Bits Bucket And Craigslist Finds For October 30, 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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Check out this clever approach to snagging old folks into a reverse mortgage on this web page.
http://www.wrisley.com/
That’s an old trick–making advertisements look like government documents. Car dealers do it all the time.
Do people become vulnerable as they age, or are the old people vulnerable by virtue of growing up in an ostensibly less-corrupt world? Or are there just a bunch of vulnerable young people out there today who will tomorrow’s vulnerable old folks (with assets to target)?
I wonder about that too. I’m only 33 and feel almost battle scarred by the amount of corruption in the world. How do you make to 68 or 88 and not figure out that people will rip you off?
“How do you make to 68 or 88 and not figure out that people will rip you off?”
If anyone has any ideas I’d love to hear them. I deal with a 78 y.o. - who although very smart - is far too trusting. Its that generation, bless ‘em. She doesn’t understand that those twentysomethings at the bank hawking commission based b.s. should not be trusted just because they work at bank! Or, worse still, that people can dress up like utilities workers to force entry into your home. Ugh!
Deregulation = more room for scams. Deindustrialization = less opportunity too make an honest dollar.
It used to be that the “best and the brightest” worked to figure out how to build a better mouse trap, or do a job more efficiently, or to design and start manufacturing something
Nowadays, the big money is in shuffling/slicing/dicing paper,
while getting a fat commission check to do so. A lot easier than actually making something, and then having to deal with all the complications involved in that.
When you have that many people trying to figure out ways to screw their customers, it’s real hard to keep up with what’s going on.
Exhibit A: Your Cellphone contract.
Agree!
Personally I feel corruption is 100 times what it was in the 50’s, 60’s & 70’s. For one thing there used to be very little junk mail and the only people who called your house was someone local. I don’t remember getting solicitation calls back then. Maybe I wasn’t paying attention. Does anyone else remember this much junk mail and unsolicited phone calls? There were always scam artists, but now it seems there’s one in every facet of everyday life. There’s nothing in this world anymore that there isn’t a scam for.
I think marketers buy mailing lists of the elderly, and then target them directly. Many, including my mom, never heard of opt out, and they trustingly answer the phone. If you know any elderly folks, make sure they’ve opted out of phone and mail solicitations. Though they are vulnerable to charitable come-ons…I’ve had to work the phone to get lots of these “non-profits” to stop harassing my mother.
After the birds and bees, I was warned about letting gas station attendants check my oil - they might “scam” me by rubbing a little of the oil off the dipstick, trying to net an extra 59c sale. (Yes, sex education and driving started at about the same age - 14.)
We have a “do not call” program in Colorado, and it works great! Its only shortcoming is that it exempts political orgs and non profits.
the biggest scammers are our politicians and the top management on Wall Street, at the banks and other large corporations - the highly successfull people of our time. Although I regret the trend, I cannot blame the young people for following in their footsteps.
–
You mean a system of the crooks, by the crooks, and for the crooks?
Jas
“I don’t remember getting solicitation calls back then.”
I don’t even worry about calls. All I have is a cell phone. Everyone I need or care to talk to is programmed in. Any other number that calls is on silent ring. I never even get bothered.
I grew up in the 60’s and life was just so much different…
My mother’s main concern was that we had to be at least 10 feet away from the tv, (we’d creep closer when she wasn’t looking) because of the perils of radiation, and that we not go swimming, until 30 minutes had passed from our last meal.
We’d go Tom Sawyering all over the hills of el lay where we lived, my friends and I. We might be gone all day, and our parents weren’t the least bit concerned about us.
In the 5th grade, somebody once brought a fifth of rum to the monkey bars, and a dozen of us killed it off, and came back to class a little snockered.
I can’t remember anything else of note in my elementary grade years, as far scandalous as that…
Except for me going streaking, in the 6th grade.
Some of my best memories are “Tom Sawyering” as a youngster in LA, with nary an adult to be found.
Really miss that whole lifestyle & regret that my children are not able to experience the joys of riding bikes all day long (without helmets), building “forts” on undeveloped land (found all around where we lived), building different types of transportation (some spare wheels, any kind of home-made frame, some tape, rope & you’re off!).
Too much fun!!!
Longitudinal studies on intelligence are pretty clear: generally there is very little drop-off in cognitive abilities through your seventies. However, when you reach 80, you are vulnerable to significant drop-offs in mental abilities. That’s not to say you could not remain sharp up till you’re 100, it’s just that it’s not particularly likely.
We grew up in a world in which people did not lock homes nor cars at night, where hitch hikers were simply people looking for a ride, and where the best thing you could say about a person was that his word was his bond.
We took people at face value, relying on what they said. Bankers were experts and could be semi-trusted to guide
We don’t live in that kind of world any more.
Fond memories….I used to hitch hike all the time…12 years old…Try that today…..
We grew up in a world in which people did not lock homes nor cars at night, where hitch hikers were simply people looking for a ride, and where the best thing you could say about a person was that his word was his bond.
When the heck did you grow up? I’m 39 and the world has never been like that in my lifetime.
in my youth, and up until my early 20s in the 1970s, hitchhiking was my preferred method of cheap (and interesting) long distance transport. i hitchhiked across the country 3 times! and i did have a few close calls with dangerous maniacs, but mostly just interesting conversations with people who treated me wonderfully.
of course, i wouldn’t try it today. mostly, i worry about the police rather than the rides. it’s just not a politically or socially acceptable thing to do anymore.
“I’m 39 and the world has never been like that in my lifetime.”
“That’s because you’re only 39.”
I’m 45, and I remember those days. Just outside of Philadelphia. I also remember when we started locking the doors and how odd that seemed to me. A shame you missed that combo.
There are country folks and there are city folks. The country folks generally know one another or at least know about one another. This knowlege forces each to trust the other; those who are known to be untrustworthy will discover nobody will do business with them.
In the city nobody knows anything about anybody. This allows the scam artist to continue his scams. The sacm artist doesn’t much card about his reputation because there are always new marks to be had.
It used to be country folks prevailed - the U.S. was mainly an agricultural nation. Now most of us live in cities.
Also, there is currently a certain amount of glorification of deception in our society. Note, for example, the popularity of Texax Hold’em, a card game of deception, bluff, and misrepresentation.
“A shame you missed that combo.”
I didn’t miss it at all. I lived through the transition. I know how it was then and I know how it is now. The old folks grew up before the transition; that’s why they’re so trusting.
I remember those days, remember when you could open the hood on a Ford from the outside? My grandparents didn’t even have keys to their house, and the worst where we lived was when someone woke up to find his hood up and carb gone off his truck one day.
My first car was a ‘60 chevy. If you took the key out without intentionally locking it, you could still start the car by turning the empty ignition switch.
pssst…
Want to hitch hike all over the place, in real-time, as in right now?
Go to New Zealand
I’ve caught many a ride with a complete stranger, luring them in with the curious powers of my thumb…
my wife’s 80 year old grandmother thinks her doctor is so nice because he never charges her and she thinks credit cards are free money.
Definitely become more vulnerable.. you see it with driving too in the elderlyl. The body just does not keep up the way it used to… physically and mentally. They’ll make a pill for it eventually.
I think the United States was different 50 or 60 years ago and don’t get me going on how strange I think the values are today verses years ago .
” A society that does not render reward and punishment in a just manner is doomed to fail ” (Author unknown )
Many married couples divide the tasks, one usually takes care of the finances, and they make financial decisions together.
In an equal world, there is a 50% chance that the remaining spouse when the first dies has little financial experience, but had always been taken care of by their former spouse.
I’m glad my wife is skeptical, conservative, and smart. Regardless, I try to keep her apprised of what we are doing with our money.
As a 68 year old, I can say that I haven’t been very trusting since I was 33. Have not been scammed often either.
Orangzilla from Countrywide CrimeSyndicate panders for more govt. distortion of housing market.
http://www.usatoday.com/money/economy/housing/2007-10-29-countrywide-ceo_N.htm?csp=34
Mozilo said the Federal Reserve’s rate cut last month will help, but the government must do more. He complained the onus to help borrowers has “all been placed on the lending community.”
Wow - what a concept - if you make a mess, then uncle Sam should clean it up. Next Uncle will be paying off credit cards
–
SOP for many business leaders. They want govt. out of business (no interference) when things are good for their business and they want “public-private partnership” when things go bad.
Jas
That’s been the SOP for many pseudo-libertarians I’ve known: rabidly oppose government intervention until such time as it might benefit them.
Not saying anyone on this blog fits that description, though.
As far as credit cards go:
http://money.cnn.com/2007/10/29/magazines/fortune/consumer_debt.fortune/index.htm
You had to know this was coming. With a nation of people who formerly depended on MEW to subsidize their income, credit cards have been the only way to make it recently. Many have been borrowing thinking that a market turn-around would eventually save their balance sheets.
From the article:
“In describing the situation to analysts, CFO Gary Crittenden said Citi’s credit card holders were beginning to increase the balance on their cards or take cash advances on those cards for the first time - behavior that, in his experience (which includes seven years as CFO of American Express), can translate into future trouble. Citi said the change in loan losses was “inherent in the portfolio but not yet visible in delinquencies.”
This is gonna get real ugly, real fast.
Once the payments are over 30-days late the “Universal Default Clause” is activated, and interest rates are raised substantially to reflect increased risk. Game over!
“Falling values is what continues to be the problem here,” said Mozilo, also Countrywide’s chairman. “And as long as values keep on falling, the subprime situation will get worse and begin to spill into prime (loans).”
Didn’t hear him complain while the values were rising and he was watching his stock rise so he could cash it in and run.
Coincidence?
http://www.bloomberg.com/apps/news?pid=20601087&sid=ao4KrwWklMNs&refer=home
I heard this morning on B-berg Radio that “the Bush administration is studying what went wrong with housing”…..
Ya know…. the bubble doesn’t bother me….. nor does the pandering… But the continued denial and obfuscation of not just housing but EVERYTHING by these A$$HATS is really wearing me thin. I’ve never in my 40-something years encountered an organization so bent on misdirecting, misleading and blowing smoke up the collective ass of the country.
…not to mention wrecking the underpinnings of our society, looting the treasury, soiling our reputation, and generally diminishing our culture as a whole.
Amen Marcus.
That’s nothing read up on Georgia Thompson’s case in Wisconsin. They used our justice department to jail political enemies. The very core of our government is rotten. They threaten actuaries not to inform congress of the costs of the medicare drug plan, they threaten scientists if they talk about global warming, they out cia agents to punish Joe Wilson for correctly informing the public on bogus IRaq intelligence. The list is endless and I’m no political hack this is by far the most destructive presidency ever.
What I find most amusing is…
In search of leaders that were flaw free, without any possible defects of character, we carefully ended up with the most flawed leaders imaginable, on both sides.
Currently, a Dumbed Down Donkey is riding a White Elephant…
I find the whole thing quite scary. For example, my newspaper buried the whole story about the fake FEMA news conference in a tiny column about half-way through the national news section. So, even blatant deceptions by the federal government are not even front page news. I’m voting Democrat (although I must admit I like Ron Paul) across the board as a matter of fear. This nation is in a world of hurt.
You’re just playing into their hands. If you think there’s any difference between the parties you’re deluding yourself (hint: look at what they DO, not what they SAY).
What is the option devil? No 3rd and NO WAY to the clownservatives.
The Dog’s right - exactly right.
Amen. I used to associated myself with the Democrat party because I loathed the Reagan/Bush empire but damn if the the Democrats haven’t proven they march to the same drummer. The MSM is already picking Hillary and I hate that woman passionately. She will be no better than Bush.
This country is run by the CFR and the FED. That much has become clearer and clearer to me as the years pass…..
Oh I hate be such a cynic at 39…..
Don’t vote for anyone but the man or woman themselves. Forget parties. They’re all corrupt. This country would be better off if there were no parties and everyone had to run on their own. Then we’d see what they were made of.
We are quickly running out of options. I will vote for Ron Paul, but I doubt that much will come from that. Don’t get me wrong - I think he has enough grass roots support to win an honest election. But Both the MSM (completely removing Ron’s name when reporting polls that he came in 2nd or 3rd) and “conservative” alternatives escoriate or black list Paul. And I have a gut feeling that the Florida 2000 election fiasco was engineered just to prepare for this eventiality (the last thing either party wants is a man of the people in office, and they now have the ability to rig elections with the push of a button).
Even if elected, Paul will be unable to accomplish anything as both parties will close ranks and create deadlock (which would actually be better than the current status quo).
For the only other option, I will have to refer you to Thomas Jefferson ’cause I sure as heck am not going to post it online.
The Wall Steet money that backed George Bush overwhelmingly in 2000 and 2004 is now solidly behind Hillary. They must figure an exhausted and disgusted country will hand the vote to the Dems, so they have picked the next Prez, and as they own the media, largely, it’s no shock that she is being portrayed as the “inevitable’ candidate. It will be more of the same, if you like the way things are going now.
I don’t think it’s quite so simple. The folks at the top set the ulimate thumbs up or down on stories. However, MSM journalists have a “culture” for lack of a better word, and that culture likes Hillary Clinton (for the most part). The people at the top are okay with Hillary, so the journalists are welcome to glorify her as they see fit.
What hasn’t been counted, however, is that almost everyone else outside of New York City type culture has no use for Hillary Clinton. The religious conservatives and redneck types hate her, soccer moms (like my sister and I) have their serious doubts about her, and in the deep South she personfies “Everything Wrong with America”.
She may carry NY and CA but she needs to appeal to the rest of the country, too. Unless she somehow gets a personality and history transplant, I think the Repulicans could put up a crash test dummy and win.
Oh yeah….I’m voting for Colbert. If he isn’t on my ballot I’m going to write him in.
If she gets all her taxes in, she’ll raise my taxes by an unbelievable amount. (With Social Security uncapping, her proposed tax on bank accounts, etc.)
However, they “mortgage bailouts” they talk about will help the big banks and that, ultimately, will get her elected. Aso she and Rangell want to lower corp interest rate from 35 to 30, which will help their electability.
And a few bones to the lucky-duckies in the non-taxpaying classs (nearly 50% of votors anyway), to establish a core base.
(BTW: I’ve always considered myself a liberal! I had no problem voting for Bill Clinton, etc.)
Spike,
The bankers were 100% behind Hillary in her NY run for the Senate. This has been in the making for a while.
In SC I just have to decide which party to vote for Colbert in.
Sure there’s no difference between any of them! When was the last time I heard that? Oh yeah, in 2000 when I was told there was no difference between Bush and Gore. How did that turn out for everyone?
Well I do find that the attempt by both parties to make sure that the front runner is annointed before the primaries BEGIN is unseemly and undemocratic.
reuven,
what do you mean by “tax on bank accounts”? tax on the interest? don’t you have it right now? (just curious — I’m from Canada and we’ve always had our interest taxed at income level)
No! What was proposed was a “wealth tax”! (Florida had one for a while that was just elminated.)
You’d get taxed on the value of your liquid assets whether you earned any income on them, or not. Here’s the details on how Florida’s worked
http://www.fresehansen.com/CM/OurPublications/OurPublications26.asp
What I like most about Stephen Colbert, is his ability to talk in complete sentences.
Not like the current occupant of 1600 Pennsylvania Ave., who is merely completing his sentence.
“…although I must admit I like Ron Paul”
Ron Paul is getting my next vote.
RE: I’m voting Democrat (although I must admit I like Ron Paul)
Go pick up a copy of David Limbaugh’s “Bankrupt” first.
I think it’s time for a “Million Renter March” to parade through Washington DC to let our politicians know we’re not going to let them continue pillaging the country. If we can’t do that, at least we should get Ben on Oprah!
While you’re probably joking, it would be wonderful to have that march — and then to Wall Street to let the masses know of all the corruption and deception that’s gone on there.
I heard this morning on B-berg Radio that “the Bush administration is studying what went wrong with housing”…..
Maybe they’ll all boot up their laptops and log into “thehousingbubbleblog.com”. Had they been reading this blog the last couple years, they would already know what’s wrong with the housing market and why. Plus they would have known it sooner than NOW.
Considering that a vast majority of the populance is still trying to figure out what went wrong, Bush and Co. are just playing the part, playing to a stupid audience. The amount of denial about what is going on continues to astound me.
Given the majority still gets its news from tv and the local newspaper…..both of which are corporate owned, thus not actually reporting anything of use to an “informed public”, why would you be surprised?
I’m still in awe of the brilliance and perseverence of the Scaife types who’ve relentlessly formed this country’s conversation for the last 30 years…….. Hey, fooled us. We thought they were talking ethics when in reality they were simply talking us out of what little power and money we had accumulated over the preceding 200 yrs.
Just pass Neil’s popcorn please…… We ain’t never seen no trainwreck like this before.
“The Fed wants to give a lower rate” to people who are refinancing mortgages that have become more expensive, said Kazuaki Oh’e, a debt salesman at CIBC World Markets in Tokyo.
Yeah well the Fed doesn’t lend money for mortgages, the bond markets do, and these days they want a little something called a “risk premium” for possible default, and in the case of foreign lenders, foreign exchange losses.
Mortgage rates aren’t coming down.
Is there any data on what percentage of troubled mortgages are actually people’s primary residence vs vacation homes or speculation?
Are we really protecting home ownership?
I’m not sure this matters. You’re not protecting “home ownership” if these folks simply can’t afford the payments.
We’ve seen stories on the HBB blog where it was clear the buyer could only afford an i/o “teaser rate”. In fact, based on the amounts some of these buyers complained about, they wouldn’t even be able to afford a hypothetical 0% mortgage that just simply divided the house cost over the term of the loan.)
UBS Takes a Mortgage Hit…
Oct. 30 (Bloomberg) — UBS AG, Europe’s largest bank by assets, reported its first quarterly loss in almost five years after declines in the U.S. subprime mortgage market led to $4.4 billion in losses and writedowns on fixed-income securities.
the tan man blames uncle sam:
Angelo Mozilo, chief executive of Countrywide Financial, on Monday strongly criticised the US government’s response to the collapse of the subprime lending market, saying there had been “zero” effort to tackle the crisis.
“In terms of tangible effort from the federal government…there has been no programme, no federal effort, no legislative assistance – zero,” he said.
http://tinyurl.com/yrbmdv
Orangzilla wants a TANgible effort on the part of the Govt…. MWHAHAHAHAHA.
Oh man, this clown is harshing my buzz . . .
He wants the goverment to bail him out yet I’ll bet Countrywide utilizes every trick of the trade it has to evade paying as much tax as possible. What a disingenuous statement.
The government is helping Countrywide and others:
Calabasas, California-based Countrywide, the largest U.S. mortgage lender, almost doubled borrowings from the Federal Home Loan Bank of Atlanta to $51 billion during the quarter, the company said in a statement last week.
Bloomberg
Tanzilo also believes he can skirt the law and not send out 1099’s
It’s this kind of sickening Pig Man benevolence that inspired the current fiasco:
“First-time buyers cannot buy a home now. Only the wealthy and privileged can afford to buy homes,” he said.
falling prices are the new fangled affordability product.
Which is exactly as they want it. We’ll just have to enjoy the new Projects, shanty-towns, etc.
“In terms of tangible effort from the federal government…there has been no programme, no federal effort, no legislative assistance – zero,” he said.
Well, good (for once). Let’s just hope this continues and that the pandering on both sides fades away to nothing.
And thank you for the morning chuckle, exeter.
Honor among thieves, indeed.
I agree with the big wrinkly orange dude: This Republican administration sure isn’t too business friendly. Then again, when they’ve looted the treasuy and spent the country’s future earnings on wars of choice, words of encouragement are all they have left.
We’ve been robbed.
Tangelo says:
“It takes a village to do this.”
Chris Winter aptly calls him the village idiot.
Countrywide…last week announced a $1.2bn third-quarter loss, reflecting $2.9bn of mortgage-related writedowns, credit losses and restructuring charges. But shares …rose sharply after it said it would return to profitability this quarter. ”
Amazing!
Russ Winter.
jim rogers calls bernanke a ‘madman’ in video interview;
http://tinyurl.com/2uslj5
JR says BB is an academic, loves to print money, and risks run on dollar.
Quick test! Are the following quotes from a) Ben Bernanke, or b) the Bolshevik party in 1921?
- “The government mint is the machine gun of the Department of Finance pouring fire into the arse of the bourgeois system.”
- “We are moving towards the complete abolition of money.”
Hint - see “Modern Times” by Paul Johnson, page 93.
Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, ‘Account overdrawn.’” - Ayn Rand - Atlas Shrugged
It’s funny how prescient Ms. Rand actually was. I guess it’s because no matter how much times change, the crooks remain the same.
Do we have her on ice somewhere?
Written 50 years ago, It feels like it’s happening in real-time right now…
Hey tri-staters….. edhopper put out a notice last week about a HBB party(?) near NYC. So if you live in NNJ, Fairfield, CT or Westchester, shoot him a note so he can determine level of interest.
kanapali@gmail.com
Sounds great, I’ll be there. Oh, wait , that’s me. :-}
A house deal to die for?
Home sellers offer a full refund when they pass on — one more gambit in a sluggish market
http://www.post-gazette.com/pg/07302/829344-30.stm
(and, if you care for them in their old age, they’ll let you inherit their retirement home, too.)
If they can’t afford to drop the price on a $399k house until it sells, there’s no way in hell they’ll die with $2.5 million.
“That’s one way you get a built-in child or a built-in someone to care.” - Bob Husick
Or a built-in someone to have you knocked off.
http://www.investors.com/editorial/IBDArticles.asp?artsec=5&issue=20071029
Subprime Problems Continue To Climb, Key Indexes Show
The reality is that what’s going on in subprime isn’t going to end anytime soon,” said Andrew Lahde, managing partner of Lahde Capital Management, which bets against mortgage-backed securities.
ABX indexes, barometers of demand for mortgage-backed securities, have plunged again in recent weeks. They range from the highest-rated AAA slice of mortgage debt to the riskiest tranches, rated BBB-.
The BBB- tranche from the second half of 2006 was worth just 17.94 cents on the dollar Monday, according to Markit.com. Some tranches eventually may prove worthless.
Couple dead serious about selling house
Bob and Ricki Husick of Pittsburgh are offering anyone who buys their home a full refund when they die.
The Husicks have been trying to sell their suburban home for almost a year, but have failed to do so in the current shaky market.
Some area homeowners have lowered prices, offered free trips and tried a variety of other gimmicks, but the Husicks came up with their own unique incentive.
http://news.yahoo.com/s/ap/20071030/ap_on_fe_st/odd_house_death_refund_4;_ylt=AthR8og1liDSBzvn1_OrENME1vAI
If they were dead serious about selling the house, they’d drop the price.
Ain’t what it used to be
http://www.stockmania.com/index.php?showimage=80
I got one for ya.
Yesterday I was talking with my bank manager. She’s helped me out with some letters for immigration (to prove to japan I can afford to study there)
I asked her if she could do me a mortgage with no stated income. (in past conversations she told me her branch was always conservative) She got a funny look and said I would have to give them something. She said if brought 50% down they would make it happen.
I was just joking and trying to ask her if the whole exotic loans thing were really met for people that had more money than was one paper, instead of for people that cant afford homes.
Interesting. This never occurred to me; of course, it never occurred to me that rich people (parents of my college friends) would take out low-interest student loans that they didn’t need and place the funds in an interest-bearing account at a higher rate. Ah, the line between morality and legality…
Not sure how it is immoral, since this is exactly what banks do: borrow money from you in your personal accounts, and loan it to others at higher rates of interest.
We kind of did that with my wife’s student loan. We could have paid it off couple of years ago, but the interest rate on it was much lower than market rate. So kept the money in CD’s.
Up until this point most banks would do no doc loans with 50% down, even back in the 90’s. I guess they figured if you defaulted, they could still get their money back. I’m not sure that’s the case anymore, if houses fall more than 50% in value.
“Yesterday I was talking with my bank manager. She’s helped me out with some letters for immigration (to prove to japan I can afford to study there)”
What? You mean Japan was interested in who is coming in their country? Imagine that!
I suggest that we enter Japan illegally, then parade around waving a US flag demanding our “rights”. I expect that we would be deported before the day was over.
You don’t have to go that far. Just try it in Mexico…
http://www.freerepublic.com/focus/f-bloggers/1602610/posts
after the fire, the fire still burns:
LONDON, October 30 (Reuters) - The fires that scorched California may be out, but a bigger man-made disaster, the housing market, burns away, threatening the U.S. economy and holders of billions of dollars of debt backed by homes.
The housing conflagration is fed by its own 100 mile-an-hour winds; impossibly high housing prices - the legacy of a binge of irresponsible borrowing - a credit crunch and rising repossessions.
http://tinyurl.com/26twzz
The housing conflagration appears to be zero percent contained.
If I wanted to sell a house in this market, this is what I would do. I would figure out what percentage of homes similar to mine in my zip code are selling. If 7% of the 3/2s in my zip code sell per month, then I would make sure my price is in the bottom 7% of all listings. How frigging hard is that to figure out? And I’m not even a Realtor ™
If comparison of prices to income reveal that only people in the 99th percentile of local income can buy your home, and meanwhile your home is about average in terms of desirability and features, what are the chances your home will sell?
I realize this is not exactly an original thought around here, really a reaction to yesterday’s CA thread and other cr*& I’ve been hearing from realtors.
Canada’s equivalent to Freddie & Fannie
CMHC opens way for more Canadians to become landlords
Wendy McLellan
The Province
Friday, October 26, 2007
Canadians can become landlords more easily with a new CMHC mortgage-insurance product that allows people to buy rental properties with no down payment.
For a premium based on the loan amount, Canada Mortgage and Housing Corp. now insures mortgages so investors can buy up to four units of rental housing with little money down.
The Crown corporation now allows 100-per-cent financing on one or two units and 90-per-cent financing for a third and fourth rental units.
Until last month, CMHC required a down payment of 15 per cent on investment properties.
The new product, introduced last month, also changed the way financial institutions calculate the ratios used to qualify borrowers for mortgages, which makes it easier to buy rental property.
It’s a complicated formula, but rather than adding 80 per cent of the rental amount to the borrower’s income, then working out the debt ratio, a 20-per-cent shortfall is added to the expense side of the calculation. The change reduces the income needed to qualify for the mortgage.
“The small rental enhancements help qualified Canadians take advantage of opportunities to invest in rental properties,” said Pierre Serré, CMHC’s vice-president of insurance products and business development.
“By purchasing these properties, these borrowers will help increase the rental housing available . . . and maintain the stock of affordable housing.”
The insurance premium is 7.25 per cent of the mortgage amount for 100-per-cent financing.
Paula Siemens, a mortgage broker with Invis Canada in Vancouver, said the new product will be attractive to investors who are interested in becoming landlords and have a reasonable cash flow to handle unexpected vacancies and expenses.
“For people who are self-employed or who don’t have a pension plan, this could give them an investment option that will generate cash flow in retirement,” Siemens said. “The rent will pay down the mortgage and when you’re ready to retire, you will have the revenue from your rental properties as income.”
http://tinyurl.com/3bkkd6
CHMC’s Offical page CAUTION PDF
http://tinyurl.com/3yweym
Won’t be long now and we’ll be in the same sinking ship!
attractive to investors who are interested in becoming landlords and have a reasonable cash flow to handle unexpected vacancies and expenses
Bwwaahahahaha! Where have we heard that before? Kind of like how option-payment ARMs are attractive to people who have large but erratic income flows. What they don’t say is that these schemes are also attractive to people who have no money and limited means to make monthly payments.
Dear Canadian Friends, we have tried similar schemes in the USA, as have our friends in the UK. I trust that you have already observed the results. Hence, I can only assume that “it’s different there”. Good luck with that!
It’s different there, eh??
kabertoss: Won’t be long now and we’ll be in the same sinking ship!
CMHC just cannot help itself, short term gain for long term pain, what’s wrong with that? How about tying the pensions of the directors onto these mortgages?
“How about tying the pensions of the directors onto these mortgages? ”
That’s short-term thinking. How about tying their children’s trust funds onto these mortgages. Let’s see if they go for the long-con.
Wow! We’ve managed to export stupid!
Home Prices Declined in August, According to Case-Shiller Index
Associated Press
Word Count: 208
NEW YORK — U.S. home prices fell nationwide in August for the eighth consecutive month, according to the S&P/Case-Shiller index released Tuesday.
And things could get worse, said Yale economist Robert Shiller, who helped create the index. “There is really no positive …
http://online.wsj.com/article/SB119374925310976184.html?mod=hpp_us_whats_news
Oct 30, 9:03 AM EDT
Home prices fall in August for 8th month
By VINNEE TONG
AP Business Writer
NEW YORK (AP) — U.S. home prices fell nationwide in August for the eighth consecutive month, according to the S&P/Case-Shiller index released Tuesday.
And things could get worse, said Yale economist Robert Shiller, who helped create the index.
“There is really no positive news in today’s report,” said Shiller, chief economist for MacroMarkets LLC which collaborated with S&P on the indicator.
Home prices as measured by the index have fallen by more every month since the beginning of the year. August is the 21st month of decelerating returns.
An index of 10 U.S. cities fell 5 percent in August from a year ago. That was the biggest drop since June 1991. The lowest ever was a decline of 6.3 percent in April 1991.
http://hosted.ap.org/dynamic/stories/H/HOME_PRICE_INDEX?SITE=CADIU&SECTION=HOME&TEMPLATE=DEFAULT
At least oil prices keep going up, even while housing steadily deflates. Good thing energy prices are so volatile, and hence inconsequentual for the Fed’s preferred measure of inflation.
Otherwise the Fed might have to raise the Fed Funds Rate to keep inflation contained.
Crude prices jump sharply, nearing $94
By John Wilen
ASSOCIATED PRESS
1:51 p.m. October 29, 2007
NEW YORK – Oil futures surged to a new record near $94 Monday, propelled by the weak dollar and news that Mexico’s state oil company had suspended a fifth of its oil production due to stormy weather.
Crude futures rallied late in the session as the euro rebounded against the dollar, analysts said. The euro hit a record high against the dollar early Monday morning, then declined only to rally back later in the day.
“The dollar seems to be the force that’s driving us now,” said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.
http://www.signonsandiego.com/news/business/20071029-1351-oilprices.html
Prof GS Bear, There is an enormous shortage of Diesel fuel in China. This shortage is not because of non availability, but because the government of China is capping the price that diesel fuel can be sold for. Since the refiners in China are for the most part privately held, the refiners have stopped production.
Draw your own conclusions about $90+ oil.
You are pointing to the proximate reasons for short term volatility, while I am looking back to what the Fed was doing back in 2002-2003 that helped get oil near its current level in the $100 range. I see no inconsistency in these views, especially given the massive amounts of liquidity that have been thrown at the credit crunch since mid-August coupled with the $US-denominated world oil price.
My suspicion is prices are speculative more than demand driven at $90+/bbl.
“My suspicion is prices are speculative more than demand driven at $90+/bbl.”
My suspicion is Fed bank rate cut speculation is driving oil price speculation. The markets are signalling a lack of faith in the Fed’s willingness to quell burgeoning inflationary pressures.
If that we’re true we’d be seeing rising inventories. We’re not. There’s no lack of people willing and able to show up and pay $90 for a barrel of oil and then burn it. It’s tough to get a lot of speculation in the price of a consumed commodity.
food for thought - oil transactions worldwide are dollar denominated. so the dollar’s weakness is also driving up crude prices.
When It Takes a Miracle
To Sell Your House
Owners, Realtors Bury Statues
Of St. Joseph to Attract Buyers;
Don’t Forget to Dig Him Up
By SARA SCHAEFER MUÑOZ
October 30, 2007; Page D1
Cari Luna is Jewish by heritage and Buddhist by religion. She meditates regularly. Yet when she and her husband put their Brooklyn, N.Y., house on the market this year and offers kept falling through, Ms. Luna turned to an unlikely source for help: St. Joseph.
Some choose to bury St. Joseph upside down.
The Catholic saint has long been believed to help with home-related matters. And according to lore now spreading on the Internet and among desperate home-sellers, burying St. Joseph in the yard of a home for sale promises a prompt bid. After Ms. Luna and her husband held five open houses, even baking cookies for one of them, she ordered a St. Joseph “real estate kit” online and buried the three-inch white statue in her yard.
“I wasn’t sure if it would be disrespectful for me, a Jewish Buddhist, to co-opt this saint for my real-estate purposes,” says Ms. Luna, a writer. She figured, “Well, could it hurt?”
http://online.wsj.com/article/SB119370066239175607.html?mod=hpp_us_whats_news
“I wasn’t sure if it would be disrespectful for me, a Jewish Buddhist, to co-opt this saint for my real-estate purposes,”
back in the day before the dawn of the 21c RE boom, I knew a few realtors, Jewish, who would plant the St. Joe statue in a pinch. (What the heck, St.Joe himself was a member of the tribe…and so was Jesus, for that matter. And Mary, and the apostles, etc. etc. and so on.)
But not St. Francis. He’s Italian.
Its funny how economics can make syncretism a little easier to swallow.
I Googled “St. Joseph” to find out where this statue tradition came from. The first sentence of the first site I clicked on reads: “Saint Joseph is petitioned by many conservative Catholics as one who grants an easy death….” That summed it up for me.
St. Joe is the patron of the dying because tradition says that he died before Jesus and Mary. He is also the patron of the church becuase he was Jesus’ guardian. He is also the patron of families. But he is not the patron of realtors.
I love this country. One site is selling a St Joseph kit and has written a prayer as part of a religious RE selling rite. Not sure if it’s a joke or not, but the prayer is hilarious!!!:
O, Saint Joseph,
you who taught our Lord
the carpenter’s trade,
and saw to it
that he was always properly housed,
hear my earnest plea.
I want you to help me now
as you helped your foster-child Jesus,
and as you have helped many others
in the matter of housing.
I wish to sell this [house/property]
quickly, easily, and profitably
and I implore you to grant my wish
by bringing me a good buyer,
one who is
eager, compliant, and honest,
and by letting nothing impede the
rapid conclusion of the sale.
Dear Saint Joseph,
I know you would do this for me
out of the goodness of your heart
and in your own good time,
but my need is very great now
and so I must make you hurry
on my behalf.
Saint Joseph, I am going to place you
in a difficult position
with your head in darkness
and you will suffer as our Lord suffered,
until this [house/property] is sold.
Then, Saint Joseph, i swear
before the cross and God Almighty,
that i will redeem you
and you will receive my gratitude
and a place of honour in my home.
Amen.
http://www.luckymojo.com/saintjoseph.html
Talked to a family member who bought new in Rochester, NY in 2005. The same house is now going $20-40k less in the same hood where construction is not complete.
B-b-b-but upstate is bubble proof!
Mwhahahaha…. It’s all uphill for NY now. Areas upstate have just recently siezed up in terms of sales and the price cutting has already begun.
Folding like a chinese chair……. schadenfreude…..
Upstate is bubble proof.
What seems to be going on is that even places that didn’t have a price bubble are having a bust, either because they had a construction bubble or because of economic decline.
WT…. BULL$HIT. Upstate NY and New England had a bubble on the scale of more notorious places like Florida and California. The difference is that the economic decline continued through the duration of the bubble and will exacerbate the bust in a hideous way. I strongly object to the contention that there was no bubble back home. The real-turds there used that line to keep the flow of FB’s coming.
“The difference is that the economic decline continued through the duration of the bubble and will exacerbate the bust in a hideous way.”
Exactly. Here in MI prices should have been dropping since the late ’90’s, but it was hidden by the bubble.
Did you see the article in the Detroit News yesterday about struggling realtors, by chance?? I got a couple laughs out of it, myself.
Did you see the article in the Detroit News yesterday about struggling realtors, by chance??
Missed it we get the Freep. Thanks for the lead - went looking for it and we still had an issue up front in the store. I’ll have to troll that Oakland County realtors web-site that supposedly gives a balanced picture of the market.
‘Upstate is bubble proof’
Thanks for the morning laugh!
I think we are misinterpreting WT’s joke. I think he meant to say that upstate didn’t have a “bubble” in the way we’ve defined it elsewhere.
I have family near the Twin Tiers (Corning, Elmira).
The poor folks there have been re-fiing and cashing out like crazy, and the prices were out of sight in 2005. I know a local real estate agent there who said it was difficult to get something to cash flow, and prices were too high for the locals. I have a distant relative who was foreclosed on, but he did managed to live it up for a while (he’s on welfare) by cashing out to buy booze.
Everyone was saying all the retirees wanted to move there from the more expensive “flatlands” (downstate PA) and that would keep sustaining prices.
I live just north of Corning-Elmira. The area took a hard hit while everyone else was bubbling because of cutbacks at Corning Glass. Housing is still priced at only a fraction of replacement cost for lots of beautiful old victorians. It is, for the area in general, considered cheap (if you ignore taxes and utilities). The fact that there was a bubble can’t be denied. The Real Estate can only go up mentality was a strong here as in other areas. Plenty of McMansion tracts around. They will just add to the smoldering decay of the region when things go back on the course they have been on for decades.
Property around the Finger Lakes has easily doubled during the bubble. Lots of hype about the wineries. The McCottage is a huge part of our market. Investment money didn’t flow here from the toothless hills of northern PA, it came mostly from DC and NYC.
Buffalo has been in steady decline since the 30s when it lost its significance as a commodities port (Welland Canal). There was a lot of construction in the burbs in the last 20 years but population and business is in an exodus from there now. My own experience selling my mom’s house this year in Williamsville indicates prices are off 10 to 15% yoy, houses for sale double and velocity about half or less. It smells like fear. There was a bubble, it was just overlaid on a downward megatrend.
Victor? LOL. Nice mall.
I have close friends who bought in Jay, NY (near Lake Placid) in 2002. They paid approx. $95K for a 20yo 3/2 chalet style SFH. As of six months ago, those same properties were going for over $200K. An average 20% annual increase in value over 5 years in an area with almost no local demand and an economy based on tourism and vacationing New Englanders…
Northeasterner,
That type housing in upstate is exactly is dropping like a rock right now. I’ve seen it happen before and we’re watching happen now. Imagine….. paying taxes and heating that shack on a 200k assessment and no way out of it for more than $75k.
Stupid people
Exeter, that’s what I was concerned about. They’ll be stuck up there for years to come.
They relocated from South Shore Mass to upstate NY, trading lower housing prices for higher food and energy prices, higher taxes, and fewer job opporotunities (but lots of outdoor recreation). They got hit with a $2000 school tax bill this year because the local property taxes don’t cover all the town’s costs (and their property taxes are high as well).
Also, they’ve refied twice now, pulling money out to pay off revolving debt and to buy a new car… I tried warning them, to no avail. I think they now owe about $150K.
They are very good friends and the last thing I want for them is financial ruin. I told them that if they move back to Mass, I will gladly let them rent one of my apartments, below market rent, even if I have to evict one of my existing tenants. They are like family to me…
I’m willing to water you’ll have some new tenants. I have to ask… How old is this couple?
Same as me, early 30’s…
I forecast they will wither on the vine unless they have a rich uncle.
For cities like Buf-Roc-Syr, I would say the bubble, as others here have noted, simply delayed the inevitable continuation of a 50+ year decline.
Well, I guess if you can call flat pricing at $90K per median home a bubble, then they had a bubble. I guess the idea is it should have already hit $60K.
The only bubble I saw was in Manhattan spillover territory.
That’s basically what I am saying. I don’t know if that is correct, but that seems to be what happened.
That aside, I do think there were some inappropriate price spikes. In the Rochester area people somehow believed Victor is the new Westchester and Park Ave. the new SoHo. The problem is these cities are rotting from the bottom up. There is no new blood.
WT, warren, washington, saratoga counties all saw 2-3x year 2000 pricing in the last 5 years.
I almost forgot: another vacant home spontaneously combusts…
http://tinyurl.com/2aqyao
that sort of thing is bound to happen when you leave a case of ripple and a couple cartons of ciggies in the basement, doors unlocked…..
oh the tragedy
I have a friend who just bought in Rochester. Still trying to get details, but she’s saying seller “took a big hit.” Percentage wise, she may be right.
Keep us posted. You ‘d have to screw up big to be upside down in Rochester. Having said that, I know several people that are…
My wife and I have been looking for rentals in the Jackson/Conway area of New Hampshire. As it turns out the first house we looked at was listed to be sold and was shown to us by the listing agent. While that deal fell through, we have been using her to dig up folks sitting on vacation rentals that may convert them to long term and the such. Anyway, had a conversation with her the other day where she stated that nothing is selling. My immediate retort, and a quite boisterous one at that, was that was nonsense. She was a bit shocked and asked what I meant so I gave her the old price it to move concept. I don’t think she was impressed with that concept but nonetheless I made quite an impression on her, probably thinks I’m a nut now. I basically told her in no uncertain terms that the folks who continue to hold on to the notion that they are going to sell their house at 2005 pricing, which is anywhere from 5-8X median income, are going to end up losing their ass. I’ve been watching prices in that area and I can tell you that there has been very little movement in pricing while inventory builds. I expect a “come to jesus” moment in the not too distant future. It felt good to finally be able to tell an agent to wake the fu*k up though.
Auger, right now is a significant moment in New England and parts of the mid-atlantic. I mentioned before here on this blog that I recently got an email from a real-turd who didn’t have time for me in early 2004 and now all of a sudden wants to talk to me 3+years later. My reply was very frank….. and I haven’t heard another word from said real-turd.
The silence after a “frank” discussion is amazing. I never pass up an opportunity to casually mention that prices are exceedingly high and they need to come down to reality before I will consider a purchase. That point needs to be made incessantly.
auger, with all the stuff that’s going on with the Fed and the dollar, I wanted to make a humble request that if you return to Bretton Woods for a repeat visit, would you be so kind as to leave some regards on my behalf?
Absolutely, they are going to be getting a lot of “floating currency” submissions to consider should they revisit that area!
So right you are Auger.
Tomorrow I am attending the closing on the sale of my home. We gave it an attention getting low list price and had 4 written offers in 4 days.
I’m not too worried about the buyers’ mortgage as they are only borrowing $50k. I noticed the locals wrote it off as a desperate anomaly as subsequent list prices only appear to be moving upward still. They’ll understand by this time next year we probably didn’t leave anything on the table.
Same experience here, CarrieAnn.
We’ve just sold 4 properties since early August (one — agricultural land — is still in escrow due to easement issues & all the rest closed).
Absolutely NO shortage of buyers out there. Got multiple offers on both non-ag properties & this during the “credit crisis” blow-up in August.
I’d say there are plenty of buyers, but too few sellers. Most folks with homes for sale right now are listers, not sellers.
RE: My wife and I have been looking for rentals in the Jackson/Conway area of New Hampshire
It’s gonna be real interesting how the Mt. Washington Valley will fare when gaz hits $5.00/$6.00 per gallon.
If the lousy winters continue it may end up as simply as alternative XMas shopping destination for bored Beantowners looking to get out of Dodge with a 4 week economy.
Merrill Lynch retires, effective immediately
“The departure of O’Neal, 56, was expected after the company took more than $8 billion in writedowns in the third quarter for bad bets on bonds and other instruments backed by subprime mortgages.”
Should be “Merrill Lynch CEO retires”.
“The head of the Wall Street investment bank Merrill Lynch was tonight negotiating a severance package tipped to be as high as $159m (£77m) after a high-risk strategy of betting billions on American mortgage-backed securities came disastrously unstuck.
Stan O’Neal, chief executive of Merrill, has told friends that he intends to resign after losing the confidence of his boardroom colleagues following the biggest loss in the bank’s 93-year history. …”
Guardian
Nice. Lose 8 billion and get a 159 million severance.
If the unfairness bothers you, I suggest you join the CEO club yourself and get in line for a multimillion dollar severance package no matter what you do going forward.
Such packages insure future failures. You get what you reward.
Good point, palmetto. Compensation packages which include large retirement payouts for failed CEOs are another form of moral hazard in the American financial landscape.
the humanity of survival on that paultry a sum…
Plunge protection measures are holding up very well so far this morning…
http://www.marketwatch.com/tools/marketsummary/
The DJIA bounced back up hard off the Bernanke put strike price of 13,800. Stock market crashes are not allowed during FOMC meeting weeks — otherwise Wall Street traders might mistakenly blame the Fed for a fundamentals-driven market downdraft.
FL senate passes SOH portability, now headed off the voters in Jan:
http://www.palmbeachpost.com/state/content/state/epaper/2007/10/29/1029proptax.html?imw=Y
This is truly a new concept (bad one, imho) in taxation. Basically, the longer you live in FL, the lower your property taxes will be. You will even be able to move (portaiblity) from one home to another and tax most/all of your smaller tax bill with you to the new home.
I will be happy to expand this bill in more detail, I assume we will see this shortly in the FL thread.. And then let the bit&ching commence!
If it’s anything like California’s Prop. 13 it’s a really designed to benefit commercial real estate investors. They hold properties in corporations so when the stock sells there’s no change in the tax base, and sell less frequently than residential. They suckered Californians by telling them it would keep them in their homes by capping property tax increases. What it did is bankrupt the public schools and screw new buyers.
“What it did is bankrupt the public schools and screw new buyers.”
Florida’s public schools deserve a good bankrupting, having become little more than centers for gang recruitment and havens for perverts masquerading as teachers.
Bullwark, You are so misinformed it is laughable.
I second that, in a non-offensive way.
An absolute disaster. I am going to urge anyone I see not to vote for it. As I’ve said, just leave things the way they are for now and let the bust play out. The businesses that have been screwed should get some relief, though. Like the Mom and Pops that were forced out because their property was valued like a condo, which Florida considers “best use”. What a joke. We have one of the last drive-in move theaters in the state, maybe the country around here and they’ve hung on, but were almost run out of business due to the bubble. I love the fact that the sign at the entrance to the theater endorse a challenger to the incumbent property appraiser in Hillsborough County.
One thing interesting about the bubble has been to watch the local govs drop their bloomers for development at the expense of communities and small businesses and I predict developers and builders will leave the local govs with a huge tab for cleaning up the mess when all is said and done.
There is still a drive in theater just miles from my place, they’re not dead yet.
Drop in consumer confidence is worse than expected.
bulletin U.S. CONSUMER CONFIDENCE FALLS TO A TWO-YEAR LOW; JOB WORRIES ARE A KEY FACTOR
U.S. Oct consumer confidence lowest in two years
By Ruth Mantell
Last Update: 10:00 AM ET Oct 30, 2007
WASHINGTON (MarketWatch) — U.S. consumer confidence continued to slide in October, the Conference Board said Tuesday, hitting its lowest level since October 2005 after Hurricane Katrina hit. The consumer confidence index fell to 95.6 in October from a revised 99.5 in September. Overall, consumers were less upbeat about the job market, according to the Conference Board. Economists had expected the index to slip to 98.0. The present situation index in October fell to 118.8 from 121.2 in the prior month, while the expectations index declined to 80.1 from 85.0. The present situation and expectations indexes also hit their lowest levels since late 2005.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B8A583932%2D2DE0%2D4837%2DBE46%2D7891E47E195E%7D&siteid=mktw
This has been discussed at length here and now the MSM finally woke up. $915 Billion in credit card debt! The next bubble to burst?
http://money.cnn.com/2007/10/29/magazines/fortune/consumer_debt.fortune/index.htm?postversion=2007103007
No, a credit card bubble bust would ruin the economy. Many don’t realize that we will never grow the economy through consumption, but rather only by investment; yet people continue to piss money away on consumption goods for todays’ satisfaction and tomorrow’s loss.
I recently received two notices in the mail. Discover and BoA are both raising interest rates on credit cards to 23%, but this is not a reflection of my ‘credit rating’, which is over 700. Good thing I have the cash to pay both of them off, and that’s exactly what I will do. However many people might get slammed in this mess.
Are you saying the basic rate is going to be 23%??? That’s incredible if so. So what would the rate bump to if you make a late payment??
Yes, basic rate of 23% for all purchases, but not balance transfers. I haven’t used either of the cards for years, although I have a small balance on both of them that will be paid off this month. Late payments raise the interest to 30%.
I got a B of A credit card offer for a 1.9% rate through May. My current credit card has a 0% rate through the end of Dec. I pay them all off before the term expires. I will check for another 0% rate from some other bank.
You’re not the only one. I got a the same notice from BoA, and my fico as of August was 810. It’s a good thing that we haven’t carried a credit card balance in many years now.
Even though I am staring the big D in the face, my wife is in agreement about not wrecking our credit, or being in debt as a result of it. We had that experience in the ’90s with the failure of a business we started; took years to pay off (what a chump I was; I should have filed for BK or found a way for the govt to let me off the hook. Stupid me for thinking you should pay your debts).
Me too. Had a health issue. Lots not covered by insurance. We used retirement savings to pay the medics. Could have gone bk, but I prefer sleeping well.
Very sorry to hear about the big D (divorce).
The more (most ?) amazing thing is that the myth of the “soft landing” is still the mantra du jour. The entire credit bubble is collapsing and the mopes still believe that the US is going to be A-OK. I have never seen such blind faith in fiction as currently followed by the majority. The closest thing I can remember reading about was in September 1928 when the DJIA crapped as a precursor to what would eventually happen 13 months later. Then a similar attitude prevailed in September 1987. The financial structures were falling apart, but the mopes kept saying “everything is fine”. Party on dudes!
test
OT, but I recently did a search on Ziprealty for homes in San Diego (it was just for curiosity sake because I live in MA), but anyway, about 5 minutes later I get an email from the Ziprealty Realtor for San Diego welcoming me and asking me to call her, blah, blah.. I almost wrote back to her so she would take me off her list but then I thought it might be interesting to get new listings everyday for SD…well, it sure has been interesting: almost every new listing sent to me is REO, pre-foreclosure, etc. It looks really bad out there… and they are listings for condos adn SFH, still overpriced I’m sure even as a REO but we’ll see what happens.
San Diego Housing, Fires and the Economy.
http://voiceofsandiego.org/articles/2007/10/29/opinion/02toscano102907.txt
A colleague of mine (at the megacorp’s San Diego site) lost his house to the fires. I wonder what percentage of people know someone who lost a house.
7,835 homes listed for resale are currently vacant…. Every family that lost a home could move into one of these residences and there would still be 6,365 empty homes in San Diego waiting to be sold.
This just in from Tucson: Survey finds our housing to be affordable. If that’s the case, then how come we have so many houses on the market? I just heard that at the current pace of sales, it would take four years to absorb all of the inventory.
That survey just looked at the average cost of a home, not true affordability which would have to include analysis of incomes. Secondly, Tuscon (and Spokane, the nearest metro area to my residence) look good simply because homes are so terribly expensive elsewhere.
So basically, Colwell Bankers are saying: Great, a standard 4/2.5 costs more than most folks can afford in Tuscon but these homes are WAY more unaffordable in many other cities and towns! Buy now!
Called an “apples-to-apples” comparison, the survey prices an average 2,200 square-foot, four bedroom, 2½-bathroom home in 317 domestic markets and 77 international markets. In Tucson, that home sells for $286,667, putting the market alongside Spokane, Wash., at $286,250; Cherry Hill, N.J., at $287,167; and Gdansk, Poland, at $283,792.
According to wikipedia:
“The median income for a household in the city was $30,981, and the median income for a family was $37,344.”
Let’ see, that would be a price to income ratio of 7.7!
They just don’t get it, do they?
So much for the “Resilient Consumer”
http://tinyurl.com/2rplxu
There’s going to be a lot of shrapnel when that $915B consumer debt bomb blows. Hope you are all eating popcorn in your bunkers by then. I think the new rich is having $0 balances on your credit card. Or none at all. The masses will stare as HBBers pull out their wallets and pay actual cash for goods.
I love how we are “consumers”. Not people, but consumers, which leads me to think that if they could find a replacement for people, and if these replacements were also “consumers”, then there would be no need for people.
We are “consumers” and some of us are “labor units”. Once we were citizens , but that’s just racist thinking.
Employee are ” Human Resources” not people
I love doing number estimates. Here’s one:
($915B/300Mill people in the US) = $3050/person. That is for everyone: babies, kids, boomers, old folks, HS students, college students, soldiers, rich, poor, middle class, etc., etc.
Now, that is $12K for each family of four.
Credit card debt. Just credit card debt. Now, think about housing debt…
Jeez,
Roidy
I carry a $0 balance, who wants my $12,000 share?
Here’s an off-topic comment:
Why doesn’t ANYONE seeom to care about the U.S. Savings Rate? According to the most recent news stories I can find it’s NEGATIVE!
Trying to get poor people to save with IRAs and working people to save with 401Ks doesn’t work.
But encouraging “home ownership” by trying to keep people in houses they can’t really afford (proposed by many presidential hopefuls in various forms) seems to be really working against getting people to save!
Maybe I don’t understand economics, but it seems that in 40 years or so, the nations where people saved money (Japan, China) will simply be able to effectively buy the United States.
Excpet their “savings” is in U.S. dollars since they had to lend us the money to keep excahge rates from adjusting as we bought more and more of their stuff.
They can’t get out of dollars because any attempt to start pulling out will cause the value of the dollar to instantly crash.
As the dollar tanks, their savings will become worthless.
In reality, they are no better off than us except for the hard assets (economic infrastructure) they are constructing.
On a related note, I was surprised that Hillary, Rangell, etc, are proposing a “Savings Tax” (a tax on liquid assets.)
“How could there be *any* popular support for this”, I wondered?
Then I remembered the negative savings rate! Most people in the US are OK with taxing “other people”. Since most people have no savings (other than their “tax return”) then nobody will object to a wealth/savings tax.
(BTW: I’m not OK with taxing other people! If they need an immediate tax to cover our war spending, then I think EVERYONE’s taxes, from richest to poorest, should go up the same percentage.)
Ahhhhh Grasshopper!!!!
You forget I have the pebbels in my hand and you hold nothing but debt.
I can excahnge these useless dollars for neat things like GE, IBM, Intel, Boeing, Alcoa, Weyrhouser, stuff like that. You know, all those things you managed to ruin with your ceaseless debt craze.
China bought up our steel industry in the 80’s, took all the pieces and reassembled it in China, they will do the same with anything left of value in the US.
How can you overpay for something when you pay for it with useless paper.
They won’t rush to exchange dollars for other fiat currencies. Why bother when we will be having a fire sale in the very near future.
So, I’ve been having this running chat with my dad about politics, budget policy, economy, etc. I’m 40, he’s 68. (He took an early retirement with some serious bank, but his wife is a serious shop-a-holic and I think she’s p i ssed through most of their liquid assets.
Anyway, he’s pretty much a hard core Republican. I hate both parties equally.
Now that he needs his Social Security, it is OFF the table for cuts. Medicare? Can’t touch that. He worked in DoD contracting his whole life, so that is pretty much off the table for cuts as well. Oh, and no tax increases.
He’s all in favor of a balanced budget.
Okay dad, how are you going to do it? DoD, VA, Social Security, Medicare, and interest on the debt are 80% of the federal budget. Everything else combined is smaller than our deficits.
So, the conversation devolved into me wanting to rob people his age of their Social Security, so I provided the table of what rates have been historically.
People my grandparents age paid in 1%, 2% , 3%, 4%… finally retiring when rates were pushing above 10% (counting employeer match). If you add up what they paid, it is something close to 2 years of income.
My dad started at 4.5% in 1958, but saw the rates climb slow but steady to 13+% as he was due to retire. Someone his age paid about 5 years of income over what would be the normal working life, starting 18-19 and retiring at 65-66.
I started out at 13% (17% if you add Medicare). IF rates do not go up, I’ll be paying over 7 years of income. However, if we do not cut payments, rates will have to go up closer to 20%, so I’ll be paying close to 10 years of income.
2.2, 5, 10…
Dad, it is not my generation that would be robbing you of your Social Security. Your parents generation already did that when they created a system in which each generation would have to pay twice the amount of income to the system as the last.
All that people of my generation are trying to do is to make sure you don’t rob us so that we don’t have to rob from our kids.
“We need money. This plan will do it.”
“Perhaps.. But in time, people will be forced to eat their offspring.”
“True..”
“Then it’s decided? OK. We go with it.”
A lot of people think “uncapping” Social Security tax is fair. What nobody every suggests is uncapping benefits, or making them proportional to what you’ve put in!
Also, I don’t know why simply raising the starting age is so controversial. It should have been pushed up a couple of years more than it has. Even a 6 month advance would go a long way to easing things up a bit.
Also, if they uncap Social Security from the 97K limit, executives and the “Entrepreneurial Class” will simply not pay it. If you have your own corporation, or are the executive of another, you can simply give yourself the salary you want. (Hence Steve Jobs $1/year salary) and find some way of compensating yourself outside of a formal salary (backdated stock options, “forgiven” loans, etc. In fact the proposals to not count forgiven debt as income will simply pave the way for corporations to finance mortgages for its execs and then not collect on them.)
sure.. take the politics out of it and fixing it is a piece of cake..
Would it be a mean thing to do to deny anyone social security that makes over a million a year in other passive retirement income (or whatever amount is fair ). Just a thought .
Aside from the moral issues of picking and choosing who should be screwed according to popular opinion, why prop up a dismal failure.. it only postpones the inevitable.
imo, SS should suffer radical change systemwide, or let it die a natural death.
@housing_wizard: Yes, it would be a mean thing. You started with a case of people making over $1M/year in passive retirement income. This is a small group of people with say, between $100 and $200 million saved up, so it won’t make much of a difference anyway.
However what people have proposed is to start taxing and/or eliminating at much lower levels.
Take a frugal couple, not high earners, who managed to save $3M and have a paid up house.
And suppose Hillary decieds that $3M is “too rich” so they don’t get social security or medicare.
These people, with their maybe 75K of fixed income may end up being NO BETTER OFF than someone who saved nothing. That would be downright cruel.
Even if the cut-offs start now with high retirement incomes (say $1M or more), that would scare enough people into thinking it could happen to them, and drive more money underground and offshore, or find legal ways of beating social security tax (like the $1/year salary technique used by Steve Jobs).
That would make it so only suckers paid Social Security tax.
@joeyinCalif: I’ve paid the maxium into Social Security since I started working full time in 1984. What do you propose should happen to folks like me? We get NOTHING? At least let us cash out with, say, 5% interest, what we put in.
I agree that SS is broken. At least get rid of SSDI for as many people as possible. Someone needs to get the balls to declare who’s really disabled and who isn’t. Right now, a woman with no money and two kids can stroll into an SSDI office say “Boo Hoo Hoo! I’m depressed! And my kids are autistic!” and get a big fat monthly check, and drugs she can sell on the street.
hey Reuven,
It gets better. You don’t have to be a citizen to get SSDI or ever worked in the US. Asian families are famous for this scam…sponsor grandma and grandpa to the US., and promise the government that they won’t be a burden. Then dump them on SSDI. My friend Alex, who’s the art director at Newsweek told me it’s the number one scam in Chinatown.
Reuven,
How about uncapping the income limit, but continuing to give these “rich” folk their SS checks when they retire?
Good post, Darrell
OT, but many of you guys I believe respect Dr./Congressman Ron Paul.
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Got called away to referee a football game featuring Tijuana-adjacent vs Beverly Hills-adjacent, and am now just back…
Ended in a scoreless tie.
“Man is devoured by the reproaches of his conscience”
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