Bits Bucket And Craigslist Finds For January 20, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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WCI Communities
http://www.sptimes.com/2008/01/20/Business/WCI_Communities__awas.shtml
“October 2005: Appointed ambassador to Portugal, Hoffman resigns from WCI. Earlier in year, the stock peaks at about $36.”
Nice timing.
I saw we auction off these non-critical ambassadorships to the highest bidder and pay down the deficit.
And he will be out of a job after Bush is gone. Hoffman is a big-time Bushie, which is how he got the job in the first place. Good thing he has millions cause his former company probably won’t be around when he comes home to Florida.
WCI: The Company That Couldn’t Lose
(Yet, they did.)
Cash customer angered when credit card users given preference in line.
This seems a bit out of place. Cash transactions are great, but they may generate change and as such may need to be handled differently. The larger lesson to take from this is that Best Buy has an extremely spotty customer service record, so it might be wise to consider alternative vendors. To claim this has anything to do with the bubble or credit versus cash for consumer purchases is going pretty far.
Hey, it’s the Bits Bucket after all.
Who made that claim?
The powers that be, have made a concerted effort to get rid of cash transactions on a retail basis, and have spent quite a bit of dough on tv commercials showing what a loser you are if you don’t use plastic.
Why?
The only place i’m aware of that welcomes cash with open arms is a few gas retailers, which will give you around 1-2% off, vs. using plastic.
Interesting. The largest liquor store in all of Texas (”Specs Liquor Warehouse”) has long offered somewhere btw. 5% to 10% discounts on cash transactions…
The tv ads are aimed dead center @ our go-go young adults, who have to be in constant motion @ all times, especially on the phone.
The tv ads are aimed dead center @ our go-go young adults, who have to be in constant motion @ all times, especially on the phone.
If I was allowed only one thought to define the twenty-somethings, that would be it.
Maybe they had lines with no cash drawers. No retailer large or small would rather take credit cards than cash. I used to own a small store and believe me all retailers have to pay 2-3% of the purchase price if someone uses a credit card. We have a large Marc’s store in this area that does not take them, even now. That 2-3% really cuts into the bottom line over time, if everyone uses credit cards. If a store does $1M a year that’s $20-30,000 in credit card charges that they have to pay to the cc companies. Now I can see limiting checks, because that’s a whole other ball game. We once took a check and the person gave us their driver’s license. Matter of fact she did it all over town. She looked just like the photo and it was an ID that she had stolen over a year before. The bank account was even closed, but back then we had no way of running the checks thru machines to verify. We were all out the money. Give me cash every time.
There are costs associated with keeping cash on hand. I’ve talked to several business operators who told me that it’s a wash as far as CC surcharges vs. cash. Most accept credit/debit cards because these are convenient for both the merchant and the customer. Even the family-operated independent convenience store in my neighborhood accepts them, albeit with a $5 minimum.
Mole Man seems a bit out of place.
Try throwing some “toilet humor” his way…..he loves it, just absolutely loves it.
LOL!
RE: Best Buy has an extremely spotty customer service record,
It’s the same with any big box retailer.
One should be especially careful relative to yard equipment.
Lowe’s & HD sell Toro & assorted other products which have different model and build specs., aka “cheap”.
My local small biz Toro dealer either refuses to work on their stuff, or, you’re put at the tail end of the service work being done for his personal clients-which means winter or summer could be over before he gets to your machine.
In the end, it pays to patronize the small guy-but J6P seems to be incapable of figuring it all out.
“RE: Best Buy has an extremely spotty customer service record,
It’s the same with any big box retailer.”
In my experience, Best Buy is the worst of the lot. So I avoid it completely.
I wonder if they keep giving this kind or preferred treatment to CC customers in a few months time, when many of them have to try ten cards before they can make a valid transaction…
in my country creditcards are used very little (just a few %), but cash is mostly replaced by debit cards and other electronic payments. Works very nice on those days (a few times each year) when the banking computers crash and for hours no one can pay except the few that still have real cash (although sometimes you then get the problem that there is insufficient change …).
Problem with the debit card here is our bank charges us to use them as a debit, so you have hit cancel and then credit. If you need to return something you have to use your card again because they can’t give you cash back. I also noticed that when I come home from shopping and look at my online bank account the purchases are credited immediately and the debits at some stores are delayed 2-3 days.
I bet they only have one clerk they can trust with a cash drawer. CC’s may charge 2-3% but who knows what percent a desperate worker will manage to skim!
Dow 6,000 or Dow 14,000?
I vote 14,000. Don’t fight the Fed.
–
You cannot be serious! Are you?
Jas
Always 1/2 serious…
IMO, anybody betting even money on a down 50% event happening before up 17% in a highly liquid market is not acting rationally.
“I vote 14,000. Don’t fight the Fed.”
i agree likewise. The fed will dump buckets of cash into consumer pocketbooks by simply printing out mountains of offical US counterfeit currency. Just the mere mention of $800 fed stimulous money to each j6p will get 6pac to get out there and spend as he is supposed to according to Pavlovian behavior theories . Even if the $800 dosen’t materialized right away it is a phychological ploy to senf j6 into a premature spending tizzy. Also this is election yr and the Bush administration/fed must juice up the stocks if nothing else even if they trash the $. U see they can and will distort the inflation numbers thru tricks so that jor6 will not notice that he is spending 8-10 % more on everything. Like a live frog slowly boiled in water.
Dollar trashed , real inflation 8-10%, dow stocks get a booster jump start to put temporary life into a dying battery, all during 2008 election year. Hell, there may even be a hidden plan XYZ in inner pentagon think tanks/war rooms to initiate a war with Iran to boost gov’t deficet spending as a red- bull style stimulant to a sluggish economy? Wars traditionally do that. Check out history of all US Wars in 20th century and their effects on economy.
“Just the mere mention of $800 fed stimulous money to each j6p…”
$140 bn stimulus / 114 m U.S. households = $1228 / hh
(I expect the stimulus per hh to be “larger than expected”…)
Take the sum of the two and divide it = 10,000 is the bottom.
That’s Abby Joseph Cohen calling for Dow 14,000. Considering her track record from the dot-com debacle, why are they even talking to her???
An economy built around extravagance is starting to collapse
“Two-hundred-dollar pairs of denim were plausible when home values soared, but now $100 jeans are looking more reasonable.”
Two hundred was outrageous and one hundred is hardly reasonable when you can get a decent pair of pants, on sale, for well under 50.
You can get very decent jeans at Costco for $14.99
yes, 10 euros in my country (including 19% sales tax) from some shops; a bit limited choice in sizes, decent quality. The American brand stuff costs usually far above 100 euros over here (and sometimes the quality is even less).
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“yes, 10 euros in my country (including 19% sales tax) from some shops; a bit limited choice in sizes, decent quality.”
This is turning into a deflation argument here. I was at Costco yesterday and bought a “cheap and nasty” pizza with six toppings for $10.79 and that is a really large pizza that feeds four.
Other items that I picked, the prices have not gone up in years that I can recall and the same is the case with pizza price. I am taking beer to a football party and all the beer that I am taking – Beck’s, Heineken, MJD & Sam Adams – cost me average of 75c (I buy 18/24 bottle packs, all of them go on sale every few months, and store in my cellar, mostly for friends). I doubt that it was any cheaper ten years ago (cans are slightly cheaper). The food at the party is BBQ Tri-tip, potatoes, salad, etc., but if one were to have a Costco Pizza and beer party it would be $5 per head. Beer and pizza parties were quite common in CA tech companies that I worked for and I don’t recall cost being any lower going back 25 years.
All the clothing is cheaper or at most the same price as 10-20 years ago. There are both deflationary and inflationary in the US economy and as money available to spend shrinks broader deflation will dominate over inflationary areas.
Jas
RE: I am taking beer to a football party and all the beer that I am taking – Beck’s, Heineken, MJD & Sam Adams – cost me average of 75c
Beer around here in the Northeast is thru the roof.
$8.00 a rack when a couple years ago micro’s could be had for $5.00.
I attribute most of the increase to shipping and the business’s employee health insurance costs.
There’s nothin’ deflationary about these outlays.
“This is turning into a deflation argument here. I was at Costco yesterday and bought a “cheap and nasty” pizza with six toppings for $10.79 and that is a really large pizza that feeds four”
A large 16″ , 12 slice pizza, regular crust, with peperroni and cheese would have cost $2.00 for the costs of the materials (pizza dough, sauce, cheese, pepperoni) back in 1995. Domins would charge $13.00 regular price fior that pizza. That was an 11.00 profit for each large 1-topping pizza sold.
Yes that $10.79 would seem to indicate deflation in pizza prices. Or more likely pizza operators have to shrink the amt of profit per pizza sold in order to stay competitive in the hyper comopetitive pizza business.
My guess is that pizza w.six toppings with plenty of cheese and using only quality ingredeients, not cheaper subsitutes, woulds cost over $5 to 6.00 just in the food ingredient costs. So Costco/costco pizza concessionaire is only making $4-5.00 profit for each lg pizza sold. They are probably running it as a loss leader item to draw in customers.
I used to do a lot of corporate selling of large pizza orders for Domino in the 90’s. 10-pizza order say on a friday for corp XYZ i give 15% discount on 10 large 1-toppings and i could still make a healthy profit. It’s called volume selling at discount to keep the cash flowing -cash flow thru volume selling at discount is one way to get thru a recession, thou u might be deep in the red by end of recession cycle.
Beer specifically will be getting very expensive due to the big worldwide shortage of hops. So stock up while you can, Jas.
“Beer specifically will be getting very expensive …”
Ditto for kegs, as thieves have been stealing them to capture the scrap value of the non-PM (stainless steel) from which they are fabricated in a time of high scrap metal price inflation. (I seem to recall that one of Alan Greenspan’s favorite stealth inflation indicators was the resale price of scrap metal.)
Legislature to act on an epidemic of stolen beer kegs
TALLAHASSEE
Florida lawmakers are getting serious about keg thieves.
A bill (HB 105) moving through the House would make it more difficult for someone to sell a beer keg to a recycling yard unless he or she can prove ownership of the stainless steel container. It seems keg thefts have become a serious problem nationally and are emblematic of a broader problem of thieves finding a more lucrative market for scrap metals because of the high demand in places like China and India.
http://www.heraldtribune.com/article/20080106/NEWS/801060435/-1/newssitemap
“Legislature to act on an epidemic of stolen beer kegs”
That is like the edpidemic of stolen catalytic converters we are seeing in LA, for their platinum value, at $50 a pop which U can recycle at plenty of scrapyards and third-world auto junk yards in such ghetto cesspool industrial grimy areas as compton, gardena , Wimington, LA port district,ect. There is a hugh, hugh black market in stolen junk auto parts in LA, and IE as well, with no regulation and oversight by local authorities. I suspect with the current bull run in metals commodity prices expect a surge in all types of property crimes targeting autos, foreclosed properties, stolen pipes and elecrtcical panels/parts in constrcution blgd zones, ect. Might be a good ooportunty to go long on metals scrapyard dealers, or invest in a metal scrapyard business. Dirty work but may be money in this stuff.
I wonder if the thieves will be targeting the transmission under your car next. Lot of heavy metal there.
You can get them for less than that at the thrift stores.
I very rarely get good used jeans at Goodwills or thrifts. (I may have one or two in my years of buying at these two outlets.) If you are a medium build male then they don’t have your size. (They have “high school” thin and “middle aged” fat but nothin’ in between.) Plenty of choices and sizes for women though.
Depends how dedicated you are. Almost all my clothes and my girlfriend’s clothes come from thrift stores. With perseverance, we find pretty much everything we want. (Although I’m still on the skinny side of the equation, which helps.)
$13.63 for stretch waste pants at WALMARTO’
it’s a big country
I usually scrounge in the dumpster for my jeans.
Just got 2 very nice Nautica dress shirts at BJ’s. 16.99
I shop at sams club all the time.Scored a nice izod jacket for 14.98 the other day.I do not pay high prices for name brands.
$20 a pair is my absolute upper limit.
Sams Club or Costco, $12.87.
Gosh I always buy Levi’s when they’re on sale at Macy’s for $18-22. I can get 4 pair for a hundred bucks.
Same here - and that goes for khakis too. It’s easy to find deals like that - unless one purposely wants to squander their money (time and labor) to try to impress a bunch of foundering debtors.
“The trading up phenomenon is quite recession-proof,” Mr. Silverstein said. “It might slow. But it’s way too early to say it’s over.”
I’m behind Mr. Silverstein on this comment. The people I know aren’t giving up those items without a fight. After all, those purchases define who they are.
The decision to give up those materialistic aspirations won’t be theirs - it will their employers.
Ugh - it will be their employers’ decision.
Like they will have a choice!
However, that’s not the real point.
The point is that even if the consumers pick and choose, the business models that were built around them are not viable to that degree. They have to be scaled back (and considerably so.)
For me, the problem was obvious. When I saw people who couldn’t boil water much less an egg but $600 skillets and saucepans at Williams-Sonoma, you knew the company was in trouble down the road.
I like the 100L+ kitchens complete w/20K stove where only the occasional caterer ever cooks.
and you know . . . if you like that kind of cookware, you can get it for much less than WS prices. I like it and the LeCreuset things too but I get them at Tuesday Morning. I’ve gotten those $200 dutch ovens there for $35.
I’m fond of LeCreuset too, and I crave those saucepans but have no place for them now.
Thanks for the tip!
I’ve never actually bought anything at WS. However, if I have to actually be in a mall, I might as well not be bored so I cruise WS and laugh at the idiocy.
Egg poachers? Special Martini makers? Egg crackers?
You can’t make this stuff up. WTF?!?
The WS in our town,has great food samples on the weekend. I’ll give WS credit for 3 things:
1. Great Merchandising
2. Appealing to snobs who want to be seperated from their $.
3. Great theme bakeware. We love our railroad cake pan (6 styles of railroad cars).
I’m sure all you ss cookware fans know about Bar Keeper’s Friend. Walmart has the best price. Its a Godsend for ss.
I have nothing against WS. Their stores are beautiful, and they certainly inspire equipment-lust in me.
However, the snob appeal is what irks me.
Reminds me of this time I was at a fancy design place in SoHo and I told the person that the layout of their model kitchen was ludicrous. Clearly, the designer had never actually done any cooking herself. You had to walk around from the “prep space” to the burners. It was borderline retarded.
Her face curdled. I had to be dragged out because I laughed in her face.
Le Creuset has some outlet stores with pretty good deals.
Church rummage sales in swanky neighborhoods (in Chicagoland, the northern suburbs) are my favorite place to score expensive cookware and kitchenware for pennies on the dollar.
I did that too when I lived in Chicago!
Swankeroos didn’t even know what they were throwing out.
I bought Calphalon cookware out of college since it was on sale 20% off. I buy quality once VS crap every few years. We still use it 15 years later and they are just as good. We recently bought COSTCO’s version of the same pans for family at half the price and they are just as good quality. I highly recommend the ‘cheaper but same quality’ COSTCO version.
Not only that, but Costco pans have lifetime warranty and good customer service. I second this recommendation, becauase even the snooty girls I invite over from time to time love the look of the pans and think I got them at WS. hahaha
Eventually the people that are putting all of these luxury goods on credit cards and then making only the minimum payments will run out of steam.
I know several couples that do this. They are always broke, but still spend, spend and spend some more. They let their home phone go directly to the fax, because it is a bill collector calling, yet they still bought the kids about $800.00 worth of garbage per child and spent $500.00 each on themselves for Christmas. All on credit cards, and again they are paying their car payments late.
I think there are a ton of people just like these couples across the country and they are just a small speed bump in the road away from total financial meltdown.
I think there are a ton of people just like these couples across the country and they are just a small speed bump in the road away from total financial meltdown.
There are tons of people like this. Only here they disconnect the home phone and only use their cells, because those numbers aren’t listed.
This is the real entitlement mentality. People feel entitled to live in luxury. Luxury is now the norm. I think there was a time when middle class folks knew they were never going to live that way and mostly didn’t care. Now it’s all aspirational.
DISAGREE! The real problem is that people knew they were NEVER going to aspire because aspiration was not in the cards for them. Their lives were never going to be better than their parents’.
Yet the parents are still alive and neither the parents nor the children can face the pain that the kids will always struggle - no matter how hard they work.
Add in the fact that the parents, who likely have pensions, Social Security and solid 401(k)’s, are now drawing down those dollars and having a blast in retirement and you can see how the resentment plays itself out in luxury aspirational spending among disaffected youth and middle-agers.
I can tell that some couples play a game, I won’t say anything if you buy X if you don’t say anything when I buy Y. A little mutual permission thing, while their finances go down the toilet. Ending in the Big D of course..
Unintended Consequences (a review) “this year, which happens to be a sabbatical year, the poorest Jews in Israel who wish to eat only food grown on non-Jewish land [as required by ancient Jewish law] are left to buy imported goods at double or triple the regular price — all in order to uphold a law meant to help feed the poorest Jews in Israel.”
The reason “the poorest Jews in Israel” are poor is that they believe that sitting reading the Torah and Talmud is more important than working, and many of them live on welfare.
Needless to say the rest of the Jewish population has little sympathy for them.
I have a BIL like that, who is Hasidic. He was raised in privilege, and although well educated, has no work ethic. He spends his days on rituals and other BS.
The rocks in my sister’s head, match the holes in his.
Agreed. As a jewish person myself I’ve always seen the Hasidum as a cult.
It is a cult for the dysfunctional. My BIL has a Trust Fund (his family was famous) and likes to mooch off my parents. Boy, talk about two low lives. The kids didn’t have a good childhood. What a bunch of screwballs.
we are looking at chrysler’s new mini-vans.our old one is 9 yrs old,bought new.Is now a good time,for auto buying,or will rebates pick up a mo. from now ? our quote is about 16% off of sticker price now.
As time goes by, the car companies will be getting hungrier. I also think the end of the month is the best time to buy.
Like you, we bought our Dodge mini van 10 years ago, but Mama’s not going to be getting another mini van this time. We’re going to be getting the Honda Pilot by the end of ‘08.
sounds high.
Consider a 2-3 year old off-lease car and save ten grand (or more)
Also what we found that gave us a great discount is if the ‘08 models are out don’t look for an untitled ‘07 model on the lot. Look for an untitled ‘06. We did that in ‘06 and saved $12k on an ‘04 never been titled with 300 miles on it. It was loaded and really there was no reason it hadn’t sold, it was just one of those leftover cars on the lot. We did the same with our ‘98 concorde in 2000. Then we drive them 10 years, so we get our money’s worth out of them.
I think car dealers are pretty hungry these days. I agree with evildoc, though - go slightly used. I recently traded in my 2001 gas-guzzling Explorer for a far more economical 2006 Pontiac Vibe with less than 20k miles. Totally talked the dealer into giving me what $$ I wanted for a trade-in even though we were miles apart at first. That, to me, said hunger. (Although it did help that I was paying the balance in cash, I suppose.)
They are hungry. Went to a Mazda delaership yesterday. Saw an 08 Tribute stickered for 19k on sale for 13,900.. Very tempted.
if you can buy from the owner you save the 12-20% the dealer charges on used cars,plus you get facts on how the car was maintained
got synthetic?
more 2 cents
At the end of the ‘08 model year I might buy a new Honda Civic IF the dealers are giving ‘em away. This is a very popular model but even so there is a possibility Honda will build more than people want. If the dealers have too many and they still do not want to give ‘em away then I won’t buy.
This is how the new car market differs from the housing market. New houses can sit MT for years before they are either sold or razed. Not true for new cars; they are discounted as much as they have to be to move ‘em when the new model year arrives.
Civics and the small Toyotas are about the only cars that make sense to buy new. The used ones are way too close in price to the new ones to make a compelling arguement to buy used vs. new.
I’d recommend buying new, as prices for these items will soon soar (particularly if it uses a lot of imported content). The country is basically reverting back to the 50s where the luxuries that did exist were out of reach of most people…and even basic items were very expensive (hence the small houses back then, for example).
The reason for new is so that you can ride this storm out without having to buy again right in the middle.
No, they won’t.
You can’t sell something to someone if their income doesn’t support it. This is going to be the dominant part of the equation.
Put differently, the foreigners can ask for any price they want for a part but what matters is what customers are willing to pay, and their willingness is linked to income.
Why is this argument not second-nature? Why do we keep having to repeat it, once for houses, then for cars, ad infinitum?
Don’t agree…cars are not priced on speculation, like houses and stocks are. They are priced based on cost to produce and then sell, and right now the larger vehicles are priced to the bone. As the dollar plummets and prices go up, sales will simply drop - in this country.
It actually is the same with housing, which is why new construction is now coming to a stop. If houses cannot be built and sold at a profit, they will not be built. As to the housing market overall, you bet it’ll plummet…there are simply way too many houses available relative to demand…even at reasonable prices.
Tell that to GM. Cars are a speculative purchase, people bought SUVs to look cool. Even selling a $45k Tahoe at $30k has a $10k profit built into it.
Car prices are getting ready to fall drastically. The industry will have a collective ‘Oh sh$*’ moment around July when the realize that hitting 14.5 million sales this year will require luck (or basically, a case which a GM-official described as very problematic back in 2003, right before the infamous employee pricing deal)
Run the old one into the ground. 9yrs.? eh, she’s just broke in.
RE: Run the old one into the ground. 9yrs.? eh, she’s just broke in.
Yup…10/15 year ownership cycles sure blows the hell out of leasing.
Never could understand the concept about being an auto tenant.
Still got a ‘88 Mustang GT.
20 summers with Mobil 1 and no exposure to winter salt. It runs like a top.
While new cars might not go down much…
A car is the 2nd most valuable item most people own. Sadly people are scrounging for money in every nook and cranny.
Selling your car is like having to sell your milk cow.
But you gotta sell it.
Apparently blue book values are a little jokey now, but just wait…
I expect used car prices to tumble to the ground, and picking up a year or 2 old car from somebody on the cheap is a real likelihood.
There’s a photo from around 1930, with a well dressed (well, everybody was well dressed then) gent, with a sign in front of his snazzy auto that says, “$100, must sell, lost everything in the stock market”
This is the human part of history that doesn’t change.
You might expect to see an updated version of this auto-neurotic-gasphyxiation with a 2 year old high end Lexus, for $3-5k, later this year.
I kid you not.
http://www.daveramsey.com/etc/lms/drive_free
Dave Ramsey on how buy vehicles, and get paid for it as well.
My sister sent me the link. Everybody who would like to save thousands should take a look.
Offer 25% less than sticker for anything in stock if you are paying cash and not a penny more.
If you want to buy from the closest dealer and want specific color/options not in stock be ready to pay extra. Likewise if you want high trade-in value for your car or want 0% financing.
I have always felt that buying a new car is throwing money away. Most cars depreciate at least 20% the first year. Unless you are the type of person that “has” to drive new, it makes much more sense to purchase a 3 year old off lease unit at 40% off.
Even better, I have found 5-7 year old boring “old lady” cars like buicks, fords. etc with 30-50,000 miles on them for as low as $3000. My current car was purchased four years ago for about $3000 from the son whose mother died and he didn’t want the car. It had 32,000 miles on it and although it is not the sexiest car around, it’s saved me about $6000 a year for for years in payment. Now, with 60,000 miles on it four years later, even if I sold it for $2000, it costs me $1000 for FOUR YEARS of use.
Beat that!
Your purchase was very smart.
Yup did something similar. Bought a 1998 Audi A4 off lease in 2001 for $12k, sold it 3 years and 60,000 miles later for $9400. Can’t beat that. Then bought a 2001 Audi A4 off lease for $17k, 5k off retail value. Have had it for 3 years with no problems and it’s paid for with 60k more miles on the clock. It still looks brand new and I think I’ll just keep driving it till it explodes couple hundred thousand miles down the track.
Are you saying 40% off the original brand new sticker price or are you suggesting offering 40% off the current blue book value of a 3 year old car?
when I bought my Tuscon, we used vehix to send an email to every dealer in the area asking for quotes on the exact model and options we wanted. After we found someone who was 4k cheaper then everyone else, we negoticated it down a little more saying we wanted to use their finaincing and at the last minute, pulled out the checkbook and used cash. This was Mr. Gwynster’s doing, he’s worth his weight in gold when it comes to pulling off deals.
If your house burns down intentionally and you’re having financial difficulties, it’s good to have connections:
http://tinyurl.com/yv6hry
“In a case some say reveals political backscratching at the courthouse, a Texas Supreme Court justice saw his arson-related indictment thrown out Friday at the request of a scandal-plagued, but fellow Republican, prosecutor.”
” Medina, also a Republican appointed by Gov. Rick Perry to the state’s highest civil court in 2004 and elected to a full term two years later, was charged with evidence tampering. Medina’s wife, Francisca, was charged with arson in the June 28 blaze that left nearly $1 million in damages.”
“The Harris County Fire Marshal’s office has said the fire was not electrical or accidental. A dog detected an accelerant at the scene.”
“Investigators became suspicious after discovering a mortgage company sued in June 2006 to foreclose on the home. The suit, filed after the family missed payments for five months, was settled in December.”
“Yates has acknowledged the family had financial problems. They owed nearly $1,900 in fees to a homeowners association and also let the insurance policy on the house lapse, meaning losses from the fire weren’t covered.”
Have David Medina and Alberto Gonzales ever been seen at the same time?
They both seem tragically stupid, despite their lofty titles…
Accelerant at a garage fire…hmmm, something suspicious here.
From what I’ve read so far, there isn’t anything more than circumstantial evidence tying the judge to the crime (i.e., he had a ARM that was vicious) and was likely going broke…but no witness or evidence, other than finding something like gasoline in the garage.
Anyway, if this judge is prosecuted without real evidence, it will be a lesson for FBs everywhere…expect to do time if your house burns down, regardless of the cause.
What’s the HBB consensus for the stockmarket on Tuesday?
I’m thinking that if Ben doesn’t throw 50 bps out by 10 am the market is going to go full throttle into a nose dive and by the time the FOMC meets on January 31 they will be doing a post mortem on Goldilocks.
‘What’s the HBB consensus for the stockmarket on Tuesday?’
You’ll laugh, you’ll cry, you’ll love the movie.
You’ll laugh, you’ll cry…you’ll kiss all of your money goodbye.
SubKommander Dred
“The FeelGood Crash of 2008″
-Larry Kodlow-
Daily Planet Blog
If there’s a bounce out there - how big? The markets couldn’t hold a gain to save their lives last week. With regards to the FFR, immediately after the holidays there were MSM musings of .75, and even 1.00, but last week that all got throttled back to .50 bps. Also that “think tank” story of a emergency cut early last week panned. Is BB becoming a kitten with a whip?
We couldnt even get a dead cat bounce Friday (except for battered Ambac and some financials). We all knew the economy was headed down fast months ago. With Bush’s new plan, and the scare tactics used to gain support therefor, there should be no more talk about whether we are or will be in a recession. Bush is a liar and a dumb azz and he is even saying we as a Nation we are totally f’ed, that’s what the check stands for. The Ambac downgrade and more news like that in the upcoming weeks will cause more wall street write downs and loses. It should be noted that credit card debt is also securitized back by these financial insurers. This isnt even the begining. Going down another 15% on the S&P and Dow is as about as hopeful and optimistic as I can be. There will be some opportunities for day traders, i.e., as companies are downgraded and fall dramatically in a day, especially over 50% like ABK. Since we have a negative tone in the markets, there will be overeaction and a big jump up, but timing these is very tricky and should only be handled by the experts and those that have high tolerance for risk. I have no doubt that if you put your money in a one year CD at 5% and then invest it in the S&P and Dow one year now that you wont be better off than if you start playing games at these levels. Remember only 100k per bank unless you have multiple beneficiaries and note this correctly on the accounts.
I think it will go down Tues., but if by some chance it goes up, that will be the only day next week that will have an upward trend. By the end of the week it will be way below 12k.
should have been “will be” rather than “wont be” in second to last sentence.
I heard a rumor that Goldilocks was eaten for lunch by the three bears.
From Barron’s:
“As of Jan. 11, the S&P index’s annual average total return is a paltry 1% since 1999. Years later, equities have not yet recovered from the bear market of 2001-2002, in which stocks were halved.
“Inflation-adjusted, the performance is even more dire, notes Jeremy Grantham, chairman and chief investment officer of GMO Securities. “The 1982-2000 bull market was the biggest in history, so you’d expect it to take a long time to wash out the excesses,” he says. Typically, long, drawn-out bear markets follow big bull markets, adds Grantham, who believes that it might be 2010 before the Orsa Major phase is fully over. “What we needed to wash out the excesses was a nice, juicy credit crunch, precisely like the one we are having right now.” “
I am looking for a short term rally - I need to sell some souped up spiders I purchased - http://www.proshares.com/funds/sso.html
LOL.
My dumbazz bought the turbo “Option” Spider which is fire engine red at the moment.
IMHO a major move… I just don’t know in which direction!
Dang, should’ve been a smiley.
Charge It, America!
“The United States of “Charge It!” is not only irony impaired. It’s also pretty talented at ignoring news it doesn’t want to hear. When the first Baby Boomer filed for Social Security benefits in October of 2007, it kicked off an era of unprecedented stress on a system that is widely predicted, based on any sane financial calculation, to go bust.”
“With our nation’s unfunded promises for Social Security, Medicare, and Medicaid reaching the $50 trillion mark, and with the nation’s top accountant and Comptroller General, David Walker, asserting that we have a “fiscal cancer,” one would think that the issue of entitlement reform would dominate the presidential debates. One would think so, that is, until one realizes the powerful pull of new, more expansive health care systems–that, and detailed analysis of sexy, invented controversies involving gender, class, and strange racial debates regarding the legacy of Martin Luther King Jr. The prevailing attitude of presidential candidates, with the exception, most notably, of Fred Thompson, is simple: “We’ll figure it out. Just not now.”
OK, well maybe Ron Paul and Fred are fiscally responsible. My point is they’re all selling us down the river for votes and the day to prepare for the future will never get here.
We have the power to do something, the question is what to do, and how to do it. IMO we need to push for a new law for elected government officials where their retirement funds get paid only after the budgets get balanced.
“Balance your Budget, or you get No Retirement”
I think the solution for the social securtiy imbalance is at hand: Workers will be forced by financial circumstances to keep on working.
The multitudes who HELOCed their future will need work off their debts and thus keep feeding the social security kitty (or alligator).
“Shop ‘Till You Drop” will become for many “Work ‘Till You Drop”, just as it once was in this fine country of ours.
The 1st crop of boomers (1946 models) can finally get at a whack at their social security money this year…
Interesting timing, wouldn’t you say?
But if they tap it now (age 62) they’ll get less per month than if they waited until 66, and a LOT less per month if they wait until age 70.
Social Security reminds me of “the people’s car”, better know as the VW.
During the 1930’s, Germans invested 5 Reichsmarks a week for their promised cars, and not 1 was delivered to them.
It has been working just fine for over 68 years.
Whether or not the fund will have to start paying out principal (somewhere in 2030 or 2040) depends upon the model of projections used and the assumptions made in the model.
Wouldn’t hurt if themoney taken by Reagan for his pet projects (nutty futuristic missiles and propping up dictators) was put ack. Awfull lot of IOUs in the trust fund where if they money was there it could be earning interest.
“It has been working just fine for over 68 years.”
The SS security system is an unsustainable pyramid scheme which served the early entrants (who paid 2 pct taxes) quite nicely at the expense of of later entrants (who get to pay entitlement taxes north of 15 pct when all entitlement taxes are included). As the crest of the baby boom retires, the flaws of pay-as-you-go retirement systems will become as hot a topic in the financial press as the housing bust is today.
P.S. Didn’t Hitler have a key role in developing the People’s Car?
Sorry GS but SS is an insurance pool that has been intentionally robbed and underfunded for a long time. Simply put; The cap on contribution requirements should have been removed long ago and there shouldn’t even be a debate about it but there is. That debate is not going to end well for those who want to see SS “wilt on the vine” a’la Beaut Gingrinch and The 40 Thieves.
“As a Christian I have no duty to allow myself to be cheated, but I have the duty to be a fighter for truth and justice.”
A.H.
exeter,
SS bears no resemblance to insurance; it’s a Ponzi scheme, pure and simple.
To suggest so would be to say all insurance is a ponzi scheme. Does not your home and auto insurance work well?
While they inflate away, to pay for S.S.and Medicare, will it be worth anything anyway?
Our worthless government squandered the $.
I wish I had their pension and benefits. They always seem to protect their nest egg.
RE: I wish I had their pension and benefits. They always seem to protect their nest egg.
Second in the gravy train benefit line-Postal workers.
Their health insurance benefits would blow you out of the water.
Any citizen producing a W-2 in this country should have equal cost access to the benefits accruing to both parties.
I figured it up once and most people would be better off collecting at 62. It would take until age 79 to make up the difference if they wait until 66. Most of them will never make it until 79 if they’re still working to make ends meet.
In general, if current income does not (greatly) exceed expenses but you can maintain some income over time, go ahead and collect. If you have high current income, wait.
If expecting early death, collect. But, be careful, you just might keep on going. Recall the immortal words of Mickey Mantle, “If I had known I was going to live this long I would have taken better care of myself.”
If truly moral, refuse SS. Just because G steals money from X and gives it to {A1,A2,A3, …,An} does this give X the right to accept money that G has stolen from {B1,B2,B3,…,Bn}?
“Most of them will never make it until 79 if they’re still working to make ends meet.”
True. But if they planned properly (i.e. paid their house off instead of HELOCing out the equity and leaving a big hunk of debt in its place) they should live way past age 79 (good genes permitting) without having to work.
Life is filled with choices and each choice has consequences. The bills for bad financial choices for many are coming due at the same time their desire/need to retire looms, right at the time they can least afford it.
It is NOT always ‘bad choices’ that have put many in the 50-62 in financial straits.
The preceding generation had their pensions and long-term employmnet with their employers plus healthcare in retirement.
Those now 50 and up where the first to hear of and experience such things as (1) RIFs (reduction in force), (2) nothing but temporary or contract work out there (3) pensions disappearing and (4) health insurance heading south. When it first began it took some time for people to realize that the implicit social contract of giving loyalty to an employer and receiving long term employment with benefits in return was being tossed in the trash by business.
That all really started around 1980. That is was the way things were going to be finally was apparent 10-15 years later. Particularly for those now over 55/58 or so, well…..they just never really were able to catch up again and change to life plan. What they had worked for in their 20s and early 30s was gone, they spent their 30s and early 40s trying to figure out the new rules - and that left only 20 years or so to do what younger people will have 40+ years to do.
“It is NOT always ‘bad choices’ that have put many in the 50-62 in financial straits.”
No always, but often enough.
The allure of Get At That Equity was too strong for many to resist. Many bought into the illusion that housing prices always go up thus one’s equity will always go up thus it is prudent to repeatidly cash the equity out because the ever rising market will forever replenish it.
But this illusion was harshly inturrupted by the destruction of the ever-rising equity value premis.
So now these people are screwed. And it wasn’t their employer who screwed them, or the economy, or society; they themselves did the screwing.
The main problem with collecting at 62 is you don’t qualify for Medicare. The risk of medical expenses crippling your assets is to great. Our wonderful health care system at work. And yes I mean the lack of universal health care and a single payer system.
My Pollyannish former friend who is up to his ears in real estate has blood pressure issues. Your statement that medical expenses could cripple your assets is very true. It is why I think it’s wise for anyone over 40 to never take out a loan on a house that is more than 1/6 of his net worth. Most people are overly optimistic and think a catastrophic illness happens to the next guy.
Being a radical libertarian (and objectivist), I accept full responsibility for my financial decisions and my health. At the same time, I see nothing worth buying that is 1/6 of my net worth. As long as that is the case, I will continue to rent.
“Comptroller General, David Walker, asserting that we have a “fiscal cancer,” one would think that the issue of entitlement reform would dominate the presidential debates.”
I’ll listen to Walker once we’ve cut off all our “aid” to foreign countries, ended special treatment for major corporations, dismantled our bases around the world, ended the Iraq war and other military actions and limited the “perks” for elected representatives to what the people get, etc. Oh, and Walker can give up his chauffered limo that he uses, that would be nice.
Palmetto-
I like Walker’s message overall. He’s been talking about the condition of our economy, monetary policy, and the spending orgy for a long time.
Its funny how most DC’ers try to claim they are middle stream Americans like us in speeches. Like when Hillary said something about the rich cats, not like one of us. I believe the Clinton’s are pushing $35M. Last time I checked, I don’t have that kind of a balance sheet. Romney is worth $200M. Must be nice.
Of the 11 richest senators in the U.S. Senate, 9 are Democrats.
Charge It, America! (forgot the link)
http://www.realclearpolitics.com/articles/2008/01/charge_it_america_1.html
Here’s a possibly goofy question, then. If you are right, does that make - I dunno, March, a good month to start a 401K?
Have been hearing, “it’s different here”, for the past year when discussing the national real-etate bubble ’s collapse and possible impact on SF Bay area prices. Looks like we’re finally coming to the end of the denial phase.
http://www.dqnews.com/RRBay0108.shtm
WashPost links:
Rents flatten due to condo projects converting to apts:
http://tinyurl.com/28xsev
How low rates may help stem the reset/foreclosure wave predicted this year:
http://tinyurl.com/3dx4gf
Housing price drops spreading to inside the beltway:
http://tinyurl.com/ypcafk
The dual edge sword that is foreclosure purchases:
http://tinyurl.com/ynr8ea
“Management companies said more prospective tenants are shopping around in the growing rental market and asking more about concessions or enticements such as free rent or a flat-screen television.”
But didn’t the so-called experts that told us that housing prices never go down also tell us that rents would rise because people weren’t buying homes?
They forgot that one less house that is bought by a former renter is one more house that has be rented out.
Now one more house that has be rented out by a desperate infestor, now amateur landlord who will take anything in rent just so they can hold on a little longer
‘Now one more house that has be rented out by a desperate infestor, now amateur landlord who will take anything in rent just so they can hold on a little longer’
In my interpretations of events unfolding, that is why I think we will have a mixed bag of inflation and deflation. Housing will go back to historic levels of pricing overall but things we need otherwise will creep up in price. Cash strapped debtors will cut back on buying and have to sell depreciated things. The harryhowmuchamonth will need a cash flow hitherto delayed because many things were paid on credit and presumed to be backed by growing real estate value.
“prices for single-family houses fell 7.7 percent in the region during the third quarter of 2007 from the comparable quarter in 2006″
7.7% X $500,000 = $38,500 annual loss
And prices are still much higher than 3X average household income.
Buying a foreclosure can indeed be like opening Pandora’s box. When you find something suitable, you MUST get an inspection BEFORE you make an offer, and also get estimates of the cost of repairs. You can then use the information to justify a lower low-ball offer to the bank.
When I sold real estate I tried to point out the flaws of buying a foreclosure. Even though most are listed thru a realto. The bank, since they did not occupy the house, had no obligation to disclose anything. I found the realtors, even though they knew the flaws, hid what they knew. Most cases you’re buying a money pit house and don’t even know it. By the time you’re done “remodeling” you’ve got more than the price of most houses you could have bought in the neighborhood. I personally would never buy one, because I’ve seen it all and it’s scarier than most people realize.
RE: Buying a foreclosure can indeed be like opening Pandora’s box
Better be sure to check with your local DEP and lead paint abatement professional.
I did a foreclsoure appraisal on a simple residence where the guy had an outlaw garage in the back field.
Unfortunately he used to dump his waste oil there too.
The bank work-out officer was clearly unhappy when I suggested he’d better get an environmental analysis of the extent of the problem as a compliment to the appraisal report,
with it’s “subject to” valuation.
Clean-up costs can run in the hundreds of thousands-of which you may be a liable party should you take possession.
The government will come after anybody with assets.
I guess you guys haven’t seen the foreclosures in South Florida. Less than 5 year old homes with little fix up required are selling for 60% of the listing price of identical homes in the same neighborhood. Going back to pre-2004 prices.
since arlington VA is populated by the never to be fired it’s only down 2%
E*Trade, Sallie Mae, FNM, FRE, AOL, Sprint, COF…there’s quite a few major employers in the NoVA region that have already announced layoffs….
Never got this info up this week, but this looks like a good spot. There is a very new condo building that went up right next to the Target on Rockville Pike at the corner of Randolph/Montrose Road. It has a circular pool on the roof. This is outside the beltway, but just by a few miles. It is called midtown Bethesda North despite being solidly inside Rockville.
I walked over the week before last to ask if they were renting. They said no. I asked if any of the owners were looking for tenants and was waved over to a bulletin board. They had a “special pricing memo” posted. I liberated it. Here is the dirt.
1 bedroom with den units:
941 square feet - was $439,900 - now $359,900
950 square feet - was $477,900 - now $394,900
2 were listed as sold, but the selling price wasn’t shown
2 bedroom units:
1502 square feet - was $656,900 - now $598,900
1338 square feet - was $579,900 - now $515,900
1338 square feet - was $571,900 - now $474,000
1336 square feet - was $656,900 - now $473,000
1336 square feet - was $584,000 - now $505,900
one unit listed as sold but no sale price given
2 bedrooms with dens:
1452 square feet - was $639,900 - now $495,000
1426 square feet - was $640,000 - now $500,000
1326 square feet - was $594,900 - now $519,900
1452 square feet - was $648,900 - now $577,900
1326 square feet - was $594,900 - now $550,900
1452 square feet - was $652,900 - now $588,900
1422 square feet - was $588,900 - now $490,900
one unit listed as sold but no sale price given
prices are listed as effective from January 2 to January 31
I’m from that area. 400 frickin thousand dollars???? The only things that place has going for it is proximity to the metro and crappy malls. Or overpriced malls, if you count White Flint.
Thanks to the lowest mortgage interest rates in a year and a half, nearly 60 percent of all new mortgage applications by mid-January were for refinancings, according to data compiled by the Mortgage Bankers Association. Some home-loan companies reported much higher proportions of refinancings. At Associated Mortgage Group in Portland, Ore., 80 percent of new applications this month have been for refinancings. “This has been the busiest January I’ve had in 20 years,” said David Jolivette, Associated’s president.
While much of the demand is from homeowners facing payment resets on adjustable-rate and interest-only loans, many applicants simply want to take advantage of rates in the mid- and upper 5 percent range — often with no out-of-pocket cash costs.
Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association, said “no-cost” refinancings — in which transaction fees are rolled into the interest rate — “are absolutely an option” for people who took out fixed-rate loans in 2006 or 2007 ,when rates were at or above 6.25 percent.
So if they’re rolling transaction fees into the interest rate of the loan, that tells me they have no money. 1/4 extra in an interest rate over 30 years is a lot of money. The higher the price of the house, the more it costs. Once again there are a lot of stupid and desperate people out there. If they’re doing this to get the absolute lowest rate they better be paying the closing costs out of pocket….oh, I forgot their pockets are empty. Plus I wonder how many “applications” are actually approved. Most applying probably think their house is worth ‘05 prices. I also wonder how many have 20 years left on their loan and they’re taking out 30 year mortgages.
A particularly poorly written article in the U-T intended to deceive by overemphasizing median prices:
http://tinyurl.com/2ucw9u
There is no mention at all of the mix of properties that did sell and the impact that might have had on changes in the median.
“
numbersanalysts are often deceiving,analystsnumbers say”See my take on the DataQuick numbers posted on the local market thread if you are interested.
The Deflation Time Bomb…
http://www.lewrockwell.com/orig8/whitney5.html
“Summary: When banks don’t lend and consumers don’t borrow; the economy crashes. End of story. The whole system is predicated on the prudent use of credit. That system is now in terminal distress. Everyone to the bunkers.”
Shotguns for $215.00 …
http://www.charlesdaly.com/html/products/firearms/shotguns/pump/pump.asp
That stimulus is such a crock. Even if people do go out and buy their garbage - they’ll just be denting existing inventory. What responsible retailer or mfg. is going to want to replace that inventory while knowing what they know now - the consumer is kaput.
And how many people will needlessly suffer?
Answer: NONE (They all deserve to suffer and need to learn the value of the dollar)
Went to buy a newspaper on Friday; the Washington Post is now fifty cents.
When did that happen?
Last I remember it was 35 cents.
Is this what inflation means?
Spook
Impossible. We’re experiencing the beginning of DEflation. Gas prices are down. Food prices are down. Medical care costs are down. You just think they’re going up.
/Sarcasm off.
Jasflation?
The whole Inflation vs. Deflation guess is a waste of time. There will be both. The inflation we’ve had and will continue to have is almost entirely the result of Pigmen speculation/gambling/Ponzi in commodities, etc. Deflation will prevail in the end with the exhaustion of FB’s, the neutering of the Pigmen and their ability to leverage ever-higher, and the destruction of unimaginible amounts of fictitious capital. Please read up on Russ, Mish and CR and all the other economics websites that discuss such things.
Everyone here in HBB knew that housing inflation was not built on fundamentals and that it would come crashing down under its own weight eventually (deflation). How can your logic and long-term view be any different with the same kinds of Pigmen games going on in oil, gold, wheat, corn, metals, etc?
Don’t be confused by its different manifestations… it’s the same cancer everywhere.
How can your logic and long-term view be any different with … oil, gold, wheat, corn, metals, etc?
I’ll tell you why. Chinese and Indians don’t compete with the US for the consumption of US housing, but they do compete for the consumption of all of the above, and are becoming more affluent. And they export real stuff to pay for it, not USD IOU’s. That’s why these commodities are getting more expensive in USD and will probably continue to do so.
Inflation is the ultimate lagging indicator. It’s strongest right before the end in a credit-based economy.
And prices have nothing to do with inflation (contrary to popular belief.)
All the home prices that are collapsing is sending more credit to credit heaven than any notional money being “printed”.
It is indeed deflationary but it’s hard to argue with people who have pre-conceived notions about things.
Why would anyone want to buy a newspaper?
I still like to get my hands dirty…
I know it’s a filthy habit, but you actually get a more interesting view of a newspaper, reading it the old fashioned way.
i agree, im 28, but ive been reading the paper since i was about 10, and there is just something about holding it.
humorous look at spending from up north …
http://tinyurl.com/2qx63e
“For much of the world, the United States is now on sale at discount prices. With credit tight, unemployment growing and worries mounting about a potential recession, American business and government leaders are courting foreign money to keep the economy growing. Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads to the world’s largest market.
Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said. ”
http://www.nytimes.com/2008/01/20/business/20invest.html?_r=1&hp&oref=slogin
Many posters on this blog would like to see Americans be more responsible and invest for retirement wisely, but those same people criticize investing in the long term in index funds.
So what’s the alternative?
I’ve read Peter Lynch, Burton Malkiel, John Bogle, Buffet and I, like them, believe if people don’t have the time to study stocks for at least 10 - 15 hours a week, they should invest in index funds.
there’s an etf for every pot
I like SWZ honkeys w gold
and MAY -tiger w oil
Right now the only responsible investments are gold, guns, and grub.
But seriously, the days of buy and hold are done until we get pe ratios back down to the historic lows of 8 or so. 14 is average. And right now we are still at 20-something.
Buy and hold works when an asset severely undervalued, like gold 5 years ago. Gold price was the ptice to dig it out of the ground. Stocks are not there yet. Maybe Dow 5k. But doubt the ppt will let that happen.
Preferably, people should do their own long term investment ’cause it aint all that difficult to beat the averages with a little bit of research. The small investor has the edge over institutional investors mainly ’cause the universe of stocks available to the little guy is much larger.
That said, if they do not have the time for research then an index fund is better than a mutual fund ’cause historically the mutual funds trail the averages. (In other words, when you invest in mutual funds you are investing in mediocrity.)
let’s hope then there is 10-15 hours a week left to study in WHICH index fund to invest
Dollar cost averaging only works in long bull markets. In a flat or down market it is a losing strategy.
Huh. The statement is completely false. It works anytime that you think the market may have major dips, and works especially well if you think we are headed into a prolonged drop, but by the time you need to sell (which in the case of retirement can mean 20 or more years) it will be at higher levels. I have no doubt we will fall from these levels, and I have no doubt in 20 years we will be higher. Thus, for retirement accounts, not only does it work, it’s the best strategy.
Tim is correct. Dollar cost averaging actually works best in bear markets as long as you dont sell until the bear market is over.
I think you made my point. If the bear market doesn’t end before you have to sell, you lose. If you started DCA in 2001 you would only be at break-even in nominal terms today, and down sharply when adjusted for inflation. That’s 7 years of no gains.
The thread was on retirement accounts, see my post below. Yes, dollar cost averaging does not work well short term, as its a long term play. With respect to the time frame you suggested that’s just a game. Anyone can pick particular periods to support an argument, thats why you have to use at least 50 years and look at historical norms. Also that period was not a major bear market like the one we are entering. That’s where dollar cost averaging works best. It’s the most risk averse way to make sure that you dont miss the advantages bear markets create for those with cash that can ride it out. Perfect for retirment accounts.
I doubt it, certainly if you start buying at the start of an epic bearmarket (and although it’s anyones guess, this one could easily get one of the longest ever). Research shows that stocks only perform well for a relatively small % of the time, you have to start buying at the right time (within a few years or so). If you take inflation into account, several recent bearmarkets took around 30 years (i.e. you had to wait 30 years before your first purchases were above water again; for later purchases maybe a bit shorter).
For the record, this bear market started back in 2000. AG’s housing bubble inflation served to forestall its progress for a few years. (Of course, I speak from a bear’s perspective…)
Kind of off the thread, but if you combine dollar cost averaging in 401ks with matching conributions (free money), your 401k can handily absorb a correction, for one thing. I got a note in the mail this weekend that my company is giving me $3900 matching contributions, based on my 2007 earnings. It makes me stay the course of having my 401k entirely in three stock mutual funds. And of course, I continue contributing fully for the 2008 401k. The 401k is what I use to hedge against my 8% stake in precious metals and 20% in government securities.
“long bull markets”
Like 1935-2007?
Just like the housing bubble, those who bought their homes before there was a bubble, pre-2000, would withstand the 50%decline on home values.
As for the stock market, those who bought in big since the last market crash in ‘87, would do fine if the markets got a 50% haircut now.
Isn’t it true that those who get in early on a Ponzi benefit the most and do not feel the pain of a decline as much as the newest members?
I respectfully disagree. Although all my taxable non-retirement accounts have gone all cash (5% CDs), if you are talking about retirment funds and you think you can hold your job, I think you should invest an equal amount each month in securities as we head down and bounce back although this will take several years, the dollar cost averaging will have you in a great position. Since we are talking long term, any reasonable split between large, medium, small cap funds would be ok. Or just stick with the S&P.
Tim — Any thoughts on the Vanguard l-t retirement funds (e.g. Retirement 2030)? I just parked some money in one last Friday (of course, this is money I don’t expect to need until 2030 or so…).
BTW, my maternal grandfather did quite well buying stock throughout the Great Depression years. I do not come from a family background of wealth, but nonetheless, his investments back in the 1930s kept my widowed grandmother solvent until she passed away at the age of 93. (He also viewed FDR’s social security system as detrimental to incentives to save.)
I assume you are referring to the Vanguard Target Retirement Funds assuming a certain long term retirement date such as 2030 such as VTHRX. These are less risky and have been managed well, showing a profit, even though we are down in excess of 15% from the peak. These are somewhat safer places to park your money. If you want more risk and to benefit from the recession, what Im doing is taking 5% and investing it in battered areas each time we drop 5% from today’s levels. I might increase this as we fall lower and i expect we are near a bottom. Despite the noise, dollar costs averaging on violent drops has always proven a sound strategy if you dont need the money until it comes back. Im a market bear for the next year at least, and a housing bear for the next 2-3 years. We survived the great depresssion and we will survive this. The bottom in stocks will definitely come before the bottom in housing, as stocks adjust immediately to expectations, while housing has a myriad of hurdles before it moves.
To clarify, I pulled out of equities last year. I intend to go back in at 5% of the amount i pulled out at each 5% drop. A similar strategy can be used for shifting between types of funds and shifting from non-risky to risky areas. I dont cant claim that that my methods will work in the future, but i have had decent record of success (which of course is no indicator of future success). I believe that timing the bottom of housing is easy because you just have to look at inventory and forclosure numbers, run cash flow analysis and compare versus historic ratios, etc., and it will be an elongated U. Stocks are much harder to predict in usually move in V shapes. Thus, once you even think we may be near a low, you should be investing, as windows close. Not your whole amount, just 5-10% or so. Good luck.
One more clarification. 5% drop from each new floor, not each time it goes up and then falls another 5%.
Tim — Thanks for the excellent bear market survival suggestions. I will pass them on to my dad, who has to worry about maintaining his retirement standard of living in the face of a War on Savers.
P.S. Tim — I talked my dad into pulling out of equities last spring. He missed out on the last leg up of the boom, but I always say better early than sorry.
Can’t wait till bershire is back at $50,000……My biggest mistake was i had a $9000 cd maturing back in 91, and i was going to buy 1 share at around $8500 and didn’t.
Realtard trying to unload his 5,000 square foot albatross located in Kelly Plantation, Destin, Florida. A cool $3 million and you can have a “True Family Plus Entertaining Home”.
“Listing Broker/Salesperson Has Ownership Interest In The Property.”
http://pensacola.craigslist.org/rfs/544843696.html
If inflation is 7% and banks are charging a 6% rate for mortgages, not 10% subprime rate, doesn’t the whole MBS system break down?
Why would I want to buy a security that is yielding a 6% rate when inflation is 7%?
why? because there are no low-risk alternatives, and the banks know it; 6% is still much better than 0% (actually -7% in this case). Manipulating the CPI down is one of the major tricks used by central banks to fleece the sheeple (both private citizens and institutions). As long as the system is working getting maximum debt is financially the most attractive strategy (even more so if you have no assets to start with).
situation in Netherlands: rates on savings accounts 2-3.75%, fixed term mortgage rates 4-5% (effectively 2-2.5% because of HMD; maybe 0.5% extra for those with the worst credit score or extremely crazy mortgages), official EU CPI 3.1%, real inflation probably near 10%…
Cramer wants US taxpayers to take over the Mortgage Insurance business:
http://tinyurl.com/ytp5z5
Doesn’t he know that insurance can only be put into place prospectively? Once a claims-triggering event (such as debt insolvency) has already occurred, it is too late to create an insurance program.
For comparison, imagine proposing to offer govt-provided insurance to all NOLA households in the week following Hurricane Katrina.
My personal impression is that Cramer and various other WS mouthpieces would like to see the greater NYC financial sector’s bad gambling debt dumped onto the US tax base. Would it be fair to the bankers and hedge fund managers who enjoyed the record bonuses and hedge fund profits to deprive them of also reaping the full consequences of the “wealth effect” their activities generated?
actually that could be a good idea if government does not interfere and homebuyers get to pay / back the real risk premium that is required in the free market; of course that will never happen …
Again, I suspect Cramer’s suggestion that U.S. taxpayers take over the Mortgage Insurance business is a smoke screen for spreading gambling debt over the U.S. federal tax base.
Why not just go back to the original form of mortgage insurance. It’s called a “down payment”.
the education of Bernanke:
Ben Bernanke’s first exposure to monetary policy was reading the works of Milton Friedman, the Nobel laureate. That was 30 years ago, when Bernanke was a graduate student at M.I.T., and he has been studying central banking ever since. By the time President Bush nominated him to run the Federal Reserve, at the end of 2005, Bernanke knew more about central banking than any economist alive. On virtually every topic of significance — how to prevent deflationary panics, for instance, or to gauge the effect of Fed moves on stock-market prices — Bernanke wrote one of the seminal papers. He championed ideas for improving communications between the Fed — whose previous chairman, Alan Greenspan, spoke in riddles — and the public, believing that clearer guidance about the Fed’s aims would help the economy run more smoothly. And having devoted much of his career to studying the causes of the Great Depression, Bernanke was the academic expert on how to prevent financial crises from spinning out of control and threatening the general economy. One line from his “Essays on the Great Depression” sounds especially prescient today: “To the extent that bank panics interfere with normal flows of credit, they may affect the performance of the real economy.”
http://tinyurl.com/3xm4nv
is that an Advertorial from the FED? Ben Bernankes expertise comes down to just one thing: solving every potential problem by printing more money. The most important experience is desperately lacking in the list though, how to prevent inflationary panics…
‘is that an Advertorial from the FED? Ben Bernankes expertise comes down to just one thing: solving every potential problem by printing more money. The most important experience is desperately lacking in the list though, how to prevent inflationary panics…’
LOL
I see him as a Vanna White or a GongShow Jamie Farr. Doesn’t even have to say anything really. Just sit there and say whether interest rates go down 0.5 % or not. Don’t harsh the casino by trying to conjure up scholar viewpoint.
At this point, I imagine it is becoming increasingly clear why AG spoke in riddles.
Ah, so BB knows everything there is to know about the Great Depression.
Funny, once again Barbara Tuchman’s “Guns of August” comes to mind. Why? Because in 1914 the German high command thought they had mastered everything about warfare. How did the Schlieffen Plan work out?
Experts never disappoint - until you start counting on them.
And all the “experts” thought WW1 would last a few months, because the Franco-Prussian War lasted less than a year, and we had so modernized warfare in the interim 43 year period between wars, surely shortening the outcome?
Book learning and experience can be quite dissimilar modes of education.
A serious misconception may arise from an academic analysis of the policy errors of yesteryear. One could mistakenly conclude that all difficult situations have readily-available remedies, which yesteryear’s policy makers could have employed to steer clear of the problems they faced. History does not allow running the experiment of seeing how things would have turned out had the supposed-remedy been employed.
“History does not allow running the experiment of seeing how things would have turned out had the supposed-remedy been employed.”
Thankfully, that could someday be remedied:
http://www.breitbart.com/article.php?id=paUniverse_sun14_parallel_universes&show_article=1&cat=0
Thanks for that — very cool!
Another great example of the phonomenon is the Three Mile Island incident. Afterwards, the investigations showed that had the operators resisted their urges to “solve” the problem - there would have been no major incident.
Sometimes ya just have to step away from a problem to solve it.
‘…had the operators resisted their urges to “solve” the problem - there would have been no major incident.’
First do no harm.
“Observation appears to “nail down” a particular state of reality”
Well I don’t need any coffee in my cup after reading that article!
Seems to my humble “observation”… that the “Universe of Everything” would be so busy allowing for every possibility… what would be the benefit if “it” basically winds being equal to nothing (or zero possiblities)? Thanks Paul in Jax, Now I won’t be able to concentrate all day on a simple thing like making a tray of purified water ice cubes for my cranberry juice cocktail.
Reminds of this book about Einstein’s Dreams:
“…Each dream involves a non-traditional conception of time. Such scenarios may involve exaggerations of true phenomena related to relativity, or may be entirely fantastical.”
http://en.wikipedia.org/wiki/Einstein’s_Dreams
Einstein’s Dreams is a 1992 novel by Alan Lightman. (ISBN 0-446-67011-1)
Yes, I’ve read that book - pretty good.
Interestingly, the parallel universes idea has been around for a long time as a religious/mystical belief having to do with dimensionality. The core idea is that each dimension is the infinite extension of the lower dimension in another direction. Thus we get (very roughly): point, (1) line, (2) plane, (3) solid, and then something like (4) what we perceive as time, (5) the infinite extension of each point in time, and (6) the manifestation of all possibilities at each point in time, (7) the extension of the manifestation of all possibilities through time.
What we perceive as time is really just our failure to appreciate the “solidness” of higher dimensionality, just as a creature operating in a two-dimensional space would perceive movements of a solid through his space as some kind of time/weather/ethereal process.
(5) means no forgiving and forgetting
(6) means, hey you really did become a professional baseball player
(7) means, yeah but you dropped the big fly ball, wait, no you didn’t, you hit the home run, no you were hit by a car on the way to the game. . . or something like that.
Best treatment of these concepts is by the Russian P.D. Ouspensky. It’s very cool (to borrow a phrase) that there is possible mathematical confirmation of it.
…so if I consider the possibility that parallel universes cannot exist… now my head hurts.
Actually that is from a very long article in the NYT Sunday Magazine. (So why not just link it that way?)
It also says that
(1) In all his pontificating about the Depression, there is not one word in anything he has ever written that mentioned the effects on real people - unemployment, bread lines, foreclosures,………
(2) he has been trying out all his theories that he published over the years about how to avoid such an economic collapse and resulting depression - and not one of them has worked.
“Ever since last summer, a meltdown in financial markets has led to daunting losses in the banking industry and throughout Wall Street. Despite having written extensively on how to deal with such episodes, Bernanke has thus far been unable to reinstill a sense of confidence. His faith in modern forecasting models notwithstanding, he failed to foresee that the sudden rise in homeowner defaults, which triggered the crisis, would have such far-reaching effects. And the monetary medicine that he has prescribed, including some of the very tools that he lovingly detailed in his research, have yet to produce a turnaround. ”
Here is the whole article: http://www.nytimes.com/2008/01/20/magazine/20Ben-Bernanke-t.html?ref=magazine
He does NOT come off well at all.
Your post is long. Why not just link it?
Ben’s California thread heading on 18th was based on a quote from Sacramento County Realtor Mike Toste.
I think 2008 is going to be a year to remember.
Lawd Almighty!! Was that a coincidence, or do we actually have a Realtor invoking the meme of the Titanic here?
And the band loaned on…
Even while the existing borrowers went underwater…
Mike Toast
Many thanks to Dean Calbreath for actually doing some research instead of just spouting useless BS like most financial journalists. His column is one of the few reasons to read the SD Union Tribune.
I have not read the full article, but I don’t see how a program of low-rate thirty-year-fixed mortgages can save those who bought homes with loans at high multiples of household incomes can save them. I believe many people are so deeply in debt that they could never hope to pay off even 0 percent loans, but I have no basis of comparison with the situation in 1933.
DEAN CALBREATH
FDR’s answer to loan mess would prove useful today
January 20, 2008
Once upon a time, there was a nation where, during an era of prosperity, large numbers of citizens used short-term, interest-only loans to purchase their homes. They were apparently unaware that once the good times ended, they would be saddled with unbearable debt. Which is exactly what happened in America roughly 75 years ago.
During the Roaring ’20s, the typical mortgage was an interest-only loan that ended with a massive balloon payment. That bears a slight resemblance to the adjustable interest rates that were so popular in recent years.
As the country lurched into the Depression, banks froze up and could no longer dole out credit – sometimes not even to the most qualified of borrowers. Because homeowners could not refinance, their only recourse was the soup line. By 1933, the year that President Roosevelt took office, many of those payments were coming due, resulting in 1,000 foreclosure filings a day.
Which is why Roosevelt felt compelled to create a program that could have some useful applications today.
During his first year in office, Roosevelt created the Home Owners Loan Corp., or HOLC, to help debt-laden borrowers pay off their mortgages. The HOLC took borrowers out of their high-interest loans and put them into 15-year loans – financed through federal bonds – with rates fixed at about 5 percent. Unlike many government bureaucracies, this was specifically designed to be a short-term program, intended to extend loans for three years and then oversee those loans for an additional 15 years.
With the HOLC and the Federal Housing Administration, the Roosevelt administration virtually created the long-term loan, which soon evolved into the 30-year, fixed-rate mortgage.
The loans took some getting used to. Nat Rogan, who headed the HOLC operations in San Diego and Imperial counties, took pains to explain to borrowers that they needed to pay the principal as well as the interest on their loans.
“This policy is in keeping with sound mortgage lending and in the real interests of the homeowner borrower, as proved by generations of experience among financial institutions,” Rogan said.
http://www.signonsandiego.com/uniontrib/20080120/news_mz1b20dean.html
Your post is long. Why not just link it?
Looks like an interesting book about the psychology of housing.
http://tinyurl.com/yst7lt
“Today, in some neighborhoods,” he observes, “finding someone who doesn’t know the square footage of her house can be as hard as finding a Playboy centerfold who doesn’t know her bust size.”
“Unlike the robber baron-era mansions, modern-day megahomes don’t feature dozens of bedrooms or entirely new kinds of rooms — they mostly just take the rooms you’d find in a normal house and make them really, really big.”
“Unlike the robber baron-era mansions, modern-day megahomes don’t feature dozens of bedrooms or entirely new kinds of rooms — they mostly just take the rooms you’d find in a normal house and make them really, really big.”
Except for the living rooms, which are usually merged into one big “great room” with kitchen and television shrine!
When we were trying to look for a second home to eventually retire to, we didn’t see one new home that met our one requirement: Space for a concert-grand piano (A Steinway D, about 8′ 11″) in the living room!
These houses had HUGE master bathrooms, enourmous kitchens, and lots of space for TV viewing, but no decent place for a piano.
My Sunnyvale house that’s much smaller than any of these McMansions has a living room that fits my piano.
(And while I enjoy watching television, I don’t believe in big shrines for them! Our TV is invisible when not on–the screen comes down from the ceiling and a front projector provides the picture)
About 10 years ago living rooms went out of style, both for apartments and SFDs. You’ll need to look at older houses.
I don’t believe in big shrines for them!
Yeah what a pain to move! And computer altars, too. I keep my PC on a plain old table.
Coupon in today’s Washington Post for 80% less salt, 25% less fat Ramen. Glad to see that the FB’s won’t have to aggravate their high blood pressure or gain weight during the downturn
http://freep.com/apps/pbcs.dll/article?AID=/20080120/BUSINESS04/801200501/1002
Article from Detroit Free Press discussing that lenders, in order to make short sales work with insolvent homeowners must cough up the delinquent HOA/Condo fees before the short sales can take place. What it is not yet exploring is that other liens attached to real property such as unpaid taxes (including separate school taxes in some states), unpaid water bills and mechanics liens can hold up sales too because they must be paid to clear up the title because they are a in a superior position to the lender for proceeds of sales. Also if these persons owe taxes to the IRS or for State/local income taxes, the governments may be also in line before the lender (because the lenders were stupid enough to give mortgages to people who had unpaid income taxes).
The problem with preannounced rate cuts: They are already priced in!
This time, Fed rate cuts might not meet expectations
By J. Alex Tarquinio
NEW YORK TIMES NEWS SERVICE
January 20, 2008
The recent bleak returns on Wall Street have ushered in a period of accord among advisers. Many have been prescribing the same bromide to their clients: Switch to defensive stocks and cut back on bonds.
Although the strategists may differ somewhat on how weak the economy will become – or indeed, whether it is already in a recession – they generally expect the Federal Reserve to cut interest rates substantially this year. Lower interest rates tend to produce better returns, but this time around, many analysts say, rate-cutting might not have an immediate salutary effect.
http://www.signonsandiego.com/uniontrib/20080120/news_1b20invest.html
Returns of the day
January 20, 2008
Redfin, the Seattle-based online real estate brokerage company, has surpassed $10 million in commission refunds to more than 1,000 customers since launching a year ago. The company promises a two-thirds rebate to buyers, with the average refund running about $10,100. Information is available at redfin.com .
http://www.signonsandiego.com/uniontrib/20080120/news_1h20topreef.html
OT> The real reason for Pres. Bush’s Middle East trip was to beg the Arab nations not to change oil sales to Euros from Dollars. The impact would be devastating. (More devastating that W has already been.)
There would be no effect whatsoever. It makes no difference what currency is used to buy any commodity, because they are freely convertible. It makes no difference whether the Arabs sell oil for dollars and convert them to Euros or just sell oil in Euros.
What would be devastating would be for the oil producers to stop buying USD debt.
BEIJING (Reuters) - China’s central bank on Sunday poured cold water on the idea that the country’s economy can decouple from the United States.
—————————–
looks like the pressure by the educated elite from America who dont gulp down the kool-aid is getting to the Ministry of Truth in the China.
keep the pressure cooker on high for just a few more months.
“Global demand is ultimately driven by the United States,”
this is still true. The US is leading the way on the property bust which is dovetailing nicely with the supply side engineering of the emerging market downfall.
401k’s Q1 statements are gonna get the attention of the sheeple.
I wonder how much leverage the Olympics has on the Chinese. How much are they restraining themselves?
On the advertising side to the Chinese, think, single feed.
Equity locusts scourge migrates south of the border…
Hot housing market south of the border
By June Fletcher
THE WALL STREET JOURNAL
January 20, 2008
The housing slump has sent many Americans shopping south of the border.
Existing-home prices in the U.S. dropped 4.5 percent in the third quarter from a year ago, according to S&P/Case-Shiller. But they are still climbing in much of Latin America and the Caribbean.
Buyers are being enticed by the kind of double-digit appreciation that has all but disappeared in the States. In addition, a growing number of new developments are targeting Americans looking for good deals and a lower cost of living.
http://www.signonsandiego.com/uniontrib/20080120/news_1h20southm.html
I’m telling ya…
There’s quite a few of us that are planning an escape, or have done so already, to foreign shores.
It used to just be a veiled threat that a hollywooder, would lay down and not follow through with.
The grass is probably greener on the other side, side, is actually doing it.
I wrote a letter to Anna Eshoo (my local rep.) to “complain” about the economic stimulus package. As long as we’re still referring it as a “tax rebate” then
- I noted the inefficiency of sending out checks. Simply put a “-800″ before the “Amount you owe” line on the 1040
Also, assuming I accept the theory that mailing everyone a check will help stimulate the economy, then why not
- Make it proportional to taxes paid! Let’s say, 1/2 of 1 percent of federal taxes paid last year. (e.g. you paid $100K in taxes, you’ll get $500!).
- Since I have a heart, folks receiving the EITC (i.e., the “negative tax”) will simply receive zero, instead of having to send the treasury a check.
And I got back from Anna the EXACT SAME FORM LETTER from her that I got back twice before which talks about (among other things) her “concern” for falling house prices. If she’s trying to manipulate up the price of houses, that, to me, is criminal. (And I’m a paid-off homeowner! I just believe in letting markets fend for themselves)
Speaking against the Tax Rebate Plan is like pointing out that there was a real estate bubble. The herd all wants it and they won’t listen to any argument to the contrary. And the Republicans and Democrats are largely agreeing on the policy–when was the last time that happened? Oh, yeah, when they decided to invade Iraq…
Assuming handing out checks really does stimulate the economy, here’s another fair way of distributing them:
Base it on the amount of *savings* a person had! After all, people who save money are being punished by the lower interest rates that were supposed to prop houses up! Let’s compensate the savers by giving them some money.
http://www.boston.com/realestate/news/articles/2008/01/20/brokers_clients_detail_web_of_dashed_dreams/?page=full
Great article from Boston Globe about mortgage fraud.
How bad is insurance broken?
Got a call last night from Wells Fargo requesting I take out an additional million dollar umbrella on the car insurance for the mighty sum of $15.00 Ameros per month….
the meat on the bone is rotting, and they need the vultures to step in…Im waitin for a bit of fresher kill.
Ive talked my book on this blog before, but Im just gonna give a little flavor on this one…3rd checking account, parked 20% of the cash in. Brokerage positions were stopped out, Short term treasuries fund has 60% of the cash, the rest is spread betwixt GnnMae, the precious, and black gold.
The notion of the critical must have inputs creating the path of pain for America is somehow driving my investment decisions at the momment. We are witnessing a controlled and needed crash of the equities, reductions in consumption, aggresive debt payments, and a rejection of SWF money on the back of an unwinding of arbitraged structured credit.
IF you have failed to panic, I would strongly urge those who think this one is blip to exit long positions on any multi-day strength in the market. Liqidations are getting a full head of steam as the race to see who is swimming naked is gonna trap some financial wizards.
Lot of pressure coming on Bernanke..its not his fault. He is trapped in a game that is not defined by historical standards of depressionary delfation forces touted as the root cause of the Great Depression.
How bad is insurance broken?
i watched cramer (note: i am not a fan of his) friday, and he was saying bring it on. he wants the insurance companies to fold? why? can you provide any insight?
That’s a great datum which I would call WFC specific. Why would they do that? Because somebody is cracking heads at WFC to try to increase revenues. Why now? Most likely because they’ve only now discovered how big a blob of SHHTF.
Non-traditional behaviors aimed at increasing revenues/cutting costs/stifling competition is often a selling/shorting opportunity. Flyers in the mailbox, companies going after small patent/copyright infringers, anything sudden and different - almost always signs of trouble.
spread that same datum to all the participants, and they are desiring a timing on the exit, what does this mean?\
\
tier ones..get long.
SSO is double plus good on vicious rally.
heavy volume lotsa action.
Market looking firm at Monday (non-U.S.) open but I am with Macke from Fast Money that no big rally until VIX trading with 3 handle, which it only gets to with another good beat-up. VIX and Put/call ratio moving towards bullish territory but huge redemptions going on in mutual funds last two weeks . . .
Australia looks weak. down 125 bps. Japan is climbing the wall of worry. Red Dragon still sleeps.
volatility, is the key.
everyone push and shove, only the weak shall perish.
normalizatin of libor and TED spreads creates scenario of platform performance, which is a false signal to non-participants.
WTF does this mean?
TAF= liquidity solved
FFR= effective 3.75%= solved
these are priced in. If hold steady, all equity is rewarded while debt is punished, test the market.
less than 75 bps cut may actually turn the equities higher. punish the debt, reward China with a market crash in equities and the strongest dollar policy they have ever scene….create deflation in CHINA.
how can this be so?
these things are thought about even when Mr Market is closed in the US
“SHANGHAI (Reuters) - China Coal Energy Co (1898.HK), the country’s second-biggest coal producer, launched on Monday an initial public offer of shares in Shanghai that could raise about $4.5 billion in one of China’s 10 biggest IPOs…”
when you cap the price of a critical must have input, and sell shares to the same people who think its a critical must have….who is a buyer?
this is a penny stock.
I do this without the help of mish and Russ, prior…. this is the first over a long weeked of hand wringing.
Read this article, and it’s possible to remember Nader in his role as a consumer safety advocate rather than as an “election spoiler”…
http://www.counterpunch.org/nader01182008.html
“All this has been caused by a combination of speculative greed, taking on huge risks for higher returns and the refusal to apply financial law and order-i.e. regulation-by the Bush regime. All this was preventable by institutional prudence and a vigilant Federal Reserve.”
“When the big boys get into trouble, they expect Uncle Sam to bail them out. Who pays the ultimate bill? You guessed it. The small taxpayer and the consumer.”
From Craigslist.
Attention Renters!
You’re Invited!
Stop renting now and buy a house with someone else, like maybe a friend or family member. H*ll, we’ll even find a complete stranger for you and arrange the whole thing if that’s what it takes! Just buy something… anything! Now!!
Join us for our Blind Date Bagholder Meetup courtesy of C21 and Wells Fargo. http://sandiego.craigslist.org/csd/rfs/545397590.html
The worst idea of all time, going in on homes with friends or strangers. These places will be tension-filled battlegrounds within months.
Safer than with relatives though.
Good article from the LA Times Biz section :
How we cashed in before the housing crash
Friends thought he was nuts when a Times reporter sold his home and started to rent in 2005. But for him, the warning signs were just too hard to miss.
http://www.latimes.com/business/la-fi-shortsell20jan20,0,1815515.story?coll=la-home-center
That ought to be a lesson to all those so-called journalist at the LA Times who could do nothing but deny the bubble. Flanagan, Petruno, etc. — all total cheerleaders without an ounce of foresight among them.
http://www.youtube.com/watch?v=4BhJVSzgUtQ&feature=related
This is hilarious - an ode to flippers by Lou Minatti.
Steve Breen’s SD Union-Tribune comic:
‘People like Ed here should have been responsible and saved their money…
instead they bought pricey houses they couldn’t afford…
which fueled the subprime meltdown…
which triggered a recession.
So now the government will hand out rebate checks to people like Ed.
(Uncle Sam to Ed): “Go stimulate the economy.”‘
http://www.signonsandiego.com/uniontrib/20080120/10.html
Be sure to scroll down to see the last two frames of the comic:
MINDLESS CONSUMPTION: IT GOT US INTO THIS MESS, IT WILL GET US OUT.
(Uncle Sam’s last word to Ed): And don’t save any of that… spend it all at the mall.
Breen really nailed it: This stimulus is a “hair of the dog that bit you” solution to the slowdown.
re•ces•sion (ri sesh’ en): n. Econ. a period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters
New incentives, not fiscal stimulus, are the best way to bolster a slowing economy
http://www.signonsandiego.com/uniontrib/20080120/news_mz1e20recess.html
This article contains some great pearls of wisdom. For instance:
Monetary policy is powerful medicine, and a little like sipping vodka: you don’t feel it, then you are on the floor. But with monetary policy, as with vodka, memories are short.
History will be a harsh critic of the low risk premiums experienced in the early aughts…
thats one of the cryptic Greenspeak quotes.
who made history, and whose living it?
DAVID IGNATIUS
THE WASHINGTON POST
Economic downturn was no surprise
January 20, 2008
…
Now congressional Democrats and the Bush White House are jostling over the size and shape of an emergency stimulus package to reduce the damage of the coming recession – with presidential candidates shouting out their advice from the wings. It reminds me of Hurricane Katrina, with frantic action after the disaster began but little precaution beforehand.
Economists, who have a theory for everything, have come up with an explanation for this chronic tendency to delay until it’s too late, and then scream for action. “Procrastination and Impatience” is the title of a paper published in December by the National Bureau of Economic Research. After conducting elaborate experiments, the three authors concluded: “Our results lend support to the hypothesis that subjects who have a preference for immediacy are indeed more likely to procrastinate.”
…
http://www.signonsandiego.com/uniontrib/20080120/news_lz1e20ignatiu.html
Guess what Fred is going to do with his $800 Stucco.
The candidates are all tripping over each other to BUY VOTERS:
http://www.nytimes.com/2008/01/20/washington/20rebate.html?ex=1201496400&en=11603607c1bf7024&ei=5070&emc=eta1
Hillary and Obama are one-upping each other on the checks they’re going to send to every American!
Bush, quite sensibly, wants to limit the tax rebate to those people who PAY TAXES! Makes sense to me! (I think cutting checks is a waste of money, though. Simply add the math to cut the taxes to th 1040 form)
But the democrats want to refund taxes to the lazy-ass Americans who haven’t paid any taxes! It’s enough to make my blood boil, and I’m a Democrat!
The parallels to Katrina are especially ominous…
I’m expecting my $800 to come in the form of a debit card, usable only @ a corporate behemoth box store.
America’s recession will be hard to shift
By Wolfgang Munchau
Published: January 20 2008 16:44 | Last updated: January 20 2008 16:44
Monetary policy affects the economy with long and variable lags. This much we know. How long depends on the state of the economy in question.
In 2001, the US got away with an unusually short recession helped by aggressive interest rate cuts and an expansionary fiscal policy. But in Japan in the early 1990s, and in Germany in the early part of this decade, it took ages for low interest rates to help the real economy.
http://www.ft.com/cms/s/2567b2aa-c775-11dc-a0b4-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F2567b2aa-c775-11dc-a0b4-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
I am reminded of the days before Katrina, when the satellite image of a giant swirling hurricane bearing down on NOLA from the south was shown on the Weather Channel.
THE OUTLOOK
U.S. Warning Signs Point
Toward a Deep Recession
Housing Crunch,
Squeeze on Consumers
Exceed Earlier Slumps
By JUSTIN LAHART
January 21, 2008
The U.S. has suffered recessions only twice in the past quarter century and both were short and mild. There are good reasons to fear that the looming recession, if it arrives, could be worse.
Housing is in the midst of its worst downturn since at least the 1970s. That has led to a meltdown in the mortgage market; with financial firms struggling to make sense of their losses, they are making it harder for even credit-worthy borrowers to get loans. The combination of heavy debt loads, still-high energy and food prices and a weakening job market has households tightening their belts. Consumer spending, long a bulwark of the economy, is faltering.
http://tradeideasintl.com/blog/?p=19
Buttonwood
Finding default
Jan 17th 2008
From The Economist print edition
What isn’t known about bad debts
WHEN the American housing market turned, subprime borrowers started defaulting. The result was some nasty surprises for investors who had bought “structured” products that were exposed, in complex ways, to those housing loans. Now the overall American economy is flirting with recession, are similar surprises awaiting investors who have bought other types of consumer and corporate debt?
The best way to answer the question is to borrow Donald Rumsfeld’s famous epistemological definitions. Defaults and delinquencies are known to be rising: companies like Citigroup and American Express have said so. But, given that consumer debts are high relative to GDP and that American house prices are falling nationwide for the first time since the second world war, might the level of bad debts be higher in this cycle? This can be classed as a “known unknown”.
http://www.economist.com/finance/displaystory.cfm?story_id=10534902
The economy
Stampede to stimulus
Jan 17th 2008 | WASHINGTON, DC
From The Economist print edition
Politicians want to give the economy a boost. They’re likely to make a hash of it
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=348876&story_id=10534098