Bits Bucket And Craigslist Finds For November 8, 2007
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Pinch… This Whittey fellow is just one of millions that followed the same path. Got a new truck because he didn’t like the color of his old one.
http://www.nytimes.com/2007/11/08/business/08borrow.html?_r=1&ref=business&oref=slogin
It’s infuriating to read about the habits of these middle class posers. I hope these losers enjoy the last month of two of life with their boat, trucks and flat screens. Their world is about to get rocked.
Odious hyperconsuming pig.
That was a coffee on the keyboard comment!
I call them “thousandaires”. A lot like “millionaires”, but without the money. Same conspicuous consumption, wanna-be, no-class, uncouth, look-at-me mentality. As this economic disruption rolls on and on, this mentality will change. Frugality will be the new black.
I am already noticing the return of frugality as a topic in the MSM.
As for “thousandaires”, I like it. That is the behavior I have seen in the nouveau riche, but the old money I know is very low key. I once heard the patriarch of one old money family say, “the whale must spout before he gets harpooned”, which I took to mean stay out of the limelight. I guess thousandaires are like the nouveau riche without the riche part. Perhaps, faux or ersatz riche?
These people are more correctly called “Bank Robbers”. They were willing participants in a scam to steal money from banks.
reuven-
I noticed the other day that you mentioned property in Windermere. I am just north of Apopka-Vineland and Conroy-Windermere.
I own a some land on Reams Road, physically adjacent to Walt Disney World. Bought it a while ago, and paid very little for it. The goal was to put a retirement house there. We had it architected and engineered, but we held off because we (correctly) assumed that we’d be able to build it cheaper, later.
I forgot to calculate in that, with central Florida in rapid decay, the area may be too dangerous to want to retire to.
One good way to know this was a bubble: large parcels of land (60 acres+) in Orange County Florida never bubbled. You could get 60 acres for $2Million at the peak of the boom. Why? Because there’s no financing available for undeveloped land! You basically have to pay cash.
20 acres in the Windermere zip code (but outside any development) that was mostly buildable (maybe 2-3 acres wet), went for $350 at the peak of the bubble, while people were paying $450 for a condo in Osceola county. To me, that was absolute proof the prices were nonsense. Take crazy financing out of the equation, and prices remained low.
We got our 20-acre parcel for very little because the sellers couldn’t sell it! It was illegally split. We bought it contingent on us fixing the legal issues, which we did. (And of course, they tried to back out of the contract at that point). They held this land for 15 years and LOST MONEY on it!
(We wanted land outside a development because we’re opposed to Home Owners Associations and CC&Rs. There’s no way to do it in Orange County unless you buy a large chunk of undeveloped land.)
Most of the really rich I know go out of their way not to flaunt their wealth.
Maybe “richiness”? Like truthiness?
Richest guy I know was a partner in a company that was sold to Cisco Systems. He and the wife celebrated by going out and buying a new car. It was a VW Beetle, and their 9-year-old daughter picked out the color.
Related to this: I remember when “stated income” loans were meant for the rich! You put 33.3% down, and the bank doesn’t need to know how much money you have. (Mostly because your “income” appears lower than it really is.)
Of course, in 2005, “stated income” loans were used by POOR PEOPLE trying to look RICH, not wealthy people who didn’t want to put all their cards on the table.
People here in the land of the $500k starter homes can’t even fill their fuel oil tanks.
Note the contractor will the $3600 per month mortgage and the $$$ level of payment arrears.
http://www.boston.com/news/local/articles/2007/11/08/new_breed_of_needy_lines_up_for_heating_aid
Great article. I just can’t understand why people just don’t dip into their savings to finance big-ticket items…like the wedding and honeymoon…Just kidding.
The wedding industry upsets me to the frothing-at-the-mouth stage. A stupid waste of small fortunes, IMHO.
Yea - my wedding was at an Elks Lodge and the honeymoon was driving around California and car-camping. Still married, though (15 years).
Mine was at some dubious “chapel” in the Gaslamp District of San Diego and that’s all I remember about it
I feel compelled to share!
We eloped!
Saved a gazillion dollars. Hubby, me, best and bestest, preacher and wife. A few photo’s shot on a cheap camera. 1981–thin gold bands.
26 years later
Happy campers we are!
Leigh
I told the wife she could have whatever wedding she wanted provided that we could not go into debt. We still had a great wedding with all our close friends and family there and it was nice to head out for our honeymoon knowing that we did not owe one red cent on it. In comparson I had several friends who 4-5 years after the fact were still making payments on their weddings.
This is fun. First marriage (1990): we spent $$$thousands$$$ on the church and the reception and the flowers and the limo and the photographer and the booze and the tuxes and dresses and rings and the cake and the honeymoon, yada yada yada. We divorced in 1997 and I have two wonderful sons and LOTS OF PICTURES!!!! Second marriage was at the Wee Kirk o’ the Heather, Las Vegas on St. Paddy’s, 2001. We had one friend come as a witness and I believe our only wedding day picture was from a photo booth in front of a backdrop of a dinosaur scene, although we have an amazing karaoke music video of us singing “I got you babe”. And then of course we have the video from the ceremony where the officant reprimanded me for saying my vows like Ned Flanders, (”I diddlee, diddlee do”). Kill joy.
My wedding was in SF City Hall. Cost about $200 for cake and flowers afterward.
I’ve been married now for 18 years.
What chaps my hide are “destination” weddings. The bride and grrom expect you to shell out thousands of dollars so you can attend their wedding in Fiji.
Based upon the experience of our family and friends, my husband and I have something called the “Allen and Katy” rule, named after an aunt and uncle married 50 years after eloping. The rule states that the fancier the wedding, the higher the likelihood of a fairly rapid divorce. Perhaps couples with misgivings about their marriage try to shore it up by investing a lot of money in the ceremony.
Oh, I am with you on this one Kay. I could (and would, if Ben would not smack me down with a virtual hammer) go on all day about how crazy it is for middle class people to spend 20-50K on a 6 hour party. I recently went to a ~100K ceremony and just wanted to puke the whole time I was there.
And you know what the bride told me (at the really expensive wedding)?
At an expensive wedding people give better gifts, so its actually a cost saving measure.
Are people fu**ing retarded?
Think about the “per head” cost at a 50K wedding. Probably about 200-400 per person (kids included) that are there. Now, think about the most expensive resturaunt you have EVER been to in your life (and trust me, I have been to some killers).. What does a 200-400 dollar plate look like there? How does that compare to the wedding dinner?
It’s a system designed to fleece American women.
And, don’t even get me started on diamonds….
I gave up on trying to own good jewelry. Every good ring I’ve had has disappeared. I remember once leaving a really nice bijou on the rowing machine at the gym. Luckily it was still there when I went back to retrieve it.
Something evidently got messed up with my “girl” wiring.
Took the words right out of my mouth, Michael. My daughter is 14 and I’m already working on lowering her expectations if she ever gets married. I refuse to go into debt to pay for anyone’s wedding, including my own should it ever happen again.
Yeah, the whole wedding industry is a scam. When my FOUR little girls get married I plan on just handing them and their soon to be husband some cash with the advice not to waste it on the wedding.
Honestly, going into debt to buy a depreciating McMansion is a MUCH better financial play then a crazy wedding. Almost anything is better for your money then a wedding. You could probably burn dollar bills for warmth and get more “value” for your dollar then you get at a wedding.
The whole idea of spending 5-6 figures on a party (and a ring/diamond) is just so foreign to me I doubt that I will ever be able to deal with it. Frankly, even if it was paid for by someone else, I just could not deal with the waste of money at my expense. If I really love somoene, wouldn’t a better gift be to not saddle their parents with debt at my expense?
I almost feel like a wedding is like going to party at Mansion (in Miami) drinking Dom all night, renting out the best private room, paying 15 strippers for entertainment and then… When the bill comes.. Sending it to your father in law…
Diamonds are NOT RARE ladies…its just a rock we have probably a 75-100 year supply DeBeers just controls the production and stockpiles them when times are slow.
Ya know a woman is be proud of her man for saving $100 on a TV, but saving thousands on a Used diamond, what a cheap bassstard he is!
=======================
And, don’t even get me started on diamonds
HA! Made a deal years ago with my son. Wedding or house.
Guess what the lad chose?
Ha. I kid you not!
Leigh
“It’s a system designed to fleece American women.” Actually not. It is a system designed to fleece the daughter’s parents. I had a friend that spent $70,000 on a River Oaks (as is really rich in Houston) wedding in 1980. The bride looked beautiful. 8 months later she was in my office to get a divorce. As soon as the sheets cooled, that was it. Dad was philosophical about it, but I could tell he was pained.
Don`t bother getting married, just find some bitch that you can`t stand, and buy her a house.
At an expensive wedding people give better gifts, so its actually a cost saving measure.
Yeah, I’ve heard that one before! Do you know anyone with a $40k wedding who gets $40k in gifts? Not that it should be a tit-for-tat trade anyway, but that bit of wishful thinking ought to be got rid of.
We had a very modest wedding, under a tropical cabana with a bunch of friends, on a weeknight, no less! No wedding gifts, please. After-office work attire. It all costs just pocket money, including the food and champagne and other drinks. Camera friend was snapping pics. Came off OK.
Sometimes we wonder if we should have had the big, fancy thing, but given we were near-broke at the time, we would have borrowed most of the money or drained it from parents from their investment accounts. All I need to do to reassure myself that we took the right path is to figure what that debt would have looked like even after years of paying it off, versus what the investment accounts and house look like now, years after the fact.
A wise friend once said: “Never marry a woman who’s father calls her Princess.”
Friend is traditional. Bought a (less than $10000) wedding and engagement ring for his 2008 wedding. This is after a year employed at a startup where his pay has been up to 5 months late and they still owe him 3.
They both are such spenders and so attuned to the “demands” of tradition that I dread the thought of getting a wedding invitation. I should probably gift them an escrow account for after the coming crash so they will at least have first and last months rent.
But MAN do those people get angry if you dare to challenge their right to get paid $500 an hour to snap some pictures, play some CDs, or do some flowers.
These people want to make a living in a job that they can only do about 30-40 days a year. (52 saturdays, but they can’t reasonably expect to be booked EVERY week).
I’m so disgusted with the gimme mindset in this country. I feel no sadness for those who will lose a great deal more than they ever thought they would in the coming years. The consumer has become physically and emotionally bloated, and lost sight of anything that truly matters. A good diet will do wonders for the psychic collapse that’s taken place. Viva Las Vegas, indeed.
I’ve been lurking here for quite some time, and just want to say this thanks to all of you, especially to Ben
Great nickname. I wish Chocolate Citizen would come back.
Hehe, we got married in a ‘Wedding Chapel’ repelete with masses of plastic flowers and chachkies, and then had a nice slap-up lunch at a local restaurant.
I bought my opal on eBay (would never buy a diamond, as you have no idea how, where, or under what conditions it was produced) and had it made into my ring from a local jeweller, and we had a lovely car vacation/honeymoon in NoCal.
Total cost, including everything, was under $5k.
At first, I felt I was being ‘cheap’, but then, after so many people complimented us on our simple, but fun, wedding, I realised that my gut feelings about pi$$ing away thousands on a half day shindig (especially for a couple who had been lving together for 4 years previously) was right.
BTW, learned in the process that a good quality Opal is actually more ‘valuable’ than a diamond. Plus, in my mind, infinitely more beautiful. And comes with none of the ‘blood’ implications of diamonds, as it was mined in Coober Pedy, Australia, by a one-man operation - who recieved a decent percentage of the cost as compensation..
I wonder if there’s a correlation between the expense of the wedding and the length of the marriage…?
BTW: 8.48 am - Benanke is getting is arse handed to him on a plate by the likes of Ron Paul, over on CNBC….nice to see someone asking some difficult questions.
A friend of mine spent $20k on a wedding back in the early 90’s. That was a lot then. The daughter came back from the honeymoon and left him the next week. What a waste.
Guilty pleasure is the show Platnum Weddings. I sit with mouth agape watching these fools spend $500K (that’s a cheap one) and up on a wedding.
I think the success of a marriage is often inversely proportional to the amount of money spent on the wedding.
My wife and I got married at the county courthouse 30 years ago for just the cost of the license.
It’s all about managing expectations. My bride and I had a simple wedding (her family’s Mexican poor). She got over the limitations imposed by our self-funding of the event and we’re 13 years and 3 kids into the after-party. Those megabuck marriages seem to blow up within a few years…
RE: Those megabuck marriages seem to blow up within a few years…
With today’s contemporary 20 & 30 somethings it’s all about the size of the rock, the reception spot, the name of the chef doin’ the catering, the “brag-brag-brag”, ostentatious nupitials posting in the local news rag, and of course the upstaging of some -ex former girlfriend.
‘Til death do us part?” You’re shittin’ me right?
I supervise a lot of young people, so I end up buying a lot of wedding gifts from registries. I get so annoyed, because they register for overpriced dishes, linens, etc, and you get so little for the money given to Macys. You get get an entire set of dishes at an outlet for the price of one place setting.
We couldn’t afford a diamond when we got married 30 years ago, and I’m glad of it now that I’ve been educated about them. Nowadays I indulge myself with a couple of beautiful gemstone or pearl pieces every year at 50% off sales - colorful emeralds, rubies and sapphires are prettier than boring diamonds. I look forward to giving them to nieces, daughters-in-law and grandchildren someday.
Anyone looking to buy a diamond should look into Gemesis.com. They are the company featured in National Geographic that is making real diamonds in the laboratory and selling them for like half the price of mined diamonds.
These are not cubic zirconias or moisannite(sp?) or anything like that. Real diamonds. Just man made. No kids arms were chopped of in the making of these diamonds. I would personally never buy a diamond any other way except maybe if it came from Canada - even then - how can you truly prove where the rock came from?
WHOA guy this is my business i love people who throw away their money on a Wedding.
But truthfully we charge double because there really is a lot of hours in prep time you never see, and brides never get married during the week, except in resort areas, like hawaii, las vegas. I know a few dj’s who easily make over $100K every year but then they have lots of weekday weddings.
And wait till they legalize gay marriage, lots of money to be made there too. What ? Why wouldn’t a republican support creating more JOBS……
Weddings & xmas are just elaborate Potlatches, nothing more…
“Potlatching was made illegal in Canada in 1885 and the United States in the late nineteenth century, largely at the urging of missionaries and government agents who considered it “a worse than useless custom” that was seen as wasteful, unproductive and injurious to the practitioners.”
http://en.wikipedia.org/wiki/Potlatch
My wife’s parents spent in the mid $10k range for our wedding. She is their only child and they had been looking forward to that part of her life for years. Although they didn’t save up for the expense, it wasn’t a bank-buster, and 60 of our friends and family got to do something really unique. We chartered a yacht and sailed around Newport Beach Harbor for 4-5 hours. The boat captain married us. It’s a great memory.
Different strokes for different folks.
On the other hand, people looked at us like we were poor-folk for waiting 5 years before our honeymoon. That’s because we *were* poor folk. Finally we got jobs a couple years ago and saved up $7k and did a great 3-week Euro trip this last August. I’m glad we didn’t wait much longer (falling dollar). The best part after coming home was just cutting a cheque for the whole affair. We met an Indian guy on our trip who said it’s common for Indian couples to take out a special type of loan to go on honeymoon which they pay for for 7 years. Not my idea of a solid financial foundation.
My father-in-law spent $500 on a luncheon just for family (+4-5 friends) and gave my wife and I another $500. My dad gave us $1000. Which nicely covered the San Diego honeymoon.
Lucky for me my wife had had her day in a previous wedding, so our was low key. I didn’t even have to suffer through a reception! There are so many benefits to marrying a once-divorced woman, not the least of which is not having to deal with all the has-to-be-perfect-wedding BS.
My girlfriend and I drove from Calgary to Las Vegas. We went to the Clark County courthouse (open til midnight), got our license, and drove to a chapel. They rebated our license fee and because we ended up “donating” $10 too much to the minister, one of the witnesses videotaped our wedding for us with our video camera. Whole thing cost us about $100. Had some fun in Vegas, drove back to Calgary.
At the time my ex and I had just left the Army. His family lived outside of Allyn, WA. My ex mother-in-law made my wedding dress, my ex-father-in-law baked our wedding cake. My ex-brother-in law provided the garden for our wedding. My family drove up from California. The people that meant the most for both my ex and I (family and close friends) were at the wedding. I believe the total cost of the wedding and honeymoon (Victoria, BC) cost $500.00. Unfortunately we divorced 6 months after we were married (Ex didn’t really want to be married after all. Wanted me to stay, and we could date other people, while still married. I told him no thanks.) I kept in touch with the inlaws. Never forgot how kind, loving and generous they were.
BTW, I’m also one of those girls that don’t like diamonds. I’ll take gold and opals any day.
Wow, that was a quick one.
Bet if feels good you didn’t waste thousands of dollars on the wedding, though!
I seem to recall that my mother and father paid for their own wedding. And they waited until my father was finished with grad school before they went on a low-budget honeymoon in Europe.
We were planning a spring wedding for daughter at rich relative’s house. Then she went on a game show and won $19K and accountant said she could save $5K if they married before year’s end. Hired a limo to drive us from PS to Vegas on Christmas eve, did wedding chapel, lunch at Excaliber, gambled a little (I made enough off the slots to pay for whole thing) and home again. All, including limo was less than $1K and we had a blast. Next morning we had brunch with extended family at Aunt’s house. Best part is 16 yrs later, they are still married and happy.
My father game me $10,000 as a wedding gift. He told me I could spend it on a wedding or save it for a house or car. We got married in L.V. at “The Little White Chapel” at 3 a.m. and it cost $35. We are still married (11 years) with 2 kids and they are the best part of my life!!! That money was the seed for my understanding money and markets in depth that enabled me to be financially stable and prepared.
…actually, when people were saying a year ago that this would spread out of Subprime, I was having a difficult time seeing how this would come about. This article does a good job of pointing that out.
Three years ago, Ms. Lerude and her husband, a lawyer, opened an $80,000 home equity line to invest in three commercial properties. She uses one as the office for her company, which provides gift baskets for real estate offices….
She has a company that provides gift baskets to Realators® companies. Anyone see a problem here?
You mean the fact that our entire financial system is now on a positive feedback loop to middle- and lower-class debt hell, based on an “ownership society” Ponzi debt-is-wealth scheme championed by an inept Presidential administration and enabled by a senile old man and his academic predecessor who seem bent on devaluing the U.S. bonar until it’s below parity with the Mexican peso?
Nope, nothing to see here… Move along now.
That a nice positive thought for the day.
Unfortunately, it is also just about indisputably correct. Time for more coffee, I am getting dark!
Try saying that three times fast. In one breath.
RE: Ponzi debt-is-wealth scheme championed by an inept Presidential administration
Yeah, like the Pelosi led Congress is anything to brag about.
“Just last week, the Commerce Department announced the economy grew a healthy 3.9 percent during the summer, largely on the back of growing consumer spending.”
Ahahaha! Clueless buffoon MSM reporters. Yeah, just keep parroting the “3.9 percent” figure, which is a totally suspect number adjusted by an intentionally disingenuous inflation rate.
You know what’s funny? I’ve found myself spending more this year on stuff than I have in a long time. It’s been because I’ve seen so many distress sales on Craigslist and Ebay on things I’ve wanted but would never pay retail for. No financing though, all cash.
so do you buy eBay stock?
Hell no.
My wife and I are all-cash too… I admit, though, that at our next major purchase (maybe a DLP TV if they go on a post-Christmas fire sale), we might accept one of those several-month same-as-cash financing offers. I just can’t resist easy arbitrage opportunities.
That is, it will be easy only if Bernanke doesn’t adopt a Japan-style ZIRP and crater the savings rate.
Does anyone here think we’re NOT going to be at ZIRP?
Prepare for the dollar carry trade.
I pray not! Please, no ZIRP!
Bob, go to bed after thanksgiving meal, set alarm for 11:30, get onto internet, and purchase TV.
Of course, price out before. This years deals at 1201 am on black Friday will be epic!
I did this in 2000 and scored like never before. This year will, by far, make that a distant memory! IMO
Best,
Leigh
Yes, I’ve been doing the same thing. I finally have the grand piano I’ve been wanting for years, courtesy of an FB.
From the article.
Only a year ago, money taken out of houses was still more than 9 percent of the nation’s disposable income, Mr. Zandi calculated, using a sampling of Equifax credit reports to supplement Fed data. By this fall, it had dropped to about 5 percent, a difference of about $350 billion a year.
“A fall of 2 percent in consumption would be big enough to trigger a recession,” said Christian Menegatti, lead analyst for RGE Monitor, a consulting firm in New York.
Sales manager, flooring and tile, new trophy wife, clueless hot air jerk….but he has a JOB……
Maybe you guys will agree with me if your company has little airhead chicky-poos in HR looking at the resumes, then this is what you will hire, a30 something from “The MORON GENERATION”
Why do people feel they have to spend a fortune on weddings? My wife and I paid cash for our modest affair. (With a little bit of help from our parents) We also paid cash for our honeymoon. We did something called save.
You paid for an affair? If I had a spouse, I don’t think it would go over too well with her…
I was cleaning the garage and came across a 1970 issue of Life with a dollar bill on the cover. Inside, it showed about eight or ten ways consumers were dealing with high inflation. Very interesting comparison with where we are today. Here are a few:
Home haircuts
Home garden
Learn sewing
Learn auto repair
Buying a cow and paying someone to feed, raise, slaughter it for your family meat needs
A woman in San Diego would drive across the border and buy veggies in Tijuana.
“Home haircuts
Home garden
Learn sewing
Learn auto repair
Buying a cow and paying someone to feed, raise, slaughter it for your family meat needs”
How funny, Everything in this list was employed by my parents durring my childhood. Suppose that this is where I learned some really great lessons aboout money and work. My father would have a cow raised every year and split it with a friend of his. Old man knew the farmer and the butcher and was able to have it raised and butchered exactly how he wanted it. I remember when other kids were excited about steak on the weekend but at my house such fair was the norm. didn’t really like the home hair cuts from mom though. We never had every thing we wanted as children but we ALWAYS had what we needed and to this day I am thankfull to my parents for that lesson.
Sewing is now more of an expensive hobby now, unless it’s drapes or a wedding dress. By the time you add up the fabric and lining and buttons and zippers and thread and seambinding and interfacing not to mention time, you’ve got a $50 skirt that you could have bought at Target for half that. It would be better made than anything you could ever hope to buy, but it certainly wouldn’t be a money-saver.
Sewing is great for fixing and alterations. In a pinch buy GOOD quality clothing, not available on the new clothing market anymore, and with sewing machine can alter to fit perfect.
Just replaced a headlamp in my truck. The auto store would have installed this $10 bulb for an additional $15. Why wait for (media-reported) high inflation to do such things?
“…A woman in San Diego would drive across the border and buy veggies in Tijuana.”
Daffy: “Hey Bugsy, you going down to your cousins in old Mexico to get your spicy carrots this year?”
Bugs: “eh, I don’t think so Daffy. The Warner Brothers haven’t updated my passport yet …and the hassle with US Immigration, Homeland Security & Minuteman militia have made things a little dicey lately…but come to think of it…Maybe, Foghorn Leghorn can brings some back with him…He was deported with Ms Prissy last month…they got caught up in a cock fighting raid on a farm down in old Tucson”
Daffy: “That’s Dessssssssssssssssssssspicible!
Ew…home haircuts! I’m ancient, but this brought back baaaad memories of my mom cutting my bangs like Mamie Eisenhower’s (in the 1960s, no less) and administering hideous Toni home perms.
Some how cleared $30.00/wk!
Someone more intelligent than I said, “find the need and provide the service”.
Poor Kid, Rich Spirit.
“Everybody was basically using their house as an A.T.M. machine,” said Dave Simonsen, a senior vice president for NAI Alliance, an industrial real estate firm in Reno. “Now they are upside down on their house without that piggy bank to go back to.”
I wish they would quit saying this–When one uses an ATM card, it is to access actual money in an account. These equity MEWs represent using the house as a credit card. If they had talked like this people would figure it out sooner.
Well said!!!
..
And this little nugget from another couple towards the end of the article:
Now that there sounds like a recession-proof business opportunity to me.
We have become a nation of sheeple who do nothing except for cooking, grooming, cleaning, selling and loaning money to each other.
The adjustments that American society is going to have to make are gonna be drastic, painful and on a very large scale.
All by itself, $ 4.00/gal gasoline will curb the bling. Let’s not even talk about soaring food and power bills.
Stock up on necessities now. Pay of your credit card debt and reduce your financial obligations. Cash will be king.
..
I learned yesterday that an acquaintance of mine owns 5 homes in South Florida, and now must dump them all (including her primary residence) because she cannot afford any of the mortgage payments. Another wannabee real estate mogul soon to come crashing to earth. It’s no wonder that there is such a divergence between asking and sold prices when the only ones lefting holding the bag at this point are morons who will only let go of their empires when the bank takes them away.
I failed miserably in my efforts to get my family to embrace the new economic realities, that will soon be upon us…
My sister owns a house outright and owes around a million on 2 houses, she needs like a hole in the head.
They have savings in 401k’s, but if liquidity goes away on all things Wall Street, she loses 2 speculative houses and her paid off house, in the bargain.
I’ve talked to her husband 4 times, ($642, $725, $758 and $808) about this, and he can’t see the forest for the trees…
Gah! Don’t these people ever stop to wonder, “Hmm…I wonder why nobody was doing this 5 years ago.”?
“Cash will be king.”
No….it will be devalued into worthlessness. Gold/Silver/tangible goods will rule the day.
Gold is cash. Paper “money” is a cash substitute, which is acceptable only during placid times.
Placid –> paper
Flaccid –> gold, silver
Got it!
Actually, I thought I had read that if you have money, the best thing to do is buy big ticket items on credit and pay back with later cheap dollars. Can one game the system of the dollar eroding?
Crazy: what big ticket items did you have in mind? Houses? Cars? Plasma TVs? See how far ahead you get with that strategy.
Listen to the people on this blog and save your money.
The picture of this Whitty guy’s apartment is priceless. He’s sitting like a king on a throne in front of a Plasma TV (complete with expensive stand) and high-end AV components, with two expensive dogs. Even his wedding ring looks big, although the picture gets fuzzy there. The best part is that you can tell him “home” is a condo because his plasma is right next to a sliding door. Refi-ing a condo, in Reno? He is SOOOOO toast.
he’s so toast, and deserves it.
Oh, I loved that photo! During breakfast, it made me laugh out loud. Did you notice that one of the dogs, the chihuahua, is really fat, and cuddled under the guy’s arm, on the couch, while the other dog is really thin, perched on the arm of the couch, giving the fat dog a dirty look? To me, it looks like the guy is saving $$ on the skinny dog’s kibble! But the skinny dog’s the lucky one. When things get really dire, it will be the fat dog who goes into Mr. Whitty’s pot…
LOL!
Where I grew up (Pittsburgh PA) when you did not like the color of your car you went to a place called “Earl Schieb” and for a 100 bucks you got the color you wanted.
Nowadays I think it was bought out by MAACO, and it costs 500 bucks, but still color alone is no reason to ditch a perfectly good car.
The are hosed in the very near future, we are all hosed in the long run, but at least we might have the opportunity to purchase an almost new pickup, but oh maybe not I don’t like its color, oh well good luck with that!!
..you went to a place called “Earl Schieb” …”
Joke from 1960’s Johnny Carson TV show opening monologe:
“You can take your car to Earl Schiester and have
your car painted for just $29.95….
And for an extra $10 bucks he will roll up the windows….
italics off
Sorry
No, we could not afford it. So I helped my cousin put up some plastic sheeting on the sides of the car port, we tapped/papered up all the windows, lights and chrome and he used some sort of one time use paint dispenser. I just called them paint bombs. It was just as good as Earl Scheib because Johnny Carson’s joke had an element of truth to it. My father said you need to do all the covering up of the parts of the car you do not want painted because the workers at Earl’s were not paid enough to do the job right.
italics OFF .. try again
In Pittsburgh, at the time you are referencing, the color change was from “rust” to something other than rust for a few months. I loved those commercials. $100 was a great deal, even back then.
…buy a new truck because you didn’t like the color of the “old” one. Puh-lease.
“Hi, I’m Earl Scheib!” Those commercials were unintentionally
hilarious.
http://query.nytimes.com/gst/fullpage.html?res=9E0CE7DA113BF931A35750C0A964958260
One thing that I took from that article (in addition to the odious-overconsuming-pig thing)is that the downside is going to be so much worse than the short upside that all that spending gave them.
Of course, they’ll probably just foreclose on both homes, let you and I pay for it, and get right back on that train without any remorse or understanding of what they’ve done.
Ocean Raton, the debut novel by John Manrique, takes an insider’s satirical look at the characters, culture and climate surrounding Florida’s bursting real estate bubble. Funny, timely, sharp yet affectionate … in this market no one is spared.
[Ocean Raton buzz]
“The setting was all too real, the characters well-developed (literally & figuratively), and knowing something of the South Florida market - not at all too bizarre to be true!”
Jerry Starkey, President & CEO WCI Communities, Inc.
Excerpt:
It’s July 2006 and exotic dancer Terri Winston is ready to make it big. Like everyone else in the Sunshine State, she decides to hitch her wagon to the hottest money-making star in the galaxy: real estate. The problem with shooting stars, however, is they eventually come crashing down.
Soon after Terri trades in her stiletto heels for stylish pumps to sell luxury condos at Ocean Raton in Pompano Beach, it becomes apparent the market is declining. With a major finance payment looming on the horizon, Ocean Raton’s delusional developer realizes more than slick ads are needed to make sales, so he calls on Terri’s unique background and commissions a mercenary team of strippers to stimulate action.
The rollercoaster careens off the rails from there, weaving through the colorful characters, culture, and climate that shape South Florida’s outlandish landscape. From erotic sales events to scheming socialites, here nothing is sacred on the quest for entitled riches. Or is it?
That’s the question Terri faces when it all finally unravels and the last hope is a face-to-face showdown with the past. With everything on the line and the golden ring in reach, an answer is required. At what price?
Ah, but I betcha he doesn’t have the perfect Florida anti-hero, Carl Hiaasen’s ex-governor Clinton “Skink” Tyree. Now that’s what Florida needs, a real Skink to take revenge on the developers and builders. Skink’s my hero.
Anyone from around the “middle of” Biscayne Bay in Miami Beach? I want to know the amount of lies from my bragging real estate “tycoon” buddy. He says his property (condo) keeps going up. It was up by (his words) 30 or 36 grand last year. That’s 3k per month.
He is so gung ho on real estate. He claims he has a wealthy uncle who made millions of dollars in RE. What’s good for his uncle is good for him.
Personal Finance 101 says stocks is the fastest way to get rich. If you are overweighted in Real Estate and underweighted in net worth (all outside real estate) you won’t do as well as a stock mutual fund investor in index stocks of broad markets and with low expense ratios.
This friend keeps bragging and bragging. I claim he’s whistling in the dark.
This in an email yesterday from a one time gf realator there trying to sell her own condo….
“At one point, I became desperate. No one called anymore. Nothing was selling, and people are just walking away from their homes down here. Literally just packing and leaving their homes to the bank.”
She claims to have a closing with two guys from NYC at a significant loss. We’ll see how that works for her.
The contagion is spreading to corporate debt.
I haven’t eaten at Old Country Buffett for months because of what I perceived as price and quality issues. From the WSJ:
At closely held Buffets Holdings Inc., owner of Old Country Buffet and other chains, potential problems are already surfacing. Buffets borrowed more than $800 million last November to buy Ryan’s Restaurant Group, a Greer, S.C., chain.
On Monday, burdened by rising food and labor costs and a heavy interest burden, Buffets posted a $5.3 million loss in its fiscal first quarter, compared with a $1.1 million loss a year ago. Its bonds are now trading at less than half their face value, implying investors see a high probability of default.
One of many companies that grabbed hold of the bull by the tail and now face the situation.
“An object in possession seldom retains the same charm that it had in pursuit.”
Pliny the Elder
I think it was Shakespeare who put it a bit more ribaldly:
“All cats are grey in the dark.”
Thomas Lodge
Though I admit it sounds like it ought to be from Merry Wives of Winsor
I always thought it was a French guy that said that bit about cats and the dark.
Ben Franklin said this, one of his snarky tips in “Advice On The Choice Of A Mistress.”
And as in the Dark all Cats are grey, the Pleasure of Corporal Enjoyment with an old Woman is at least equal, and frequently superior; every Knack being, by Practice, capable of Improvement.
— Mr. Franklin
That’s only the first US use of the quote. The origin is English.
“That’s it man, game over man, game over! What the f**k are we gonna do now? What are we gonna do?”
Bill Paxton’s character in “Aliens,” presciently commenting on the U.S. economy
Now that’s scary.
“An object in possession seldom retains the same charm that it had in pursuit.”
Pliny the Elder
********
Well, maybe - but an outstanding exception could be made if one is drinking a “Pliny the Elder”:
http://www.russianriverbrewing.com/pages/beers/plinytheelder.html
entirely true, after 4 or 5 pliny the elders, this whole housing bubble mess just seems to dissipate…at least for a few hours. Too bad they don’t bottle it
! it’s really worth finding this double ipa if possible.. gotta love it, the first comment I post on a bubble blog after reading for maybe 4 years, and it’s about a double ipa!
Nazdrovia!
Homebuilders update.
Nov. 8 (Bloomberg) — Toll Brothers Inc., the largest U.S. builder of luxury houses, said revenue fell 36 percent in the fiscal fourth quarter as faltering consumer confidence cut demand.
Homebuilding revenue dropped to $1.17 billion in the three months ended Oct. 31 from $1.81 billion a year earlier, the Horsham, Pennsylvania-based company said today in a statement. That beat the average estimate of $1.13 billion of five analysts surveyed by Bloomberg.
Interesting that Toll didn’t include earnings in their early report. They’ve been I think the only major homebuilder to stay in the black so far. Perhaps this is the quarter they finally have to do the deed and take the writedowns. Or I wonder if they might announce that they have to restate previous quarters? Could be a bad day for them.
Ignoring earnings and reporting revenue gains…..just like with the dot com stocks in the 90’s.
Toll Blames Media for his Piss Poor Results!!!
“Perhaps, as the presidential campaign heats up and moves to the front page, negative articles about housing will move off the front page,” he (Bob Toll) said in the statement. “Then, hopefully, the positive underpinnings of low interest rates, low unemployment and a decent economy will raise consumer confidence and provide the platform for a turnaround in the new home market.”
http://tinyurl.com/2c6ry9
Maybe Bob, there’s another explanation.
Your product is grossly overpriced. You paid FAR too much for the materials to build your product (land/lumber/labor) and now you want to try to pass this cost off to your customer.. That’s not how the market works, so, continue to cut your prices and chace down that dying market.
And, Bob, just to add a little sun to you day, there’s another possiblity that I doubt you have even explored. Perhaps you have saited the demand for McMansions. Like, we don’t need ANY more built for the next 10 (and perhaps forever, if energy keeps going up) years. Your product might be like a horse drawn carriage after the car came out. No longer needed, and certainly not needed in the numbers required before.
Buggy whips, anyone?
What’s funny is the stock is up premarket. Go figure.
“What’s funny is the stock is up premarket. Go figure. ”
I went and figured, and bought some puts. Toll is toast.
Oh, one thing I forgot to add the other day that the owner of the builder I work for said along with his claim that the slump is over. He claimed that all these land write-downs are just accounting schemes and that the builders still actually own the land.
Now the boss is wrong on just about everything else, so it wouldn’t suprise me that he’d be wrong on this too. My understanding is that most builders don’t own the land they own options to purchase from the developers. In the even of a downturn they basically just don’t complete the purchase and forfeit their deposit (just like their customers are doing to them).
Now admittedly there are a lot of builders that now have their own in-house developers. And at the height of the bubble many of the big boys had decades worth of land. So the reality is likely somewhere in the middle. Does anyone out there have any more info on this?
“Cause it makes no sense to me to do a write-down if you don’t actually get rid of the depreciating asset. And if it’s true that they are still holding onto land then they’re even more toast then I already thought.
The builders do own the land that is being written down. Example.. they have 1000 lots they own that they valued at $50,000 per lot. Now they are worth $30,000. Poof, $-20000 x 1000 = $20 million writedown.
But don’t they have to pay anual taxes on this land which would make it a perpetual money drain ?
Nov. 8 (Bloomberg) — The Bank of England kept its benchmark interest rate unchanged at a six-year high, with policy makers resisting calls for a cut on concern that rising oil and food prices will fan inflation.
I’m not an expert on this, but I know that the LIBOR rate, from London, has more effect on US ARMs than anything the US has control over.
So, if the LIBOR rate stays where it is (relatively high), then a lot a US home ‘owners’ will find themselves being LIBORated from their houses.
ECB today leaves rates unchanged (at 4%) as well, despite surging inflation for energy and food costs all over Europe and an inflation rate that (despite all the manipulation) is way above the official ECB targe. They have clearly decided to ignore inflation and support the housing market and the big speculators, just like the idiots from the FED and the BOE.
Ahhhh, anyone care to predict the level of bonuses that Wall Street firms give out this year. I vividly remember us HBBers shaking our heads wondering why the record payouts last year…with this catastrophe just around the corner then.
maybe even bigger bonuses than last year? With all the market turmoil, accounting problems and massive fraud going on on Wall Street, probably no one will notice until far in the future (when all these brilliant minds have parachuted themselves into some faraway tax heaven).
They say the bonus pool will be down next year, BUT with this kind of excesses: OMG!
The 16.9 BILLION pool works out to $533K per employee. What a bunch of &#@! PIGS!
When Goldman Sachs Group Inc. employees cash their year-end checks, they’ll have enough money to buy Bear Stearns Cos.
Goldman, the biggest and most profitable U.S. securities firm, set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of 2007, according to the company’s third-quarter earnings report. The stock market values Bear Stearns Cos., the fifth-biggest firm, at $14.7 billion. Bonuses, the majority of Wall Street compensation, are typically paid after the fiscal year ends this month
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNSK6SSBn5Zc
That article made me sick. Just wait until later this year AFTER bonus payouts have been made that GS figures out that a lot of their level 3 assets on their books are worth squat!
From another blog (http://www.rgemonitor.com/blog/roubini/) GS Level 3 assets are $72 billion, equity base is $39 billion. Their Level 3 assets to equity ratio is 185%. Needless to say a significant enough reduction in the valuation of the level 3 assets calls into question the viability of the various Investment Banks. No worries since Paulsen and the Fed would never let their banking buddies not get their multi-million dollar bonuses which are their birth right!
So here’s a currency question from yesterday. The Chinese regulators announced that the are going to diversify away from dollars.
If you held a trillion dollars in currency, and you wanted to get rid of those dollars, why would you announce that fact BEFORE the sale? If anything, I’d announce that I was going to buy dollars to manipulate the price favorably to a sale.
Because you know you can’t “really” diversify without killing your own economy, and you want to blackmail the target into NOT further cutting interest rates?
But then the US knows that you can’t “really” diversify without killing your own economy, and you know that I know it, so your threat is empty.
The Upshot of the Dollar’s Fall
“…The dollar’s plunge started when some Chinese central bank officials were quoted suggesting China would be diversifying its $1.4 trillion in foreign currency reserves, moving away from dollar holdings. But Chandler says those officials shouldn’t have been taken seriously because they have little power: It would be like the mayor of Milwaukee making comments on the war in Iraq, he says….”
Businessweek
http://tinyurl.com/yqgqh3
I like Milwaukee, a fun city.
From the Article: Five Things You Need to Know
“The only problem is Cheng (the person that made the announcement), a member of the National People’s Congress, has nothing to do with setting currency policy. ”
http://www.minyanville.com/articles/c-jpm-cof-rl-bac/index/a/14782
They were just saving face…
How so?
The Chinese have a history of having announcements made in the form of comments from some person who has no apparent relationship to the subject.
Instant disavowal….” Who us? Nah, the guy who siad that is some dumb clerk in another branch. Why would you pay attention to that?”
Meanwhile, at about 8:30 yesterday morning there was a big yen buy which yanked the USD/YEN trade. This was an actual trade, which shot many of the stops according to one trader. That was the real shot across the bow…”See what we CAN do if we want to?”
8:30 yesterday morning there was a big yen buy which yanked the USD/YEN trade. This was an actual trade, which shot many of the stops according to one trader.
Like most home buyers, that one trader is clueless.
JPY has entirely ignored the decline of the USD in the past 4 months… and is due to move to 109 or even lower very quickly. The YEN is undervalued.
I think it was an “unofficial” announcement, quickly retracted. For all that, a deliberate shot across the bows. Sort of flexing muscle, giving the bad eye, some light jostling, and then saying, “just kidding…”
It was just an insult. It is quite a rush for them feeling they are on top and the US has fallen down. Pride commeth…
This is the (Gordon) “Brown Bottom” strategy.
My son, an Economics major at CalPoly in San Luis Obispo, was given an assignment for his Urban Economics class to determine whether he would recommend purchasing a house in SLO. He’d appreciate any links to pricing statistics in that region, as wel as percentage of subprime loans, ARM resets, etc.
I told him all he has to do is copy & paste the nightly California thread…
Here is my reply to his email:
The best source of data is the Case-Shiller index. This index eliminates some of the flaws inherent with “median home price” statistics. The major flaw with median home price statistics, as I’m sure you know, is that it is more a measure of purchasing power, rather than housing prices. If you have purchasing power of $300,000 and housing prices decline 10%, you will probably buy a larger home at the same $300,000 purchase price, rather than pay $270,000 for the home you would have purchased before the decline. In other words, median pricing “masks” the stronger effect of purchase power.
The Case-Shiller metrics are more meaningful, because it tracks the price of the same house from year to year.
Another approach you may want to take is to isolate a single community where most of the houses are identical, and plot their prices over the last 5 years. You can pull sales information from the county recorder’s web site, or from zillow. If you can identify the community, I can try to get the numbers for you.
Prices are “backward-looking”, however. Your decision to recommend a home purchase should be “forward-looking”, e.g. where are prices going to go from today? Forward-looking factors include:
Number of homes on inventory (compared to historical levels)
Number of foreclosures
Number of vacancies
Percentage of loans that are sub-prime (higher default rate)
Percentage of loans subject to ARM resets
Employment, and employer movement (are any big employers moving in, or moving out)
Percentage of employment comprised by real-estate related sectors
Wait - you forgot to include “forward-looking quotes from CAR” on that list.
“recommend purchasing a house”
Without going into macro economics, ans can be very simple
does income support housing prices? for reasonable/historic dti
does home return a reasonable return if rented out ?
that would an both qns
Thanks! I’ll suggest he add the affordability (median income to median home price) as well as cap rate.
No No No! First you have to figure out what the professor want’s to hear. Maybe gather up a pile of his 2004-2005 housing related MSM interviews, then… wait, maybe not.
Bloomberg Radio interviewed an analyst from Punk Zeigel. He made the statement that the unwinding of bad paper could take 2 years or more. What did he compare the current situation to? You got it……. 1987-1991 housing bust finance fallout. And everyone knows what happened from 1991-2001……..
When exactly are the xmas bonuses dolled out to the oh so deserving ones that work so hard for their money, extraordinary losses notwithstanding?
I posted the exact same question on CR not 10 minutes ago.
I think they get them at the end of November.
(From the Phoenix AZ area)
“Schools stunned by voter rejection
Budget overrides defeated in 17 of 22 Valley districts”
http://www.azcentral.com/arizonarepublic/news/articles/1108overrides1108.html
You know it’s really bad when people start to doubt giving a blank check to the public schools - maybe there is a bright side to this crash (aside from shorts). I just wish some of these doubters would show up in Houston.
“You know it’s really bad when people start to doubt giving a blank check to the public schools”
Actually, it’s good, it means people are getting more perceptive and taking a look around and seeing what they’re really getting for their money. As I said below, maybe if the school systems did a better job (and the parents, too, parents are a large part of the problem with many school systems) we wouldn’t have so many FBs right now.
Agree - 100%. It’s a shame it takes a housing crash for people to start to question the motives of the monopoly that gets to mold their kids.
Testify.
What really torques me are the comments about per-pupil spending not being high enough. I wish these people would take a clue from the business world where, trust me, we don’t brag about how high are per-unit costs are.
Yeah, I know. It’s not nice to compare children with widgets, but I’m trying to make a point about the “more money is always better” mentality that pervades the school financing discussion.
Oops. I meant to say OUR per-unit costs. My bad.
per pupil costs are misleading, because it is special needs students who really drive these costs, not the general student population.
The sad truth is that poorer districts neglect special needs students for lack of resources, while wealthier districts lavish the most money on those students whose parents have successfully sued the school district.
In “wealth” mode, it’s hard to argue against spending on special needs kids. In “poverty” mode, “our future” becomes “our liability”.
I don’t know what the answer is … maybe we should consult an ethicist.
Voters in our State, S.C. shot down all of the large school bond proposals. Finally folks are starting to get it I think. BTW we are dead last in public education, so I guess throwing money at the situation has done no good.
In Florida’s latest teacher pervert scandal, one of the children tried to tell the administrators that the teacher was getting some underage action. The poor kid was maligned, told she was lying and suspended from school for gossiping. When the teacher was caught, she was vindicated, but what a traumatic incident.
Up here the local community college tried to push through a renewal of their operating millage even though the current one doesn’t expire for another THREE years. It was crushed.
But South Carolina is in the bottom ten of spending per pupil of the fifty states, so they weren’t spending much to begin with.
“Arizona schools chief Tom Horne said that if the districts do not persuade voters to change their minds, they will face “catastrophic” cuts that could reduce teacher pay, increase class size and leave new schools without desks.”
Good article, krazy bill. I guess people just don’t want to take it in the hindquarters anymore. The comment by one of the posters regarding one of the major problems with the school system was interesting. And of course, here comes the “honcho” with his threats of cuts. Well, it seems the people have wised up. Good for them. Why should they pay more for a system that sucks? Same here in Florida. The public school system is rotten. Maybe if it really worked, we wouldn’t have so many FBs, but many schools have been reduced to “esteem” clinics and gang recruitment centers and cruising venues for perverts.
Ooh, I’m scared. The kids won’t have new desks, ooh.
I was surprised that ANY override vote failed!
For so many years the voters here would pass higher school budget votes by 2:1. Perhaps folks are starting to realize that mo’ money is not the answer to every problem?
And yes; that statement about desks was laughable…or at least grinable:)
Instead of desks they could buy some of those plastic chairs on sale at Rite Aid.
The public school system is rotten. Maybe if it really worked, we wouldn’t have so many FBs, but many schools have been reduced to “esteem” clinics and gang recruitment centers and cruising venues for perverts.
For the duration of our residence in one of SE PA’s braggadocio school districts, no one in my family has had kids in the public schools. Our taxes have increased to support the expansion of school facilities and especially the inflated administration salaries. What have we gotten in return? A bunch of spoiled brat children of the wannabe poseurs who have invaded this once semi-rural area. State cops regularly visit the high school, mainly for drug busts, and I’m not talking weed.
I wonder if more people are going to be motivated to home school, in FLA anyway. Around here people are so in love with saying they’re in the GV school district.
Ugh.
Being pro-homeschooling is yet another reason not to buy a house, at least within city limits in my area. If you own property (whether you truly own it outright or not), you end up having to pay taxes into a school system you loathe and then pay again to school them right yourself.
Around here people are so in love with saying they’re in the GV school district
I remember looking at homes in the GV District. At the time, everyone was telling us how it was the up-and-coming great school district. To us it sounded like a bunch of wannabee-rich folks moving in to various “affordable” McMansions instead of opting for more modest digs in districts closer to the city. We opted for latter in the tried-and-true WSSD district. Taxes are a bit nutty (not much industry), but we’ve saved bunches on non-designer clothing in this down-to-earth pocket of ex-hippy suburbia.
WS= Wallingford Swarthmore?
Here in Massachusetts nearly all the overrides have been shot down. Population growth is flat or down slightly, but fixed costs like energy and medical insurance for the employees are up 8- 10% per year for years now.
Still, no override. Much as people like to support their local schools here, these costs are way out of the control of local communities to deal with. Now Taxachusetts ranks behind Florida, Illinois, and North Carolina for per capita tax burden.
Storm Clouds…
http://news.yahoo.com/s/ft/20071107/bs_ft/fto110720071644452313;_ylt=AlCS0GhSrZ70ECAdLUMGpIn2ULEF
Just wanted to say I enjoyed reading the exchange between Tom, Stanley Johnson and Hoz yesterday on Maria Bartiromo….you guys crack me up!
It’s funny how we’ve transitioned and transmorgrified from the 1980’s Michael Jackson “Pepsi Generation” to the Maria Bartiromo “Kool-Aide” Generation.
I do not have the faintest idea who or what a Maria Bartiromo is. Never watch her show.
my comedy act for today:
From Citigroup’s Board of Director meeting discussing the recent Federal Reserve Rate cut.
“The Fed has to cut rates because it risks disappointing the market if it doesn’t.”
and
“The Fed can’t cut rates because it will fuel expectations of another one in December.”
and after the rate cut
“The language in the FOMC statement won’t be remembered after the first round or two of weak numbers.” (DJIA down 360 points next day).
Any person on the HBB (except me) could do a better job as a member of the board of directors than the current BOD of Citigroup.
(I could not do well, because the vast amount of moneys available for easy pickings would cause me to make the rest of the Wall Street mopes look like pikers. LOL)
Bloomberg for quotes
Treasury on the Dollar(cartoon)
http://www.stockmania.com/index.php?showimage=88
It’s so true. “We are committed to a strong dollar,” over and over again. Paulson might as well come out and say, “I like turtles.” It would be just as meaningful.
Where are you located?
LOL, that video certainly logged a lot of miles.
You get props for that one. Well done…
Thanks!
I have a question. I feel like most of us here on this great site are like minded in many ways. Well, smart with money comes to mind first. Are many of you all looking to buy in 08 or 09 for investments purposes? I have been waiting for this train wreck for a couple of years to make a few investments. I really do feel sorry for some (not all) of people just getting by and losing there home. The one thing that makes me feel better is some of the lower income folks are going to walk away with just paying a tax deductable rent on these homes because they did not put money down.
Regards,
Lane
Mwhahaha…. “investment”….. you are joking this morning correct? I think most here are looking for a PLACE TO LIVE.
O. I thought maybe there were alot of both, investors and people looking to buy a house at a great price.
Regards,
Lane
I am just looking for a place to live that I can own at a reasonable (ROTFFLMFAO in CA) price. I want to be able to pay it off before I reach retirement to better align my expenses at that time.
I think most of the people here feel that historically housing has just about kept pace with inflation…. no more, no less… except for the bubble. Therefore, when housing returns to whatever passes for normal it will not be a great investment, nor is there any reason for it to be.
BTW, our last great ‘investments’ have been a tech stock market (and the Nasdaq is still roughly only 50% of its high) and real estate. For real estate, look at Japan - and then convince yourself it’s an investment.
There are some who make money in real estate… they build apartment or rental complexes when building costs are very low, get the properties on solid footing - and then sell for a profit. SFH are not where it’s at.
I will not be looking to buy for kids and G-kids for at least 6 -12 years (should I still be alive), I certainly would not look at SFR as an investment.
Nice suburban property today is the ghetto of the future. Lack of adequate transportation.
If y’ou’re lookin’ to flip houses in the future without any real work on your part, that time might not come again for a very long time. First, houses have to drop and bottom out in price (2 years from now, maybe?), then, inventory has to clear at those low prices( another 2 years?), THEN, peoples’ memories of this mess will have to fade. That last part might be the longest part of the wait.
I guess when this mess is over and done hardly anyone will think about buying a home for investment for the next 20 years or so. Unless the central gangsters manage to respike the punch bowl with even lower rates for an even bigger housing bubble, by making sure everyone spends their last savings on RE and stocks (I am pretty sure they are trying to do that, not sure if it is possible).
I think any respiking will be very difficult at this point. The spectre of inflation is showing that it is and has been eating away at the general public’s finances for some time. As a result of the past 10 years price inflation of most if not all consumables which was driven by housing and now food and fuel people chose to take on more debt to cover it because debt was cheap - then - but now the tide has turned and not only is debt getting harder to service for many, but the psychology has undergone a shift. IMHO, it will be very hard to get people to take on more debt even if it is made cheap again somehow. But, sheeple are sheeple so I guess it is a possibility. And as you said, “getting everyone to spend their last savings on RE and stocks”, I do see the banksters trying to suck the sheeple into equities for the shearing.
that becomes a good time to start looking seriously to buy as investment, no?
Please expound on this “investment” idea people. Show me how buying a place to live is an “investment”.
sure, one should buy when no one is interested in RE anymore. But I don’t see that happening in the next few years, certainly not in Europe where the bubble is still in full swing and the downturn will probably take more than 10 years.
I’ve become so interested in housing that I’m preparing myself for a second career in residential real estate after I retire from surgery. I figure that I can parlay my obsessive interest into something that will create a little income when I’m too old for the stress of my current job.
If you’re looking to buy anytime soon it better be a killer deal, or IMHO you’ll end up in ‘10 and ‘11 in the same position as a lot of folks are in today.
Forget appreciation for a while. If you’re into cash flow, that’s another thing, but it better be awful darn positive to be worth the hassle.
If the “right” piece of real estate came up for sale today @ current market values, I might buy it tomorrow…
There are other factors to consider, aside from price.
True….I was just looking at it from an investing angle.
There’s a few deals happening, albeit slowly. An investor friend is closing this week on a 3 bedroom brick ranch that got foreclosed at 125K. All it needs is a furnace and he’s paying 29K, then will just sit on it and rent. Not too hard to cash flow it at that price.
I keep alternating between getting some land for a farm and building my own home, or buying a wad of rentals for investment. The cons for the rentals is that they will likely be dilapidated and in need of major work, I won’t be able to eat them, and the market won’t bottom ’til at least 2012 (2008 would be WAY too early to buy for investment purposes).
I’ll likely wind up buying land in the next year or two, renting for a while to save up money while farming the land and then trying to get a few rental properties after the bottom if I can find a few steals.
You will get more for your money buying the dream home someone else slaved to build.
While there will be steals to be had you’ll have to stay on your toes to keep from getting burned. Here’s some good rules to go by:
1. Don’t buy anything constructed by a tract builder from 2003 on. No exceptions.
2. Don’t buy anything that has sat vacant or been repo’d.
3. DO buy directly from a distressed seller who had their home custom built and is about to go under. This way you don’t have to deal with the trashed interior, flooded basement, nasty mold/filth, horrendous material and builder defects from the boom years.
The reason I will build my own home is because I can and it’ll be a LOT more nice, energy efficient and very low maintenance than any pre-existing construction that’s out there. That being said, I’ll be looking for a few steals for rentals.
Right on Dog. When I can build it better for $45-50/sq ft, the junk out there is gonna have to be real cheap to compel me.
4. And most important…
Got Water?
The cons for the rentals is that they will likely be dilapidated and in need of major work
There it is in a nutshell. I didn’t realize until I made the plunge how much capital was required to maintain and improve an older (circa 1900) multi unit. It is alot of work and a hassle. My advise to anyone looking to break into cashflow properties is either be prepared to do the work yourself (i.e. be very handy) or be prepared to spend considerable amounts of money in improvements, as it seems even the best properties were barely maintained over the years, at least in my area of SE Mass. Also, have a 7 to 10 yr time horizon.
The upside to buying something that needs work is that come April, I have a ton of deductions and depreciation. I end up getting quite a bit back from the government, essentially subsidizing my improvements. Figure this year I’ll have spent $18K on improvements for an increase of $2400/yr in my net cash flow, roughly a 13% return on capital before taking into account taxes. What I didn’t pay cash for (labor mostly), I financed at 0% for 12 months from HD (materials).
The day the mortgage is paid on my investment property, I’ll be a happy camper… $34K/yr in (gross)rental income, with 3% increases YOY is nothing to sneeze at. Of course, by the time the place is paid for, it will need a new roof among other things… a never ending cycle of improvements and depreciation.
I feel like an oddball sometimes. I neither invest or looking to buy a house. I just like the common sense and intelligent conversation. Used to come home from school in good part of westside LA to see notices of forclosure sale tacked on front of house at same time caterers and staff were setting up for big dinner that night. My parents both came from lots of money, but could never adapt to not being able to replicate their childhood lives. I learned early in life that it’s not money until it’s cash in your hand and to buy everything for cash so no one could take it away from you. Right now, unemployed, have little money, but no debt so I’m happy. I’m also ready for next phase of life, armed with all the knowledge I need to move forward thanks to this blog. Also, lots of laughs.
Markets and Dollar Sink as Slowdown Worry Increases
By MICHAEL M. GRYNBAUM and PETER S. GOODMAN
Published: November 8, 2007 — NY Times
http://www.nytimes.com/2007/11/08/business/08econ.html?hp
Stock markets plummeted and the dollar sank to a record low against the euro yesterday as investors worldwide grew skittish over rising oil prices and the prospect of a substantial economic slowdown in the United States.
The Dow Jones industrial average fell 360 points and the broader stock market dropped nearly 3 percent, driven down by fear that the troubles in housing are likely to continue well into next year, contributing to further losses in credit markets and spreading pain to the rest of the economy. After a relatively strong summer, consumer spending is expected to tighten and business profits slow in the months ahead, analysts said.
“We are experiencing among our clients an awakening that the United States is in big trouble,” said Erik Nielsen, chief Europe economist at Goldman Sachs.
They are just awakening to this?
“When any government, or any church for that matter, undertakes to say to its subjects, This you may not read, this you must not see, this you are forbidden to know, the end result is tyranny and oppression no matter how holy the motives.”
Robert A. Heinlein
Well said, or quoted, and on the heels of Guy Fawkes day no less.
Ah yes…. (fun)Yun declares the renaissance of the housing boom on bankrate.com….. TxChick, prepare for more skyrocketing prices in TX…… funYun says so.
http://www.bankrate.com/brm/news/real-estate/20071108_real_estate_revival_a1.asp
What a deluded little twerp this guy is. Tell that to the guy who’s about to take a 45% haircut on a house to me (if the bank accepts it).
As my 88 year old father would say….. He has a kind face…… the kind I’d like to throw shit at.
One of my dad’s favorite sayings was, “You can’t shine shit.” I use that a lot.
As I’ve mentioned, NYC is the last place to say “it’s diffferent here.”
http://www.nydailynews.com/money/2007/11/08/2007-11-08_citys_housing_market_strong.html
“Much of the nation’s housing market may be crumbling, but New Yorkers who sell their homes are getting rich fast - while those who want to buy are finding it ever tougher. The average sales price for all city homes climbed to $782,000 in the third quarter, an increase of 20% over the same period a year ago, according to a report released yesterday by the Real Estate Board of New York.”
This contrasts with what is going on over the border. A co-worker from NJ says friends in the real estate business won’t be celebrating Christmas this year. A friend from across the river is giving up on being a real estate broker and looking for a job.
We are the last domino, not to mention the home to a big chunk of the MSM. When people realize the bust has arrived here, you’ll really hear doom and gloom on the airwaves.
Oh, and BTW, remember hearing that based on the trailing price-earnings ratio, stocks were a bargain? We I looked in the WSJ today, and the trailing PE for the Dow is over 40, now that the losses are being admitted to. That’s a 2.5% return. But don’t worry, based on projected profits over the next 12 months, the forward PE is just 15, for a 6.6% return. A buy signal?
This is only the beginning of the losses. The banks will start shorting everything in sight once the recession hits.
Perhaps because they are paying such high prices for apartments, Manhattanites are increasingly defaulting on their condo fees.
http://www.nysun.com/article/66066
“Much has been said about Manhattan’s perceived real estate invincibility in the aftermath of the subprime meltdown, but lawyers representing dozens of condominium boards in some of the city’s wealthiest neighborhoods say they are seeing these default cases increase as much as 25% this year…During the last housing downturn in the early 1990s, there was a similar increase in defaults preceding numerous foreclosures.”
What is worse than having your fellow owners default on condo fees? Having your fellow owners default on co-op fees, which are much higher because they include a common mortgage. That’s what led to rolling defaults in the early 1990s.
REBNY needs a good investigation by the Attorney General’s Office at this point -to release the data to the press without putting it on your own site is highly suspicious - and it’s continued lack of disclosure about methods for collecting such dat. Their spin deliberately omits NYSAR data about enormous sales declines in both Brooklyn and Queens (manhattan data, of course, remains concealed from NYSAR) — So “average” prices may be up a bit in the boros, but sales plummeted more than 50 percent in Brooklyn yoy and were down 35 percent yoy in Queens - what this speaks to is an enormous decline in demand among middle income buyers — so that is pushing “average” sale price up–because richer folks are the only ones who can afford to buy in the post-subprime environment. Not to mention the omission of inventory data.
Also I suspect both REBNY and NYSAR data omit foreclosures — which have spiked to record levels in the boros (something the Daily News has covered itself - but couldn’t be bothered to mention in this story — along with inventor and sales decine data — shame on ‘em!).
Sorry for typo fest - “as is its continued lack of disclosure about methods for collecting such data”..and “inventory” in last paragraph — I’m mad as hell and can’t type it anymore!
Another agent going under?
http://chicago.craigslist.org/sox/rfs/472295422.html
Garage
Heated
2.5 car capacity
What kinda of car will fit in the 1/2 spot?
-Richie
People do use garages to store things besides cars.
A Smart car.
A bicycle. Oh, BTW, did you know that you can park 12 bicycles in the space occupied by one car?
A HELOC hog.
The house is in Joliet.
That’s still a pantsload of money to live that far out.
I live not too far from this house, used to be the upscale end of the west side. When all is said and done, he might be able to get 300K.
Since when is Joliet desireable??
I thought it was the first stop out of Gary.
Too funny!
I’m surprised he didn’t list the electrical outlet count in each room. I wonder if the place comes with lightbulbs?
Retail numbers coming out are anemic at best.
And will only get worse with mroe rate cuts.
“Being right too soon is socially unacceptable.”
Robert A. Heinlein
That’s because it makes those who don’t catch on so fast feel stupid.
I don’t care. I do it anyway.
Going house l@@king today!
*See* ya tonight, with updates, of course.
Best,
Leigh
Another bubble bites the dust:
“Buyers rejected a quarter of the works for sale at Sotheby’s Impressionist and modern art auction last night, as the auction house fell short of its low estimate in the sale for the first time in more than two years.
The results totaled $269.7 million, well under the presale low estimate of $355.6 million and barely half the high estimate of $494.2 million. A Van Gogh estimated to sell for as much as $35 million failed to draw a single bidder….”
http://tinyurl.com/2uggg9
Bloomberg
Speculated on that over the weekend. It couldn’t come soon enough if you ask me (which obviously, noone did, lol)
http://www.luxist.com/2007/11/08/fall-auctions-in-new-york-so-far-so-good/
I know some people in this business, albeit at a much lower level than million-plus artwork. Sales are still moving for them. I think they’re seeing some benefits from the devaluing dollar, as more Europeans and Japanese have been shopping for deals stateside. Now is the peak season for most vintage art / decorative art / furniture sales, too. It’ll be interesting to see what happens in the dead of winter.
I like glass art particularly and find there is a pretty active secondary market for very good pieces where people are needing to raise cash. Here’s one. Lots of silly wishing prices (retail plus “investment gains”) but also seeing “motivated sellers”
http://www.glassart-exchange.com/Classifieds/Xintro.asp
Hoz, this actually surprises me. Unlike land, they don’t make Van Goghs anymore. I guess this is evidence that things aren’t contained if the superrich are passing on art.
Bubble, bubble not oil or trouble….
“If it looks like a duck, and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family anatidae on our hands.”
Douglas Adams
Tomorrow night after work is the get together for the NY area HBBers in Manhattan.
Email me for the details.
kanapali@gmail.com
Wish I could be there. Mid-town makes for a very long day for me from upper westchester.
The theme for the 2008 Burning Man is…
“American Dream”
ha ha
You going, Lad?
Might see you there.
Looking forward to seeing how the BmORG interprets ‘The American Dream’…..
It’ll be my 6th sojourn…
Should be interesting, your dreams may vary.
Good place to cover another quarter with Bernanke on deck. 1490 would be a good stop.
The Toxic Giant and It’s Own Black Hole
Wall Street Metes Out Street Justice to Citigroup
By PAM MARTENS
The Citigroup debacle rises from the same ideology creating endless reports on failures of Federal agencies to perform their oversight roles in protecting the American people with the taxes we give them to do just that. Viewed collectively, one can only conclude that the Bush administration has reengineered these taxpayer supported agencies to stand down on corporate malfeasance with a mantra of corporate profits before people and the flimsy overt pretext that free markets will handily function in the place of regulators with subpoena power.”
another article about the ‘wisdom of the free markets’. Not.
http://tinyurl.com/3cf87c
Retail Sales Down, Warm Weather to Blame…
Nov. 8 (Bloomberg) — U.S. October sales at Wal-Mart Stores Inc., Macy’s Inc. and other U.S. retailers trailed analysts’ estimates after record-high temperatures in the Northeast kept consumers from buying jackets and sweaters.
Target Corp. reported sales at stores open at least a year that surpassed the retailer’s already-reduced forecast as consumers worried about the economy sought marked-down items. Shares of Gap Inc. rose after the company’s forecast weren’t as bad as some analysts expected.
Where will most people buy their consumer goods, if they have no money and the big box stores get closed down, all at the same time?
I hear it’s hot in hell.
Perhaps retailers are selling less because they have less to sell. I read that import volumes have plunged at the ports of Los Angeles and Long Beach at a time of year when shipments should be arriving for Chirstmas.
Posted on Cal blog last night:
” Comment by de
2007-11-08 04:33:15
Hoz, while there’s great correlation (>90%?) between EURJPY and the S&P, it appears that the S&P 500 leads the EUR/JPY. Not by much… but then again you only need a few hours in the world of electronic trading.
Why then is the Euro/Yen index the major one with respect to the US markets?”
The interest rates in Europe particularly in the UK are greater than the interest rates in the US. Borrow moneys in Japan, buy European bonds etc. If somebody had the US dollar as a part of the “carry Trade” they lost 8% since August.
jp, commented above about using the dollar for “carry Trades”, it is happening. There is a favorable risk/reward ratio, just not large enough to justify the risk in my opinion. However, when the Federal Reserve lowers the fed fund rates again, the trade will be most favorable.
The way I would do the trade would be to short US stocks, use the cash from the short stock and buy Pounds and with the pounds buy gilts and similar but higher yielding stocks in Europe.
London is now the financial capital of the world. 2nd is New York, 3rd is Hong Kong. By 2010, Hong Kong will be 1, London 2 and NY 3rd.
IMO, Pound is in a shakier position than the Dollar.
Of course, my limey coworker swore up and down that his BPs were backed by gold.
“Many of the newcomers settled in developments on the edge of town. Ranch land that less than a decade ago was still a moonscape of sun-baked soil dotted with sagebrush has been transformed into golf courses and Spanish-style houses on streets with names like Painted Vista Drive and Rio Wrangler.”
I’ll bet “Rio Wrangler” is every bit as tacky as it sounds. Another Nevada ghost town in the making?
The schlub in this article is straight out of HBB central casting, no?
–
November 08, 2007
A US Congresswoman Can’t Believe That the CEOs [of Finance Co.] Can Be So Stupid!
During her questioning of Ben Bernanke.
No, my dear madam, they are NOT stupid, they are crooks and they play stupid, or surprised, after the fact. Only a financially blind could have failed to see what was transpiring in the mortgage finance markets during 2004-06. It is too much to give these CEOs benefit of the doubt and assume that they were among the financially blind who failed to see the outcome. The true nature of the American financial system is:
A system of the crooks, by the crooks, and for the crooks.
Is the biggest culprit, Mozilo, suffering in any way? Are millions of American households suffering as a result of his and his cohorts’ activities? I rest my case.
Jas
if you have google maps, go to “5500 s Indiana, Chicago IL”.
The green areas between the row houses, they are not side yards or city parks, these were abandoned houses. look around, there are green spaces for blocks and blocks. It is in other neighborhoods also. Somehow things got so bad that the people abandoned their houses and the bank couldnt find a new buyer. Eventually the city couldnt even find a buyer and had to buldoze the buildings at the cities expense. How did things get so bad, that no one wanted these houses even for taxes. Declining industry? racial problems? Increased crime? The crime and race problems probably come from the lack of jobs. This neighborhood seems to have it all, its in what was the 2nd largest city, its on a major transit line, near a freeway, and 1 mile from the University of Chicago.
This is not the only place. Look at many industrial cities of the northeast and midwest; and you will see neighborhoods with lots of green lots.
What does this mean in terms of todays housing crash? banks have this idea that they can foreclose and always find another buyer; But what if no one wants the house for any price. The foreclusre losses are a lot bigger with a 100% loss than a 20% loss. Homebuyers have this idea that neighborhoods are forever, that blight doesnt happen. In many of the new areas, this could happen; i am thinking many california central valley and inland empire locations. What happens to a new mcmansion nieghborhood when 30% of the houses are are abandoned, crime is everywhere, its 500$ a month for AC, and the 1 hour commute costs $200 a month. Could we see entire neighborhoods where 30% of the houses are taken over by the city and buldozed. dont think its impossible; its happened many times before.
if you dont have google maps, zillow.com works also
Absolutely! I grew up in the Northeast, so I was familiar with blocks that used to have once-nice homes that now have boarded up homes, or foundations where homes once were. Places like this existed in NY (Buffalo, etc), Newark, NJ, etc.
So when I saw blocks and blocks of houses in Lake County FL being snatched up by “investors” and nobody really living there, I said to myself “these will be a neighborhood of boarded-up and crackhouse in 5 years”. People thought I was nuts when I suggested that.
But it’s the ONLY LIKELY SCENARIO now. All it takes is one house/block to be abandoned, and to be occupied by squatters, etc, for this to start happening rapidly.
And, I’ll go out on a limb here, you’ll see boarded-up homes and crackhouses in CELEBRATION FLORIDA within 5 years.
There are many places in Chicago, Detroit and Cleveland (just to name three big Midwestern cities) that have never recovered from the blight of the late ’60s and early ’70s.
Many marginal or downright scary Chicago neighborhoods were gentrified or developed (exploited?) during the boom. Some weren’t.
For me, the archetypal example of how any neighborhood can decay remains the mansions of Prairie Avenue on Chicago’s Near South Side. It was home to many of Chicago’s leading families in the late 19th and early 20th centuries. In the early-to-mid ’90s, most of the mansions were crumbling, and it was a virtual ghost town, especially at night.
I hate to give Realtors any credit whatsoever, but as they say, location, location, location…
Of course, luck also plays a role… Ask any soldier and he’ll tell you he’d rather be lucky than smart once the bullets start flying.
Don’t the cities only bulldoze the abandoned and deteriorated houses if they are serious about protecting the populace from blight and disease? Of course, they also can’t be optimistic or they would believe that if they just wait long enough, things will get better on their own.
Does one really forsee this in CA? That is, cities actually taking pessimistic action to defend against a real and worsening problem. Perhaps they could get ready by practicing bulldozing the underbrush…
Homeowners Feel the Pinch of Lost Equity
“Everybody was basically using their house as an A.T.M. machine,” said Dave Simonsen, a senior vice president for NAI Alliance, an industrial real estate firm in Reno. “Now they are upside down on their house without that piggy bank to go back to.”
From 2004 through 2006, Americans pulled about $840 billion a year out of residential real estate, via sales, home equity lines of credit and refinanced mortgages, according to data presented in an updated working paper by James Kennedy, an economist, and Alan Greenspan, the former Federal Reserve chairman. These so-called home equity withdrawals financed as much as $310 billion a year in personal consumption from 2004 to 2006, according to the data.
http://www.nytimes.com/2007/11/08/business/08borrow.html?pagewanted=1&_r=1&ei=5089&en=9a4bc10b12f7b45c&ex=1352264400&partner=rssyahoo&emc=rss&adxnnlx=1194537818-s4zuYNGUUITuTxRT0U3skg
The article the WT Economist gave us, on the recent upturn in New York foreclosures, is like music to me. A former Manhattanite, I sold a 2bd. co-op (disgusting inventions) in early 2005 for a 400% profit from when I bought in the mid-nineties. I was pretty happy to do that. Of course, since then, the market’s gone up 50%, and rents have skyrocketed as well, although still not nearly in the ballpark of 120th of sales price. So I’ve moved to Dumbo, an area of Brooklyn near NYC with former warehouse that are now ‘lofts’–think Soho in the mid-seventies. Oh yeah, it too is massively overpriced (2 bdrm apts. for 1.2 mil!) I’ve been aghast at the rise in prices everywhere aroundme, the trust-fund babies littering Manhattan sidewalks and the death of the NYC soul as I’ve always known and loved it.
I’ve come to think of Manhattan as Disneyland North, and it’s time to move on. The big Q for anyone who loves the urban life that NYC provides, is, as always, Where. A friend of mine swears by Pittsburgh, and I intend to check it out. Any other urban junkies like myself who feel trapped and are looking for an alternative (and yes, I love nature, crave it at times even, but don’t have to need to have coursing through my bloodstream on a daily basis.)
Oh, and I too am looking forward to meeting the other HBB’ers this Friday.
Cheers.
@$#%ing Bernanke.
I’ve come to think of Manhattan as Disneyland North, and it’s time to move on. The big Q for anyone who loves the urban life that NYC provides, is, as always, Where.
The changes to Manhattan are pretty disconcerting — it’s like a big tourist rap shopping mall now. Where’s the grit? Where’s the crunk? Most importantly, where the idiosyncracy?
In terms of other cities, I don’t think Chicago has completely lost it (though certain neighborhoods have lost their character). I’m a big fan of second-tier cities with panache, like Milwaukee and Cincinnati. I’ve heard good things about Pittsburgh, too, but it’s been more than a decade since I’ve visited there.
Fed Chairman Sees Period of Slow Growth
Thursday November 8, 11:12 am ET
By Martin Crutsinger, AP Economics Writer
Federal Reserve Chairman Bernanke Says Growth Will Slow Significantly in Coming Months
http://biz.yahoo.com/ap/071108/bernanke_economy.html?.v=15
I guess he can’t lower the interest rate any more.
I’m bubbling mad at all this. This was a completely man-made mess. Two groups–the gullible American Public who bought houses they couldn’t afford, and the Bankers who created clever ways to buy/sell risky debt–crashed the economy.
And every solution, either active bailouts, or just the resulting inflation, means that YOU and I will end up paying for it.
Everyone here needs to be relentless with writing letters (real letters in envelopes–they count for more) to our elected officials, telling them not to forget the innocent victims of this mess. And remind the MSM whenever they get the innocent victims mixed up. The “single mom” on welfare who “lost her home” isn’t an innocent victim. She’s a co-conspirator in a bank robbery.
“If the economy slows to a crawl, the Fed cuts rates to boost activity while if inflation becomes a threat, it raises interest rates to dampen price pressures.”
Ahhh, but what to do when BOTH happen at the same time…?
How’s the economy doing, and where are commodity prices going?
Just a sanity check here to see if anyone else is noticing the same things. I have a rather good long-term memory for details, maps, etc. In the last couple of weeks, my “this is not the same” feeling has been going crazy at the grocery store. (H.E.B. here in Austin, Neighborhood Market in Rockwall).
I’d swear that the number of package re-designs to put smaller amounts in the same package while looking the same has gone through the roof lately, but I have not been actually recoding things, so I can’t say with certainty. 4.0oz becomes 3.65oz, etc. The repackaging must not be enough though, as the number of little price increases in a short period of time also seems the highest in years (duh).
To further complicate my ability to notice, the stores I’ve shopped at have all recently rearranged some of their sections and changed the brands/sizes they stock for some things — perhaps to obscure price hikes and repackaging of items (tinfoil hat mode on for a sec).
I know the topic has been touched a lot on here lately, but I am wondering specifically if you guys are seeing the same repackaging frenzy.
Being the sunflower seed addict that I am, I noticed that…
Frito Lays went from 2 for a Dollar (or 50 Cents each), to 2 for a Dollar. (or 1 for 59 Cents)
The weight went from 2 1/2 oz’s to 2 1/4 oz’s, per package.
No inflation here, please move along…
“No inflation here, please move along…”
You are forgetting about hedonics…2 1/4 oz of junk food is actually worth MORE to you as a consumer than 2 1/2 oz, as it will force you to eat less unhealthy snacks. Therefore, by decreasing the package contents, they are actually giving you *increased* value, for that greater cost.
See, no inflation! Hedonics rule!
I went to a 12 step program…
“i’m aladinsane and i’ve gone to seed”
Interesting observation. Seems like there would be a government or industry group that tracks retail prices at the unit level (oz, lb, gram, etc.) rather than by median prices - kind of like how the Case-Shiller analysis digs deeper than the median by tracking same-home sales over time. But then again, since the Fed doesn’t seem to care about inflation on ‘volatile’ food and energy costs, maybe no one tracks consumer prices that accurately except the person that has to actually buy it.
I like it when stores display cost-per-unit because it’s easy to compare one store’s ‘regular’ price with another store’s ’sale’ price without bringing a calculator. For example, the cat litter I regularly buy is randomly stocked in a dizzying array of container sizes: 23 lbs, 28 lbs, 28 lbs with 3 lbs Free, 31 lbs, 35 lbs, etc., and I swear the price label on the shelf never seems to change. Like anything, the burden of determining the best value is always left up to the consumer.
I also remember talking to a college Packaging major a few years back. He said for many items the actual cost of the product was inconsequential compared to the additional costs for assembly, packaging, shipping and stocking. Manufacturers could increase the amount of actual product per container for almost no additional cost, then advertise things like ‘20% more’ for the same price. Manufacturers must really be in trouble now if they are both decreasing the package sizes and increasing prices at the same time. Welcome to Inflation at a local store near you!
–
Congressman Makes Bernanke Eat His Words and Another Accuses Him of Painting a Rosy Picture
Bernanke said, “I was wrong and you were right” about the housing inventory forecast 8 months ago. Bernanke will keep downplaying the housing horror show in the US that would affect the whole world economy.
Jas
Ochen horror show!
Just so you know . . .
http://www.hamzeianalytics.net/
Bernanke-Govt could relieve GSEs of jumbo mortgage risk
http://www.reuters.com/article/marketsNews/idUSWAT00842720071108?rpc=44
What could possibly be an honest logical reason for such a move? The only reason I can think of involves fraud, corruption and kickbacks.
“One possibility would be if the federal government were to be willing to act as guarantor…to take away the credit risk from GSEs, so that they could process these jumbo loans and sell them to the secondary market and that would be of some assistance to the mortgage market”
Anyone remember the government guaranteeing crazy “investment strategies” by insuring savings and loan deposits with very little regulation on how the money could be “invested”? Does no one remember the FSLIC, and the RTC?
Does it really make sense to push through a GSE-engineered bailout at this rather inopportune time?
Cuomo Hits Fannie Mae, Freddie Mac With Subpoeanas
The New York attorney general subpoenaed mortgage finance giants Fannie Mae and Freddie Mac as he sought to expand his housing industry investigation by focusing on companies that package house loans and sell them to investors.
http://blog.washingtonpost.com/washbizblog/2007/11/cuomo_hits_fannie_mae_freddie_1.html
Ron Paul is reaming BB for weakening the dollar and hurting savers. BB says that consumers break even because they make dollars and spend dollars. Paul counters that elderly savers are being killed by inflation, despite the CPI faked numbers. BB responds with silence, crickets, and someone snickers. Disgusting.
Which rep followed Paul and talked about the greater fool?
Also, who was it that made Bernanke admit he was wrong? I saw Rep. Sanchez from OC (the center of this mess) say that she had to align herself with Dr. Paul. Think some of these reps realize Dr. Paul is gaining momentum and want to be VP?
I watched the FED meeting for about 15 minutes before I had to leave for work.
Is it just me, or did anyone else detect a rather nervous tick on Bernanke’s right lip?
Yes, and his voice was noticeably trembling.
Ron Paul just gave Helicopter Ben a good A$$-whipping. Kicked the poor guy’s teeth in. As expected, HeliBen just said that there’s no inflation, the fall in the dollar doesn’t mean higher prices because we buy things here in the US. The Fed is an economic mafia. Ron Paul knows it and was ready to jump out of the chair and kick his a$$.
“the fall in the dollar doesn’t mean higher prices because we buy things here in the US”
Except for little things that nobody uses, like, say OIL?
Also, a thought experiment for Gentle Ben…a declining dollar makes our goods less expensive to the rest of the world, meaning they can buy more of our “stuff” for the same amount of Euros/Yen/whatever. That increases demand. What does that do to prices here in the US?
Hint…increased demand tends to do what to prices…?
Another way to look at it…due to a very weak dollar, people with Euros have become relatively “richer” than those of us with dollars (thier buying power has increased relative to mine). So I am now competing with people that are “richer” for the same items made in the US. What does that do to prices?
It’s not rocket science.
Raw materials that come from abroad get more expensive with a falling dollar. Add that tons of stuff we buy (clothing, cars, appliances, furniture) are made abroad, and get more expensive with a falling dollar.
How do these people look themselves in the mirror?
Bernanke: Credit, oil still concerns
In testimony before Congress’ joint economic committee, Federal Reserve Chairman Ben Bernanke says the central bank is concerned about credit crunch and rising oil prices.
http://money.cnn.com/2007/11/08/news/economy/bernanke/index.htm?source=yahoo_quote
My impression of the Senate hearings are that BB wants to open up the government backed loans ,(would be a bail out for Wall street banks/lenders ,and would be taxpayers woes ).
Alot of bandstanding was going on in the hearings ,but Ron Paul blasted BB with what was wrong with the system ,with low rates and bad policy etc.
Mark my words , the underlining plan is to bail out banks with government insured loans and new money will be available by Government insured loans and maybe some more rate cuts . You can see that government backed loans is how they want to open the credit markets for new money also . BB suggests that the housing problem will be contained within 6 months ,that is a joke . Everyone should write their Congressmen and tell them that they don’t want government backed loans to bail out the credit tightening .
“BB suggests that the housing problem will be contained within 6 months ,that is a joke .”
Haven’t we heard that one already?
“Everyone should write their Congressmen and tell them that they don’t want government backed loans to bail out the credit tightening .”
i agree with this! this is a big issue. with election year comming up, these fools are going to try to get the taxpayers to hold the bag. in my opinion if they do make a move towards this idea, we are going to suffer worse consiquinces than if they would do the right thing and let these fools work it out themselves. we are all in this mess, with the forclosures, job loss, slowing economy, falling dollar, inflation, just to name a few. but what makes them think that the overwhelming majority wants to save these speculators??? i would much rather purge the system and take our lumps to get this over with. maybe if we scream loud enough to congress about the serious issues, they “might” listen.
Right, why should the government buy into a falling knife and keep the prices jacked up by offering taxpayer backed loans . Countrywide Funding is just waiting around for the Government to offer those loans so Orange Man can dump a buch of the junk that they are holding and to open up their lending lines again IMHO .
Why should the government offer easy money (and it would be ) to bail out the lenders . Maybe we should have a tight money market until home prices conform with prudent lending . To bad if the builders have a bunch of houses from overbuilding for the speculators .
As it stands right now , appraisals are a joke in a declining market (not that appraisals weren’t a joke before ). As a taxpayer I want prudent lending and I know Wallstreet/lenders just want to offload this junk to the gov. backed loan programs . BB was talking like it was only going to be a short term lending policy ,but this is a red flag that it’s is a bail out .
BB tried to suggest that the Feds were not helping banks (in the form of bail out ),but what do you call Fed lending based on their cr*ap junk paper.
Also the subject came up about global money supply in the Senate meetings ,and I don’t think the problem was addressed the way it should of been .
Tell me ,why should BB and the Senators be talking about bail-outs when the public has not been given a clear picture of the true loss or potential loss ,and to whom that loss will fall on . This is a joke my friends and I am getting sick of it .Tell me who the real parties of interest are that will get bailed out and maybe than I can tell you if I’m in favor of it or not .
It galls me that taxpayers who are priced out of the market by gamblers buying ten houses on pure speculation are now going to be put on the hook to bail out the lenders who now hold bad gambling debt, thanks to loans they made to speculators.
Interesting…
The perceived “investment metals” are ramping up, pricewise.
While the Pt cruiser metals, with no history of being wealth, and mainly used in industry (catalytic converters)
Are flat in the water…
I hope there’s not a “gold bubble”. Don’t you need cash to buy gold? Or are people able to buy exchange traded gold on margin?
Amounts up to 100 troy ounces have been given to people, with the only proviso being that they can fog a mirror with their breath, and lie about their income potential and agree to a odorous payment plan.
er wait,
that was in regards to houses…
An investor(s) without much cash can influence the price of gold or silver in the futures market. This has resulted in PM bubbles.
Also earlier this year, major mining companies, which normally hedge in the futures market, bought back their hedges. Either production is going to be lower (not likely) or companies will keep some PMs off the market in anticipation of higher prices.
Many PM stocks in Africa jumped 30%+ yesterday. The stocks are like “out of the money call options” and the calls went into the money. I use the Black-Scholes equation to value mining stocks. A lot of mines can produce gold at prices from 650 to 800 oz, when the price jumped it made a whole bunch of mines profitable. Not a lot of gold, but huge jumps in stock prices.
Gold stocks will be the only way to play, for most investors…
You don’t need capital, just switch out other stocks from your portfolio~
That’s where your Gold Bubble will be…
Here’s a perfect example of the Media’s lack of understanding:
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20071028/A_BIZ/710280311
“S.J. County foreclosures continue to claim victims”
In fact, you and I are the true victims. Since when is someone who can’t pay back a debt he agreed to a “victim”?
And here’s the letter I dashed off to the “reporter”
Bruce:
Re: “S.J. County foreclosures continue to claim victims”
I saw no mention of the true victims of these foreclosures: hardworking taxpaying Americans (like me) who are able to save money. While you were correct in pointing out the trouble renters are having finding places to rent that aren’t in foreclosure, people who can’t pay their mortgages are hardly victims. In fact, they’re essentially bank robbers.
I’m going to end up paying for this mess in several ways:
1. Bernanke keeping interest rates artificially low to help people who got mortgages they can’t afford. This robs me of a reliable fixed income from my savings.
2. Taxpayer bailouts–proposed by Senator Clinton, and rep. Rangel–that I’ll have to pay for. (I pay lots of taxes. In fact, I don’t qualify for a mortgage interest deduction, as your “sob stories” do–because the government thinks I make too much money.)
3. IRS, under political pressure from left, not charging people taxes on income from forgiven debt. (So me and other responsible Taxpayers will have to!)
3. Inflation devaluing my money.
4. Phony valuations (lots of people got “cash back at closing” during the bubble) causing my home to be overvalued, and my property taxes going up more than they should.
Let’s consider one of your sob stories:
I did the math. a 30-year fixed mortgage on 500K at 6.5%, which they could have had easily back in 2005, has montly payments of 3160.34. Add in $300/month PMI payment (which is on the low side) because there’s no down payment, and $500/month property taxes, and that comes to $4060/month
So, you see, they couldn’t afford their house with a traditional fixed mortgage! They knowingly bought a house they couldn’t afford. While this is unfortunate–we all make mistakes–they’re hardly victims. What do you expect the bank to do? Give them the house for free? The bank already paid out real money–$500K in actual dollars–to the person who sold the house.
If they didn’t have a downpayment –and I’m assuming they didn’t–they actually got a good deal! They’ll be able to walk away from this no-recourse loan, having been able to live in a nice house for two years while only paying a teaser rate. That’s not so bad.
In the future, please don’t refer to people as “victims” unless they fit the definition of a victim. The renters who lost their rental are victims. Responsible taxpayers are victims. These borrowers aren’t.
In fact, they’re going to get a great deal.It looks like the IRS won’t be taxing folks on forgiven debt, so again I’ll have to pick up the extra tax burden. They pocketed the 200K difference between purchase price and sale price (or more, if the house doesn’t sell for 300K).
Sincerely,
Reuven S*****y
“2. Taxpayer bailouts–proposed by Senator Clinton, and rep. Rangel–that I’ll have to pay for. (I pay lots of taxes. In fact, I don’t qualify for a mortgage interest deduction, as your “sob stories” do–because the government thinks I make too much money.)”
If you are talking about AMT be aware that mortgage interest and charitable deductions do NOT phase out with AMT although everything else (property tax/income tax/2% Misc. deductions and credits and personal exemptions) do get wiped out with AMT.
Other than that you make some great points.
Yep, good points . You people are not going to like it when your taxes are raised to bail out all these jerk gamblers and Wall Street greedy pigs who funded this lending party . The people who made the mess should pay for the mess .These lenders don’t want to rewrite their junk loans because they know that they will never be good . They just want to pass the junk to someone else ….wrong .
For the Feds and the Senators to even suggest bail out plans when it isn’t even clear what the loss is and who is going to take the loss is a joke .I find it offensive that BB suggested that they should raised government backed loans to 1 million ,on a short term basis of course . Make no mistake , the powers are trying to sit it up for the taxpayer backed loans to take over all this junk paper and to fund future junk easy money paper ,to pass the buck to the taxpayers . I think the plan is to lower interest rate to nothing so they can offer government backed low interest bail out loans ,at the expense of the dollar . There is no reason why the government should offer funding when the RE market is crashing . The main reason for the RE crash is over supply and fake speculator demand after interest rates were held to low for to long and alot fraud and easy money lending .
No reason to bail out this junk paper or give future easy money in the form of government backed loans that the taxpapers would suffer major loss on as the market continues to go down .
You just let the market get down to prudent lending standards and whatever price that bears, and you let the gamblers take their loss . I can’t believe how much BB is in the pocket of Wall Street .
They would like the public to think that they are just providing funds for lending ,but this a a bail-out for bad paper . Why should the government backed loans be the new sub-prime lender on the block .No reason for interest rate cuts and they should be raised if anything .
Sorry, but you’re wrong! Mortgage Interest Deductions do phase out. (It’s moot now because I’ve paid off my house completely 2 years ago.)
No, I am not talking about AMT! There is a separate phase-out for mortgage interest deduction.
From the IRS publication here:
http://www.irs.gov/pub/irs-pdf/p936.pdf
Certain itemized
deductions (including home mortgage interest)
are limited if your adjusted gross income is
more than $150,500 ($75,250 if you are married
filing separately). For more information, see the
instructions for Schedule A (Form 1040).
And see Line 29 on Schedule A for the phase-out formula.
Also, folks with “forgiven debt” that pushes them over these limits should have to pay AMT *and* lose their mortgage interest deduction for the year in which their loan was forgiven.
“In fact, you and I are the true victims…”
Since there’s a “writers strike” here in CA…Jay Leno is forced to use a “rerun” response:
Leno: “Exactly! Exactly!”
From yesterday…
Chick: “Hey, Jas . . . Cisco down big AH on reduced guidance. NDX futs down 26. It’s all good in Kalleefornia!”
Jas: “I am loaded with naked calls and long puts on Crisco and Junior. Tomorrow could turn out as good as today.”
Leighsong: “Hmmm…methinks not?”
-x-x-x-
Today…
Well, I am more than 3/4th of the way there, Leigh. The next update of portfolios might do it. It is all about having the right goods.
Jas
I reshorted the stuff I covered in the bounce this a.m. while BB was talking and am thinking off offloading it pretty soon here.
–
Just went over the top (higher gains than yesterday).
It is good to get lucky from time-to-time.
Some things are always inflating and some things are always deflating.
As Scams deflate my portfolios inflate! As Treasuries inflate (in price and not in yield) and gold inflates I love it. Mine are long-term positions and not short-term trading positions.
Jas
Cisco kid was no friend of mine.
–
Having Champagne with my lunch (highly unusual) today in a very fancy flute with Cisco logo itched on it.
Cheers.
Jas
Who is the fool on right now talking about the “victims” whose mortgages are resetting? They are not victims! This whole thing is infuriating!
I am really upset about all of this. I never cared too much about actively managing investments. I’ve been very conservative, frugal saver, and we both work hard. We’re double-income-no-kids, one of us is an Executive at a large company, and the other (me) runs a small business. We save well over half of our after-tax income. Have zero debt. I thought we were “all set”.
Now I fear that the government will confiscate our money, through taxes, inflation, and unnatuarlly low interest rates, making it difficult for us to retire.
Good luck surviving the War on Savers. If you actively pursue dollar devaluation risk diversification, you should be OK.
You could be in the “Dollar carry trade” compelled to lend out to 3rd world countries to get a decent return just like the japanese housewifes’ lend to America, buying mortgages. I wonder who will lend to us now that its seen we just walk away from debt?
–
Bernanke Supports Raising Limit For Fannie and Freddie to $1M!
When pressed by New York Senator Chucky Schumer.
To keep the Bankrupters and Fraudsters of New York City happy?
Jas
Just covered all shorts from yesterday a.m. What a bonanza. Now will be watching for long entry.
This is unbelievable. Doesn’t the Fed realize there are already 17 million plus vacant homes, and raising the conforming limit will respark the real estate infestment craze and lead to more real national wealth wasted on unneeded McMansions? And what of the unpleasant implication that midwesterners will be asked to implicitly subsidize a bailout of wealthy coastal owners of million dollar McMansions? And what if our foreign creditors decide it is a dumb idea and refuse to pour any more money down the U.S. mortgage lending rat hole?
This proposal smacks of desperation.
Bernanke: Conforming loan limit could reach $1 mln
Thu Nov 8, 2007 12:44pm EST
WASHINGTON (Reuters) - If Congress decides to temporarily lift the $417,000 cap on mortgage loans eligible for purchase by Fannie Mae and Freddie Mac, then a reasonable level might be $1 million, Federal Reserve Chairman Ben Bernanke said on Thursday.
http://www.reuters.com/article/businessNews/idUSWAT00843520071108
This is absolutely idiotic.
Can’t anyone on the Fed Board do ANYTHING right these days?
Just do one thing that will not make the eventual situation worse.
Just one.
–
Such a person would never be appointed to the Fed!
BFNYC control the political system for a reason. Why do you suppose that Paulson is in the White House straight from the Gold House?
Jas
One way to look at it is if the Fed succeeds in trashing the value of the dollar by 58.3 percent, then the real value of a home from the standpoint of a foreign infester would go up by [1/(1-0.583) - 1] X 100% = 140%. A 140% increase in the value of a home that used to be worth $417,000 would get you to $1,000,000. Perhaps the real reason for the proposed increase is to help protect the value of foreign lender collateral against a drop in the value of the dollar?
One more little issue: Won’t the GSEs be a bit preoccupied for the near term with legal issues to worry about expanding their business into purchasing millionaire-sized McMansion loans?
Cuomo Hits Fannie Mae, Freddie Mac With Subpoeanas
The New York attorney general subpoenaed mortgage finance giants Fannie Mae and Freddie Mac as he sought to expand his housing industry investigation by focusing on companies that package house loans and sell them to investors.
http://blog.washingtonpost.com/washbizblog/2007/11/cuomo_hits_fannie_mae_freddie_1.html
It svcks to begin with that the infestment bankers were able to take the money and run off with massive bonuses and $100m+ retirements as rewards for trashing the global economy. To think that the big banks will now enjoy the luxury of passing their toxic subslime debt on to the taxpayer via black hole GSE balance sheets is beyond the pale.
What they are trying to do must be stopped PB . It’s evil to ask the taxpayers to bail out anything when the taxpayers are really not aware of just who they are bailing out . Does anybody really believe that these so called government backed loans up to a million dollars arent a bail out of the current junk loan paper and future junk loan paper that will be easy money /easy terms .The general population would not be in favor of it if they really knew who they were bailing out .
Just let everything crash and burn ,get back to prudent lending ,raise the interest rates and use government funds for possible FDIC bail-outs for saving deposits ,(if the taxpayers wants that ),but don’t try to pull a fast one on me .
The worst part stems from the Fed’s no mea culpa stance on this whole mess (as pointed out in a leading OpEd piece in the WSJ last week). Since they accept no blame for the mess at hand, it is in their interest to get the debauchery rolling again and hide the steaming pile of elephant dung from view before someone raises serious doubts.
Infestment bankers, you got that right
/ I infested the market!
They infested the market with SIVs!
BTW: If someone walks away from a home that’s more than $150K underwater, then they may taking the mortgage interest deduction (which starts to phase out for incomes over $150K) illegally.
While it seems like the IRS will, in response to political pressure, not be taxing forgiven debt as income, it seems grossly unfair that this forgiven income be ignored completely, such as when calculating AMT, and eligibility for mortgage interest deduction.’
If these taxes go uncollected, why should anyone else pay his taxes? It sets a horrible precedent.
“it seems grossly unfair that this forgiven income be ignored completely”
Haven’t you been reading the newspapers? These people are “victims”, like when someone comes up behind you and mugs you.
Did the plunge protection team disband with Prince’s exit? Because the stock market has gone through a structural change this week.
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=GOOG&sid=1795093&dist=TQP_chart_date&freq=1&time=9
Securing mineral wealth
Japan’s Minister of Economy, Trade and Industry Akira Amari is to visit South Africa and Botswana this week in a bid to secure alternative sources of rare metals, which are indispensable for Japan’s high-tech industries. (Reuters)
Meanwhile Mr. Paulson struck out yesterday in South Africa.
“…Washington aims to increase its oil supplies from the region. US policymakers, including Paulson, are aware of China’s growing role as a trade partner and destination for African natural resources. Despite the wide variety of topics set for discussion, the summit will be dominated by the question of US and Chinese competition for trade with the region.”
China and Asia won.
They have more dollars to spend. This will drive up costs for all Americans. What a the stupid lie that people won’t be hurt by a decreasing dollar because they get paid and buy things only in dollars.
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
Charles Dickens, David Copperfield, 1849
English novelist (1812 - 1870)
Tuesday, November 6, 2007
Bring on the recession! I’ll survive
Moira Manion
If the U.S. economy were to go into a recession, it would be bad news for just about everyone from business owners to mortgage holders. But commentator Moira Manion says people like her who don’t have much don’t have much to lose.
[Commentator and cartoonist Moira Manion's drawing of herself.]
KAI RYSSDAL: You heard Bob Moon just a couple of minutes ago. Recession’s in the air more every day now. Which would be bad news for just about everyone from business-owners to mortgage-holders. But commentator Moira Manion says those who don’t have much, don’t have much to lose.
MOIRA MANION: I’ve witnessed recessions kill off businesses large and small. I’ve seen recessions cost people their jobs.
I smell a new recession in the offing. Trust me. I know the scent. And I’m not the least bit concerned.
I have no debt. No credit cards. No mortgage. No car. No cell phone. I don’t owe student loans. I have no financial obligations at all, beyond wishing to pay back friends who gave me money to pay my rent. This is because I’m poor. After taxes, I net $1,200 a month. But my monthly expenses are only $920. As long as I live frugally, and nothing goes wrong, I can get by.
http://marketplace.publicradio.org/display/web/2007/11/06/manion_commentary/
“I can easily get another minimum-wage job in this Servant Economy…”
An apt name for the current economy.
At the opposite end of the economic food chain, it is more of a take-the-money-and-run economy.
“As long as I live frugally, and nothing goes wrong, I can get by.”
–
Famous last words. Most people don’t go into personal bankruptcy because of housing or credit cards. They go into bankruptcy because of unforseen health care expenses.
Dutch auction in progress on ziprealty.com
12336 MEADOWBROOK LANE, Poway, CA 92064**
Bedrooms: 5
Full Baths: 2
Partial Baths: 0
Square Feet: 1,752
Lot Size: 8,276 Sq. Ft.
Year Built: 1958
Listing Date: 04/05/07
On Market: 217 days
Type: SFR
Status: ACTIVE
MLS #: 076036795
Description
Seller to entertain $409,888 - $439,888 * just in time for summer ….. Corner lot house w/ pool!!! Bring your designing ideas * subject to lender approval
ZipRealty Price Track:
Price Reduced: 06/02/07 — $499,888 to $489,888
Price Reduced: 08/18/07 — $489,888 to $469,888
Price Reduced: 09/21/07 — $469,888 to $439,888
Price Reduced: 10/10/07 — $439,888 to $419,888
Price Reduced: 10/20/07 — $419,888 to $409,888
I don’t have time to read all the posts today so I apologize if someone already posted this. Our newspaper had an article today that said there’s more recalls on
toys made in China. This from the Associated press:
Millions of Chinese made toys for children have been pulled from shelves in North America and Australia after scientists found they contain a chemical that converts into a powerful “date rape” drug when ingested. Two children in the U.S. and three in Australia were hospitalized after swallowing the beads. In the United States, the toy goes by the name Aqua Dots, a highly popular holiday toy distributed by Toronto based Spin Master Toys. They are called Bindeez in Australia, where they were named toy of the year at an industry function earlier this year. It could not immediately be learned whether Aqua Dots beads are made in the same factories as the Bindeez product. Both are sold by Australia based Moose Enterprises.
I’ll bet they’ll be all kinds of perverted adults sweeping these things off the shelves at the store, and scraping the paint off.
If my kids were small, I wouldn’t be buying any toy made in China, no matter how popular.
Plus also saw national debt hit $9 trillion.
i saw this on the news last night here in bakersfield. the only merchant they showed that pulled it off their shelves was target. this is very scarry because there is no telling how many smaller businesses have this product.
Here comes the PPT cruiser to get us back near even, on the day…
and here’s how it sounds to the hoi polloi:
blah, blah, blah, Wall Street came back from 200 points off, and closed down 13.13 points in a strong comeback, blah, blah, blah
Miraculous closes happen on Wall Street every other day any more…
Seems as though the Greenspan put outlived the tenure of its namesake…
Famous last words…
http://biz.yahoo.com/rb/071108/usa_bernanke.html?.v=7
SPRING RENEWAL
The Fed has cut rates by a cumulative three-quarters of a percentage point over the past two months to buffer the economy against financial turmoil and the housing downturn.
However, financial markets have shown renewed instability in recent weeks as major U.S. financial firms Citigroup (NYSE:C - News) and Merrill Lynch (NYSE:MER - News) reported substantial write-downs due to investments linked to subprime mortgages.
Tighter credit following market turbulence is likely to restrain economic growth as borrowing costs rise, Bernanke said. But he said the Fed’s view is that underlying strength will buoy the economy through a stormy period.
“We think that by the spring of early next year, as these credit problems resolve and as, we hope, the housing market begins to find a bottom … the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace,” he said.
~Springtime for LaDeeDah, and Germany~ . . .
(sorry, couldn’t resist)
I am not buying the story about rate cut hopes leading the financials back from the brink. I think it is rather due to the rekindled hopes for a GSE-engineered taxpayer-funded Jumbo mortgage bailout, thanks to BB’s million-dollar comment during Senate testimony today.
U.S. stocks, ex technology, stage come back in late trade
By Nick Godt
Last Update: 3:59 PM ET Nov 8, 2007
NEW YORK (MarketWatch) — U.S. stocks staged a comeback late on Thursday, with the broad S&P 500 index returning to positive territory, as financial stocks turned around on expectations the Federal Reserve will cut rates.
http://www.marketwatch.com/news/story/us-stocks-ex-technology-stage/story.aspx?guid=%7B4ADC85C4%2D33AE%2D4397%2D93D8%2D1571EEA43F02%7D
http://www.reuters.com/article/bondsNews/idUSWAT00842720071108
Bernanke trying to get a jumbo mortgage bailout at taxpayers expense.
“One possibility would be if the federal government were to be willing to act as guarantor…”
Where would the federal government get the insurance fund needed to support its newfound roll as guarantor of the toxic subprime debt which will presumably be sand-blasted off the liability side of the balance sheet at private corporations Fan and Fred and the infestment banks they indirectly support? Will these private corporations’ shareholders enjoy a windfall courtesy of US (aka U.S. taxpayers)? Who would be the bagholder of last resort in this non-bailout of the GSEs and all the other big players in the REIC who brought us this mess?
And, Mr. Ben Jones, what is the score in our long-running debate about whether or not there will be a bailout? Because these proposals have a way of resurfacing again and again until the situation becomes so dire that passage finally becomes the logical alternative to a near-term plunge into the abyss.
There’s already been a bailout. HR 3648 passed!
Tax free SUV purchases for everyone at the lenders’ expense!
H.R. 3648: Mortgage Forgiveness Debt Relief Act of 2007
To amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes.
http://www.govtrack.us/congress/bill.xpd?bill=h110-3648&tab=summary
Federal government as a guarantor…hmm….good to know that we live in a free market capitalist economy where the market decides and rings out excesses. Oh wait, never mind the government will bail us all out of our bad decisions right ?
Only 27 congressmen thought it was wrong to make responsible taxpayers bail out irresponsible borrowers:
http://projects.washingtonpost.com/congress/110/house/1/votes/948/
HR 3648 makes it legal to walk away from a mortgage and NOT OWE MONEY on the forgiven debt.
Democrats and Republicans alike are calling this very real income (in many cases it paid for Humvees, boob jobs, and granite countertops) “Phantom Income”.
After reading the comments about Bernanke talking about raising the Fannie and Freddie limits to a million, I must say that an extreme naseau has overtaken me. It is a feeling of utter hopelessness. The insanity is off the charts. My only solace is that at 58 years old, I only have a limited amount of time left to put up with all of this perverted nonsense. I really feel sorry for the younger generations.
Giving people with “money problems” more credit is like giving alcohol to alcoholics. Absolutely nothing good can come out of it.
In so many of the stories we see hear, the FBs wouldn’t be able to afford their home even if they got magially refied into a 30-year fixed at 6%. They can afford to pay the teaser and nothing more.
How would dragging them along a few more years help anybody?
And all these tax cuts! PMI is now deductible, for example. What crap.
“How would dragging them along a few more years help anybody?”
It helps infestment banks avoid having to sell sumpprime assets at fire sale prices while a means of passing the toxic debt on to the taxpayer can be worked out.
The Chances of getting a government job in China are 1:60
Approximately 5MM students graduate from Chinese Universities each year. Graduates are required to take the Civil Service Exam, approximately 800,000 pass the first section and then whittling down starts. The government allows only 13,000 new hires per year. (I believe last month 36,000 new US Federal Jobs were created). “The civil service has become one of the most popular options because it is thought to offer a stable income, social status and good welfare benefits.”
And if the ratio stays at 60:1, China will never have to have a large tax structure. (I think this will change as China starts expanding its Navy.)
The massive Chinese bureaucracy, relative to its population, is small.
The T-bond yield curve is close to fully inverted out to three years, followed by a steep uptrend to longer maturities that appears to reflect the anticipated inflationary impact of a massive bubble reflation campaign.
http://www.bloomberg.com/markets/rates/index.html
Much steeper than it was last year. looks like a re-inflation situation and a bail out for the banks borrow short lend long business.
If BB is warning on inflation, then it must not be the Fed’s fault…
Bernanke warns on risks of higher inflation
By Krishna Guha in Washington
Published: November 8 2007 15:36 | Last updated: November 8 2007 15:36
The fall in the dollar and the rise in the price of oil poses a risk to US inflation, Ben Bernanke told Congress on Thursday, as he explained why the latest Fed statement judged the risks to growth and inflation as roughly balanced.
The Fed chairman said the weak US currency and the higher price of energy would increase headline inflation in the short term and “had the potential to boost inflation in the longer run” – though only if inflation expectations became “unmoored.”
http://www.ft.com/cms/s/d0d9639a-8e0e-11dc-8591-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fd0d9639a-8e0e-11dc-8591-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
The dollar
Ready for a rout?
Nov 8th 2007 | WASHINGTON, DC
From The Economist print edition
The dollar’s decline accelerates
http://www.economist.com/finance/displaystory.cfm?story_id=10109226
Anyone interested in a Silicon Valley “Housing Bubble Blog” meet up? I figure we can meet at the Cupertino Panera Bread, have lunch (while watching R-E agents close deals! Then go to an open house together. Imagine the realtor who sees a crowd of people waiting to see her home!)
Anyone interested, email me at
reamsroad *at* gmail (dot) com and I’ll start a little mailing list
FYI - E-mail from Dr. Ron Paul after his campaign, disparaged by elitists as being so much Internet fluff, raised an incredible $4.2 million in very real dollars in a 24-hour period [November 5th, Guy Falkes Day]. Backed by the “forgotten voters” - the productive working and middle classes - the Ron Paul Revolution is on a roll!
November 6, 2007
Amazing! I have to admit being floored by the $4.2 million dollars you raised yesterday for this campaign. And unlike the fatcat operations of the opposition, the average contribution from our 36,672 donors was $103.
I say “you raised,” because this historic event was created, organized, and run by volunteers. This is the spirit that has protected American freedom in our past; this is the spirit that is doing so again.
Some of the mainstream media have sat up and taken notice. Others have pooh-poohed our record online fundraising. But the day is coming–far faster than they know–when they will not be able to ignore our freedom revolution.
We are working hard, with you, to spread our message far and wide-in New Hampshire, in South Carolina, in Iowa, and in every other state with a primary. And people are listening.
As you and I know, there is hope for America-in liberty and peace, and the prosperity they bring. There is hope for America–in a sound dollar, the rule of law, and the Constitution. There is hope for America–in a people’s revolution that brings us all together, of whatever race and age and background.
What momentum we have! Please help me keep it up. As you and I know, and our opponents are only suspecting, we have Success on our minds, and in our hearts.
Freedom! Surely it is worth all our hard work. Please help me continue to do that work, with your continuing support https://www.ronpaul2008.com/donate
Without your help, this campaign would be dead in the water. Help us keep steaming towards victory.
Sincerely,
Ron
That $4.2m may represent a lot more votes than your typical $4.2m contribution to the likes of HC, RG, MR etc.
Live by the sword, die by the sword.
Pressure on banks to lead subprime response
By Eoin Callan in Washington
Published: November 8 2007 19:20 | Last updated: November 8 2007 19:20
US policymakers are shifting towards a response to the subprime mortgage crisis that would require greater concessions by investors and financial services companies.
http://www.ft.com/cms/s/0/25ef66ec-8e2b-11dc-8591-0000779fd2ac.html
BB’s testimony was a valiant attempt to keep all the elephants hidden under the living room rug. They are creating quite a stench these days, despite his best efforts…
Credit markets
CDOh no!
Nov 8th 2007 | FRANKFURT, LONDON AND NEW YORK
From The Economist print edition
With trades scarce and losses mounting, it is going to be a harsh winter
IT WAS not a good omen. This week Lewis Ranieri, a pioneer of mortgage securitisation in his “Liar’s Poker” days at Salomon Brothers, sold his property-financing firm because the subprime crisis had cut it off from fresh debt. If the industry’s godfather can’t navigate the storm-tossed markets, what hope its greedy children?
Banks that a few months ago were falling over each other to underwrite mortgage-backed securities and the labyrinthine pooling structures, known as collateralised-debt obligations (CDOs), that sit atop them, have admitted to more than $30 billion in losses. That figure is set to rise sharply as mortgage defaults in America climb. Citigroup estimates that big banks may be facing $64 billion in write-downs, excluding its own figures—and it was one of the top two underwriters of CDOs. Banks will be dealing with the pain for a lot longer than anyone imagined only a couple of months ago.
http://www.economist.com/finance/displaystory.cfm?story_id=10113339
Finance & Economics
Citigroup
Cracks in the edifice
Nov 8th 2007 | NEW YORK
From The Economist print edition
The world’s biggest bank loses its boss, and a few billion
Illustration by Satoshi Kambayashi
ON REFLECTION, it was not the best of metaphors. In an interview in August, as the first wave of subprime woe was crashing over markets, Chuck Prince explained that customers flocked to Citigroup in such trying times because “we are a pillar of strength.” Less than three months later, that depiction looks almost comically awry. A double dose of mortgage-related write-downs—the first big, the second enormous—has made a mockery of risk models and controls at the world’s largest bank. On November 4th, as the scale of the second write-down was revealed, Mr Prince took the “only honourable course” and resigned. The troubles of Citi and other big banks helped push down the Dow Jones Industrial Average to its lowest level since mid-September on November 7th.
It is no coincidence that Mr Prince’s departure came less than a week after the ignominious exit of his counterpart at Merrill Lynch, Stan O’Neal. Both banks had ploughed gleefully into collateralised-debt obligations (CDOs), which pool mortgage-backed securities and other credit instruments, becoming the top two underwriters in the business. Poorly understood (even by their creators, it seems), these are now souring at an alarming rate.
http://www.economist.com/finance/displaystory.cfm?story_id=10111659
COMMENTARY
Lifelines for the Drowning Dollar
By DAVID MALPASS
November 9, 2007; Page A19
Dollar weakness is neutralizing the positive effects of the Federal Reserve’s interest-rate cuts. As the dollar spirals downward, weakened by Washington’s indifference and market expectations of more rate cuts, liquidity drains from the U.S. into inflation hedges like gold and, in the case of entrepreneurship and risk-taking capital, to countries with strengthening currencies. This drain undercuts the growth impact of the Fed’s recent rate cuts, complicating the recovery from the August credit-market turbulence. Question: What’s harder to sell than a complex loan during a credit crunch? A dollar-denominated one.
Foreign countries are suffering the opposite phenomenon. Global investors want to buy more in strong-currency countries, heating up those countries’ economies, land values and stock markets. If their central banks hike rates, as China has been doing and Australia did on Nov. 7, it invites even more capital inflows in search of higher yields and currency appreciation, reinforcing the upward currency spiral.
http://online.wsj.com/article/SB119457528080387510.html?mod=googlenews_wsj
Could someone please remind me whether the Fed is accountable to the Congress or to the White House?
Idea of Jumbo-Loan Guarantee Is Floated
By DAMIAN PALETTA
November 9, 2007; Page A2
WASHINGTON — Federal Reserve Chairman Ben Bernanke yesterday floated a new idea to fix the troubled market for mortgages too large for Fannie Mae and Freddie Mac to buy: Allow the companies to securitize jumbo-size mortgages but have the federal government guarantee them.
Fannie and Freddie currently can buy mortgages only up to $417,000, and Congress — so far — hasn’t acted to lift that limit despite distress in that market that has made jumbo mortgages at “somewhat tighter terms and higher prices,” as Mr. Bernanke put it.
As an alternative to lifting that $417,000 cap, Mr. Bernanke offered a surprise answer to questions on Capitol Hill. He suggested that Congress could consider allowing the companies, known as “government sponsored enterprises,” buy mortgages of as much as $1 million from lenders, pay the government a fee for guaranteeing them and then turn them into securities to be sold to investors.
“That would be, I think, of some assistance to the mortgage market,” the Fed chairman said. “From the federal government’s point of view, it would be taking on some credit risk, which you may or may not be willing to do.” He added, “It would be a good idea to make the GSEs ultimately responsible for some, any excess losses, or some part of excess losses, relative to the premiums that are paid.”
Mr. Bernanke’s idea is significant because it could potentially extend the government’s support and exposure to the mortgage market…. For years, the Fed and the Bush Treasury have complained that investors believe the companies have an implicit government guarantee of their debt. Fannie Mae and Freddie Mac purchase loans on the secondary market and either package them into securities or hold them in their portfolios, which now total $1.4 trillion.
Sen. Charles Schumer (D., N.Y.), chairman of the Joint Economic Committee, where Mr. Bernanke was testifying, said he would consider introducing a bill very soon to accomplish Mr. Bernanke’s suggestion. “I think that’s a very good idea,” Sen. Schumer said.
http://online.wsj.com/article/SB119455499562686966.html?mod=hpp_us_whats_news
Proposed weekend topic: Now that the bubble has popped and all horses have pretty much not only left the barn but also either died of starvation or frozen to death out in the cold, will the Fed and Congress finally team up to put the U.S. taxpayer on the hook for the tab for Wall Street excesses through an explicit GSE guarantee of sumpprime debt?
I guess so long as the Fed and Senate can pass move the liability for the subprime debacle off the infestment banks’ balance sheets and in to the black hole GSE balance sheets with an explicit U.S. taxpayer guarantee to boot, then it will all be good again back here in the good ole U.S. of A.?
Crisis ‘to get worse before it gets better’
By Michael Mackenzie in New York, Gillian Tett and David Oakley in London
Published: November 8 2007 21:33 | Last updated: November 8 2007 21:33
In recent days, the faceless bankers who work in the Treasury departments of some of the world’s largest banks have started to get uneasy as it has become clear that the summer credit crisis is far from over.
The angst stems from expectations among investors and banking analysts that more red ink from financials is inevitable. As banks face having to write down further securities, derivatives and credit structures that reference the deteriorating US mortgage market, many fear a protracted period of stress for the financial system.
“What’s now clear is that the mess is here to stay, and that it’s likely to get worse for homeowners and the banks long before it gets better,” said William O’Donnell, strategist at UBS.
“The worst is yet to come, and we are heading into year-end when there is a lack of liquidity,” said TJ Marta, fixed-income strategist at RBC Capital Markets.
http://www.ft.com/cms/s/0/a5db161e-8e3d-11dc-8591-0000779fd2ac.html