December 28, 2007

Weekend Topic Suggestions!

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172 Comments »

Comment by Ben Jones
2007-12-28 04:32:00

We have just experienced a historic year. What was the biggest housing bubble event of 2007?

Comment by housing hanky panky
2007-12-28 04:43:59

Containment didn’t happen :smile:

Comment by Ben Jones
2007-12-28 04:53:15

‘ Anyone looking to reflect on the high points of the year in business and finance can pretty much do it in one, maybe two, words: subprime mess.

How the non-payment of mortgage interest by a homeowner in Ft. Myers, Florida — and others like him — morphed into an international credit crisis, heaping such huge losses on Wall Street that its biggest banks had to look overseas for a capital infusion, is a story that will be told for years to come. Maybe Wall Street memories will be longer than the crisis this time around.’

‘ For those who may have missed the subprime press coverage or been too intimidated by the acronyms to dive in, herewith is a user’s guide to the subprime year of 2007:’

‘S is for the Subprime loans that were sold to Wall Street, Securitized and snapped up by Structured Investment Vehicles, which ran into trouble funding themselves.’

‘ U is for Unreported losses… B is for Boohoo, Bonus foregone… P is for Paulson. Paulson has hatched or encouraged one plan after the next to soften the fallout from the mortgage meltdown.’

‘ R is for Regulation, Recession. The same senators and representatives who prodded lenders to extend credit to low- income folks in the 1970s and 1980s to help them buy homes are now horrified that the objects of their beneficence got put into loans they couldn’t afford.’

‘ I is for Interest rates, which are apt to come down in the new year. Central banks have been busy acting as lenders of last resort… E is for the economy, which will be the biggest loser from the housing bubble gone bust. Today’s economy may be more resilient than in the past, but periods of excess credit creation tend to yield to periods of credit constraint.’

Comment by Professor Bear
2007-12-28 05:14:48

‘ R is for Regulation, Recession. The same senators and representatives who prodded lenders to extend credit to low- income folks in the 1970s and 1980s to help them buy homes are now horrified that the objects of their beneficence got put into loans they couldn’t afford.’

Subprime loans = Frankenstein monsters of the credit world

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Comment by mikey
2007-12-28 06:51:23

Here it is folks. The beginning of the REAL bottom line in America from Yahoo News.

People are MORE worried about their POCKETBOOKS than WAR and TERROR… Oh MY :)

http://news.yahoo.com/page/election-2008-political-pulse-voter-worries;_ylt=AlgQIyck2dpAZff4×1HaEqOs0NUE

 
Comment by yogurt
2007-12-28 08:11:20

Yet another attempt to pin this fiasco on poor people, aka “subprime borrowers”.

Listen up, people. The problem was not with the borrowers. The problem was with the collateral. Lenders were making loans which far exceeded the fundamental valuation of the property based on income, i.e. rents. That’s the real problem, it extended across all loan classes, and all types of property from Compton to West LA. And all of these properties are going to be experiencing defauts.

 
Comment by yogurt
2007-12-28 08:17:21

The same senators and representatives who prodded lenders to extend credit to low- income folks in the 1970s and 1980s to help them buy homes are now horrified

So how come the bubble didn’t start in the 70s or 80s but around 2001?

Huh, huh?

 
Comment by bluprint
2007-12-28 13:40:49

The problem was with the collateral.

The collapse in collateral prices was just the fan on the house of cards that was the entire lending/borrowing/investing in housing during this period. The (inevitable) collapse in prices just happened to be the first step in knocking the whole thing down.

 
 
Comment by Mormon_Tea
2007-12-28 05:15:24

And “M” is for mortgage meltdown, caused the greed of moneymen to manufacture monetary gain where none actually existed; to make loans using metrics that did not apply, which morphed into monumental losses, causing misery for millions.

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Comment by exeter
2007-12-28 05:40:47

Can we get a K for Koolaide?

 
Comment by aladinsane
2007-12-28 06:46:45

“R” is for Rapture of Money…

In case of rapture, your account will be unaccounted for.

 
Comment by PontiacMI
2007-12-28 11:26:36

“C” is for cookie, that’s good enough for me…

 
Comment by exeter
2007-12-28 11:32:51

T for teletubbies?

 
 
Comment by arlingtonva
2007-12-28 05:22:29

“biggest banks had to look overseas for a capital infusion”

Soon China, Singapore and Abu Dhabi will be setting monetary policy and in charge of the printing press…or are they already?

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Comment by Earl 288
2007-12-28 20:38:42

B is for boo hoo hoo. That`s funny !!

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Comment by aladinsane
2007-12-28 04:48:36

The Funds of August…

Comment by Ben Jones
2007-12-28 04:56:14

‘In January 2007, the chief economist at the National Association of Realtors said, about the housing market, ‘The steady improvement in [home] sales will support price appreciation … [despite] all the wild projections by academics, Wall Street analysts, and others in the media.’

‘We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,” Federal Reserve Chairman Ben Bernanke said in May.’

Comment by housing hanky panky
2007-12-28 05:06:50

And this Ben…………….

“How they got housing wrong”

http://money.cnn.com/2007/12/28/news/economy/housing_forecasts/index.htm?postversion=2007122805

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Comment by Ben Jones
2007-12-28 05:25:31

‘This was the year of the property shock. The house price boom could only ever last so long, but despite all the warnings, many consumers thought it would never end. In 2007, they were proved wrong. By March, the average national house price fell for the first time in five years.’

‘ Property prices, especially those for more exclusive homes in Dublin, were already falling as buyers turned up their noses at what were seen to be exorbitant valuations.’

 
Comment by aladinsane
2007-12-28 05:33:14

Irish real estate went up like 30x in value, in 30 years…

Got Bubble?

 
Comment by exeter
2007-12-28 05:35:21

Regionally, the big event in the northeast was the dramatic decline in sales in Sept/Oct. The notion that nothing has changed and the status quo still holds among RE believers is still very strong. Few if any of them make the fundamental connection between sales volume and pricing and none are willing to admit that sales volume is the lifeblood of the entire market. Their perspective is something like “I don’t have to sell, therefore, I haven’t lost anything”. My point is that the last 5-6 years haven’t put a nickel in their pocket. Not one red cent.

 
Comment by Housing Wizard
2007-12-28 06:21:35

F= is for Fraud . In the last 5 years ,it was fashionable to submit liar loans to get in on the real estate boom . Short term ownership and flipping of real estate to a greater fool was deemed the investment of choice while the so-called experts in real estate campaigned real estate appreciation as the sure bet road to riches ……until the music stopped and no greater fools could be found to buy loans or homes .

 
Comment by hd74man
2007-12-28 11:10:23

RE: Short term ownership and flipping of real estate to a greater fool was deemed the investment of choice while the so-called experts in real estate campaigned real estate appreciation as the sure bet road to riches ……until the music stopped and no greater fools could be found to buy loans or homes .

Like you had to be some type of rocket scientist to figure out how all this was gonna end.

 
 
Comment by hwy50ina49dodge
2007-12-28 11:03:14

‘We do not expect significant spillovers … or to the financial system,” Federal Reserve Chairman Ben Bernanke

They are ALL “True Believers” …most… “derived” an “income” from their “collective” sustained belief.

Now the new “Belief” is this: I’ve been “deceived” & “I’m a victim of this deceit” & “We” will “punish” those that perpetrated this “deceit” & “We will “save” those that “suffered” because of this “deceit” & In the year 2008 “We” will vanquish “deceit” throughout the Nation and return the real estate industry back to “normalcy” & 2008 will be the best year ever to buy a home.

http://en.wikipedia.org/wiki/The_True_Believer

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Comment by Matt_in_TX
2007-12-28 07:42:42

The housing bubble was renamed the “Subprime” this or the “Subprime that”.

Mentally containing it, just a little, to loans (and only “dodgy loans” at that). Thus the concern for how loans perform, rather than overpriced houses. And all the interest in propping up housing prices because the problem we have is with bad loans.

 
Comment by Frank Giovinazzi
2007-12-28 07:59:31

That people still don’t get the idea that affordability is the primary issue.

 
Comment by WT Economist
2007-12-28 08:22:04

In a way, the biggest story was the dog that didn’t bark.

Consider all that has happened — the media realizing the bubble was a bubble, the media realizing the bubble had popped, financial organizations admitting huge losses, soaring energy prices, a credit crunch, a dollar collapse, etc. These are the worst economic conditions I can recall since the 1970s and early 1980s, worse than the early 1990s.

And yet employment and the stock market (in total) are up.

Are the U.S. and global economy that resiliant? Or was 2007 the year the sea suddenly pulled away from the shore after an earthquake, drawing onlookers to the beach?

 
Comment by ex-nnvmtgbrkr
2007-12-28 09:30:16

“What was the biggest housing bubble event of 2007?”

The introduction of the Joshua tree as a WMD.

Comment by P'cola Popper
2007-12-28 10:21:43

LOL!!

 
 
Comment by Xpovos
2007-12-28 10:16:06

“We have just experienced a historic year.”
Understatement of the past 362 days.

 
Comment by SFMechanist
2007-12-28 10:33:00

The article (in April I think) in the New York Times that it is better to rent than buy, and stating exactly why accurately. MSM coverage changed after that.

Another watershed event might be the credit freeze that began around November that had central banks of the world scrambling in unison to restore liquidity.

 
 
Comment by txchick57
Comment by Pen
2007-12-28 06:02:11

“Everyone was passing the risk to the next deal and keeping it within a closed system,” says Ann Rutledge, a principal of R&R Consulting, a New York structured-finance consultancy. “If you hold my risk and I hold yours, we can say whatever we think it’s worth and generate fees from that. It’s like…creating artificial value.”

I saw this referred to as, “marking to make believe”.

 
Comment by jim A
2007-12-28 06:47:08

Pooling of risks is used to decrease the chance of catastrophic losses and is then tranching is used to concentrate risks for some bondholders and decrease them for others. The problem is that few realized the degree to which, as the pooling process created a national market for real estate, it corelated the risks enough to mean that tranching did little to segement them.

 
 
Comment by Professor Bear
2007-12-28 05:08:01

Monetary policy is transmitted with long and variable lags. Where will the blizzard of helicopter money that was dropped since August land?

Comment by Mormon_Tea
2007-12-28 05:19:34

Look for creative gifts, loans, and legislative bailouts of INSURERS in particular, would be my guess.

 
Comment by combotechie
2007-12-28 05:24:13

IMHO the helicoptor mulah will be more than cancelled out by the Rapture if the fiat mulah back into thin air from whence it came due to repudiations and bankruptcys.

 
Comment by Professor Bear
2007-12-28 05:28:45

Fed Auction’s Biggest Interest Comes From Wall Street Area
By Sudeep Reddy
Word Count: 355

WASHINGTON — The Federal Reserve’s first auction of $20 billion in loans to banks under an initiative aimed at unfreezing money markets drew 93 bidders, indicating interest from all sorts of banks across the country. But the first details of where the money went suggest the biggest borrowers are near Wall Street.

http://online.wsj.com/article/SB119880644394254559.html?mod=hpp_us_whats_news

 
 
Comment by Professor Bear
2007-12-28 05:17:06

Will the serial bottom callers throw in the towel in 2008? If not, will they be calling for a bottom by 2009, 2010, 2011, 2012 or later this time next year?

Comment by bob carpenter
2007-12-28 05:25:31

There will be a bottom at some point but we wont see price appreciation for years beyond that like some expect. The only reason to really buy a house is to live in.

Sure there will be money to be made but it wont be in the tens of thousands like we just experienced and it will be out of hard work and labor.

Comment by dennisd
2007-12-28 06:30:22

“hard work and labor”

Please, no cursing permitted on this blog.

Comment by Xpovos
2007-12-28 08:08:52

Taxation!

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Comment by SanFranciscoBayAreaGal
2007-12-28 21:02:01

“The only reason to really buy a house is to live in.”

This is what it always should have been. When did buying a house become an investment? A houe is a place to live in. Nothing more, nothing less.

A financial investor on one of the PBS stations told the audience a house is not an investment. To bad that message didn’t get out.

 
 
Comment by WT Economist
2007-12-28 08:23:54

A better question is when should those who said there was a bubble start considering a bottom, or at least the end of the bulk of the nominal price declines. Which is really asking when will the bulk of the nominal price declines occur, in 2008, 2009 or later?

Comment by Professor Bear
2007-12-28 23:40:57

Sooner — I think they are happening right now, and will continue to happen until “much larger than expected” declines in valuations have occurred.

 
 
Comment by hwy50ina49dodge
2007-12-28 11:11:48

the serial bottom callers… will find their exact target location here:

“At ground zero”

Anyone got the gps coordinates for that? … I’ve already investigated “Area 57″ it wasn’t to be found. ;-)

 
 
Comment by Professor Bear
2007-12-28 05:23:37

Will new home sales finally bottom out in 2008 to a level where new home purchase demand is sufficient to match new home supply? What will the big NYSE-listed builders’ profit streams look like by then?

http://www.bloomberg.com/apps/news?pid=20601103&sid=aFnbiogDmxI4&refer=news

 
Comment by Professor Bear
2007-12-28 05:25:11

Economic Malaise Is Widening
By Kelly Evans
Word Count: 467
http://online.wsj.com/article/SB119876201103952607.html?mod=hpp_us_whats_news

 
Comment by txchick57
2007-12-28 05:27:20

Economy and housing an election issue. Gee, who said that would happen over two years ago

http://news.yahoo.com/page/election-2008-political-pulse-voter-worries

Comment by spike66
2007-12-28 18:04:48

Come on Txchick, you’re shortchanging yourself. Don’t forget the bankruptcy reform law…still out there like a tiger, just waiting to snare Hillary when the BKs start ramping up. Think spring.

 
 
Comment by Professor Bear
2007-12-28 05:27:20

Will houses come along with the yards that go up for sale?

Happy New Year? Don’t Bank On It
By David Enrich and Carrick Mollenkamp
Word Count: 1,264 | Companies Featured in This Article: Citigroup, Merrill Lynch, Morgan Stanley, Redecard, UBS

In the credit crisis, banks have been taking extraordinary steps to shore up their finances, selling stakes to foreign investors and snapping up loans from central banks.

Now comes the yard sale.

In a sign that they see tough times ahead, U.S. and European banks are considering sales of everything from branches to entire units. Possible sellers include Citigroup Inc., which may unload or shut several midsize units, and United Kingdom banking giant HSBC Holdings PLC, which could exit all or parts of its $13 billion auto-finance business, say people familiar with the situation.

http://online.wsj.com/article/SB119879191007753637.html?mod=hpp_us_whats_news

Comment by Kid Clu
2007-12-28 12:37:01

Six months from now will I have to bank at the local Shanghai America branch???

 
 
Comment by combotechie
2007-12-28 05:29:09

So, if Ron Paul is to become our new President, do we also get a fresh batch of congressmen?
I’d like to see a return of the “Contract With America” concept of 1994.

Comment by exeter
2007-12-28 05:44:22

“I’d like to see a return of the “Contract With America” concept of 1994.”

Yeah right. A retread of that stupidity so as to finally crash and burn.

No thanks.

Comment by combotechie
2007-12-28 05:50:43

Hey, it worked for a while, there was a hint of a balanced budget that followed.

Comment by exeter
2007-12-28 06:32:09

It seemed to be a truce declared on an ideological battleground between two opposing ideologies, neither of which provide real remedies for real problems on Main Street america.

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Comment by wmbz
2007-12-28 06:51:55

“neither of which provide real remedies for real problems on Main Street america”.

So just what exactly are the “real problems” on main street?

 
Comment by exeter
2007-12-28 07:02:25

By virtue of the fact you have ask tells us the status quo is acceptable to you.

 
Comment by wmbz
2007-12-28 07:21:30

Very weak reply… but expected!

 
Comment by wmbz
2007-12-28 07:24:47

“tells us”

Forgot to ask who’s us?

 
Comment by AnnScott
2007-12-28 09:05:38

Comment by wmbz
2007-12-28 06:51:55
“neither of which provide real remedies for real problems on Main Street america”.

So just what exactly are the “real problems” on main street?

(1) Flat or falling real incomes
(2) Loss of health coverage (47,000,000) or health coverage with unaffordable deductibles and copays (20,000,000)
(3) Diminishing employment prospects. (Job growth has largely been in retail or hospitality such as hotels or restaurant/food service) Plus employment insecurity.
(4) Disappearing pensions for those who were promised
such things. (Telling people to manage their own savings and come up with enough for retirement has never worked in recorded history for 90% of the population.)
(5) Rising cost of necessities - food, heating, medical, transportation (combine this with #1 and it is devastating.)

 
Comment by exeter
2007-12-28 10:21:11

Just click your heels together Ann. All those problems will just disappear!!! Really!

 
Comment by desi dude
2007-12-28 10:29:37

Not sure how many would agree. But any kind of pension, pvt or govt would never be enough for a large population.

Families survived before the invention of the big govt, based on being family. Father helped the schooling of their children and children took care of their parents. Three generations in the family lived together under one roof. Grand children got the benefit of love from grand parents, parents got free child care for their children, grand parents were looked after by their children.
Can we go back? Yes, if the worst predictions on this come to pass, people will go back to survival mode.

 
Comment by wmbz
2007-12-28 11:14:04

Comment by AnnScott
2007-12-28 09:05:38

So just what exactly are the “real problems” on main street?

(1) Flat or falling real incomes
(2) Loss of health coverage (47,000,000) or health coverage with unaffordable deductibles and copays (20,000,000)
(3) Diminishing employment prospects. (Job growth has largely been in retail or hospitality such as hotels or restaurant/food service) Plus employment insecurity.
(4) Disappearing pensions for those who were promised
such things. (Telling people to manage their own savings and come up with enough for retirement has never worked in recorded history for 90% of the population.)
(5) Rising cost of necessities - food, heating, medical, transportation (combine this with #1 and it is devastating.)

So how does one solve these problems? Please, please don’t mention Government intervention.

 
Comment by exeter
2007-12-28 11:41:08

No. We couldn’t have the old boogeyman govt. do anything about it.

 
Comment by Kid Clu
2007-12-28 12:49:53

Desi Dude
Sorry to disappoint you, but we don’t live in a re-run of the Waltons. Anytime you want to live with MY extended family, you are welcome too, but odds are you will wish you had some dull razor blades in under a week.

 
Comment by exeter
2007-12-28 12:52:31

LMAO…..

 
Comment by ronin
2007-12-28 16:18:31

You are forgetting one of the biggest hits on the middle class: Constantly increasing taxation.

Decreasing taxes will allow the American additional funds to afford the other stuff. Raising taxes will have the opposite effect.

 
 
 
Comment by Ben Jones
2007-12-28 05:55:05

‘So, if Ron Paul is to become our new President, do we also get a fresh batch of congressmen?’

Exeter,

I see you bash everything in sight, but at least RP represents a change from the decades long mess in DC. What do you bring to make a change?

Comment by exeter
2007-12-28 06:25:57

Honestly I wasn’t aware I bash everything. I tend to reserve my hammering for the status quo. I didn’t say anything about RP, only the fraud and scam that the “contract on americans” really was. I’ll stand behind anyone willing to take on the corporate and wall street whore infestation of DC. RP may be successful at that task if elected but the republican national crimesyndicate stands in the way of that possibility. So everyone presumes I stand behind Hillary Clinton just because I believe RP isn’t electable? Isn’t that kind of kindergarten logic exactly why the country is so divided? Isn’t that why half the country refuses to vote with their wallet like the wealthy elite and wall street money changers do? Ben, you’re correct on characterizing DC as a “decades long mess” but the constant harping on “govt is horrible” by some on this blog is so boringly stupid and factually incorrect makes me believe there is no hope. Govt. in fact has done more good than bad however, good govt. has been hamstrung for the last 25 years by the screech monkeys who insist govt. has no place in establishing ground rules for everyone to play by. I’m sure this post will draw out the gun freaks, fear mongers and apoclyptic moonbats.

Have at it.

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Comment by watcher
2007-12-28 07:59:31

Honestly I wasn’t aware I bash everything….I’m sure this post will draw out the gun freaks, fear mongers and apoclyptic moonbats.”

case closed.

 
Comment by exeter
2007-12-28 09:57:41

Nice admission. We’ll keep that in mind.

 
 
 
 
Comment by wmbz
2007-12-28 06:13:37

I for one would love to see Ron Paul get in, and will vote for him. However I do doubt that he’ll make it. Also I don’t see Hillary getting the nod either so who’s it gonna be? Don’t know but if we get a another in the endless line of Republodems we will continue down the same broken path.

 
Comment by Lip
2007-12-28 06:40:54

Combotechie,

Ron Paul has no chance of being elected this cycle and if he runs as an independent in the general election, it will only serve to elect the Hillary/Obama/Edwards side because he’ll split the Republican vote. IMO we should be more pragmatic, voting for the best person that “has a chance to win”. Need proof?

1) In 1992 without Ross Perot running and splitting the Rep vote, Bill Clinton never would’ve been elected.
2) In 2000 without Nader running and splitting the Dem’s vote, W never would’ve been elected.

Regarding the Contract with America, what part don’t you like Exeter?
FIRST, require all laws that apply to the rest of the country also apply equally to the Congress;
SECOND, select a major, independent auditing firm to conduct a comprehensive audit of Congress for waste, fraud or abuse;
THIRD, cut the number of House committees, and cut committee staff by one-third;
FOURTH, limit the terms of all committee chairs;
FIFTH, ban the casting of proxy votes in committee;
SIXTH, require committee meetings to be open to the public;
SEVENTH, require a three-fifths majority vote to pass a tax increase;
EIGHTH, guarantee an honest accounting of our Federal Budget by implementing zero base-line budgeting.

http://www.house.gov/house/Contract/CONTRACT.html

Peace to all,
Lip

Comment by Ben Jones
2007-12-28 06:46:41

‘Ron Paul has no chance of being elected this cycle’

That’s what everybody, and I mean everybody, told me when he ran in my district to get back in congress in the mid-90’s. Of course, he won by a landslide.

Oh, and almost everyone was resolutely sure that housing prices would never fall too.

Comment by txchick57
2007-12-28 07:28:10

You were in the Houston area?

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Comment by Faster Pussycat, Sell Sell
2007-12-28 10:52:11

C’mon txchick, keep up! :-)

Even I figured it out. His knowledge of the Houston bust is too specific for him not to have been there.

 
 
 
Comment by exeter
2007-12-28 07:00:54

1. THE FISCAL RESPONSIBILITY ACT- didn’t happen
2. THE TAKING BACK OUR STREETS ACT:check
3. THE PERSONAL RESPONSIBILITY ACT: check
4. THE FAMILY REINFORCEMENT ACT: check
5. THE AMERICAN DREAM RESTORATION ACT: check
6. THE NATIONAL SECURITY RESTORATION ACT: check
7. THE SENIOR CITIZENS FAIRNESS ACT: check
8. THE JOB CREATION AND WAGE ENHANCEMENT ACT: That went a long ways didn’t it.
9. THE COMMON SENSE LEGAL REFORM ACT: You wouldn’t want common folk to have a means to protect themselves would you?? Naaaa.
10. THE CITIZEN LEGISLATURE ACT: Desperate GOP power grabbing made mince meat of this one too.

Comment by Lip
2007-12-28 10:22:54

Exeter,

The fact that not all of these things happened as they hoped doesn’t mean the Contract wasn’t good.

How do you think we supposedly “balanced the budget” during the Clinton years? The Republicans cut taxes which had the effect of improving the economy, which resulted in higher tax revenues. (aka Supply Side Economics).

You doubt job creation and wealth in the last 20 years? AZ currently has a jobless rate that’s less than 4% and we have more people changing classes from lower to middle, and from middle to upper classes, than any country in the world.
Where else do people have more freedom?

Don’t get me wrong, the Republicans could be a lot better, but the Dems bring even higher taxes, even higher government spending, and an even more socialistic tendencies. IMO they’re barely better than the Dems.

I hope that you and yours have a peaceful and healthful 2008.

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Comment by exeter
2007-12-28 10:35:13

“How do you think we supposedly “balanced the budget” during the Clinton years? The Republicans cut taxes which had the effect of improving the economy, which resulted in higher tax revenues. (aka Supply Side Economics).”

Sorry Lip but that is plain factually incorrect and you know it. Clinton raised revenues by raising taxes on the wealthiest folks. It had nothing to do with “supply side” economics. But here’s a fact you can digest or ponder as you wish;

Feb 19, 2007, in front of congress, under oath, Bernanke stated that cutting taxes does NOT increase revenue.

Mar 2007 Hank Paulson, in front of congress and under oath was asked the same question. Paulson gave the same answer as Bernanke.

 
Comment by wmbz
2007-12-28 11:31:16
 
 
 
Comment by AnnScott
2007-12-28 09:13:57

Right and do it all by cutting anything for the most vulnerable people such as the disabled in terms of food assistance, housing and medical care.

They attacked the weak to help the upper 1% and spent on their favorite things like more bombs. Isn’t having th capcaity to blow up the world 3 or 5 times over enough?

Comment by shuzilla
2007-12-28 09:51:21

“Isn’t having th capcaity to blow up the world 3 or 5 times over enough?”

Usama doesn’t think so. Our ability to defeat and destroy a nation or the world has no bearing on roague terrorists who can move somewhat freely across borders. The ability to blast a hole through a mountain has no bearing on angioplasty. We have to find a new way to fight, and we’re doing that… regardless of who gets elected president.

Besides, what some call cuts others call decrease in growth. The argument is that if spending on a program has increased for several years at 8% annually, for example, a proposal to reduce that to 6% growth in spending is seen as a 2% cut to supporters of that program. It’s political mumbo jumbo.

Some programs were set at a fixed annual increase way back when inflation was worse than recent history. Any attempt to bring the rate of increase in line with actual inflation and need is OK by me.

Now, if you want to argue what the actual inflation rate or growth in need is…

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Comment by exeter
2007-12-28 10:18:55

“Usama doesn’t think so.”

Wheeling out the boogeyman…..

 
Comment by shuzilla
2007-12-28 17:04:01

Exeter, your referring to Usama bin Laden as a mere “boogeyman” simply affirms you are completely out of touch with reality. I can get a 9-11 tape to lend you, if that would help ground you a bit.

 
 
 
Comment by Kime
2007-12-28 09:45:43

“IMO we should be more pragmatic, voting for the best person that “has a chance to win”.”

IF that person has a real chance to win. The Republicans don’t really have any chance of winning this time, IMO. The economy will be doing too badly, aside from any other reasons. Their only slim chance is to pick someone who is actually different like RP. So we should vote for the person we think is best for the job, and maybe the Republicans (and other parties that choose their candidates based on what they think will win instead of idealogical beliefs) will get the message when they choose their next candidate.

 
Comment by Michael Viking
2007-12-28 10:47:03

Lip, your “vote for the winner” mentality is the biggest problem with voting in this country. Nobody wants to vote for a “loser” because they’ll be a loser by association. They want to vote for whom they perceive will be the winner so they can be a “winner”, too. That’s bogus. Vote for whom you like. Forget who might win.

As far as Ross Perot goes: if people were like me instead of you, he would have been elected. Exit polls showed he would have won just fine if it weren’t for the “I would have voted for him, but I didn’t think he could win” kind of people. WTF? Vote for the candidate you believe in, not who you think can/will win.

Another huge voting problem is the people who vote strictly on the abortion issue. Give me a break. What does abortion have to do with the problems this country faces?

Go Ron Paul!

Peace,
-Michael

Comment by Not_In_Montana
2007-12-28 15:49:16

Vote for the candidate you believe in, not who you think can/will win.

OK, Fred Thompson it is!

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Comment by aladinsane
2007-12-28 05:31:03

For many, xmas is the one time to connect with the entire family…

Are they clued in to what’s happening, or totally oblivious?

Do tell…

Comment by de
2007-12-28 05:47:13

Are they clued in to what’s happening, or totally oblivious?

Spent holidays with son and daughter-in-law. They’re clued in. They work for the same company, and are being transferred together. They close on the sale of their NJ house in less than two weeks. They did all the right things:
· Set asking price below comps
· Fixed up some things, (mainly flooring in kitchen and bedrooms), but didn’t fall for the granite countertopss and complete makeovers.
· Responded to a low ball offer with a counter. Counter accepted.
· Ended up with a sale, and will walk away with money (they bought in 2001).

Meanwhile they have signed a lease agreement in their new location and will wait until they buy. And yes, renting is a lot chepaer than buying.

Because of this blog and the people on it, there will be one less FB fanmily :-)

Comment by Matt_in_TX
2007-12-28 07:45:04

There is still time to save the… Oh, sorry ;)

 
 
Comment by Paul in Jax
2007-12-28 07:14:50

Further along in this blog someone mentioned that the only people getting it are the first-time buyers and the sellers. Other than those directly involved in the business, I would tend to go along with that.

People who have never owned (Sister 3) are out of it. People who have families and have owned their existing house for awhile are out of it (Sister 1). But sister 2, who bought a non-descript condo in ATL after a divorce in 2005 is beginning to get it. At first she just realized that once you factor in HOA fees and insurance that your tax benefit was more than eaten up versus renting, with no real benefit. NOW she has made the more important realization that her condo is a depreciating asset and that she may in fact not build any equity in it anytime soon. She still has to get from the “anytime soon” to “ever” stage.

 
Comment by Xpovos
2007-12-28 07:24:18

Not family, but not clued in. I got together with a group of casual acquaintances (meet once a month kind of thing) and mentioned that I’d just started renting in a new location. So that got the usual questions, and I was honest and forthright with the data, “I’m paying $1200 a month”, I said. One response was, “Why don’t you buy!? If you can afford that you could afford to buy.” So I pointed out the obvious. No, I can’t. I threw down the gauntlet, if he could find me a comparable dwelling where the PITI would run me -around- $1200, I would buy it, even though I’m not otherwise financially ready. Naturally, no such place was found.

People are so caught up in their own situations, that those who bought 7+ years ago don’t really realize how bad it is out there. But maybe now a handful more acknowledge the affordability issue.

 
Comment by Kid Clu
2007-12-28 13:23:18

I went to the annual Christmas Eve party my boyfriend’s family has. No one talked about the housing bubble, but we did talk about the long reach of the Wall Street credit bubble. His sister and BIL are CPAs who do accounting for many small to mid-size companies in the Southeast. The BIL said that “It is getting really bad out there”, meaning the economy. He also said that he never thought that he would be working for so many companies that had invested in derivatives , like he is now. He (and I) were appalled at the magnitude and pervasiveness of derivative ownership that he has encountered. He said that even a “little-bitty” non-profit that he does work for now owns derivatives. He talked about the difficulty in valuing derivatives, and the amount of documentation he had to read for each one to try and figure out what it was worth. I told him to just say they weren’t worth anything (kind of as a joke). But he pondered this and seemed to think it was a good idea, because he couldn’t get in to any trouble that way.

 
Comment by Kim
2007-12-28 14:27:16

“Are they clued in to what’s happening, or totally oblivious?”

Family is partially clued in, but still gave me a bit of grief for the super lowball offers I made this summer.

 
 
Comment by Professor Bear
2007-12-28 05:31:43

Hedge Funds Feeling Pinch on Credit, Too
By Gregory Zuckerman and Alistair MacDonald
Word Count: 850 | Companies Featured in This Article: CQS, Morgan Stanley, Goldman Sachs, Merrill Lynch, Bear Stearns, Citigroup, UBS, Credit Suisse
It isn’t just consumers who are having a harder time getting credit from lenders.

It’s hedge funds, too.

Investment banks are cutting back on loans to hedge funds, eliminating some clients and raising borrowing fees for others. The lenders are slimming their balance sheets after heavy losses in the debt markets in recent months. And, after taking multibillion-dollar write-downs, they also are becoming more cautious as the economy slows, according to people familiar with the situation.

“Banks aren’t in a position to be accommodating at the moment,” said Michael Hintze, chief executive of CQS, a London-based hedge fund with $9 …”

http://online.wsj.com/article/SB119880712858154541.html?mod=hpp_us_whats_news

 
Comment by Muggy
2007-12-28 05:32:52

I would like to profit from this mess; not greed, but a small piece of cheese for my patience. I would like again to discuss ways to bubble-sit while growing the bank. It’s not enough to have correctly identified it and predicted it; we should all be thriving.

For example, I capitulated on buying a used car a month ago. I wanted to wait, but I needed one now. I predict crazy car reductions in 2008. We’ve discussed this before, but 2008 will be the year of the waverunner fire-sale. I’m not a toy guy, but hey, if you are they’ll be cheap…

Does anyone know of a fund like Lahde’s where you don’t need $250k to play?

Comment by Professor Bear
2007-12-28 05:44:50

“It’s not enough to have correctly identified it and predicted it; we should all be thriving.”

The goal of the War on Savers is to make this strategy difficult and risky to pursue.

Comment by Muggy
2007-12-28 06:08:57

I actually had a relative tell me that saving was “un-Christian” because of a passage in the bible about somebody burying their gold or whatever.

What will they think of next?

Oh well, if hoarding all my loot makes me a nerd, color me Skolnick.

Comment by Paul in Jax
2007-12-28 06:55:42

Sounds like she’s talking about the parable of the talents. One person received 5, doubled and came back with 10, and was praised. Another received 2, doubled it and came back with 4, and was praised. Another received 1, buried it and was admonished for not having an increase.

The meanings of the parable are: always do the best with what you have, jealousy is a sin, and that everyone can improve his lot in life.

Like most fake “Christians,” who like to shuck and jive to harmonized rock music with the word “Jesus” occasionally gratuitously thrown in, and show off their BMWs at the local mega-church, your friend is an idiot.

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Comment by Roy G Biv
2007-12-28 10:38:16

Cutting, but well said.

 
Comment by Kime
2007-12-28 10:41:33

“Like most fake “Christians,” who like to shuck and jive to harmonized rock music with the word “Jesus” occasionally gratuitously thrown in, and show off their BMWs at the local mega-church, your friend is an idiot.”

That is quite a judgment on someone that you know nothing about. It could easily be that they simply misunderstand the passage.

 
Comment by Muggy
2007-12-28 11:49:42

“That is quite a judgment on someone that you know nothing about. ”

No, my relative is mostly an idiot.

 
 
 
 
Comment by exeter
2007-12-28 06:48:36

I’ve been looking in the RV market for a 5th wheel for 2 years now. No price capitulation by dealers or owners yet but with the MEW dried up, it seems to me that dealers will be a bit more motivated than in the past.

Comment by Kid Clu
2007-12-28 13:28:12

Try the south GA area, where most RVs are made.

 
 
Comment by Left LA Behind
2007-12-28 12:39:04

I want to find a way to short Credit Card and Automobile debt. Lahde figured out the MBSs, but what about CCs and Autos? Seems like an obvious play.

 
 
Comment by Professor Bear
2007-12-28 05:34:43

How to live cheap but good…

The Court House: How One Family Fought Foreclosure
By Amir Efrati
Word Count: 1,296 | Companies Featured in This Article: Bank of America , Jones Day

BEACHWOOD, Ohio — Faced with the threat of foreclosure, many homeowners give up and abandon their homes.

Then there’s Richard Davet.

He and his wife, Lynn, lived in a six-bedroom home in this Cleveland suburb for nearly 20 years when, in 1996, he was served with a foreclosure lawsuit. Rather than turn over the keys, he hit the law books. Flooding the courts with papers, Mr. Davet staved off foreclosure for 11 years, until this past January, when a county sheriff’s deputy evicted the couple and changed the locks. They didn’t make a mortgage payment the entire time.

http://online.wsj.com/article/SB119881051300654741.html?mod=hpp_us_pageone

Comment by ozajh
2007-12-28 06:39:47

Evicted “the couple”??

OK, no kids involved to get hurt. I would support the lender keeping after these parasitic scum until they got every cent owing.

 
Comment by safe_as_apartments
2007-12-28 06:57:33

Yeah, but how much time did the guy waste with the frivolous filings? What’s the opportunity cost?

Comment by Roy G Biv
2007-12-28 10:42:51

Then again, how much time to people waste in frivolous discussions of “who is number one” when they play all the games again next year. We atleast ‘learned’ something from his actions.

 
 
Comment by Kim
2007-12-28 14:44:01

Wow… talk about gaming the system. I’m surprised this guy isn’t in politics.

For all the money he spent on lawyers, he could have paid the $4,000 ten times over, assuming he was serious about keeping the house instead of just jeeping up the game of getting a “free” roof over his head.

Comment by Not_In_Montana
2007-12-28 15:55:13

It sounds like he cut his lawyer loose and took over the case himself. It can be done…guy must not have a job though.

 
 
 
Comment by vmaxer
2007-12-28 05:35:43

How about a 2008 predictions thread?

 
Comment by Professor Bear
2007-12-28 05:35:45

Buffett to Start A Bond Insurer For Cities, States
By Karen Richardson
Word Count: 1,330 | Companies Featured in This Article: Ambac Financial , MBIA, Berkshire Hathaway

Warren Buffett, seizing a chance to profit from turmoil in the nation’s credit markets, is starting up a bond insurer that aims to make it cheaper for local governments to borrow and promises to be a tough competitor for the industry’s embattled incumbents.

The billionaire investor’s Berkshire Hathaway Assurance Corp., set to open for business today in New York state, will guarantee the bonds that cities, counties and states use to finance sewer systems, schools, hospitals and other public projects.

The new venture, backed by an almost-certain triple-A credit rating, is likely to be cheered by municipalities and municipal-bond investors …

http://online.wsj.com/article/SB119882407904955371.html?mod=hpp_us_pageone

 
Comment by Professor Bear
2007-12-28 05:39:44

Remember how tourism and other industries were supposed to prop up the SD economy during the housing recession?

S.D. tourism outlook is overcast

‘07 dip in visitors likely to continue

By David Washburn
STAFF WRITER

December 28, 2007

Spiraling energy prices, plummeting home prices and the nationwide credit crunch hurt San Diego’s tourism industry in 2007 and have clouded the outlook for next year as well, according to a report from the San Diego Convention & Visitors Bureau.

A projected 31.4 million people visited the county in 2007, a 2.1 percent decrease from 2006. The county saw fewer of nearly all visitor types, with the number of overnight visitors dropping 3.6 percent and day visitors off seven-tenths of a percent, according to the report released yesterday.

http://www.signonsandiego.com/uniontrib/20071228/news_1b28convis.html

Comment by Lip
2007-12-28 06:17:19

PB,

Not enough Zonies coming over? The future is looking pretty slow over here in AZ with many companies cutting back in 2008, some drastically.

Must admit we went to the OC this past summer. Will have to tell the fetching Mrs Lip that we need to come over to SD this coming summer. My favorite area is the LaJolla beach.

 
 
Comment by Professor Bear
2007-12-28 05:43:22

Where are we headed in 2008 with respect to the housing bubble stages of grief? My sense is that most people are still in the denial (or perhaps oblivion) stage, which has me bracing myself for the anger stage that awaits.

Comment by david cee
2007-12-28 05:58:07

July 4, 2008 Capitulation sinks in. Once the March, April, May - spring buying season doesn’t happen, the unsold listed houses will throw in the towel. Countrywides REO website in Nevada has over 1000 properties, there are over 8000 bank owned REO’s in Nevada. If Countrywide needs to raise cash, joe6pack is in a world of hurt.

Comment by jim A
2007-12-28 06:50:54

Naah, people will keep fooling themselves until Sep. THAT’S when desperation will kick in IMHO.

Comment by Not_In_Montana
2007-12-28 10:12:32

And don’t forget, the presidential candidates will pile on the promises to “fix” everything. They won’t be able to resist.

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Comment by Danni
2007-12-28 06:00:05

The only people in my neighborhood that realize that the winds have shifted are the first time buyers and a handful of sellers….
and even then, the handful of sellers who have had their houses on the market for 1 year or more and have an inkling that there is a problem, still don’t lower their price more than 10k at a time.
Personally, I think the anger is there, just under the surface…hence, the wishing prices are only dropping by 10k. It’s like the equivalent of sellers saying ‘HA, that’ll show ‘em’

Comment by exeter
2007-12-28 06:08:40

“Personally, I think the anger is there, just under the surface…”

More like a panicky fear type anger just under the surface as a result of not knowing whats looming on the horizon. Rather than get past the fight/flight they stay safe by staying in a state of denial. I’m quite easy and light on the hard reality with RE koolade drinkers unless they’re completely arrogant. One never knows the reaction they might get when poking at a RE-tard to hard or too frequently.

 
 
 
Comment by combotechie
2007-12-28 05:48:57

Maybe bling will go out of style to be replaced by practicalibity (one can only hope).
Houses to get smaller, designed to be lived in not designed to impress; No more greeting rooms at the front entrance that are there to merely walk through to get to somewhere else.

Comment by aladinsane
2007-12-28 06:06:29

We are headed into a bottomless pit for many, economically…

Bling will go away by itself, just like it did in the 1930’s.

There were dozens of automakers in the 20’s, until there was just a few.

I once did an appraisal on a set of sterling silver flatware, dating from 1927. It had 8 different spoons, 11 different forks and 7 different knives.

Your great-grandfather’s or grandmother’s bling…

Comment by ille_vir
2007-12-28 06:49:52

Imagining somebody doing an appraisal on some dental grills fifty years from now gave me a chuckle. I wonder what future generations will think of us.

 
 
 
Comment by Ben Jones
2007-12-28 05:49:31

One interesting turn in 2007 was the increasing irrevelance of the NAR. They went from the front of the RE BS to the back of the class. Is the future of the REIC in doubt as a result of their reckless cheerleading?

Comment by exeter
2007-12-28 05:59:47

Didn’t the DOJ file suit against NAR to open up the MLS to everyone?

 
Comment by WT Economist
2007-12-28 08:49:32

I think there may be a replacement of NAR data as the semi-official measure of U.S. housing prices, by the Case-Shiller index or something else. For years there was no alternative, but now there is one. Lots of people are starting to mine deed recording records now, and it seems that the repeat sales method is ascendent.

BTW, I can now get sales of similar houses in my ‘hood right from the NYC Dept. of Finance. Doesn’t help me if no similar houses sell, but I’ll see it when one does.

 
Comment by hwy50ina49dodge
2007-12-28 11:31:59

NAR = New American Recession ;-)

 
 
Comment by Clark
2007-12-28 06:28:21

It is funny to watch the politicians on the TV in Iowa. Obama sounding like a superhero and the Justice League with his, “lets go save the world” LOL Did he always say ‘ta instead of to?

Hillary now says she has been telling the President to do something about the housing foreclosures, ‘er crisis, since March. Can you believe that? Like anything a politician could ever do would have made a difference anyway.

Ron Paul is always slighted on the TV, if it werent for a few of his commercials, a person wouldnt even know he was running.

Last week, after a long absence, the, “We buy houses” signs have reappeared on street corners.

The topic of the day was once how to fix the housing bubble, was there ever a topic, what are the worst things they can do to drag this thing out and make things worse off for all, all in the name of helping? I bet, we’ll watch them do just that.

Heh heh, yard sale, hahahahaha! burn.

Comment by Housing Wizard
2007-12-28 07:03:58

A bad loan is a bad loan …….unless real estate is going up to cover the FB and the lender . How many years will it take for real estate to start going up again ?

 
 
Comment by Ben Jones
2007-12-28 06:33:19

‘Ron Paul is always slighted on the TV, if it werent for a few of his commercials, a person wouldnt even know he was running.’

Here in Flagstaff, I haven’t seen even a bumper sticker for anyone but RP, and every week I see several people waving signs for him at city hall. It’s all young folk, too.

Comment by aladinsane
2007-12-28 06:42:28

We drove from the Central Valley of California to Tuscon and saw tons of RP campaign signs along the way, more than any other candidate, by far…

Comment by cactus
2007-12-28 07:39:04

wow thats a drive, about 16 hours?

Comment by aladinsane
2007-12-28 07:49:48

We did it over a few days…

Our favorite RP sign was on a dilapidated shack, incredibly weathered by the elements, somewhere on interstate 8 near Gila Bend.

A good metaphor for the times…

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Comment by Vermontergal
2007-12-28 07:04:58

There’s a Ron Paul sign up in downtown Burlington (This is the city where our independent and left of center Senator Bernie Sanders got his start.)

The other day I went to a local story time and a woman and her children had Ron Paul pins on. Not the biggest fan of pinning political buttons on kids but Ron Paul has reached the Northeast, too. I have to admit Ron Paul appeals to me simply because he doesn’t appear to have been bought out by special interest groups. McCain had a similar appeal until it was clear that he had sold out, too.

I’m convinced that the issue with lack of exposure is that most of the people who run the media either don’t like, don’t approve, or more simply, don’t know how to explain Ron Paul. My husband and I have met enough print journalists to be underwhelmed in general with their intelligence and ambition (there are notable exceptions, of course). Ron Paul is not a guy that’s easy to describe in sound bites.

We could have a moment this election cycle as when Truman was elected where the media was convinced they knew who had won, only to discover they were the last ones to know.

 
Comment by FB wants a do over
2007-12-28 08:14:50

Here in MA. RP bumper stickers are rarely seen though there are two on my car. This morning I saw 3 RP signs in the front of a house a few streets down from me. It was awesome to see. I wanted to stop, get out of the car, knock on the owner’s door and shake his or her hand. My house in on a dead end street / caldisack, so RP signs in front of our house probably wouldn’t add a lot of value to RP’s campaign.

Comment by spike66
2007-12-28 10:03:38

No bumper sticker sightings, but I do see Ron Paul signs in apt. windows. Well, I see three in ny nabe. But election season hasn’t started here yet. I’m a believer in voting your choice, and leaving the “calculations” to the media. Enough men and women have died to secure that choice for me, so I don’t play it like a chip in Vegas. Even though I have a string of candidates I’ve voted for who’ve lost–I have done my best for the republic.

 
 
Comment by Michael Viking
2007-12-28 11:41:08

Ben, what do you make of the fact that RP never shows up in mainstream polls? When people were convinced he wouldn’t win in Houston and he did, were mainstream polls showing he wasn’t even close to winning?

I’m baffled as to all the money he’s raising, his Internet presence, etc., and yet I think I’ve only met one person over about 40 who’s heard of him. It’s going to be very interesting to see how he actually does in the polls.

 
 
Comment by jim A
2007-12-28 07:24:43

Does anyone think that the prevalence of routine click-wrap licenses for software that few read and fewer understand has contributed to borrowers signing without any basic understanding of loan terms? When signing whatever boilerplate is put in front of you is the norm…

Comment by FB wants a do over
2007-12-28 08:41:17

Good question. The corp america I’m gainfully employed in recently learned a valuable lesson. Seems an end user downloaded a freebie utility, clicked accept on the EULA “end user license agreement” during the install and started using the software. A couple months late the vendor showed up with a lawyer saying we gave them permission via the EULA to audit our company for some of the other licensed software they actually sell. We came out mostly clean and legal, however, it was a wakeup call to ensure we diligently police software licensing within the company. I’m not supposed to mention the vendor by name, however, think PDF.

Comment by Joe
2007-12-28 22:42:23

Um, that’s BS and you guys fell for it. The user had no authorization to enter into an agreement on the company’s behalf.

Comment by jim a
2007-12-29 07:19:39

Big fight that I got into with the IT people at work. I refused to click on one of these because “I have no authority to agree to contracts on behalf of the US government.”

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Comment by Clark
2007-12-28 07:28:04

There are many signs, it is just from watching TV a person might not ever notice Ron Paul. The slant is obvious, sorry, the slight is obvious. The local news shows a State debate, yet only shows the faces or outlines of the, “front runners?” I see the faces of all the other candidates, but never RP.

Worse, our local paper called him dangerous, yet focused on experience and personality on other canidates, not the ideas.

Ron Paul just needs some scandal to make the news.

I think this year they expanded the size of allowable CRP set-aside farmland, do homebuilders participate in this gov program too?

I also noticed a mention that the Fed CAN make loans directly to individuals - first recipeniants of the money benfit and all that.

Comment by hwy50ina49dodge
2007-12-28 11:37:42

“Ron Paul just needs some scandal to make the news.”

He should publicly state that the Earth is 5,999 years old and that he believes that Jesus was left handed. ;-)

Comment by Not_In_Montana
2007-12-28 15:58:18

Well it did just come out today that he doesn’t believe in evolution…

 
 
 
Comment by cactus
2007-12-28 07:32:58

Will the housing bubble cause long term changes or is it just another bubble that will end in a year or two? Is it possible that the ownership society is over and renting is the future? And in this future will the landlords be foriegn? They seem to be the ones with the deep pockets and willing to invest in US banks. A new Pottersville?

Comment by Frank Giovinazzi
2007-12-28 08:12:53

We haven’t spoken much about this, but I think when huge numbers of houses foreclose all at once, including those who just walk, investment funds will come in and buy blocks of homes at 10-30 cents on the dollar.

There will be rental farms in America, similar to company towns.

While mgmnt companies prefer multifamily buildings to manage, SFHs in a geographic cluster can be handled, and will give new meaning to the term, slumlord.

Look for nabes with 65% subprime penetration, marginal quality and then look for a mass default. This will of course occur everywhere, once the hundredth monkey in your locale gets hit on the head with the financial coconut.

I know other parts of the country have empty new stock and recently built and vacated properties, so your results may vary. I am looking at a couple of areas in Suffolk County, NY with older, rundown homes where I think this is highly possible. Depending on how bad it gets, would a big clearinghouse sell me a thousand homes for $20 million? [or 20K per?]

Rental farms, coming to a neighborhood near you.

Comment by jim A
2007-12-28 08:24:44

But older neighborhoods don’t generally have the high concentration of FBs that newer neighborhoods do. ISTM that this is more likely in newer exurban developments, where EVERYONE bought at bubble prices. If enough banks or flippers want/need to sell they can band together to change HOA rules that discourage absentee ownership.

Comment by Frank Giovinazzi
2007-12-28 09:28:56

Jim, that’s a good point about the newer developments, and I agree about certain older neighborhoods, that have long-term owners, but there are rundown ones where higher concentration of immigrants/fraud/general poverty allowed for flipping and refi. I’m watching 2 nabes in Suffolk County where I see the rental farm concept occurring.

As far as HOA and absentee ownership, what happens if I buy the whole development? Call me massa’, that’s what. There will be many that turn into virtual jails for the renters. See Neil Stephenson’s Snow Crash on this funny and scary concept.

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Comment by cactus
2007-12-28 09:53:56

If its cheap enough old homes can be demolished and apartments can be built. Common in the San Fernando Valley CA in the 1980’s. Central Planning of dense housing near cities and transportation once gasoline really gets expensive. These kinds of economic set- backs give politicians reasons to exert more control over populations as they can’t seem to control their own finances.
Thats right Rental Farms with names like “Park Place” or “Riverwalk” so they won’t feel so slummy.

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Comment by ahansen
2007-12-28 09:35:30

Municipalities brought to you by KBR.
(GWB perpetual CEO)

Fire/security by Blackwater. Schools by News Corp. etc.

 
 
Comment by yogurt
2007-12-28 08:14:02

Home ownership, either by owner-occupiers or landlords, will make sense in the future for the same reason that it made sense in the past, up to a few years ago.

When it’s cheaper than renting

 
 
Comment by aladinsane
2007-12-28 07:40:30

U-Haul rates from perceived big cities in trouble to perceived smaller city havens, are quite extraordinary…

When it costs twice or 3 times as much to get out of dodge, versus getting into dodge… means people are leaving in droves~

It’s such an honest barometer of what’s what.

 
Comment by watcher
2007-12-28 08:20:29

If anyone had said at the beginning of the year that the dollar index would be below long-term support of 80, I would have expected a cascading financial disaster. Well, I still do expect one but it is progressing more slowly. So as food, fuel, healthcare and everything you buy goes up in price, how do you plan to survive the dollar devaluation? Flee the country, bury your gold, ignore it and hope it goes away? Whither the withering dollar? When will Joe 6Pack finally reach is pain threshhold?

http://quotes.ino.com/chart/?s=NYBOT_DX&t=f

Comment by aladinsane
2007-12-28 08:45:52

We were quite taken by Casa Grande in Az.

Smack dab in the middle of nowhere.

Per capita income of $16k…

45 miles to Phoenix, 70 to Tucson.

Each roundtrip car visit to those locales is around $15 or $25 currently.

The A/C bill in the summer has to be mighty.

How much longer can people last, before push meets shove?

Comment by rms
2007-12-28 23:00:54

“We were quite taken by Casa Grande in Az.

Smack dab in the middle of nowhere.

Per capita income of $16k…

45 miles to Phoenix, 70 to Tucson.”

Nice rural countryside for the titanium road bicycle, and world-class skydiving 20-minutes away in Eloy.

 
 
Comment by spike66
2007-12-28 10:08:16

watcher,
good question. I understand the smart money is on index puts, but since I am the dumb money, I am on the sidelines in treasuries and cash. I am always interested in what shrewder folks are doing, but dumb money like me is neither nimble nor courageous. And that will probably cost me big time.

Comment by watcher
2007-12-28 10:16:42

I’m a HBB energy investor and gold bug from way back, and I don’t trade it. Just buy and hold and sell to rebalance.

 
 
 
Comment by aladinsane
2007-12-28 08:24:31

How about Fear…

Is it creeping into people’s minds?

http://www.youtube.com/watch?v=grhNs_m-s1o&feature=related

 
Comment by Salinasron
2007-12-28 09:36:13

“Lenders were making loans which far exceeded the fundamental valuation of the property based on income”

Yes, most of us here saw this as a housing bubble. For us it wasn’t hard to see as housing costs far outstripped income costs to support it. But I think that we failed to see that housing was masking a ‘liquidity bubble’. Bankers were not only throwing easy money at RE buyers but at the same time throwing money out for CC’s and mortgaging the future in automobile sales, tv’s, motorcycles, motorhomes, etc through the buy now pay later ‘how’a much’a month it a’gonna cost me’ plan. This is why 2008 is going to be a real eye opener for wall street and government officials who still don’t get the depth to which this foray into fiscal irresponsibility has taken this nation and others as well.

 
Comment by aladinsane
2007-12-28 09:53:49

What about Mother Nature?

Has she been up to mischief in your neighborhood?

San Diego is looking to be ground zero for the real estate bust, and has just had the dreaded Quagga mussel invade it’s 5th reservoir, since the summer.

“Quaggas, which are native to Ukraine, were first found in North America 18 years ago in Lake Erie. They apparently hitchhiked to the United States in the ballast water of oceangoing ships.”

“The mussels are impossible to eradicate once they become established in a reservoir, lake or other body of water. They clog pipes and screens at power stations, water treatment plants and agricultural irrigation lines. They also foul pumps and motors exposed to water.”

http://www.signonsandiego.com/news/metro/20071225-9999-1m25quagga.html

Comment by combotechie
2007-12-28 11:55:24

So what keeps down the quagga population in he Ukraine? Some sort of fish? Otters maybe?

Maybe the solution to the problem isn’t all that difficult to find.

Comment by aladinsane
2007-12-28 13:12:37

Maybe the problem was constructing the St. Lawrence Seaway, allowing access to the Atlantic Ocean, and the Soviet ships that brought the Quaggas 20 years ago?

It took just one generation to go from there, to the Pacific Ocean.

http://en.wikipedia.org/wiki/Saint_Lawrence_Seaway

 
 
 
Comment by Jas Jain
2007-12-28 10:02:25


ECRI’s Unrelenting Mantra of “stronger housing activity” During 07/06/07-11/16/07

Nov 16, 2007: “The effect of higher rates and jobless claims was partially offset by stronger housing activity and higher stock prices, said Lakshman Achuthan, managing director at ECRI.”

“NEW YORK, Sept 14 (Reuters) - A weekly gauge of future U.S. economic growth edged up due to higher stock prices, lower interest rates and stronger housing activity…”

“NEW YORK, Aug 10 (Reuters)…The fall in the index was partly offset by stronger housing activity, Achuthan said.”

“NEW YORK, July 13 (Reuters) - A gauge of future U.S. economic growth rose in the latest week due to measures of stronger housing activity, lower jobless claims and higher stock prices…”

“NEW YORK, July 6 (Reuters) - A gauge of future U.S. economic growth edged up in the latest week due to lower interest rates and stronger housing activity…”

Talk about clueless economists, or dismal scientists. Where they blind to the reality or were they purposely misleading the public?

Jas

 
Comment by watcher
2007-12-28 12:04:43

How about a look back; where were we right, and wrong? When I started reading this blog I thought we would be further along in the correction by now. I expected a faster crash with 2007 as ‘crash year’ and a bounce along the bottom for years after. It seems the train wreck will be a bit more slow motion, but still as devastating.

Comment by Salinasron
2007-12-28 16:47:50

“I expected a faster crash with 2007 as ‘crash year’ and a bounce along the bottom for years after.”

Wow, how could things start unwinding any faster. The exposed soft underbelly of this fiasco has hit with lightening speed in WS and banking here and around the world. The depths to which this delves exceeded my comprehension at the time, and is truly potentially frightening and far reaching. Stop looking at a few trees and see the forrest.

 
Comment by San Diego RE Bear
2007-12-28 19:36:28

I thought (years ago) that December of ‘07 would be when I started house hunting and sometime in 2008 would be when I buy. Unless something drastic happens that timeline has been put off at least two years. :( So I guess I’m not very good at predicting when the bottom will occur. However, although the correction started well after I thought it would, the past few months have been breath taking in the acceration and 2008 should be a fascinating year.

 
 
Comment by Charles J Gervasi
2007-12-28 12:05:52

Inflation is coming

The deflating housing bubble will pressure the Fed to keep rates low, even as inflation picks up. This will make the bust more tolerable to the average homedebtor. Inflation will be around 8%, and the NAR will be boasting 3% nominal increase in real estate prices.

Long-term rates (and mortgages) will rise steadily. This will keep inflation-adjusted prices falling for several years. People will forget ever having thought of housing as an investment instead of an expense.

This whole thing will take at least five years right now to play out.

I would like to see discussion of how the average investor can benefit from rising inflation.

 
Comment by rms
2007-12-28 19:43:13

How about the year’s best threads?

Here’s my vote:

Comment by HK_Vol
2007-09-08 05:56:49

http://thehousingbubbleblog.com/?p=3383

 
Comment by Professor Bear
2007-12-28 23:56:19

Is this the news that led the DJIA to a +6.26 point rally today?

Sales of New Homes Off Sharply
By KELLY EVANS
December 29, 2007

Sales of new homes fell an unexpectedly sharp 9% in November, while small gains reported for the previous two months were largely erased by downward revisions.

The magnitude of the decline, reported by the Commerce Department, surprised economists. Based on earlier sales data, some had hoped that the housing market might be beginning to stabilize. Joshua Shapiro, chief U.S. economist at research firm MFR Inc. in New York, called yesterday’s report “stunningly weak.”

At the current sales rate, it would take 9.3 months to sell off the backlog of houses — a level exceeded only twice since 1981. That suggests that prices will continue to fall well into next year.

http://online.wsj.com/article/SB119884885661555567.html?mod=hpp_us_whats_news

 
Comment by Professor Bear
2007-12-28 23:59:25

From freeze to squeeze: lexicon of a crisis
By Lorien Kite

Published: December 28 2007 19:38 | Last updated: December 28 2007 19:38

An appreciation of moral hazard was not the only reason to wince back in September when Adam Applegarth, then chief executive of Northern Rock, took to the airwaves to explain the lender’s decision to approach the Bank of England for support. “We can’t tell when the global freeze is going to unwind,” he said.

It would be a stern pedant who took him to task for the infelicity. Stylistic elegance is one of the first casualties of disordered times and Mr Applegarth was not alone. Indeed, such has been the riot of metaphor as bankers, regulators and commentators struggled to explain the collapse in interbank lending to a confused public that pretty much everyone has stumbled.

http://www.ft.com/cms/s/b9ab959a-b554-11dc-896e-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fb9ab959a-b554-11dc-896e-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

 
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