Prolonging The Inevitable In California
The Bay Area News Group reports from California. “In southeast Antioch, where a swarm of East Bay foreclosures makes its thickest nest, the children on Catanzaro Way live among a grove of real estate signs that turn like autumn leaves, from ‘For Sale’ to ‘Reduced Price’ to bright ‘Auction’ yellow. Ten vacant houses run along a single block, where two-story homes sold for as much as half a million dollars in 2005, but no one here wants to guess what they would fetch now.”
“Local agents say home values in Antioch have slipped a solid 30 percent from their highs. Now, 1,200 homes in the city are listed for sale. Banks own a third of them. Last month, fewer than 40 sold.”
“‘I’m kind of embarrassed to have my friends come over,’ said 15-year-old Angelica Berrera. ‘We used to come outside and have a good time. It used to be nice. Now it’s …’”
“‘Empty,’ said her sister, Natalie.”
“From East Oakland to North Richmond to Discovery Bay, several newer developments, along with urban enclaves that got a jolt of renewal during the housing boom, now bow under the weight of abandoned and foreclosed homes. Most, but not all, of these clusters crop up in lower-income areas, where studies have shown the subprime loan drive at its most rampant.”
“Among recent signs of trouble in the East Bay: Building officials are scurrying to board up empty houses to keep squatters and drug dealers at bay. In some areas, thieves rip through the walls of foreclosed homes for wiring and yank out copper plumbing.”
“Roofing and renovation projects are stalling at condominium complexes across the East Bay, as assessments go unpaid by owners who have walked away or are headed for foreclosure.”
“Some residents on the edge of losing their homes are stripping them inside and out, swiping light fixtures, gates, dishwashers, garbage disposals and air-conditioner units, and leaving behind piles of garbage, old cars and debris.”
“‘It’s a last act of defiance against the bank,’ said Jim Tucker, a code enforcement officer who patrols a large swath of southeast Antioch.”
“‘Some banks have responded by cleaning up properties. But most “don’t want to lose any more money than they already have,’ said Tucker, who tries to convince them that letting a house go south will cost more.”
“In Antioch, officials no longer send gentle courtesy notices before citations and fines, said Denise Skaggs, head of code enforcement. To owners about to lose their homes, it’s not much of a threat, she said.”
“‘I’m losing leverage with people. They say, ‘Go ahead and put a lien on my property. I’m losing it anyway,’ she said. ‘Threats have increased. This last year you’ve seen the tightness, that edge. People are real quick to threaten us. We don’t knock on doors anymore.’”
The Record Searchlight. “My Nov. 5 ‘Buzz’ item ‘Betting the Market’ attempted to tackle the question of how many foreclosures are homes once owned by investors who missed the market. I wrote at the time ‘unless you count each deed at the county recorder’s office, that is impossible to know.’”
“Maybe not. Realtor Chris Young e-mailed me to say you can receive weekly notices of default. Many of Young’s colleague receive said notices, he said.”
“Young sent me 34 pages of pre-foreclosures, dating from late August through late October. When the home address and the mailing address don’t match, that’s probably means it’s an investment property. Of the 126 pre-foreclosures I got, 39, or 31 percent, of the addresses didn’t match up.”
“Remember, for a nine-month stretch in 2005, the Redding area topped the nation in percentage of homes sold to investors — at that time nearly one out of every four home purchase loans was taken out by speculators.”
The Merced Sun Star. “Merced’s new home sales rose from 39 in August to 69 in September, though the figures still pale in comparison to the 106 homes sold at this time last year. A report released this week by the California Building Industry Association shows some slight gains in Merced in September.”
“‘The market seems to be kind of holding,’ said Mike Salvadori of Century 21 Salvadori Realty. ‘You never know from one month. It’s not a sign.’”
“Salvadori’s real estate business is listing about 200 homes, nearly double what it usually offers, and Salvadori said the overall market is worse than when Castle Air Force Base closed in 1995. ‘I have not seen the market quite as depressed as it is,’ he noted.”
“Merced’s real estate frenzy peaked in August 2005 when 650 new and used homes were sold. The number fell to 369 in August 2006, and by October 2007, agents sold only 71 homes, according to DataQuick.”
“The median price for new homes in Merced hovered at $323,990 in August and September. That’s nearly a 17 percent decrease from last year, when the prices were at $388,990. About 7 percent of families with a median income, $46,800, can support the mortgage on a new home, up from the 4 percent that could afford homes in the second quarter.”
“Guy Maxwell, owner of Maxwell Homes, said he had anticipated that the booming building market would cycle through to a bust based on his past experience in the area. As a precaution, he stopped construction on any new subdivisions in 2005.”
“‘I think builders are, in part, extremely optimistic,’ he said, explaining the market’s tumble. ‘They tend to be the people who think it’s never going to end. The money’s good, it’s just fun and you get wrapped up in it.’”
From Eyeoutforyou.com. “The number of vacant houses across Bakersfield has shot up in the last year, and local leaders will look at whether the city can do something about it.”
“Vacant houses became a health issue this summer in Kern County, when the mosquito abatement district worried abandoned swimming pools could be breeding areas for mosquitoes carrying West Nile Virus. The Mosquito District had special aerial photos taken, and identified some 1,200 ’suspect’ pools.”
“Committee member Jacquie Sullivan says not only are neglected houses an eyesore, they can actully become a hazard. ‘There’s also a safety issue problem when a house is abandoned, they can certainly become a target — and that’s just not good for neighborhoods.’”
“Sullivan says vacant houses are clearly an issue with the current foreclosure situation — and somebody needs to take responsiblity for the problems from neglected properties. ‘We need to do something about it, and it really does take down the morale and the value of neighborhoods,’ Sullivan said.”
The Union Tribune. “Gov. Arnold Schwarzenegger may have swatted a home run last week – or at least a double or triple – when he got four mortgage lenders to agree to ease the way for subprime borrowers to keep their homes.”
“Unfortunately, this may only be the bottom half of the first inning of a game in which we’ve already fallen way behind.”
“There’s the problem that the mortgage lenders who issued the loans and signed the agreement with Schwarzenegger are not necessarily the people who now hold the loans. Most mortgages have been repackaged and sold to investors, who could reside as far away as Zurich, Tokyo or Beijing. Will those investors agree to follow Schwarzenegger’s recommendations? That’s an open question.”
“Second, the plan will not help out anyone who’s already fallen behind on payments. During the past six months alone, 126,514 notices of default were issued in California, including 10,056 in San Diego.”
“‘If you’re current on your loan payments, his plan will help keep you from getting into trouble,’ said T.J. Knowles, a broker with CalMortgage. ‘But what about the people who are already upside down in this market? The people at the lower end of the totem pole? The system is protecting itself, not the individual. The lending institutions will get out of this fine, but some individuals are going to be toast.’”
“Third, the plan does nothing to bail out real estate speculators. Don’t get me wrong. I’m not saying those speculators should be bailed out. But when the speculators do go into default, their foreclosed properties will continue to be a drag on the market, even if Schwarzenegger’s plan helps out every other borrower. Which it won’t.”
“And then there’s the question of whether all homeowners will want to keep making their mortgage payments in the current environment. On his Web site, local real estate agent Bob Schwartz estimates that condominiums in downtown San Diego and Mission Valley have lost about 25 percent of their value since 2005.”
“The condominiums that Schwartz has evaluated in Fashion Valley and Pacific Beach have declined by an average of nearly $100,000.”
“‘What happens when somebody wakes up and finds that the place they bought in 2005 is down a hundred grand?’ Schwartz said. ‘If they didn’t put down a down-payment and if they can find a rental that’s cheaper than their mortgage payments, I don’t know what their incentive would be to stay there.’”
“Schwartz said he thinks the Schwarzenegger program will encourage some people to keep paying on their homes, ‘but it’ll just slow down the decline (on the real estate market). It’s not going to turn it around. He’s just prolonging the inevitable.’”
This may sound a bit strange but I wonder if one of the first affordable ways to buy a home won’t be a new custom home. Given that land prices will probably be the first to hit bottom and materials will probably follow etc. I remember that for a long time new homes where a lot cheaper than existing homes as a child. Outside of foreclosures I’d think new homes would probably be the next best buy.
It may be a new group of building companies that actually do it. Also esp for California the McMansions are not good homes and newer homes would have to compete per square foot so new sensible homes make a lot of sense. So overall builders buying cheap land could probably still be profitable selling smaller homes even in given foreclosures. Sure it will be tough times but builders will keep building for a while I think.
How are the developers going to deal with taxes on the empty lots?
I was doing some checking on property near my current residence in Alaska. After the oil bust many of the properties could be had simply by paying the taxes. If things get as bad nationwide as they were here in the 80s. Buying in the traditional sense might be completely unnecessary as many places even in good locations will be abandoned.
This could also apply to houses. When I left Katonah NY my monthly rent was about 2-3 hundred dollars a month above taxes. I really enjoyed living there while I did, it was a nice quite town, but there is no way I would have bought anything in that area. The taxes alone would eat most people alive. I’m wondering how long some people will be able to manage. It might be simple to pick up an albatross for taxes alone.
Radon? You’re not in the interior (Fairbanks and vicinity, in AK talk), by any chance…
I was in Anchorage during the bust and doing bankruptcies. Prices dropped 50% within about a year. I don’t think you’ll see the same this time. Granted there’s a housing bubble, but that was a specific situational happening. People were just leaving the keys in the house and moving back to where they came from (lower 48).
“So overall builders buying cheap land could probably still be profitable selling smaller homes even in given foreclosures. Sure it will be tough times but builders will keep building for a while I think.”
Good point to consider. Someone, somewhere will always be ready, willing, and able to build. Down the road, in say in 2012 or so, they might get a chance - and then who will ever want all those “boom” era houses of shoddy construction and dubious location when brand new houses in better locations and of better quality come online?
A lot of what was built recently will be just plain worthless.
I think you are right. I have gone home shopping and really what I would like is a craftsman. Often I have thought “Gee, it could be made smaller, I could actually have a yard, and it would be what I wanted to begin with.”
I may not be the white picket fence guy, but a “green” craftsman with the oak tree would do for me.
You articulated our strategy perfectly. I’m convinced that the existing home market will take the longest to fall, and foreclosures are very slow to hit the market (and not always very desirable homes, often either junk or McMansions). So we are making low ball bids on lots with the intention of building a reasonably sized, energy efficient, custom home in late 2008 or 2009. It still won’t be the bottom of the market, but should allow us to get a home we want at an affordable price.
Yeah thats what I’m thinking building houses is a business pure and simple either you build something someone can afford or you go out of business. And competition will be fierce.
Ditto.
What I’d like to see is developers preparing lots for water recycling & rainwater catchment (So Cal) & require a minimum size of 10K sf or more (can plant more vegetation which cleans the air, provides oxygen, and absorbs water). Require decent set-backs and set aside areas where homes cannot be more than one story (privacy, as well as aesthetics).
Then…have “green” (and other) builders available to build custom homes — totally designed by the owner, NOT the builder/developer.
This would enable us to have nice, clean, green neighborhoods with a variety of houses that have some space between them (and privacy!).
If we had the time & money, we’d be looking into doing this ourselves.
Cheaper new construction would be a happy thought for us. If we buy another house again at all, it will be in about 5-6 years. My thought was to buy an old farmhouse that needs demolishing (essentially it would be at the value of the land) and build a small off grid house. I’m guessing (I need to do further research) that we’d get the advantage of having a “grandfathered” with the advantages of new building construction.
This is strongly true if you look at what is happening to construction. Increasingly even in custom construction modular components are being used to great cost savings. With all that and the advance of efficiency and green building methods and materials it is quite possible that building new now will save a substantial percentage of operating cost over the lifetime of the building. That translates into very large savings over longer periods, especially if keeps in mind the 1:5:200 rule that we are starting to leave behind us.
Actually, Schwarzenegger’s “deal” with these four lenders was nothing more than grandstanding, it didn’t change at all how any of the aforementioned lenders have been or will be doing business with those facing foreclosure. Nothing at all.
http://www.modbee.com/local/story/131542.html
Our governator is a f’ing idiot. What do you expect of a muscle-bound, steriod using f’up like Arnold.
But in the history of CA governors… he’s one of the better.
I don’t mind his grandstanding. I do mind not getting the budget under control! We’re broke! Stop spending except where it counts:
Schools
Police/fire
infrastructure.
Cut the California bureaucracy. Its the least efficient of the 50 states (last I looked). Get more money to the end. That alone will let us cut the budget 33% without cutting services. If smart, cut expenses 33% and up spending (like on roads…).
Got popcorn?
Neil
Actually, I think fire could afford to be cut in California.
They had several thousand people on standby all of last week, and they still let this latest fire get out of control. Very bad.
Also, many CDF (Cal Fire) captains are making $200K+. It seems a little excessive for a bunch of has-beens that get paid OT from the second they’re called to the second they’re home…even while sleeping. Plus, their contract stipulates that they will get hotel rooms wherever they go. CDF actually forced some people out of hotels who had their homes burned.
Also, cut the prison guards while you’re at it…$100K+ w/o a college degree or any entrepreneurial skills likewise seems excessive.
Cut the high paid state workers pay and who will buy the 700K tract homes in Cali ?
Sorry to top post but speaking of fire:
Another resident who lost his home was Flea, the bassist for the Red Hot Chili Peppers, property records showed. The musician, whose real name is Michael Balzary, had bought another home in Malibu last year, but the one destroyed was for sale for $4.8 million, the Los Angeles Times reported.
People of CA got the governor they deserved. They fell for the flash, superficial glitz and empty promises made by someone who didn’t understand that governing a huge diverse state is easier said than done. IMHO he had no qualifications, no experience and was pro big business. He had some success running his personal business but that doesn’t always translate to government where you have to consider the best interests of all the people, not just the bottom line.
Tom McClintock!!! Now he’s the man who should have won, but he’s not glitzy enough for these self-centered, shallow people here in CA!!!
Umm…did ya’ see our choices? From what I recall, we had a crooked hispanic that was cought taking bribes, a porn star, and Gary Coleman.
I voted for Gary Coleman.
I vote for cutting the schools. Top to bottom. Our system is a joke, the results are dismal, and I think socialized schooling is institutionalizing mediocrity (at best).
Speaking of muscle bound did anybody see where Hulk Hogan wife filed for divorce ? http://www2.tbo.com/content/2007/nov/23/hulks-wife-files-divorce/?news-breaking
Nick’s divorce (ala ‘Hulk Hogan’) might be a pure financial play due to their recent incidents…
A friend’s divorce is being finalized on the house settlement. She wants to be just bought out. He’s decided to either let her buy him out (she couldn’t) or sell and he’ll rent for ‘a year or two’. So I’ve had a little influence.
Got popcorn?
Neil
Whudda ya gonna do when the hulkster…serves you with papers?
Even though I’ve only visited CA, seeing the state go downhill from a distance kinda bums me out, I very much enjoyed my visits there. My relatives got the heck out of CA about a year ago and moved up to WA after living in CA for 25 years. I don’t know anything about the state before or after Ahhnold, but they felt it had deteriorated way beyond what was safe for their children.
California: I love it. Hate the taxes. Was a Libertarian Party activist from 1980 to 1984 there. Even held a minor office at age 23. Thought the state was ready to go individualist! LOL. Answer: Convert my traditional non-deductible IRAs to Roth IRAs in 2010 after living / working in a state with no income taxes (Washington, Florida, or New Hampshire). Pay only federal taxes on my traditional non-deductible IRA and gains. In 2012 move to California with my Roth and municipal bonds, and series I bonds. Then thumb my nose at the libs and just enjoy returning to the state where I was born. Life is good!
In 2012 California houses in the best areas (beach cities) will probably be 30% to 40% lower than the prices of 2007. I’d love to buy a condo or loft in San Francisco at a 40% discount and just laugh at the socialists!
Wait if you can. 50% to 70% will be the norm as “nobody” but a very few will have “both” good credit and cash. Loans will be but for the elite as rentals will be in fashion again for many people.
Bill, why will you thumb your nose at the libertarians? Just because Calif is so infested w/ socialists?
BTW there are additional states w/ no income tax: NV, SD, WY, TX. Does NH really have no income tax? Isn’t it rather that they tax only certain types of income?
NH taxes property at a very high rate. Ya see, it costs money to have government services, so people pay taxes - either income, sales, or property. You can get a house dirt cheap in TX - $100K - but you’ll pay $3000 in property taxes every year. Here in Oregon, we have income tax, and property tax of a bit less than 1%.
az_lender, by “libs” I meant “liberals.” They stole the meaning of liberal from the classical liberal sense (Frederick Bastiat). They made its economic meaning opposite - status quo government meddling rather than live and let live.
Oh yeah CA is not safe for children and other living things. We have bunches of earthquakes, wildfires, crappy schools, crumbling infastructure, etc., etc.. Gee if I could only get another 18,000,000 people to believe all of this and leave it would be sweet…….C’ya! Don’t let the door hit you in arse on the way out!
“Oh yeah CA is not safe…”
It is amazing the damage the social safety net has wrought in California. The helping hand has become a way of life for so many there. How does China deal with these same issues?
How does China deal with these same issues?
They don’t, and behold the results.
Where’d they move to in WA?
Bellingham area.
Sorry, brain fart, I meant Kirkland area.
Schwarzenegger’s “deal” is a clever plot to make current “owners” pay taxes and maintenance before the APR freeze ends and bank finally forecloses. That’s what I would do if I were a mortgage lender…
Bleedin’ the turnips one last time, huh?
“That’s what I would do if I were a mortgage lender.”
Or any other type of lender.
Someone on this blog recently said the ideal parasite is one that does not kill its host. The ideal lender is one that extensively bleeds the FB of money but stopping just short of the point of FB capitulation.
The spiel of the NAR, the Gov, the MSM, serve to generate Hope among the ranks of the FB to induce them to suck it up and hang on to their overpriced POS RE holding by someway and somehow getting hold of the necessary vig.
“Or any other type of lender.”
Well, if the collateral was in the form of, say, gold coins, I’d gladly take it from a borrower. Gold is easy to sell and there are no taxes to pay for just having it.
Yep, the parasite analogy is pretty good. Many borrowers could be “saved” if their loan terms were extended to 40 or 50 years. Every two years their finances would be reviewed and APR adjusted to make sure that they are paying everyfreakingthing they can afford. That would, obviously, still be less that they originally agreed to pay.
Moi, je suis la parasite par excellence. Not a single one of my borrowers is in trouble with me. I keep bragging about this. You correctly describe me as a parasite. The borrowers send me Christmas cards. I don’t LOL at them, I do realize that my hosts (borrowers) are important to me.
How many ways can I say ‘ditto’. He mtg’d our future with give aways to the unions and indians. Solution to the budget mess: Cut all the state worker pay and pensions 5-10%. They would at least have a job! No new taxes. If any of the mtgs have been fractionalized and sold, forget it. It’s a bunch of BS.
“If any of the mtgs have been fractionalized and sold, forget it. It’s a bunch of BS.”
I’m not so sure. Most of the service agreements that I have read (admission- I have only read service contracts with Lehman (as conduit) or Countrywide (as servicer)) have fairly loose rules as to how the servicer can deal with delinquent FB. It comes down to a judgment as to whether the servicer is trying to maximize the value of the ‘trust fund’ aka bondholders. The servicer has to notify the conduit, but one of the major tests of ‘reasonableness’ is whether the servicer applies the same approaches to properties it is servicing as it does to properties that it still owns. So, if it is reasonable that income to the bondholders would be maximized by lowering payments and bleeding FB longer, instead of foreclosing, I’ll bet the servicer can agree to that strategy. Personally, I could see bondholders preferring to get their cash out (via foreclosure) rather than get paid in lowered flows of declining dollars, but I am not sure they have much legal leverage to micromanage the service agreements- would they sue the conduit to force the conduit to force the servicer to not renegotiate mortgages… I don’t see this happening.
Pismo: I agree (even though I’m a state (UC) employee.) In the last downturn we took a 5% paycut for three years, and we survived. I respect the work that police, fire and prison guards do, but to allow them to retire with 90% top pay pensions is fiscal suicide. We’ve got to fix that ASAP - make their pensions similar to other state workers, and make state workers more responsible for their own retirements. We need lots of money for water projects, etc.
“Solution to the budget mess: Cut all the state worker pay and pensions 5-10%.”
I’ve been wondering when the states will begin cutting dental and vision from their medical plans to more resemble the federal government healthcare plans.
If they do, you’ll see a lot of staff leave and that’s one thing UC can’t have. We have to beg good people to work for us since UC pay is definately not up to ca state par.
“If they do, you’ll see a lot of staff leave…”
I dunno, G. Many office staffers are married to the 1099 types, e.g., the pick-up truck with a ladder-rack and the hand tools in five gallon buckets. The wife’s job brings home the medical benefits and some chump change, so she is captive. Now faculty are in a different league, so they can jump-ship easier. Federal pay isn’t great either, and their last 1.8% annual pay increase frustrated many, but it’s tough to demand more when the military folks are getting screwed-over even more. I’ve seen many examples of government employees with the same pay, but some are always broke and no annual leave or medical leave either. They tend to blame everyone else when they don’t get that promotion. It’s easier now though because many upper positions now require a minimal security clearance, and the flakes know they can’t slip past the requirements by dressing nice. And the professional job interviews always contain an element of light humor, so the HR types can look for the corn-cob pipe slot. BTW, I pay full out-of-pocket dental expenses for a family of four; it just means used cars, not new.
Solution to the budget mess: Cut all the state worker pay and pensions 5-10%.
————————–
I’d rather see all the illegal aliens deported first. Somehow, I have a feeling all of our problems (budget, crime, overtaxed infrastructure) would literally disappear overnight.
BTW, for those who think prison guards (or any public worker, for that matter) make too much money, why aren’t you doing it? Step up to the plate and partake of all that “easy” money.
Birds of a feather, empty nesting…
“From East Oakland to North Richmond to Discovery Bay, several newer developments, along with urban enclaves that got a jolt of renewal during the housing boom, now bow under the weight of abandoned and foreclosed homes. Most, but not all, of these clusters crop up in lower-income areas, where studies have shown the subprime loan drive at its most rampant.”
“There’s the problem that the mortgage lenders who issued the loans and signed the agreement with Schwarzenegger are not necessarily the people who now hold the loans. Most mortgages have been repackaged and sold to investors, who could reside as far away as Zurich, Tokyo or Beijing. Will those investors agree to follow Schwarzenegger’s recommendations? That’s an open question.”
I’m thinking that his idea gets terminated.
Yes, let’s antagonize the world’s investors - and see where that gets us.
Sarah Connor?
New tv series coming up called the “Sarah Connor Chronicles.”
Weeeeeeeeeeeeee……
I wonder if the securitization contracts by which the loan originators sold packages of loans to investors allowed the lenders (which typically retained servicing rights) to do modifications.
If so, expect litigation all around. Investors are not going to be happy, and they’ll be looking at every possible ground on which to require the lenders to repurchase the loans.
Vacant houses? What happened to the shortage? They aren’t making any more land. Buy now or be priced out forever.
Right, it is interesting that no one in the California press reminds the public that they were sold that line of hoeey just a year or two ago, now that they are boarding up ‘500k’ houses, etc. Emperors clothes indeed.
And they still spew how certain areas are immune. Not! I remember the 1990’s downturn well. Its one of two times I can recall seeing ‘the adults’ crying in mass in public. The other time was the 1970’s recession; but that was more due to sudden job losses in the area.
Sadly. That’s coming back. We’ve read articles for four years on how America’s economy has become one of selling to each other. Now what happens when people ‘keep to budget’ (due to lack of credit) and do a little more comparison shopping.
Informed cautious customers are the enemy of salespeople.
I cannot wait to see this quarters car sales reports. They will be… telling.
Got popcorn?
Neil
As a society, we need to turn a deaf ear to whining. What could be more deleterious to an individual or a society than giving people something they didn’t earn? Everybody in their heart of hearts knows they’ve had chances to do better in life, and have only fallen short because they took an easy way out. Suck it up, people! If you want a better life, make it happen! Fie on social engineers!
[Rant off]
I think one of Ayn Rand’s characters ranted about individuals or society giving/receiving the unearned. This is not to oppose goodwill. For those Ayn Rand haters, she was in favor of goodwill, but not charity. There is a distinction. Donating to the American Cancer Society is goodwill, since the donation may, in part, benefit the donor in the future. Charity is selfless giving with no gain hoped for by the donor. At the other end of the scale is the notion of being a sacrificial animal, a giver of the unearned, which is currently what Warren Buffett wishes upon all upper income people.
Okay, I like Ayn Rand up to a certain point. (Anthem is a great little book.) If I’m understanding what you are saying, then Ayn Rand and I have have to disagree about charity and goodwill. It takes a certain blackness of spirit to give only in with hopes of getting in return, either immediately or in the future.
Many Americans have sacrificed their lives so that I could without fear type this opinion without fear of retribution. It would seem that supreme act of sacrifice is really a charity to me. I did nothing to earn the gift of freedom of speech. I’m thinking we are in need of a world a little bigger (and warmer) than Ayn Rand’s…
At any rate, taxes are not charity or goodwill because they are not voluntary. On the other hand, and I’ll probably get reamed here: taxing “rich” people makes sense because - follow me here - they have most of the money. On a practical level - what does heavily taxing poor people get you except a poor return and riots?
And on another level - might a “rich” citizen in a democracy have more of a responsibility to his country to pay because he is more able to do so? Somewhere along the line, I learned that with freedom and power came responsibility. What is wealth but freedom and power in a practical form?
Mind you, I’m not advocating “taxing the rich” in the real world. I think we should scrap the whole income tax code and tax consumption. If you want 1/2 million dollar brand new yacht and can afford it, then the government probably should have their hand out, too. I also think we need to get rid of a ton of the social engineering programs and pork.
I guess I’m just sayin that the “don’t tax me because I’m not rich (even though I’m in the top 20% of all households)” whine so often seems to come off as “screw everyone else, I’ve got mine.” - especially when you add Ayn Rand sort of quote.
If you did not start the company, diviend taxation might in fact be a very good idea - in essesense, by not subjecting diviend returns. If you are smart, you spend as much time as you
Personally, I think we should stop spending so much money (including entitlement programs like a non-means tested Social Security.
Crud - please ignore the last two paragraphs - I didn’t realize they were there when I hit submit. Must be time for bed!
Vermonter, you made some good points. My father was injured as a result of his military service in WWII. However his was a different generation. We have no common culture these days. It is a stew, not a melting pot. It’s hard being a nationalist if few of your neighbors speak your language and don’t smile back when you smile at them (that was what it was like when I lived in LA for three years).
Living in LA and SF is all about not making eye contact.
“Not! I remember the 1990’s downturn well. Its one of two times I can recall seeing ‘the adults’ crying in mass in public.”
That recession hit aviation particularly hard. I worked with several older mechanics who commuted across country to cling to jobs - sometimes living in vans or 5 to a 1bdrm. These were skilled and useful men - not useless punk wannabe banker pig men who call up old ladies trying to sell them bogus “investments”.
Pain lies ahead.
Just a SWAG, but the last and hardest to fall will be the SF Bay area - they’ll probably hold out until 2009 until capitulation sets in.
In other news, the weekend before last, I was at a Holiday Inn just north of Chicago and they had a fully packed real estate seminar going on. The parking lot was overflowing with the usual Hummers and higher end cars with signs like “We buy foreclosures!” on the doors.
“Informed cautious customers are the enemy of salespeople.”
Maybe the enemies of lying con-artists… From the perspective of a professional salesperson who operates within the principles of integrity - customers (whatever their level of knowledge or sophistication) are your friend! If a potential customer is ill-equipped to make a wise choice, an excellent opportunity to be of service has presented itself… A genuine desire to help and rigorous honesty have ALWAYS paid off for me; regardless of whether I “lost” the possible sale in front of me at the moment…
Couldn’t agree more, houseless.
Years ago, I lost some international customers because I was honest about what we could do for them. Guess what? They came back within a year and were loyal (and our best!) buyers from that point forward.
Honesty rocks!
With all the problems with vacant houses ,someone should invent life-like dolls sitting at a fake table in a dining room to make it look like someone lives in the house .Maybe they can put a timer light on inside to make it look like people are in the house .
2 years ago this blog talked about what a problem these vacant houses were going to be . I can’t believe how this RE crash is playing out just like what many here predicted 2 or more years ago .
“‘I’m losing leverage with people. They say, ‘Go ahead and put a lien on my property. I’m losing it anyway,’ she said. ‘Threats have increased. This last year you’ve seen the tightness, that edge. People are real quick to threaten us. We don’t knock on doors anymore.’”
There ya go. Social unrest, one of the nastier side effects of the bubble. Our idiot pols better hope this sort of thing remains “contained” or restricted to the homeowners. Somehow, I don’t think so. Myself, I’m less inclined to be polite about taking crap from people these days. I just don’t feel quite as easygoing as I used to.
GDP report is released this Thursday Nov 29th at 8:30 AM ET?? It could very well prove to be +4.9%!!! The last few data points of real gdp growth have been +0.6%, 3.8%, 3.9%, and with a +4.8% data point that will be a mere 700% increase in the trajectory of real gdp growth!!! How can anyone with a brain say we’re headed into a recession if the USA economy is expanding at an accelerated pace?! Let me just say that again and in CAPS, THE USA ECONOMY IS EXPANDING AT AN ACCELERATED PACE!!! I’d say the markets and some economists are detached from economic reality and that the stock indices are completely disjointed from the actual data. The stock markets globally should be at a new all time high. No recession in 2008 will materialize.
Tell me Im wrong.
You’re wrong. Any release this week is an adjustment to previous releases. Are some saying Q3 (actually FY 07 Q4) will be adjusted up by 1%? We’ll see.
Last two quarters were helped by higher exports and higher inventories. Inventory build shows up as a positive in GDP but puts downward pressure on future GDP growth.
I believe Current Q is being forecasted between 0.5% and 2.0%. I’d guess low 1’s and then revised down. First Q ‘08 is likely to be weak.
Note that ECB has announced open market operations for the rest of the year to stem gathering credit crunch in Europe - export growth should remain positive, but should slow.
I say recession will materialize, although will agree it is hard to be bearish on stocks for the remainder of ‘07. But I don’t want to be jumping in either.
If you believe the BLS (Bureau of Labor Statistics) then you must believe in the Tooth Fairy. GDP is all ‘local’. Where did I hear that before? hehehehehehe
“It could very well prove to be +4.9%”
What number are you using for the “GDP deflator” (in other words, how much of your expected increase is caused by plain ‘ol inflation?)
Palm, I am - well let’s just say “intimately” connected to the criminal justice system here in Chicago. Every weekend I hear firsthand how ugly it is getting - not rumors - real incidents. Anyone plopping down hundreds upon hundreds of thousands of dollars in this climate is an idiot - the cities are on the peripice. Your walking stick idea is still sticking in my head.
ej, I’m seeing anecdotal evidence here in what was, until 2000, a relatively laid back part of West Central Florida. The retirement community here is having break-ins at the businesses on the edge of their community and residents are having their cars broken into right in the driveways. The homes will be next. Many of these people are sitting ducks, being older and unable to move as quickly as they used to, or being slowed down by various medications and physical conditions. The bubble caused a change in demographics that I don’t think these people are prepared for.
Interesting that at this juncture,the Supremes have accepted a case to decide on the rights of Americans to keep handguns in their homes–after passing on similar cases for years.
More exactly, it’s ruling on whether a jurisdiction (DC) has the right to issue a blanket ban on keeping handguns in homes. Lots of issues here, and since DC is not a state, I do not know enough about law to know whether the outcome will be more applicable to states or cities.
The fact that the Supremes took it up means it will likely have national implications.
“Interesting that at this juncture,the Supremes have accepted a case to decide on the rights of Americans to keep handguns in their homes–after passing on similar cases for years.”
Yes, because society for the average person (of which I am one) is getting very rough and the rule of law is becoming a joke, so we are at a point when average folks might actually need those handguns for self-defense. And it is at this point that it might be best to further deprive the citizenry of their right to keep and bear arms.
palmetto,
Deprive? You think Iraq is bloody…
FTR, if any court is likely to affirm an individual right it’s this one. Personally, I don’t see how they could come to any other conclusion.
Should they not, though, it’s highly likely that quite a number of states would independently affirm an individual right (if they haven’t done so already) just as others move towards almost total bans. Unfortunately, the left coast would almost certainly fall into the latter camp.
Especially in Florida nobody reports on crime!
Anecdotal evidence of increased criminal activities noted in So Cal as well.
I see a lot more broken glass in the good neighborhoods this year around San Francisco, compared to previous years going back to the mid 90’s.
“There ya go. Social unrest, one of the nastier side effects of the bubble. Our idiot pols better hope this sort of thing remains “contained” or restricted to the homeowners”
The idiot pols in city halls are protected by the ‘pratetorian guard’ police stations which are alway next to city halls in every city in america. When there is widespread social unrest and /or rioting the first thing the pols look out for are their own asses.
Maxwell Smart knows KAOS is around the corner…
“Guy Maxwell, owner of Maxwell Homes, said he had anticipated that the booming building market would cycle through to a bust based on his past experience in the area. As a precaution, he stopped construction on any new subdivisions in 2005.”
“‘I think builders are, in part, extremely optimistic,’ he said, explaining the market’s tumble. ‘They tend to be the people who think it’s never going to end. The money’s good, it’s just fun and you get wrapped up in it.’”
Maxwell Smart knows KAOS is around the corner…
“Guy Maxwell, owner of Maxwell Homes, said he had anticipated that the booming building market would cycle through to a bust based on his past experience in the area. As a precaution, he stopped construction on any new subdivisions in 2005.”
“‘I think builders are, in part, extremely optimistic,’ he said, explaining the market’s tumble. ‘They tend to be the people who think it’s never going to end. The money’s good, it’s just fun and you get wrapped up in it.’”
Merced has been in this housing downturn/bust for over a year and a half now. They will slowly come out of it as otherparts of the state continue to feel the pain IMHO.
Actor/Corporate Stooge/Whatever
“Schwartz said he thinks the Schwarzenegger program will encourage some people to keep paying on their homes, ‘but it’ll just slow down the decline (on the real estate market). It’s not going to turn it around. He’s just prolonging the inevitable.’”
“‘What happens when somebody wakes up and finds that the place they bought in 2005 is down a hundred grand?’ Schwartz said. ‘If they didn’t put down a down-payment and if they can find a rental that’s cheaper than their mortgage payments, I don’t know what their incentive would be to stay there.’”
This is the next big stunner for the so-called experts….I think we’re going to see a lot of FB’s just leave the keys on the proverbial granite counter.
They’re going to call their representative, and say “BOO HOO! Force those bad banks to re-write our mortgages for $100K less! And give us a hug!” And congress will try it’s darndest to pull something like that off. You have to encourage Americans to borrow and spend!
“They’re going to call their representative, and say “BOO HOO! Force those bad banks to re-write our mortgages for $100K less! And give us a hug!””
Don’t forget the participation trophy!
—This is the next big stunner for the so-called experts….I think we’re going to see a lot of FB’s just leave the keys on the proverbial granite counter.—-
Or, in this case, the not-so-proverbial granite counter.
“Guy Maxwell, owner of Maxwell Homes, said he had anticipated that the booming building market would cycle through to a bust based on his past experience in the area. As a precaution, he stopped construction on any new subdivisions in 2005.”
Wow, a builder who actually saw it coming.
Maxwell, smart.
Not only is he Smart, but he had the foresight to load up early on precious metals and incorporate them into the tools of his trade. Who among us has not heard of the legendary Maxwell’s Silver Hammer?
Let me guess. He has no investors so it is only his own money on the line. He decided to play it safe. And, I bet you will see a new Maxwell Homes subdivision in 2012 after Guy finishes his world tour and beach vacations financed by the great bubble of 2004.
LOL, so true. He probably did have his own money at stake. Amazing how that can cause a rise in IQ.
Voila, the secret of az_lender’s perfectly performing trailer trash borrowers. No doc, no outside appraiser, no questions about income or assets or credit history: just a big fat down payment to chain the borrower to the property and insure the return of az_lender’s VERY OWN money, plus a modest (?) 9% or 10% fixed interest rate.
“Gov. Arnold Schwarzenegger may have swatted a home run last week – or at least a double or triple – when he got four mortgage lenders to agree to ease the way for subprime borrowers to keep their homes.”
“Unfortunately, this may only be the bottom half of the first inning of a game in which we’ve already fallen way behind.”
Call it a ground-rule double, with the governator stranded on base.
We go to the top of the 2nd inning…
Debt leading, 666 to 0
“Debt leading, 666 to 0″
LOL
This is off topic, but might interest some of you, given that it is related to the falling dollar and the Fed. I sell online high end very specialized jewelry. I haven’t raised prices even with rising metal prices. About 3 months ago my US orders or even inquiries dropped drastically. It’s now my slow season but still last years I was getting some US orders. My orders are coming from Europe now.
Luxury items are the 1st thing that people realize, they can do without…
I think the word is spreading like wildfire of somebody that knows somebody else in a world of financial trouble, in our country.
Even for those in which finances are fine, the contagion is catching…
I believe that a recession is coming soon. It’s fine with me, but I’d prefer not to try to prevent it and just get it over with. It pushes businesses to move to more productive areas of business. For example, small time mortgage brokers will go out of business and work somewhere or start businesses where they add value.
I think high end can still do ok in a recession if it is a better value than similar products and placed in stores in upscale areas. Of course the heloc high end consumers spending money they didn’t really earn won’t be buying, but then you can’t count on them buying long term anyway. The upper classes are growing long term and that is my real market.
Wholesalers like me can become retailers, if necessary. Or, I can partner with retailers - I have some flexibility in the way I can move merchandise. Brick-and-mortar retailers are like plants - they’re stuck in one palce and have deal with the current weather.
I think the big sign that has been on numerous threads is furniture. I have several stores go belly up in Santa Barbara and Ventura counties respectively.
Tiger - I import and wholesale low end to middle price points non-fine jewelry and handicrafts - it’s a small business that is left over from a bigger business I once had (and which I’m trying to crank back up due to seeing no hope of trying to make a living buying and selling houses). I’ve been raising prices - I’ve always competed on price - and have been able to maintain my margins, but of course not my percentage margins. In the low end I’ve been able to increase my dollar margins slightly as prices have risen. I currently import from Mexico, Bali, and India - I went to Bali in May to reestablish some old contacts and go to Mexico often; have never been to India. Last order from India prices were up 35% and quality dropped - may have to make a trip. I sell mostly to mom and pops, college towns, strip malls, tourist gift shops - mostly customers I’ve had for a long time, and mostly in the Virginias and the Carolinas even though I hang out in NE FL as a housing bubble refugee. Overall I’d say business is OK - I’ve been doing this 20 years and I’ve certainly seen a lot worse. It’s very hard to develop new business now, though, and that’s why I’m currently ensconsed in Costa Rica, recovering in a pleasant little place with “Wireless Eengk-teh-NEHT” after having my face adjusted ever-so-slightly so twenty-something chicks take me seriously as a cool guy, with cool stuff! Trying to make it happen! That’s why I’m posting so much - not much else to do except wait for my meals, take walks, and play with the dogs!
I produce high end very niche jewelry rather than low end because foreigners will always be able to make low to mid end jewelry cheaper. My profit margins are probably amongst the highest in the industry, though I haven’t been pushing for volume yet. I had a huge learning curve, but at least my competition is very small because of that.
I know little about importing, so can’t offer much advice. Have you thought of selling in Europe? Maybe you could take a vacation with some samples. The dollar going down and metals going up (even silver) must be hurting importing jewelry to the US. Maybe Europe could be an expandable market.
Tell me about silver - my finished cost in country is 20% more than I was charging wholesale 3-4 years ago. So silver rings with stones have actually become cheaper than plain silver rings - thus the move toward Bali and India merchandise. Thanks for the concern - but I generally like what I do, essentially being a traveling salesman with near infinite freedom. I can always shift to online retail, but this is dangerous, because part of the understanding of buying wholesale from someone is that you (the wholesaler) don’t come in and compete in the market. So it’s not like you can just easily do both. I’m not worried about it, though - I have $ in the bank, other skills I can build on, and my expenses are manageable.
I meant to sell wholesale in Europe, not get into retail. I have wondered about semi precious stone prices. I don’t watch them, but I don’t think they get speculated on like metals, so there would be a bigger difference between metals and stone prices. That makes sense to go towards stones or beads.
Realtors are hilarious…check out this comment to a blog post from SJ Mercury News’ Real Estate Blog:
____________________________________________
I think the one thing that the media is guilty of is taking national averages and giving those statistics as local statistics. I am a Realtor for Alain Pinel in Saratoga and we have had several big sales ($2,500,000 - $6,000,000) within our office over the last few months. Areas like Palo Alto have less than 1 months inventory. (Calculated by the number of active listings compared to pending and sold) I have heard about some “quiet” sales, listings not on the MLS selling up to $15,000,000. No one ever hears about these transactions. On a personal note, I was recently involved in a transaction where I was representing the buyers and won out in multiple offers on a house in Santa Clara. I believe there are still a lot of nay-sayers out there who are going to miss the boat. Our economy is doing good, jobs are being created…have you been on Hwy 85 during rush hour?? All this to say, our real estate market is correcting itself. It is weeding out the agents who shouldn’t be in the business as well as buyers who shouldn’t be purchasing real estate. We are back to the basics…buyers must have steady employment, income, decent credit and a down payment…go figure!
Posted by: Jason Noriega | November 14, 2007 10:16 PM
I was in Saratoga a few weeks ago. Looked at 3 open houses near my old house. All three were staged and empty. In two of the houses, we were the only lookers. In the other one, there were two other groups when we were there. The first house has since been taken off the market without selling. All 3 houses in the “Golden Triangle”.
“Some residents on the edge of losing their homes are stripping them inside and out, swiping light fixtures, gates, dishwashers, garbage disposals and air-conditioner units, and leaving behind piles of garbage, old cars and debris.”
“‘It’s a last act of defiance against the bank,’ said Jim Tucker, a code enforcement officer who patrols a large swath of southeast Antioch.”
It’s not good enough for these people that they got a great deal! They put no money down (in most cases), paid a low teaser rate. Esentially, they got to rent a nice house from a bank for a couple of years. When they are no longer willing to pay, what do they do? They ruin their homes to get revenge on a bank that was nice enough to take a chance on them (and elicit sympathy from the CA state government.)
It’s DISGUSTING, if you ask me! Anyone who strips a home before the bank gets is has proved he’s not a victim. If he’s sophisticated enough to know he can raise some $$$ by selling the fixtures, he was sophisticated enough to know how to work a system and move into a home he couldn’t afford, and hand the keys back to the bank when the going got tough. It was the plan from day 1.
Personally, I couldn’t do this to a house, regardless of the circumstances. But the banks and investers who financed these loans assumed the risks of something like this happening.
If there is any good to come from this, the banks and lenders will be a little more careful with who they lend their money to in the future. Rates will go up; lending standards will tighten, but people with a strong credit score, a down payment, and verifable assets and income will see some very good deals.
I agree with you reuven, “it’s DISGUSTING .” I know of a foreclosure where the FB took the “stairs” ,after they stayed for months for free ,after the FB’s took out numerous equity loans to buy junk . Do people like these FB’s blame themselves …………NO . I ran into this FB years later, after they ripped off everyone regarding that house , and all the FB told was a victim tale . Oh, did I mention that the wife got a boob job and some new diamonds just before they stopped paying on the house.
We can also thank our congress men and women, who voted overwhemingly (only about 12 republicans voted NO and zero democrats) not to collect income tax on forgiven mortgage debt.
Now there’s absolutely no incentive not to trash the house! If you owed income tax on forgiven debt (as you should–it’s real income!) then you’d want to maximize the amount the bank can sell the house, to minimuze your tax bill.
Congress has created a moral hazard! In the name of “helping people”, they’re making neighborhoods turn into ghettos faster than if they just left things alone.
“Some residents on the edge of losing their homes are stripping them inside and out, swiping light fixtures, gates, dishwashers, garbage disposals and air-conditioner units, and leaving behind piles of garbage, old cars and debris.”
The Indians on the reservations have been doing this for years.
Banks might start doing background checks like some employers. LOL!
FB’s final act of defiance. I don’t think so, it’s first act of defiance watch as they go from owners to bitter renters and the defiance becoming unbearable when landlord tries to screw them out of deposit.
Anybody who takes out a loan that they know deep down can only be repaid through an act of Providence is exhibiting borderline criminal behavior already. So what should we expect? Perhaps we’re turning into Dickens’s London, or the U.S. Gold Rush days - a dangerous place where thievery and vandalism is simply a fact of life and doesn’t necessarily exclude one from the general swath of humanity. That’s why I wouldn’t live in CA; I don’t want to be treated like a criminal for keeping a gun in my car and a shotgun in my house, and defending myself if necessary.
Realtor Chris Young e-mailed me to say you can receive weekly notices of default. Many of Young’s colleague receive said notices, he said.
This might be a bit off topic…
Where/how does one receive such notices (without dealing with an agent)? I’m in central Ark. and intend to buy probably next spring or summer. My wife and I are planning to put our house on the market as early as next month and rent until we find a place we want.
I do a pretty good job of keeping my pulse on the local market. I know more about property (including title) research than most people not in the RE business (title people, lawyers, surveyors, etc) and have found places to get various information about property online for local counties which I am interested in. Having historical price information is useful in comparing to an asking price for a piece of property.
I also visit foreclosure.com and other similar sites and can frequently (not always, it depends on the stage of foreclosure what information those sites display for the free lookers like me) determine exactly which property is being foreclosed. I haven’t joined any of the foreclosure sites as they are usually expensive.
So, any recommendations on how to get more informed about foreclosures? I intend that when we do buy, we are going to get a hell of a deal and foreclosures seem to be a pretty good potential place to get a good price.
I like these links (but some don’t work)
http://www.thedirectoriescompany.com/reos.htm
For those of you who haven’t been to FL lately: I have been visiting Florida to see family. I thought SoCal was bad! Heh - I can tell you that the housing industry here is in pandemonium; much worse than Orange County. I’ve never seen anything like it. For sale signs everywhere, and I mean everywhere.
Everyone I meet is complaining about the slow economy. Some people have to go very far away to find work, others have been laid off, and others say there’s very little for them to do at work. The mall today was half empty. It was very easy to park and the stores had no lines. It’s quite remarkable, something I never thought I’d see. It reminds me a bit of the dotcom bust.
All I keep thinking as I drive around the roads (southern and central FL) is “who is supposed to buy all this stuff that’s for sale?”
Re FL (sorry for all the non-CA posts) - I have a customer at the Volusia Mall in Daytona Beach, and I can vouch for that place being dead. However, once you get up to Jacksonville, things are only “soft” - nothing at all like the peninsula. Finance and housing is hurting, city budget is in disarray, but CSX and big port expansion are helping, and Ponte Vedra Beach continues to be a favored destination for the wealthy.
In 2000 the total value per the FED Reserve Flow of Funds report for US housing value was 10.4 trillion dollars. In 2007 the value based on Q2 is 21 trillion dollars of that 11 trillion is considered equity. Now ask yourself how could the value of housing rise that quickly? It can’t really and these numbers point out the problem facing the financial sector as it tries to sell these numbers using credit products like SIV, ABCP, CDO’s etc to investors anywhere in the world . Nobody believes that these numbers are real so the value as collateral continues to decline. My guess is that home values as measured by the FED will decline to at least the 1999 range during the next 10 years to around 9.5 trillion.
Let’s say a 10 trillion loss of equity (in 2007 dollars) in houses over 10 years - that may be pushing it, but then again it may not be far off. Then I think you are looking at a depression. The decline would be like a net non-savings by households and creditors - spending would have to decrease dramatically from its current level in order for people to remain solvent. This would lead to a downward spiral of business confidence, credit expansion, rapidly rising unemployment, and rapidly declining GDP.
For the next few years, because inflation expectations are generally fairly low, there could be some stimulative effect of an expansive monetary policy, but its effects would likely be minimal and fairly short-term.
There actually may be a solution to the crisis but I haven’t seen it discussed politically (Palmetto, please grip something): completely shift immigration policy and begin encouraging or even subsidizing a large new round of immigration, especially among the educated classes. There are still many Asians who would like to come to the U.S. Population growth is the most efficient way of absorbing excess housing capacity.
“There actually may be a solution to the crisis but I haven’t seen it discussed politically (Palmetto, please grip something): completely shift immigration policy and begin encouraging or even subsidizing a large new round of immigration, especially among the educated classes.”
Absolutely. It’s politically untenable right now because people correlate (not without justification) increases in immigration to decreases in real domestic wages. But here’s the thing: if the US takes the most desirable educated, English-speaking Asian immigrants available, then wages overseas will rise while American wages decline. Equilibrium is inevitable–the only question is whether it will be brought about by a continued decline in American wages (and standard of living), a rise in Asia’s, or a combination of the two. In my mind, the combination provides for the most greatest economic stability as the financial world completes its transition from the post-WWII era to the new, Asian-dominated one.
Will many young, working Americans be hurt (including myself–a 27 year-old with a degree)? Yes, but our economic prospects were already mortgaged away by the Baby Boomers. The best thing that we can do is encourage immigration of Asia’s best and brightest to help shoulder the incredible burden we have inherited from the Boomers, both in terms of an otherwise unsustainable Social Security obligations and other public debt.
The utterly irresponsible policies enacted since WWII have already ensured that the next 50 years will be far less prosperous than the previous half century. The only way that this country will survive is to mitigate the damage of this impending financial collapse. And the best–perhaps only–way to do so is through attracting the “high-quality” immigrants that Asia has to offer, while taking much-needed steps to curtail the illegal entry of the predominantly uneducated Central and South Americans.
“Palmetto, please grip something”
Grip this, boyos.
“And the best–perhaps only–way to do so is through attracting the “high-quality” immigrants that Asia has to offer, while taking much-needed steps to curtail the illegal entry of the predominantly uneducated Central and South Americans.”
I E-chat with a very educated Chinese lady(from Foshan) who writes/types perfect English . She said getting visas to immigrate to US very hard after 911. I have no problem getting skilled educated immigrants from India, Japan and China to immigrate to US. They are very law-abiding ,industrous and in many cases they already know rudiments of English Language, or even decent english, as it is taught as a second language in most univerities in the far east.
This is what outrages me : We allow millions and millions of unskilled dirt-poor illegal peasants from Mexico /Central america to just waltz across the border. They have no skills, do not speak a word of english and are a DRAIN UPON SOCIAL services. Yeah, they do the bottom of barrel labor jobs, but that just keeps labor costs down for low end blue collar trades which just enriches greedy expolitative businesses and corporations such as hb’ers and fast food chains.
Also, the illegals spawn out millions of low-educated smart-alect unmotivated offspring, many of whom turn to gangs , thus also straining social services and the criminal justice system and bleeding the US taxpayer.
We should indeed restrict immigration to only the best and brightest of Asia-they will pay their share of taxes, start businesses, are law- abiding and unlike most americans are thrifty prudent savers.
What happen to “Bring us your poor, your tired, your huddled masses…”
You are advocating economic/intellectual warfare albeit a subtle form.
Very politically incorrect, but spot on.
“What happen to “Bring us your poor, your tired, your huddled masses…””
We’ve re-branded. It’s now “What can Brown do for you?”
(Full credit to The Daily Show.)
I’ll take the best and brightest from any region. Asia has no corner on the market.
And deportation works, folks. It can be done humanely and very cheap, compared to the costs we currently pay.
The alternative is to do it non-humanely, which is the likely result if the economy continues to worsen and class and real race wars heat up here.
They are doing just the opposite and increasing barriers to immigration. The reason they are doing this is that they know unemployment is going to worsen. If they kick out the illegals then there will be more jobs for US citizens. Most people don’t understand the full impact of inflation if it occurs gradually, but everyone understands being unemployed. This is why China is allowing inflation to run wild. They would rather deal with that than with unemployed ex soldiers.
Also in that Antioch article (SJ Mercury News) it said;
“A vacant house is a great place if you’re homeless and a drug addict and it’s wintertime,” said Maria Benjamin, program director for Community Housing and Development Corp. of North Richmond. “It’s getting cold outside. They’re fire hazards.
I told people over and over that neighborhoods with empty houses will become burned out ghettos in no time. Sadly, I’m being proved correct.
The 99 GDP was around 9 trillion and we are running slightly over 13 trillion in 2007. The depression will hit the finance sector and RE related business, very similiar to Japan, I think. While spill over is to be expected I think this just shows the extent of the over valved RE market and credit products created from it. The rest of the economy will move along, clearly the consumer would pull back but you can see in the GDP numbers that the economy would still be viable and a 30’s style depression would not be in the cards.
Right, 1930-33 was unbelievably severe - there is certainly room for something to be strong enough to be called a depression without being The Great Depression II. There were two very nasty recessions in the late 1800s (generally caused by lack rather than overabundance of credit, related strongly to seasonality of farming and - dare I say it - lack of central banking) and a couple of deep recessions between 73 and 82, but nothing to compare to that bad boy in the early 30s. But whether we get into something like 90-91 or 73-74, or whatever, you can be sure the mantra will be: “It’s as bad or worse than the Great Depression! Do something!”
OK, that’s enough posting for the weekend. Thanks you, bloggers, for indulging me.
“The rest of the economy will move along,”
What “rest of the economy”?
We have construciton, financial services, retail, agriculture, government and medical. Everything else is just to support those.
Financial serivice is toast. We’ve added, what is it? $5 trillion in mortgage debt in the last 10 years. I think it likely that $2 trillion of that will result in losses.
To whom? Banks, hedge funds, insurance companies, pension funds. As this debt unwinds and results in escalating margin calls and bankruptcies, the problem will multiply as corporate debt unwinds.
Now add in the personal debt that is now in excess of $1 trillion, up from $500 billion in the last 10 years. Households are on the razor’s edge and the slightest recession will cause a blow up in credit cards, vehicle loans and other household debt.
Consumers have been spending 10% more than they make. Slice 10% off consumer spending, and retail is toast.
Construction is toast since the credit bubble resulted in overbuilding of EVERY real estate type.
AND… even government debt has gone through the roof. $500 billion a year federal deficits and local governments all over the country have been going into debt with bond issue after bond issue to poivide infrastructure needed to support the recent boom. The plan is that new revenues will pay these debts, but there won’t be revenue. Now factor the burden that large losses will put on the local governments’ pension funds.
AND, let’s not underestimate the burden that aging Babyboomers will put on the government with increase social security and medicare!
Transportation will be devistated as constrction and retail slows. The remaining service sector will crumble under the weight of cut backs in construciton, retail, government, and financial services.
Exports? Europe is in as big or bigger trouble than us when it comes to debt. The rest of the world’s economy is built on selling us (US, Canada, Australia and Europe) stuff on credit.
So, agriculture and medical are supposed to keep our economy chugging along?
Our economy has been 100% debt fueled since the 80s. $13 trillion GDP??? Yeah, based on adding $3 trillion a year in total debt. What will the GDP be when much of that debt goes poof, and we’re not able to add more?
The Great Depression was caused by the central bank not adding liquididty needed to prevent runs on banks. This one will be triggered by the central banks inability to add enough liquidity to prevent insolvancy of the bulk of the financial services companies…. instead of a run on the banks, it will be a run on hedge funds, banks going bankrupt, mortgage industry (including Freddy and Fannie) shutting down, mass foreclosures on a scale not seen in history, total lock up of consumer credit, massive government spending cuts, and collapse of the current concept of pensions, social security and retirement.
Regarding government debt your comments might even be understated. Here in Portland tax abatements are common on all the nouveau condos in nouveau neighborhoods. In the Pearl, I seem to remember 10 year abatements at $500 on $500K condos. New infrastructure bringing in little support. Repulsive. Where was my abatement for rehabbing a home that was to be demolished ten years ago? (I digress)
Regarding the “$13 trillion GDP???”, I’m reading The Demise of the Dollar by Addison Wiggin right now which touches on how much bad business contributes to GDP and that real GDP averaged -2% change in 6 previous recessions but a .2% increase after the dotcom-led recession. I don’t know how they’re going to engineer that this time…
To Fresno Bubblesomething,
Ahnold isn’t an idiot, just a good politician, and therefore a very bad economist. At least he TRIED to cut expenditures in “Cuh-lifornia”, but the people (the real idiots) spoke, so he went along for the ride. Now everybody will pay back with interest the lifestyles they paid for with foreign savings.
My heart bleeds for these greedy idiots:
Richter, 40, who was a chemist at California Steel, and her husband, Mark, 44, a quality control supervisor for the same company, are about to lose their family home and plan to move to Texas with their four children. They have joined one of the lawsuits against Pacific Wealth.
In early 2006, the couple had a four-bedroom home in Rialto with $200,000 in equity. They refinanced and invested about $190,000. They also bought three investment homes. They invested $65,000 from credit cards that Pacific Wealth had opened in their names.
Payments from the company started faltering in December. In January, a box of Iraqi dinars arrived on their doorstep — the proceeds of their $65,000. Mark Richter got on the Internet and discovered that the dinars were worth about $9,000. He also found Vicky Reiss’ lawsuit.
It was late at night. “When Mark saw the lawsuit, he woke me up and said, ‘You need to read this,’ ” Anna Richter said. “His face was death. I knew at that point we had been had, we had been completely ripped off. Everything fell into place.”
http://www.pe.com/reports/2007/wealth/stories/PE_SR_20071118_main.d56b48c.html
This is the kind of case that I find interesting . Here you had regular people who were greedy and they allowed a con-artist investment company of crooks to do what they wished with blank loan applications and purchase contracts based on the lure of riches .
Does a investor get off the hook just because they believed the crooks about the investments paying off ,and does the investor get off the hook when they allowed the crooks to do whatever they wanted on blank loan applications and purchase contracts?
I said it a long time ago that a loan applicant/investor is on weak ground legally when it’s discovered that they allowed crooks to prepare fraudulent loan applications/sales contract by signing blank forms . The investor is saying ,”Do what you have to do to make me money and I will trust you .” Fraudulent contracts and applications end up being the evidence in a trial with the investors signatures bold and clear .
IMHO ,these investors are going to be torn apart in court ,just like FB borrowers that lied on their applications or allowed loan agents freedom to do whatever it took to get their loan in the form of fraud .
These investors ,in the news article above ,were so caught up in the RE frenzy, and the lure of making easy money, that they put all prudent business practice aside and went for the brass ring .
That being said ,these investors were ripped off,but how much of being ripped off was the investors willingness to let a third party do whatever it took to make the deal ,as long as they didn’t know what was going to be filled into the blank applications .
If I was on a jury ,I would really have to be convinced that those people didn’t know that blank applications were the investors giving permission to the crooks to “do what it takes “to make the deal ,IMHO. I would also have to have proof that their signatures were forged by the crooks or the applications were forged .
Granny always told me as a young’un, “if it sounds to good to be true…..”
Thanks Granny.
A “mark” to market.
I think it is time for me to move back to California. I plan to go to San Luis Obispo and open a dog boutique/candlemaking shop. I hear there is an opening for this type of business. Fido can get pampered with gourmet doggie biscuits while getting a manicure and Suzy the Housewife can make decorative candles while she waits. It is a can’t lose business. Let me get my HELOC to fund this. I think I can get some discounted retail space. LOL
Sounds like a can’t miss opportunity! Can I send you some money, or am I already priced out?
The Bay Area News Group reports from California. “In southeast Antioch, where a swarm of East Bay foreclosures makes its thickest nest, the children on Catanzaro Way live among a grove of real estate signs that turn like autumn leaves, from ‘For Sale’ to ‘Reduced Price’ to bright ‘Auction’ yellow. Ten vacant houses run along a single block, where two-story homes sold for as much as half a million dollars in 2005, but no one here wants to guess what they would fetch now.”
“Local agents say home values in Antioch have slipped a solid 30 percent from their highs. Now, 1,200 homes in the city are listed for sale. Banks own a third of them. Last month, fewer than 40 sold.”
Neener neener. I told everyone we’d see big drops in a matter of months. Sounds like the flippers and the RE shills are getting a good spanking. Serves them right. I for one am sick of the holier than thou fat@$$ RE types and their condescending patronizing attitudes. No wonder everyone hates RE agents. I guess they can have fun cleaning out that stinky playland at the McDonalds.
Ugga Bugga!
Darrell_in_PHX you paint a bleak picture and it may turn out to be so, the current liquidity contraction will grow worse which showns clearly in todays GDP with 13 trillion at Q2 2007 and a RE valuation of 21 trillion says much about what is to coming. My focus is the finacial and RE sector which is clearly over valued, what happens to the AG,industrial, transportation, health,biotech, utilities,energy, and other sectors I don’t have a crystal ball like you.
It’s amazing how quickly things are moving in CA, here to the NY-CT-NJ aka the tri-state area price’s are barely moving and the builders(Toll,Lenear,ect…) are still asking 06 prices for the most part. I currently live about 90 miles north of NYC in poughkeepsie, and Toll built a bunch of crap here and they still want 400,000 for 3-2 townhouses and 600k for 4 bedroom McMansions, Lenear has built a bunch of 700K McMansions…There is no local economy to support those prices, so to afford these over priced pos and be financially secure a husband and wife would have to both commute 2hr’s each way in and out of NYC(4hr’s total)…Is it really worth it? Currently the estimate is that 35% of the poeple that live here work in NYC, so this won’t change till layoffs in NYC start…. Forclosures are climbing but it’s seems more poeple are declairing BK rather then being forclosed on so they get to keep the house for another year or longer…I have 20 percent down and plenty or reserve after that, but who knows how long this is going to drag out since the gov is definetly set to drag it out….Not to mention the crack heads on wall street who lost boat loads of cash and still got there redonkulouse bonus’s….
NYTickedoff, you said:
“It’s amazing how quickly things are moving in CA, here to the NY-CT-NJ aka the tri-state area price’s are barely moving and the builders(Toll,Lenear,ect…)”
Well, it depends. The articles posted here are for parts of CA that have had a lot of recent building. Areas that have not are still stable to down a % or two. San Jose up to SF. Still bidding wars for desirable houses, inventories are higher but not outrageously so. Merced or Antioch are not the same as Silicon Valley, much like Rochester is not the same as NYC.
I do think there will be a down turn in prices, but it’s not really happening in Silicon Valley yet overall. Sure there’s individual places that went way down but the medians in a given zip code are still pretty stable.
So NY is probably not that different than CA overall.
I live in Silicon Valley (and, even though I’m a 100% paid-up homeowner with a house in Sunnyvale, I’d welcome a 50% reduction in house prices.).
Prices have already dropped, in that I’m seeing houses go for $1.1M instead of $1.4M. I think it has a ways to go.
What’s “different” about Sunnyvale and Palo Alto over, say, Antioch and Manteca, is that people want to live here. So at some price, houses will sell. I doubt if you’ll see boarded up houses here. However, in overbuilt parts of Manteca, Antioch, Stockton, Sacramento, etc, there may be no buyers for dozens and dozens of homes at any price.
But there will be people who bought at $1.2M who will be sell for $600K when the bubble hits the bottom.
Today I went out to eat at a place where a lot of young people were at and I could not help but feel bad for the future they might be facing . I think it’s just awful that these young people might have problems finding jobs in the near future .
I was very lucky in my lifetime that work was always available for me .I was looking at a young couple at the restaurant I went to and I wondered what kind of future are they going to have for the next 10 to 15 years , and than the couple smiled at me ,and I almost felt like crying inside .
Sorry for the emotional rant .
Very sweet, Wiz. We must remember that humans do tend to be resilient, and some posts on this thread make me feel optimistic!
I like the reports of higher wages in “poor” countries. It feels like we might be closer to that equilibrium & that much closer to reaching bottom (in terms of standard of living relative to the rest of the world & maybe our PRODUCTIVE economy might finally get a chance to be revived).
Think happy thoughts.
CA renter, the reports of higher wages in “poor” countries are true. This is probably part of the angst felt in the US. People felt that the 60s were the heyday of the US. The standard of living today is higher than in the 60s. Houses are bigger, more families have two cars (and they are better), people have PCs, broadband, etc. But, the gap between the US and the rest of the world is narrowing. Therefore people in the US feel less rich even we are actually richer.