Bits Bucket And Craigslist Finds For October 11, 2007
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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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Doubled
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apDsvvy6RO7M
Is there any information out there on foreclosure demographics? Is the bulk of the increase in poor urban areas and overbuilt exurbs?
–
Let us look at factors that lead to foreclosures:
(1) When prices re rising there are few reasons for foreclosures and during such periods there is always some low level of foreclosures.
(2) The single most important factor is falling prices. Longer prices continue to fall one would see an exponential growth in foreclosures.
(3) Close behind the falling prices is leverage. What % of homes in an area are 100%, 90% & 80% leveraged.
(4) Quality of leveraged owners. That is where subprime owners come in. However, the biggest problem for subprime borrowers is #3, i.e., leverage.
In places like Central Valley, San Diego and many parts of CA we have all of #2,3 &4. In terms of demographics it seems that blacks, Hispanics and single women were disproportionately “pushed” into buying homes they couldn’t afford during 2002-2007Q1. Hence, they are lot more likely to be foreclosed upon than the rest among the owners. It would be nice to get demographic break down of flippers. I haven’t seem any except that Californicators were disproportionately involved.
Jas
“(2) The single most important factor is falling prices. Longer prices continue to fall one would see an exponential growth in foreclosures.”
This above all is why it is utterly essential the Fed make enough helicopter drops to reignite housing price inflation, or short of that lofty goal, at least inflate enough to offset the deflation that is in the bag already. Too bad (as many posters here have already pointed out, including yours truly) that this plan is not sound, as any efforts to prop up housing prices above the long-term steady-state equilibrium level will simply result in further overbuilding and attendant deflationary pressure. The invisible hand will eventually overcome any and all efforts to paralyze it.
Not to mention that we have already covered that helicopter drops do not translate into wage increases UNLESS the government admits to 15-20% inflation and employees start demanding it. Combined with the fact that it takes years for any inflation to work through the economy and by that time the prices decile / foreclosure cycle will be in full force.
I wonder if they will put housing back in the CPI now that it is deflating?
But housing price appreciation will raise only ONE source of income: the house ATM. Labor-based income (wages) will never inflate to meet those higher mortgage payments. Companies would rather go to China/India than raise wages. We’ll just have defaults later than sooner.
(5) Honest computers spitting out out honest data, fraud can’t hide now.
What house price appreciation does though is inflate away the debt, allowing people with ARMs to refinance that otherwise wouldn’t be able to. Say someone has an ARM that adjusts to 10%, and can’t afford the new rate. If prices have decreased too much, they can’t afford to refinance since they’d have to bring cash to the table. If prices remain flat though they can refinance at say 7% (or get another ARM with a teaser rate) without bringing anything to the table. That’s all independent of wages.
Oxide: of course the housing ATM isn’t a source of income any more than the regular ATM is. Just like a regular ATM it merely moves wealth to a different part of one’s personal balance sheet.
The only helicopter drops that will save housing would be if BB pays down all underwater mortgages to 2010 - 11 value + 10% equity for the FBs.
Jas said:
“Let us look at factors that lead to foreclosures… [4 discussed]
********
This reminds me of a recent discussion I had with an analytics guy who works for Pig Men. He formerly, as well, worked for a ratings agency (I believe it was the one who’s name begins with an “S”).
In any case, I asked him about modeling. Without prompting, he brought up “the subprime mortgage problems” and explained that he had seen and worked on some very complex models. Different programming languages, sophisticated, but opaque, blah, blah, blah. He then stated that they all had “great data on foreclosures for [only] the past 15 years”.
What? There were no foreclosures before 1992? (What about that popular San Diego website showing NOD’s going back to 1982?) Prices can’t go down?!
I didn’t ask him these things, but was left wondering how easy it must have seemed to the Pig Men to be modeling such things in the era of Easy Al Greenspan. He put such a nice floor under everything.
This modeling “problem” was not news to me, but it was interesting to hear it directly and realize that it was really a simple case of “garbage in, garbage out.”
Or maybe, when combined with the Fed’s easy money policies, just plain garbage.
Jas also said:
“…In terms of demographics it seems that blacks, Hispanics and single women were disproportionately “pushed” into buying homes they couldn’t afford during 2002-2007Q1. Hence, they are lot more likely to be foreclosed upon than the rest among the owners. It would be nice to get demographic break down of flippers.”
*******
How about the NY Times trumpeting women as leading the condo buying charge in NYC? I wonder how that is working out, as some of the articles were probably published not much more than one year ago.
Remember? Some of these people had very average incomes for the area… and according to the stories had the foresight to see that if they bought it was “all going to work out.”
Responsible reporting, that New York Times.
Don’t forget the smart under-30 demographic. My guess is that we will soon read about the disproportionately high default rates in the under-30 buyers during the years 2004-2006.
This describes Atlanta…some zips with few foreclosures; others with massive foreclosures.
Hmm, I think we might need a bigger container…
C’mon, it’s contained to planet earth, surely that’s big enough.
“The truth of the matter is that borrowers are going into default as soon as they hit their adjustments,” said Rick Sharga, executive vice president of marketing at Irvine, California-based RealtyTrac.
C’mon, how could those brokers know these people weren’t going to be earning big raises, inheriting large amounts of money, or hitting the lottery?
These people funding these neg-am dumba$$ loans NEVER intended them to be carried to maturity. The hope by ALL parties to the transaction was that the appreciation fairy would enable borrowers to REFI and pay off the loan early.
The [brokers, re agents, lenders] commissions, fees on the contracts said it was the right thing too do.
The national foreclosure rate was one for every 557 households, according to RealtyTrac.
can someone compare this to 91-93 ?
“The national foreclosure rate was one for every 557 households, according to RealtyTrac.
can someone compare this to 91-93 ? ”
Don’t have the comparison, but I just calculated 3.2 million foreclosures over the next 18 months at this rate, and the rate is rising. We will probably have around 5 million foreclosures by the end of Q109, if you include all the knife-catching sheeple who are asking for directions to the slaughterhouse.
DP
can someone compare this to 91-93 ?
Hmmm….If my memory serves me right I remember 91-93 being a extreamly high inventory market with falling prices more than high forclosures (excluding commercial)….1981-82 may be worth looking at though…
I found this interesting as well because the MOM number was down a bit and the YOY number doubled.
In the Palmdale 93552 zip I noticed the same pattern, down 5% MOM, but up 600+% YOY (I’m typing this in the parking lot so I don’t have my exact numbers.)
Additionally, it would be easy to hypothesis that this MOM decline is the coatail of the brief MOM decline we saw this past spring. If that’s the case then we might have one more month of MOM decline but after that it’s off to the races.
Got debt?
But you can bet that the “bottom is in” crowd will latch onto the fact that the number is 8% less than in August. They will say, “see, we are already at bottom and working our way up.” That is how their pathetic little minds work. Expect stocks to take off today and the rally in the homebuilders to continue.
I’m not sure about the builders, I think the bankers will run up though.
..
Ali Velschi called the bottom when he mentioned that MOM drop this morning on CNN.
Everything is OK Sheeple. There will be no recession. The housing market has recovered from the necessary adjustments.
Go back to using your credit cards.
Isn’t Velshi the Canadian guy who has his degree in religious studies? Yeah, I believe him.
The reset increase only kicked in massively starting last May so with a six month lag foreclosures should start taking off again big time about November/December.
Yes, that’s my point, there was a pullback in the MOM NOD numbers in March and April, I remember all the shills making hay with that. This MOM reduction in foreclosure activity is just the follow through on that.
And all the banks are “working with” their deadbeats
http://tinyurl.com/3yw3ll
And CNN has the unmitigated gall to entitle an article today that foreclosures have dropped!!
Classic NAR focus on M-O-M #s instead of Y-O-Y #’s which are up dramatically!! Such an intellectually dishonest maneuver that insults the intelligence of its readership.
Hey, CNN I did not know you had a NAR membership!!
August had 23 working days; September 19.
So a 5% monthly drop is a 15% daily increase. which is not a fair way to look at it, but close enough to make the reality flat & awful.
RE: Doubled
“Everything’s contained.”
Only doubled? Nothing yet.
Kitchen Sink Earnings
http://www.stockmania.com/index.php?showimage=64
Don’t forget to include the toilet bowl. That seems appropriate.
Yeah, more like swirling the toilet bowl earnings to me.
I may have to add that. Ha.
Fantastic!
As America’s mortgage markets began unraveling this year, economists seeking explanations pointed to “subprime” mortgages issued to low-income, minority and urban borrowers. But an analysis of more than 130 million home loans made over the past decade reveals that risky mortgages were made in nearly every corner of the nation, from small towns in the middle of nowhere to inner cities to affluent suburbs.
The analysis of loan data by The Wall Street Journal indicates that from 2004 to 2006, when home prices peaked in many parts of the country, more than 2,500 banks, thrifts, credit unions and mortgage companies made a combined $1.5 trillion in high-interest-rate loans…
WSJ: http://tinyurl.com/2eaouy
All contained
Yep, the cheap loans with little or no standards were everywhere(high to low income), along with the “RE always goes up” slogan. In fact it was probably pushed more at higher income people then low since they could buy the really expensive properties(where the big profits are). The lower income ones jumped in more at the end of the boom when the mortgage companies were scrambling to keep up volume.
Looks like it’s “not” different here in the midlands of South Carolina after all! I see a little dark spot right in the center of the State. :- )
“subprime” mortgages issued to low-income, minority and urban borrowers. But an analysis of more than 130 million home loans made over the past decade reveals that risky mortgages were made in nearly every corner of the nation, from small towns in the middle of nowhere to inner cities to affluent suburbs.
Despite the sloppy sentence (shame on you WSJ), they touch on a REALLY important point. They finally make a distinction between “subprime” and “risky.” FINALLY! Originally the MSM made it sound as if the only risky mortgages were subprime, and they were risky only because they were subprime. That’s what they meant by “contained.” Only the subprimes were toast because only the subprimes were risky. Everyone else was fine.
Wrong. The fact is, you can take out a risky mortgage even with a prime FICO. And that’s probably what was happening in every corner of the nation. Subprimes in the inner cities, Alt-A in the small towns where people had a little equity from long ago, trade-ups in the burbs, and your hybrid subprime strawberry picker in the McMansion. All risky. It all depends on principal and income, not FICO. That’s the fatal flaw I’ve been harping on.
Also stunning is more than 130 million home loans made over the past decade. Gosh, even Zillow only has 70 million houses in its database. And 130 million is one mortgage for every three people, roughly the number of households right? How do you get 130 million mortgages out of 70-100(?) million actual homes?
An astounding number of those 130 million must be HELOC’s and serial cash-outs. It’s as if everyone is swimming naked.
How do you get 130 million mortgages out of 70-100(?) million actual homes?
It’s possible, I suppose. I bought in 2000 when I was in my mid-20s and pretty naive about the whole thing - my rate was almost 8%@30. When rates started to fall, I refi’ed once at 6.5%@30. Then they continued to fall. And fall.
So I refi’ed one last time for 5.125@15. w00t! I also begged everyone I knew to refi (not cash out) at these rates. I knew we’d never see them again.
Did similarly. Initial arm in 01, converted to a fixed a year or two later, and then converted to a 5.25 30 yr.
the banks are actually PAYING you to borrow that money at those rates. When the dollar starts to tank those 5% loans will be hurting the banks for the next 10-30 years.
Question for everyone: on what logical grounds did the banks have to expect that 5% rate for 30 years would be a good deal? Did they really think that rates would stay that low? Did they really think that inflation would never go above 5%? It seems to me that any logical person would not lend for 30 years at anything below the 30 year moving average for rates. What were they thinking?
All good questions and points, but I, for one, am happy as a clam at present with the loan. Companies must hate me–paying the credit card in full every month, no overdrafts from my bank, etc.
Problem is, most of us (including me) are not seeing salary increases to compensate for the tanking dollar. And everything else in my life is getting more expensive. Inflation may help with the loan, but it’s making me angry overall.
“Question for everyone: on what logical grounds did the banks have to expect that 5% rate for 30 years would be a good deal?”
Securitzed into fixed rate instruments. If held for portfolio, covered by interest rate swaps. You can check a bank’s F/S footnotes for interest rate sensitivity.
It is a good question. I went from a 7.25% to a 5.5% mortgage a few years ago. The rate later dropped to 5.25% but I stayed where I was. OTOH my monthly mortgage payment is now $425 and I thought then how could banks later hope to make very much on rates like this. I agree that in the future they’ll regret this group of lower rated mortgages.
“How do you get 130 million mortgages out of 70-100(?) million actual homes?”
Umm, people don’t stay in their homes for 10 years. I could possibly be responsible for 3 loans from the date of my original mortgage.
“But an analysis of more than 130 million home loans made over the past decade”
That figure is over 10 years time.
There was a lot of flipping going on.
“An astounding number of those 130 million must be HELOC’s and serial cash-outs. It’s as if everyone is swimming naked.”
That is one of the big stinkin’ elephants hiding under the living room rug!
130 million loans made, how many paid off due to a subsequent sale? I would venture a guess that people moved on average every 5 years and so that 130 million loans made only represents 65 million current loans. At the same time, it also says that 60-70% of homes have been bought/sold/refinanced at bubble prices.
The answer to your question is easy, Oxide. Yes, you hit on a very important one (multiple reasons), and that is serial refi. Also, consider - as I’m sure you have already - that though there are 70-100M houses, that obviously many, MANY of them have been bought and sold numerous times in the last decade.
A massive article! pretty much sums up what has been discussed here. They point out that the subprime mess is not limited to the ghetto. My sister has seen foreclosures in the upper crust communities of Lake Forest (where “starter homes” = 1M+), jokers have been reaching & stretching for their god given McMansion too.
The Journal’s findings reveal that the subprime aftermath is hurting a far broader array of Americans than many realize, cutting across differences in income, race and geography. From investors hoping to strike it rich by speculating on condominiums to the working poor chasing the homeownership dream, subprime loans burrowed into the heart of the American financial system — and now are bringing deepening woe. “We had an aggressive home-mortgage industry trying to get people into homes they couldn’t afford at a time when home prices were very high. It turned out to be a house of cards,” says Karl Case, an economics professor at Wellesley College. “We’re in the early stages of the cleanup.”
“From investors hoping to strike it rich by speculating on condominiums to the working poor chasing the homeownership dream, subprime loans burrowed into the heart of the American financial system — and now are bringing deepening woe.”
I was at the bank the other day and the subject of mortgages came up, I made a humorous remark about some banners the bank had scattered around in the lobby for home equity loans. I mentioned that the bank must be pretty brave to still offer those, because most people don’t have much left in the way of equity. The tellers perked up right away and started talking about foreclosures (mostly about the foreclosures in CA, I guess it’s still “different” here in Fla, LOL). Then we got on the subject of ARMS and I mentioned how those were designed primarily for investors and short term holders of RE, for people who know how to use those loans properly. Some guy from the nearby affluent retirement community was at one of the windows depositing his poker earnings or some such thing and he turned around and said “I’m an investor and I got creamed by an ARM”. I must say, I admired his honesty.
Yes, it is different in Fla. All you have to do is quickly look at that chart to see that almost 40% of the loans in Miami/Dade, Ft.Myers/Lee and Lakeland were high interest loans. In the context of the article that the loans go into default as soon as the rate resets, a REO fire sale can’t be far away.
..
With “both feet on the ground” here in Polk County, I can assure you that there’s blood starting to trickle in the streets.
Median per capita income is like 35K; median household income is like 45K.
There are thousands of homes for sale here in Central Florida. I live in one of the less “gentrified” areas ( heck, Polk County is an agricommunity ) and in some of the areas 1 out of every 10 or so homes have “For Sale/Rent/Owner Finance/Get Me Out Of This House/Whatever It Takes” signs in the front yard. In some areas it is like one out of every 5 or 6 homes up for grabs….
Desperation is in the air.
I love it here, it is my permanent home, but I rent. My salary is a measly 45K. I will patiently wait until 2009 or so before I test the waters for a small, tidy home. 150K doesn’t get you much…YET…..In 2000 you could have had a wonderful home for 150K.
Be patient. Keep your powder dry. The fun is just beginning………
“Got Popcorn?”
Has Wall Street be using the word subprime incorrectly? Technically, “subprime” means “risky based on FICO,” but now it sounds like subprime mortgage is actually code for “anything that involves a reset,” be it ARM, I/O, neg-am, neg-am+ARM, I/O+neg-am. They need to call it what it is: The “exotic mortgage meltdown.”
I am guessing the picture would worsen considerably if they broadened the scope of their story to all exotics. Alt-A and prime ARM resets will be the next shocking big story (2008-2010).
Cramer and Kudlow will be priceless entertainment. It’s one thing for their buddies to lose a bonus on other people’s money, but wait until the buddies own McMansions are in default and their Navigator is repo’d out from under them. I’m keeping my corn unpopped for that day.
Words go mainstream and take on new meaning. This will forever be known as “subprime” issue.
Unfortunately, that has certainly been the case thus far - let’s hope the media gets something right out of this in the end!
Yup. The easiest way to keep the problem “contained” to subprime is to expand subprime to include all problem loans.
‘The easiest way to keep the problem “contained” to subprime is to expand subprime to include all problem loans.’
Or, as the title of today’s front page WSJ article suggests, apply the term ’subprime’ even more liberally to include the entire U.S. economy.
I think its Countrywide that has one of them on their books. I thought about placing a super lowball, and then I found out the annual property taxes are $33K. Gulp.
Sorry… was referring to IllinoisBob’s comment:
“My sister has seen foreclosures in the upper crust communities of Lake Forest (where “starter homes” = 1M+), jokers have been reaching & stretching for their god given McMansion too.”
I don’t care what havoc this housing bubble creates as long as it stops the REIC naming things LAKE FOREST or FOREST LAKE!
Woah. That’s been bookmarked.
I remember reading a paper by an economics professor from MIT that analyzed what was going on in the housing market that was causing such massive price increases. He Id’ed two factors, one major & one minor. I forget the minor one, but the major one was SUB-PRIME LENDING.
He voiced concern about how it was reaching a terminal velocity and would flame out. Well, here we are finally an economist that knows what the hell he is talking about. I have no idea why everyone is saying “Oh my, sub-prime, where did it come from, we had no idea this would happen” Its common sense and it was economically forecast ed several years ago.
Hang tight, with attitudes like the one Las Vegas home”owner” featured in this article where she stopped paying during the teaser rate period because of the evaporation of 150k in value we are going to see a dramatic price drop over the next couple of years and THEN it will be a good time to buy. It will not be like Japan’s post bubble burst. There people sacrificed all other forms of consumption to honor & pay the debt. We do not behave that way, in our must have everything now consumerism mindset people w/ toxic loans and/or who are upside down will just walk away and leave the banks & investors holding the bag. They in turn will hawk the assets at dramatic discounts after they realize that holding onto them and demanding the loan balance just reduces the asset recover value even more. The big fear will be how badly this will damage our financial/banking system which is a direct spill over point into the greater economy.
Yet last year’s data show that even as the housing market was weakening, some lenders still were eager to make riskier loans. Banks and thrifts grabbed 52% of the market for high-rate loans last year, up from 44% in 2005. SunTrust Banks Inc., of Atlanta, long known as a conservative lender, more than doubled the number of high-rate loans made by its mortgage unit. Smaller banks such as First National Bank of Arizona, part of First National Bank Holding Co. of Scottsdale, Ariz., also revved up their riskier mortgage lending last year.
“economics professor from MIT”
William Wheaton
The MSM and Ben’s blog have a meeting of the minds on the front page of today’s WSJ.
The WSJ’s analysis is seriously flawed. It just takes up paper space.
Not all high interest loans are subprime. (other high interest loans are Option Arms, Alt A, expanded criteria 100%).
WSJ,
You are coming around, but why still sugarcoat this jagged not so little pill, anymore?
The enron State of America
Should have been your title, and where was it a few years ago, when computer aided cassandras, the likes of us…
Saw the clear and present danger, backed by facts, not myth.
p.s.
Thanks for sealing the fate of the late, not so great newspaper trade.
“Do you think when two representatives holding diametrically opposing views get together and shake hands, the contradictions between our systems will simply melt away? What kind of a daydream is that?”
Nikita Khrushchev
The Federal Reserve System, created in 1913, is a private banking system, that creates money by issuing Treasury securities or IOUs.
How weird is that? Some guys, who make a very good living, are going to work today, where they will be handing out IOUs that say ’some other guy (taxpayers) is going to pay principal and interest’. Some private bankers are handing out IOUs that say American taxpayers are on the hook.
I’m tired of the government fighting wars and issuing crippling debt for my sake.
Wars create debt and bankers love debt.
2 + 2 = Masters of War
and debt creates wars, because when the debt gets out of hand a big war is the easiest way to reset the system; of course bankers have always loved war, right from the beginning of the banking industry in the UK.
“Wars create debt and bankers love debt.
2 + 2 = Masters of War ”
It is no secret that wars require massive gov’t debt spending/deficit spending. What happens when the US goes to war on a major level( Civil war,WWI,WWII) is that It creates a wartime socialist economy and directs and supervises the means of production. It becomes a true central planned economic war engine with the entire state/citizenry organized and directed toward victory at any costs and of course that requires massive Gov’t borrowing and spending/printing of dollars. The Union and confederacy both ran up massive deficits during the Civil WAr which of course enriched th few financiers and businessmen who profited from providing loans/gov’t contracts.graft to the US.
Same thing in both WWI and II-a few superrich private financiers/contractors/corporations get rich through providing goods.services to the US Gov’t(think Adolph Berle, Joseph P Kennedy in WWII) . The current middle east conflict no different-Haliburton just doing what waa done in all previous US conflicts-fattening itself on US Wartime spending, which of course always involves Graft amd massive cost overrruns.
Looks no different than Gov’t Spending at all levels E.G CA Gov’t spending on massive projects-freeways, metrolink-also involves much graft and massive cost overruns.
It becomes a true central planned economic war engine with the entire state/citizenry organized and directed toward victory at any costs and of course that requires massive Gov’t borrowing and spending/printing of dollars.
The deficit part of the equation is happening this time around, but the centralized war planning engine is not in place (not in the completely mobilized context of WWII, at least), nor is the concept of “shared sacrifice” among the citizenry.
the centralized war planning engine definitely IS in place, only this time it works a little different: the FOREVER war. And in Europe it’s getting very similar, more and more money and troops being spent on ‘fighting terrorism’ (stealing oil from other nations). The war machine is gearing up for maybe the longest war in modern history. Huge profits for the neocon cronies into the indefinite future, that’s a lot better than just 5 years of fat profits.
And to staff the forever war you need a displaced portion of the citizenry who can’t find decent jobs anymore. Kids from small towns who have no money for college and no local job prospects beyond menial minimum wage jobs can definitely be tempted by a “career” in the military, which retires you after 20 short years with a pension. The trick is to survive those 20 years.
what is socialist with what you just said?
not too loud 90% of your hood is on the fed teet- 80% in my hood
22151
“I’m tired of the government fighting wars and issuing crippling debt for my sake.”
Exactly. At some point, we the people will have to start saying, “No.” But I’m afraid that we have been so brainwashed, it will take much more pain to get people to realize that we’ve been lied to our whole lives.
I always like to define money by its characteristics. That is, the things that we call money tend to share the same characteristics - medium of exchange, store of value, unit of measure. It really doesn’t matter what we use for money, as long as it maintains those characteristics well. The problem with our “money” is that it’s a terrible store of value and it’s undefinable as a unit of measure.
Consider cigarettes in a prison as money. They function well as a medium of exchange, have some limited store of value, and are a good unit of measure (if someone tried to give you a pack of broken cigs, you would know it’s not worth as much as a pack of standard cigs).
And as far as “What is a dollar”? I don’t consider the Federal Reserve Notes to be “dollars”. In the past, Fed notes were something you could exchange for dollars; not the dollars themselves. So what changed? Nothing. The fed just removed the wording from their notes stating that they could be exchanged. That’s all. Show me the law that changes the definition of a dollar from a coin containing 371.25 grains of fine silver to a federal reserve note, and I’ll say “fine.” But just because everybody else fell for the trick, doesn’t mean I have to.
Amen! I have been thinking about this a lot and it seems like anyone expecting to be paid in “dollars” should refuse FRN and sue them for real dollars.
FRN is legal tender. You go to jail if you don’t accept it. Of course I haven’t heard of this happening lately…..you first.
Explains to me this (I already know the anser), why then does our US Constitution still say: “No state shall make anything but gold and silver coin a ternder in payment of debt.” [Art. 1, Sec. 10]?
Because Article 1, Section 8 reserves that power for Congress.
My property manager refuses to take cash, so … ALL debts public and private? Only if they are electronic blip dollars. Greenbacks need not apply.
–
Merchants of Debt have played very important role in wars, and millions who died, for the past 350 years. Now, the same Merchants of Debt to govt. have turned into Debt Pushers to households.
Big money to be made form debt and trading of debt.
Jas
if loan payments aren’t allowed to cross borders, armies will.
Note the Fed’s creation was well-timed for U.S. entry into WWI.
Sink the Lusitania you nasty Germans…pretty please!
“Note the Fed’s creation was well-timed for U.S. entry into WWI.”
I have a very simple explanation for WhY the US got involved in both WWi and WWII. No complex tin hat Conspiracy weaving explanations-no imperialistic capitalistic bankers conspiracies, heres a simple 4 word
explanation:
TO SAVE BRITAINS ASS!
um… You’re forgetting that Japan invaded us. Many more Americans died in the Pacific theater.
…which equates to saving the collective asses of the elite bankers….theirs, who were/are also ours….
No Washington DC gang has the guts to question the Private federal reserve except Ron Paul. How sad for America.
Et tu, wsj with the idiotic weather-blaming for retail slump:
http://online.wsj.com/article/SB119210162294155872.html?mod=hpp_us_whats_news
He he. I was just about to post the same thing from CNBC…
http://www.cnbc.com/id/21225591
The problem this time is GOOD weather. Remember last spring, the problem was BAD weather?
Looks like the weather has to be perfect for the economy to be sound. Makes perfect sense. /sarcasm off
Apparently, real estate requires fair weather.
chuckle.
Neil
Yeah….And its mid October and I guess they are anticipating better weather to come ??
Not too cold, not too hot, not too wet, not too dry. When it is cold at a traditionally cold time of year, the weather is blamed. When it is moderate at a moderate-weather time of year, it is still blamed. Apparently people roll up and hide when the weather is anything but just right.
i.e., Goldilocks weather.
It buys them some time until they can doctor up some revised retail numbers.
Isn’t the WSJ the rag that Mr. Fox News bought? Is anyone really surprised by its degradation?
you mean accelerated degradation
tighter monetary policy?
“And did he say, “tighter monetary policy”? Hahahaha! The Congress just raised the limit on the National Debt by almost $900 billion, which is almost a trillion dollars, as made necessary when the Congress has already used the last 12 months to deficit-spend almost $500 billion more than they collected, all made possible by the Congress using the last 6 short years to increase the debt by a staggering $3.2 trillion, all financed by the Federal Reserve creating the money out of thin air so that it could be borrowed and used to buy the government debt, thus relieving the government from having to raise that much in taxes or borrowing that much in savings!”
http://atimes.com/atimes/Global_Economy/IJ12Dj06.html
That was really great. We can only hope that the Fed does such a disastrous job that even the middle-class, usually clueless to almost everything, begins to realize that the governmental monetary floodgates are not in their best interest.
RE: even the middle-class, usually clueless to almost everything, begins to realize that the governmental monetary floodgates are not in their best interest.
Charlie Rangel likes floodgates.
Clueless American’s get the government they deserve.
http://www.politico.com/news/stories/1007/6250.html
As per a comment posted yesterday about maids in Las Vegas, check out this quote from the PBS show “American Experience: Las Vegas” which aired in summer 1995:
——
Yvette Dixon, Maid, Bellagio: … Housekeeping. Hello? When I lived in California I didn’t have many opportunities, but here they got so many hotels coming up, stores open up everyday, so you can get a job real easy. …I would come here and visit [my brother], and he said, you should come up here, it’s easy to get a house up here and stuff. When you apply for it, you can move into a brand new house. They build it the way you want, you know, the way you want them to, no money down. Not a penny. Now that was for me! I was ready for that. So it’s real nice, it’s a two bedroom, two bathroom, but right now I’m thinking about getting a bigger house because I have three granddaughters now, so we’re going to get a bigger place. …But it’s a real town! This is indeed the best move I ever made. I wasn’t established in California. I went there in 1970. I never bought a house, I never owned anything, and when you get in your forties you have to own something, you know. So soon as I moved here, I got my jobs, got a new car, got a new truck, got a new house and I’ve only been here six years. I cleaned up!
—–
I think her clock is about to get cleaned.
http://www.pbs.org/wgbh/amex/lasvegas/filmmore/pt.html
oops, I mean 2005. my bad.
And while she was delivering this monologue as she was changing towels and making beds, she sounded so pleased with herself, like she was the smart one and the rest of us were missing out.
I’m not surprised she thought she was so smart, the worse off somebody is, (not in monetary terms, but just as a human being) the more arrogant they are. This applies to people at all rungs of life.
I’ve always been astounded by the direct correlation of cluelessness and arrogance. It’s downright scary considering how arrogant almost all politicos, CEOs and members of the MSM are. Peter principle in action…
My sentiments exactly, fran.
“History is a race between education and catastrophe.” H.G. Wells
“History is a race between education and catastrophe.” H.G. Wells
“and the delusion of youth and [insert your nemesis: 'liberals,' etc....] is that education can win” manhattanite
“History is a race between education and catastrophe.” H.G. Wells
“…and youth maintains the delusion that education can win.” manhattanite
I’m just ticked that we’re likely to have the Depression before the Roaring-20s of cynicism. By the time everyone is disillusioned, I’m going to be too old to Roar.
“…the more arrogant they are. This applies to people at all rungs of life.”
O.K., I’m feeling pretty arrogant myself today…”I don’t care, so he’s the Vice President of the United States of America…I’m still not going “duck hunting” with “Dicky Boy” Cheney and Karl “I got the moves” Rove! Get it? Got it?…Good!
You’re not arrogant, you just choose not to associate with the wrong sort of folks.
There’s even a name for it. 2 researchers at Cornell wrote a paper that described the phenomenon by which people of lesser competence overestimate their abilities. The Dunning-Kruger effect (named for the researchers who published the paper) may describe the factors behind the housing bubble more accurately than just about anything else.
Also known as ‘The Peter Principle’
“In a hierarchy every employee tends to rise to his level of incompetence.”
Trust Cornell to re-invent the wheel
confident but clueless
SD U-T: http://tinyurl.com/yq4rup
“The housing picture in California is likely to remain gloomy throughout 2008 as sales drop to their lowest level in 23 years and prices decline 4 percent, the biggest downturn in 15 years, the California Association of Realtors predicted yesterday.”
“Meanwhile, the National Association of Realtors predicts an upturn in sales nationally next year to 6.12 million, compared with this year’s estimated total of 5.78 million. The association also believes prices will rise 1 percent to a national median of $243,900.”
Now that we know what won’t happen, how much will sales and prices actually decline in 2008?
Sales will drop to 4.4 to 4.7 million in 2008.
Prices will drop 6% to 13% (David’s prediction) for the next six months. Most likely 2008 will see a 10% to 20% price drop. That is huge and, excluding 1931, unprecedented on a national scale.
Got popcorn?
Neil
Who is interested in buying a home when newspapers everywhere are predicting double-digit price drops in the next couple of years?
I guess the buyer pool will be limited to rich folks who can easily stomach $100,000+ drops in net worth, and to people who can somehow qualify for a loan, then read the papers they are signing, even though they are too illiterate to read USA Today.
“Who is interested in buying a home when newspapers everywhere are predicting double-digit price drops in the next couple of years?”
i wouldn’t discount the potential purchases of young couples whose nesting instinct trumps common sense.
I think you’re right about that.
I couldn’t manage to talk two otherwise intelligent and financially savvy friends out of buying a condo this August. They’d politely listen to my arguments against buying right now (especially condos), but there was no dissuading them.
I chalk it up to nesting with their infant.
I hope it doesn’t hurt them in the long run.
I’m sorry, but that’s ridiculous! Plenty of people rent through the first child. Traditionally, the house-buying push happens when the oldest is about to hit kindergarten or first grade. By then you should have some money saved up!
My grandmother, who grew up VERY wealthy in the 1930’s (any wealthy was very during the GD, lol, but she summered in Key West, that sort of thing), married a farmboy who went to college on the GI bill and started a family in a tiny, crappy house in one of the crappier suburbs of Chicago. They didn’t move into a nicer house in a toity suburb (the same house they live in now, btw) until the two oldest were about to start school and the third was on the way.
I don’t know if the infamous cramped house was a rental or not, but I do know that my parents rented right until the summer of 1984. They bought a house a month before I started kindergarten.
Actually, they bought at the worst possible time and probably should have kept renting, but whatever.
I was four years old before I lived in an owned house. I did not come to any harm! Wtf is up with people these days.
The housing picture in California is likely to remain gloomy…
What is so gloomy about affordable housing?
I remember fleeing California 10 years ago when prices where much lower than now. We were coming off a real estate bust and prices were down in Shake-n-bake land. And you know what? It was still expensive compared to other places.
I fear that California will never be “affordable”. Cheaper than now? Without a doubt.
Ambac expects to report a loss of up to $3.50 a share in the third quarter. The company said a mark-to-market adjustment for credit derivatives amounted to an unrealized pre-tax loss of $743 million.
Reuters: http://tinyurl.com/yueseq
“A friend, whose house is in foreclosure, relayed to me the following story:
He answers a knock on the door, and a couple of surprised guys who had driven up in a large pickup truck stutter a bit, say they are there from the bank, make some excuses and then leave. He is sure that they were not from the bank. He thinks that these guys were tracking foreclosed properties and were there looking for a vacant property they could raid for fixtures, etc.
Can anyone report any similar situations?”
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=2213226
I bet this crime will grow enormously.
I know some folks who were remodelling a duplex and had the AC units stolen from outside.
Hell, I ran an errand down to the local gas station one time — it couldn’t have taken more than 10 minutes — and when I got home, the airconditioning wasn’t working. The place was only a few months old, so I called the builder to complain. When he arrived, he found the outside AC unit sitting precariously on its concrete foundation, and the refrigerant line had been cut. He figured that someone saw me leave, tried to steal the AC unit, and I suprised them when I came home so quickly.
That was 15 years ago in the midwest.
Tons of AC units are being stolen in Iowa / Nebraska. They are back to taking a photocopy of your drivers license at the Alters when you sell your scrap. Pretty soon they may go back to taking your fingerprint too (my father told me they did it in the early 90’s).
..
The Polk County Sheriff’s Office just ran an article in the Lakeland Ledger the other day about the formation of a new task force to investigate and stop thefts from construction sites and abandoned homes.
An unemployed army of meth-head tweakers are stripping copper wire, AC units, appliances and fixtures from flipper homes and spec construction throughout the county.
Some of those speed freaks are the same ones that installed the stuff when they were employed in the industry, I bet……
.
“Some of those speed freaks are the same ones that installed the stuff when they were employed in the industry, I bet……”
When I heard about the duplex, I wondered if it wasn’t an inside job by a couple of workers from the contractor. But, there could have been any number of suspects: the illegals living across the street, the section 8 renters on the corner, the tatooed alkie living two doors down.
One of my clients (a utility) told me that there is an unprecedented amount of “metal” theft going on in the IE. Just recently, they said someone tried to use metal tree trimmers to pull copper insulation off a pipe, but didn’t realize he was also pulling out a high voltage line that provided electric to this small station. He actually EXPLODED and his partner hightailed it up to the nearest fire station for help. How does that conversation go? Help, my friend is in pieces?
It’s rampant in the desert. There are huge billboards warning criminals (you gotta love it) that it’s a crime. The tweekers want them some copper to sell.
“I bet this crime will grow enormously.”
I think a number of crimes will grow enormously before all this takes its course. Some people look around and start feeling like schmucks for being honest and doing things ethically and treating others as they’d want to be treated, especially when it appears that the very “cream” of society thinks nothing of committing financial and political crime and profit enormously from it. Crime waves come from the top down.
I just thought of a good new scam that I am sure people will try soon: They call FBs pretending to be from the bank and arrange a ’settlement’ payment to reduce the payment terms of the mortgage. Show up in suits with bogus documents and they are off to the next appointment.
What makes me nervous is all the illegals that will no longer have work to do now that the home building has just about ended and people aren’t atming their houses to put in concrete and patios. Some will go home, I’am sure, but I’d say most will stick around and they will do whatever needs doing to eat. With the unprecedented numbers of them in the country right now, that is a scary thought.
We rent in a really cute little neighborhood with an actual downtown within walking distance. However, there is one block about three blocks south of me that someone had the idea to knock down all the great victorian and sfh’s from the 1920’s to 40’s that this place is known for and put up the nastiest apartment buildings and duplexes I’ve seen. The place teams with gangsta looking guys, graffiti, and police. Once the welfare/construction jobs run out and they start looking our direction, we’ll be moving to a newer neighborhood ASAP
I have been concerned about this (unemployed illegals) for years.
IIRC MExican remittances were down 30% or so earlier in the year.
Irving, Texas school district is wondering where 65 illegal students are, deciding they must have stayed home due to scares about deporting criminal illegals.
Housing starts in the area? Gee, is it barely possible the construction workers moved on?
Here is an interesting article from May 2007. The premise is that a decrease in illegal border crossings is a precursor to a recession.
Title: “What’s US economy’s future? Ask illegal immigrants”
http://tinyurl.com/22soxp
Ron Paul’s campaign headquarters is on the second floor of a dry cleaning establishment in Arlington Va. If he runs the government like his campaign there will be no reason to raise the debt ceiling. Ironically, a massive, newly built, FDIC campus is a block away from his shoestring headquarters.
I like Ron Paul’s ideas. Unfortunately, I think he comes off like Perot to some people: a nut. I think he needs to get out there in more media and make sure he acts stately….
He needs to keep being exactly who he is. I hear this all the time from people: “I like Ron Paul’s ideas, BUT, etc., etc.”
First of all, he’s been elected over and over in his own district. That’s a winner, not a loser. And on the subject of being considered a “nut”, compared to who? Giuliani???? McCain???? Mitt “I’m a Hunter” Romney??? If people compare Ron Paul to those characters and Ron Paul is the one coming off as a “nut”, we’re in serious trouble. If Paul is a “nut”, the rest of them are certifiable psychos.
They aren’t giving him the time of day. I saw the Forbes article about the GOP debate, and Ron Paul didn’t get a single mention in the entire article. It’s going to be a tough win, because the media is focused on the name recognition of Giuliani and McCain and such.
Perhaps I just clue into it, but Ron Paul have been the only political bumper stickers that I’ve seen so far around Norfolk, VA. Well, many people still have the Bush 04 stickers, you’d think they would have peeled them off by now.
“They aren’t giving him the time of day.”
Yeah, Brian Williams’ shoulder pads would start squirming like Britney’s boob job on SNL if he had to mention Ron Paul. That’s OK, people are pretty much tuning out the MSM anyway. It’s just too smarmy and smug and stupid. There’s another shakedown for ya. If the MSM ever gave out their REAL ratings, they couldn’t get a dime for their advertising time. Love to see the corps piss their money away on the MSM. Love it.
Ron Paul is despised and feard by the supply side globalista apologist psychopaths running our public and private institutions. I would like to see him win for the sheer enjoyment of watching so called “conservatives” scramble for a new moniker. These creepy clown CONservatives(voters and elected alike) have no clue to the meaning of the word
You get me wrong - I want him to win. He needs to fine tune his delivery - not his message. Don’t jump ugly on me! He is passionate about stuff, but can come off somewhat a zealot. Just constructive criticism, nothing more.
No I wasn’t critisizing you at at MBA. Not at all. I was making a separate point about how the established gop machine is attempting but failing to destroy Dr. Paul. Just like the same machine hijacked a religion called Christianity.
Ann Coulter loving and Cheney a**kissing Glenn Beck is touting Ron Paul as a nut job. This after he rips the administration’s practices and the government as a whole throughout his whole show. (eye roll)
saw my first ron paul bumoer sticker today - on a car out in the middle of nowhere in E. Utah. Go ron!
I can’t wait to see the title of Ann Coulter’s NEXT book
http://www.pittsburghlive.com/x/pittsburghtrib/news/breaking/s_532113.html
“The seven-county Pittsburgh region, where foreclosures had been declining this summer, increased in September, with 1,194 foreclosures last month, up 44 percent from the 670 in August. ”
I was surprised by these numbers. I hadn’t realized Pittsburgh was so bubblicious.
Quite a number of cities in the Midwest participated in the bubble by not going down earlier. If you bought a house in Detroit for 100K in 2000, in 2005 you could have still sold for 100K. Now the same house is likely to sell for 50K. The jobs to afford the 100K house left in 2002. Replacement jobs are not present, yet.
What no bread, and uhm…what are they called, “foreclosures”?
All’s well here in $300.00 per pair Mazzholeland.
http://www.boston.com/yourlife/fashion/articles/2007/10/11/the_sisterhood_of_trying_on_pants
The girl in the pic is trying on the Baby Got Back brand.
“three stylish 30-somethings sampled armloads of the season’s newest jeans on a recent Monday night.”
Note the implication of the wording. You’re not stylish if you’re not doing the same thing. Also bugging me: “the seasons newest jeans”. THEY’RE FRICKIN JEANS! I’m going to get some denim, sew it together, and become a new fashion icon sporting the new “Huck Finn” style. Priss also “feels so 70’s” in a pair. How can you feel like a particular decade, and, how can you “feel it” if you were barely around for it? These are the same type of brainwashed idiots that get a discount mailer and think, “Look how much money I will save!” Well, tard, you’d save even more if you DIDN’T GO SHOPPING!!! Remember my wife was one of these, and I turned her brain on - YESSSS!!!
And then they put the stuff on their credit card and most of them end up “paying” interest on the so called ” savings”
1984 double speak–when spending means saving
http://www.minyanville.com/articles/Housing-Homebuilders-Beazer-KB+Homes-Hovnanian-D.R.+Horton-Standard+Pacific-Meritage/index/a/14378
And how long have you been long?
The article ends with lots more doom on the way.
“The latter, in my humble opinion, stands out as the most likley catalyst for the final collapse in homebuilders’ equity prices (50% from the coming recovery highs?) and should generate the type of desperation and despondency toward real estate that - after some years - will create the right environment for a sustained housing bull.”
Renters, beware of subprime landlords…
Mortgage Turmoil Hits Renters
Tenants Face Eviction
When Their Buildings
Go Into Foreclosure
By KELLY EVANS
October 11, 2007; Page D1
The mortgage mess is claiming a new group of victims: renters.
Across the country, a rising number of landlords are falling behind on mortgage payments, sending their properties into foreclosure, according to legal-services attorneys, local officials and financial experts — and in many cases, their tenants are being forced out of their homes. Often, the tenants’ first inkling of trouble occurs when they get a letter from the bank directing them to leave the premises.
http://online.wsj.com/article/SB119206052887155348.html?mod=hpp_us_whats_news
Home owners are the losers now, and renting is the new black.
October 10, 2007, 8:15 pm
Renters Reclaim Their Bad Reputation
Owning your own home has long been part of the folklore of the American dream: a backyard playground for your kids, two shiny cars in the driveway and a crackling fireplace. And during the housing boom of the last few years, more people than ever were able to make that dream a reality, thanks to cheap mortgages and low qualification standards. Renting — that old standby for young professionals or people with less-than-perfect credit histories — became increasingly unpopular and unappealing.
As Danilo Pelletiere, research director at the National Low Income Housing Coalition in Washington, put it: “If you weren’t owning in 2006, there’s a reason,” and that reason wasn’t pretty. “The stigma of renting was raised to a really high level,” he said. “If you were renting you were a loser.”
http://blogs.wsj.com/developments/2007/10/10/renters-reclaim-their-bad-reputation/
“If you were renting you were a loser.”
Not fiscally.
“I’m a loser, baby. So why don’t you kill me?” -Beck
Interesting….I’ve never seen so many “for rent” signs outside of apartment complexes around Boston, ever.
And just the other day I saw my first “for sale” sign outside a 20 unit or so, decent looking, apartment building. It never occured to me that apartment owners may have levered up as well in this process but, on the other hand, why wouldn’t many of them have extracted equity (using crummy loans) as well?
One would think owning rental property would work in an enviroment where ownership is now unattractive (if not unfeasible). But maybe there’s a ceiling on what they can get for rent. At some price point perhaps people chose more roommates or go back home.
Here in the Norfolk / Virginia Beach area there are tons of rentals available as well. Using sites like archive.org to look at rental listing webpages from 1, 2, 3 and 4 years ago, there appear to be more vacancies now than ever.
I tend to say it’s because people are leaving the region, as it’s too expensive now. I have no proof if this is true or not, and our area actually does always have people coming and going due to Military transfers.
I could actually say it’s different here, since all the military people don’t want to rent for their 2 or 4 year terms, and bought, and now will get transferred, and won’t be able to hock the homestead.
I *hate* renting, but I’m not going to make some fools day by overpaying for a house. If anything, the housing bubble has made me re-think my decision to stay in the area versus relocating to DC or Raleigh (Don’t worry DC/Raleigh people, I’m an okay guy).
In the meantime, I rent, zero debt, and tons of toys.
Not only is Hampton Roads expensive, but it has become incredibly overbuilt as well. I started going there in ‘94 to visit the in laws, and everytime I have returned since there is a new subdivision going up here, another condo complex there, etc. Total population hasn’t been increasing that much in that time (~10%?) but the amoun of housing has to have increased by 30% or more.
Yet the ridiculous pricing remains for now.
But maybe there’s a ceiling on what they can get for rent.
Yes. More and more FOR RENT signs locally, but if they are overpriced, they stay vacant. I just looked at a bungalow on a horse farm. It would have suited my housing needs, but it was 30% too high.
It doesn’t make sense for me to overpay on a rental, if I’m waiting out the market for a lower house price.
two bubble signs of the times from the Netherlands:
- at least ten Dutch real estate investment funds/developers, that promised double-digit returns on RE investments (often in Spain, Turkey etc.), have secretly stopped all activities, taking millions of money with them. Because they target investors that invest more than 50K euro each, these funds are exempt from any oversight from the financial authorities. One could have guessed right from the start that many of these funds are criminal organisations that just take the money and run at the right time. Sign of RE top?
- the number of Dutch debtors that ‘disappear’ is increasing strongly, currently estimated at 250-500.000 (1.5-3% of population, or maybe one should say 15-30% of debtors?). Getting out of sight of creditors is as easy as moving to another city and not registering again for the local records. The Dutch government protects personal data, making it nearly impossible to track debtors (never underestimate what the Dutch government will do to protect criminals).
This bull knows how to party!
Bolstered by Wal-Mart forecast, U.S. stocks open higher
By Kate Gibson
Last Update: 9:34 AM ET Oct 11, 2007
NEW YORK (MarketWatch) - U.S. stocks opened higher Thursday after Wal-Mart Stores Inc., the world’s biggest retailer, hiked its profit expectations for the third quarter and early data cast a more positive light on the U.S. economy. T
http://www.marketwatch.com/news/story/bolstered-wal-mart-forecast-us-stocks/story.aspx?guid=%7BB61BED8B%2D5D94%2D4777%2DBCCC%2DAABF9A27CDBE%7D
LOL
GS, When the stock market goes up because WalMart reports improved sales “Wal-Mart reported a 1.5 percent increase in same-store sales, slightly below the 1.8 percent estimate from analysts surveyed by Thomson Financial.” (It is important to look at the phrasing in the article, “slightly below” vs. if sales had gone from projected 1.5% to up 1.8%, the article would have stated “jumped 20%”). In reality, the sales did not even keep up with inflation over the last year.
“But the discounter raised its profit outlook to a range of 66 cents to 69 cents from its previous 62 cents to 65 cents due to cost cutting.” Cost cutting for WalMart is cutting hours for employees from 40hrs/wk to 30 hrs/wk. This way WalMart does not have to pay benefits like health insurance or paid breaks.
“The company said apparel and home furnishings remain weak, and that company research continue to show that customers remain concerned about their finances, particularly the cost of living.”
In sum, WalMart is selling fewer items and WalMart is making moneys by cutting wages.
In addition to the front page bold type WSJ article on foreclosures referenced above, the Journal has an article in its personal journal section on responsible renters with valid leases dumped on the street as their landlord gets foreclosed on.
My advice — don’t rent without the landlord giving you a security deposit.
This is why when I was looking for a place to rent here in San Diego I only considered renting from long time owners, absolutely no renting from flippers. Zillowed them all. It’s even better to rent from a property management firm.
San Diego appears to be underwater.
http://www.voiceofsandiego.org/articles/2007/10/11/news/03foreclosure101107.txt
(Banks seized 14 times as many San Diego County homes last month as they did in September of last year, leaving home values vulnerable, lenders flooded with properties and government officials scurrying to help.)
A mere doubling of foreclosures doesn’t impress me, given what’s gone on. A fourteen-fold increase is more like it.
Assuming an exponential rate of growth, SD’s foreclosure doubling time is 96 days (just over three months).
guys my bet is on nasdaq, cheap $ will work wonders for tech sector.invest in technology, US tourism (my pick is IHR up 25% in last one month) and GOLD. dont forget the railroads . Falling US auto industry will help railroad do well in the long run
Aren’t we a bit against a tech brick wall? Can’t make PC’s faster without overheating or installing huge fans. US Tourism? Hmm, I’d like you to explain that one before I try to shoot it down. GOLD, YES. Railroads - I believe that they are experiencing a bit of a renaissance, but failing US auto industry - how does that help? Do you mean that people will use rail again instead of cars? Optimistic, even a bit idealistic, but I’m not so sure it’s going to happen in our lifetime. Short term, failing auto industry hurts RR’s because rail is used to ship vehicles long distances, Sam. They only get on trucks after they’ve been delivered to localized (centralized) “ports” that are most often right next to a rail yard, or at least next to a track. Lower auto sales / production means fewer REV $ as fewer railcars are needed. This, in turn, reduces working hours of train engineers and conductors, reducing their incomes and consumption levels, unless the RR’s can pick up the slack somewhere else. Though, RR’s are quick to lay off newly hired train crews even in the event of a light cough. Part of the reason they get paid so much is because of little job security. Sorry I got off “track” (pun).
After repeated derailments on upstate NY rails in the last few years, the state decided to have a look and found that in many areas the rails are not in good condition.
Not that I know anything about investing but I’m wondering if it might be profitable to consider investing in RR support industries. I’m not sure how the RRs could make $$$ in the short run when they have so much maintenance work to do before they can increase capacity.
Well, Union Pacific hires ALL of their track repair and maintenance crew. They also hire all of their own welders, repair persons for railcars. In fact, about the only type of manual labor they source to another company is painting box cars. You really have to dig deep to find the suppprt industries for rail. I’m talking railroad tie makers, steel companies that supply the actual rails, and diesel engine manufacturers. Hey, at least if you invest in diesel engines, you’ll cover the trimodal trifecta (rail, truck, boat), assuming one takes up the slack of the other. I might have something there.
GE does financing on loco’s (some of which it sells) AND buses/coaches.
If they stayed out of home mortgages (oops, GMAC) they may find like the GM of old that the debt business is a good business.
Not sure what happens in a recession, although I doubt Class I is gonna default.
And yes, Chad, you’re totally right–RR’s improving profitability in the last decade has been from the auto transport trade. The falloff in new car buying will only hurt them.
Increased fuel prices could help RR’s for some jobs … or it could push more trucking co’s to hybrids. Some big companies are already putting in orders for hybrid tractors.
I suspect Mr. Buffet is buying RRs on the supposition they’ll be in demand as the price of petrol increases the expense of trucking beyond the economic
Or he already has all the dark blues, oranges and greens
I just had to share what came in the mail yesterday. I bought a subscription to MONEY a while back and they gave me a complimentary subscription to Business 2.0, which turned out to be a bit of a rag. Yesterday, I got the October issue in a wrapper declaring “This is your last issue of Business 2.0.” (Oh really? Cool. They were taking up space.)
It follows up with “Business 2.0 will no longer be published in print form.”
The best part? The cover story: How To Play The Real-Estate Bounce-Back.
F***ed magazine.
Ironically, I cancelled my subscription to MONEY two weeks ago.
I got a free subscription Biz 2.0 a couple of years ago. After reading an issue or two I started sending them straight from the mailbox to the recycling bin.
NEW YORK, Oct 11 (Reuters) - The U.S. Federal Reserve said on Thursday it was adding temporary reserves to the banking system through overnight repos.
This was the third operation of the day. The overnights followed seven-day and 14-day repurchases.
NEW YORK, Oct 11 (Reuters) - The Federal Reserve said on Thursday it added $20 billion of temporary reserves to the banking system through seven-day repurchases.
A total of $86.95 billion in bids were submitted for the operation. The Fed said it accepted $17.5 billion in Treasuries and $2.5 billion in agency debt.
Voz, This is an excellent read. by John P. Hussman, Ph.D.
Show Me The Money!
“…If you examine the data you’ll find that the total level of “liquidity” that the FOMC deals with is minuscule in relation to a $13.8 trillion economy, and the variation is even smaller. The total reserves of the U.S. banking system are about $40-$45 billion, and are very stable. The Fed simply does not “inject” meaningful amounts of “liquidity” to the banking system.
Indeed, the latest cuts in Fed controlled interest rates were effected without any injection of “liquidity” into the banking system at all. Total borrowings by depository institutions from the Federal Reserve (i.e. borrowings at the Discount Rate) actually fell last week to $2.421 billion, from $3.158 billion the preceding week. That couple of billion dollars is the sum total of all outstanding borrowings at the Discount Rate. Though these figures are still higher than the typical level of discount window borrowing (a few hundred million), they are minuscule. Yet these are the figures that investors are revved up about as if this “liquidity” will save the mortgage market.
Meanwhile, there has been no material change in the “liquidity” provided by the Federal Reserve in the federal funds market either. It’s kind of funny (and just a little pathetic) how the press and investors get all excited every time the FOMC does an open market operation, as if they represent fresh “injections” of liquidity into the banking system. They are generally nothing but rollovers of existing repurchase agreements. …”
http://tinyurl.com/2r5pf7
Net of maturities $10.5 billion was withdrawn today.
http://www.gmtfo.com/reporeader/OMOps.aspx
thanks Hoz, and Popper:
The read was good, and the slosh chart is interesting.
NEW YORK, Oct 11 (Reuters) - The Federal Reserve said on Thursday it added $9.5 billion in temporary reserves to the banking system through overnight repurchases.
Federal funds traded in the open market were at 4.813 percent, above the Fed’s target rate of 4.75 percent.
The Fed said $44.1 billion worth of bids were submitted. It accepted $200 million worth of Treasuries, $3.722 billion in agencies and $5.578 billion worth of mortgage backed securities
It’s a good thing most people don’t read anymore.
Mayor Daley wants 100,000,000 more in property taxes even against a backdrop of stagnant sales. I can’t imagine people buying into Chicago/Cook county when the government shows no ability to trim the fat.
LOL, Andy, Florida govs (state and local) want more, too. They’re pitting their shants right now over the budget. Gonna get worse, too. Just as TSHTF and people abandon homes, they now have fewer people paying taxes and a bigger expense for cleaning up or tearing down abandoned property.
FYI, one of the Hillsborough County Commissioners in FLA threw a hissy because his “pet” project for a junior sports complex was shot down for budgetary reasons. You can bet he’s got the long knives out.
It only makes sense that local governments would need more taxes to provide the “same” services. Because local governments don’t have the privilege of printing their own money they operate the same way individuals and companies operate. Costs for gas, materials, and everything else the local governments need is going up. Not to excuse the excess in local governments, but to help put in perspective that you cannot expect local governments to maintain a flat income level with changing prices.
Michigan, here we come
If you’re trying to avoid tax increases, don’t come here.
Just think of all those condos - especially the recent construction - which have crazy tax bills already. Between inflation spiking HOA and gov’t spending spiking property taxes any further increases in the city’s levy will leave multifamily D.O.A.
There’s a disaster waiting to unfold here. Will the F.I.R.E. jobs hold up in Chicago? B of A might gut LaSalle jobs in favor of Charlotte. If those downtown jobs go this will be like Miami.
Don’t forget all the TIFs created in the past 10 years to improve blighted areas like the Loop.
A surprising number of people don’t even consider those additional expenditures when they buy a condo — and those taxes and HOAs can add up quickly.
“Mayor Daley wants 100,000,000 more in property taxes even against a backdrop of stagnant sales. I can’t imagine people buying into Chicago/Cook county when the government shows no ability to trim the fat.”
They were also trying to push through a sales tax increase in non-grocery purchases to 11%. When the time comes, we might be taking another look at RE in Lake or DuPage County instead.
My last chance to observe a real estate housing bubble, was in el lay…
Late 80’s-early 90’s
Back then, getting information was like pulling teeth. You had to pit the lies of the newspapers against the lies of the Realtors, and make some sense of it.
This Housing Bubble is 100x bigger, and the information flow almost as huge, as well.
Information, good or bad… will not be denied access to us, this time.
We are headed for a rather sudden shift of paradigm soon, it’s so much bigger than the Housing Bubble, in reality.
Yes it is. Housing bubble is just a symptom.
“Now if you look at the last 200 years of financial history, you had investment booms and mania in relatively small sectors in the economy: in the US in canals and railroad in the 19th century, some regional real estate markets.
And then in the 1920s you had the stock market boom, and in the late 80s you have a silver, gold and energy share boom, and in the year 2000 we had a boom in tech stocks and in Japan in the 80s in Japanese shares.
“And each time these bubbles burst, they had an impact but the impact was largely sectoral or regional and not affecting the whole world.
“Now, we have a bubble everywhere. We have a bubble in real estate prices, we have a bubble in stock, we have a bubble in art prices, we have a bubble in commodities.”
“If someone argues we’re in a global synchronized boom, I agree entirely. The consequence will be that the next bust will be a global synchronized bust.”
Mr. Marc Faber
Your new paradigm same as the old paradigm, “Buddy, can you spare a dime?”
I don’t see the current March of Dimes getting too far, not enough exercise.
“Buy high, sell higher. Sell low, buy lower. That’s the way the old saw about making money in the market should read. To do otherwise is to be guilty of picking tops and bottoms. Both are deadly ego games.” - Edward Allen Toppel
MRIS stats (mid-Atlantic area) are out today.
Loudoun county VA - wealthiest per-home in the USA and one of the top fastest-growing counties in the U.S. - homes sales last month were 288. This is the lowest one-month number since February 2000, and the lowest number for September since 1998 (back when Loudoun’s population was about 1/2 of what it is now).
Corresponding stat is that sales prices as a percentage of asking price was 92.01% - an extremely low number historically. The only time on record numbers were that low were last winter.
These are numbers that are normally high in the summer and low in the winter. The fact that they’re already low in September doesn’t bode well for a warm 07/08 winter for sellers.
FWIW - a month or two ago I predicted a rough fall for Loudoun and NoVA in general - looks like it’s starting. It’s due in large part to the higher rates on jumbos starting in August. Inventory for NoVA is back up to record levels now, seasonally adjusted, after dipping below during the summer.
I think nationwide this winter is going to be seen as the “nuclear winter” of the housing bubble pop - when things *really* started going bad.
It seems like the outer ‘burbs of DC will take a hard hit soon, no doubt.
I think real deflation / panic will take longer in places like Arlington and Rockville.
I keep getting my eCONomists McCain & McClain mixed up…
Which one was was the prisoner of war and which one is a prism or whore?
http://online.barrons.com/article/SB119196523530153865.html?mod=yahoobarrons&ru=yahoo
LOL! i missed you yesterday, about 3:00pm pt, i thought there is something missing here, it was like the HBB was running one piston short, and then i realized you wern’t posting. did your power go off yesterday?
The prisoner of war became a political whore.
http://tinyurl.com/2n4lal
If DC is different they why did sales plunge?
in away this is good news, but i think they deliberatly fudged those numbers to get bb to lower that interest rate.
Good jobs news causes rates to increase
http://biz.yahoo.com/brn/071011/22266.html?.v=1
or just held a gun to his head
RALEIGH, N.C. (AP) - State Treasurer Richard Moore has asked the U.S. Securities and Exchange Commission to investigate the timing of stock sales made by the chief executive of mortgage lender Countrywide Financial Corp. (NYSE:CFC)
Moore, the trustee of a pension fund that holds more than $11 million in Countrywide shares, said in an Oct. 8 letter to SEC Chairman Christopher Cox that he was ’shocked’ to learn that CEO Angelo Mozilo ‘apparently manipulated his trading plans to cash in’ as the subprime crisis was heating up.
‘As one of many investors who have felt the painful losses in Countrywide stock, I am outraged at his manipulation of the system and this abuse of shareholders,’ Moore wrote. ‘The timing of these sales and the changes to the trading plans raise serious questions about whether this is mere coincidence….’
CNN: http://tinyurl.com/2razea
Can we get a MoziloWatch blog?
In a recent statement, Mozilo said he recognizes that Countrywide’s stock is ‘under pressure.’
‘However, the terms of the 10b5-1 Plan that I established in October 2006 require that these sales be executed,’ he said.
i think this says it all. a plan that he established that required it to be executed. i think his head is on the chopping block! LOL!!
I’ve realized in retrospect that bestowing Rusty Staub’s good nickname to the man, was my bad.
“Le Tan Orange” will be his new moniker temporarily…
Soon to be, Duck L’Orange
I’m impressed with the treasurer’s speed of reaction to this surprise crisis.
http://money.cnn.com/news/newsfeeds/articles/djf500/200710111106DOWJONESDJONLINE000802_FORTUNE5.htm
Beazer homes restating earnings on accounting/mortgage violations.
Sorry if it’s been posted.
Where Money Rushes to the Top
Travels Across Greenspan’s America
“Alan Greenspan’s low-interest-rate-fueled real estate boom was in essence a form of class warfare, strengthening the power of large property holders while reducing that of working persons. Recent Fed actions confirm this. The interest rate cuts will not help homeowners now in trouble. The banks will not cut deals with them, and prospective buyers will not get lower rate mortgages. The banks and other creditors, however, now have the liquidity necessary to help them ride out the crisis. And should the economy slip into recession, so what? Those on top will buy up those without enough ready cash to withstand a downturn, concentrating economic power still further. Workers will lose their jobs, and there will be more foreclosures. But they are too disorganized and demoralized to do anything about it.”
http://tinyurl.com/2waaah
“…But they are too disorganized and demoralized to do anything about it.”
One word:…………… Yet!
Coming soon: “An avalanche of ANGER!”
Countrywide mortgage funding down 44% last month
http://www.marketwatch.com/News/Story/countrywide-mortgage-funding-down-44/story.aspx?guid=%7BD9DD71DD%2D0A64%2D4A61%2D9254%2DC6A58BE96A22%7D
One week of local defaults - this is getting UGLY:
http://fidelitykern.com/nod.pdf
alot of these homes had second mortgages taken out on them. so much for the atm machine. lol!
I’m on my 4th update for Bakersfried…but here was # 2:
Bakersfield,
Oil, carrots, pesticide dust and… foreclosed houses
LMAO!!!
Doh!
Mortgage industry miseries mount
OC Register
http://tinyurl.com/2yocoz
OC Register real estate reporter Jeff Collins attended Department of Real Estate Commissioner Jeff Davi’s annual appearance at the California Association of Realtors conference Wednesday. Here’s his report. …
State Real Estate Commissioner Jeff Davi vowed to get tough on real estate license violators and pleaded with an audience at the California Realtor Expo to report violations so his department can get “bad actors” out of the business. Davi said that complaints this year are up 15% to 17% because of the housing slump. There’s also been an increase in the number of mortgage-related complaints, he said.
Still, the commissioner warned, don’t expect prompt action: It can take up to a year or longer before legal proceedings can be launched against violators because of the time involved in investigating complaints. He said a staff of 38 professionals are devoted to policing around 540,000 real estate licensees as well as those practicing real estate without a license. Even if his staff were increased, it still would take months to complete investigations, he said.
While Davi wants bad actors out of the business, his administration isn’t trying to limit the overall number of licensees. Responding to a question from the audience, Davi said Gov. Arnold Schwarzenegger opposes efforts to limit those getting into the real estate game, even though one out of every 53 California adults now has a license.
“You can’t swing a dead cat without hitting a real estate licensee,” complained Los Angeles real estate broker Laura Hall.
“The position of the governor has always been to promote opportunities,” Davi replied. “And he feels real estate is an opportunity.”
Davi, meanwhile, turns 40 today. He briefly donned a set of pink Mickey Mouse ears as the audience sang “Happy Birthday” on Wednesday.
ben, if you use this post please title it appropriatly,
“You can’t swing a dead cat without hitting a real estate licensee”
LOL!
I know, I love that quote and I couldn’t resist posting!
Laura Hall…. Laura Hall… That name rings a bell.
Oh, that’s right! I met her at that Dead Cat Swingers Anonymous meeting I went to up in L.A! Man oh man, could she swing a dead cat, in her day. But, as they say, “There but for the grace of God go I!” All the guys at the meeting were saying, “I wish I knew her when she was still swinging dead cats!”
–
“And he feels real estate is an opportunity.”
For massive fraud?
Jas
Keep an eye on your wallets, they’re at it again:
News story: Government creates coalition of real estate interests to address foreclosure issue
“The House pursued its own plan for helping homeowners, passing a bill to create a federal trust fund to finance construction and rehabilitation of affordable housing. The measure would provide between $800 million to $1 billion a year with the goal of creating 1.5 million affordable housing units over the next decade by funding grants to a variety of housing providers.
The trust fund would be financed mostly from profits Fannie Mae and Freddie Mac, the chief U.S. buyers and guarantors of mortgages.
President Bush has threatened to veto the measure. The White House and conservative Republicans argue that it would duplicate a program at the Department of Housing and Urban Development. GOP lawmakers said that siphoning money from Fannie Mae and Freddie Mac would amount to a tax on middle-income homebuyers.”
“On September 14, China requested the World Trade Organization (WTO) to settle its dispute with the United States over Chinese coated paper after negotiations with the US failed….It is the first time that China has filed a WTO case against the US since the country’s entry to the world trade body in 2001….
With its huge trade deficit, the US has undergone an industrial restructure. The government has to protect its domestic industries from foreign competitors. As one of the biggest trade partners of the US, China has not only increased its export volume to the US but has also added value to its commodities in recent years thanks to the development of Chinese manufacturing.
Thus, competition between Chinese exports and US domestic products have become more intensive.
It is, therefore, natural for US authorities to resort to antidumping measures to protect their domestic industries.
Another motive is the strategic interests of the US. Researchers from the US National Bureau of Economic Research, Thomas J. Prusa and Susan Skeath, found that US antidumping cases were often driven by political pressure, national security interests, and historical economic relations. And these considerations are sometimes more important than economic interests.”
http://tinyurl.com/2u2qab
–
David Rosenberg, ML, 10/11/07: Breaking News — 3Q earnings on the precipice of turning negative We saw a several profit warnings from companies yesterday, which prompted Thomson Financial (who track earnings) to say that S&P 500 earnings have “a good chance” of turning negative. Not that it wouldn’t take much, with the current 3Q tracking at just 0.1% YoY (we will see a slew of earnings reports in the next several weeks). Indeed, if earnings were to decline, this would be the first negative print since the end of 4Q01.
According to a Wall Street “strategist:” “Earnings don’t matter, what matters for the market is whether or not Fed would cut rates.” Yes, fed would cut rates all the way to zero as the depression develops in 2008. Bulls, charge!
Jas
DAVID CALLAWAY
Earnings season casts long shadow on rally
Commentary: Outlooks key to financials, techs; Oct. 19 looms
http://www.marketwatch.com/news/story/earnings-season-casts-long-shadow/story.aspx?guid=%7B16073D3F%2D3140%2D4255%2DA5DD%2DDCC8D0252639%7D
But if warnings start to pile up, we could be in for the rough patch many have expected for this time of year. Thomson Financial underscored the growing concern about earnings season on Wednesday when it said that it’s possible earnings growth for the S&P 500 Index could turn negative this earnings season for the first time since early 2002.
Investors need to ask themselves this weekend whether we’re in a scenario like in August 1998, where the Federal Reserve Board cut rates by 50 basis points and drew a line under the growing Asian currency/Russian debt crisis, ending the turmoil and allowing stocks to resume climbing for two more years before the bottom fell out. Or whether we’re closer to 1987, when the bottom fell out that October, but the market then recovered in the last few months of the year and kept rising from there. Or whether it’s 1991 and 1992, when the last real-estate crisis claimed many banks in New England and elsewhere, and the country went into recession. Or finally, whether we’re just in uncharted territory this time.
i’d say rule #1 of investing is don’t start piling in new money whent the market is reaching new highs. Then again this kept happening for two years until the epic bear market in 2000/2001
here we go again, thanks to good ol ben. watch your wallet guys they will be looking pretty thin in the future.
Oil surges to $83 on U.S. crude stocks draw
http://www.reuters.com/article/hotStocksNews/idUSSP10407020071011
here we go again, thanks to good ol ben. watch your wallet guys they will be looking pretty thin in the future.
Oil surges to $83 on U.S. crude stocks draw
Our portfolio is getting very heavy on energy, commodities, and currencies, more so than I feel comfortable with. Boom boom has further unbalanced the economy. As Hoz pointed out, even “preserving” your worth with precious metals and commodities is a losing bet- you will pay taxes on the “gains”.
–
State sales taxes flash recession warning
Thu Oct 11, 2007 12:25pm EDT
By Joan Gralla - Analysis
NEW YORK (Reuters) - About half of all states are collecting less from their sales taxes than expected, which could signal a recession lies ahead as the home market fades.
The receding housing boom could then reveal the underlying economic weakness it had camouflaged, according to Philippa Dunne, a co-editor with the New York-based Liscio Report, published by an economic research firm.
To Dunne, the recession warning light is flashing yellow.
“There are a lot of unknowns, but the state sales tax receipts are pretty much at recession levels,” she said, adding about 25 states are seeing disappointing sales tax revenues.
It’s not just jobs in construction, lending and real estate that are at risk. Less demand for materials, from cement to carpets, could cause malls and manufacturers to slash workers.
Despite Midwest growth pockets, such as Chicago, surrounding areas that never tapped the housing boom could get hit if credit-wary consumers buy fewer clothes or services.
The Northeast’s economy now is imperiled because banks and brokerages have been cutting jobs since this summer when the subprime mortgage sector morphed into a profit-eating ogre.
Florida, once a paradise for speculating “home flippers,” has already tipped into a recession, some economists say.
Even the Northwest, despite still vibrant employers in the high-tech and aircraft sectors, could suffer because housing-related employment was so overblown, said Mark McMullen, a Portland, Oregon-based senior economist with Economy.com.
He puts the likelihood of a U.S. recession in the next couple of years at 40 percent, mainly due to the broad reach of the housing market’s slide.
…
http://www.reuters.com/article/reutersEdge/idUSN1137468020071011
Just do like Michigan and expand the sales tax to house sitting, baby shoe bronzing, coin operated lockers, and dating services (among others). Problem solved. Next!!
Shiller Historical Housing Price Chart
Does anyone have a link to a clean copy of the Robert Shiller’s 100+ year housing chart?
Thanks.
This looks clean to me…
http://www.quartzcity.net/wp-content/uploads/2006/08//housingprice_history.jpg
Thanks!
I can barely wait to see how that chart looks come 2011.
–
America’s Misery Index Way Ahead of France & Italy
David Rosenberg: “US [Misery Index, compiled by Merrill Lynch] still close to historic highs. There has been virtually no improvement in the US misery status since we first rolled out this measure in early 2005, with the index still very close to 14-year highs.”
Fourteen years ago (when the data starts) Italy was far ahead (in misery) of France and France was far ahead of the US. Situation has totally reversed. The rise of misery began after 1999 according to the data. Does it have anything to do with the Scam Market bubble burst followed by bad policies of the Bush-Greenspan-Bernanke regime? We know what lies ahead for China and India with their stock bubbles.
Can’t we Americans be humble and learn from the French, or even Italians, about how to run the govt. and the economy? Looks like we are too busy lecturing to the rest of the world how to run govt and economy.
Jas
at least for Italy the argument is invalid. They have extremely bad and corrupt government, but were bailed out (especially after the euro introduction in 2000-2001) with money from other EU taxpayers. As for France, we will see what happens while their GWB-chearleader Sarkozy is in control, I predict they will go a lot higher on the miserly list within a few years.
Women used to be trix’s, aviatrix, etc.
The only trix left, seemingly is the dominatrix.
My new moniker for the distaff land cheerleading squad…
Realtortrix
2,4,6,8 enjoy your fate
‘realestatrix’? BTW, the sleaziest realt#hore I met was a guy…
Plunge protection time for AAPL
http://www.marketwatch.com/quotes/aapl
Ahem…
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=AAPL&time=20&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Maybe trees do grow to the sky, after all?
Who is supporting the Apple put strike price of $160 and how?
Correlation svcks on the way down…
http://www.marketwatch.com/tools/marketsummary/
BREACH!
DJIA dipped below 14K; this will not be allowed to stand.
http://www.marketwatch.com/Quotes/?symb=indu
NEW YORK, Oct 11 (Reuters) - Sallie Mae … posted a third-quarter loss on Thursday, reflecting losses from derivative and hedging activities.
Sallie Mae … said it lost $344 million, or $0.85 a share, compared with a profit of $263 million, or 60 cents a share, a year earlier.
…
Analysts had, on average, expected quarterly earnings of 73 cents per share, according to Reuters Estimates.
http://tinyurl.com/2o4yf3