Anyone See A Trend Developing?
Reades suggested a topic on recent credit market trends. “MBIA has a liquidity issue, Fitch places on negative watch over 170K muninicpal issues. Banks reporting losses that have never lost money before, even in the Great Depression. California’s debt mushrooms from 4 to 14 billion in 6 months. Florida halts redemptions from its state fund. CA has 90K forclosures in the last two months. A number of midwestern cities are effectivly bankrupt. Anyone see a trend developing?”
A reply, “Where is it going to lead? For now, inflation seems the most likely result, since this will add points to the borrowing costs of a whole lot of local government debt issues or at least discourage refunding of existing ones. All roads lead to the taxpayer.”
And another posted, “Not just inflation costs for additional borrowing, but is that borrowing going to happen? With falling tax revenues you have hard choices–continue to delay maintenance on bridges, roads, water infrastructure etc., or cut services like police, fire, etc. Will they cut current service jobs–again police, fire and teachers, or how will they close the shortfall in public pension liabilities?”
And lastly, “I have a feeling those ’secure’ pensions will not exist in their current form for very long. Anticipating major defaults on state & municipal bonds in the coming years.”
“No raises/pay cuts for govt employees, reduced healthcare and pension benefits. BTW, for those who don’t know, most public employees do NOT have health benefits after retirement (except for those ‘grandfathered’ in). I’ve seen people argue without knowing the facts here, so just wanted to point that out.”
“I think there is no way to avoid a very serious recession/depression beginning in 2008. Actually, the recession is already here on the streets, but the statistics aren’t showing it, yet.”
The North County Times. “The mortgage crisis has seeped into the municipal bond market, threatening to drive up borrowing costs for government issuers and reduce the value of investor portfolios, analysts said Friday.”
“In order to secure lower interest rates, governments buy insurance policies that raise the credit rating of bonds, which municipalities such as city and county governments sell as debt in order to raise funds.”
“Several of the biggest firms that sell those insurance policies are having trouble, because they also insured securities that hold subprime mortgages.”
“This week, the three agencies that effectively determine interest rates on bonds by grading credit ratings — Moody’s, Standard & Poor’s and Fitch Ratings — have published reports with negative expectations for four major insurance companies that cover at least 1,088 North County bonds worth hundreds of millions of dollars.”
“‘This is probably the largest event that has ever occurred for bond insurance companies,’ said Howard Mischel, managing director of Standard & Poor’s. ‘This is sort of like the 500-year storm for them.’”
The Wall Street Journal. “In recent months, bond insurers — which guarantee the principal and interest payments on various types of debt — have gotten clobbered amid uncertainty about some messy types of mortgage securities they have backed. The situation is raising questions about whether the insurers are financially strong enough to cover any potential losses.”
“Uncertainty about insurers like these is hurting the prices of the bonds they insure — including muni bonds, even though they remain relatively safe, given the rarity of their defaults.”
“Some mutual-fund managers say they have never seen such deep price discounts. For a more aggressive bond investor, this could spell opportunities to lock in attractive muni-bond deals.”
“‘We’ve kind of gotten sucked into this whole flurry of credit concerns that’s unduly affected some very high-quality securities,’ says Reid Smith of the Vanguard Group.”
“Monday, Mr. Smith’s team noticed that California Economic Recovery bonds insured by bond insurer Financial Guaranty Insurance Co. were trading at a lower price, and 0.05 percentage-point higher yield, than a similar bond without insurance.”
“Nuveen Investments municipal-bond-fund manager John Miller says he has similarly been buying MBIA-insured bonds now trading at attractive prices. ‘Insured municipal bonds in general over the last several weeks have continued to get cheaper,’ he says, adding: ‘This is the widest spread I can recall,’ referring to the difference between certain yields.”
“In particular, offerings such as some investment-grade hospital bonds have been hammered, he says.”
“‘Right now, you have muni bonds that are yielding what Treasury bonds are yielding, despite the fact that they give tax-free income,’ says Lewis Altfest, a New York-based fee-only planner. Thus, on an after-tax basis their yields are much higher.”
“Despite the buys in the municipal market, so far investors aren’t biting. This past week, municipal-bond funds reported their sixth straight week of net outflows — the longest string of consecutive weeks in two years.”
Anyone who thinks increasing bankruptcies and foreclosures and increased borrowing costs for states and municipalities means inflation needs a refresher course in macroeconomics. All of the above factors reduce aggregate demand and do nothing to aggregate supply. Thus they will cause deflation. The only thing that can possibly cause inflation is increased deficit spending by the federal govt (since the states are not allowed to deficit spend). Now yes, a massive taxpayer bailout would increase fed deficit spending. But the likelihood of such a massive bailout is very slim, either under the current or the next administration. A minor bailout, which is much more probable, will be overwhelmed by the loss of aggregate demand caused by bankruptcies.
Inflation does not mean your costs are going up faster than your salary. Inflation means both costs and salary are going up in a spiral, as producers and workers keep trying to get ahead of one another. When costs alone are going up, that just means some people are getting poorer (Americans) while other people are getting richer (oil exporters).
That’s pretty much how I see it. The US gov can’t borrow significantly more for stimulous packages as it will increase overall rates, thus would probably do more damage than good to the economy. I think we’ve already had years of inflation (excess liquidity), that has only made bubble parts of the economy artificially expensive.
all taps have been on “open full” since 9/11
katrina-iraq-the rebates
it’s a spend-a-thon
“(since the states are not allowed to deficit spend)”
California runs a deficit most years. They will without doubt continue to do so, and accelerate this until state bonds start to default. Then and only then will state spending decrease.
Having said that, I agree that the losses in the capital markets will far outweigh government infusions, thus deflation.
Right on. I used to think the deflationists were on another planet. The only place inflation can be seen is the rear view mirror. And thats where most of the folks on main street are looking.
How can I leverage that?
“I used to think the deflationists were on another planet. The only place inflation can be seen is the rear view mirror. And thats where most of the folks on main street are looking.”
So in coming years we’ll not only see the cost of shelter declining but we can also expect to pay less for food, transportation and medical expenses?
Yeah, right.
“So in coming years we’ll not only see the cost of shelter declining but we can also expect to pay less for food, transportation and medical expenses?”
Price is a symptom - not a cause - of debt deflation or debt inflation. Inflation is measured by an increase in the debt money supply. Deflation is measured by an increase that is LESS than the previous increase in the debt money supply.
In the unfolding depression, prices (particularly for items that are necessities - food, fuel, ‘health’ care) are irrelevant. Just as FDR burned crops and slaughtered livestock (while Americans STARVED!) in an effort to support prices during Great Depression I, supply will be cut to support prices in an attempt to ‘force’ price inflation.
As with WWII (which wiped 50 million off the face of the earth) it will only work when the ’supply’ of debt-riddled Americans is cut - through war, famine and/or disease.
As opposed to WWII, that Americans - on American soil - will take the hit this time around should be apparent to everyone by now. Read any foreign paper and see the banks/funds collapsing because ‘fat a$$, deadbeat, middle-east invading, greedy, torturing Americans’ don’t pay their mortgages.
Looks to me like we’ve been set up. Remembering the cheering for the Iraq invasion, it couldn’t happen to a more deserving group of clowns.
Unlike after 9/11 - the entire world will shrug when we’re taken out.
Homeland Security/Patriot Acts I & II/’illegal’ immigrant detainment centers are in place to take care of those who balk at going along with the new ‘program.’
You can’t have your cake and eat it too.
RE: Looks to me like we’ve been set up.
Just like the Germans during and after WW I.
Payback was indeed a bitch.
The wealth in the United States is concentrated among a particular cohort, and that same cohort is the only one to successfully lobby the U.S. Census Bureau to exclude them from economic rankings.
“Deflation is measured by an increase that is LESS than the previous increase in the debt money supply.”
If I accelerate from 25 to 45 MPH in 6 seconds, and then accelerate from 45 to 55 in another 6 seconds, I’m slowing down?
LOL!
When it comes to debt - yes. Enough new debt must be generated to not only SERVICE previously created debt, but to pay for the cost of current existence.
The day before yesterday, you needed to borrow $2 to pay interest (service debt) and eat.
Yesterday you needed to borrow $4 bucks to pay interest and eat.
Today you need to borrow $6 to pay the interest and eat.
If you only borrow $5 instead of $6 - you’re screwed. Either you don’t pay the interest (and the debt pyramid implodes) or you don’t eat and you die.
The debt money supply increased by $5 - but it wasn’t enough.
As with any debt pyramid, eventually you get to the point you can’t service the debt. That should be obvious to everyone here or we would all be living in McMansions with $1,000,000 mortgages - wouldn’t we?
Enough new debt must be generated to not only SERVICE previously created debt, but to pay for the cost of current existence.
Since much of the current debt holdings will not be repaid, I would argue this is an increase in money supply. The IRS characterizes unpaid debt as income. Thus debt in it’s current form is inflationary - no different from helicopter drops…
So for the deflationary camp, I see an ever increasing spiral of loan defaults as the relative valuation of the debt increases, which will effectively wipe out many if not all municipal retirement funds as municipalities and social security funds fail in ever increasing numbers, precipitating attempts at increased taxation and further consumer, corporate and govt. financial failures. In effect a total and magnificent financial collapse of the US dollar.
In the Inflationary camp, I see the Federal Government bailing out the municipalities and lenders with in effect newly printed currency in order to prevent the collapse of the economic system. Social Security recipients and retirees continue to receive checks each month (albeit with devalued currency. Wages increase (protectionism?) Heavy tariffs are placed on products and labor from cheap third world labor and life goes on, just without all the cheap imported junk we all so love and a substantially reduced standard of living for the regular Joe.
Take your pick. Both are bad, but there is no happy ending to this story. I just hope it is possible to control the fall.
“So in coming years we’ll not only see the cost of shelter declining but we can also expect to pay less for food, transportation and medical expenses?”
If one buys into the peak oil/terrist boogeyman mantra, no. On the other hand, using history as our guide, there is nothing but hot air supporting oil (transportation, food) prices. Medical is a big ? mark.
The Federal Government has a 9 trillion dollar debt just in outstanding paper, forget about future liabilities (Medicare/Social Security) - half of it during W’s administration, and almost $1 trillion just to pay for Iraq. Medicare expenses will continue to skyrocket, and in a decade, Social Security will begin to pay out more than it collects so there is no “trust fund” to help hide the deficit. Do you really believe the Federal Government (put into power by the American electorate) will make drastic cuts rather than just print more money? Congress wouldn’t even pay for the 1 year fix to the AMT - just add it to the deficit.
When the states and local governments go bust, who do you think they will turn to for help? Do you really think Ohio or Michigan will become lawless “Mad Max” areas?
‘Do you really believe the Federal Government will make drastic cuts rather than just print more money?’
With the US savings rate at zero, this money must be borrowed abroad. It is oversimplification to say that it is printed. The entire concept of fiat money is at stake.
I don’t believe that governments and central banks are all powerful, and they seem to face a rapidly narrowing alley in choices. It is those unfunded liabilities that cause me to doubt the hyper inflation possibility the most. Are we going to see a $50 trillion liability turn into $100 trillion? IMO, this would cause a decrease in the US standard of living much lower than simply allowing everyday prices to fall into affordability.
“With the US savings rate at zero, this money must be borrowed abroad. It is oversimplification to say that it is printed. The entire concept of fiat money is at stake.”
The Fed will continue to sacrifice economic principle to prevent an asset deflation. The current price deflation in housing is a result of the collapse of its purchasing mechanism that the Fed must make up for in the form of dollar devaluation. In essence, the problem for the banks is that the credit price of assets is rapidly going towards a cash price and this is something the banking system absolutely cannot tolerate because the “price” , whether it’s cash or credit price, is what the banks use to derive their solvency. Cash price items will continue to inflate as the Fed continues to create money out of thin air in an attempt to shore up the prices of assets that were bought recently on credit. At the end of the day, it’s a numbers game and as long as the dollar is the reserve currency, they’ll get away with it.
‘The Fed will continue to sacrifice economic principle to prevent an asset deflation.’
IMO, this is what they have been doing for over a decade, and are now pushing on a string. Look at the massive amounts of cash the CBs are pushing at the investment banks. But if they just turn around and do carry trades or buy higher rate treasuries, it won’t flow out into the economy, neccesarily.
I remember long ago trolls would say, ‘when housing falls, the Fed will just lower rates and the boom will continue.’ But I alsways pointed out that if the Fed starts cutting, it would probably mean we are heading into recession, hardly a good time to buy houses. Now, many economist and even the man on the street can see a downturn.
Well, Ben and others, the question of whether is will be inflation or deflation ahead, is flawed, because the two are not mutually exclusive. In fact they are joined at the hip. The most likely scenario is for a crash of the dollar, or monetary inflation, to occur contemporaneously with domestic housing value deflation. The repudiation of debt denominated in our fiat currency does not prevent the decline in current dollars of the housing stock. In other words, expect the prices of real estate to fall, expect the value of the dollar to fall, expect gold to rise, expect unemployment to rise, and expect interest rates and budget deficits to rise, and the standard of living here and abroad to fall. This IMO is the only logical outcome moving forward. A classic depression during a classic currency collapse. No one here remembers it simply because it hasn’t happened yet; but it will, and the forces creating it increase daily.
Attribute the Nobel prize in Economics to Adam Smith and have a Merry Christmas, and a safe New Year.
MT, see?
For me, what it boils down to is if it costs to much, I’m not going to buy, or I will cut back, or I will find a way to extend what I have. I have surprised myself with what I can live without.
IMHO Ben, you mentioned the real cause/damage of this whole mess–the decreasing standard of living. That is, due to globalization, everyone turned their heads because this bubble was the final propping-up attempt by Greenspan et al who knew darn well that the end of the ‘high’ standard of living was coming on fast. Without the bubble and its effects, it would have meant an earlier end to average Americans ever feeling wealthy again.
From now on, no matter what is or is not done, things will never be that same for the US–as real incomes decline and jobs are exported in perpetuity.
‘as real incomes decline and jobs are exported in perpetuity.’
I don’t know. Like immigration, I’ve always suspected that peoples attitude toward off-shoring would change when the economy finally turned down in a meaningful way. And recall what Bernanke said just the other day when asked about the lower US dollar? He said it wouldn’t hurt you if you bought US products.
Also, the impact of the new Fed rules on lending this week are huge, IMO. Potentially this was the death knell for the housing bubble.
I agree that the bubble is dead, but I think it’s too late to reverse the effect of offshoring important engineering knowledge, key technologies, and many high-paying manufacturing and professional jobs. Regarding high finance, the US specialty, we know where that and those jobs are heading as well, besides in the toilet.
What’s left–service jobs, unfortunately. If buying US means repairing bad bridges etc, then maybe we are getting somewhere.
I am as disgusted as anybody with the current state of things but I will point out a bright spot for America. We still have very strong innovative research and universities. I work around a lot of foreigners (they still want to come to US universities) and they work very hard and are often very bright. However, most have to be constantly told what to do next and have to have hands held while solving problems. Thinking outside the box is a trait western culture has a strength in. The Chinese are trying to replicate this ingenuity by devoting huge amounts of money to technical universities. None of that liberal arts stuff, mind you, that tends to bread anti-establishment views. It is my strong belief that a society cannot be both innovative and blindly politically obedient. This is why I think the communist/capitalist experiment will fail. China may become an innovator but it will be the death of the entrenched and corrupt communist government.
As far as the lack of Americans in hard science, research does not pay well and many Americans have been “misallocated” to the world of finance. I look forward to welcoming them back from the dark side.
Interesting concept..
Wall St. has long “bought up” the best and brightest in pretty much all fields to run the finance machine. There are a few problems with this, mostly, that frankly, compared to most of the sciences, what Wall St does is just not all that hard. It’s a serious misallocation of brain power; we stop research to have our best and brighest figure out how to package up crappy loans?
It will be interesting to see what happens if this trend slows or stops. What if something other then finance could actually afford to get the ‘best’ at something?
“What if something other then finance could actually afford to get the ‘best’ at something?”
Well, a crappy salary is better than no salary. This is my concern.
I wish the recent path taken by the best and brightest in the US had not revolved around money, but it did….and I see much wisdom retiring with professional baby boomers that was not passed on to the next generation.
With tight credit, personal savings negative, real incomes falling, national real estate prices falling, huge federal and personal debt, US in financial turmoil and many industry experts retiring, the post-bubble standard of living finally has nowhere to go but straight down.
“None of that liberal arts stuff, mind you, that tends to bread anti-establishment views.” So, what your saying, in essence, is that our liberal arts tradition (or what’s left of it) is the difference between the US and China in terms of our innovative advantage.
“I am as disgusted as anybody with the current state of things but I will point out a bright spot for America. We still have very strong innovative research and universities.”
—————————————————
Sorry, but R&D is not going to save us. It won’t even come close. There are many countries which either promote the theft of intellectual property or turn a blind eye to the fact that it is going on. Think of movies/purses/impotence drugs being copied in SE Asia. Also, I don’t recall the specific country [India?], but some time ago, I read that a rather large country was not going to honor the intellectual property rights of the maker of an AIDS drug so that they would not have to pay as much. What is to stop any other country from doing the same on everything? On things like drugs, you can get most, if not all, of what you need to produce and use it from the patent materials and/or chemical literature. On engineered items, just buy a few and de-construct. How long do you think that it will be until China quits buying GE jet engines because they are building their own using [stolen] American technology?
As far as education goes, how much of our GDP is university education? I’m not sure that it even gets close to 1%. Our university system may be a ‘bright spot’, but it likely amounts to a candle in the Sahara at noon compared to what is going on.
“What if something other then finance could actually…”
What if something other than finance could actually…
Right you are. During the past 10 years, about half my husband’s graduate students (in astrophysics) have been lured away by hedge funds. Not his very best students, but some pretty good ones. And it’s hard to convince someone that they should stick with science rather than starting at Renaissance at $200K…
‘Wall St. has long “bought up” the best and brightest in pretty much all fields to run the finance machine.’
As an ex-NIH funded researcher at a major University of California, I can tell you that government funding for medical/biological research has fallen through the floor. Paylines for submitted grant applications are in the range ~8%, which means that over 90% of applicants come up empty.
This morphs an academic career in medical or biological research into something of a lottery, and few of our ‘best and brightest’ students will subject themselves to such a crapshoot.
If foreigners no longer loan us money the government will have to monetize the debt, which is still inflationary.
http://en.wikipedia.org/wiki/Monetize
Besides being illegal, such a move would destroy the US dollar. What would that fix?
It would be necessary to fund government operation.
“It would be necessary to fund government operation.”
And would last for all of five minutes before the entire mess imploded anyway.
Looks like we’ve gotten ourselves into checkmate.
“Money Printing” is definitely the X-factor in this equation. We are a nation at war, and our Government will continue to fund it at any cost. If the Fed turned off the printing press I think we would see deflation, but considering the war, I believe we will see Stagflation..
I believe we will see Stagflation..
Correction…Are seeing stagflation. Costs of necessities are way up. Salaries and wages are flat.
All of the above factors reduce aggregate demand and do nothing to aggregate supply. Thus they will cause deflation.”
Demand for what? Housing, sure but not other things like fuel, food, health care. Don’t expect general deflation.
Inflation means both costs and salary are going up in a spiral, as producers and workers keep trying to get ahead of one another.”
No, it means money supply is going up. Also, the past few years we have had significant increases in fuel, food, housing, etc. but salaries did not increase so they don’t have to move together.
When costs alone are going up, that just means some people are getting poorer (Americans) while other people are getting richer (oil exporters).
Even oil exporters have to move their money out of dollars; that’s why you see them investing in banks, etc. and breaking dollar pegs. Inflation destroys the value of a dollar so in that sense it is better to be a debtor than creditor; the creditor therefore moves his money into inflation hedges.
“Inflation does not mean your costs are going up faster than your salary.”
Stagflation.
“MBIA has a liquidity issue, Fitch places on negative watch over 170K muninicpal issues. Banks reporting losses that have never lost money before, even in the Great Depression. California’s debt mushrooms from 4 to 14 billion in 6 months. Florida halts redemptions from its state fund. CA has 90K forclosures in the last two months. A number of midwestern cities are effectivly bankrupt. Anyone see a trend developing?”
Why doesn’t the Main Street Media put this questions to Greenspin and Bernanke? Or any other of the elite, overpaid, overeducated economic professors and real estate guru’s or missed the boat.
Here’e a link to a list of $5.3 billion in RMBS that were marked down yesterday. Of particular not is the $783 million writedown “from just one WaMu 2007 subprime deal — includes AAA downgrades, mortgages originated entirely by WaMu, 60+ day delinquencies at 9.17 percent. Stunning.”
http://www.housingwire.com/
If X= all the residential foreclosures caused by the bubble over the next five years…. what percentage of X are we at now? As a lurker renter with cash, I have no idea, but I’d have to wild guess about 25%. What say y’all?
(Of course I’m not mentioning CRE losses; they have their own shark to jump)
I’m totally guessing…about 5-10%, maybe even less. This is only the beginning & many people we know personally will not be able to hold on through the next five years. Only the very weakest have defaulted so far (i.e., $30K income with $600K mortgage & high credit card debt, etc.).
This is why the PTB are shaking in their boots. They now know how ugly this is going to get, IMHO.
JamesRaven, I’d say haha. We are just at the beginning of the foreclosure crisis. The first wave (sub-prime) hasn’t even crested. Then there is going to be Alt-A, Pay Option Arms and finally prime waves, though the last two could form one giant wave. Thats not even considering CRE, which will decline faster and with less govt intervention.
It all comes down to whether you think the govt has the ability to keep people borrowing and spending. In that case you are thinking of inflationary recession. Otherwise its deflationary recession. Invest accordingly.
“It all comes down to whether you think the govt has the ability to keep people borrowing and spending. In that case you are thinking of inflationary recession. Otherwise its deflationary recession. Invest accordingly.”
Govt has the ability to grab numbers out of thin air to keep markets happy, but no way they can stop this wave. Point taken. Still renting. Still cash. Still moving to NE in the spring. (From S.D.)
http://www.larouchepub.com/other/2007/3450foreclosures.html
Congress Leaves Without Action; Housing Tsunami Rising Everywhere.
Is Larouche out of prison?
LaRouche has been out of prison since the early 90s, I believe.
If you don’t believe America has political prisoners, take a good hard look at the railroading of LL and some of his associates in Virgina’s infamous Rocket Docket. Most instructive is the case of Michael Billington, who got 77 years in prison on trumped-up charges for refusing to “cooperate” in this Soviet-style political show trial. LaRouche spoke truth to power, and he paid a heavy price for it.
http://www.larouchepub.com/hzl/2007/3449finance_system.html
You’d have to be blind not to see the “developing trend” of the systemic meltdown of the world financial system. Here are the stark facts you won’t find presented in MSM propaganda outlets like the WALL STREET URINAL, (waste of) TIME, or NEWSPEAK.
I hope this doesn’t become a trend, but it looks more likely than not…
http://www.guardian.co.uk/feedarticle?id=7170119
Tent city in suburbs is cost of U.S. home crisis
* Reuters
* Friday December 21 2007
By Dana Ford
ONTARIO, Calif., Dec 21 (Reuters) - Between railroad tracks and beneath the roar of departing planes sits “tent city,” a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.
The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis.
What a bunch of crap!
Most people who lose their houses actually come out ahead. They can pay far less in rent than their old mortgage, and their loan was zero down so the only loss they suffer is the cost of an extra move.
As a matter of fact, I’m wondering if the rise in consumer spending last month wasn’t due to the INCREASE in disposable income that former FBs (now renters) have.
not to mention paying nothing for 3 to 9 months as the process unfolds
It costs a lot of money to move one’s household to another location…as any serial renter can attest. It is also very hard to maintain one’s employment without say, hot water in which to wash, a telephone or a mailing address. You are assuming, incorrectly, that losing one’s house is simply a matter of picking up and immediately moving to a cheaper (out-of-pocket cheaper anyway,) rental. It isn’t. There are security deposits, hook-ups, rescaling, restocking expenses. Huge amounts of time off from work to manage the logistics. Interruptions in everything from steady employment to the kids’ schooling. With all due respect, Bill, I daresay you’d not in an instant trade places with anyone living in a two bedroom washer/dryer box…even to save a “crap”load of money.
Merry Christmas. Please be thankful you are sheltered. Many are not.
Just to put this in perspective, it cost me 2K to move ~2000 sq/ft of stuff from one rental to another (full service move, although I boxed everything) here in S. FL.
Yes, that’s alot of money. But, for many of those coming out of insane moragages, they might make up the difference with the savings (renting vs. owning) in the first month.
I do agree that it is a PITA, and certainly more distruptive to someone’s life then “just pick up and move”. But it’s also, when compared to the scale of overpricing many people paid for homes, a perverbial drop in the bucket.
Including all upfront costs (deposits, fees, movers, etc, etc) it cost me about 10K to move to my new home, up front, out of pocket (however, 6K of that was either upfront rent or security deposits, so can’t really be counted as the cost of moving).
On your last point, I certainly agree. Give thanks that most of us here had the foresight and interest to figure out this housing bubble, and we can all sleep soundly this holiday season while most of our neighbors continue to see 1000’s of dollars evaporate every week.
ahansen: Thank you for pointing this out (and for your Christmas spirit)! Having just been through a move, I don’t know how anyone manages it unless one member of the family either works from home or has flexible hours. Getting Internet, phone, cable, blinds and a washer-dryer installed consumed many long hours, just sitting around and waiting for people to show up. This was after organizing the move, packing and unpacking boxes, trying to make furniture fit, sending things to off to Goodwill, etc. It’s stressful to move even when the move is voluntary, by choice. I can only imagine how hard it must be if you are moving under the dark cloud of foreclosure.
“There are security deposits, hook-ups, rescaling, restocking expenses. Huge amounts of time off from work to manage the logistics.”
ahansen,
You are correct about the time & money involved in such a move; but where was the sympathy when renters were foreced from their homes, over and over again, as landlords decied to flip and/or make money off the inflated prices.
Did you see how many apartments (where low income people tend to live) were taken out of commission to be converted to “condos”?
The sooner housing prices are allowed to correct, the sooner people can get off the streets.
http://www.globalresearch.ca/index.php?context=viewArticle&code=%20SC20060206&articleId=1897
KBR got a fat $385 million contract to build & staff detention camps for illegals and deportees. Maybe they can leverage that expertise to build new Hoovervilles for the FBs and RE industry cast-offs.
“KBR got a fat $385 million contract to build & staff detention camps for illegals and deportees. Maybe they can leverage that expertise to build new Hoovervilles for the FBs and RE industry cast-offs.”
No need - those camps ARE for Americans - not “illegals and deportees,” as is Homeland Security and Patriot Acts I & II.
Oh? You thought those were for ‘terrorists?’
You really believe those in charge had ‘no idea’ what was coming? That everyone on this board could see it - but THEY couldn’t?
LOL!
I remember when I first read that over a year ago.
At first I thought naw - now I’m not so sure!
Leigh
Chenny made sure his “friends” got the big contracts for building several sites to be used in case there was another Katerina where the homeless could be sheltered. It seems they new in advance many troubled home owners would need “temporary housing” and “who” better than the insiders will be able to bill the government for this new houseing? This is just about as good as the contracts [no bids] for our Iraq war.
A good reporter could get this story, truth, but there are few today who will. Few years we will see but it is better now the public is kept in the dark and God forbid we know the tax payers costs for this!
Rental occupancy rates are approaching 100% in most markets, so foreclosed FBs won’t have any shelter unless it’s provided by U.S. taxpayers.
??
I don’t see that at all in Cambridge, MA. There is quite a lot for rent and prices seem to be holding steady.
“Rental occupancy rates are approaching 100% in most markets, so foreclosed FBs won’t have any shelter unless it’s provided by U.S. taxpayers.”
Sorry, my post was intended for an earlier comment.
“Between railroad tracks and beneath the roar of departing planes sits “tent city,” a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.”
There is no worse area to pitch a homeless tent city than Ontario. To call it a ‘Once booming suburbia’ is an overstatement. Ontario region of the IE is a vast sprawling rather open expanse of gigantic warehouses and Industrial processing operations. 90% of land use is industrial/ commercial. Lots of railroad tracts crisscross all over this vast warehouse and commercial hub of the IE.
Very poor region for tent cities.
I would guess that this tent city is somewhere along Mission ave just south of Ontario airport, as i have spotted in the past some areas off mission which appear to be suitable spots for homeless encampments. Not ideal because Ontario is too spread out and lacks any concentrated dense, old and rotted-out civic dtwns for homeless to congregate. This writer might have checked the old civic center area of Corona off lincoln near 6th, where there appears to be a rapidly growing congregration of homeless as well.
Regarding municipal bonds, I have been investing a big chunk of money monthly in them since 2002. The caveat is that states don’t print money, so if we get into a depression where over 25% of the people do not have jobs, there will be far less revenue to pay the interest on municipals. Some states could go bankrupt. Tax free is nice, but I work out of my state for months at a time and have to pay taxes on the muni income to the other state anyway. I just use munis for diversification. I suggest a mixture of ten year TIPS and precious metals bullion to add more diversification and safety. The US Government will simply get the Fed to print more money to help pay the interest on savings bonds, TIPS, and other US government securities even if there is a huge revenue shortfall.
Starting next year you can’t buy more than $20k in savings bonds per year ($10k EE, $10k I).
That’s not good news. But maybe the government will raise the I bond fixed rates back to 2% like a few years ago. In 2001 you could put $60,000 into I bonds and the fixed rate was 3%. The variable rate adjusts every 6 months but the fixed rate lasts 30 years and the combined interest grows tax deferred. In 2012 we will likely be able to say that if someone bought Series I bonds in 2001 instead of a house, he would be much better off financially.
‘ All roads lead to the taxpayer.”
- Keep your eye on California, our liberal Senators Fienstein and Boxer will lead the charge for ‘Bailouts’. They can’t help themselves, if it is the wrong thing to do - they do it!
“Most people who lose their houses actually come out ahead.” …California being a no-recourse state. Evicted renters, maybe?
As for a lot of the rest of the country, The FBer is still on the hook for the house. No walking away, unless you can get the debt discharged through bankruptcy, or if you can go off-the-books and evade the creditors. I have to assume that a lot of ppl’s jobs won’t let them choose that 2nd option, without going from, say, 80K to 18.
As for bankruptcy - IAMNAL and am not up to date on enforecement as carried out by the courts, but the 2006 Bankruptcy laws were supposed to make it extremely difficult for the petitioner to go Chapter 7 (erase all debts) if he or she has anything like the “average” income for the area, effectively putting them on a 5 year “diet plan” paying off what they can - with pocket change for rent and life’s other little essentials. So yes, if the bankruptcy courts are enforcing that one, I could see a tent city result for those without sufficient assets that they can arrange to shelter them ahead of time. Then there’s also collateral damage like people losing their jobs/health insurance - you have to look ahead to someone already in a bad place and what the “last straw” actually is for them.
Hey, maybe the aftermath will be good for places like Clevland and Detroit - all the vagrants/vandals/copper thiefs, etc. without digs will be moving to San Diego or Miami…
This is the last place to really save $$$$$, lets face it, Someone has to take on the Civil Service Unions, and to create flexibility in work rules and to make it easy to fire them.
We to change the slogan to “The NEW civil service, it’s NOT a lifetime job anymore!”
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“No raises/pay cuts for govt employees, reduced healthcare and pension benefits.
Eliminate public employee unions, eliminate the middle class for good.
The sooner people understand this, the more likely we’ll be able to build up the middle class again, but time is running out.
Just an FYI, but in regard to the comment that “most public employees do NOT have health benefits after retirement”, that doesn’t apply to Fed gov’t workers. If you’re eligible for Fed retirement, you’re eligible for lifetime health benes - one of the biggest draws to a career in the Fed gov’t.
If you’re eligible for Fed retirement, you’re eligible for lifetime health benes - one of the biggest draws to a career in the Fed gov’t.
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Is that for new employees as well?
I admit that I’m not very familiar with Fed govt., just municipal and some state (esp. California, which tends to have some of the most generous benefits packages). In every case I’m aware of, the new employees (and non-tenured employees at the time of change, about 10 or more years ago) do not get these benefits.
If Federal employees do, I apologize for making a sweeping statement about something I do not know much about. Sorry about the generalization.
My wife worked at TSA for a while and there was no retirement fund beyond that into which she paid and the few percent the govt matched. I think this only applied in most cases to previous generations. Problem they are living a lot longer, health care costs are of the chart and there is not enough money in the universe to pay for all of it…
Ben touched on this but I agree. The turn in public sentiment against illegal immigration is fueled by resentment at the condoning of lawlessness by the authorities, but as jobs dry up, the competition for work will increase the pressure against illegals. Two courts upheld Arizona’s new law, including Ninth Court of Appeals in California, so it will be interesting to see how things play out. I suspect that despite the lobbying by Microsoft et. al, that HB-1 visas will also be re-examined.
The one thing about our devalued dollar–European companies may start looking to offshore here, as it is significantly cheaper to do so than at any time in the past.
Think of WW1 Germany. Now put that on a global scale regarding money. Make a new Global currency; the only currency accepted no exceptions. This puts everyone on the same level and we ALL get to start the insanity over again. Some will have more a few will have less cash when each currency is exchanged for the new “Earth Cash” all debts wiped clean. Global bank, Global stock market, global debt bankers are again in control.
Trying on my matching extra thick tinfoil cape, looks stunning with the hat! Just cant walk outside by the road in the sun because its so bright it blinds the drivers. Can’t wait for the stealth suit to come out next year.
At federal jobs, (at least here at DHS) 5 years continuous, uninterrupted employment leading into retirement insures one the option of the same medical coverage in retirement one had while employed.