These Are The Days Of No Shame
A report from the Arizona Republic. “Houses have their own Web sites and hold open houses every day. Classified ads start with ‘desperate’ in boldface. In this desperate, desolate, strung-out housing slump, it was only a matter of time before someone thought of T-shirts. When it comes to selling houses, these are the days of no shame. Jeni Barton needs to sell her Gilbert four-bedroom quickly, so she busted out the iron-ons and made T-shirts for her kids that say, ‘Buy my house,’ on the front and trumpet the home’s Web site n the back.”
“All that and still there’s nothing doing at chez Barton. She’s lucky to have one person come to an open house. When people see her daughters and their T-shirts, ‘they just kinda laugh,’ Barton says.”
“There’s a job waiting in Denver, a slew of new homes competing for buyers across the street, and the Christmas crush is freaking her out. Barton’s efforts are a way to calm the panic.”
“‘I’m hoping to speed it up a little. I’m virtually exhausted from keeping (the house) perfect 24/7 and not having anyone come and look at it,’ says Barton. ‘I’ve been trying to figure out what I can do so I didn’t feel so helpless, so I felt like I was doing something.’”
“‘What (buyers) are really looking for is the best deal,’ says agent Neil Brooks. ‘They’re really afraid the market’s gonna keep going down, and they want the lowest price right now.’”
“The only way to really sell a house quickly, Brooks says, is to slash that price until it’s irresistibly low.”
“Still, it’s easy to get lost in this sea of stucco and ‘for sale’ signs. There were 58,178 homes on the market as of October, compared with 47,588 in October 2006 and 23,483 in October 2005.”
“The Valley’s growing foreclosure problem is hitting the upper and middle class the hardest. Metro Phoenix homes in neighborhoods where prices range from $400,000 to $450,000 now have the highest foreclosure rate.”
“The problems are worse for homes in the $400,000-to-$450,000 range because many speculators bought in those neighborhoods, some families moved up beyond their means, and the recent credit crunch has made getting mortgages for more than $400,000 tougher.”
“Valley foreclosures have been steadily climbing this year and are at their highest level since the real-estate crash of the late 1980s. Based on figures from the past few months, as many as 10,000 homeowners across metro Phoenix will lose their homes this year. Last year, there were fewer than 2,000 foreclosures.”
“Homes in areas in the $200,000-to-$250,000 range have the second-highest foreclosure rate, with 63 out of every 10,000 homes in foreclosure.”
From KVOA in Arizona. “Wendy Hatt moved into a house on the far Northwest side with her family just over a year and a half ago. But, her American dream turned into a nightmare earlier this year. Wendy’s home had appreciated in value by about $100,000, only months after she and her husband bought it. So, they took out a second mortgage for almost $80,000 to enhance their new home.”
“When the housing bubble burst, that $100,000 in equity evaporated. But, the interest on that second adjustable rate mortgage by now had climbed from 8% to almost 16%, creating a monster of a monthly payment they couldn’t handle.”
“‘Then, it just gets pulled from right out underneath you.’ Now the couple faces possible foreclosure on the house.”
“Pima County foreclosures are up almost 300% over last year. Real estate professionals and city leaders say the problem here in the 85706 area is that too many people bought homes at the wrong time. They paid too high a price and used adjustable rate mortgages that are now coming back to haunt them.”
“Wendy’s real estate agent is trying to work out a short sale…for less than she owes on it to cut their losses. In her case, that’s just over a $100,000.”
The Wall Street Journal on Arizona. “For people hoping to refinance a home, it should be good news: Yields on U.S. Treasury securities are falling — which translates into lower mortgage interest rates.”
“However…due to continuing turmoil in the housing market, some borrowers could find that they are being shut out of refinancing entirely, as lenders tighten their standards.”
“Steven Walsh, a mortgage broker in Scottsdale, Ariz, says that some of his borrowers have called him looking to refinance and take advantage of lower rates, but are going away empty-handed.”
“Martin Quijada, an architect from Gilbert, Ariz., who has perfect credit, has been looking to refinance his mortgage loan recently. But two banks with good rates wouldn’t sign off on the appraisal, says Mr. Walsh, his broker. Another bank agreed that the appraisal was fine but had ‘terrible rates,’ Mr. Walsh said.”
“‘I was expecting a much simpler process,’ says Mr. Quijada, who plans to hold out for now, in hopes of getting a better rate later. But Mr. Walsh warns that, even if rates drop further, Mr. Quijada will still have to deal with the appraisal issue.”
The Review Journal from Nevada. “Sales of both new and existing homes dropped drastically in October and median prices continue to slide from last year’s peak, a local housing analyst reported Wednesday.”
“Larry Murphy, president of Las Vegas-based SalesTraq, said he talked to a mortgage lender who’s processing six or seven loans in one subdivision of the Anthem community in which new home prices were slashed $250,000, or about 30 percent.”
“‘I don’t know if it’s true or if it’s just a rumor, but he said half of them are Realtors and they plan on walking away from their current home, the same home they bought from the same builder last year,’ Murphy said.”
“Median new home prices fell 9.2 percent in October to $299,575 while sales plummeted 49 percent to 1,302, compared with the same month a year ago, according to SalesTraq. Existing home prices dropped 11.4 percent in October to $257,000 and sales were down 44.3 percent to 1,549.”
The Las Vegas Business Press. “Real estate investors face similar hard-money problem with Las Vegas land values dropping in the third quarter as a result of higher development costs, increased interest rates and a housing-market slowdown.”
“Median vacant land prices were $677,300 per acre at the end of September, or $41,200 less than the previous quarter, reports Applied Analysis. The average price per square foot was $15.55, which is a 5.7 percent drop from the second quarter.”
“Changing market conditions have heavily affected the mid- and high-rise luxury market with nearly 56.4 percent of all projects, 58,461 units worth, stuck in the planning or proposal stage, Applied Analysis reports. Another 3,877 units have been suspended and 5,253 units have been canceled.”
“‘Reservations don’t equal sales,’ said Brian Gordon, an Applied Analysis principal. ‘There are several investors placing refundable deposits on multiple projects around town. But when it comes time to sign the contract, they will often re-evaluate their selection.’”
“Third quarter sales in Southern Nevada’s apartment market slowed amid diminishing inventory and lack of new construction. The slowdown is in response to a softening single-family home market as well as rising land and construction costs.”
“More than 200 apartment buildings, about 11,196 units, sold in the third quarter or 46 percent less than a year ago, reports Michael Belnick, an apartment specialist. ‘We are seeing drastic sales declines even stronger than the residential market,’ Belnick said.”
“The Las Vegas Valley apartment market inventory consisted of roughly 181,085 units in the third quarter, with a 7.7 percent vacancy rate.”
“‘We are experiencing a slower real estate investment market for residential income properties than most markets,’ said Belnick. ‘But we will not be as affected as much as areas like San Diego or Phoenix due to our job and population growth over the next several years.’”
‘New home sales continued to slide in October, according to housing market consultant John Strobeck’s monthly Southern Arizona Housing Market Letter. New home sales totaled 508 last month, down from 695 in the same month last year, the report said. The median price for new homes last month, $229,278, was also down about 10 percent from the median price in October 2006, according to the report.’
‘In a city dependent on tourism and a housing industry clinging to hope for a quick recovery, Las Vegas Realtors, developers and investors remain anxious about whether the U.S. is headed for a recession.’
‘Daniel Hurwitz, the president and chief operating officer of Ohio-based Developers Diversified, which owns and manages more than 740 retail properties in the U.S. and abroad, says anyone who predicts a recession isn’t looking at the facts because there is growth in wages, jobs and retail sales. He much of the equity people took out of their homes didn’t go to retail sales and the fallout shouldn’t hit that sector hard.’
‘We don’t think there will be a recession,’ Hurwitz says. ‘We think it is all overblown.’
‘Hurwitz says he’s heard from retailers in the same exact center in the same product line who talk about their sales growth. One complains that the oil prices or economic slowdown has lowered their sales and the other will say they’re doing great. ‘We have had a lot of excuses coming through the pipeline,’ Hurwitz says. ‘It’s about merchandising. The losers are going to look for an excuse.’
‘The retail market is one that McAuliffe said has peaked and has a lot of supply threats. Hurwitz said he doesn’t agree with that assessment of the retail market. ‘The supply pressure in retail doesn’t mean it’s overbuilt,’ Hurwitz said. ‘It means we are under demolished.’
“Daniel Hurwitz, … says anyone who predicts a recession isn’t looking at the facts”
I guess Hurwitz hasn’t ever looked at a chart of housing starts and recessions, because the fact is that sharp drops in housing starts nearly always are followed by a recession.
Got Facts?
Fortunes shift as oil prices soar
http://www.latimes.com/business/la-fi-oilworld24nov24,1,7427504.story?coll=la-headlines-business&ctrack=2&cset=true
Eating out is getting lonelier
Restaurants are feeling the pinch as people cut back on their spending in the face of tightening household budgets.
http://www.latimes.com/business/la-fi-restaurants24nov24,1,4065752.story?coll=la-headlines-business&ctrack=1&cset=true
How can people on CNBC say that inflation is low when right above them on the tv screen oil is usually in an orange box because it hit a new high or whatever it means?
I have to admit, that I think the one person on CNBC who might not be onboard with the no-inflation, everything is a-ok, goldilocks, no -housing bubble, nothing to worry about here is Joe Kernin. I don’t watch all that often, but when I do, he seems to sort of hang/shake his head in disbelief/disagreement. At this point, it mostly seems that he is mostly there for the paycheck and doesn’t want to be rock the boat.
He oscillates between common sense and having to keep up with the party line. He strikes me as a regular guy that just wants to get drunk and chase women. Many times he doesn’t seem like he wants to spew what is expected of him to spew. Carlos Quintanilla will smile all day long and spout the party line, not Joe Kernan.
Agree w/ your assessment - kind of like him. But my estimation of him fell somewhat when I saw this:
http://www.cnbc.com/id/18059379/
In any case, as with the credit/housing bubble, there’s probably little we can do with climate change other than watch the train wreck. And maybe get out of the way of the train… limit exposure to MBS, and for climate change, sell that eroding beach-front condo.
Chain restaurants are lonely places these days. I have noticed that business has picked up at the local QDoba. I guess a $6 burrito is a lot cheaper than eating at Chili’s
Chili’s, The Ninety-Nine, et al. have really upped their prices and shrunk their portions.
PIZZA, wtf? all over the Boston/Boston North area, any sitdown pizza place will run you $25 for a pizza and a couple of sodas. It’s nuts.
Sure, they’re gouging, but even still, I can’t imagine what their costs are like these days. The utilities, food costs, insurances, rents, maintenance, etc. must be killing them.
I was in Boston last month. We stopped at a restaurant in their “Little Italy” section. I could not believe the prices. I live in New York and I thought I was being robbed. The service was poor and the veal was like rubber. But the price was sure high.
The only Italian restaurant I would recommend there is Bricco, which is outstanding (yes, expensive, but worth it). Most are tourist traps (like in NYC’s Little Italy).
RE: I was in Boston last month. We stopped at a restaurant in their “Little Italy” section. I could not believe the prices. I live in New York and I thought I was being robbed. The service was poor and the veal was like rubber. But the price was sure high.
aka…North End. It’s where all the i-net dinner dating whores want to be taken.
A total rip-off.
For tourists and desperate dating suckers only.
I like to go to Chotchky’s. Their wait staff always have lots of flare.
As an Italian, I’m offended by $15 pasta dishes. It’s pasta, people. Pasta.
CNBC was saying “inflation is low” last 6 years when housing prices got inflated 300% . This is the most important inflation indicator and Mr. Bernanke instead of moving FED rates up is lowering down, in helping Iran’s and Venezuala’s presidents predictions on US to be real.
He didn’t have a choice after Greengas inflated two bubbles. Raising rates would have collapsed the entire banking system. While some people here might cheer such a thing happening, his job is to preserve it. Besides, we have $9 trillion in debt to inflate away
“Besides, we have $9 trillion in debt to inflate away”
Money doesn’t exist until it is borrowed. Inflation is nothing more than inflation of the money (debt) supply. Price increases are a symptom, not the cause.
Therefore, one inflates the debt away by creating more debt - debt that must be paid back.
Anyone care to explain how borrowing today to pay off what you borrowed yesterday works out?
“Anyone care to explain how borrowing today to pay off what you borrowed yesterday works out? ”
The only explanation is that several empires disappeared before this one, remember ancient Egypt, Roman Empire even Soviet empire… By this double inflation money will become a wallpaper like it was in Soviet Union … Yes, I know it could not happen here in GREAT UNITED STATES it is THE ONLY DEMOCRATIC COUNTRY IN THE WORLD, ha ha ha…
“By this double inflation money will become a wallpaper like it was in Soviet Union … ”
Money was a wallpaper in Soviet Union? Really?
Yes, it was at the end of it , like what it seems to becoming here since year 2000.
Erunda.
It is not erunda , you can get thouse Soviet old roubles by the kilgrams, if you need it for your walls …
They can say inflation is low because if one expense goes up, people spend less on other things. It’s called substitution.
“It’s much more difficult to limit your use of gasoline than it is to limit your purchase of hamburgers and fries. As gasoline prices and other costs go up, something has to give,” Nickelsburg said.”
Nickelsburg - how appropriate.
You see, inflation is really low….as long as you don’t travel or commute….or eat…
What happens when people run out of things they can substitute ???
Yeah, the cost of food+gas+medicine+housing has risen so quickly that I’ve had my brain extracted and placed in a warehoused oxygenated vat to reduce expenses. It has certainly cut down on my costs, and I’m glad to be doing my part to combat a perceived rise in inflation.
They exclude food and fuel from the price index, so increases in these items are not measured for inflation.
This dude’s company is based in Ohio?. Has he ever heard of cleveland?
http://money.cnn.com/2007/11/12/real_estate/Cleveland_foreclosure_factors/
To Developers Diversified: Fire Mr. Hurwitz. He is a bad Witz (i.e. joke).
It’s your house Mr. Jones, dang, must you pull my toes so hard?
You know how to punch em!
Owl…queezy!
“…Wendy’s home had appreciated in value by about $100,000, only months after she and her husband bought it”
Days of No Shame Ben?
I’m ashamed to tell folks on this Blog how long it took me to save up $15,000 for the down payment on my 20 acre ranch, let’s just say…it didn’t happen in 60 days. Cramas$ is right…I know nothing…nothing!
It gets even better …
her marriage even broke-up over this.
Living the american dream but what do I know, I live in a rental (cough cough, making 200K+ a year, cough cough married to the same beautiful woman for the past 13 years)
“Wendy’s home had appreciated in value by about $100,000″
This should have read, “in her mind Wendy’s home had appreciated in value by about $100,000.”
good point…
Debt is wealth.
Because she was able to borrow $100,000 more…
I read Wendy’s sad story and she sure has true grit and 5 lbs of iron but I think I saw the movie…
Hello ?…”My name is Mattie Ross, of Near Dardanelle in Yell County. My family owns property, and I don’t know why I’m being treated like this” as she speed dials and speaks to her personal bankruptcy attorney, Lawyer J. Noble Daggett.
Cut to Scene #23
Marshal Reuben J. (”Rooster”) Cogburn is being devoured alive by a gang of hungry privileged RE squirrels while Texas Ranger La Boeuf sings and dances to YMCA in the background with Lucky Ned Pepper
The Wall Street Journal on Arizona. “For people hoping to refinance a home, it should be good news: Yields on U.S. Treasury securities are falling — which translates into lower mortgage interest rates.”
1 - the yields are falling because of the flight to safety, so to me this is an indication that the risk tolerance for other fixed income products has lessened and the risk premium for non-gov products will be increasing
2 - why do these people not get that mtge rates don’t directly correlate to gov bond yield changes or Fed rates?
3 - even if mtge rates directly followed gov bond yields, there is still the issue of LTVs, credit scores, etc. to get those “A” rates.
Aren’t most ARMS tied to libor? I am sure that will hurt even those who aren’t tied to libor.
Not sure about the libor thing, but what I am sure about is that the adjustments coming due on the ARMs are not going to put the rates back to teaser rates. Bottom line is that the FBs are F’d and that isn’t going to change.
Most arms NOT directly tied to Libor but as Libor is considered (by big banks) a near risk free place to park cash, lots and lots of other money rates are heavily influenced by the level and direction of Libor, specifically the USD Libor-Swap curve.
I’m such a credit wonk :>
The only ARM notes I ever read were set to jump, after the first five years, to “LIBOR plus 2%.” Admittedly we are talking about a number of notes that can be counted on the fingers of one hand. So i’m not saying “most” ARMs are tied to LIBOR, but I doubt that the ones I read are the only ones.
It was the option ARMs that were tied to LIBOR. The more traditional ARMs are usually tied to the FFR.
Equity is fleeting, but debt lasts forever.
When is the MSM going to give up trying to characterize these losers as victims? This couple was greedy and stupid and suckered themselves by taking on too much debt. Now they’re going to stick it to the bank (which deserves the loss, too).
The equity fairy is gone, and only the debt hangover remains…
Not to mention the stupid terms linked to the debt..
A rate that started at 8%?????
Increasing to 16%????
16% is an unsecured personal loan type of rate…
That’s right America, keep securing your consumer purchases with your home…
Ask the people in your workplace that have a credit card balance about the interest rate on their credit cards. I would be at least 75% that are paying interest have no idea what the rate is. I would also bet they have money in an account that pays less than 3% interest that could be used to pay off the higher interest debt. The average sheep does not understand the concept of debt.
I’d love to see the balance sheets of my co-workers.
I’d really love to see an analysis of a typical J6P’s balance sheet.
I suspect that if people put together a balance sheet, profit and loss, etc. for their personal finances and then tried to write a prospectus and annual report using that data, that they’d be horrified.
Dude, most people I know don’t even realize that net worth means you subtract your mortgage from your house’s resale value. I’m talking about mid-forties professionals, not someone FOB. In Palm Beach County, of course everyone is worth $1 million. Oh, do I need to deduct the amount I owe the bank from that???
“Ooooohhhhhh, it’s asset minus liabilities? Now I get it.” Pause. “That really sucks.”
One of my husband’s recent talks with my MIL revealed that she wanted to have $1 Mil of assets on retiring and right now they “only” have $800K of assets. My immediate question to my husband was so what is their current net worth/net worth goal? (They have several rental houses with mortgages.) He could only shrug his shoulders. Apparently, if you don’t talk about liabilities, they don’t exist.
RE: They have several rental houses with mortgages
Don’t you know silly.
Of course there’s a positive cash flow.
The only expenses associated with rental properties are taxes and insurance. Right? (snicker)
No measure of “personal net worth” EVER includes any value of the primary residence (even after accounting for liabilities).
I thought net worth included equity in one’s primary residence. Of course, that’s now a lot lower for many people than it used to be.
But OTOH I believe that it’s correct that equity in the primary residence is excluded from qualification as a “HNWI” and possibly other cases where only liquid assets are considered.
No measure of “personal net worth” EVER includes any value of the primary residence (even after accounting for liabilities).
Well, this is just silly… Lets say that I own a house worth $20M and it has no mortgage. My other liquid assets are $1M and my current and long-term liabilities are $2M. If the house is not counted, then my net worth is negative $1M.
RE: I would be at least 75% that are paying interest have no idea what the rate is.
Rate?
I’ll be there are scads of husbands who haven’t a clue that their wives have run up thousands of dollars behind their backs.
Look at the post on here with the bimbo who was in charge of the books and had hocked the ranch to the tune of
$150K ww cc debt.
My best friend , whose a doc, just got broadsided with $5k @ 33%.
There was a nuclear mushroom cloud over his house for a week!
Scores of people are no longer in control of their lives-financial or personal.
I am woman, hear me meow (claws through the air, lioness!)
Cage that lioness. Big bars, no way out, toss food at her and some water too!
NO PLASTIC!
Sadly one of my friends is completing a divorce over ‘hidden debt.’ After years of financial issues with his wife, she agreed under marriage counciling to limit her expenses and keep to a budget. Three ‘undisclosed’ credit cards later… he was done. He’ll work 60 hours a week for years to pay that debt off.
Sad… his twin brother has a wife who keeps his spending in check. Ironic eh?
Got popcorn?
Neil
Me thinks you win the part of the bet that they have no idea of their credit rate. Me also thinks you lose the bet that that have any savings other than loose change in the ashtray in the SUV. They’re living paycheck to paycheck.
“‘But we will not be as affected as much as areas like San Diego or Phoenix due to our job and population growth over the next several years.’”
And how does he know what their job and population growth will be over the next several years?
Haven’t you heard? Growth in the gambling business will outpace the growth in other types of businesses ad infinitum - it’s a well-known fact, just ask any LV booster.
Isn’t Vegas dependent on SoCal for the lion’s share of its gambling/resort business? If SoCal’s collective wallet gets slammed shut, what happens to Vegas?
No, gambling (excuse me, gaming) is always going to grow faster than other segments of the economy, no matter what. The dynamic optimization solution is that gambling will be more than 99% of the economy in the lifetime of your children.
We have entered a faith-based economy. economics and rising home prices are a religion. you don’t need facts because your viewpoint is correct. therefore no recession and no falling home prices. just have faith! the US will not go into recession because we have the largest and most dynamic economy in the world. that’s not the real reason though. the reason is because the US economy is rooted for like your alma mater’s football team. nothing can waiver the faith-based adherents from thinking that their team could not make a bowl game or go into a recession. what’s worse is you can’t even think about it because that would cause it to happen. those in the faith-based economic community just says buy and hold and cheer.
Great comment John Law. … Even so-called economists and various experts can’t divorce their predictions from the faith-based, everything’s-gonna-be-allright mind-set.
It’s so ingrained in their DNA, they can’t imagine things any other way, so all of their prognostications and “research” come from an ultra-optimistic, best-case scenario vantage point.
Even Wall Street honchos refused to believe that all that crazy risk they were taking on wouldn’t bite them on the ass. For most of us on this blog, it was so obvious. But then, we skipped the kool-aid when it was passed around.
– Judge Smales
“You’ll get nothing and like it!”
“Even so-called economists and various experts can’t divorce their predictions from the faith-based, everything’s-gonna-be-allright mind-set.”
it even effects people like shiller and thornburg on some levels. they know whats going to happen but even then they say “maybe this will happen” when you just want them to waive their hands and say go for the lifeboats.
I wrote Thornburg last year and asked what the chances of a recession were-his response- 1 in 3- I thought someone else had answered my email. That cannot be the Thornburg I saw on Youtube lecturing Ca. developers.
Looks like LV_Landlord had a sex change.
If I hadn’t read that, I would have assumed that was someone talking about Portland. I hear this line about 2x per week. Sigh…
“‘But we will not be as affected as much as areas like San Diego or Phoenix due to our job and population growth over the next several years.’”
“Because recession in California and the rest of the country, and sky-high energy and food prices couldn’t possibly affect the number of people travelling large distances to gamble in the desert, or the profitability of lodging and feeding them here”.
Believe it or not, this could have been foretold 30-40 years ago, when the credit card industry managed to get the government to allow interest rates to float above the usury rate of 10%. Then you get them going to 25% on the loans , real estate lenders following suit. Did I ever think that the real estate lenders would be asking for 12% on firsts, and god knows what on seconds? Nope, but the urgent need for the lenders to make as much as the CC lenders drove everthing up.
And, the excess money available caused by the high rates on interest allowed the brokers to loan to everyone possible, and without any control on the suitability of the loans to the borrower.
Will it change? probably not!
The usury rate of 10%? Sounds like Koran-speak.
usury is prohibited in the bible too.
Just shows you how incredibly f$cked up religion is. The interest rate is the price of a commodity, money, which is regulated by supply and demand. The whole concept of usury is on the level of a third-grader, not unlike wandering prophets like Mohammed and Jesus being proclaimed “God.”
The “interest rate” on revolving and unsecured credit is not really the price of money in the sense that most people think about it. A particular interest rate that you pay is the price of money *to you*.
Imagine if you went to the supermarket and the cashier said: “Well, Paul, for you, milk is $5.00/gallon. For your neighbor, it’s $3.00/gallon and for the guy up the street, it’s $8.00/gallon.” Not much relationship to supply and demand, but that’s the way credit cards and (lately) mortgages work.
It isn’t usury that is prohibited. It is “interest”.
Usury means more than reasonable. If you borrow for free, you are using the lender. If you are charged 25% (in a no inflation world) you are being “used”.
http://www.pbs.org/wgbh/pages/frontline/shows/credit/
PBS Frontline story about the ins/outs of the industry and how nefarious they can be.
Pen-
Great link. I watched this PBS program on the credit card industry a while ago, and although it wasn’t earth shattering, it was interesting. People don’t know their FICO Scores, or what they are? Yikes!
The DE and Dakota fight for the industry’s homebase was really an eye opener.
‘There are several investors placing refundable deposits on multiple projects around town. But when it comes time to sign the contract, they will often re-evaluate their selection.’”
Investors allowed to place REFUNDABLE deposits?!? No duh! They either sell the contract for a profit or they demand money back. Recipe for disaster.
I’m hosting another blogger dinner in LA. We’ll vote on location. Click on my name to link to my blog if you’re interested.
Got popcorn?
Neil
Murphy’s Law, updated.
“‘I don’t know if it’s true or if it’s just a rumor, but he said half of them are Realtors and they plan on walking away from their current home, the same home they bought from the same builder last year,’ Murphy said.”
The Jung and the Wreckless
“Wendy Hatt moved into a house on the far Northwest side with her family just over a year and a half ago. But, her American dream turned into a nightmare earlier this year. Wendy’s home had appreciated in value by about $100,000, only months after she and her husband bought it. So, they took out a second mortgage for almost $80,000 to enhance their new home.”
the home equity doughwasn’t even out of the oven yet and they borrowed on it.
To the homedebter and the reporter writing the story… does the phrase (money) easy come, easy go not come to mind?
“The Valley’s growing foreclosure problem is hitting the upper and middle class the hardest. Metro Phoenix homes in neighborhoods where prices range from $400,000 to $450,000 now have the highest foreclosure rate.”
We are seeing the same thing but with a difference. These are not primary homes but 2nd homes roaring into foreclosure with breathtaking mortgages of $450,000, $580,000, 760,000 and the grand prize winner at $1,700,000. The next group down are the $250,000 – 400,000 2nd homes carrying $185,00 - $375,000. Over 90-95% foreclosures in my county are 2nd home owners.
Over 90-95% foreclosures in my county are 2nd home owners.
Translation: specuvestors.
Actually I think they are virutally all greedy gotts’-have-it-all types. My area is a called the “Gold Coast of Michigan.” My village is located on the shore of Lake Michigan (go 10 feet west and you are in the Lake) and surrounded by a US National Park that goes 5 -10 miles inland to the east and 20 miles both north and south of US.
Even the NYT and Chicago Trib keep touting us as an “unspoiled place for a 2nd home.” (You should have read the nasty email I sent to the NYT real estate reporter on that one! 2nd homeowners drive up prices and drive out families who have been here for 125 or more years thus destroying communities.)
Anyway, this little village gets swamped by 1.4 - 1.8 million tourists every summer. (The other 9-10 months, its a great place to be if you retired early and love the water.)
We do get even with the 2nd home people through the tax system.
“There were 58,178 homes on the market as of October, compared with 47,588 in October 2006 and 23,483 in October 2005.”
That’s a soul-crushing amount of inventory. Does anyone know what the population is in the area they surveyed?
ballpark figure is ~2mil
4 million. Sept closings were 3,000. Oct up to 3600. So, ONLY 16 months of supply.
Just zillowed this chick’s house (eg, the one making her kids were ads for her house). Forget the shirts, CUT THE PRICE. Asking 339k for a house that was bought for 211k in 2003. Picture an undistinguished stucco box. Gimme a break.
Greed Greed Greed.
My prediction is that those kids will be wearing the “Buy My House” shirts for a very very long time.
That seems pretty desperate to me.I would not want my realtor to know I was hurting let alone the rest of the world.Pathetic they use the kids to peddle their crap.
Yeah, pathetic is the word.
Some people are getting the message though. Friends here in Austin cut their home asking price by $50K. Had been on the market for 6 months, moved in 2 weeks.
But I suppose in CA/NV/AZ/FL cutting the price would put lots of people in an unworkable short sale position. And they can’t deal with the reality of having to walk away or deal with crushing payments indefinitely. Hence wonderful ideas like the T-shirts.
“My parents went to specuvestor college and all I’ve got left is this lousy T-shirt”
211k for a house in 2003 and that after probably being worth $125k in 2000. I’d pay no more than 211k plus a t shirt to clean my shoes with. Take it or leave it.
make bail?
How about, “pimp my mom”?
Baseline for how bad it can get (attention Bill Gross - those bags under your eyes haven’t even gotten going yet):
1929: unemployment rate 3.1%, real GNP index 101.4*
1933: unemployment rate 25.4%, real GNP index 68.3
(1937=100).
Imagine EVERY month for FOUR years the unemployment rate reported up by 0.4%. Imagine EVERY quarter for FOUR years GDP reported down at an annualized rate of about 6%. That’s the baseline for how bad it has gotten in the not-too-distant history of the U.S.
I’m trying to picture Las Vegas. . .
“1933: unemployment rate 25.4%, real GNP index 68.3″
The Great Depression was caused by the Fed’s refusal to provide emergency liquidity, precipitating bank runs and deflation.
I agree that the credit excesses of the ’20s morphed into a Depression due to a lack of understanding of monetary policy. But what ended the Depression was the government’s ability to directly stimulate the economy through work programs. Government spending as a percentage of GNP was only about 8% in 1933. So, at least they had that going for them. The only way to grow the government today is to accept European-style socialism. Which is basically what will happen, for better of worse.
“But what ended the Depression was the government’s ability to directly stimulate the economy through work programs. ”
no that distorted the recovery and made the depression worse. what ended the Great Depression was that the economy finally recovered after WWII. people finally had put off consumption enough that when people finally started spending it brought about a boom. that was only because people had underconsumed for so long.
In the late 40s they were still afraid that the downturn they were having would be a depression, which it wasn’t.
John Law - 100% dead on, many studies found that the social programs enacted by govt during the depression only deepened it.
Don’t think you are reading the same data that I studied. Incomes DID go up with the money poured into the economy through the WPA and other programs.
Not only did the data show that but it was confirmed for me by people who were between 49 -22 years of age in 1929, including 3 who successfully started businesses in 1933 - 39 which continued until their deaths.
Don’t knock the work programs our infrastructure could use it. Mass transit, distributive generation, and improved energy infrastructure would be a great way to create US jobs and stimulate the economy. Oil will continue to rise and countries that ignore this will fail. I mean we fight islamic terrorism and fund it at the same time via oil. We lament the rise of Hugo Chavez but give him more money than he knows what to do with by wasting oil. Putin roles back democracy, assasinates critics and journalists, pressures Europe, and pampers Iran and we can do nothing about it because he has oil. The US needs to wake up. I’m hopefull this collapse will surve as a wake up call.
“The Great Depression was caused by the Fed’s refusal to provide emergency liquidity, precipitating bank runs and deflation.”
now, the Great Depression was caused by the Fed’s inability to restrain the growth of credit during the Roaring Twenties. would you think now that falling home prices were caused by the inability of the Fed to keep people in their homes by providing credit?
Brad’s comment above is the theory of the macroeconomists who love to talk in high flown general terms and forget that what it all comes down to is what Aunt Tilly and Uncle Jake have in their paycheck.
The Depression really began in ‘26-28 but wasn’t officially recognized until the stock market blew up and the big boys got burned.
Credit was handed out look popcorn in the 20’s. It started right after the war and was the first time that the idea of ‘buying on time’ entered Main St. USA. Consumers began buying on credit - cars, washing machines, radios, and all the other goodies that they had never had before. The behavior of consumers was pretty much the same as at a drunken orgy. The credit accounts were direct receivables by the retail seller as there were no credit cards like Mastercard in the ’20s. There were no ‘home equity loans’ and getting an unsecured personal loan nearly took an act of God so the consumers paid their monthly payments to the seller of the goods - think car dealer, washing machine seller, etc. Wouldn’t have matter what the Fed did- the consumers were NOT borrowing from the bank for their goodies.
Problem was that wages and income basically stayed flat or, in some things, actually decreased. The bills came in and came in and came in until Aunt Tilly and Uncle Jake couldn’t buy anymore and still eat if they were to make their payments. They quit buying.
When the guy-on-the-street quit buying, the retail stores cut back ordering and cut back staff. When orders dropped, manfacturers reduced production and reduced staff. All those who lost their jobs because of drops in sales and manufacturing quit buying - and often quit paying. That reduced demand even more, and onwards and downwards went the drop in demand from consumers who did not have the money to buy.
It wouldn’t have matter if the Fed had cut interest rates so businesses could borrow more money to keep making things - the consumer could NOT buy. The manufacturer would just end up with a lot of cars or washing machines they couldn’t sell.
All the theories by the macroeconomics people about the ‘Fed did this” or “the Fed did that” are based upon the false belief that changing interest rates will put money in the consumers’ pocket to spend. (It also makes them feel a bit like God to believe that with a Delphic oracle type sentence or 2 about interest rates, they can change the economic reality for 100’s of millions of people.) Now with existence of HELOC’s and credit cards, it is true that the interest rate cutting by the Fed has extended the ability of consumers to buy. Note the word “extended” as sooner or later Aunt Tilly and Uncle Jake will run out of real income with which to make the payments. When that happens, it is the 1920’s all over again. The only thing that can alter that outcome is for real incomes - the cash in the pocket income - to take a very large leap upwards that passes the rate of inflation. No other way for people to keep buying when they have hit the limits of their ability to make the payments.
That income-up scenario is difficult to see happening when US business is competing against businesses in China that ay 1/10th or 1/20th the wages - unless CEO salaries and the incomes of the upper 1% get dispersed more evenly with the workforce. Even then there will come a day when wages worldwide have to level and for the US that means a HUGE drop in income and wealth.
My education included a specialty in the history of the economics and social thought of the Depression.
“My education included a specialty in the history of the economics and social thought of the Depression.”
I just read Murray Rothbard’s “The Great Depression.”
What a great post! I hope you will continue to add your insightful comments on HBB.
AnnScott,
agreed, great post. Another great read…the old classic,
Hard Times by Studs Terkel.
Agreed - great post!
One of the reasons that I so enjoy reading Ben’s blog. Full of such top-notch posts.
Okay all - I’m blushing.Thank you for the compliments. I have always been fascinated by that era. A lot of my interest probably stems from the fact that my great-grandfather (49 years old in 1929), grandparents (22-28 in 1929) and 6 sets of great-uncles and aunts told me so much about it. My great-grandfather also told me about the depression of the ’90s (1890’s) and I was in college when he died.
Part of their legacy to me was what are considered some very peculair attitudes in the the late 20th/early 21st US about things to avoid including:
·Credit mentality instead of paying cash. “Don’t spend money you don’t already have in your pocket.” (Don’t have credit cards and don’t want them, cars are bought cash, if I don’t have the money I save and wait.)
·Rich grew richer at the expense of others. “Don’t pay someone else to provide something that you can learn to do or to make yourself.” (3 college and post-grad degrees and I still paint the house inside and out myself.)
·Abandonment of traditional values and frugality. “Never buy anything you can use – only what you can’t live without.” (’Wants’ and ‘needs’ are not the same thing -well, except for my perennial gardens.)
·Self-Indulgence and self-gratification by immediate acquisition of possessions. “Don’t buy anything until you have twice the purchase amount.” (And if I can save money by waiting for a sale or better deal, I wait.)
·High Expectations by gambling in the stock market. “It’s doesn’t matter how much money you can make, but how much money you can save!” (College friend’s father offerred the group of us a choice: $50 gift certificates to Brooks Brothers or 3 stocks in the corporation of which he was president. I ask him what doorknob I would own and he howled with laughter and said take the Brooks Bro certificate, the shirt will last you longer than I can guarantee stock prices. The stock I turned down was a Fortune 50; and I still have the oxford shirt although a little worn all these decades later and fit only for gardening.)
BullSh1t: The depression was caused by overdue correction to mal-investment. Look at how much the stock market had gone up.
Stocks could be bought on 90% margin, but mortages were still a relatively rare concept. Financial meltdown due to fairly rapid 85% crash in stocks.
Today stocks need 50% margin, but mortages need (have needed) zero margin. Financial meltdown due to rapid __% crash in housing?
Galbraith’s assessment seems to coincide with yours. Stock crash causing the depression rather than the other way round.
Houstonian.
I tend to agree with your assessment. The Studs Turkle book features account after account after account of people done in by their margin(al) speculation in the stock market and the high interest rates on their home and farm mortgages.
Nonsense. The Great Depression was caused by the unwinding of a credit bubble, just like this one. Nothing the Fed did, or could have done, would have stopped it.
This is it exactly. Now we have an even larger credit bubble to unwind.
Heh heh… maybe the fed can try the “pushing on a string” approach in a new way. Keynes just didn’t understand that if you just push *harder* it will work. Just pump up the fed on crank and steroids, and it will get people spending
The Great Depression was caused by the Fed’s refusal to provide emergency liquidity, precipitating bank runs and deflation.
Yeah, and Bonnie & Clyde would’ve survived if only the FBI had broken out the bandaids.
That surely is Bernanke’s belief. We’ll see how it works out…
funny you should write about this.
the other day I was reading about the Great Depression on wikipedia..
you could have replaced the 1920 - 1930 dates with Y2K dates and you would have thought you reading a current day article..
“you could have replaced the 1920 - 1930 dates with Y2K dates and you would have thought you reading a current day article..”
Grasshopper, look up the age distribution within the population at that time being mindfull of the shorter lifespans typical of the era. See anything?
I wish the topic of age distribution in population came up more in economic discussions. It makes sense to me that a large group of “peak” wage earners would have a profound effect on an economy.
The only author I’ve seen discuss it in depth is Harry Dent and his predictions leave much to be desired. (One of them is that we all be using “luxury” goods as the “cheap” ones will be phased out as we all become fabulously wealthy.)
I’ve read multiple authors on the subject — can’t remember their names at present, though.
There really was no major impact by the age distribution of the population in the 20’s as compared to now. And no, their life spans were NOT that much shorter -we are not talking the middle ages. My geat-grandfather was 49 in 1929 and lived to 89 and the other great-grans all made it to 78 -86. My great-great grandmother died in the late 1920’s at the age of 81. People who made it to adulthood and did not die from childhood illnesses generally lived 7 -8 decades. It was the child mortality rate that makes the lifespans appear shorter.
There is a difference in that most people remained in the workforce until they (a) died or (b) became physically unable to work - excluding those who amassed enough wealth to cease working as they became elderly. The idea of ‘retirement’ when one is in good enough health to work didn’t really become widespread until after WWII when Social Security provided enough income for people to avoid poverty. Accordingly more of the existing population was in the workforce as compared to today.
Also the population was primarily located in rural and agricultural areas rather than in urban areas as today. The oldest memeer of the family could still drive the horse-drawn wagon or milk a cow.
The New Deal policies came to recognize that the urban workers over the age of 50 would probably never find employment to return to the wokforce. (They didn’t know that WWII would create an insatiable demand for any workers of any age.) The payment of the Social Security Old Age Pension was designed, in part, to provide for these workers. The first payments were made in 1937.
There really was no major impact by the age distribution of the population in the 20’s as compared to now.
Not so. There was a major immigration influx in the teens, leading to a “peak earner / peak spender” bubble in the 20’s.
History rhymes.
That was an increase in population but it was not in the 1920’s.
First the Immigration Act of 1921 capped immigration at only 3% of the number of immigrants alreafy residing in the US from any country. EX: If there were 100,000 Poles, only 3000 could immigrate.
The immigration act of 1924 put a more severe limit on the number of immigrants reducing it to a 2% quota.
It reduced the immigration from many countries such as Italy and Poland by 98%. Total immigration was effectively capped at about 150,000 -170,000 a year.
There was no influx of immigrants in the 1920’s. The large immigrations took place before WWI (1850’s-60’s until 1914ish) and for 2-3 years after.
Most of the immigrants pre-WWI would have been of all ages by through the 20’s. It all depended upon how old they were then arrived. Boatloads of children-only were not shipped over prior to WWI. Someone who arrived in 1898 at age 22 would have been 44 in 1920. DItto arrive 1906 at 27, then it is age 41 in 1920.
From 1790 to 1860, the population increased every 10 years by 32-38%; and from 1860-1890, it slowed to increases averaging around 25% every 10 years. From 1890-1900, and 1900-1910, the US population grew at the slowest rate since 1790 being only 21% every 10 years during those time periods. From 1910-1920, it decreased to a 15% rate over 10 years; then 1920-1930, it went up to 16.2%; from 1930-1940 it was 7.3%; from 1940 -1950 to 14.5%; and 1950-1960 it was 18.5%. Since then the rate of population increase has been steadily declined varying between 9+ to 13+%.
There was no ‘bulge’ in the 1920’s. The rate of the population increase was steadily declining. The only substantial upwards deviation from the declining rate of population increase was the 1950-1960 period when it went up 4.5%.
You missed my point. Nobody stated that the population increased in the 20’s.
The huge numbers that immigrated in the teen’s formed the basis for a peak earner / peak spender bulge in the 20’s.
Two entirely different things.
“But two banks with good rates wouldn’t sign off on the appraisal, says Mr. Walsh,”
The appraisers should be quivering. The subject of appraisers and appraisals came up in our management meeting recently. Everybody agreed that many appraisers were going to jail. This whole thing will be pinned on them as they have the least solidarity and the least political clout. If I were an appraiser right now I would be scared $hitless to sign my name to anything. They are going to get hung out to dry like a wet shirt.
New York Attorney General Files Suit Against eAppraiseIT
Cuomo alleges company conspired with Washington Mutual to inflate real estate appraisals.
Source: BUILDER Online News Service
Publication date: November 2, 2007
By Robb Crocker
New York Attorney General Andrew M. Cuomo announced Thursday that he is suing eAppraiseIT, one of the nation’s largest real estate appraisal management companies, and its parent corporation, First American Corp., for colluding with Washington Mutual to inflate the appraisal values of homes. The lawsuit was filed in the Supreme Court of New York, New York County.
http://www.builderonline.com/industry-news.asp?sectionID=26&articleID=602982
I hope the appraisers get reamed. They were the last line of defense (IMO) against the run away prices. They should have gone to their associations, governing bodies, etc. and blown the whistle on the “pressure” that they were “suffering” regarding “hitting the numbers”.
They better hope their associations can get them a good f—ing lawyer or two.
Their best bet would be to head directly to the AG, seek immunity and agree to testify against everyone in sight.
Appraisers did try to stop it. A petition was sent to congress and regulators with about 7000 names several years ago.
OT..
Anyone care to comment on what will happen if/when the following happens?
1 - A major bank or brokerage goes insolvent/BK..
2 - One or more money market funds break the buck…
3 - A major, national public home builder goes BK…
The (technical) advice on Saturday morning business cartoons today was to buy the home builders as they had dropped 60-90% from their peak. It was said that Pulte (IIRC) had gone up 10,000% since their last low-low years ago. At least one of the other talking heads mentioned the B word (B for Bankruptcy as an alternate possible ending.)
The prices clearly indicate that bankruptcy is the most likely outcome for the majority of HBs. Even with only a slight chance of long-term profitability most of these stocks probably have a fair option value of $10 or so. So, these are already options, not stocks, and buying one here should be looked at no differently from risking $10 on any far-out-of-the-money option. If you’re not in the habit of buying GOOG 1000s or GS 300s why would you buy Pulte at 10? (Just guessing at prices here, but that should be the investment concept.)
CNBC Will call it a “buying opportunity”!
A GE money market fund already “broke the buck” this month. I think it is possible that others will follow suit.
Forget the “if”, it’s definitely a “when” question.
RE: Martin Quijada, an architect from Gilbert, Ariz., who has perfect credit, has been looking to refinance his mortgage loan recently. But two banks with good rates wouldn’t sign off on the appraisal,
Number hitters still doin’ a brisk business.
But their whoremaster mortgage brokers are out.
And the legit banks are sayin’ no dice.
Tsk…tsk.
Hey NYCityBoy …
If you happen to get to Boston again, go to the North End (Little Italy section) and go to ARTU’S. They have excellent food and decent prices.
Ever better, let me know when you’re coming and I’ll go with ya…
For pastry, find Maria’s..not fancy, but the best and most fresh.
Pen, I have to say I took the Acela Express and loved it. It was 3 1/2 hours but it was comfortable with a wonderful view. I would do that again in a heartbeat. I think my wife and I might have to do that next spring. I will keep you in mind.
“Median vacant land prices were $677,300 per acre ”
Really? That’s pretty overpriced, for a bunch of scrub land, suitable only for beefs wandering around or growing cactus.
Hard to believe.
When this thing comes crashing down, it’s going to crater.
Interesting about the lady with the T-shirts: isn’t the Xmas season when real estate slows down quite a bit? So the next few months should be even slower than normal = non-existent.
Also, there is expected to be another 1.5 million homes added to the “FOR SALE” market.
This really amazes Me. $677,300 per acre of sand.
I remember in the early 80’s I think, they were selling Arizona land for 50 bucks an acre. I told my wife maybe We ought to buy a few hundred acres, maybe sometime in the future some idiot would actually want to live in the desert and We might make some money.
Then We said , Nah, I don’t think so.
OT..
Ben, tomorrow morning, can we have a topic on “Greenspan’s comments in Oslo” on Friday 11/23?
“so she busted out the iron-ons and made T-shirts for her kids that say, ‘Buy my house,’ on the front and trumpet the home’s Web site n the back.”
She should have gotten them t-shirts that read, “I was conceived by stupid” and have an arrow that points to her. Those poor little ba$tards. I would love to see a TxChick rant on this chlorine infested gene pool.
The next iron-ons for the kids’ shirts will read: “Please Adopt Me!”
Oh Gawd..! Trump University coming to DC:
http://www.myeducationnetwork.com/profit_from_foreclosure/DC/washington_dc/18717/
I would like to nominate Jeni ‘pimp your kids’ Barton as Mother of the Year.
She’s a mother alright.
Jeni Barton is a screaming all of 29 years old.
Crying like a baby.
How long is that job in Denver (another f@cked going down the tubes place) going to wait for her?
S.W.A.G. (something with a graphic)
“Houses have their own Web sites and hold open houses every day. Classified ads start with ‘desperate’ in boldface. In this desperate, desolate, strung-out housing slump, it was only a matter of time before someone thought of T-shirts. When it comes to selling houses, these are the days of no shame. Jeni Barton needs to sell her Gilbert four-bedroom quickly, so she busted out the iron-ons and made T-shirts for her kids that say, ‘Buy my house,’ on the front and trumpet the home’s Web site n the back.”
That is wrong on on so many levels.
Why children? As if they are not affected enough?
This will end well…er…
Leigh
Alot of you criticize people who have little to no idea regarding their finances…I agree 100%….there are lot of dumb and stupid people out there.
BUT GUESS WHAT…people get lucky…people find a way somehow. That’s what’s happening now. I know I know…we see alot of foreclosures, etc…but even through all this, people are coming out ahead from it all. Alot of people are making money…by the skin of their teeth…they’re getting lucky. But of course, who’s going to admit to that?
Ask anyone on this blog if they got lucky buying at the right time and now cashing out…OH NO…no way…it was all talent, skill, and brains….of course it was. Alot of people are going to make a killing off the backs of others…whether they ever realized it or not.
Whatever money the stupids make by luck will eventually be lost via their stupidity.
Huh?
Yeah, huh??
I think someone is a little angry we aren’t buying.
No Neil….I’m not angry at all. That wasn’t the point of what I said although it seems you interpreted it that way for some odd reason. I’m speaking of the people who did buy and got lucky and now talk out of their asses about how talented they were and clever they were. I just used people here as an example of some people who are like that…no one in specific here.
As far as Finance Guy thinking it makes no sense, I think “getting lucky” is a pretty clear comment.
“Alot of people are going to make a killing off the backs of others…whether they ever realized it or not”
I think all those people hang out at this blog, and yes we will make a killing.
Dude. You are making no sense.
Yes, people get lucky every day (eg, goog founders, people who bought in palo alto in the 60s, etc) but people also get unlucky everyday too. SO what!
In order to make an investment decision one has to look at the distributions of likely outcomes, judge the probabilities of each, and also take into account ones risk aversion as loosing is typically much much more painful than coming out ahead. After all that is done, one has to further analyze the factors that could cause one pain (rate resets, job relocation, etc) and ensure that these don’t mess up ones otherwise perfect plans.
SO, looking at housing today: 1) its only going to go down in a very big way over the next 3 years, particularly on the coasts (come on punk, argue with me here. historical norms and tightened lending standards and the flood of resets coming guarantees this!) 2) renting is cheap relative to housing, 3) there are better (non-USD) investments out there.
Sure, one or two people will get “lucky” (whatever that means) but one or two thousand are going to get drowned beneath the wave.
I’m trying to find a pair of running shoes Made in the USA so that I don’t get cheap products on the backs of exploited workers overseas.
Anyone know where to find athletic shoes made in the USA?
If you do, let us know. I try to buy USA when I can/as I can afford it - but my son learned to read “Made in China” pretty early.
Yes please let us know, I went on this quest last spring. I have found that some lines of New Balance are made in the USA, but even sneakers that up until a few years ago were made here (e.g. Sacouny) are now being Made in China. And the quality at the same price point has totally gone done the tubes. Good luck.
Why on earth would you want to buy shoes made in the USA? I hope we don’t have many individuals who think they can make a living sewing canvas anymore. Now, if you want to design them…that’s another story. BTW, most all reputable companies now have policies against sweatshop labor.
Spoken like a true American. We do all the planning, design, marketing, and management. But, we can’t lower ourselves to do the actual manufacturing work?
Why can’t we actually make shoes, clothes, widgets or whatever?
Have YOU ever tried to make a pair of shoes? You? Yourself?
I like to make stuff and I’m pretty good at what I decide to put my hand to, in general, but I have to say, I about lost all my fingers, half my toes, some cats, a water tower, and the rest of you nearly lost the western half of the state of Washington, the time I decided to make some shoes. This was in the summer of last year.
I was never so happy to be a consumer, after that little episode. Making shoes is no joke. That’s why we have this ‘mechanized’ and ‘Industrial Revolution’ thing, and now this whole ‘pay differently colored 3rd-worlders starvation wages to make us shoes’.
I’m just thinking aloud. And now excuse me, I have to check the cats, see if they’ve recovered.
LOL - what kind of shoes did you try to make?? I can just picture that…
Cute shoes, simple, and not even any high heels or rhinestones.
You know what, how about you and me agree to never discuss the shoe episode ever again. It causes pain.
Spoken like a true American. We do all the planning, design, marketing, and management. But, we can’t lower ourselves to do the actual manufacturing work?
Why can’t we actually make shoes, clothes, widgets or whatever?
We certainly can. The production technology is all American. But why would we want to? Have you ever been in a shoe plant? It’s not exactly paradise on earth. The current wage in China in shoe factories is around $0.60 an hour. Who the heck wants to work for $0.60 an hour? Let some Third Worlder whose alternative is back-breaking farm work at $0.20 an hour do it. There’s this weird idea that if we close our factories there, Third Worlders automatically become happy, wealthy people. That’s the complete opposite of the reality. Factories catering to the export market provide the best wages and benefits. This is why locals flock to them and avoid domestic employers, who work them to death and then stiff them of their wages.
I worked in a shoe factory in Maryland one summer while I was in college. I sewed tongues into children’s shoes. It was hot, miserable, and back-breaking (or back aching). I don’t know how anyone could work in there for years. I would be suicidal.
We certainly can. The production technology is all American. But why would we want to? Have you ever been in a shoe plant? It’s not exactly paradise on earth. The current wage in China in shoe factories is around $0.60 an hour. Who the heck wants to work for $0.60 an hour? Let some Third Worlder whose alternative is back-breaking farm work at $0.20 an hour do it. There’s this weird idea that if we close our factories there, Third Worlders automatically become happy, wealthy people. That’s the complete opposite of the reality. Factories catering to the export market provide the best wages and benefits. This is why locals flock to them and avoid domestic employers, who work them to death and then stiff them of their wages.
Wow…just wow. The arrogance of Americans is at an all-time high. If it didn’t sadden me so much, I’d laugh at your Utopian idea that somehow slaves working in “controlled” and “humane” work environments in shoeplants (so you can buy shoes for $20) is somehow an alternative to working in other slave areas on farms….
I’m sure they’d be grateful to you for thinking of them in such caring and thoughtful ways.
Great comments here.
Some people are just unbelievable. It makes sense to them that people making $10 an hour cannot afford to make payment for $500k home. Yet they think paying Chinese workers 60 cents an hour should have them make shoes as good as paying Americans $10 an hour.
Is it Chinese workers are inferior or you just being too cheap? You know who is working in whatever still running shoe factories in America? New immigrants! A lot of them from China. Are they a better person than a Chinese worker?
2 reasons:
a) Not everyone on the planet was born with the inclination or talent to do “design and management work”. By definition, there can only be limited numbers of those anyway. Everyone else needs to make a honest living and I’d prefer it to be my neighbors.
b) If we entirely lose our manufacturing capability, we lose a great deal of our security as a nation. The servants (China and various other countries) become the masters. Do you want to beholding to China just to get our country clothed and other necessities of daily life?
‘Not everyone on the planet was born with the inclination or talent to do “design and management work”.’
Well lucky for me, I WAS.
‘Everyone else needs to make a honest living and I’d prefer it to be my neighbors.’
Gosh, me, too. Instead of me, I mean.
LOL -
‘Do you want to beholding to China just to get our country clothed and other necessities of daily life?’
Nope. You can’t trust their taste. I mean, look at those dumb pigtails on the Ming vases.
That’s why I’ve stockpiled a whole bunch of cute clothes. Cute clothes, and cute shoes. I’m set!
What with that, and the bullets, I’m set.
ROTFL - Enough!! My husband already thinks I’m on the edge -no need to confirm by having me laugh this much at my computer screen!!
Your description of trying to make shoes killed! Glad to hear you have them stockpiled given your experience.
Also, great to hear you have bullets. Personally, I’ve got my own stockpile of ammunition. Not only that……I make my own cartridges and you can bet they are better than cheap ammo made overseas.
Anyone need 9 mm, 45 ACP, .38, .357, or .223? 12 ga shot shells also.
‘Anyone need 9 mm, 45 ACP, .38, .357, or .223? 12 ga shot shells also.’
Are you serious?
Do you have a website? Do you take Paypal?
lol. Was kidding, but my buddies at the range trade with me sometimes for other things. Too bad we don’t live in the same state we could barter also (kitties for bullets?).
And I was getting all excited, too.
New Balance manufactures some of their running shoes in the US. I have purchased these on many occasion and they are a fine shoe:
http://tinyurl.com/2lsgs6 or newbalance.com - support center
San Antonion Shoes (SAS) still say “Made in America” on their boxes, at least on the last pair I bought. Their web site (http://www.sasshoes.com/) doesn’t have much information, but does have contact information.
“Martin Quijada, an architect from Gilbert, Ariz., .. perfect credit, .. looking to refinance his mortgage loan … But two banks with good rates wouldn’t sign off on the appraisal…Another bank agreed that the appraisal was fine but had ‘terrible rates..”
——————
Here’s what you should do Martin boy:
1. Move to Ca
2. Enter the lucrative strawberry pickin’ business (stellar FICO will follow)
3.Try not to get hit by the 750K wad of green comin’ your way.
“The Valley’s growing foreclosure problem is hitting the upper and middle class the hardest. Metro Phoenix homes in neighborhoods where prices range from $400,000 to $450,000 now have the highest foreclosure rate.”
What a bizarre statement! I can assure you that “foreclosure” isn’t hitting the “upper class”. Foreclosure is hitting people who bought houses they couldn’t afford. Someone who has a negative net worth from making stupid financial decisions can only be defined as “low class”. I don’t care if some bank entrusted them with a 500,000 mortgage. These deadbeats are “low class” not “upper class”
There is the ‘economic’ upper class and ’social’ upper class. They are not synonomous.
The ‘economic’ upper class are defaulting like mad on their $600,000, 800,000 and up second homes in our area. They all jsut ‘had to have’ that cottage on the Great Lake in the heart of a US National Park.
BTW, economic upper class is the top 20% of household incomes in the US and that bracket starts at $90,000.
Ok…just came back from a holiday visit to Fl and let me tell you it is scary out there…you can see, feel and hear the recession in that state. Most people I spoke to are scared and said that the changes in the area are coming fast and furious. They see what is happening around them. In just the short 6 months after I left major restaurants have shut down, others that I visited have told me that business is down 50-60% since the summer!! Mom and Pop places that had been around for years are gone. Landlords are talking to storefront tenants asking them that if their is a problem with paying their rent to speak to them first to try to work something out. Forget any business that was attached to the housing industry they are gone or going(example furniture stores closed)…others that benefited from it are dying…crime is also on the rise and the division set up to the handle foreclosures within the police department have their hands full…mall were half empty by noon time as you drove by(the people I saw coming out had none to one packages in their hands)….I actually went into one of the chain stores outside the mall to see if they had a item left that I wanted from one of the ads(this was around 2 pm). The parking lot had about 5 cars and I figured they were probably out since it was a great deal(50% less than regular price and it was a item I was considering purchasing several weeks ago)..well not only did they have plenty in stock, they only sold about 2! The store told me they are planning after the holidays to close down the “in mall” locations. I actually got the item and checked out of the store faster than I had at any other time shopping their when I lived in the area. NO ONE in the line..all registers opened and the clerks asking people to come through the checkout! Those that had owned franchised realty companies have shut down and started their own “one man” shops or have left their industry for good only to find that the jobs out there cannot support their 3-5 year rise to “ATM/spend it all” riches and their quick descent. For sale signs still are abound and many realtors/mortgage brokers/appraisers/title agents are having properties foreclosed on, left the area, going back to school or are now working in circuit city/best buy.. I think that Florida is definitely a state to watch and to get an idea of what is about to hit this country in the next coming months…depression describes the mood and recession describes the state…
Wow, Ann, that’s quite a post.
i fear that your post will be about california in but a few years (or year). Too many stores out here, too many people buying things they can’t afford.
i fear that your post will be about california in but a few years (or year). Too many stores out here, too many people buying things they can’t afford.
One can only hope.
Not a bad post, but I suggest you google ‘paragraph’.
Sorry Ozajh
But when you have been in a car for 12 hours, passing drunk drivers and fans going to the gainsville game throwing up by the side of the road…you don’t always worry about proper “paragraphs.”
But I will dust off my MBA for you and do a review…
A bit off topic, but this really got me steamed:
http://money.cnn.com/2007/11/19/real_estate/foreclosure_fix_Stutzmans/index.htm?postversion=2007112112
These deadbeats have had a previous bankruptcy, which the MSM refers to as brushes with late payments. Then after Countrywide agrees to forgive $25000 in debt and convert their mortgage to a fixed rate, the tramp has the nerve to state: ‘Stutzman more reserved about the outcome. “It sounds good, but I think it’s something that should have been done a long time ago,” she said.
What good is being done by helping these ungrateful, irresponsible burdens on society? This makes me sick.
You need to relax, man. Here–drink some beer and then go try to make some shoes. That’ll calm you right down.
LOL!
The first question is how can countrywide afford forgiving any debt, and second is why these poeple were ever given another mortgage and basicly a a heloc after a BK, it’s like it is’nt even a big deal to declair BK anymore…The reality is despite there sob story they should be forced to declair BK a second time and loose there house, maybe then they will learn to live within there means and save for rainy days….
The solution here has got to be making the foreclosure machine more efficient. The mentioned figure of 50K is too much.
But I guess the real problem in much of the country is that the current market value of the foreclosed-on properties has dropped so much that the lender is left holding the bag. Which means that ultimately the taxpayer is left holding the bag for the inevitable bail-outs.
Ungrateful is definitely the word… the correct “work-out” would be pushing them back into the rental market where they belong. Or perky/smug/young Darlene can find a job that brings in enough money to pay the mortgage as agreed. Maybe she can even find one that doesn’t involve a pole.
The language used is also very biased:
he showed up on a Wednesday - “intake day” - when ESOP offers group and individual counseling for borrowers trapped in bad loans.
“Trapped in bad loans”? How about “people who entered into a loan agreement and then want to find a way out of their contractual obligation”.
At least this one’s not a “single mom”. For some reason, being a harlet and having little bastards is now something to be proud of!
“…maybe then they will learn to live within there means…”(sic)
I think a lot of the suicide loans have represented a hope of some means to live within, if you catch my drift.
I have a brother-in-law who has been a manager for [tech industry product] in [not the US] and is now back, having let his heath deteriorate considerably over there, and finally getting the boot. Meanwhile, family back home enjoyed nice BIG house in the heartland, partly through MODEST windfall (pre-bubble) of Calif. home sale, even ended up helping eldest daughter buy one of her own to start “securing her future”, although her degree failed to snag her a job making much above minimum wage. Now Dad’s home, not employed, not particularly insurable. Lots and Lots of medical bills.
You can probably connect the dots from here…just one more variation on the same story. The kicker is that Bro-in-Law has always been kinda an arrogant social Darwinist/great-white-hunter type with a “some are meant to bear the burden of leadership and others are happier as peasants, yada yada” mentality.
About those peasants…2nd & 3rd world farmers and shoe makers are not weak or squeamish, can sacrifice, can live without latte, can stick with a not-ideal marriage to keep family and family finances strong, and really just aren’t that much into the whole existential anxiety thing. I really think, therefore, that “emerging nations” have a decent shot of beating the West in the current round of this whole evolutionary game. Paging Marie Antionette, please pick up the white collar courtesy phone!
Buffett in purchase negotiations with Northern Rock:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/25/cnbuff125.xml