An Unpopular Truth
It’s Friday desk clearing time for this blogger. “Arizona ranks among the top 10 states in the nation in foreclosures, the number of homes for sale in the Valley is at its highest level in years, and people who absolutely must sell face problems. ‘Once we take the listing, we tell them up front that we have to adjust the price every 30s days,’ said Avi Asallas of Century 21. ‘Before, we could sell a house within 30 to 60 days, but now we cannot put a time frame on it because there are so many properties.’”
“Meanwhile, a number of Valley residents are going through foreclosure. ‘I bought a house for $400,000 in Maricopa, and my house isn’t even worth $280,000,’ said one woman.”
“AmTrust Bank of Cleveland began foreclosure proceedings Oct. 19 against a partnership that developed Painter’s Loft, a 20-unit condo at a former factory. Ken Lurie of Rysar Properties said he is disappointed the bank lost confidence in the duo’s ability to sell the remaining units.”
“‘It’s not a failed project,’ Mr. Lurie said. ‘It’ll be a success, but not for me. I’m in business to make a profit.’”
“Central Texas still has a healthy housing market, but homes will take longer to sell and must be priced lower in 2008, broker Dee Shultz said. ‘Our prices are going to have to come down a bit,’ said Shultz.”
“In the downtown condominium market, ‘we’re in uncharted territory,’ said Kent Collins, partner, Centro Partners LLC. ‘Just as we went through a period in the late 1990s when new apartments were being built downtown, and we didn’t know the depth of the market or the price point, we are in the same place today in the condominium market.’”
“Shultz agreed, saying the number of new downtown condos being built is ‘a little frightening,’ and it remains to be seen if they will sell as anticipated.”
“They camped overnight and slept in their cars. But they didn’t do it to buy tickets to a rock concert or get the latest gadget. They did it to buy land. The ACT Government put 55 blocks in the new Gungahlin suburb of Forde on to the market yesterday.”
“23-year-old Angela Tonkovic and her husband got what they had come for. But Ms Tonkovic said she was shocked at how competitive the market was.”
“‘It’s insane that it has come to this. There were people lying out on the grass with pillows and sleeping bags because they didn’t want to risk losing the land they wanted,’ she said. ‘I never thought I would have to do something like this when it came to buying land or a home.’”
“At the Indovina Bank on 39 Ham Nghi Street district 1, there were thousands shoving and jostling against one another to transfer VND200 million to Phu My Hung Corporation which is offering 300 apartments to only 1,000 ‘candidates.’”
“But will there be a time when the real estate bubble busts after reaching its saturation point and becoming stagnant? Meanwhile, the fever is on since it is still very profitable to buy apartments.”
“A man waiting to transfer money at the scene told Sai Gon Giai Phong he earlier bought a $300,000 apartment which now costs $2 million. ‘There’s no business more profitable than this,’ another sitting nearby intervened.”
“Vietnamese Deputy Prime Minister Nguyen Sinh Hung promised government will impose progressive taxes on housing speculation to help deflate an impending bubble in the real estate market.”
“Ho Chi Minh City recently saw disturbing degrees of speculation-based property sales ominous of a bubbling market when thousands surrounded a housing site last week to purchase flats even before foundations had been laid.”
“Prospective buyers hired proxies to wait in long winding lines for registration applications, with at least one person paid some US$1,000 simply stand in line.”
“With real estate prices having risen 500 percent since 2002, Latvia has long been an investment hot-spot. But the Baltic state’s property firms are getting gloomy as a government anti-inflation drive bites and jitters spill over from the United States’ home loan crisis.”
“‘Activities in the market have slowed down considerably. People are waiting, though nobody can really predict what will happen in the future. The situation is bleak,’ Aigars Smits, head of the Arco Real Estate company, told AFP.”
“The average price of a single-family home in Calgary has dropped for the third consecutive month and in October was more than $53,000 less than it was in July when it hit a record $505,920. Single-family Calgary metro sales for October decreased by 10.3 per cent from October 2006, and new listings were up.”
“By the standards of our gravity-defying real-estate market, it didn’t sound all that irrationally exuberant: a well-appointed Kits Point pad, with about 1,300-feet of space and a view of the ocean. Price: a cool $1.25 million.”
“Well, it was no penthouse, dear reader. It was a basement suite in a house. And the view? To get your $1.25-million ocean view, you would have to gaze through a ground-level basement window, peek under a thick grove of rhododendron bushes, then across the street, hopefully nobody parks by the sidewalk here, look past Kitsilano Park and then, oooh-la-la! A tantalizing glimpse of English Bay, about two football fields away.”
“With the housing market melting so spectacularly to the south of us, you can detect a frisson of unease these days when the subject of real estate comes up: Are we, too, sitting atop a massive real-estate bubble ready to burst or are we truly living in a unique market that might soar faster, higher and stronger as the 2010 Olympics approach?”
“Who, in the real world, can afford to live here anymore? New immigrants? The working class? The middle class? Students? Your own kids? Affordability, or more accurately the lack of it, is becoming a national lament. In its latest quarterly survey, the Royal Bank of Canada reports that in every province and city it tracks, the cost of owning a house is eating up more and more of family incomes.”
“The number of Oregon and Salem-area homes slipping into foreclosure rose sharply in the third quarter of 2007, another sign of fallout from the national mortgage loan mess.”
“There were 229 new foreclosure filings in Marion County during July, August and September, a 29 percent increase from year-earlier figures. There were 81 foreclosure filings in Polk County, an 84 percent increase.”
“Ken LeVeille, a mortgage broker in Salem, said Oregon’s market often trails California’s, so it’s to be expected that foreclosures will rise here. ‘This is a normal correction,’ LeVeille said. ‘It has to correct. Otherwise, we’d have a disaster. We’d all be paying California prices.’”
“Those were the days when middle- and upper-income buyers were wishing that God would make more land, when developers were happy that He couldn’t, when mortgage bankers couldn’t decide whether they wanted more land or simply bigger houses to underwrite.”
“Those dynamics were nowhere more visible in Arkansas than in its northwest corner, where food processing and trucking and, especially, Wal-Mart, were creating a demand for upscale housing unlike anything seen anywhere else in Arkansas.”
“A Little Rock attorney paused at my table to confess his fear that he was making too much money. ‘When times are bad, businesses sue other businesses,’” said the litigator, ‘and right now my business is booming.’”
“Need a plumber? An electrician? Another amigo who lives in northwest Arkansas joked recently that getting either these days is as easy as picking up the phone. A joke, yes, but no laughter: What could be humorous about the surge in foreclosures in Benton and Washington counties, up 85 percent and 130 percent, respectively, in the first three quarters of 2007?”
“Now rides the Federal Reserve to the rescue, offering a second reduction in short-term rates in as many months and not bothering to hide its concern over the impact of the sub-prime mortgage debacle on the broader economy, yet cautioning the industry that it had best be prepared (and no pun intended) to clean up its own house. Or houses. In fact it is already doing so — at a price.”
“Defaults on home mortgage loans are rippling through the county. Politicians are picking up the violins and wailing about how borrowers were taken advantage of.”
“Borrowers seem to want to forget that home mortgages are contracts. Obligations are imposed on both home buyers and lenders. These obligations are a two-way street, and both sides must deal in good faith and do their homework before pen is touched to paper.”
“But in the current mortgage mayhem, many buyers overstated their creditworthiness and obtained loans they wouldn’t otherwise have had.”
“If people borrow money, they need to be stewards of their decisions, and manage their finances in a responsible way. When borrowers don’t believe they should be held accountable, contracts become meaningless and society starts to break down.”
“It is an unpopular truth, but many buyers facing foreclosure are victims of their own hand. Too many people bought homes they couldn’t afford. It made no sense to stretch by buying the higher-end homes they did, and many shouldn’t have been buying a home at all.”
“What were they thinking? These are hopeful buyers in a hopeful game that sometimes ends badly. What these people are calling ruination at the hands of predators is their hopeful thinking not coming true when the economics came home to roost.”
What a great week! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
“A man waiting to transfer money at the scene told Sai Gon Giai Phong he earlier bought a $300,000 apartment which now costs $2 million. ‘There’s no business more profitable than this,’ another sitting nearby intervened.”
this is vietnam. holly cow. for a moment i thought it could be OC, CA. these people should look at shanghai real estate as a lesson.
If there were only an easy way to profit from the bubble lessons we’ve learned here in the US. How to bet against Vietnamese housing???
I wonder how many of those shabby old Viet Cong and NVA vets, especially the maimed ones, are thinking, this sure as hell wasn’t what we bled and died for.
Hmm, I wonder. Reminds me of a bar conversation I had with a limey in Germany in the 1970s, when Germany was prospering much more than Britain: “Makes you wonder who won the bloody war, don’t it?”
Aside: Jim Rogers had a great line tonight when Kudlow asked him if he was worried about the Chinese being Communists: “Massachusetts is more communistic than China.”
China has become more capitalistic but it is still one party rule with no democracy. There gov still controls a large part of industry and has recently started a fund to buy up foreign companies. Ask the Falun Gong and the Dali Lama how democratic they are. Ask Tibet how democratic China is. Ask Tiawan.
Great call on the price you had a few days ago Paul.
Communism is a weasel word. He should have said totalitarian, state-controlled death factory. The Massachusetts would be a distant second.
the only thing that keeps Massachusetts in check is the US Constitution.
they burned suspected witches and would like to burn suspected conservatives.
Most of them were forced to fight or else their relatives would be slaughtered or starved to death. I don’t think they really care.
Or Florida.
average income is $50 per month. Not kidding.
“What a great week!”
Ben — You seem least surprised of anyone who reads or writes here about how the unraveling of the bubble is playing out. I am always deeply impressed by your cool-headed perspective on shocking new developments.
Adventures of a vulture capitalist selling short on Citi.
http://www.theage.com.au/news/business/adventures-of-a-vulture-capitalist-selling-short-on-citi/2007/11/02/1193619147595.html
From his quotes, he sounds like a reader of this blog. He actually quotes the PPT.
Hey Luvsfootie, is that you in this article??
Nah, but that’s how I think
It is getting hard to separate fact from fiction any more. Is this story for real? It seems too good to make it up.
In those days, I knew little about the President’s Working Group on Financial Markets — the Plunge Protection Team. We will learn now. The investigation will begin, the collusion will be uncovered, some will be punished, many disgraced, most will walk free and maintain their riches. Most of the men and women responsible for the sacking of the US and much of the world’s capital will be covered by the absence of laws enacted to protect investors from the theft and carnage to come, or through the interpretations of laws by juries confronted by matters deeply arcane. In the end, if there is an end, for we are, as a pundit finally acknowledged on CNBC after the close of play with the Dow down 360-plus points, are at “the beginning of the beginning”.
500 percent since 2002?
Latvia sounds worse than the OC!
Home For Sale in Ikskile, Latvia
Newly Built, Modern And Exquisite Family Home Of Your Dreams
Asking Price: 270,000 €
A romantic family house for sale in Latvia, Ikskile – 25 km from Riga in a wonderful, picturesque place near the river Daugava. The house was built in 2007. The estate has been built properly using high quality construction materials; it has a well-considered and convenient planning. On the first floor there is a spacious hall with the staircase leading to the second floor, a study, a lounge with the exit to the terrace where an outdoor fireplace has been planned. There are a kitchen, a bathroom, a heating room and an exit to the garage on the first floor as well. On the second floor there are three bedrooms with sauna premises and a bathroom. There is a household room in the house as well. Heating system – a feat pump; the floor is heated. The garage has an automatic gate. Dwelling space 230 m2, land 1400 m2.
http://tinyurl.com/2s7vdo
Not inexpensive anymore. In Riga, 3 bdrms are EU600K. Of course the economy is growing at 11% per year and the population is 2MM. with 99.9% literacy and 0 poverty.
my brother loved that place….I’d like to visit someday….
Vladimir Zhirinovsky and other ultra-nationalist Russian would-be dictators have vowed to take back the Baltics by force. Buy there at your own risk.
I’m not buying - nothing!
No wonder they joined NATO the first instant they could…
Yeah and the average income is 20,000 euros a year if that.
Real affordable for the average buyer! NOT!
Lots of upside (maybe in 25 years, MAYBE!)
No bubble here, nosiree Bob!
Do the math!
Thanks for the Canadian info Ben. I’ll bet you have a ton of Canadian readers, as we’ve had a massive housing bubble, especially out west in Alberta and BC.
Most Canadians are still happily delusional and think we’re immune from a bubble even when prices double in 2 years.
All evidence though shows that the bubble in Alberta is beginning to unwind rather quickly, with massivly rising inventories, falling sales, and now prices are begining to come off thier peaks. Realtor groups in Canada are running around like chickens with thier heads cut off trying to assure the unthinking masses that prices will simply “level off” at a new permanently high plateau. Sound familiar?
In U.S. dollars, Canadian home prices have risen 10% in the last 6 weeks. And that in itself can’t be good for prices in local currency.
Yep… I’m sitting here in Vancouver BC watching the bubble intensify.
We really need a correction here soon.
Been following Ben’s awesome Blog for over a year now.
Cheers Ben!
The Alberta Bubble. I’ve been around “Next Year Country” for over half my life and thought i had seen it all. What has happened in Calgreedy (Calgary), Edmonton, the rest of Alberta and all of Saskatchewan is a true sight to behold. The first declines of $ 50,000 or so are just the frost off the pumpkin. The rest are just starting to go and there is NO reason not to think that ultimately there will be 50% or more declines going forward. For this prairie reality, one just needs to think of Siberia. Seven or so months of winter, three or so months of black flies and mosquitoes (everywhere) and one or two months of it being so great that one seems to forget reality till he has to hide out till the next two months or so comes along ten or so months later. Effing ugly as a place to live and in the context of the oilpatch stuff, all of the Alberta oilpatch probably could be engineered and run by about 300,000 employees and their families. The rest is overhyped crapola of the spin that gets in between reality and thinking that they are doing something. Guess i’ve just been here too long and seen too much reality. It’s real hard country and real ugly living and that is a whole bunch of the basis of why the CDN $ is now at $ 1.07 U.S, up from 60 cents U.S. a few short years ago……. .. This can’t sustain the loss of jobs and security and inflated asset prices starting to bite throughout the rest of the country so before too long there has to be reckoning. The West Coast is due for an intergenerational price asshanding wrt to the real estate markets, as too likely the Toronto and other “Big” city markets…….. Rant off….
BC is the next Florida.
Lower sales in Portland and the rest of Oregon. Lower sales in Snohomish and Pierce counties. Lower prices in Calgary. It’s coming. A gigantic pincers movement-no place for insane Vancouver prices to escape to. Been ten years since a place was affordable here.
“It’s not a failed project,” Mr. Lurie said. “It’ll be a success, but not for me. I’m in business to make a profit.”
It doesn’t take much to confuse me, so I’m confused. If it ain’t a failed project, and it’ll be a success, by the transitive property wouldn’t he be able to stick around to see it through??
“AmTrust Bank of Cleveland began foreclosure proceedings Oct. 19 against a partnership that developed Painter’s Loft, a 20-unit condo at a former factory. Ken Lurie of Rysar Properties said he is disappointed the bank lost confidence in the duo’s ability to sell the remaining units.”
Um, no, the bank lost confidence in its ability to get its money back because you were unable to pay them, dumbass.
Prince is done as CEO at Citibank, to resign Sunday, says WSJ.
Emergency meeting this weekend re SIV losses.
http://online.wsj.com/article/SB119403363814780742.html?mod=hpp_us_whats_news
Citigroup is the largest player in the $350 billion SIV market, managing seven of these off-balance sheet vehicles that hold a combined $80 billion in assets. SIVs have issued short-term debt to investors such as money-market funds while buying mortgage-backed securities and other assets that carry a higher yield.
i have a feeling these guys are going to have one hell of a haircut when all this plays out! ouch!!!!
You create SIV’s to put out these small fires. When it comes home to roost, you now have a raging wildfire that cannot be contained.
I say let a recession happen and raise rates. It will be painful but long term, the country will be better off.
“Citigroup is reeling from troubles connected to mortgage-backed debt. A person familiar with the matter said the bank may report further losses on Monday. Its stock has fallen 31% this year.”
How much do you think they will report on Monday? Do I hear $5 billion? Can I get a $10 billion?
sh!t. they manage my 401(k)….
By now it’s down to a 301(k).
more to the point, who would have thunk it. a bunch of joe six pack, get rich quick schemes, could buckle these wall street bankers??? i dont understand!! who out smarted who??
They outsmarted themselves.
They outthunk themselves.
I wonder how much his golden parachute will cost.
He gets a golden parachute. Shareholders get a golden shower.
NYC - you’re cracking me up - 301k, Golden Shower….
Thx!
There will be a massive rally in the stock market Monday, perhaps up 300 points or so. Of course, Prince will get a severence package of at least $200M and probably be hired as CEO of another large company within a few weeks.
I share your hunch — there has never been a better time for dips to buy stock!
Clever.
“If people borrow money, they need to be stewards of their decisions, and manage their finances in a responsible way. When borrowers don’t believe they should be held accountable, contracts become meaningless and society starts to break down.”
“What were they thinking? These are hopeful buyers in a hopeful game that sometimes ends badly. What these people are calling ruination at the hands of predators is their hopeful thinking not coming true when the economics came home to roost.”
F-ing aye, Bubba!! At last, a voice of reason. I’m just getting sick of hearing about the victim buyer/borrower. I don’t care if someone said this or promised that, they still should’ve known better.
There are no victims in this game except the taxpayer - borrowers, lenders, and investors were just plain greedy and stupid.
I don’t have a full grasp on comprehending all the Canadian markets, but it kind of sounds like a majority of the entire country is overpriced. That must be absolute hell. That’s also a totally different dynamic than in the US where if you live in CA or NY and truly get fed up, there’s other states and cities that offer better affordability.
There are few places in the US that are still affordable if you look carefully at income data. Houses cost less in some markets relatively to CA and NY, but they are still expensive relative to local incomes.
But those prices are getting more affordable. I got to see the Boston disaster firsthand last week. Well, I didn’t see it but I got to hear about it while I was visiting. I thought Boston was so special. The housing bust, coming to a Manhattan near you.
Note: We got a beautiful postcard today for the rotten 45 John Street development here in the Financial District. Two bedroom apartments as small as 980 square feet are starting at $1.25 million. Excuse me while I go pi$$ myself with laughter.
Overpriced?
Tax rate = 46.4% (what I pay)
Average tax levied on all levels per capita = 50%
No mortgage interest or any personal housing tax deductions.
Average gross pre-tax Canadian income less than US comparable (until past 3 months due to CDN dollar appreciation)
Average single family home price countrywide approx 250,000 CDN dollars ( it now costs approx 106 American cents to buy one CDN dollar).
Nah……..our market is cheap, will only appreciate and never, ever go down.
As f#$@king if!!!!!!!!!!!!!!
Do the math!
Yep, They truly are and the Canadian stock markets are equally or more so overpriced. I am grateful for the rally in the CDN$ as it has allowed me to procrastinate and ultimately go out and buy more physical gold in hand for less. I well remember buying gold at $ 400 U.S. a few short years ago and having to pay something like $ 600 CDN. From my readings, Canada is the sixth most taxed country on the planet, and it certainly feels like that from my experience, so just buying and adding to long term physical gold here just feels good from where it was in the past. In any event i really don’t think there are picnic places of cheap anywhere anymore, except perhaps in the physical precious metals as they have been beaten down and “managed” by TPTB for so long so as to prove that “Paper” is worth more than gold. We’ll see in due time……
Dec CBOT GOLD after hours at 809, a 20 year high, and climbing. The economics everywhere is confusing. Flight to safety.
The market is going way down
But Mr. Cee, communists hate gold (reference, Franklin Delano Roosevelt). Nary an Austrian economist in the Dumbocrapic Party. I wouldn’t marvel about gold if I was a Hitlary Clowntoon supporter.
Careful, Bill, or David Cee will throw a hissy fit and pour the rest of his money down the Hillarious Clowntoon campaign rat hole just to spite you.
I am afraid that if things get too bad, the politicians will start to seize assets like FDR seized gold back in 1933. Those who were smart and did not speculate in the stock markets got screwed back then. In a few years, the smart ones who did not speculate in the RE ponzi scheme might be screwed in order to save the “victims” of this ponzi scheme. Of course, the politicians and their friends won’t be asked to sacrifice.
‘I bought a house for $400,000 in Maricopa, and my house isn’t even worth $280,000,’ said one woman.”
Yeah, but she just HAD to have it back in 2005, and Suzanne’s research indicated housing only goes up.
She’s wrong. She paid $400k, so now her house has to be worth $600k. So she should put it on the market for $625k and wait for someone to bid $650k. That’s the way it works, right?
it has to be that way, just as sammy said “suzanne researched it”
The NAR’s report showed homesales were down 8% from last month. A big fat lie. It was down either 22 or 28%!
Look.
http://homeguide123.com/articles/Home_Sales_and_Home_Prices%3A_What_the_Media_Isn%27t_Telling_You.html
If you look, you will see it.
situation:
dow 7,000
several bank failures
AAA bonds rewritten to junk
consumers stop buying
layoffs in many industries (non-motgage related)
dollar shot to he11, euro and yen are crap too
how’s your nest-egg holding up?
I still have my health. I hope.
gimme some of that AAA junk..
to paraphrase JDRockerfeller..”The time to buy is when there’s blood in the streets..
Actually it was a term coined by a member of the centuries old and vastly influential european branch of the Rothschild family referring I believe to the even older addage “sell on the cannons, buy on the trumpets”.
I plan to buy some of those AAA bonds when they are rewritten to junk. I plan to buy junk bonds when they are rewritten to sub-junk. Millionaires are made in times of crisis.
When I picked up one of those freebie weekly newspapers today, I noticed that it was thinner than usual. I thought maybe one of the sections had fallen out, so I got another one at another place. It, too, was thinner than usual. That was when I figured out the reason–the RE section had way fewer than pages than usual. They are really starting to cut back on their advertising budgets.
Apologies if somebody has brought this up earlier but I heard that NAR took out a one page ad in the today’s issue of USA Today. Is this true?
If true did they include any of the old standards such “Time to Buy” or “Real Estate Only Goes Up”, etc. Any memorable Fun Yun quotes?
“If it weren’t for a favorable economic backdrop, housing would probably have a hard landing,” Yun says. “As it is, we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later.”
Thanks M.B.A just as I thought the recovery is still just around the corner!
It is true. I saw the article. Just another so called ad why real estate is always a good buy as long as you use a NAR licenced REALTOR.
The number of people who are moving in with friends or family, or sharing apartments or houses to save money, has caught economists at the Realtors association off-guard. The growth in “new households” — first-time buyers or first-time renters — has plunged 70% from last year’s rate.
“This is very unusual,” says Lawrence Yun, the NAR’s senior economist. “Even during a recession, household formations do not slow to this current level.”
“When today’s consumers look at real estate markets, they need to use the same analytical approach as investors in the stock market. Those buyers aren’t generally concerned about the volume of stock trades on a given day. Why should they be? They’re focused on price trends. And by that measure, now is a great time for consumers to be in the housing market: Prices have steadied, and inventories are healthy.”
Stock market investors don’t look at volume? Smart ones certainly do.
Prices have steadied? Every bit of empirical data coming in shows prices are accelerating to the down side.
NAR is clearly having a harder and harder time spinning the data. I hope they continue down this path so that as Realtor credibility is destroyed we might finally eliminate this social parasite altogether (or at least eliminate their monopoly on information).
Can’t stand Realtwhores either.
Basically no better than vermin for the most part.
“They’re focused on price trends. And by that measure, now is a great time for consumers to be in the housing market:”
The trend ain’t your friend in the housing market. Never been a better time to catch a falling knife, though…
And from what I can see, more and more people are understanding this. The reality of price drops, and drastic price drops, are sinking into the masses. The psychology has changed. I see it in the outlying areas of New York City. I saw it in Boston. I saw it in North Carolina. There is nothing like a few little trips to see that the media is truly full of Lereah (that means $hit).
Steadied. Much like Cisco stock at $90 a share.
Hot off the presses:
“. . . a higher than usual number of homeowners will face delinquency during the next year and a half,” Robert Steel, undersecretary for domestic finance, told a congressional panel in prepared remarks.
Not only are we paying these guys’ salaries, but evidently someone also had to be paid to prepare this piece of intelligence. There’s more market-relevant news shared on a first-grade playground than this.
OT - Arizona.
Was this posted?
http://www6.comcast.net/news/articles/national/2007/11/02/Nuclear.Plant.Lockdown/?cvqh=itn_nuclear
Back from a walk in the trees…
“Well, it was no penthouse, dear reader. It was a basement suite in a house. And the view? To get your $1.25-million ocean view, you would have to gaze through a ground-level basement window, peek under a thick grove of rhododendron bushes, then across the street, hopefully nobody parks by the sidewalk here, look past Kitsilano Park and then, oooh-la-la! A tantalizing glimpse of English Bay, about two football fields away.”
Hee Hee! How about arranging a series of mirrors for a few blocks in, say, Torrance near Anza and have them go all the way down to King Harbor and reflect the water into…voila! A box marketed as a house! It can sell for having “a peek of the ocean!” $1,000,000!
When I lived in the South Bay I would read lots of RE ads of homes with “peek of the ocean’ views.
Spare me!
WOW! Look who is finally posting again. This was one of the best blogs out there but then it died for about 15 months. He seems to be back!
http://economicrot.blogspot.com/
Thanks, Tom. I just read his last post from June 6, 2006 and I have a new name for him… Nostradamus.
Read all of his posts INCLUDING his first. His first lays it all out and everything that he predicted way back then HAS happened.
holy cow! I liked his blog. Latest post says Los Vegas houses in some stage of foreclosure almost equals the number of houses for sale! That’s bad.
Here is a catalog of Peter Schiff Videos. Great stuff!
http://www.europac.net/video.asp
Loans - still available.
In fact; they’re spending money on advertising.
I guess I’m having a hard time understanding WHAT entity would make loans right now. You can hear them, on the radio, Yahoo news, in the real estate section of the newspaper.
WHY on earth would anyone make a loan right now, with the understanding that the entire real estate market is going to slowly sink under the icy waters of the artic. Like the Titanic.
The lenders must surely understand the situation right now. Let’s say they make a loan for $350,000. The buyer agrees to pay a certain amount per month to pay it back.
In the meantime, that house which was worth $350 K is now worth $330 K, $299 K, $250 K.
The lender holds title to something that is steadily decreasing in value.
Now compare that with this Blog, or informed investors who have decided to “Wait it out” and let the bloodletting reach its maximum level.
This “wait and see” attitude is going to be a self fulfilling prophecy, in that the market is truly going to go down drastically. Then when it reaches the bottom, people will cautiously move in and start buying.
The faster this mess reaches the bottom, the better it will be. Rather that stupid real estate Fairy Godmothers who just keep perpetuating distorted prices which do not reflect reality.
“Those who corrupt the public mind are just as evil as those who steal from the public purse.”
Adlai E. Stevenson, Jr.
Lending money is what lenders do, just as building is what builders do.
If lenders stopped lending and builders stopped building both would have to lay everyone off and close up shop.
Which may happen anyway.
They’re call FHA, Fannie, Freddie and Ginnie. Most of the loans going out these days are backed by us taxpayers.
Anyone know about AmTrust’s exposure to all this toxic waste out there. Their online bank is offering 5.36% APY savings, but I see their mortgage lending wing is one of the top 10 in the country and I know that means they might have gotten there riding subprime during the bubble’s heyday. Apparently they use to be called Ohio Savings Bank and have a solid reputation, but these are interesting times so I do not want to chase a few extra bucks just to expose my savings to an unstable institution. Thanks.
as of today, i see 5.25 on moneymarket accounts.. not bad, but not a reason to bank online with an unknown quantity, imho..
these AMTrust guys seem to be primarily insurance .. check out any company at this web page..
http://moneycentral.msn.com/companyreport
type in “amtrust” as the name/symbol.. and select AFSI for an overview..
If people
borrow loan money, they need to be stewards of their decisions, and manage their finances in a responsible way. ….“It is an unpopular truth, but many
buyers lenders facing foreclosure are victims of their own hand. Too many lenders made loans to peoplebought homes they couldn’t afford who couldn’t afford them. It made no sense tostretch by buying the higher-end homes make the loans they did.“What were they thinking? These are hopeful buyers in a hopeful game that sometimes ends badly. What these people are calling ruination at the hands of predators is their hopeful thinking not coming true when the economics came home to roost.”
Sorry, wrong slash (I think)….help!
strikeI didn’t mean it …. really.
LawnGuyLand Real Estate MarketWho let Freddy Kruger loose on this blog?
LOL!!!!!
test
did that work?
http://www.latimes.com/business/la-fi-homes3nov03,0,7824038.story?track=mostviewed-storylevel
The fat lady has sung in Los Angeles, let the downturn begin God has spoken. For those of you who do not know, if Fred Sands says it’s over it’s over. He is the guru of Los Angeles real estate. These comments coming from him are “HUGE”. Mark my words…
And as a side note would someone kill the strike through.
Interesting comments by Fred Sands . I got a letter in my file that Fred Sands wrote (many years ago ) saying a bunch of nice things about me .
“Too many people bought homes they couldn’t afford. It made no sense to stretch by buying the higher-end homes they did, and many shouldn’t have been buying a home at all.”
D’oh.
“What were they thinking?”
They were thinking, ‘Real estate always goes up.’
There is something that is missing when we only say that the borrower is to blame for buying something they can’t afford .Borrowers have always been like this and lenders would turn them down in prior lending cycles ,(so this is why realtors didn’t waste their time bringing borrowers to property they couldn’t afford .)
The lenders and appraisers and underwriters are responsible for underwriting a loan ,not for the borrower so much ,but for the protection of the loan funds that are put up by a investor that is counting on a risk rating to be accurate .The whole purpose of underwriting is to protect the funds of investors/banks /deposits of the Nation /pension plans ,etc. So ,of course the borrower is to blame ,but the lender is liable is so many ways if they breached their duty to underwrite a loan and give a accurate risk rating .
If you put your money in the stock market and you bet on a Company ,you would be pissed if you found out that the Company was only worth 2 billion instead of 50 billion ,based on fraud .
So ,when the lenders breached their duty to underwrite the loans and they just passed this cr*p on to the secondary market, and it was rated AAA (or higher than the true risk),it became a serious failure of lawful duty to underwrite loans on the part of the lenders .Appraisal departments breached their duty to appraise property according to very strict rules ,and of course the regulators were asleep when all this hanky panky was going on .After a few appraisers messed up the comps by faulty appraisals ,than other appraisers use those same comps and a vicious cycle begins . Appraisal practice has strict rules for a reason . All sanity went out the window and the entire system became more and more corrupted as time passed and now its blowing up . Only under this sort of corruption of normal prudent business practice can you get so many vacant houses ,so many foreclosures ,and so much waste and loss of money . The lawsuits are just going to keep coming . Maybe all the players in the lending game think they are cleared because the borrowers signed the loan documents ,but I don’t know about that .
“There is something that is missing when we only say that the borrower is to blame for buying something they can’t afford.”
I fully agree. Subprime securitization led to the illusion among lenders that someone else held the credit risk. Consequently, underwriting standards went out the window, but nobody bothered to give the hapless borrowers the memo.
But PB ,liability is going to be a issue in the future . There are going to be court cases where the courts are going to have the burden of decisions on liability . The rules were in place and the fact that the rules were just not followed is going to be a issue . What a mess .
Respectfully disagree PB.
Subprime and other mortgage securitizations bearing inappropriate ratings, arising from either shoddy work or outright pandering on the part of the ratings agencies, led to the illusion among lenders (ultimate owners of the paper) that what they owned was thoroughly vetted and that historical payment performance data could be relied upon to support the valuations they bought at.
http://www.latimes.com/business/la-fi-homes3nov03,0,7824038.story?track=mostviewed-storylevel
This is a big story, my other post have gotten eaten. Fred Sands coming out saying that is huge, huge, huge…
Your going to see a race for the bottom now in Los Angeles that is going to be spectacular. The vast majority of Realtors in this city hang onto this guy like he’s Warren Jeffs. If he says it’s over it is over. It has just gotten intersting in L.A.
OK OK mrincomestream ,its huge ,its huge .Do you really think the Realtors are going to get out of the business because of Fred Sands statements? What about the sellers ,alot of the sellers won’t care what Fred Sands said .
You know what I think was huge mrincomestream? When I saw people standing in line at Countywide Bank to collect their FDIC insured deposit accounts . It huge that the New York DA filed a lawsuit against a Appraisal Company and WM for collusion with appraisals . It’s huge that the SEC has investigations pending on a big bank and stock investment firm and on and on . You would of thought that real estate going down in prices by 25 or 30% in some places would be a little alarming to the realtors ,along with the high foreclosure rates . But ,I will take you at your word that Fred Sands words did it (and I bet your right to ,really ,that’s how weird realtors have become ).
Wiz-
You remember how huge Fred Sands was until he sold out. He owned the Real Estate business in L.A. He sold that business for record numbers. At one point he had all the top brokers working for him, every single one of them. He is held in very high regard in this city by the Realtor population even now and he’s been retired for quite some time. The only person to even come close to what he accomplished in this city is the guy who owns the RE/MAX in the South Bay.
It’s not about him telling the Realtors to leave, through atrition a certain amount of them are going to jump ship anyway.
It’s the fact that he made this statement…
“Such frank remarks are rare at gatherings of famously upbeat real estate agents, but Sands said those in the business needed to remember the last slump and realize “the last five or six years were not normal.”
The soaring market of a few years ago will be followed by a correspondingly sharp decline, he said: “The longer the up cycle, the more excess there is, and the worse it is for what follows.”
He was in the thick of it during the last downturn, he managed to survive but it was a hard time for him which was one of the reasons he sold out, plus the battles with Jon Douglas and others for king of the hill. He also made a very wicked run at the MLS in this city that was a huge battle. When he sold out he had to be doing at least 40-50% of the business at the time. That’s no small feat in this city my friend.
Not only that but he co-signed this statement…
Speaking with Sands was Alan Long, president of the Southern California region of Sotheby’s International Realty Inc., who also told agents to cut listing prices to speed sales. Rising foreclosures could cause prices to fall 20% below 2005 levels, he said.
They just marked the market down to about 40% of todays value. What’s huge about that is he still owns quite a bit of property in SoCal.
There are a lot of flippers, investors and sellers in this city who are very aware of who Fred Sands is, this will not blow over lightly in this city.
The link for the article has already hit my INBOX 30 times. All with the heading of or some variation of “Have you seen this”
HUGE! HUGE! HUGE! I tell ya…
OK OK ,it’s huge .Realtors need a vocie of reason I guess to stop some of brainwashing .It’s just amazing to me what it took , not that I don’t share your high marks for Fred Sands .
I think this is called Credit Gridlock. Who would YOU lend your money to today? In reality, who (in their right mind) would want to borrow? There are a bazillion bagholders out there right now either wondering what happend to them or trying to think their way out of the mire they have gotten themselves in to. Even allowing for some wiggling room, it is way less than likely anyone will be back for more. With that being said, it is really hard to think that so many could be so stupid bidding up (any) stocks and trying to game these markets one more time. I’m much more interested in looking for rocks to hide under in face of the coming unwind. It won’t be pretty and it will last for a whole lot longer than most of us currently think imho.
Another unpopular truth: Gold prices are a good inflation proxy when official inflation statistics are suspect. So are oil and other commodities prices.
Of course, given a globalized economy, it is hard to separate the hypothesis that U.S. inflation is spinning out of control from the alternative that the U.S. dollar is going down the tubes from the other alternative that the Fed has lost all inflation fighting credibility. Perhaps there is little difference.
Gold pushes past $800 mark
By Javier Blas and Chris Flood in London
Published: November 2 2007 11:33 | Last updated: November 2 2007 22:44
Gold surged through the $800 an ounce level on Friday for the first time in 28 years as investors sought refuge from a second wave of credit turbulence.
Renewed US dollar weakness and fears about an inflation spike after crude oil prices jumped to more than $95 a barrel also contributed to gold’s strength.
http://www.ft.com/cms/s/3eb66376-8933-11dc-b52e-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F3eb66376-8933-11dc-b52e-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
http://www.slate.com/id/2175724/
Protecting Paulson’s Pals
The subprime collapse didn’t bother the Bush administration, until Wall Street bankers started whimpering.
The subprime mess has been spreading like toxic mold since the housing market peaked last year. So why did it take until now for the government to decide it should do something about it? I have a theory.
When individual borrowers began to suffer, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson didn’t seem overly concerned. The market would clear out the problem through the foreclosure process. Loans would get written off; properties would change hands and be resold. When upstart subprime mortgage lenders ran into trouble, Bernanke and Paulson shrugged again. The market would clear out the problem through the bankruptcy process. Subprime companies like New Century Financial filed for Chapter 11, others liquidated or restructured, and loans made to the lenders were written down. Meanwhile, Paulson and Bernanke assured us that the subprime mess was contained.
But as the summer turned to fall, and the next several shoes dropped, their attitude changed. And that is because the next group of unfortunates to fall victim to subprime woes were massive banks. In recent years, banks in New York, London, and other financial capitals set up off-balance-sheet funding vehicles called SIVs, or conduits. The entities borrow money at low interest rates for short periods, say 30 to 90 days, and use the funds to buy longer-term debt that pays higher interest rates. To stay in business, the conduits must continually roll over the short-term debt. But as they searched for higher yields, some conduits stuffed themselves with subprime-mortgage-backed securities. And when lenders became alarmed at the declining value of those holdings, they were reluctant to roll over the debt. Banks thus faced a choice. They could either raise cash by dumping the already-depressed subprime junk onto the market, or bring the conduits onto their balance sheets and assure short-term lenders they’d get paid back.
We are trained to believe that RE will always go up. We also have short memories.
The fact of the matter is that it has been all good for the last 12 or so years.
Anyway, like it or not re always does go up, and for the long haul you can’t go wrong (assumes you do not buy at peak and have cash reserves).
You know I have been waiting for the appraisal fraud issue to come up regarding the housing boom .Do you realize how vunerable this makes the lenders and mortgage companies to liability ? What is the word , “collusion “.
Hd74man has been posting for a long time about just how corrupt the appraisal process became during the bubble. You would need this very important check and balance system to go haywire regarding the appraisal process in order for the whole price inflation to soar ,because nothing really justified it and certainly affordability had already been capped way back in late 2002 .The money provider lenders (Wall Street) kept on coming up with new teaser rate products and time bomb low down loans ,and the appraisers kept endorsing the absurd price increases just because sales were made.
When a appraiser make a appraisal on a sales transaction , it’s suppose to be a arms length transaction between a willing and able buyer and seller .You can’t say that short term speculators ,who didn’t have any staying power ,or unqualified buyers who had limited ability to even afford the teaser rates for very long ,are “able borrowers “. This is where the underwriting of a loan comes into play . They were approving people with no down payments ,no assets ,no income verifications ,no proof the borrower would occupy the property ,no concern for other debts or mortgages the borrower had and on and on .If the appraiser didn’t stop the loan by balking at the unjustified increase in price ,the underwriters had every reason in the world to turn down the loans ,in spite of the appraisals hitting . So, the people in the loan industry just breached their duty to underwrite loans and relied on real estate going up to hide all sins while they passed the risk on to third parties .
Still to this very day I can’t believe that not one check and balance department involved in real estate transactions refused to go along with this mania , and if they did, I guess they just got out of the business ,or were pressured out of the business . Still ,the people that are in the business now are corrupt ,(except people who post here of course ) so many need to be purged from the business. I just have a belief that once a person goes over a certain line of corruption ,they are not trustworthy anymore . At the same time I can understand how extensive the pressure was on employees to close their eyes because they needed a job . Can they seperate the ringleaders from the yes men and women who were just following
orders ? Can they seperate the borrowers that just wanted a home and didn’t understand the loan docs. from the greedy liar speculators who drove up the prices and lied on their loan applications ? I am very dissapointed with real estate agents ,in that they could of refused to take people to property they couldn’t afford ,in spite of knowing the lenders would spin a borrower into a toxic loan they couldn’t afford long term and promise them they could refinance later . So many myths were peddled by the Realtors and the MSM loved to quote those myths during the housing boom . The crazy lending was so bad and the collusion between all the check and balance systems was so apparent that this mess is a once in a 100 years event ,IMHO.
Appraisers have been talking about the fraud and lender pressure, and the incompetant new trainee appraisers, very avidly on Appriaser’s Forum since about 2004. I think of it as one of the oldest stories of the housing bubble - but it’s getting press now that the prosecuters are hunting.
The ultimate truth? Is the deconstruction of the American middle-class. Housing is the nest-egg of the American middle-class! Start by outsourcing all the work to cheap foreign labor and then create unsustainable mortgage debt? Thereby you can deconstruct? As the American middle-class is already realized as unsustainable. (oil $95)
All those looking for a lower home prices? Be careful what you ask fo, you might get it. And you will! But it’s all relative! Ben, please don’t kick me off this blog for this post!
if local Labor prices itself out of the market, local business can’t compete against foreign companies.
Orgainized labor screwed the American worker.
It started in the 50’s with the steel strike.. months of no steel. Everything related shut down… a big victory for unions.
As a result, we started importing “cheap” steel and discovered it was not as low-quality as we expected.. one thing leads to another..
For American workers to compete they must price their services competitively. If a service can be outsourced or a product can be imported cheaply, business must do it. Business is not a public charity who’s existance is allowed only to provide some particular standard of living to the population. Business cannot survive except by being competitive.
be careful what you ask for.. you may kill the goose that lays the golden eggs..
Oh, there has to b some balance in the situation. Basically the economy stinks if there isn’t any reward for workers. Used to be so little of the money went to workers that productivity was crap and real wealth was low.
Unions did a good job in balancing out the situation.
We also had a bunch of good technical advantages for a while.
Right now, we are probably just transitioning away from the role as world police man and sole super power. There are 1.2 billion people in China and a simialr amount in India. Not to mention Russia. We don’t have the ideology problems from the past. So, our best bets are to back away and let those jackasses work things out amoung them.
Been this way for a while. We back away and see what develops next. Its time to move on.
This arguement ultimately leads to the following
1. Should we just open our boarders and allow anyone who wants to work into the country. I mean we could import people to do anyjob in the US for 1/10th the going rate.
2. Should we outsource jobs to countries that allow slavery or the equivalent. ie no workers rights at all, no recourse if they are not paid, or if they work in unsafe conditions.
3. Should we outsource to countries that have no pollution controls. What if they dump nuclear waste in the ocean. I mean you could generate some cheap electricity if you didn’t worry about pollution controls on coal plants or where to put the waste.
4. Should we outsource to countries that don’t have a level legal playing field. ie they don’t enforce copyrights and patents, they give breaks to their companies over others, and they subsidize production w cheap currency ect.
Outsourcing to all of the above would cut costs for business. At some point you need government to create a level playing field and enforce rules. I think that’s been the problem with real estate no rule enforcement. Everyone has been out doing what will make them the most money which is the capitalistic way, but without rules and a level playing field things eventually collapse.
E. Easton ,can I pat you on the back for your great post . Your summary is exactly what I’m worried about and I don’t understand why the issues you brought up are not being discussed in circles as the major problem with globalism .
I think many people on this blog are very concerned about the risks involved with this contraction in the housing market .Many people are concerned about job loss ,but at the same time people want real estate prices to be in line with affordability .You can’t have nest eggs based on mania inflated prices . Building a nest egg in equity usually takes years ,but this housing bubble borrowed into the future and raised prices beyond anything that was sustainable as far as affordable based on real incomes of the borrowers ,or even ability to put a down payment on current prices . You had housing that was created that was based on demand that did not have the ability to pay the loan if the market didn’t continue to go up .
The outsourcing of American jobs will be another factor in the lack of a sustainable housing market .
The demand that raised the prices was based on many people who could not really afford the payment long term ,so it was a false demand and the increase in prices that took place will fall accordingly .
Very concise summary expaining why house prices, absent inflation, by my humble metrics should be a very long time in ever seeing the heights of the bubble again.
“They camped overnight and slept in their cars …”
I happen to live in the ACT (stands for Australian Capital Territory, analogy is DC although geographically the ACT is a LOT bigger). Yes, it’s truly that crazy.
We have a price median of $A428K at last estimate, and the land at Forde being referred to started at $199K for a small serviced building block.
The main problem here is an absolute land monopoly, and a massively incompetent local government addicted to land sale proceeds. Add in the fact that in Australia property taxes are based on land value only, and there is a strong vested interest in ever-higher prices.
So while all the State and Territory governments may SAY they are in favour of more affordable prices (to help the first-time buyers and low-income people yada yada yada), what they actually DO is adopt policies which keep the price of residentially zoned land as high as they can.
joeyincalif ,,,in response to your post .
Sure the Unions might of went a little to far at times ,but why was the only answer for the Corporations to dump Americans and go outside the country and seek slave labor ? I think the issue of global markets is going to start to be a big one coming up because without the real estate boom ,it will hit Americans just how many jobs from the American Corporations are going to other countries ,It’s a question of how is the middle class going to exist without jobs because the real estate business isn’t going to keep the middle class going in America. Do all these Corporations really think that the Americans are going to be able to buy their products when they don’t have good wages ,and they are tapped out of credit and can’t use the housing ATM ,or do American Corporstions even care anymore because they have global markets to buy their junk ?
global markets will slow down too. Just wait till those foreign countries cannot afford to buy our exports.. nobody at home can buy and nobody abroad can buy our products. Jobless numbers could be staggering.
If there are alternatives besides using the current ’slave’ country for labor, i don’t know what they are.. aside from robotics, which local labor would not appreciate at all. Cheap labor is a business magnet.
Maybe we are to blame for our troubles.. We do want inexpensive products and services. And we own stocks, be it direct ownership, 401k, IRA, or pension funds, etc.. and DO want those corporations to make as large a profit as possible.
and maybe we (meaning american labor) started this whole globalization thing.. by not realizing the only thing that keeps jobs at home is competitive american businesses that do not need to look outside the country in order to compete effectively.
–
middle class is going to suffer in the coming recession.. Personal job loss should be the number one concern, imo. Forget about inflation and the economy and the markets and all that stuff.. Secure a steady future income to weather the storm.
There’s no question in my mind that things other than real estate are out of balance and will fall. RE just happened to trigger the correction, but something else may have. A recession isn’t the end of the world.. it’s more like a slap in the face that opens one’s eyes.
my response appears to have been eaten.. i’ll give it more time.
if it doesn’t show, one point i think worth of making twice is that if the Recession is realized, global markets will likely crash along with ours.
No customers, foreign or domestic = no business = no jobs. The quibbling about outsourcing will seem petty.
I have thought of the point that you make ,but why would the Corporations change their low wage ,make more money ,screw American workers stance in a recession ?The Corporations might even try to save more money by using low slave labor wages from other countries in a recession .
testing unstrike
USA today story describes the next big hit to homeowners
Increased sales tax.
Likely because property taxes are falling.
Actually that should say because property tax revenue is falling. Mill rates will probably rise as well.
To the guy who said labor needs to price itself competitively w the world.
http://news.yahoo.com/s/ap/20071102/ap_on_re_us/maids_in_the_shadows
If it’s really going to be capitalism w no rules we should just open the boarders and allow anyone in that wants to lower the cost of labor. That would get us competetive fast.
We’d also have to scap most of our environmental regulations. Chinese companese can dump waste right into the river saves them a ton of money. The patent system would have to be structured so that the US could infringe on any foreigners patent, copyright or trademark. Finally we’d have to get rid of all those safety regulations. I mean do coal miners really need that safety gear in the mine.
I suppose we could lower ourselves to their level. Alternatively, maybe foreign countries will learn from our mistakes as well as our successes, and will rise to our standards willingly instead of learning the hard way.
This whole globalization thing is somewhat new and it should be expected to require a period of adjustment.. look 50 years ago, today, and 50 years down the road. Things do change for the better. Nobody is in control but everyone has some bit of influence.
——-
As far as the link regarding slavers in the USA, Canada has an active trade.. to say nothing of N Africa where children are for sale in the local markets..
They say that whatever you can imagine one human being doing to another, it’s happening at this moment somewhere on Earth.
One cure for us as far as underpaid and/or abused workers, legal or illegal, is quite simple: Enforce existing laws.
But ,I just start to get a little uneasy when I’m told that American have to compete with slave labor in other countries .We spent years in American history getting rid of slave labor and we elevated the wages of the middle class by Unions and other forces to the point where we became strong because of a strong middle class . All I’m saying is that if we go backwards because the Corporations only want cheap labor now because they are enjoying greedy profits ,than how good is this globalism . How good is globalism when it might cost the United States the middle class and we just become a Nation of the rich and the poor . I just think somehow the balance has shited to the higher profits of the Corporations being a higher priority than the survival of the United States middle and middle/upper class .
Your singing my song M. Easton and if this trend with the Corporations gets any more steam ,the next thing you might hear is that we should be competitive with the coal miners of other countries and not have safety gear.
joey ……I have no faith that other countries will come up to the American standards of passed decades regarding labor and wages or any other standards that America fought for . That being said ,some Countries have better standards than America ,so I’m speaking about the countries that the Corporations seems to be getting this cheap labor from .
The Corporations want capitalism with no rules right now by going to other countries and they have the nerve to say that Americans need to get more competitive with 3 dollar a hour workers from foreign Countries. Don’t you see that this new stance by the Corporations will set America back 100 years in terms of wages and working conditions .
I’m just going to come right out and say that the Advertisers and Wall Street and Corporations and Global Markets are now in control of America ,and somehow this happened when Americans was paying more attention to the housing boom than the change in the American markets to global markets . . Greenspan even said words to the effect that globalism was controling the real estate market inflation more than the Feds influence by rate changes . Somehow something is awry here if America have no control anymore over what happens in America .
hey wiz ..
Not so long ago, China was isolated .. we didn’t need to concern ourselves with them except as their being a potential enemy. Now China is an economic partner and competitor.
Europe just now banded together to form a viable economic power nearly equal to ours.
Japan is another powerhouse economic force we havent had to deal with until recently.
These are fierce, global competitors who’s economies are intertwined with ours. We either learn to deal with the competition or we’re going to suffer. Isolation is not an option.
What you say is true.. To an increasing degree, America has less control over what happens in America than it used to. All sorts of borders have broken down and our place in the world has changed.
A reasonably creative mind could focus the blame on any one of several events or entities.. An open mind that sees the whole picture might view it as a natural, inevitable evolution of the species. The world is getting smaller.
joey , i don’t know if your going to see this post or not, but I’m responding anyway . Don’t you think that I would like to think that there will be some positive outcomes from the partnerships you mentioned . You say Isolation is not a option . Does that mean that I’m forced to buy China toxic junk because they buy our debt ? Really ,how can Americans compete with 3 dollar a hour slave labor ,it’s never going to happen .
I don’t know how the meshing of the different Countries with Americans can take place when the values are so different .Your saying for the sake of the health of the corporations and partnerships with foreign countries ,Americans have to change their ways ,and in fact compete with countries with slave labor , out of control pollution ,while we are indirectly threatened by their potential to nuke us .
The only creative thing that I’m thinking about is how can Americans get good jobs back so they can exist and not become poor like the 3 dollar a hour wage slaves in some of these countries .
I don’t know that America can’t make choices to change the direction of the trends . I loved it when China was in Isolation and I really wish they would of maintained that policy .
Look , it all boils down to some of these countries have to much of a population and when push comes to shove I don’t want to compete with how big the China mouth is to feed .
We as Americans can have alot of idealism at times ,but you also have to know the real nature of the beast . I hope you are right that the global trends will produce a positive outcome , but if it costs the Americans their standard of living ,than how can it be positive ?
i’m awake… and am keeping an eye on this thread..
nobody is forced to buy anything.. If Chinese product are toxic and people don’t want them, and if there’s no substitute, an entrepreneur can manufacture them and that product, being in high demand, will command a high price. This is an opportunity.
People think there’s a huge profit difference between manufacturing off shore and here, but there isn’t. Having to deal from China is expensive and margins are minimal. Mexico would be better suited if that govt were not corrupt at the core.
Do you think AT+T or Computer mfg’s like getting constant complaints about heavy foreign accents on customer service? Does Matell appreciate lead based paint on their toys and multi-million unit recalls ? What does this do to their brand name recognition and their reputation?
Big Labor could make mutually beneficial deals with american companies but they absolutely will not .. It’s not in their nature to give up anything. So, they sacrifice their future for a small gain today.
America’s will power and ability is always underestimated.. we are fat and lazy, unless goaded into action.. But then, whoever is causing trouble had better watch out. We are capable of anything.
Will a recession get people off their asses and demand change as far as globalization? It depends on how much suffering there is and who is doing the suffering.
I didn’t think I would get a post back from you ,but I’m responding over a day later Joey ,to your post above ,maybe you will see it .
I understand what your saying about the competition being a wake up call for the lazy Americans ,but at the same time if a society can’t give a man a good job ,he won’t be able to pick himself up by his own bootstraps .
CNBC did a survey where they found out that 60% of people on the poll they took (who knows how objective) were not in favor of globalism and feared it based on the job loss issues /toxic problems ,etc.
The housing boom and alot of cheap credit has delayed Americans from their complaints about the job loss to foreign countries . I don’t see foreign countries going out of their way to give jobs to Americans (unless they have their company based in America ). You say the profit margins aren’t that much higher with American Corporations using outside cheap labor ,so that leads me to believe that part of the reason Corp. are doing it is because of the lack of rules they get away with in foreign countries .
In American history ,Corporations were forced to give a greater share of their pie to the wage earner ,so the middle class grew and America became strong .More laws were enacted to protect the employee ,and as time passed the balance between the employer and the employee became a productive one without either side abusing the other side . Than the balance scales started tilting a little to much in favor of the employee . At that point ,the problems could of been worked out ,but the corporations started trending in another direction .You act like Americans have a choice of not buying China produced goods when so much of what is available is from China , because we gave up our manfacturing base here in America .
You can already see that global markets increased the money supply in America ,and that goes a long way toward creating bubbles. Anyway ,alot of people I know think that people from other countries think that American are fools when it comes to foreign policy . Fair trade is a great concept ,but Corporations dumping Americans and going to the global wage markets for greater profits and lack of rules is capitalism at its best ,but it won’t be very good for your average joe blow in American .
There is one more concept I would like to chew over . It’s the concept that if something becomes to big , it can’t be controlled . I don’t think Americans are in favor of being directly affected by event on the other side of the world . Also ,if countries that do not share the same values , get to much in bed with each other ,that can cause a upheavel if the values clash .
America should just do their own thing , start to develope cheaper energy ,and just trade with other countries like they always did in the pass. But, maybe your right that the new trends of globalism will work out better than my glut is telling me they will . Also ,I’m all for other countries uplifting themselves ,but we all know many countries are held back by a number of reasons .
What I dislike is the American idea that we can make the rest of the world into Americans, because it isn’t going to happen . Anyway just a little more of my 2 cents and I enjoyed your 2 cents .