has been stung by criticism that it is providing a bail-out to Northern Rock and wants the terms to be published, so it can demonstrate how tough they are for Northern Rock’s shareholders. The central bank said: “We expect the terms to be disclosed in due course.”
http://www.ft.com/cms/s/0/39199b78-6489-11dc-90ea-0000779fd2ac.html
He better hurry. Pretty soon, there will be no subprime industry to regulate.
Sept. 17 (Bloomberg) — U.S. Representative Barney Frank, whose efforts to clamp down on mortgage-lending abuses were thwarted by the last Republican Congress, is about to try again. He should have better luck this time….
With a record number of homeowners facing foreclosure, momentum is building behind legislation that lawmakers will be able to cite when they run for re-election next year. Mortgage- industry officials are bracing themselves.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4GwkwpYGjb4&refer=home
about 1/3 of the house ads on the Boston/Merrimack Valley ads I looked at show houses with no furniture in em. hm… but prices are still mark-to-I-Wish. and the number of For Sale signs along Rt 133 through Lowell/Tewksbury seems to have doubled over the weekend.
Its that “fall bounce” everyone always talks about, FYI, it ain’t gonna happen for several years, we are on a long term downtrend. They need to start marking the RENT to reality and hope it covers 75% of the carrying costs. Fliptards turn floplords, Justice!!
Yawn…
From The Sunday Times
September 16, 2007
World’s banks hit for $30billion in credit crunch
Louise Armitstead and David Smith
THE world’s investment banks are to reveal a $30 billion (£14.9 billion) hit from bad debts as they unveil results that give the first real insight into the impact of the debt crisis.
City analysts predict the banks will have to write down as much as 10% of the $300 billion of leveraged loans currently agreed but not yet syndicated when they report third-quarter results to the market.
Banks are also expected to announce further hefty provisions to cover their exposure to commercial paper, including the so-called conduits and SIVs, a type of highly leveraged investment fund. In some cases profits for the third quarter could have been almost wiped out by a combination of exposure to bad debts and complicated commercial paper.
Kian Abouhossein, banking analyst at JP Morgan, said: “The hits will essentially mean that some investment banks will have made almost no money over the last quarter. Profits will be close to zero.”
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2459578.ece
While I know what’s bad for wall street is not usually good for main street; but after years of wall street screwing main street I can see nothing but justice in the fact that all the big money gurus, despite all their collective intellect, efforts and ego have laid a big fat goose egg!! Lets hope for more
We will need a centipede to provide us with all the shoes that will be dropped during this crisis.
From Greenspan’s interview about The Big Down with the Financial Times:
He says: “We know in an accounting sense what is causing it” – the share of worker compensation in national income in the US and some other developed countries is unusually low by historical standards – “but we don’t know in an economic sense what the processes are.”
In the long run, he says “real compensation tends to parallel real productivity, and we have seen that for generations, but not now. It has veered off course for reasons I am not clear about.”
-Basically, what it seems like Greenspan is saying here is that Congress set up the environment for this to happen by legistlating globalization. I know that many here think globalization was a natural process, but I remember it being actively pushed by the Clinton administration, and taken to a jove extreme King George 2. We removed/lowered tarrifs, changed tax structures, did all kinds of things to cause globalization. The way I interpret Greenspan’s words is that Congress needs to stop begging the Federal Reserve for a solution to the problem that they are creating.
Amen!!!
I just got done watching Allen Greenspan on 60 Minutes. Basically, he said that housing is going to go down further. He also said in his interview with the Financial Times that inflation and interest rates are going to up, and the central banks can’t do anything about it. He seemed to be implying that Congress ought to step up a bit.
The following statement (from his 60 Min interview) stood out to me. He said “We will get through this. We always do.” I think he meant that the US will not lose its place as the dominant country in the world. I do NOT think that he meant we will avoid a recession, due to the fact that we have NOT always avoided recessions in the past. How do you guys interpret all this?
The following statement (from his 60 Min interview) stood out to me. He said “We will get through this. We always do.” I think he meant that the US will not lose its place as the dominant country in the world. I do NOT think that he meant we will avoid a recession, due to the fact that we have NOT always avoided recessions in the past. How do you guys interpret all this?
Call me Mr. Negativity, V, but I interpret this to mean Greedspin is talking to his elite corporate whoremasters: “We will get through this- the intelligentsia is too small and powerless to overthrow us, and the rabble is too clueless to figure out we’ve done this to them, so we are safe from them too”. Do not, I repeat, do not, cancel your country club membership or hop your private jet to St. Kitts.”.
That’s my take also.