Bits Bucket And Craigslist Finds For September 27, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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So I was watching this debate about what to do about prices. Some lady politician was on pitching her idea that rather than foreclosure, we make mortgage companies take payments equal to market rent for their house. If their interest is higher, then the size of the loan grows.
Basically her argument is a false dichotomy falacy.
1) We drop thier house payment to market rate for rent.
or
2) We make them homeless, forcing them to live on the streets.
Ummmm….. HELLO!!! If they can afford to pay “market rent” for the house they currently “own”, then if they get foreclosed on they can afford to rent a very similar house. They WON’T be homeless and living on the street.
HOw, oh HOW, could it be helpful for the FB to be locked into an overpriced asset with interest that is larger than the payment so that their loan is going up not down? Getting foreclosed on is the BEST thing for them!
What she is really worried about is that those foreclosures will get put back into the market and will eventually sell at a much lower rate, dropping property taxes and killing HER budget.
Her plan is bad for “own”ers, bad for people wanting to buy, bad for lenders, bad for Realtors… The ONLY people it is good for is politicians that keep property taxes high.
I’m not sure that it’s bad for lenders. Many of the recent borrowers have no skin in the game. Since foreclosed houses will eventually sell for a market price (and they’ll bleed like crazy once they’re REOs), getting rental equivalent payments might be a quicker way to realize their losses and cheaper than foreclosure. the problem is this. The way that mortgages are pooled and tranched, such a plan,(like any workout or modification) helps some bondholders and hurts others. Since there is a significant class of people that whould be hurt by such a plan, they’ll lobby to prevent the change in law and sue if any such law was eventually passed.
” getting rental equivalent payments might be a quicker way to realize their losses and cheaper than foreclosure.”
So a bank will go into property management on a declining asset. The renters will have no motivation to maintain the property, weeds will grow, cars will be parked on the lawns, screens will be hanging off the windows, multifamilies will be occupying the property and when the tenents stop paying rent, how long will it take to evict them and clean up the property to put it back on the market? Dah, good idea not!!
I think this would wipe out a huge portion of mortgage lending. Why would I want to lend any money, if I get “market” rent, defined pretty much as market interest plus the additional amount to offset all the risk and hassle, only to be greatly at risk that the sale value of the property will be less than the original note, much less the fairy-tale amount that resulted from very sizeable negative amortization? And how, in principle, is this different from rent control, as it affects landlords, except perhaps worse as the property is likely to decline in value? Price controls do not work. Government interference makes economic matters worse, not better.
“if I get “market” rent, defined pretty much as market interest plus the additional amount to offset all the risk and hassle”
It would be a short jump between ‘market rent’ and ‘rent control’ in places like SF, LA, and SD.
You’re dead-on when you say it’ll wipe out mortgage lending. Talk about a credit crisis!
or they start asking for 95% downpayment
Location, Location, Location
http://www.latimes.com/news/local/la-me-fwyhouse25sep25,1,1730507.story?coll=la-headlines-california&ctrack=1&cset=true
LOL!!!
here’s my contrib for this a.m.
http://ftalphaville.ft.com/blog/2007/09/27/7659/hedgies-dont-deserve-their-fees-says-1000000000000-citi-survey/
Nice paint job.
Has Gary Shilling lost his mind? He is buying 30 yr treasurys, expects deflation, and expects the dollar to become safe haven. From Bloomberg:
http://tinyurl.com/25gdtw
I think after watching the Europan banks print a 500 billion dollars that I’m in agreement with Schilling. When things contract overseas due to US recession expect heavy discounting from Asian banks to increase exports.
You could have some really messy situations occuring soon.
He might be right early on some of this stuff.
Picking the least worst fiat currency seems like work to me…
9.15.05
FORBES
Shilling wrote:”….Coming on top of earlier stock losses, the destruction of housing wealth will end the quarter-century binge of borrowing and spending and initiate a consumer saving spree. That will hurt credit card issuers and providers of discretionary goods and services such as autos, cruise lines, airlines and hotels. High energy prices are already harming Wal-Mart, and falling house prices will spread the pain up the retailing spectrum.
This is a dire forecast. Still, a severe nationwide break in house prices could destroy enough net worth and spawn a big enough financial crisis to shift the good deflation of excess supply I foresee to the bad deflation of deficient demand.”
Consumer saving spree = Consumer lead Recession
He continues to cite Japan as the example of what happens in the liquidity trap. The US could not even get the FFR over 5.25 before the shat hit the fan, and now this big rally in Treasuries is all the way to..5%?
When will the people who drive the real economy (credit bingers) start to run-out of gas? When they do, it turns off the spigot to Asia, and they are forced to devalue currencies.
Personally, I have for the past eighteen months hammered home the “consume less” tirade on my family, and they are starting to get the picture. This is the painful part because these children of consumption are soft and weak, they know not what it means to do more with less, they are interested in doing more with much more.
If the long bond cannot sustain an ernest rally, and the consumer starts to pull back to a greater extent, the pain of the deflation will continue to the commodity markets in the form of deficient demand.
The Fed’s ability to “engineer” the economy out of deflation, however, is entirely dependent on that appetite for credit - for proof just look at where Banks and Housing stocks are now following the Federal Reserve 50 basis points slash in the Fed Funds and Discount rates - almost exactly where they were before it.
credit appetite IMHO is satiated, unless of course you have borrowed short and now need long money to stay above water, in that instance you can always try the discount window….. doesnt mean ya get the dough, though.
The Federal Reserve discount window is telling the world that our own appetite for credit is waning, note the overnight REPOS only getting 10% of submitted paper turning over.
“children of consumption”
Is that like Children of the Corn?
Ha! In a manner of speaking.
With scythes!? Do they have scythes!! Say yes! I love scythes!
Is that you, Stewart Gilligan Griffin???
Personally, I have for the past eighteen months hammered home the “consume less” tirade on my family, and they are starting to get the picture. This is the painful part because these children of consumption are soft and weak, they know not what it means to do more with less, they are interested in doing more with much more.
I think this is a very good point. Even boomers have known nothing but good times generally speaking.
This reminds of a story I read some years ago. IIRC some high school kids were visited in their history class by some old timers who live through the depression. After hearing how people had no money and could not buy anything that resembled a luxury, one of the students blurted out “what did you do?”, and the old timers responded in unison “We did without!”. Without new clothes or shoes, without cars, vacations, restaurant meals, etc. The high school kids were shocked and dumbfounded.
That’s the reason that Ken Burns decied to do his series on “The War” - apprently, many kids in high school believe that the US fought with the Germans to overcome the Russians during WWII. I’m stupifeid.
Pfft… I thought EVERYONE knew the Germans bombed Pearl Harbor. Didn’t anyone see Animal House?
Boomers have known good times now, but in the 50’s most of us lived a very simple life. We didn’t run out and buy clothes all the time, and everything was handed down. Most families only had one car and they drove it for quite awhile. Most houses were 1100-1200 sf. No one ever drove to school and we walked everywhere. Parents only bought things for their kids on birthdays, Christmas and Easter. There was football, basketball and track for boys only and maybe two clubs at school so parents weren’t running their kids constantly. It was a really big deal to go on vacation or to eat out the 3 or so times a year that anyone did. We had dress shoes, school shoes and play shoes. Dances were free at the school after the games. I don’t know how society has turned into what it is today, but boomers have overdone it to compensate for all the things they didn’t have or get to do(both for themselves and their kids). But life was much simpler and a lot more fun. And people took a lot more responsibility for their actions. I guess it’s true that more consumption leads to less satisfaction.
I blame T.V.
The 1950s were a time of great prosperity in America, just in case you’re still up.
“…and falling house prices will spread the pain up the retailing spectrum.”
Herein, a very good argument for wearing one’s spectacles while drinking tea and reading HBB.
LOL!
ROTFLAMO!
Wrecked ‘em? We killed ‘em!
Gary Shilling is a stopped clock. He’s been talking deflation since the early 1990s at least.
Remember Bernanke’s famous words…he said he would drop money from a helicopter and run the printing presses as fast as necessary. This is the same guy that studied the Great Depression for most of his younger years. He forgot to study the Weimar Republic. I actually we won’t be far from hyperinflation after a few more interest rate cuts as he tries to stave off this recession on Bush’s watch. They must have threatened him with life and limb like they did to Greenspan.
In the gamble between fire (inflation) and ice (deflation), he is betting on ice. Think how well that bet would have done in Japan circa 1989, and also that the Fed would probably prefer to survive over the long run (more likely under controlled deflation than uncontrolled inflation) and you may come around to his point of view.
I think he is correct. The Fed’s ability to inflate depends on demand from creditworthy borrowers and the ability of the banking system to supply such credit. What we’ve seen primarily so far is supply disruption as the banking and associate systems have broken down.
We’ve only seen demand disruption in the mortgage sector so far since it’s the only one where credit standards have returned to pre-bubble levels. There are huge bulges of accumulated kamikaze loans in almost every credit market. The levels of such new loans written have fallen since the Great Unmasking began with subprime. Yet these other areas have seen few if any big writedowns. The disappearence of EZ lending in ultra junk (CCC and below) corporates, leveraged lending, 3rd World goverment bonds, graduated payment CMBS will inflict massive damage worldwide when it leads to unwinding of current (mis)pricing in those bond markets.
If Shilling is correct, why is everyone freaking out about inflation, the falling dollar, gold prices, long term treasurys? I’m puzzled.
Falling dollar: spins the emerging market fundamentals out of control and essentially forces the other currencies to devalue.
Interest Rates: a failed rally to get the long bonds in the 8’s while the short end is in the 4’s will not convince the consumer that inflation is really happening. This is the liquidity trap.
Inflation: Inflation in the needs = reductions of needs = lowering consumption = consumer lead recession
–
I am predicting the same as Shilling. That means I have lost my mind too. I am predicting outright deflation in 2008, i.e., negative YoY CPI change.
It will be a demand-driven depression, i.e., lack of demand. If demand drops at 5-6% annual rate it would be an unstoppable deflationary depression. Businesses take a long time to scale back and in the meanwhile the prices must be cut to move the output and inventory.
Jas
Inventory is a lot better managed than past slowdowns. Not to say it won’t happen but I think supply/demand of inventory is much better managed because of technology.
I can’t speak for Jas but to me it looks like this will be about overcapacity, not inventory. Inventory cycles take a few years to build and can be worked out in 2-3 quarters. China and India seem to be the key here. Those nations have built tremendous industrial capacity that is predicated on rapid export growth. Over 40% of China’s GDP is investment - largely factories or infrastructure to support factories. With US consumer demand set to decline and European demand beginning to stagnate as well, there is high potential for a demand bust. This could look like the consumer-led 1990 recession on steroids - with China and possibly India playing the part of Japan.
So what’s not to expect about a deflation, followed by hyperinflation. In no way do I possess Jas’ knowledge/capability, but that’s the only possibility I can envision, given circumstances.
You know, I was going to post as another thread. I bought some gold as insurance. BUT there is still a big deflationary lever globally through a global labor glut. US housing will crash but the dollar might do ok. US gov. will rigged inflation numbers so US entitlements will be lower, further driving down inflation. What part of this makes no sense, what’s missing?
BUT there is still a big deflationary lever globally through a global labor glut.
The elephant in the living room. Plus the unwashed masses that are employed cannot afford to buy the products and services they produce.
I think the global labor glut is overstated.
Wages in China are rising fast for unskilled labor, and there are shortages of some types of skilled labor.
The same in India — wages for the really skilled IT people have risen almost to the point where there is little cost advantage over the US. The quality of offshore tech support has declined and costs have risen. They’re not going to disappear, but their rate of growth of first-world offshoring is going to decline.
China has its own problems — rising expectations and the social unrest, and a financial system far more rickety than that which plunged Japan into slow-growth deflation for over a decade.
Oh! This is good
http://ftalphaville.ft.com/blog/2007/09/26/7630/a-sane-roubini-says-for-housing-its-worse-than-predicted/
After reading that article, it begs a question from me. At what price and market conditions will buying a house be a wise use of money? Wise use in sense having a place that will be a shelter for you and maybe taxes somewhat, but also an inflation hedge. I am dismayed that something as basic as having a place to live has become such a hot potato. Jeesh, always goes up, me eye.
I think that reasonable prices can be defined by the traditional criteria of price to household income and price to market rent. Those suggest drops of 30-40% in most parts of the country. Of course, the income and rent side of the equation can move as well.
The inflation hedge component kicks in when we return to the L-T trendline in price, which is roughly inflation + 0.5% annually. That indicator would require a decline of 40% to normalize and typically when you seen falls of that magnitude, corrections tend to overshoot.
I have yet to see someone here post some type of formula that incorporates the most important point about purchasing a house: future rent avoided, once the mortgage is paid off. Oh, many will say that costs never go away, maintenance, property taxes, etc. That’s only true to a point: If I go into the market to rent a house from a landlord, I’m necessarily paying more than the cost (to provide a return to the landlord.) And prop taxes in California are fixed (for the most part) Anywho, such formula I’m looking for would probably suggest that someone over 70 years old should not have bought a house even in 1996, and someone under 25 should have bought a house in 2004, when there was no doubt we were in this housing bubble. And let’s just focus on total housing expenditures over a lifetime, ignoring all the “pay $300 less for rent and invest in stock market and make 20% per year.”
It sounds like you assume holding the house to death & giving it a 0 value then. Assuming holding it for 20 years, & then selling it, might be more realistic. Realizing that the house has a value which (usually) rises is why rents are currently below mortgage payments. (How far they are below total housing expenditures is pretty much the subject of everything on this blog.)
We’re in our mid 50’s with a paid off house. Right now our taxes and insurance are $234 month. Most places in our area for 2000sf would rent for $1000-1200 mo. So I figure other than maintenance we can live the next 25 years fairly cheaply. We only got a 15 year loan. Adding up all the payments plus taxes and ins. and without counting the IT deduction our house is still worth more than we paid into it. That’s allowing for prices to fall further in our area, even though they never went up much after 2000. Even selling it and renting we could probably pay $1000 in rent just from the proceeds. If the market is priced reasonably it’s great to own, but now is definitely not the time.
I meant to say $1000 in rent just from the interest if we invested the proceeds even in a low interest account.
Couple days ago I was at my duaghter’s flag football practice. Started chatting with one of the other dad’s. He used to own a house right near the school, but couple years ago moved to a larger, brand-new house about 10 miles away.
chat-chat-chat. Eventually we start talking about weather, temps, etc. I say I’m looking for my elec bill to drop now that we’ve stopped breaking 110 and are actually seeing highs in the 90s with overnight lows in the 70s.
He tells me his elec bill was over $500 for Aug! Holy crud. I paid $200 and thought that was high. Heck, I even ahve a pool. Of course, my 1800 sqft house has combination evap and AC. I use evap for most of the cooling, with the AC only kicking in when the inside of the house breaks 80… or if I’m doing some work and want the temp cooler. I also have solar water heater. I run my pool pump about half the number of hours the “experts” recommend. Of course, those same experts want me to replace filters and want me to pay them to service the pump every x hours of operation.
Oh, and I have a 1-story on a larger lot. His house is 2 story, which is crazy inefficient for heating and cooling, but allowed a larger house on a much smaller lot.
He said he’s thinking of installing solar water heater now that the state passed a law that HOAs can ban them. He wanted to put that in when the house was eing built, but HOA didn’t allow it.
He still can’t throw an evap cooler up on the roof. Looks ugly.
Whatever. I’ll take an ugly evap cooler on the roof if it drops my elec bill a couple hundred a month!
Haven’t heard much about these lately. They were a discussion staple in 2005 here
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/05/23/notes052307.DTL
Toyota prius actually consumes more resources over its life than a hummer. Hummer was still dumb idea.
puhleeze, the “article” you mention has been debunked numerous times.
http://www.thecarconnection.com/Auto_News/Green_Car_News/Prius_Versus_HUMMER_Exploding_the_Myth.S196.A12220.html
One of my best investments over the last couple of years is industrial metals. The batteries for the Prius and similar machines requires a significant amount of cobalt. The price of cobalt has gone up 300% . The US strategic reserves of cobalt is depleted and as a result the US is no longer a player. The article cited ignores the amount of cobalt and rare earth metals needed for these batteries. The world is awash with nickel not so with cobalt or accessible rare earths. China mines 95% of all rare earths, (there is a rare earth mine in California that according to the USGS mined some but less than 0.05% of rare earth mined last year). I do not care if the Prius is greener than the hummer - a moot argument, it is just not a sustainable form of transportation. There are not enough accessible minerals left to supply the demand. China was the largest exporter of Rare Earths and the Chinese have stopped exporting. Most high energy/ long term batteries come from China.
Hummers are rank. We rented one on our recent trip to Yellowstone, it was vile.
Ranger at the entrance station took one look at our banana yellow H3 rental and said
‘So…were you planning on viewing any wildlife today?’
Me: “erm…we hope to…”
Ranger: “word to the wise - ditch the car first”
Me (suddenly realising that I’m not in my little Nissan Sentra, but in something that could, possibly, scare all beasts for miles around) “Ah, yes, its a rental, its the only thing Avis had left at Jackson Hole Airport. Horrible, isn’t it?”
Ranger: “Yep. It doesn’t look like your style”
Me: “So true”
The only advantage of driving a boat like that, was that you could never lose it in the car park. The irony, it only seats 5, even though it weighs about 2 tonnes. Fuel consumption - about 15 miles to the gallon. Horrible, horrible ‘car’….
Believe it or not, the hummer seems tame compared to this gargantuan, a $326k rv…
http://www.battlefieldrv.com/images/catalogimages/2006%20M2%20outside.jpg
We saw one of these in Mesa Verde National Park, I yelled out “Drop Anchor” and got a snide look back from the driver
When I was in the service the HMMWV was the biggest dog of a vehicle I’d ever seen. Truely a offspring of inept design and crappy construction by GM (which seems to be standard practice for them).
I was astounded when they started catching on in the civilian market. Whenever I see someone drive by in one I imagine that they are still compensating for having been beat up and given swirlies every day in grade school.
But the H2 is in no way like the HMMWV. It is a squared up Suburban with a Hummer esque grill. The H3 is a toy.
The H3 is a Chevy Colorado in a $13,000 halloween costume.
The H4 will be a Kia.
And The H5 will be a little red wagon.
H6 will be those roller skates built into sneakers.
old saudi proverb:
“my grandfather rode a camel, i drive a car, my son flies a plane — and my grandson will ride a camel.”
Our solar array is up and the meter starts running backwards, today or tomorrow…
If you generate more electricity than consumed will the power company cut you a check?
It’s the law in many places.
Unfortunately, no.
They do here in Iowa. Though try getting a windmill past zoning, just try.
Had a guy in our area who many years ago had his house destroyed by a tornado. When he rebuilt he had a windmill installed in the back field. The electric co was mad at him because he had negative electric bills.
I was just at Solar World. Talk about the next bubble. The conference went from under 1,000 attendees in 2003 to over 10,000 this year.
Easy money for now, you just need to get off the train at the last stop before it crashes.
I used to sell solar.
Biofuels is also a bubble. Anything energy-related.
I think E&P in energy isn’t bad. I am more in the Matt Simmons camp regarding energy prices.
Agree. I’m starting to see lots of small cars painted to advertise solar companies. However, as far as bubbles go, this is one I’m ok with!
(Both solar and bio-fuels.) However, long term, we must become more energy independent. So this is a bubble, for strategic reasons (if nothing else), the government should enable.
Got popcorn?
Neil
Solar has been more of a green decision, than a financial one…
Not anymore.
It’s the 1979 VW Rabbit diesel, of our times.
Last night on our local news in Tampa Bay there was a story about FPL (Florida Power and Light, one of the power utilities in the state) building a solar generating plant. Supposed to be up and running in five years, maybe less. I thought that was awesome, and I realized that it is good business for them. They are pretty much at the mercy of the oil, coal, nat gas companies and even though they pass the costs on to the consumer, I think they can see it will get ugly. Plus, I would imagine it is cheaper to go with solar (we’re certainly a good state for that) than have to deal with all the pollution controls, etc. Anyway, it was great to see a Florida utility get on board with this.
Well solar has the advantage in hot, arid places that peak supply comes at the same time as peak demand. (Hot summer days) This enables it to be a little more competetive than a simple $/KWHrs comparison might indicate.
We’re not exactly arid here in Florida, although this summer was relatively dry in comparison to the past few years. However, we do have plenty of sun, so I think it might just work out here. I’ll be interested to see what happens to oil, gas and coal costs as this unfolds. Back in the early 80s, people in FLA got fed up with power costs and began installing solar water heaters indoors and for the pool. We lived in house that had a solar water heater. Talk about HOT water!!! But then, power rates began to sort of magically drop. Now, if peak oil is a myth, as some say, look for oil prices to drop as solar and biofuels, etc. become popular. Also look for a lot of drum beating about nuclear.
The electrical grid in France is nuclear powered for the most part…
After all the nimby’ing gets done, we should be able to switch over to that source in our country, in the year 2525
my 2 cents:
1. hummers are the ultimate american obscenity.
2. france’s 80+% reliance on nuclear power represents the most intelligent and farsighted electrical grid on the planet. (this, from someone who is otherwise generally skeptical about the political wisdom of the french….)
3. the warm and fuzzy ‘global warming’ hysteria is actually just a stalking horse for PEAK OIL, which is here, and now … and yet remains the unspoken horror which no politician dare mentions.
5. malthus was right — just a few hundred years ahead of the curve. the REAL environmental canard is that the planet can carry 6… or 8, or 9 billion peeps.
the planet can — and eventually will — support about 1 or 2 billion people.
can you spell O-L-D-U-V-A-I ???
better google it before the blackouts begin………..
Plenty of energy related stuff is rife with scamming possibilities. Think carbon credits.
I’d love to own a Hummer. And a plane. The more carbon I can spew, the happier I’ll be.
“Plenty of energy related stuff is rife with scamming possibilities. Think carbon credits.”
100% true — in more ways than you probably realize. 1. a feel-good fix for the guilt-racked rich; 2. an excuse to raise taxes on the rest of us. 3. an effective way to keep primitive societies primitive by preventing development needed electrification; 4. scientifically a scam, in that co2 is a lagging rather than a leading indicator of global warming (effect being mistaken for cause).
“I’d love to own a Hummer. And a plane. The more carbon I can spew, the happier I’ll be.”
a plane sounds nice. and, yes — why not make it a learjet!
but a hummer??? WTF for?
btw, do i really have to convince people in phnx, lv and the rest of the southwest that you’re rapidly running out of water???
i guess it’s just bad coffee this morning….
i got out of bed on the DOOMER side!
Water is no biggie, until you don’t have any…
nystate also has a provision allowing for crediting home-produced electricity to make our meters run backward. i might install a wind turbine in my backyard to reduce or disappear my $100-$200 electric bill. i’d be the first apartment in manhattan to do so. i have a feeling my co-op board will give me a hard time…..
congrats and good luck with your new solar array!
Why a Hummer?? Oh, I don’t know. Guess it would be fun to be able to pay cash for one, that’s all. Something different.
Yes, a Learjet…great idea…..that would be AWESOME!!!! I’ll be paying cash of course due to all the profit I make from all the learnin’ I’m doing on this blog.
“Why a Hummer?? Oh, I don’t know. Guess it would be fun to be able to pay cash for one, that’s all. Something different.”
well, when gas hits $10/gal, cash won’t be a problem — they’ll be giving away hummers by then……..
“The new water restrictions in Long Beach resulted in about 200 emails inquiring about the new watering rules and 100 to 150 reports of neighbors violating the water restrictions. The most recent water restrictions allow people to water their lawns three days per week.”
Neighbors ratting out one another, early on in the California drought of 2007…
http://www.presstelegram.com/news/ci_6990013
Hummer’s original slogan ideas, rejected for obvious reasons.
Hummer; For those of you pussies without the wherewithal to actually hike rugged terrain.
Hummer; When your would rather your feet touch cushy pedals, your fat ass to heated leather, and your epidermis kept at a steady 70 degrees.
bubble?
Our electrical grid is powered by oil largely…
We locked in energy for the rest of our lives, @ today’s rates.
The biggest problem with solar, is the array has to be positioned just right.
This disqualifies 3/4’s of suburban homes from being able to catch the warmth of the sun.
Germany, a well known sun haven now has 3% of the houses, solared up.
Ok, my friends with suburban German house installed solar panels 20 months ago, and did not have electric bills to pay since then. There is no AC, it does not get hot like in the south, but solid shutters keep much of the heat out.
I was checking out a solar site linked to a manufacturer. It had this calculator to show you your RoI by installing Photo Voltaic.
To cut half my elec usage, I’d have to drop $50K on sollar cells. That would cut my bill by $100 a month. Doing simple math, than is 500 month return. 41 years. About double the life expectancy of the cells. Add in interest/oppertunity cost for that money, and it is WAY negative RoI.
Their calculator said I’d break even in 7 years. WHAT? Oh. They say it will add $25K to the resell value of my house, and they are saying that elect bills will go up at 7% a year, every year, forever, and don’t assume any oppertunity cost for the money.
Bubble indeed.
Our electric bill ranges from $150 to $400 a month…
We heloced on our house and got a fixed loan, and it costs us $250 a month for our system.
What’s not to like?
Are n’t two story places more energy efficient? Less area (outside wall / roof) exsposure per sq foot of living space?
Heat rises. Here in PHX, that means you’re constantly running a central ac system’s fan just to keep the air stirred. And, you cna’t really keep up, so to keep upstairs cool, downstairs has to be cold.
In colder climate, you’re burning more heat to make the upstairs too hot to keep the downstairs warm.
1 story, while it has the greater surface area, doesn’t have the problem of constantly working to pull the heat back down.
I agree with the warm climate comment, disagree with cold climate comment. Being in Iowa, we have the pleasure of having two seasons, winter and summer. In winter, it is not deathly hot upstairs just to keep the downstairs warm. There is a difference, but not like in the summer.
I would say that if you have a 2 story, and it is much hotter upstairs in the summer, your cold air returns are not big enough, or you do not have enough of them. In our 1870’s farmhouse with vents that have not been modified in over 6 decades, we have NO return vents upstairs, and the difference is astounding. However, in my sisters place, that is about 2 years old (the husband built the house himself), there is adequate return ducting, and there is virtually no temp difference at all no matter what time of year.
Yes two stories are more energy efficient.
He tells me his elec bill was over $500 for Aug!
And to think I get grumpy when our bill hits $150 in July/August! And that I feel guilty about turning down the thermostat to 72F.
But, what is your heating bill in winter? When I lived in Colorado, my houses didn’t even have AC. I did install a window mounted evap system that we’d yank out every winter.
But my natural gas bill jumped in winter for heat.
Here in PHX, the elec bill goes up in summer and down in winter, and I don’t have gas to the house.
My net seasonal change here is inverse but equal to colorado. There, util bills $50-100 per month higher in winter. Here $50-100 higher in summer.
IIRC our gas bill peaked at $180 last winter. This is a 3000 sq ft house with a 1000 sq ft unfinished basement.
So I would say that our average gas/electric bill for the year is about $130-140 per month. It was lower before natural gas prices spiked a few years ago.
Our previous house had a swamp cooler, and our average combined bill was around $80 (2000 sq ft house).
I think that my response might have gone into the 60 second black hole, so here goes again
I would say that our average combined gas/electric bill is around $130/month. There are months when its just over $200, but also some that are well under $100.
We had a swamp cooler in a previous house and the electric bill was even lower.
FWIW, I do know people with smaller, much older houses than ours who have much higher bills than we do (so much for the saw that older houses are always built better).
I live in Tampa in a house build in 1983 to the then best efficiency standards. The heat pump/ac unit was replaced in 1999 with a 13 seer unit. I am on levelized billing (TECO) and my monthly electric bill is $85.00. On average I use 30KW per day in the cooling season ( April through November) and 15KW per day in “winter.” I do not run the unit in winter—the house gets enough passive heating from the sun. At night it might drop into the low 60s and heat up to the low 70s in the daytime. Any cooler: that’s what sweaters are for.
Before I forget I have the thermostat set to 81°F.
Me too.
I finally found out what’s going on with an obviously abandoned house in my neighborhood by flat-out asking the guy who lives across the street from the place.
He said the owner, who paid diddly about fifteen years ago, had done cash-out refis until he owed $333,000 - last year’s market value. He quit his job to become a real estate appraiser “at the wrong time”, as my neighbor put it. Deep in debt and with no income he had a heart attack and racked up medial bills.
The bank took the house 3 months ago and just lets it sit and rot. It’s full of termites and rats and now the county is hitting the bank with big fines but still the bank does nothing. I wonder if it sits on the bank’s books as a $330,000 asset and that’s why they pay the fine and leave it alone.
Btw, I thought CDs would be paying less by now but World Savings is still paying 5.41% and Wachovia is suddenly paying over 5%. Interesting.
This is Pinellas County, FL.
RATS!!
Good grief.
Hey, these days a rat would be considered a viable tennant. You, nor Barney Frank, would not like to see all of these rats go homeless just because of ARM resets.
Besides, rats might be reincarnated congressmen.
That’s why they make rat traps so painful.
nah, politicians come back as cockroaches. Far more difficult to kill.
I took a drive around Poinciana, FL the other day and discovered many abandoned houses. Sure there were plenty of “for sales” and rentals, but there was a huge glut of abandoned houses with foot high grass in the front yards. These homes were not for sale or rent. In some areas there were clusters of them together.
Only in F el lay,
Can you watch your home deteriorate before your very eyes…
I suspect at this point in the real estate downturn sellers believe they can wait for a market recovery to list their empty houses.
I wonder how long it will be before the dirtbags realize that they can move into an empty out of state flipper wannabes house and live there rent free for months before anyone realizes.
It’s been done. I’m particularly impressed by the con-men who market these properties and demand rent up-front. I had a tenant a month ago who prepaid a year’s rent to one of these thieves.
I saw the same thing happen in metro San Diego in the 1990’s.
Hey Kaylaw,
Might be worth your while to alert the county medical office…rats are disease carriers, and once ensconsced in a neighborhood, they breed quickly and start foraging in widening circles.
If your county won’t send an exterminator, buy some of those big rat hotels they sell at Walmart or HD. This is unfortunately a real threat to your neighborhood’s health.
“I wonder if it sits on the bank’s books as a $330,000 asset and that’s why they pay the fine and leave it alone.”
I’d bet you’re correct!
This property needs to be sold to Freddie or Fannie as soon as the lobbyists get their way.
Are there any cute tables and chairs in there?
“Btw, I thought CDs would be paying less by now but World Savings is still paying 5.41% and Wachovia is suddenly paying over 5%. Interesting.”
IMO it’s because the rate that the banks are still CHARGING is very high, regardless of the FFR.
U.S. for sale to foreigners by Texas hold’em rules
“Under P3, the USA is up for sale,” a conference attendee told WND by telephone at the conclusion of the meeting. “Whatever the public now owns – roads, ports, waste management water systems, rail lines, public parking facilities, airports, even lotteries and sports stadiums – are up for grabs and the only requirement is that the foreigners have the cash.”
http://www.worldnetdaily.com:80/news/article.asp?ARTICLE_ID=57857
The new governor of Massachusetts is looking at the same thing. Privatizing public infrastructure, namely roads and bridges. There isn’t enough money to fix and maintain them. This is a clever political dodge.
Our roads and bridges are literally crumbling here. Rather be seen as the bad guy who has to raise taxes to fix this, sell or lease the roads for a quick upfront treasury windfall. Then let the corporation hike tolls to the moon. Plausible deniability. Even better, structure the deal so that the company will be immune from liability the next time a tunnel collapses and kills a motorist (which happened here last year) or a manhole cover flies through a windshield and paralyzes a commuter (which happened last month). Everyone wins! There will be a yearly State House junket to Cancun paid for by the company.
Massive middle class tax hikes are coming. Whether by state or by corporation, they are coming.
everyone wins for sure - a lot of vital infrastucture in my country (NL) is owned by US investors (selling out public property and infrastructure was all the rage in the nineties). It has been steady downhill since with reliability, service and performance.
Scary stuff - Maybe the toughetst political/financial/moral decison we’ll have to make in the next decade is whether we want to do the hard work of putting America back together, or sell our country to the highest bidder and kiss what’s left of our nation and its freedoms goodbye.
We ought to be ashamed of what we’ve frittered away in the name of lining a few lazy pockets. Been watching ‘the War’ on pbs over the last few nights — seems we’ve done a lot of spitting on their sacrifice in the last few years.
Don’t get too depressed. A phoenix will rise from the ashes…
A phoenix will rise from the ashes…
I hope you are right because more and more it is tough to figure out what is so great about being an American citizen.
Well alot of that had to do with funky tax shelters rather than actual return on investment. American Companies would buy public infrastructure, immediately lease it back to the local government, and then take a tax deduction on the depreciation of the asset. It was all the rage with with many public utilities here. Since local governments don’t PAY taxes, lease back arrangements allowed others to take deductions for depreciating assets that otherwise nobody would get an advantage from. Everybody won, except for all other taxpayers. It became such a big business that tax shelter companies started to look far afield to find assets to buy, lease, and depreciate. The IRS really cracked down on this sort of “abusive tax shelter,” a few years back.
yes, same story in Europe, except that the IRS does not object here as far as I know, as the owners are foreign corporations outside their jurisdiction.
Is this the same state that found a way to fund 24 Mil for highway sound barriers this year alone?
WND was shut out, but was the NY Times there?? Just wondering.
It’s really sad how government at all levels has become a corrupt game of influence-buying. Welfare payoffs to the poor to buy their votes. Tax breaks and favorable regulations for megacorps to buy campaign contributions. There is plenty of money in most state and municipal treasuries to build and maintain infrastructure but the politicians would rather focus on THEIR political infrastructure instead. There is a reason that John Adams said:
“Our constitution is made only for a moral and religious people. It is wholly inadequate to the government of any other.”
His insight was that control is necessary in any society. In Early America, standards of personal behavior were sufficiently high, that most problems were literally handled internally by self-control. The small remaining problems were mostly resolved through social pressure and local law enforcement. This left tremendous scope for personal liberty and the nation enjoyed the fruits of both freedom and order simultaneously.
Our nation’s moral and ethical collapse has led to increasing crime and corruption. Increasingly harsh measures are required to keep both in check and we are faced with the age-old dilemma: order and repression on the one hand or freedom and chaos on the other. Political corruption now threatens not just our finances but our sovreignty and our very lives as poorly maintained infrastructure begins to fail.
Homes of the Billionaires
what emptiness is being filled?
http://tinyurl.com/2da7s5
I lived in Rancho Palos Verdes for about 5 years, and on walks along the coast, you’d see goliathon houses with 8 rooms and 438 windows…
Grew up in Rolling Hills, 50’s-70. Coastal RPV/Lunada Bay was a joke then, as it is now. The first decent quake and they’ll be picking granite and stainless off the beach. (Portugese Bend, 1956 anyone? ) Read “Time and the Terraced Land.” (Most likely, a-insane, you already have….)
Read it years ago…
Great book~
Banks shunned the BoE yesterday and the markets rallied. Banks borrowed from the ECB earlier today and the markets are expected to rally. Anyone get the sense these markets are acting irrationally exuberant? Good news is bad news and bad news is good news. From Bloomberg:
The ECB loaned 3.9 billion euros ($5.5 billion) at its marginal rate of 5 percent yesterday, the most since October 2004, the Frankfurt-based central bank said in a daily borrowing-requirement statement today.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aANFlf9nerT8&refer=home
gold is looking for a new 30-year-or-so high today, guess that is also good news - just strange that they don’t mention it in the general press.
yesterday the Dutch TV news asked Trichet what he was going to do about the huge drop in Dutch consumer sentiment. Fortunately he did not offer a rate cut right away, but I guess these idiots keep asking until they get what they want, despite the fact that the Dutch home and stock market keep surging. If anything, the ECB needs to seriously raise rates to scare away the speculators.
After what happened to Northern Rock, UK banks are avoiding the BoE. Word leaked out about the identity of the emergency borrower and a bank run followed. They are using their subsidiaries on the continent to borrow Euros instead. The EU is unaccountable and undemocratic so there’s less chance of anyone discovering who is in big trouble unless they own up themselves.
All News Is Super - ANIS
Recession or Mid Cycle Slowdown?
http://www.stockmania.com/2007_09_27_archive.html
What gets me is the idea that a recession now constitutes some sort of economic ragnarok, not a regular occurance. It seems that many in Wall Street have bet that they have magicly suspended the business cycle and are unwilling to accept that they might be wrong.
Exactly! Recessions are not allowed anymore. No intermediate cycles to periodically cleanse the economy. Instead, we have to put it all off for one big bust.
It’s like not “allowing” forest fires in burn based ecosystems. Burn periodically in a controlled manner or wait for 100 years of material build up and watch the fires rage out of control.
Yep. –Short levees that impinge on the floodplain and serve to make the water go higher. Setting us up for an economic Katrina.
Well, they’ve put this one off so long and the imbalances have become so huge that it will be really bad. But that’s what you get for using tylenol to treat appendicitis.
So, part of the deal that ended the GM strike was a transfer of the healthcare for retirees from the company to the union to admnister. The company is going to make a giant one-time deposit to the union, and the union is then responsible for managing the assets and paying the healthcare.
So, is GM dumping overpriced CDOs and MBSs into this fund?
Hey union, here is $40 billion in assets… (that have a current market of $.70 on the $1 or less and likely to face mass defaults). It is your problem now!
From the Detroit News:
“Trust fund for retiree health care: GM would pay the union about 70 cents on the dollar to take over $50 billion in retiree health obligations. The GM infusion will go into a voluntary employees’ beneficiary association, or VEBA, that the UAW said will cover health care benefits for GM retirees and surviving spouses, now numbering 340,000, for the next 80 years.”
I took that to mean cash, but where they gonna get $35 billion??
i think it’s coming from the Big 3 .. Ford,GM and Chrysler
35 Billion aint that much. The California Public Employees pension fund has about $250 billion to play with.
Recently an Inquirer article stated the return on the state of PA’s employee pension fund posting a 22 per cent return for last year.
I think I’m going to get an $8/hr a job with the state just to secure my retirement.
I think that sentence was garbled but I am confident that me talk pretty someday.
Don’t be too hard on yourself, you’re all you’ve got
That’s OK. It’s what we’ve come to expect from our government workers…
Just joking.
CNN says it will be “professionally managed”. Whatever/whoever that means.
means the UAW mafioso will have a harder time skimming..
Probably by the same dirtbags that brought us SIV’s and CDO’s.
It means you’re paying the managers so they’ve lost their amatur status.
Why would you assume cash? I’d assume it would be MBS and CDOs. So, the union is getting 70% of the amount needed to meet obligations, and that amount may be in assets with a greatly overstated value.
“and that amount may be in assets with a greatly overstated value.”
Yep may be. Housing is not the only sector or profession rampant with fraud.
GM has $22 billion in cash on the balance sheet. They can take a chunk of that plus contribute company stock. That would go a long way towards what they’ve promised but I’m not sure where the rest comes from. Maybe they can issue some bonds at a more favorable rate since the financials now look better?
Plan Uses Taxes to Fight Climate Change
Dingell says he hasn’t rule out such a so-called “cap-and-trade” system, either, but that at least for now he wants to float what he believes is a better idea. He will propose for discussion:
_A 50-cent-a-gallon tax on gasoline and jet fuel, phased in over five years, on top of existing taxes.
_A tax on carbon, at $50 a ton, released from burning coal, petroleum or natural gas.
_Phaseout of the interest tax deduction on home mortgages for homes over 3,000 square feet. Owners would keep most of the deduction for homes at the lower end of the scale, but it would be eliminated entirely for homes of 4,200 feet or more.
He estimates that would affect 10 percent of homeowners. He says “it’s only fair” to tax those who buy large suburban houses and create urban sprawl. Historic and farm houses would be exempted.
http://www.washingtonpost.com/wp-dyn/content/article/2007/09/26/AR2007092602127_pf.html
I guess everybody in Europe would LOVE to have a 50 ct-a-gallon gas tax
I agree about taxing jet fuel, it’s about time.
and regarding HMD: in the Netherlands (with the most favorable HMD system in the developed world) a proposal to make the HMD for homes over 1 million euro a little bit less attractive has been grounded by strong political opposition from the conservatives. The plan would make the tax advantage for the 40.000 or so richest homeowners a little bit smaller ( few hundred to maybe a thousand euros a year). Of course something that hits the financial elite is totally unacceptable …
Keep in mind that that’s on top of current gasoline taxes: 18.4¢per gallon Federal taxes, and State taxes that vary from 8¢ /gal in Alaska to 32.1¢ /gal in Wisconsin. I’m not sure what that averages out to when normalizd for population affected, or gallons sold. Complicated by the fact that the Federal part isn’t paid on gas for agricultural equipment not used on roads. (The tax goes to the Transportation Trust Fund for highway and mass transit improvements) I’d bet that it’s still lower than in most of Europe.
But saying that even if our taxes went up in the US they’d still be lower than in Europe is a non-starter here politicaly. The perception is that Europe is over-regulated and over-taxed and that’s WHY the US economy has historically had a better growth rate.
I guess everybody in Europe would LOVE to have a 50 ct-a-gallon gas tax I agree about taxing jet fuel, it’s about time.
Maybe in Europe where everything is close and trains are everywhere. Don’t try that in the US.
Then again, coporate America has pretty much cut back on business travel (except for people in sales). Its not unusual now to work on “geographically diverse” teams for years with people you have never met face to face. We now have a special room at the office that has several hi-def TV’s that we can use for some meetings. It beats talking to a crowd of disembodied voices over a conference call.
the trains in most of Europe are certainly better than in the US, but FAR, FAR worse than they were one generation ago. And don’t even start talking about other ways of public transport (mostly owned by foreign companies in my country), in many regions it is so bad that people act as if it no longer exists. Gotta have a car or move to another part of the country …
This is what global warming (or is it climate change now?) is really about. Lots of additional taxes to fund more unproductive bureaucrats and lots more control over our lives.
I don’t like McMansions and SUV’s either, but if someone wants to live that lifestyle they should be allowed to, without lectures from hypocrites who flit around the world in private jets.
It’s “climate change” because the GCMs predict that there will be greater fluctuations in localized climate (and the paleo-data are starting to support that thesis). Temperature is only one measure of climate (in econ speak, is that your deltas or gammas getting larger?). Think aridity, “storminess”, etc. So “global warming” doesn’t describe the whole problem and may even not occur in some places.
And it’s not about funding unproductive bureaucrats. At the end of the day, and without being too aggrandizing, it’s about our survival. We may not be evolved for thinking into the future (past one or two gens), but I think that we have to try lest the Earth shake us off like a bad cold to paraphrase George Carlin.
Friends of HBB and those who try to politicize climate on this board: Give this eco-stuff a rest, please. I realize that the discussion/argument track of least resistance is
McMansion >> high energy >> Inconvenient Truth >> Gore >> McMansion >> hypocrite
is tempting and possibly logical. Just try a little harder to get out of the partisan rut that “they” have put you in. Who gives a crap about Gore? Trust me. On any scientific blog, you “climate change deniers” would be the equivalent of real estate trolls on this board and perhaps upbraided worse than they are here.
In other news:
Am I screwed in my long SRS position? Apparently, I am an inverterate gambler as well as a climate change cheerleader.
MrBubble
“On any scientific blog, you ‘climate change deniers’ would be the equivalent of real estate trolls on this board and perhaps upbraided worse than they are here.”
having been called a troll recently on this board, i might as well bite. you can definitely include me in the ‘denier’ category. science moves forward by repeatable experimentation and ironclad evidence. all of the predictions of the warmistas are derived from notoriously inaccurate computer models.
and you are simply wrong in your assertion that most scientists have embraced the climate change/global warming hypothesis. they have simply been scared into silence.
and, as i’ve said somewhere above, the best science indicates that co2 is a lagging indicator and not a predictor of warming.
air, sea and land pollution? you bet!
overpopulation ? unquestionably!
serious resource depletion ? absolutely!
should we take serious measures to alleviate all of the above? without a doubt!
but anthropogenic climate change? miniscule, if any.
and, like it or not — nature bats last.
richard lindzen, the most eminent climate scientist at m.i.t. and reid bryson, the father of climatology at umich, are merely 2 of the thousands of respected and credentialed climate scientists who are extremely dubious of the climate change frenzy to which you obviously subscribe.
and the ipcc report was written by bureaucrats, cherry picking data to fit their ideological agenda, rather than meticulously reporting the full panoply of inconvenient data at hand provided by scientists.
it is precisely the implied threat to any doubter of being called a ‘troll’ that makes the panoramic claims of global warming hystericists so obnoxious.
and so suspect.
The models used for global warming (i.e., climate change) predictions look like they are an offshoot of the models used to value CDO’s, etc.
p.s. like lou, i am thoroughly disgusted by suvs, mcmansions, personal-watercraft-spewing, the oil-fueled, corn-syup-based, forced-fed,dumbed-down, debt-fueled-consumer crazed, environmentally insane society we’ve become.
but ‘global waming/climate change’ hysteria is more about controlling our lives than telling us the difficult truths that must be faced.
want some truth??? want to save the planet???
then let the die-off begin!
Dear Manhattanite,
I can assure you, I am neither a bureaucrat nor “scared into silence.” More to the point, the Official Position of many of our esteemed academic/scientific institutions and the overwhelming consensus of those of us actually doing the science may be at odds–depending upon where the financing originates.
That’s a nice way of saying, your “thousands” of credentialed scientists are um, (didacted.)
Just a hint; Fox may not be your most reliable network for anything other than moderately outrageous cartoon programs.
“the overwhelming consensus of those of us actually doing the science may be at odds–depending upon where the financing originates…”
yours is precisely the kind of smarmy, ad hominem, guilt-by-association attack which makes so many reputable scientists shudder.
i find it particularly interesting that another major climate change promoter — james hansen, of the noaa — was recently revealed to be funded in his successful pr campaign to promote the gw hysteria by george soros ($750,000) and theresa heinz kerry ($250,000).
http://www.ibdeditorials.com/IBDArticles.aspx?id=275526219598836
and here’s a report of 500 reputable scientists who disagree with the ‘consensus’ you find so compelling.
http://www.earthtimes.org/articles/show/news_press_release,176495.shtml
best i can glean, climate science is still quite young, and there’s lots to be discovered.
as the science continues to change, i wonder if your politically expedient conclusions will be subject to change as well.
as far as fox news…? never heard of it!
test
MrBubble
No comments going through. My tin-foil hat is starting to sizzle. Is this blog controlled by the Hudson Institute, Discovery Institute or Scientologists? Ben, what am I doing wrong?
btw, rather than “didacted” (which you ain’t!), i’m sure you meant “redacted”, which is what you need to be!
“overwhelming consensus of those of us actually doing the science may be at odds–depending upon where the financing originates.”
the above, however, is a good point: these days, it is almost impossible to get funding for a study that does not purport to support the gw/cc bandwagon (although the warmistas would very much like us to think the opposite is true.
in fact, to butt up against the gw/cc is very likely to be a career-ending move.
so sad. eventually, i’m confident that science will prevail.
and, no mr. bubble: most climate deniers are quite comfortable with evolution — in species, and in scientific discovery as well.
have you never heard of “interglacial”? you should have — we’re approaching the end of one right now.
so i suggest — just to cover you a$$ — you get your snowshoes re-strung while continuing to promote your feel-good global warming social agenda.
M’kay.
You’re getting dangerously close to “you’re a poo-poo head” territory with ahansen.
Just check back in a while to see if my posts are up and then answer them. As a preview, I aver that the Hudson Institute is allied with DuPont, Monsanto, and a host of uglies as well as the Discovery Institute of Intelligent Design infamy and that I can easily argue against any and all points that are made in that piece of pablum. For example, it’s quite trivial to de-bunk the “solar isolation” argument.
No need for an ad hominem attack on my part. We can take it off-line if you’d like, so as not to waste anyone else’s time.
“Chuck Norris doesn’t believe in climate change. Climate change believes in Chuck Norris.”
Oooh. I missed this shot across my bow:
“and, no mr. bubble: most climate deniers are quite comfortable with evolution — in species, and in scientific discovery as well. have you never heard of “interglacial”? you should have — we’re approaching the end of one right now.”
Actually, I study paleo-climatology, so yeah, I’m a little familiar with the term “interglacial”. LOL. Would you like to discuss CO2 levels throughout the Cenozoic? Please thrill me with your acumen, Clarise.
MrBubble
“btw, rather than “didacted” (which you ain’t!), i’m sure you meant “redacted”, which is what you need to be!”
My Goodness! I go away for a few minutes….
Interesting brainfart on my part there…I shall consider its implications. Followed by an excellent piece of pundantry!
Fortunately, your writing surpasses your analysis.
So. How do you think the Chicago Climate Exchange will impact the fourex
vis a vis the housing market?
In other news:
Am I screwed in my long SRS position? Apparently, I am an inverterate gambler as well as a climate change cheerleader.
MrBubble
You know MrBubble, I was thinking the exact same thing. My SRS position has been taking an a$$whipping, even yesterday when the homebuilders reported that they are on the highway to hell at twice the speed limit. So I tried to research the underlying securities for SRS. It is a derivative that shorts the DJ US Real Estate Index. I tried to get the index components on the DJ Indexes website. I didn’t find the components, but did find that the index consists of commercial REITs. So you are really shorting the commercial rental market, not the residential housing market. Commercial REITs don’t give a flying fart what DR Horton is doing, so you don’t see SRS move as you might expect on bad housing news. I’ll let someone else smarter than me comment on the prospects for commercial REITs.
And all the global warming people can come up with is “solutions” like: more taxes on the middle class and poor (while the rich strut about in their limos and fly to “Save the Earth” benefits), hand-outs to poor nations (who will spend them on guns to better kill each other), and a complete pass to the industrializing nations, like China, who don’t give a dang about the Earth while living amid their waste.
I am all in favor of reduced consumption, but if it results in unelected paper-pushers rationing my energy, telling me what I and cannot buy, and taxing me into poverty while they ride around in fancy cars and live in big homes, forget it!
Global warming may be true, and certainly humanity can screw up the planet, but I have ZERO faith in humanity to fix the problem. This is from the same species that brought us “liar loans,’ CDO’s, and other mortgage crap. Why should I assume that humans will do any better at fixing the environment - a “cause” that will grant them an order of magnitude more power and wealth than the housing market - after they’ve managed to turn a basic need such as housing into a corrupt circus?
I’ll conserve, certainly, but I’ll also knock the lights out of any environut who shows up in his SUV to tell me that I am not allowed to drive my little car any more or heat my house.
This is what global warming (or is it climate change now?) is really about. Lots of additional taxes to fund more unproductive bureaucrats and lots more control over our lives.
And big biz is getting ready to jump on that gravy train too. “Hand over your money, and we will save the world”.
Anyway, I think that there are other good reasons to reduce emissions, such as reduced air pollution and making the oil deposits last longer. I buy 600 kWh of wind generated electricity every month.
Yikes, Dingell is trying to kill any GHG legislation to support his main constituents (Ford and GM).
Dingell is a Dingbat.
$50/ton is hugely punitive and a gas tax would be of negligible benefit in reducing carbon emissions but would piss off Joe Sixpack.
The gas tax would be taxing the same carbon emissions twice.
Most practical policymakers start out at about $5/ton and move up to $30/ton by 2020 or so.
$30/ton is a sweet spot with regard to climate policy.
The McMansion tax is a GREAT idea for more than carbon emissions reasons.
The reason these rules won’t be “political poison” to him is ’cause he isn’t going to be around much longer.
test
More class warfare election year stunts.
If the goal is to discourage McMansions, start off buy eliminating the mortgage subsidy. No reason renters in California (or owners in most of the country) should be subsidizing homoaners in bubble zones or idiots with stucco and plywood monstrosities.
don’t worry, just look how these energy conservation regulations work out in the Netherlands: if you buy a Porsche Cayenne, you get a 10K euro grant from the government because it is supposed to be a little bit more efficient than other cars in its class. And I don’t think these buyers use the 10K to buy a really efficient car, they might as well spend it on some extra fuel.
We also have a new law (effective next year), that will require homeowners to provide an energy efficiency report for their home when they want to sell it. So from next year everyone can see that a Dutch McMansion is bad for the wallet (energye cost) and the environment. I don’t think the people who buy these homes will be even a tiny bit interested in this information. But of course it is great news for RE agents and their friends that need more business, the reports are mandatory and will cost at least a few hundred euro (the report itself is pretty useless, based on a computer model and some measuring of dimensions of the home). Maybe all those unemployed US realtors can lobby for something similar?
Kern Kounty Building Dept, (of all places!) required energy efficiency calcs for the home I built in 1999. I believe the California Uniform Building Code requires these for any structure built at over 4000′ elevation. (To the extent that when I added two more windows to the approved plans, I had to redo the engineering.)
Mortgage deduction makes houses more expensive!
It only benefits real estate agents and mortgage brokers, banks, Wall Street.
Get rid of it!
sure, that’s why the Netherlands has about the highest home prices in the world relative to average income. If you include this HMD, the Netherlands spends more on housing subsidies than on education and healthcare. I don’t think it will change until after a housing crash, because all of the financial and political elite benefits hugely from this system.
Was talking yesterday, with one of the bigger retail dealers in Gold bullion, in L.A.
This week has been a rather one sided affair…
My buddy figures he sold $250k this week over the counter, and bought less than $25k over the counter.
10 to 1 ratio
Won’t be long before the Gold Window slams shut…
The window will never slam shut - it’ll just cost more to buy from.
Up big today that’s for sure - for the reason you mention - more being bought than sold (from a consumer standpoint).
The window in this country will shut soon…
Here’s why.
There are about a dozen big bullion firms in this country, and they feed hundreds of smaller companies, on a wholesale basis.
Inventories of mellow yellow are dwindling quickly, and a 10 to 1 ratio of buyers to sellers is downright freaky, financially.
It’s the polar opposite of what’s happening in real estate…
“It’s the polar opposite of what’s happening in real estate…”
aladinsane you’re beginning to sound like Sir Greenspent:
You’ve created an… “Irrational Conundrum”
Matter pulls away from anti-matter
Don’t count on it. Worldwide gold production will rise with rising gold prices.
“Gold production”? I don’t think is such a thing amigo.
Gold mining can be increased - but it’s hugely expensive, hindered by land availability, and has long turnaround time to really increase mining. Also mined gold is but a miniscule portion of available gold. It’s not like iPods where a single year’s production can nearly double the current amount of iPods in the world.
Worldwide mining of gold is about 50 million troy oz per year, which is about .01% (1/100th of 1 percent) of the 4.5 trillion oz already mined and held.
“Worldwide mining of gold is about 50 million troy oz per year, which is about .01% (1/100th of 1 percent) of the 4.5 trillion oz already mined and held.”
That is both wrong AND makes no sense. If the yearly production is 0.01 percent of the supply, then you would be arguing that the present production level has been steady over the last 10,000 years (!) In fact, annual production is quite high due to technological advances (it is just a bit less than the historical peak production in 2001). Gold production is about 2500 metric tons per year, and the total accumulated ‘hoard’ is about 145,000 tons.
http://www.goldsheetlinks.com/production2.htm
http://en.wikipedia.org/wiki/Gold
And I expect supply to increase with the high gold prices (it dropped after 2001 due to lack of interest in prospecting due to lower prices). Heck, I might even dust off my mining skills and give it a go…
Thanks AKRon,
Hey I learned something new today…some knucklehead created “Inflation” in Egypt in 1324…I’ll be danged…
From the wikipedia gold link:
“..he was reportedly accompanied by a caravan that included thousands of people and nearly a hundred camels, giving away so much gold that it took over a decade for the economy across North Africa to recover, due to the rapid inflation that it initiated.”
Interesting. I read that a similar inflation occurred when the Spanish brought tons of gold back from South America. And when Caligula started secretly mixing silver into the Roman gold coins, they also saw prices rise for the first time in centuries.
the Roman story is actually more similar to what is happening in the US now; the empire was overspending and overstretching. They started with clipping the coins, then mixing in silver and in the end there was hardly any precious metal left in the coins. One should also read what happened with the silver mines. One of the results was that towards the end of the inflationary period, Roman centurions who received their wages in fixed coin (probably 1 denarius for a day of service) noticed a dramatic reduction of their spending power overseas, and many of them started to work for the local rulers that they were supposed to be fighting.
His name was Mansa Mussa (mansa means “king” in West Africa, and is also the root of “massa” which has a dual etymology from Latin magister via English master). There are depictions of him in Medieval European documents, such was his fame.
This is really cool, because I’ve never heard his famous journey brought up in an economic context, but it makes sense.
“Gold mining can be increased - but it’s hugely expensive,”
You’re right. A pick axe and a shovel are hideously expensive.
I’ve gone panning for gold in the mother lode of the Golden State many times…
You need 7 items, to be successful, as it’s doubtful you’ll find much, as the rivers where the deposits are, have been gone over tens of thousands of times since 1849.
A miner’s pan and a 6 pack of beer.
They cannot even keep up with their predictions. Gold prices have been so low for so long that it will take many years to get production up and even then it will not keep up with demand.
Won’t be long before the Gold Window slams shut…
umm… 1934? Because in my book, a window that only open for a few, special customers (foreign governments) isn’t open. We have no fiction of gold backing, and make no mistake, in 1933 it WAS a fiction. Without enough gold to back the currency in circulation, the government had little choice but to cease the free exchange of dollars for gold at a fixed rate. Since we have a fiat currency the Gov has little reason to restrict the ownership of gold, it’s market price doesn’t affect the money supply.
There are at least $50 for every $1 worth of gold available, on the worldwide market…
The fat lady isn’t going to fit in a size 1 dress
When she gets to a size 12, send her my way. Yeah, I like ‘em big. What’s it to you?
PS: Tell her to bring the Au too. Heh
Anyone catch Cisneros on CNBC singing the praises of Countrywide? Disgusting. He parrotted excately the leatherette gut sacks talking points, Country wide only hurt by credit crunch, they are saintlike helping people get homes, etc. Guess the Federal Government is now officially supporting this loan shark.
kemp is a housing commie too- CFC does only good things , eh comrade”?
OK it’s official:
The Man on the Street has decided it is a Buyer’s Market. How do I know? Last night, my roommate, who is my filter to what the MSM is spewing, advised me that “Now is the time to buy because it’s a buyers’ market.”
All I could see reverberating in my head was that Eichorn Pinnacle chart from yesterday’s bits bucket. I’ve been trying to come to terms with the reality that unless I find a seller who accepts a deep discount, I may have to wait a year or two before buying a home. Yesterday’s chart leads me to believe the timeframe is even a little longer.
What could I say to my roommate? I wanted to shout: ARE YOU KIDDING HAVE YOU SEEN THE EICHORN PINNACLE CHART? But I managed to edit myself and mumbled something about not being ready for the commitment of owning a house.
All I can say with certainty is that Oprah or someone on The View must have opined that it is now time for the poor renting fools of America to take advantage of the current Buyer’s Market.
I blame everything on Yosemite…
Don’t worry, they won’t be able to get a mortgage.
From KB Home’s Q3 report, emphasis added:
The Company’s construction business generated an operating loss of $766.9 million in the 2007 third quarter, a decrease of $959.0 million from operating income of $192.1 million in last year’s third quarter due to losses from both homebuilding operations and land sales. The operating loss from homebuilding was primarily due to pretax, non-cash charges of $639.0 million for inventory impairments and land option contract abandonments, $34.0 million for impairments related to future land losses, and $107.9 million for goodwill impairment, as well as the greater use of price concessions and sales incentives to meet competition. The inventory-related charges resulted in the Company’s housing gross margin falling to a negative 28.0% in the third quarter of 2007 from 21.1% in the year earlier quarter. Excluding inventory impairment and abandonment charges ($639.0 million in 2007 and $49.2 million in 2006), the Company’s third quarter housing gross margin would have been 13.9% in 2007 and 23.3% in 2006. The Company recorded a loss on land sales of $34.9 million in the third quarter of 2007, including impairment charges related to planned future land sales. The Company’s equity in pretax loss of unconsolidated joint ventures in the quarter totaled $21.0 million, including an impairment charge of $17.1 million.
http://tinyurl.com/39t7e3
More from the report:
The Company’s 2007 third-quarter cancellation rate of 50% was lower than the 60% rate in the prior year third quarter but higher than the 34% rate in the 2007 second quarter, reflecting the challenged housing and credit environment.
More, without asset sale, Q3 loss was (6.19) per share:
Loss from continuing operations was (6.19) per share
Gain from one time asset sale was 5.73 per share
Reported Q3 loss (0.46) per share
KB did so much better, selling toys
More importantly though is this statement, for long-term implications at least:
“the Company’s third quarter housing gross margin would have been 13.9% in 2007 and 23.3% in 2006.”
That’s a *huge* drop in margins, not affected by “one time events”. As home prices continue downwards this number will only get worse. If it goes negative - even if KB removes all land from their books they still will have to change their business model somehow in order to stay in business.
It’s looking more and more like *lots* of homebuilders are going to be going bankrupt within the next 5 years.
Read it again. The reality is negative 28 pct margin.
I did read it.
“The operating loss from homebuilding was primarily due to pretax, non-cash charges of $639.0 million for inventory impairments… ”
Inventory impairments are non-recurring expenses, thus the statement that while margins for the quarter were negative 28%, they would have been 13.9% without the non-recurring charges.
Obviously you can’t just ignore one-time inventory impairment charges, as they provide a big hit on the bottom line. My point is that that’s a one-time hit - something that a strong company can survive. A strong company however *cannot* survive ongoing losses from continuing operations, unless something changes. And while KB isn’t in that territory of ongoing losses yet - they’re being pushed in that direction by lower home prices. In other words even if sales magically picked up to normal levels, they’re still headed for deep doo-doo.
You make a good point and clearly we reach the same conclusion. However, there is a recurrence of non-recurrent charges, albeit, for differing amounts. This is what the company said last quarter, Q2:
The Company’s construction business generated an operating loss of $263.0 million in the second quarter of 2007, a decrease of $556.5 million from operating income of $293.5 million in the second quarter of 2006, reflecting losses from both homebuilding operations and land sales. The Company’s 2007 second-quarter housing gross margin fell to -3.9% from 25.6% in the year-earlier period, largely the result of pretax, non-cash charges of $244.5 million for inventory impairments and land option contract abandonments during the quarter, and greater use of price concessions and sales incentives to meet competition. Excluding the non-cash charges, the Company’s second-quarter housing gross margin would have been 14.9%.
http://tinyurl.com/ytbr5o
ah hell. these wars of imperialism are costing us more than anything else. with millions displaces hundreds of thousands killed and our own 3000 plus killed countless maimed and traumatized. that money, those multi billions couldve given us all health care, and we could have housed the indigent and mentally ill to boot and lifted our kids out of poverty. commie? bs. its called progress, peaceful coexistence and taking care of our fellow man.
“…these wars of imperialism are costing us more than anything else”
Yes, I see what your saying…the current US taxpayers & future US taxpayers $$$$$$$$$$$$$$$$$$ money could have been utilized… in America… on Americans… but you must remember why our great “decider” started the legendary war in Iraq…”He tried to kill my daddy!”
See what happens when you pick a fight with a fanatic zealot militant gang dressed in 15th century rags
Pentagon to US taxpayers…we need more F18’s and Tanks…oh, and some crates of spare parts…these sandal wearing, fungus toed, terrorist are quite tricky to subdue and convert…it’s like… they really don’t want a Starbucks in Baghdad.
Anyone know where that banner “Mission Accomplished” is? I could sure use for the Doo Dah Parade this year.
blah blah blah. why don’t you go smoke some more dope and bayonette a pregnant woman?
“…bayonette a pregnant woman” ?
chilidoggg,
Did you sleep with Ann Coulter last night?…or did you just get up on the wrong side of bed this morning.
jeesh. instead of spirited debate resort to name calling. thats the way of the lunkheads like o’reilly and limbaugh. weak.
Saw some news show in passing saying that Saddam was willing to retire for $1 billion. Wondering it if would have been a good deal
The Company recorded a loss on land sales of $34.9 million in the third quarter of 2007, including impairment charges related to planned future land sales.
WTF?? Doesn’t everyone realize they’re not making anymore land!
That loss in land on land sales number will increase exponentially over the next 2 years.
Has anyone read or seen a review of the following? Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics
Who’s the author, and do you have any links. Thanks.
William Bonner and Lila Rajiva. Thanks
Also, Amazon does have some reviews but I am looking for something a little more critical.
http://www.amazon.com/gp/product/0470112328/102-4271854-9661739?ie=UTF8&tag=dailyreckonin-20&linkCode=xm2&camp=1789&creativeASIN=0470112328
Something a little more critical? Wait for your local library to get a copy. This book is probably just a thinly veiled advertisement for Bill Bonner’s newsletter.
Bill Bonner is a permabear. He is also the publisher of a number of other newletters most of which are also permanently bearish. By permanently bearish, I mean that these guys missed the whole stock market thing from 1973 to 2007. Idiots.
some reviews: http://www.amazon.com/Mobs-Messiahs-Markets-Surviving-Spectacle/dp/0470112328
I recently hired a guy who moved to South Florida from Connecticut. He was going to buy a place, but I talked him to renting, which wasn’t real tough after showing him the NYT buy versus rent calculator.
So, he started to look for a rental home. After, a brief search, he settled on a nice SFH in Coral Springs for $1,600 a month. He signed a lease and gave the owner a check for first, last, and security. Yesterday, he told me about the transaction and I asked whether he checked to make sure that the owner was in trouble financially. He hadn’t. So I showed him how to look up the owner in the County Clerk’s website. Sure enough, a foreclosure proceeding had been filed on the owner on September 18th.
Luckily, my employee had time to put a stop payment on the check.
I’ve seen many talk about situations like this on these boards. However, this is the first time where I have seen an owner that was actually had actual foreclosure proceeding ongoing while he was seeking a renter. I imagine this same owner is currently looking for another sucker for that he can bilk out of first, last, and security right before he loses his home to the bank.
On a side note, this owner pulled around $300,000 out the home through refinancing and HELOCs between 2004 and 2006. I really wish there was some sort of criminal action that could be taken against sc*mbags like this.
Great story, and another great success for this blog. You should hint to the employee that he should throw a few dollars at this site.
we have one in foreclosure listed for rent around the corner, what kills me is that a realtor is handling the rental listing, I feel like leaving a note on the door to warn prospective tenants away.
I would file a complaint against the Realtor with the RE Commission. Here’s their listing for Florida:
http://www.myflorida.com/dbpr/re/complaint.html
Heck, if you post the listing information, I’ll do it.
If you see someone over there, maybe wander over and tell them yourself. That would freak the realtor out and be good for a laugh.
Do it! Leave that note. Really. Staple it down good, so it won’t blow away.
A nice, pink, official looking “notice of forclosure action” would be good.
Gatorfan,
You’re a great boss.
will some POS lender gave him the money, tough sh*t.
Short term top in gold? LOL
http://dallas.craigslist.org/wan/433439112.html
lol…”unwanted” gold.
More Chuckles from Mark Gilbert:
Sept. 27 (Bloomberg) — A famous series of jokes uses the actor Chuck Norris, martial artist and star of “Walker, Texas Ranger,” as a paragon of masculinity and omnipotence. “Guns don’t kill people, Chuck Norris kills people,” goes one. “Chuck Norris doesn’t get wet, water gets Chuck Norris,” goes another.
Similar thinking can be applied to the current state of financial markets. Here, then, is the world of money recast in Chuck Norris terms.
Chuck Norris doesn’t borrow at the Fed’s discount window. Chuck Norris LENDS at the Fed’s discount window.
Chuck Norris charges the Bank of England a penalty rate for borrowing. And guarantees its deposits.
Chuck Norris doesn’t mark-to-market. The market marks to Chuck Norris.
http://www.bloomberg.com/apps/news?pid=20601039&sid=aLepjRCRQ3go&refer=home
thats just funny
“Chuck Norris doesn’t buy gold to hedge against inflation. Gold buys Chuck Norris to hedge against inflation.”
Fantastic
I heard from a little bird that Bear Stearns is thinking of requiring all employees to eat Buffett lunches, in trying to lure somebody to their cause.
For those who were curious as to which top 20 builder I work for, it isn’t Centex. I’ll tell all in the near future when I transition to a recession-proof field of work.
Ah - so you’ll be working for the Fed soon. Congrats.
Maybe my millionaire brother will hire you…can you do corporate taxes?
There nothing like a federal seizure law to motivate the tax man to come a knocking when the economy is a rocking.
my bail out plan:
pass a law to reset all the poor little ole me FBs FICO scores to whatever their score was in 2001.
for the specuvators and heloc spenders…F’em.
Just reading the WSJ this morning and noticed an article about the a foreclosure tax forgivness; ie. no tax bill for those who have debt forgiven.
Anyone else see this? This a done deal, or another one of those GREAT ideas out there to help the poor FB.
As has been mentioned before: All such ideas would cause a great shifting of W-2 income to loan-forgiveness income. Exec pay would never be taxed, because it would come in the form of a mortgage from the company, which was later forgiven.
“Just reading the WSJ this morning and noticed an article about the a foreclosure tax forgivness; ie. no tax bill for those who have debt forgiven.”
I would think this would encourage foreclosures and short sales. Hey, why worry if you’re a FB and thanks to Congress you won’t get stuck paying tax on a few hundred grand that WAMU decided “to forgive.”
Congress may think they’ve “helped”, but I think they’ve removed an important psychological and financial barrier…FB’s can now just throw up their hands and walk away.
will speed up the decline…less likely to get a Japan effect here then.
Northern Virginia inventory - after tailing off some this year (not reaching the same peak as last summer), inventory has been higher the last few months, and will be again hitting the seasonally-adjusted record soon - within the next day or two it looks like. They haven’t been going down in the fall at all like normal - instead slightly increasing. I’m sure the high interest rate on jumbo loans is a significant factor.
http://tinyurl.com/249l7m
Anyone noticing this in other areas?
Take a look at this poor woman.
http://washingtondc.craigslist.org/nva/rfs/432643400.html
Single mother of 2 buying a $700K+ house. What sense does this make?
A similar home is sold at 100K less than her asking. I guess her lender or lenders will face more difficult situation in the coming future.
Just take a rental before it all hits your credit report, drop the bank some jingle mail and call it a day. Give the bank the deed in lieu (DIL) and let them absorb the 100k+ loss. No one will nor should catch a knife for someone else just so they can keep their credit in tact, no matter how compelling the circumstances, i.e. you made your bed, now lay in it.
She claims that it can easily be rented. So- rent it. Oh, maybe she forgot to mention that this easy to secure rent won’t come close to covering the carry costs.
Anyone catch the Ryland quarter report? It should have been released yesterday but I cant find it anywhere. Guess have to wait for the call today.
Who said charts don’t work?
https://image.minyanville.com/assets/FCK_Aug2007/File/lance927.png
But I am going to try a dollar long with the break down of the triple bottom.
ECB about to cut, jump the dollar rally.
I’m in. There’s nothing that thrills me more than a false breakout or breakdown.
“break down of the triple bottom.”
What does this mean??
Breakdown to new lows. If you look at that chart, there’s a rather uneven triple bottom. Usually a breakdown of one of those is “bad” but a lot of times they’re stop runs.
doesn’t she sound sexy when talking technical analysis ?
Here’s one where the triple bottom held and see how it took off after that
http://stockcharts.com/h-sc/ui?s=pmcs
I think so, too, and I’m even a girl.
Yeah, but does she have any single girlfriends who can do that???
It’s true. TX is hot. In Manhattan, I see hundreds of beautiful women every day, but when I see one reading The Economist or a science magazine I can’t take my eyes off them.
NEW YORK, Sept 27 (Reuters) - The U.S. Federal Reserve said on Thursday it added temporary reserves to the banking system through 7-day repurchase agreements, 4-day repurchase agreements and overnight repurchase agreements.
Earlier on Thursday the Fed undertook a 14-day repurchase agreement.
Federal funds, the benchmark overnight lending rate to banks, last traded at 5.063 percent, above the Fed’s targeted rate of 4.75 percent.
MULTI -TASKING IS IMPORTANT
NEW YORK, Sept 27 (Reuters) - The U.S. Federal Reserve said on Thursday it added $5 billion of temporary reserves to the banking system through overnight repurchase agreements.
The Fed said the collateral accepted on the overnight repurchase was made up of $588 million of agencies and $4.412 billion of mortgage-backed securities. A total of $48.75 billion in bids were submitted for the overnight repurchase.
5 rolled on 50 BILLLION REQUEST
boys and girls, who is holding bag?
Can you explain, please??
parties are holding debt, that is not, cannot, and wont be rolled over (the issuance of new debt replacing the old)……this is pain of the highest order, technical insovlencey.
I am of the opinion at this point in time, the leverage that is not rolling over is the foundation of the derivatives market.
TORONTO, Sept 27 (Reuters) - Seeking to avoid a “meltdown” or a “firesale” of assets, a committee of investors holding about C$35 billion worth of Canadian asset backed commercial paper wants to extend a 60-day interim restructuring deadline that comes up next month.
“What we’re trying to do is avoid a meltdown, which would not be in the interests of any of the investors,” lawyer Purdy Crawford said during a conference call on Thursday.
———————————–
this is the market…..waiting for the rate cuts aint gonna help
Just heard they did a second action for $38 billion. Largest action since Aug 10.
Good thing that interest rate cut fixed the credit markets.
We are back to DEFCON 1.
your fired. and the bank is bankrupt
Just a reminder that $24B was a rollover and it may be that all $38B was rollover.
OK, I have a question and I’d like some opinions and the “regulars” here seem like a very financial literate crowd and I’d like some of their opinions.
I’ve read that others have cashed out their 401(k)s for various reasons on this board and I’m contemplating doing it for the following reasons:
1. Credit Card Debt pay off (optional student loan pay off only leaving us with Mort.)
2. Establishment of emergency savings
3. Boost “regular” savings
Even after tabulating that I would get about $0.60 on the $1 for what I pull out I can do all the above without a problem. In the interest of not sounding like I’m robbing Peter to pay Paul I did some math and with my being 30, I could still put a way a decent amount for retirement. The problem I have that doing something like this flies in the face of everything I’ve ever learned about retirement planning but at the same time I see a lot of big pluses to doing it this early in my life. To those of you here who have done it, why did you do it? What big problems did you not foresee? To those of you who say “No bad idea man”, I’m really leaning towards not doing it but at the same time I see some immediate gains and also see the potential to put more away for savings/retirment.
I’ve seen a big storm on the horizon and it only seems to be getting closer. I found this blog after following a link on Slashdot and seeing the hard numbers it has presented has only backed up what I’ve been thinking these past couple of years. My wife and I have been working on establishing the above but it’s taking time and will continue to take more time. I really don’t want to get caught holding a bag when the storm finally arrives. Thoughts? Opinions?
I cashed out my 401k for several reasons:
1) If the dollar crashes between now and 30 years from now (when you retire) then your 401k will be worthless anyway.
2) It is very likely that the dollar will become worthless over that time
3) The financial elite who “manage” these funds are more or less sheep who “won’t get fired for buying IBM”, or in this case MBS.
4) Who is to say that the financial turmoil heading our way won’t change the rules for 401k’s?
5) I hate government manipulation / regulation of the market (which is what 401k’s are). You trade financial freedom for tax breaks. Pay your taxes/gains today and enjoy financial freedom.
6) Retirement is a false entitlement that has manifest since the foundation of social security.
Bottom line is that those on this blog are many months ahead of the “managers” of these funds who have to wait until it is too late and will get stuck in the exit with everyone else.
To be fair, I only had 7K in my 401k and am only 25 years old. I only had a 401k because of the 100% matching on my contributions while I worked at Raytheon for a little over a year. So after paying the penalty I still came out ahead.
My dad on the other hand is just 5 years from retirement and would take a much bigger hit to cash out now. So instead he arranged funds in his 401k to avoid MBS and other risky areas. Sadly there not much that is safe these days except maybe gold/silver or other tangible or income producing assets.
No! don’t do that! By “cashing out” means we moved out of equity positions into cash positions in 401K–the tax benefits are still substantial.
That I’ve already done. Did that right after the DOW hit 14k. But the more I read the more I want to put a tinfoil hat on and hide in my cellar. I just really see tons of advantages to both right now.
As I said, I’m leaning towards just leaving it as it is. Just looking for some other opinions as well.
I don’t understand what you’d do with the money that you can’t do with a 401k? just do a self-directed 401k if necessary.
The tax hit now translates to a direct percentage loss of the eventual nest egg. So if your 10K grew to 1M (nominal), then by removing it now it will grow to 600K. In both cases you took the hit on inflation over time.
Why exactly would you remove it from tax-free status?
So you can sell short.
Reason 1 makes a tiny bit of sense if the credit card debt is carrying a ridiculous rate, but you can probably do that with a loan from the 401k rather than a penalty distribution. As far as savings - forget it. If you have a real emergency, you can probably qualify for a penalty free withdrawal when you need it.
Thanks for the input. Was wondering what some other thoughts were on this type of transaction.
I’ve gone from 90% to 100% sure I’m not going to do this. Was one of those random thoughts in the shower that sometimes have to lead to wonderful results. Always good to know options
Every situation is different for every person, of course. I cashed out mine because:
1. I saw better long term prospects in physical gold and silver, and in silver stocks, than anything in the prospectus of the “plans” available.
2. I see baby boomers retiring en masse, and when mandatory withdrawal age kicks in (2016) I can envision more net sellers than buyers ~ which drives the prices of securities down.
3. Who gives a crap about tax “benefits” now? They are not breaks, they are really just deferred. And, if you save a ton (as my brother in law does), and wait until the last minute to start drawing, you might push yourself into a higher tax bracket if you’re not careful.
4. Having a high interest revolving line (credit card) that can jump it’s rate at the drop of a hat, is dangerous, and if you want to cash out to pay that off, you’d better be sure that you or your wife are not just going to rack up the balances again.
5. My company went with another 401k management company, and there was a “blackout” timeframe, that I was not comfortable with.
6. Most likely, each time you change a job, you’ll pay a transaction fee to move from one 401k to another.
7. There are more mutual funds than there are publicly traded companies, and these are the darlings of many 401k’s.
8. I didn’t want to take transaction fees up the wazoo. Regardless of how much “control” you think you have over your 401k money, you really don’t. The Bear Stearns hedge fund investors probably thought their money was safe, and that they could withdraw it at any time. . .
9. And that leads me to - Having a 401k does not guarantee you a positive return on your money. My coworker who came here earlier this year, had her 401k balance DROP before she switched it over, as they had made bad investments.
10. I hate the idea of a company match, because it takes time to be vested, and it ties you to a company you may hate working for. I’d rather enjoy the freedom. My dad worked for the railroad for over 30 years, and he said he wouldn’t retire until he was 67, because the railroad pension would not pay for my mom’s health insurance until she turned 60. So, though this is not exactly 401k related, it shows how you will stick it out longer at a job you absolutely hate, to get “what your’re entitled to”.
11. I can sleep at night knowing exactly where my money is. I’m a control freak.
the answer to the question of “should I cash out my 401k?”
is not to be had on this blog, a better question is “Why would a person who is intersted about the housing bubble be interested in opinions of HBB’s”
the answer to that question my friend is a known unknown. The known unknowns are defined here as: ” market risk”.
So the question really is” Should I sell my market risk based on current available data?”
Yesterday, landlord told me that people who visit/vacation/buy in Park City are not of the kind who would be affected by an economic downturn. Seriously.
I’ve heard this talk elsewhere. It will be funny to see what happens to these people when the dollar crashes and prices rise substantially. No one is immune from the falling dollar.
“No one is immune from the falling dollar.”
True,…but can you think of a select group…whose steak will not get any thinner…like for… the rest of their lives?
What’s funny is that, when you say Park City, I can’t help but think that there are several Park City’s in the U.S. but it doesn’t really matter because real-estate is “NOT” local. Park City, Utah definitely fits the inaccurate picture your landlord paints.
How to read your last sentence: Are you now saying that he is right ?? (yes indeed we are talking PC in ‘Utauh’ here). Number of listings up 20 % in a year, many of the 3 (or 4, or six) chimney kind. In any case, I’ve had enough bubble gum for now.
Down 21 pct YOY
Down 8.3 pct MOM
Annual pace 795,000!
Sept. 27 (Bloomberg) — Sales of new homes in the U.S. dropped more than forecast in August and prices plunged by the most in almost four decades, pointing to a worsening housing recession that spells more cutbacks in construction.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azA_sYTsFsgM&refer=home
“cutbacks in construction” should read “cutbacks in CONSUMPTION.”
Prices down MOM and YOY! From the WSJ:
The median price of a new home decreased by 7.5% to $225,700 in August from $243,900 in August 2006. The average price declined by 8.0% to $292,000 from $317,300 a year earlier. In July this year, the median price was $246,200 and the average was $306,200.
http://online.wsj.com/article/SB119089524605541278.html?mod=hps_us_whats_news
So let me get this straight. New Home sales are weaker than the already expected poor numbers. Housing slowdown is usually a clear indicator of a coming recession. And Wall Street rallies?
The disconnect between Main Street and Wall street is becoming absurd.
It’s all my fault…
I accidentally wore my rally cap inside out, and somebody on wall Street took that as a sign, apparently.
Its almost to the point that it’s becoming obvious that the stock market is the next big bubble and/or its being manipulated. There is no reason its should be near a record all time high.
Where do you think that the billions of repurchase agreements are going? Here is my theory, banks are borrowing from the FED based upon the mark to model MBS and then investing in the stock market in an attempt to cover losses on the mark to market MBS. Once they have covered their losses they will start selling and the stock market will crash.
VT DAN…I have the same theory you do .
“…There is no reason its should be near a record all time high.”
“It’s always darkest…just before the dawn”
My normally bearish FIL is suddenly saying he expects the stock markets to go up (indefinitely?) and a plateau of gold and silver prices. While he is still fully in gold and silver. I think he’s off his rocker!!! Maybe senilism is starting to set in at 64??
Home Builders up across the board on this “good news”:
http://tinyurl.com/2ffkc4
–
Most important New Home Sales stat is:
Completed For sale at end of period
January 177
February 180
March 181
April 181
May 182
June 181
July 178
August 180
The peak in previous cycles was 125K! The bottom is more like 60K.
Jas
These teachers have much to learn about investing
http://www.suburbanchicagonews.com/beaconnews/business/berko/563090,2_3_AU19_BERKO_S1.article
My wife and are 54 and recently moved to be with our son and grandchildren after 31 years of teaching in Florida. We now have our Illinois teaching certificates and will teach there until we are 67 and can collect Social Security plus a retirement plan from the Illinois school system. There’s no way we can live on the $237,000 we have in our 403(b) annuity plans. A broker in Chicago has advised us to cash in our 403(b) to an Individual Retirement Account and invest this money in five different high-yield bond funds and reinvest the dividends……..
Dear F.L.: In the past year, after reviewing myriad 403(b) plans, I’ve sadly concluded that teachers may be among the dumbest investors in all of creation. That speaks poorly for members of this noble profession who won’t do their financial homework but will fail students who don’t do their school homework!
Candidly, after 31 years of teaching, it’s pathetic that all you and your wife have to show for your work is a total of $214,000 in your 403(b) plans. What you are describing isn’t a retirement plan, it’s a disaster plan. Your broker is dumber than a bowling shoe. Please drop him like a hot rock before he burns a huge hole in your retirement future…….
Berko cracks me up.
But dont they also have a teachers pension. Dont know about chicago, but pensions for Seattle area school boards are very good.
I was listening to the local ultra conservative talk radio host on the way into work this morning. He made the following argument about the ’subprime mortgage meltdown’ that we hear so much about. ( And which is, in his estimation, beginning to tail off.)
It was, he says, caused by political correctness. Banks were forced to make loans to people in bad areas in order to keep on the right side of Federal regulators. So the banks did this, sold off the loans as quickly as they could, and now we are reaping our PC whirlwind. He said he would probably hear from mortgage brokers to tell him how wrong he was. I wasn’t able to listen long enough to hear the MBs, Realtors, seminar gurus and specuvestors call in and tell him how much of an effect their greed had on the situation. I am sure they were lining up on the switchboard. Greed and fraud, apparently, had nothing to do with it. At least that’s some good news.
Being rather conservative myself, I’m a bit offended by this lame excuse. Who was it, and where??
In a roundabout way, he/she is excusing FB’s IMHO. Unacceptable.
It was Jim Quinn in Pittsburgh. Pretty much a local guy even though I believe he is syndicated to a few other markets.
The CRA Community Reinvestment Act did play a role. If you do a fly over of any major city mostly inner city neighborhoods on realty trac you will see tons of REO properties.
CRA is toothless. It prevented areas from being redlined de jure, but not de facto.
No one lent in those areas that did not want to. In NYC they expected every hood to be the next hipsterville.
I am not sure of the CRA impact and I suspect that many lending institutions will use CRA as the reason for making the “defaulting loans”. CRA becomes a very good scapegoat. If I were a Countrywide exec, I would blame CRA for my decision to make loans.
It is very easy to forget that a lending institution is damned if it denied the loan. It is far more expensive for a bank to defend itself from the government than it is to write off bad loans. Unfortunately few lenders believed that the market was in this massive a bubble and that the lenders very existence is in jeopardy.
“It was, he says, caused by political correctness. Banks were forced to make loans to people in bad areas in order to keep on the right side of Federal regulators. So the banks did this, sold off the loans as quickly as they could, and now we are reaping our PC whirlwind. He said he would probably hear from mortgage brokers to tell him how wrong he was. I wasn’t able to listen long enough to hear the MBs, Realtors, seminar gurus and specuvestors call in and tell him how much of an effect their greed had on the situation. I am sure they were lining up on the switchboard. Greed and fraud, apparently, had nothing to do with it. At least that’s some good news. ”
I heard a similar argument recently. When he says “bad areas” it’s a subtle reference to minorities. He must be thinking of the all-black state of Indiana, the foreclosure capital of the world.
2000 (total population)
White 90.13%
Black 8.91%
AIAN 0.65%
Asian 1.21%
NHPI 0.08%
–
David Rosenberg, ML Research; 09/27/07:
“Las Vegas — a leading indicator for the US housing market? According to work by an MIT econ professor, Las Vegas home prices are a good barometer for the rest of the country. Part of the reason is that there are many real
estate investors in Las Vegas and when they head for hills, you can expect prices elsewhere to fall. According to the recently-released Case-Shiller index, home prices in Las Vegas are down 6% on a year-over-year basis as of July. We expect nationwide prices to drop 5% in 2007 and look for an additional 5% decline next year.”
I think that these 5% numbers are bogus. Annual rate of decline in LCV should be more like 20%.
Jas
I wonder if C-S might be too conservative in showing the change in the worst bubble markets. Why? Because a lot of them had a lot of new building, and the new building/new subdivisions may have inflated faster and now be getting discounted faster than the houses in the C-S study group. If I understand correctly, C-S measures the change in prices on the same places over a long period of time, requiring therefore that they’ve been around for a while to show up in the measurement.
Faulty logic?
Cramer on CNBC this morning defending his bearish stance on homebuilders and the housing market… Good stuff.
I guess if Mr. Cramer is defending his stance on housing market negativity, it is time to buy the home builders.
My thoughts too, if it were any other group.
“The poor subprime nation had it so good for so long. What a pity the world turns. Now, it seems to be at the twilight of a magnificent – if preposterous – era…in which Americans could spend money they didn’t have on things they didn’t need and not have to worry about what happened next. But now we find out. And we find ourselves in the worst possible situation – squeezed between the two prefixes like a skinny word in a fat dictionary. Deflation is taking the oomph out of our economy and the value out of our assets. Inflation, meanwhile, is increasing the cost of everything we buy.”
http://www.dailyreckoning.com.au/grim-signs-for-us-economy/2007/09/27/#more-1518
Recycling should do well in this environment, no? What’s more, as prices and demand for commodities increase, so will demand for capital, labor, and equipment — supply components. How will markets/industries respond? Perhaps they create more supply. How will consumption behavior change? Substitution, drop in demand? Hording, increase in demand? Therein, we shall find opportunity. It’s time to speculate. It’s time for a commodities bubble blog.
OECD calls for UK rate cut. From the Telegraph:
One of the world’s leading economic authorities has called for the Bank of England to cut interest rates, warning that the credit crunch and the weakening housing market could hit the economy in the coming months.
http://tinyurl.com/28u9vh
well-known (but stupid …) economists and institutions asking for a rate cut, either from BOE or ECB, are becoming a daily occurence in Europe. The housing and stock markets in Europe are still surging and they are already calling for emergency action. All these learned idiots must be terrified about what will happen when the EU housing bubble starts collapsing.
under the radar:
secretly, the level of systemic risk is very high; thus the options expire queens gambit Discount cutting over the last 2 options expirations weeks coupled with the target rate of 4.75, and liquididty actions solving the “settlements” issues in the ABCP markets…..so, now we got systemic risk in the open, while market risk remains hidden……dude, sweet….
Rate cut drum beating will continue for some time, as the markets for debt are not functioning, and when things dont work , people run to daddy, and say “Fix this!” and the only tool they know is lowering rates. Its been the fix the whole time, but when you bring up the liquididty trap, they dont care, they are now a part of the RIGHT THE F*CK NOW generation. This is also part of the problem, the right now quick fix plays into the systemic risk, it plays into the liquididty trap….
some things need to change, the perception of time is the most important. The sky aint fallin, but the system is failing and unless we can change as nation, the problems are just gonna get worse.
One of my favorite stalled housing projects just got de-moat’d a month ago, about a year after the soil was compacted and electricity and water were put in and nothing else, aside from a wall to hide the failure from view…
I drove by the other day and there are about 15 framed houses now and the worker bees are hard at it.
Why did they decide now, to finish this white elephant?
Another 15 new homes the Central Valley needs, like a hole in the head…
–
Most important New Home Sales stat is:
Completed For sale at end of period
January 177
February 180
March 181
April 181
May 182
June 181
July 178
August 180
The peak in previous cycles was 125K! The bottom is more like 60K.
Jas
–
Looks like the New Home sales fall 50%+ from the peak and the bottom occurs into the recession.
Since we are already in the recession the number should fall below 700K within months and the bottom would be lower than 500K.
Jas
What is it about Oil? You’d think people & Nations… would fight over something more useful…like… diamonds.
Got Oil?
Also, I not convinced by the arguments that the price of oil has any bearing on the US Economy…everything at the $ dollar store still… just cost $ 1.00.
“…a crisis that began Aug. 19 with protests over a fuel price hike”
9 killed in 2nd day of Myanmar crackdown
http://news.yahoo.com/s/ap/20070927/ap_on_re_as/myanmar
Well, the dollar store, remember, used to be the dime store. And, inflation is very easily hidden. When you still see that stuff is a buck, is it EXACTLY the same stuff? Smaller quantities, lower quality, etc. Get me?
Are mortgage bailouts in the bag or aren’t they? ME CONFUSED!
No Bailout for Stressed Mortgage Holders
Government will provide some aid, but not enough to save millions of families from losing their homes.
By Matthew Mogul, Associate Editor, The Kiplinger Letter
September 26, 2007
RELATED FORECASTS
Expect only limited help from the government as the subprime mortgage mess continues to take a heavy toll. Foreclosures are approaching record levels, and we expect more than 2 million families to lose their homes over the course of this year and the next as interest rates on adjustable rate mortgages reset higher and push the monthly payments out of reach.
That’s not to say regulators and government agencies won’t try. Though no big bailouts are on the way — for either homeowners or lenders holding troubled mortgage loans — government officials in Washington and at the state and local levels are pushing initiatives that will help stanch some of the bleeding.
“I haven’t seen one broad program that would put an end to this,” says Rick Sharga, vice president of marketing for RealtyTrac, a California-based group that tracks foreclosures. “What is heartening is there are a number of small programs that will help some people keep their homes. I think you’re going to see these small scale activities that will have an impact.”
http://www.kiplinger.com/businessresource/forecast/archive/no_bailout_for_stressed_mortgage_holders_070926.html
What is the status of this bailout plan? (It is hard to find news stories on it, which makes me suspect that it is moving forward under cover of MSM stealth.)
Bush’s Housing Bailout: Bad Idea
By Seth Jayson August 31, 2007
Word on the street is that today, President Bush will speak to the nation, asking Congress to step up to the plate and try to help distressed American debtors. You know, the ones who bought at the real estate market top and took out terrible subprime loans — even though plenty of people warned them not to? The ones who didn’t bother worrying about resetting interest rates or future payments, because they figured they could always refinance later, or sell into what was then a red-hot, always-inflating market?
Memo to the president: You don’t fix a deflating asset bubble by reinflating it. That’s what expanding FHA insurance (reportedly, the brunt of the president’s proposal) would do. When the government takes on the risk that lenders should hold, it lowers the cost of lending. And that, as recent history has shown, makes people do all sorts of silly things — such as, say, sign up for terrible teaser-rate ARMs.
http://www.fool.com/investing/general/2007/08/31/bushs-housing-bailout-bad-idea.aspx
“…You don’t fix a deflating asset bubble by reinflating it. …”
Unfortunately this is what has to happen. Whether the new bubble is the stock market, bonds or ?, the economy relies on bubble moneys. It is not possible to reinflate the housing bubble, the affordability issue is still present. The US still needs $50B per month to operate and the moneys have to come from somewhere; the FCB’s don’t seem to wish to be bag holders. So it is imperative for the government to create a new bubble.
Personally I believe the new bubble will be in retirement insurance schemes. The only reason for such a ridiculous belief is there hasn’t been a bubble in insurance schemes yet. This bubble would also allow the banks and Wall Street to participate. To have any credibility, this new bubble would have to be guaranteed by the government. Staving off the financial crisis this government will guarantee the new bubble.
We are a decade away from the next bubble. This housing bubble will not be bottomed for another 10 years.
My mouth (not money) for the next bubble is on nukular energy.
It may certainly be a bubble, but even though it will be a large bubble, it would not be large enough to pull the economy.
A true bubble of the proportions needed to suck up the excess from the housing and stock market bubbles must impact the entire population. Ergo, it must be government insured as an investment and seem plausible. I do not think nuclear energy can fit that description.
maybe government-provided and insured silicone bubbles for the ladies to start with (throw in some fake muscle transplants for the guys)? If government wants to provide everyone with an above-average home, why not provide everyone with an above-average look? Just imagine how much money you can spend on improving people’s external appearance, especially when new genetics technologies finally arrive on the healthcare market.
“Unfortunately this is what has to happen. Whether the new bubble is the stock market, bonds or ?, the economy relies on bubble moneys.”
Wasn’t always this way. . .
Did someone already post about HR 3648, which seeks to remove the $250k/$500k tax exclusion for investors in second homes? This seems like a significant change to housing related policy.
http://www.house.gov/jct/x-86-07.pdf
Probably a good idea…that’s part of what caused this bubble along with the Tax Bill that passed in 1996.
BTW, I was carefully tracking the SD ziprealty.com (MLS) median list price earlier this year, until it became too boring to continue (much like watching paint dry). Anyway, last I checked before today (4/06/07), the median SFR list price was $599,000 and stuck there. Just now (9/27/07), I checked again and it has fallen off to $555,000 (down $45,000 or 7.5% since early April). This spring apparently was not the time to buy in San Diego.
I did a similar comparison for the SFR median list price in the highest of high-end zip codes, 92067 (Rancho Santa Fe). Here is the comparison:
4/06/07 $3,800,000
9/27/07 $3,900,000
Amazingly, the median list price has gone up!
However, a comparison to recent sales data (from Sandicor.com ) provides an interesting contrast, as the August 2007 median SFR sale price (for a total of $48m in sales) was but $2,550,000, while the median list price for new listings last month (all $259m-worth!) was $4,395,000 — a $1,845,000 (72%) premium of new-listing median list price over median sale price for August 2007.
Ergo it looks to me as though the increasing median list price increase in Rancho Santa Fe is more reflective of super-high-end investors heading for the exit doors than of an increase in the quality-adjusted price of homes there. Who wants to buy flip homes priced over $1m???
“Real estate investor Matthew Martinez is the point man for a private equity group that plans to invest $200 million in Florida condo developments.”
“The smart money is thinking about buying there right now,” says Martinez. “It may be six to 12 months early, but it’s a good time to be searching for deals.”
Local housing markets that have fallen far, yet have the potential to recover soon, are ripe targets for “vulture investors,” who buy cheap in the hope that prices will rebound.
http://money.cnn.com/2007/09/24/real_estate/vultures_circling/index.htm?cnn=yes
Where is he he getting his “investment” money?
If these purchases are not below rental income value, they will lose money too.
MILAN, Sept 27 (Reuters) - Italy’s Banco Popolare … on Thursday denied a Bloomberg report that it had tried to liquidate a real estate fund in Germany.
In a statement, the bank also called “baseless” rumours that it had asked the European Central Bank for funding at its penalty rate.
http://tinyurl.com/2nezdr
juicy,
banco popular denies..
which plunged into the red in the first half of the year after unveiling large credit exposures on derivatives
the next bubble:
credit exposure on derivatives.
The US economy faces a 40 to 45 per cent risk of recession induced by the housing market downturn, the chief executive of Freddie Mac warned on Thursday as data showed sales of new homes hit a seven-year low in August.
Richard Syron, chief executive of the government-sponsored mortgage agency, said the credit squeeze had left some parts of the US housing market “literally frozen”. This was a “substantial depressive to the overall economy”. He forecast that the Federal Reserve would be forced to make another “material” cut in interest rates to stop the US economy slowing further.
The FT: http://tinyurl.com/2wzf3r
Russia has the crunch. From MSN:
It is after 9pm on a Tuesday in Moscow and shoppers are still poring over television sets and washing machines at M-Video, an electronic goods retailer and one of the biggest operators in Russia’s consumer boom.
But at the consumer loans desk, the bank that has played a big role in stimulating the rapid growth of Russia’s retail sector has not been issuing many loans. “A lot of customers are being rejected,” says Julia, a sales representative for Russian Standard Bank, the top consumer lender. “We used to approve 90 per cent of applications for loans. Now the majority . . . are declined.”
http://tinyurl.com/23m5yx
when this happens in China, you will see a revolution.
Don’t miss this one from the Telegraph:
In a new report, “The Global Economy Hits a Crunch”, the US investment bank [Goldman] said it was no longer sure that Asia and Europe would be able to pick up the growth baton as America stumbled. It fears that turmoil is spreading beyond the debt markets to the factory floor.
…
The bank said Europe is now so weak after a clutch of dire confidence surveys in Germany, Italy, France, and The Netherlands that any further rate rises by the European Central Bank are “off the table”.
It expects the euro to fall back to $1.35 against the dollar over the next year, and sterling to tumble to $1.88 as the Bank of England pushes through three rate cuts.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/27/bcngold127.xml
our facrory floor already walked.
problems solved.
From today’s New York Post about the “hot toys for the holidays”: Future chefs - both boys and girls - can get an early start with the Grand Walk-In Kitchen, which features six feet of granite-like countertops, 100 accessories, as well as make-believe grills, microwaves and gourmet stoves to create imaginary culinary feasts. Gee, do they get the make-believe home equity loan to go with it?
Look what this Communist, a typical comment, posted in a CNN blog about the Mortgage bailout:
It’s amazing that this stupid woman says a bailout will help us all because it “keeps our property values high”.
So here’s my question: isn’t price fixing illegal? Why is it legal for the Government to step in and try to keep house prices inflated when it wouldn’t be legal to do the same thing for milk prices or oil prices?
Good point about price fixing .
What this goof doesn’t understand is if borrowers refused to buy homes they could not afford ,than the prices would not of skyrocketed .
If the lenders want to reduce the interest rate to keep one of their borrowers from going into foreclosure ,than find ,but to make taxpayers pay for this stupid lending is wrong .Also,this borrower acts like she was forced to go on a toxic loan .In fact ,because of borrowers like her ,this housing bubble got inflated . If she can’t qualify for her paymentthan it is because it’s a liar loan . I can’t help it if this borrower bought all the sales pitches from commissioned salespeople during the boom . Why doesn’t this women just call up her lender and say” change my loan terms or I will walk “.