Bits Bucket And Craigslist Finds For January 26, 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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Name:Ben Jones
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“Public confidence in the integrity of the Government is
indispensable to faith in democracy; and when we lose
faith in the system, we have lost faith in everything we
fight and spend for.”
Adlai E. Stevenson, Jr.
Smokes, Lad, you’re up early!
“France fell because there was corruption without indignation” - Romain Rolland
Revolution! As one of the characters in the movie “Amazing Grace” said, “America popped the cork… and Paris drank the wine.” I was reading about Jefferson and Adams last night again. Love them and their bitter fights and their true love for each other. Jefferson was a true modern; living lavishly, always in debt and constantly remodeling. Adams was spartan in comparison. Both had differing philosophical views on the role of centralized government. Wonder what they would have to say about all this-
“How can you be at two places at once, when you’re not anywhere at all…”
ooooh..Firesign Theater. Flashback
What was that? I’ve forgotten. Was it an NPR show?
Firesign theatre album
How can you be two places at once when you’re nowhere at all.
Stumbled upon Fireside Theater CDs on the internet. They go for about $10 each from Laugh.com.
Sure brings back the good old days at school in Berkeley, CA
Antelope freeway one mile.
“Stimulus Plan…”
townhall.com opinion article
http://tinyurl.com/3bdxg8
typical clownhall hitpiece. Where was the Heritage Foundation when this disaster was being assembled? Cheerleading the new “Ownership Society” no doubt. This administration, with the Greenspan Fed, is largely responsible for allowing lenders and borrowers to go off the hook 2002-2006.
Not that I want to have any truck with the present Dems.
I thought the whole purpose of the heritage foundation, was a place for the neo-cons to make speeches, where they wouldn’t get heckled.
Funny. Mostly, it seems to be a bunch of hags and trolls, spinning the virtues of abstinence. As IF . . .
“Mostly, it seems to be a bunch of hags and trolls, spinning the virtues of abstinence. As IF . . .”
Gotta agree with this.
Interestingly enough, yesterday someone posted a link to an article where the Office of Comptroller to the Currency deliberately canned states efforts to stop subprime lending in 2004. The Chief clown of OCC even stated so in a speaking engagement to the Federalist Society which is the syphlitic hermaphrodite brother to the creepy crawly Heritage foundation morons.
Cheerleading the Debtorship Society
“Liberals quickly rejected calls for pro-growth tax relief, such as calls to make the Bush tax cuts permanent or the exciting package unveiled by 55 members of the House Republican Study Committee. The RSC members want to lower the top tax rate on corporate income from 35% to the average of our largest trading partners, or 25%, end the practice of taxing the portion of capital gains attributable to inflation, and make it easier for businesses to invest in new plant and equipment.”
So the Republicans (as a whole) want tax relief and you naysayers would rather let the Bush tax cuts end, effectively raising taxes. You let your partisanship fog your thinking.
Any tax reduction or tax relief is good news to me. Period.
Does anyone know what the effective tax rate is for corporations?
I know many pay no taxes.
It’s meaningless to talk about what rate others pay if you don’t talk about effective rates. The US tax code allows for a lot of deductions for business.
This is a wikipedia entry
In the United States, the federal corporate income rate for the year 2006 varies between 15 and 39% depending on taxable income. But since 1999, when Treasury announced the “check the box” system many corporations can elect to be treated as a pass-through entity, thereby skipping the entity level 35% tax and having all income pass through to the shareholders. This is the tax treatment that the much discussed “S” corporations receive; but now many more types of state-law corporations may avoid double taxation by “checking the box”. Dividends are also subject to a lower rate of income tax in the United States. The U.S. corporate tax rate is ranked as the second highest statutory rate among the OECD countries (the U.S. average rate of 39.3 ranks just behind Japan’s 39.5 and well above the OECD average of 28.7).[13] However, the U.S also has the greatest number of corporate tax loopholes of any OECD member,[14] allowing many corporations to achieve a lower effective tax rate than the published rates.
example from other country, the Netherlands:
small corporations (Inc.) pay around 25% corporate income tax and large corporations pay around 10% (sounds fair, doesn’t it?). There are many loopholes for big corporations, and if you are big enough the tax office is happy to offer you special (even lower) rates. Lately they have even been granting the right of never being audited to certain taxpayers (which means they simply trust that your tax records are 100% correct and will never check them). This right is granted by secret treaty, so no one can check. Doesn’t get any better than that I think …
Oh yes, our Finance Minister is also working on special investment vehicles (for wealthy people having more than 20 million or so in assets, or corporations without actual activities) that will pay only 0.1% yearly tax on investment income (instead of 30% tax on a a presumed 4% rental income for normal citizens).
Corporations don’t pay taxes; people pay taxes. Corporations just collect taxes on behalf of the government. Empolyees, shareholders, and consumers actually pay the taxes.
And tax cut without an equivalent cut in spending is no tax cut at all, its just a tax postponement with interest penalties. A tax that is bore by Joe Six pack whose wealth is future wages paid in a depreciating currency. There has been a funtamental difference in the way we pay for bloated government in recent years. Instead of taxing the richest people to pay for ongoing expenses, we instead borrow from them (e.g. T- Bills) and the rest of the world and pay them interest.
Let me agree that “Government Spending” is the main problem to our perrenial budget deficits, but tax cuts can generate more income by placing the money into the hands of the people who are most productive.
I don’t want to get into an argument about Supply Side economics. I think that it has merit, but if you don’t then it would seem that you think the government can spend your money better than you can.
Personally I want to keep as much of my own money as possible.
Your last statement is the money shot, I think. You don’t want to get into an argument about Supply Side Economics because it isn’t working … and it isn’t working in a really big way.
Enjoy your faded American empire. I think the neo-con’s mocked the French so hard because deep in their heart of hearts, they know they are next.
not a gator (if you’re not a gator, what are you a seminole?)
Disagree totally with your comment regarding supply side economics not working, just don’t feel like trying to prove it to a bunch of people that aren’t willing to think about it.
“Spending” is the problem. If you look at revenues you’ll find that they’ve always risen when taxes were cut. Problem always remains, Spending increased more. Cutting taxes started with JFK, continued with Reagan, and now with W. I’ll do a little research and come back a later date.
I usually don’t chime in on political BS. But I get tired of all the Bill Gates wanna be replicans, slamming democrats. Most just keep voting republican just because they always say “we’ll cut taxes” and they want the breaks in case they ever get rich.
I’ve been in business for over 25 years, and I always did great when we had a Democrat President. These are facts.
Reagan Years, Gas went from .35 to $1.80. Economy crashed. Interest rates went to 21%. Housing Tanked.
Clinton Years, Gas dropped to .89 a gallon. Economy was great, budget surplus.
Bush Sr. Years, gas up, war , budget deficit.
Bush Jr. Years, Gas up , war, budget deficit, economy trashed.
Please note, I consider myself a independent. I don’t like all of any politicians sides. However , I have never seen Republicans do anything for this country except screw it up. I don’t listen to what anyone tells Me, I go by what I see and know.
Everyone who’s voted for 2 generations of Bush’s because You’re a republican, How’s that worked out for You so Far?
I didn’t vote for either Bush and i can report it sucks.
Ahh yes…. Those pesky little facts tend to get in the way of the rhetoric.
Thank you Marion…
Jan. 26 (Bloomberg) — Three New York agencies sued Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and 23 more underwriters for allegedly helping Countrywide Financial Corp. to defraud investors.
New York’s city and state comptrollers and their pension funds added the securities firms, two accounting firms and Countrywide officers and directors as defendants in a federal securities-fraud lawsuit filed against the home lender in August.
“The underwriters and accountants enabled Countrywide to release false statements. Investors lost millions and New Yorkers lost their homes,” New York State Comptroller Thomas DiNapoli said in a statement. “We need to recover the pension fund’s losses and find a way to help all those families.”
Sounds like the fraud allegations are countrywide:
“Countrywide Fraud Suit Expands To 26 More Financial Services Firms
Dow Jones
January 25, 2008: 04:56 PM EST
…
The expanded suit includes ABN Amro Inc., A.G. Edwards & Sons Inc., Banc of America Securities LLC, Barclays Capital Inc., BNP Paribas Securities Corp., BNY Capital Markets Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Dresdner Kleinwort Wasserstein Securities Inc., Goldman Sachs & Co., Greenwich Capital Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc., Merrill Lynch & Co., Morgan Stanley & Co., RBC Capital Markets Corp., RBC Dominion Securities Inc., RBC Dain Rauscher Inc., Scotia Capital Inc., SG Americas Securities, TD Securities Inc., UBS Securities LLC., Wachovia Capital Markets LLC, Wachovia Securities Inc., Grant Thornton LLP and KPMG LLP.”
http://money.cnn.com/news/newsfeeds/articles/djf500/200801251656DOWJONESDJONLINE000854_FORTUNE5.htm
My big question in this rush to get their money back is…………………..where does Angelo Mozillo fit into all this????
Do you think we can be charged with defrauding them and looting the company of 100’s of millions of dollars??
He probably has already transferred all his loot to some banana republic bank. I doubt they will ever see the money.
If he’s smart he is taking up residency in one of those “we don’t extradite criminal countries”.
I, for one, would like to see him do the Enron perp walk in a NY courtroom, filled with angry investors!!
he will *die* before being sentenced.
yeah, just like ken lay ‘died’ conveniently and why they actually fought after his death to vacate the conviction…hahaha
I was looking at listings, last night, for Long Island, NY. It’s amazing how much denial still exists. Wishing prices abound. A lot of sellers are still looking for someone with a “bucket of money and a box of stupid”. It should be another bad year for transactions, as many sellers cling to the past and ride the market down. Listings fell about 10% heading into the holidays, and are steadily climbing back up. I expect an explosion of listings by spring.
I was just doing the same thing. Tons of open houses this weekend in my town, not a lot of price reductions.
I don’t understand the purpose of having more than one, maybe two, open house showings for your home. Especially when you’re not reducing prices significantly. Stale, stale, stale.
Right now, there seems to be “hope now” in the misguided increase in Fannie/Freddie limits.
Well, the siege is here. Will the cavalry ever show up?
A seized engine, not a siege.
Just for you
http://bigpicture.typepad.com/comments/2008/01/conspiracy-theo.html
Sweet!
I’ll just pop into the kitchen and get me some aluminum foil.
Nothing like seeing your job advertised before you’re fired…
John Mauldin was in Europe last week, and the chat he repeated in his latest newsletter states variations of this theory are blanketing the continent….
Heh, Suzie Orman was on Larry King on Thursday evening and said that the increase in the GSE limits was THE BIG IDEA that would turn this housing market around….oh and she also said the markets would likely go up on Friday (yesterday), and we all know how that turned out…
Debt is a poor substitute for income.
Hmm, Suzie is an example of “you can’t fix stupid” syndrome.
Roidy
Exactly. Her “People first, then money, then things” line and other popular quotes are brilliant advice for people making decisions about their finances. When people go to someone like that wanting to know how the markets will perform tomorrow or what legislation the government should endorse it becomes clear hardly anyone even knows how to ask relevant questions anymore.
I have staffers come into my office all the time now to get my opinion. This is just recently, like in the last 2 weeks. One of them asked, “Where did learn all this financial stuff?”. “I read A LOT!” was my reply.
The funny part is these are grunt level accounting people asking this. These are Suzie’s people.
Suze used to be good and give very practical advice (if a little annoyingly new age-ish.) Unfortunately, celebrity made her believe her own press and she started to make market predictions about the same time as she started pushing auto loans. Going from “buy and hold” to “you would have known when to sell in 2000 if you read (and paid for) my newsletter” was more than a little dishonest. Oh well. Still lots of good voices out there for the average person - at least until they think they’re brilliant enough to beat the market too.
My guess is that Suze’s show has a lot of real estate-based advertising on it. I can’t watch it because she is so demeaning to her listeners.
forget the increase as long as the banks want a beefy dp (10-20%) the prices are going nowhere but down
I’m sure the banks WILL get a beefy DP.
Although I’ve seen some fairly good reductions on some properties, I’m amazed at some listings that are wildly over priced. Many properties I’ve seen listed for a year or more. Most of these sellers need to be left to choke on these properties or have the lenders take them away. Other than checking out the MLS, it’s not worth the time to even look seriously at anything. Although I do like stopping at the occasional open house and telling the broker “it’s way overpriced”.
It looks like it’s another year for buyers to sit on their wallets.
I think that’s what I’ll do this weekend to gear up for the Spring…go to Open houses and tell them they’re over priced.
I’ve got South Shore Nassau County…any taker for North Shore…how ’bout the glamorous Hicksville/Levittown area.
There are probably balloons on every other corner this weekend in that area.
True we need 35% haircuts to get things going. Individuals can agree to the as they are too broke to come out of pocket, and banks dont want to recognize the losses just yet. No reason to look during the next 18 months. Continue to watch the foreclosure numbers pile up. The massive liquidations thereof will be the best bargains. My current projection is last quarter of 2009 as the time for some great bargain shopping. Although I dont see real appreciation until 3 years after that, you should be able to get a deal that wont be too risky or out of line with historical norms. Most of us waited this long, just slightly less than 2 years to go.
It looks like it’s another year for buyers to sit on their wallets.
Yup.
Long island is in for some real pain
i am staying put in my place- renewing lease in may
another year to save and wait for some reality to set in
since we have no kids long island does not fit into our plans
and those taxes are insane as well as gas prices
i cannot imagine having to get in my car for every trip
it is nice to walk to a store for the little stuff
i have plenty of freinds and family on long island
but most bought their homes in the 90’s
I would tell you more stories of my “Adventures in Lowballing” but I don’t want to get jumped by my fellow HBBs again.
I noticed some of the houses here went off the market over the holidays. None of them boasted the “SOLD” sign. There have been only a few transactions on the local listings. A couple are still the “box of stupid” and a couple are 20% off.
Doesn’t matter, no one should buy in an overpriced location for the next few years anyway.
‘no one should buy ‘
That’s quite a blanket statement. True for the most part–but not in every circumstance.
It is nice to know that it is much more difficult to fill that bucket by borrowing. Ample supplies to fill the box, though.
vmax. Bear in mind that inventory declined DEC 07 but was still 11% higher than the DEC 06.
A counterfeit economy, combined the ease of counterfeiting paper money = disaster for those of you that think “cash is king”
As recently as just a few decades ago, It was genuinely difficult and highly expensive to counterfeit paper money, as it required an amazing outlay of capital for equipment, to decently duplicate greenbacks…
About 15 years ago, I went into a copy place with a 1934 $1000 Banknote and made a color copy 3 times it’s actual size, to see how far technology had advanced, and was amazed.
Technology has advanced in spades, since then…
About 10 years ago, my friend worked as a traveling service technician for a company that made really, really high-end laser
While my friend was making TWO different service calls, the Secret Service raided the office! In both cases the owners of the laser printers were legitimate businesses. One day an employee decided to try copying a $1 bill, just to see what would happen — and the results were so good that they began counterfeiting $20’s and $100’s. The quality of the bills was sufficiently high that they were able to pass them, and the Secret Service eventually had to track down the employees.
I guess the Option ARM and no-doc mortgage products are sort of the housing equivalent of these copy machines. For some people, the temptation of easy money just becomes too great to resist.
Technology knows no borders in our modern world, and the reach of the secret service doesn’t extend past ours…
Well, depends. There are secret service offices focused on counterfeit U.S. currency throughout the world.
It’s a big world, out there.
Be carefull printing anything on color laserjet printers. Virtually all HP models, and many from other mfgr’s have a ’secret’ watermark that can allow authorities to identify the serial number of the printer and date/time that any page was printed. I’m responsible for thousands of HP printers in a production environment and have verified this with my own eyes.
More info from this guy: http://www.bunniestudios.com/wordpress/?p=48
More thorough info and lists of exactly which models spy on you:
http://www.eff.org/issues/printers
If the printer was operating deep in the heart of Shanxi Province, how exactly would the bust go down?
That’s what i’m talking about…
regarding copying technology: over the last ten years or so, most high quality color laser printers and copiers not only got technology that enables authorities to track the printer/copier that made the print (usually using tiny yellow dots in a fixed pattern on the page), but they can also recognize banknotes and prevent duplication. Just try to scan a banknote with a recent version of Adobe Photoshop and see what happens. I wouldn’t be surprised if the more high tech equipment will try to make a ’service call’ on it’s own now when it encounters a banknote being copied/printed.
Even Euro banknotes (that have far better counterfeit prevention than US dollars) are easily forged nowadays; some counterfeit notes are so good that only real specialists can see the difference…
KEWL, make lots of copies then put the HP on Craigslist for FREE …….no trace.
———————————–
Be carefull printing anything on color laserjet printers. Virtually all HP models, and many from other mfgr’s have a ’secret’ watermark that can allow authorities to identify the serial number of the printer and date/time that any page was printed.
Nobody’s advocating counterfeiting currency…
Just exposing the risk that many of you aren’t aware of, that’s a clear and present danger.
Don’t spend that rebate check yet,
“Just when House Democratic leaders and President Bush reach a rare political compromise on an economic stimulus plan, the Senate threatened Friday to rain on their bipartisan parade.
Senators from both parties were already drafting their own plans, which could increase spending and draw the ire of deficit-minded lawmakers. It could also complicate efforts to get checks in the mail to millions of Americans by late spring.
Sounding the alarm about Senate tinkering, White House spokeswoman Dana Perino said: “We believe this is a very good bipartisan compromise, and it would be unfortunate if the Senate did anything to slow it down or blow it up.”
Although both chambers are controlled by Democrats, senators are notoriously protective of their prerogatives. “The Senate is not going to willy-nilly rubber-stamp what the House does,” Sen. Max Baucus (D-Mont.), chairman of the finance committee, said in a telephone interview.”
http://www.latimes.com/news/nationworld/nation/la-na-stimulus26jan26,0,758050.story
Our stalemated government will end up doing nothing, only after it exhausts all other possibilities, true to form.
Sometimes that’s a good thing.
amen to that…
can’t wait to see the mess this payday loan will unleash on the bond market and the USD
“Our stalemated government will end up doing nothing, only after it exhausts all other possibilities, true to form.”
Sorry, I must disagree with you on this one.
Our governments always do something. That is the problem.
Every “crises” requires some government response.
But this requires SPENDING OUR MONEY, to give their voters free goodies. They are very, very good at that.
They just fail to understand the consequences. The house and senate will vote to pass around more free money, and people who work for a living will pay for it in lost dollar value.
No checks, bc of zero balance.
That’s good news. I don’t believe that “stimulus” is going to do anything except increase the federal deficit.
Why don’t they start enacting usury laws? Shouldn’t 30% interest be illegal? If the sheeple got a break on their credit card bills, it would help more than a lousy $600 government check.
Heard some talk jock out of SF yesterday say that he and those he knew in the city were not going to use the money to pay down debt or CC’s but to buy a big screen tv. He also mused about how great the raise in the jumbo rate was going to help SF house owners move their property because now people could get a loan. Guy was totally out of the loop.
but that would, like, “make sense”
I have no horse in this race but I think it’s outrageous to cut out the extension of unemployment benefits and give money to people with household incomes over 100K. I hope Rangel and Kennedy assert themselves and put Bush in the position of possibly vetoing a bill that would help unemployed people. Let’s see what that weasel would do then.
I have a horse in the race and I don’t really care about this pittance of a so called refund.The whole thing is a joke.Why is the goburnment sending out checkw when they are already broke? I guess they have a learned a thing or two from subprimers.they can keep their dam check.
I don’t really care about this pittance of a so called refund.
Well, if you consider $1800 a “pittance”, then maybe you should send a letter to the IRS and the Treasury stating they should give your tax rebate to someone else.
If the federal government wants to give it’s citizens a portion of the taxes it collects back, I’m all for it. My family pays state income tax, property tax, excise tax, sales tax, federal income tax, payroll tax, and capital gains tax. I’m quite sure we pay our share of taxes…
The fact that our government runs massive deficits is not an issue of taxation, but of rampant overspending, big, intrusive Federal government, and the waging of two conflicts in the name of fighting terror. Cut spending…
The above discussion from arizona dude and noreaster are very interesting when juxtaposed.
The same issue is viewed through two different beliefs. One believes the government is subservient to the people, and the other-through the statement “if the federal governement wants to give it’s[sic] citizens”-believes they belong to the government.
That summarizes the debate, and the struggle.
They seem to expect the $1800 to literally change our lifestyle–from scrimping to spenthrift.–So yes–in the big scheme of things $1800 is a pittance, IMHO
$1800? when did it become 1800?
I disagree, Kerk. I think it’s a matter of Northeasterner not seeming to understand that we’re only “getting our money back” if the government stops spending it… This would probably mean cutting all that defense spending that the Northeast depends on. (That includes my father’s job.) This would probably mean pulling out of Iraq. It might even mean cutting SSI and SSD payments. Or maybe just Medicare. To me, all of these options suck, but if we were to take these drastic austerity measures, I would feel 100% fine about a tax cut.
“This would probably mean pulling out of Iraq. It might even mean cutting SSI and SSD payments.”
They need to eliminate SSI. 95% of the people on that program are fraudsters, and once they get approved, there is no systematic way to verify that they’re still disabled. Many end up going into jail and still have their SSI payments sent to their boy/girlfriend, to use on casinos and dope.
I agree re: extending unemployment benefits. There should be real pushback on that issue from both sides of the aisle.
As for “the weasel,” he’s already shown that he’s not afraid to veto a measure with wide bipartisan support when it’s aimed the less fortunate instead of his high-livin’ corporate buddies (Kenny Boy Lay, RIP).
“No one in this world has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.”
H. L. Mencken
RIP=”really in Papeete”? I always thought that it was more than a bit suspicious that he “passed away” and was cremated in such short order, so close to the time he was intended to go into the penitentiary. Close friend of the Bushies, anything is possible. Maybe he’s off in some tropical paradise drinking fruity cocktails with DB Cooper and Elvis.
I was reading something about him the other night, and I believe it hinted that during the autopsy they found that it appeared that Ken Lay had prior heart surgeries, although it was kept under wraps from the corporate board or some such. With that much bad attention, it’s no surprise that he kicked over.
or, it simply indicates that the cadaver was of somebody else.
Extending unemployment benefits would make a whole lot more sense that increasing the max conforming GSE loan. The latter infuriates me. What we need is affordable housing, not more government intervention to sustain current prices (that’s what the REIC wants). I really hope this entire stimulus plan stalls and fails.
>>”Senators from both parties were already drafting their own plans, which could increase spending and draw the ire of deficit-minded lawmakers…”
but of course the 150billion pulled from mid-air is not itself seen as ‘increased spending’
More bacon, please…
http://www.signonsandiego.com/uniontrib/20080126/news_1n26economy.html
“It would be irresponsible for Senate Democrats to load this bill up with pork and other spending. Families and small businesses need help now, and this agreement shouldn’t be derailed because of partisan politics.”
And your point is Senator what? That this bill “will” be laden with additional pork because that’s the way it works. Both sides suck and there’s only a small minority that really care.
We Need Term Limits!
Oh that would be just great! Then the lobbyists would really run everything.
Hmmm….. and when did you determine the need for term limits….. Nov. 2006?
The need for term limits became apparent in California prior to 1990, when Willie Brown had accumulated so much power that the citizens resorted to amending the state constitution to force him out.
Wikipedia entry on Willie
Savings Now a Political Issue…
“Move over jobs, war, healthcare and immigration. There’s a new issue on the presidential campaign trail: your retirement savings.
In a sign of changing times, a dawning reality that millions of workers face an income squeeze when they retire has elevated the once-personal matter of building a nest egg to the national political agenda.
-Leading Democratic candidates are calling for savings programs — unrelated to Social Security — targeted to moderate-income households, greased with matching tax credits and powered through payroll deductions. Republicans have avoided that strategy, instead putting their faith in tax cuts and policies that fuel economic growth as ways to promote new saving.”
http://www.latimes.com/news/nationworld/nation/la-fi-savings27jan27,0,1035095.story
Don’t have savings? Here, let the government give you some. Now you’ll feel better.
My children’s generation will save. They won’t want to work until they die like they saw our generation do.
I am a saver and hope to retire at 50
I used to save for an early retirement. Then I met more retired folks and found them to be unproductive, uninteresting, and prone to be self absorbed. I still have enough to cover myself in case of disability, but the bulk of my assets are now invested directly in ventures of one sort or another.
Regarding government encouraged savings, these moves come after significant research showing that they have positive results and are welcomed by people. That seems a vast improvement over the recent past where people were encouraged to have blind faith in pension plans which are clearly failing. Government pension insurance is bursting at the seams already when the failures are just starting and the boomers have barely started to retire.
Perhaps more or better educations would help, but sitting back and saying neener, I saved and you didn’t, so here let me insure your pension plan as it inevitably implodes doesn’t sound either more practical or more noble.
“I used to save for an early retirement. Then I met more retired folks and found them to be unproductive, uninteresting, and prone to be self absorbed.”
I retired at 57. Love every minute of it. Self absorbed, you bet. Just started taking up fly fishing. Other than that, working out at the gym, eating right, gourmet cooking, community involvement, etc. Productive, you bet; I take care of my family and kids when they need my help (advice, physical) to keep them productive so that they too can retire young and enjoy life. I spent years working in the Coroner’s Office and saw a lot of people die young and without having ever really enjoyed life. If you call going to work for someone else in a mundane job living, you better think again.
I retired at 40, the only problem was, no income - so after awhile I had to go back to work. But at least I like what I do.
“If working is so good for us, how come they have to pay us to do it?”
anonymous New Zealander
if your savings consists of $600 rebate check you are up a creek without a paddle
i keep more than that in a lockbox in my place for a rainy day fund. this country needs a real wake up call
No kidding!
Folks at work asked what I was going to do with the $1200. I said “it goes straight into a forex account so I can earn a little before I give it back in taxes”
Next question was predictible “what’s a forex account?” but the second was far better “we have to pay taxes on it?” I didn’t know whether to laugh or cry.
Many many years ago I was laid off from my job at a failing company, and became eligible for unemployment. When I discovered that the unemployment compensation would be taxable, I declined to take it, and started my own company instead of looking for another job. Looking back, this is one of the best decisions I ever made.
You don’t have to pay taxes on it if it is characterized as a return of federal income taxes. Since you can’t deduct federal taxes paid from your gross income to get to your taxable income, a rebate on those taxes doesn’t have to be taken back into income. The result would be different if it was a rebate of state or local taxes that you had deducted from your federal taxes as part of an itemized deduction.
Not positive if it would play out differently for the folks getting something despite not paying federal income taxes at all, but my guess is they would get the same treatement as if it were a payment from the earned income tax credit.
Please don’t scare people without reason.
The point is that the taxpayers are paying the bill. We will pay more taxes later to pay back this “rebate”.
I still have a copy of an article about retirement from 20 years ago entitled “you saved, but they didn’t, so now what?” Now what if those who spent rather than saved and are now “needy” are the majority?
The problem is exacerbated by the fact that the federal government did the same thing, with extra money extracted from the less well off in the from of a regressive payroll tax to “save Social Secuirty.”
I was watching Moyers last night and it would appear he is brainwashed just like many are on the subject of saving and borrowing. With respect to the drying up of credit and declining prices in housing, he wondered how people are going to send their children to college, if they can’t borrow against the equity in their home. Sheesh. Why doesn’t he ask why people can’t save and spend out of pocket?
College is overrated, thats the short story.
I worked my way through college and had no debt on graduating with a masters in environmental engineering. That was 35 years ago. No way could I do that now.
Getting a degree results in more money in pocket is the short and verifiably accurate story. The problem of paying for college has more to do with the mechanisms used to fund it and the way high tuitions are used for bragging.
I worked my way through college 35 years ago splitting firewood and graduated with a BSChE with honors.
No way I would even try to do that again!
There was a Simpson’s episode where, in a dream sequence, Bart imagines his college graduation and when the University President hands over Bart’s diploma on stage, he says something like “Congratulations, you have graduated from the MOST expensive, and therefore, BEST university in the country”….had to laugh at that one.
Wonder if there will ever be a Simpson’s episode that touches on some of the excesses of the housing bubble….
“Wonder if there will ever be a Simpson’s episode that touches on some of the excesses of the housing bubble….”
Try January 7th, 2008. Bart Simpson’s opening credits chalkboard punishment: Teacher did not pay too much for her condo.
Hah, Really…? I missed that, but touche, Bart, touche…!
There’s more to college than the extra money you can get from a degree at the end of the road, especially if you pay as you go. I teach at a community college, where you can get a solid two year core for pennies (in addition to a technical skill if that’s what you want). More than 90% of my students still live at home with their parents (19 and 20yolds) and though diverse, the district is relatively affluent and many of these kids have other options but are cashing in on the “deal” of cheaper classes. I have also worked at a large urban public university, teaching exactly the same class, and I can safely say that though the “core” there is considered a bargain, it costs 4 to 5x what it does in the CC. All of that being said, both of my own kids are now in four year colleges away from home. Given the difference in personalities between my son and daughter, my daughter (wild child) stayed close to home for two years and then went away to school and my son went straight away out of high school. I saw a dramatic change in my daughter, maturity-wise, when she “left home”, and now that she’s nearing the end of her fourth year, Mom and Dad are getting smarter every day! My latest call from her was for advice on salmon cooking (using the dorm kitchen).
Both of my kids worked… at the local grocery stores as baggers and clerks, then for Sonic as hops and cooks, even though we have a six-figure income. I wanted them to meet the adult folks who didn’t have the option of college, or that thought that extra training past a GED was “overrated”. After a few years of eau-de stale fry grease clothing, we never had to sell them on school. Yes, we’re paying- but as we go. And even though we’ve told both of them not to worry about working while they were in school, my daughter has two jobs (she likes to work). We are loving watching them grow up, make friends and enjoy the camraderie of their respective schools. I ate a lot of hamburger helper “back in the day” to enjoy this debt-free gratification, and if my kids are happy with their careers (teacher, engineer) it will have been well worth it.
Dinasmom,great story. My son is 15 and has saved enough $ to buy his own car. I’m requiring him to buy his own insurance–so if it goes up he’ll feel the pain. Great lessons when it comes from your own pocketbook. The college thing will be another mountain to climb in a couple of years. One of the reasons we sold our house in ‘05 was to capture the ‘equity’ so we would have money available for his college. I had learned my lesson about ‘equity’ when I bought in ‘89. OUCH!
Why didn’t he ask why the price of a “basic” undergraduate education keeps skyrocketing at a pace far beyond that of the inflation rate?
Good question, ET. We really have a brain-dead media on both sides of the fence. I keep wondering how it is that much of the media keeps supporting itself, there are so many outlets all saying much the same thing.
Easy. Too much availability of federal student loans.
There is much correlation between housing and college markets. Prices only so high because people who can’t or shouldn’t be affording it can get a subsidized product. That’s why the dropout rate at some schools (especially FL) is so high….these people take loans, party their asses off until they get kicked out, and walk away. Grants are a much better solution to helping out lesser capable people.
Florida undergraduate tuituion is too low as well. I want there to be free access for all to education but the current system is broken.
For a good example of a progressive fix, see what changes Harvard made to their tuition.
It’s all those scholorships and subsidizes and student loans that cause college prices to be inflated. Too many people insist on going to college. I did go to college for two years and have an associate’s degree. Am self employeed with an internet business so no need for more college
Comment by Moman
2008-01-26 07:45:47
Easy. Too much availability of federal student loans.
There is much correlation between housing and college markets. Prices only so high because people who can’t or shouldn’t be affording it can get a subsidized product. That’s why the dropout rate at some schools (especially FL) is so high….these people take loans, party their asses off until they get kicked out, and walk away. Grants are a much better solution to helping out lesser capable people.
Easy answer to that:
(1) stop admitting anyone who has not had 4 years of history, 4 years of English lit, 4 years of science (earth science, biology, chemistry and phsyics), 4 years of math (algebra I and II, geometry and trigonmetry and calculus) and at least 2 years of a foriegn language —- AND who doe not have at least a B- average and SATS that put them in the top 33%.
(2) Stop all remedial classes at 4 year colleges. That is the purpose of community colleges.
“Am self employeed with an internet business so no need for more college”
After reading your posts for the last few days, I’d agree with this statement. What you need is a little more high school, first.
Though state schools are considerably more expensive in real dollars than they were 35 years ago, getting a degree today is doable. My parents would have never taken equity out of their home to pay for my education.
I worked in the summers rather than going to Europe like Moyers’ kids might have done. My folks contributed what they could. The gap was filled by a state college loan. Paid it in off in less than a year. I earned a college degree. I earned my masters recently by working fulltime and going to school at night. Granted my children are grown so I didn’t have childcare looming over me to make it harder, but I now have a graduate degree. Is college worth it? In most cases, you bet. I make far more than most who only have a HS education.
Is a college degree required? It depends on what one wants to do or enjoys doing. It depends on life goals and expectations. It depends on the value of education one is brought up with.
We still need electricians, mechanics (I know one who works for a Benz dealership in Atlanta & makes $130K a year), plumbers (mine has a Lexus for his personal car and I certainly don’t), and other skilled jobs. Most who excel in those areas are doing just fine. Some apprenticed and others went to technical colleges or community colleges.
No, no one has to leverage the equity in their house for a child to get educated. They may chose to, but there are other options. I like Moyers, but he is far off the mark on this. His statement is elitist made by some “haves” who have presumed that the “have nots” probably use “investments” like home equity to “have more.” That is why politicians (who are members of the “haves”) spout off similar statements.
Determination, values, and will are the drivers for someone who wants a college education. If the parents are wealthy then the student obviously has more choices about where and how, but that is life. Those that have, have. Those that don’t, don’t.
My dad did take out loans on the house to send 3 of us to state schools. However, he was very responsible with money so taking those loans wasn’t financial suicide to him. It’s just how he chose to finance our college (which he did - fully - exept for books and spending $$ which was on us). Also, his house was paid off long before 30 years.
As for the current cost of state schools, Penn State’s annual tuition is the equivalent of a year of daycare (which I’m currently paying for). I figure if I can do daycare now, I’ll be able to handle college 15 years from now.
I also completely agree with you that a college degree, while opening doors for some (and mandartory in certain fields), is not necessary for success. I remember they used to mock the “tech school” kids in high school. Some would treat them like they were stupid because that’s all they could do. Guess who has the last laugh now as many of those tech school kids now own their own successful businesses.
Like anything else, an inability to pay for college, including through debt, will result in a falling price for college.
Even state schools are through the roof. In Ohio, undergrad tuition, dorm, books, and fees will easily cost $70,000 for a four-year education.
Incidentially, Ohio is almost #1 in the nation as the most expensive state college system. It is also up there with the four highest taxing states, and the among the top handful in schoolteacher salaries.
Oh yeah- and fighting for the #1 in foreclosures- especially per capita.
Hmmm…
70K for a 4-year education.
Have the kid get a job at $8/hour, let’s say $6.40 after taxes. 70K / 6.40 = 10937 hours / 2000 working hours a year = 5.5 years.
So. If some kid wants an education they can stay home with mom and dad from 18 to 24, save the income from a minimum wage job and then go to college. As an added bonus they will gain an appreciation for what a college education will do for them.
Is that a price most 18 year olds would be willing to pay? Perhaps not, but then everything seems worthwhile when it’s paid for with OPM.
“he wondered how people are going to send their children to college”
Yes spend good money to send you kid to college to get a $30K job. Let’s see, should my kid go to college to get a degree in history, sociology, anthropology, political science, etc or should my kid become a fireman, policeman, correctional officer, etc without any college. The latter start with a higher pay, better benefits, better retirement at 50-55 and start with no debt. While they are on the job they can go to school at night, earn a degree and come out with job experience that can convert to money. I’ve known many in the safety field that earned a law degree while on the job and had a house, money in the bank and a family to boot.
As for me, I worked from my soph year of high school on to pay for my college degrees. My kids are paying for theirs as they go too with me donating only $400 a month. Two have finished and two to go.
“January 7th”
correction - The new Simpsons episode was obviously on a Sunday, so January 6th.
I worked my way through a BS, JD, and MS. I don’t understand the concept that people have to pay for their children’s higher education. I also don’t understand why you have to borrow tons of money to obtain an education?
If you live in a metropolitan area go to a community college for the first half of your undergraduate degree then a state or city school for the second half. As for a masters, nearly all classes are given at night, so work in the day and take 1 or 2 courses per semester.
You want to enhance the capability of this civilization to rebuild its infrastructure, rebuild its manufacturing base, understand the difference between hysteria and logic, and teach the next generation how to work through problems? Get a handle on what it actually requires to develop a scientist or an engineer. Working your way through school is not an option.
Core requirements still require a grounding in history, english, poli sci or your fluff discipline of choice. The core requirements of science and engineering require the ability to chase a problem to its root cause, and to document the story for history. Writing and grammar are skills gained along the way. The payoff with a science or engineering degree is a lifelong capability in critical reason, and an aversion to the madness of crowds. THE DOWNSIDE: the price. Critical thinking requires lab courses and problem sets, a real demand on time. It is impossible to pursue these fields without lab courses or multiple problem sets each and every day. Therefore, the only Americans who can aspire to these critical thinking disciplines must use their school time in working and studying. You cannot take lab courses at night: a lab takes three hours, and writing up findings, assuming you know what you are doing, takes another three. This is in addition to class time and the obligatory weekly problem session conducted by the T.A. (teaching assistant). Therefore, every science course requires four hours of class time, three hours in lab, and two hours in the TA session, and the required study hours. Multiply that by four lab courses per semester, and you will begin to see the cavalier sound of “working your way through school”. Likewise, for engineering, completing a non-trivial problem set chews up a minimum of four hours. This assumes you understood what went on in class and are up to date. Under these circumstances, “working your way through school” is not an option.
People who have no understanding of the demands of a science and engineering curriculum want to enhance United States capability in engineering and science. These same people extol “working your way through school”. It is no wonder the doctors and scientists in our country are over-represented by H1B immigrants.
For the straight A average poli sci, english or history major, by way of contrast, the week’s challenge is reading a book and associated articles, and writing a couple of term papers. You can do this while working your way through school.
Unfortunately, while going for the real thing, there are no short cuts. Personally, I have a graduate degree in hard science and an MBA. My undergraduate science degree was on an academic scholarship at an Ivy. I would have lost my free ride if my GPA had slipped under 3.8 for a millisecond. Had I lost my GPA, I would have slunk back to my hometown to a lifetime of slinging hamburgers or breeding in exchange for a roof over my head.
Any ignoramus can be a Poli Sci/History/English major, and most of them are. You want to reconstitute our civilization? Nurture our scientists, and stop the self-righteous blather about letting them work their way through school.
PS - I got my MBA at night at NYU, considered a decent program. My employer paid for it. I found it easy by comparison. I had a full time job running a refinery, two children, and a 150 mile round trip to class two nights a week. Currently, I support the good guys by tracing and documenting the electronic traces left by money launderers.
Amazing, the flexibility you get in your life if you have gone through the relative agony of a grounding in hard science.
/rant off. Flame on. I want to hear about the capabilities of english, history and poly sci majors in reconsituting our grid, making improvised microbe filters, accessing ground water, redeveloping subsistence communities, and re-establishing basic public health measures after the coming apocalypse.
I also have a “hard science” degree (physics), and I disagree. Yes, a modern physics lab course is relatively expensive–but mostly paid for by having a modern physics lab in which one is doing modern physics research, paid for by (relatively modest by federal standards) gov research grants, not tuition. And the basics physics lab we had was only expensive in terms of slave labor grad student TA’s (we had three). Many of the labs were done with relatively inexpensive materials.
There is no reason why in real money terms my physics education cost maybe four times what Rachel Carson paid for her biology degree in the 1950’s.
I will tell you one thing–the buildings are a lot fancier than they were in the 1950’s. Heck, the 1950’s lab buildings in most colleges I’ve visited looked suspiciously like elementary schools from the 1950’s. The new lab buildings look like hospitals. Another case of overspending.
The story in America today is waste, waste, waste.
Why does the destination sign on a transit bus cost $5K? Why do we have ASA/GPS programs just so the driver doesn’t have to bother making stop announcements? They could probably save $8K going back to rollsigns (curtain signs) and a good pair of lungs. The fancy shmancy systems break down so often that I find myself sticking paper signs in the headsign space some days anyway… or, you know, in the window, which is a breach of some DOT regulation, but here the cops give us a break on that.
WASTE.
“I want to hear about the capabilities of english, history and poly sci majors in reconsituting our grid, making improvised microbe filters, accessing ground water, redeveloping subsistence communities, and re-establishing basic public health measures after the coming apocalypse.”
My my. Please sit down and regain your composure. Hysteria impedes rational analysis.
But, but, but … ours is a CONSUMER BASED economy. If people saved instead of spent then where would our economy be?
All that spending supported those nifty $8/hr retail jobs here in the US and those lucrative $0.25/hr manufacturing jobs in China. You can’t just heartlessly decide to save instead of spend and watch as these folks are thrown out of work. The shame.
Republicans have avoided that strategy, instead putting their faith in tax cuts and policies that fuel economic growth as ways to promote new saving.
Like the Republicans haven’t been running the US entirely by themselves for 4 out of the last 5 years? Didn’t the country have a negative savings rate for the first time since the Great Depression?
Want to promote savings? Quite debasing the currency, raise interest rates, and require people to put up a down payment to buy a house, jackasses.
just raising interest rates alone would probably suffice to end most of the madness. Uncle Ben understands that, that is why he is trying to force rates down; savers are his worst nightmare.
I would imagine that savings will begin to happen when the Gov begins to get it’s own financial house in order. Increasing debt is no way to save. Beside, savings looks so appealing when the dollar keeps getting trashed and the constant war against us continues to escalate. Definately a mixed message out of Gov, spend and save us oh blessed consumer (we’re no longer citizens), oh by the way save because we pissed your retirement away.
Local observations here in Salinas CA. One 5 bedroom house had been for rent for 6 months or more and vacant is now just vacant. Will be foreclosure soon I’m sure. Where I rent you couldn’t have found a rental or ‘for sale’ listing lasting a day in 2004-2006; now 3 ‘for rent’ and 3 ‘for sale’ lasting 2 months. Two houses that were ‘for sale’ and were not going to be given away are now in foreclosure. Local RE are still trying to hide the truth here but things are picking up. High gas prices will continue to plague those commuting into SJ. More businesses are going out of business here in Monterey Co.
They would rather walk away then throw good money after bad money. made sense
Why would they throw good money after bad money after having walked away? Doesn’t make sense.
“Most importantly, Wall Street’s reputation, once its greatest asset, is also in jeopardy. Just as Detroit lost its reputation for high quality cars, bankrupted dotcoms and worthless subprime debt are creating similar problems for Wall Street. You can’t expect to keep your customers if you continually sell them shoddy merchandise. Wall Street has spread hundred of billions of dollars in losses around the world and in so doing shattered its reputation with some of its best customers.”
http://www.financialsense.com/fsu/editorials/schiff/2008/0125.html
As you sow, so shall you reap…
RE: soon New York will lose its position at the center of global capital markets.
It’s gone already-London’s become the new King of Finance from everything I’m reading
This is interesting and a little scary
http://www.marketwatch.com/news/story/outside-box-great-fiscal-stimulus/story.aspx?guid=%7BD3B850E5%2DE05D%2D40DA%2DA630%2D42B3CB838AE9%7D&dist=hplatest
History does not repeat itself, BUT it does rhyme. Rereading this article makes me wonder what the “chorus” is today. Remember that the savings bank was the main repository of money in those days. Those accounts were uninsured. Today most people have their savings in other uninsured accounts -401ks, 305bs, hedge funds, index funds- and not savings accounts. So can we speculate on what a “run on the bank” would look like in these circumstances? I’m not sure, and I’d like input on this.
Note: Real estate “tanks” three years -1926 - before the stockmarket did in 1929. Hmmmm. Do I see a pattern?
Roidy
“Today most people have their savings in other uninsured accounts”
This is stressin’ me out. Should I just move all of my funds to my bank account?
I have been seriously considering moving into an insured account myself. It’s a Funny thing that wealthy people are unprotected by insurance. Oh sure, they have the Fed and US Gov to help, still if it gets too bad nothing will help them.
Roidy
You know, it just depends on your threshold for gambling, IMO.
It was so amusing to see so many MSM stories this past week begging folks not to pull their 401k savings. There was a lot of talk about the “long run” this week, are some people getting nervous?
Those 401k plans pour a lot of money into the market. Interesting that some huge funds like Magellan, that were closed to new investors are open again…the redemptions must have been big.
That was interesting and contains a link to an original Time magazine article dated 12-2-1929.
A link further in the article, points to a very detailed account of the economic stimulus package proposed in 1929 by Hoover. The article in the link below was actually written in 1929 I think. Seems like a scaled down version of what the govt proposes today, interesting historical read:
http://www.time.com/time/printout/0,8816,738193,00.html
The amounts, $M to low $B, seem small, but of course, the dollar has been inflated so much since then. I think $1m-$1B amounts were huge in their context of the late 1920’s.
GDP was on the order of $100b, so multiply that times something like 140. Back then gov’t spending was only 3% of the economy.
The population was smaller too so you need to adjust by that as well to make a statistically meaningful observation.
Walter Williams…
http://jewishworldreview.com/cols/williams012308.php3
“As with most economic problems, we find the hand of government. The Community Reinvestment Act of 1977, whose provisions were strengthened during the Clinton administration, is a federal law that mandates lenders to offer credit throughout their entire market and discourages them from restricting their credit services to high-income markets, a practice known as redlining.”
Is this the seed that started this whole mess? Unintended consequences of legislation frequently cause more problems than they solve.
Are you really that thick? A law passed in 1977, which affected only a small part of the low end of US RE market, mysteriously caused a nationwide housing bubble post-2001? Or is this yet another attempt to blame the Democrats and the darkies for something which they had no control over at all?
That law prohibits lenders from refusing loans to people just because they live in a certain area, but in no way prevents lenders from demanding down payments, income verification, maximum debt service ratios, etc. from any borrower.
It was the lending industry itself that abandoned lending standards when they started securitizing loans and offloading risk to suckers, er, investors. This and Greenspan’s easy money was responsible for the bubble. As if I have to remind anyone on this forum of that.
Yogurt,
As is typical, my question was, “Is this the seed that started it?” Obviously you disagree, which is fine, but you could have just stated your thoughts rather than suggesting I’m thick.
For your information Walter Williams is a black man, African American if you like, a college professor, and he’s the one that suggested that this started the whole mess.
I suggest that you take your lithium and settle down.
of course not, the housing/credit bubble is a worldwide issue, at least in the anglo-saxon world. Only legislation, actions and events that happened on an international scale (like the actions of irresponsible central banksters) are a likely explanation for the current mess.
“at least in the anglo-saxon world.”
I keep seeing this term used by non-Americans. What precisely is meant by this…do you have a working definition? Here in the US, as we achieve third world status, banana republic seems to be our future, Spanish our language.
What Does the Fed Know?
John Mauldin’s latest has an interesting take on the rate cut this week.
It requires your email address, but I’ve learned a few things from his writings.
http://www.frontlinethoughts.com/gateway.asp
you forgot to post the most important part….
http://www.frontlinethoughts.com/printarticle.asp?id=mwo012508
$5 Billion a Quarter
Here is how I think the next few quarters are going to play out. Each new downgrade triggers more losses at financial institutions. You don’t write down a bond insured by MBIA as AAA until there is actually a write-down. And then you do, and announce it at the end of the quarter. Along with the rest of the losses caused by new downgrades. We are going to see massive write-offs every quarter by the same financial institutions that have already written off $100 billion. We are only in the beginning innings.
There are very serious suggestions that several extremely large banks (and not just in the US), of the “too big to be allowed to fail” size, technically have negative equity. With each announcement of a new massive write-off, we will see yet another large capital investment announced as well.
And every time it happens, the market is going to be disappointed. And continuing disappointment is what keeps a bear market intact. Couple that with earnings disappointments from companies with exposure to consumer spending, and you have a recipe for a bear market that could linger for awhile.
I think there is very serious risk that taxpayer money is going to have to be spent on shoring up some of the financial players that are at risk. There will be much screaming and wailing and gnashing of teeth before that happens, but it is quite possible.
As I am closing this letter (as I have yet another meeting tonight), I take special note that Bank Credit Analyst has changed their forecast. They now are forecasting a recession, but they see one that is worse than I am predicting. They think the recession will last a year and that GDP will be around a -2% for that time period. I will call Martin Barnes when I am back in Texas next week and get an update for you. Martin is one of the best economic minds I know, and I value his opinion highly.
RE: I think there is very serious risk that taxpayer money is going to have to be spent on shoring up some of the financial players that are at risk. There will be much screaming and wailing and gnashing of teeth before that happens, but it is quite possible.
People will stop working and go on the dole.
It’s happening already amoungst 50+YO men.
for emphasis…
I take special note that Bank Credit Analyst has changed their forecast. They now are forecasting a recession, but they see one that is worse than I am predicting. They think the recession will last a year and that GDP will be around a -2% for that time period.
GDP will be around a -2% for that time
That translates into a lot of job losses, business failures, and of course, more forecloures and a continuing fall in real estate prices.
and this part …
I think there is very serious risk that taxpayer money is going to have to be spent on shoring up some of the financial players that are at risk. There will be much screaming and wailing and gnashing of teeth before that happens, but it is quite possible.
Which we here at the HBB have discussed at length for some time now.
Cramer has a bit of that Realtor DNA in him. Discuss….
http://www.youtube.com/watch?v=SGkrNJ19DSU
That was real good.Rick santelli tore cramer a new @hole and I thought it was great.Rick is a very smart guy for sure.
Look, Rick’s ok, but he was shooting fish in a barrel when he “threw down” against Cramer. BTW, Cramer really doesn’t like Rick S. Listen to Cramer’s voice inflection before Santelli even starts. LOL. Prolly called Jim on his crap before.
Roidy
That was funny, the edits were great - especially splicing in fish face’s cackle. Perfectly illustrates that the best way to control information is to flood the world with too much information.
I saw a Cramer moment yesterday on CNBC’s “High Net Worth” show. He said that interest rates are now so low that he is looking for real estate to buy, just to take advantage of the “free money”. He also said that price matters less than locking in at a low interest rate.
I thought that I was hallucinating. Maybe I was. Did anyone else see that?
I saw it too. He said he had looked at 2 foreclosed properties. I think he’s a pretty smart guy in a self serving sort of way, but I’m not sure old Jimbo always connects the dots.
“Never follow the crowd.”
Bernard Baruch
An investment in knowledge always pays the best interest.
— Benjamin Franklin
He that is of the opinion money will do everything may well be suspected of doing everything for money.
— Benjamin Franklin
If you would be wealthy, think of saving as well as getting.
— Benjamin Franklin
Following the crowd = buying gold when everyone doubts the Fed’s ability or interest in controlling inflationary pressures
My gold investments are disguised as jewelry;-)
Professor:
The hoi polloi “crowd” really can’t afford Gold. It’s a messy deal for them, as you have to pay in entirety. No down payments need apply.
Now about the “crowd” of tarnished CEO’s, with $100 Million Golden Parachutes?
They are most definitely buying…
I am thinking lots of too-clever-by-half hedge hog managers have to be piling into PMs about now. And when the piling in has driven prices far enough in excess of long term fundamentals, this bubble will also pop like the housing bubble and tech stock bubble before it.
We’ll have to continue this conversation, 4 figures from now…
I wanted to let you guys know that homes in Loxahatchee(acreage) Florida are going down big time. Ditto for vacent lots. now $80k an acre, I predict itll become $30k an acre.
Guys, let everyone know how home prices are falling where you live!
Why not look around Lakeland, FL? Swampland that couldn’t be sold for $600/acre was selling for $30k in 2005.
Nothing new here, all of FL is in a freefall.
Loxahatchee will be over priced at 30,000 an acre.
http://tinyurl.com/27xmxk
From the NYT article:
Jody and Nicholas LeCursi tried to sell their home in Jackson, Mich., for two years. The initial price was $102,000, which produced no nibbles. Switching agents and lowering the price to $98,000 did not help. In October, they took the home off the market so they could remodel a bathroom and bedroom. When the work is done, they said, they will try to sell the home again, probably at a lower price. They calculate that a buyer could pay as little as $700 a month. “Why would someone want to rent if they could own and pay the same thing?” asked Ms. LeCursi, who works in rehabilitation at the University of Michigan in nearby Ann Arbor. “People need incentive. Hopefully, that rate cut will supply it.”
“I don’t have anyone interested in refinancing,” said Patricia Nosan Bednarcik, an agent in hard-hit Cleveland. “Dollars to doughnuts, most people probably owe more than what the house is worth right now. And that’s a problem since housing prices will probably fall even more.”
If rent costs the same as owning and that house is overpriced then rent is also overpriced. Lots of “cheap” locations have rents that cost more than owning, yet ive been told house prices will still drop. If rent doesn’t drop, for every house that gets rented by some fool, 10 will sit empty.
It sits 1/2 way between Ann Arbor (36 miles) and Battle Creek (47 miles). Tedious commute to either place - and Jackson is NOT a hot bed of jobs.
Rents look like they vary from $1250 -550 so who can tell without information about the house.
That area has quite a few REOs which, of course, lenders are willing to sell for whatever they can get. The problem there isn’t directly caused by the collapse of the auto industry. It is the ripple effect upon all kinds of businesses. Means fewer people having the money to buy much of anything.
Mercury falling (comic):
http://www.gocomics.com/nickanderson/
I believe it was Icarus.
Too many chefs spoil the broth…
http://online.wsj.com/article/SB120131064256718583.html?mod=hpp_us_whats_news
Chauncey Gardner (’ssshrubery) is aging @ a rapid pace.
“The main purpose of the stock market is to make fools of as many men as possible.”
Bernard Baruch
How many more emergency rate cuts are left in the powder keg before it is empty?
Did rogue trader figure in Fed’s cut of key rate?
French bank scrambled to nullify its bad trades
By Nelson D. Schwartz and Nicola Clark
NEW YORK TIMES NEWS SERVICE
http://www.signonsandiego.com/uniontrib/20080126/29.html
If this is true, the Fed may not cut rates this week. Or, to save face, may cut 25 bps.
They have to cut 50 pct or else crash the stock market. Given the knee-jerk response to le rogue tradeur, it looks like the cut is on the way (maybe larger than 50 bps for “extra insurance”).
How can $8.6 m balance a $1.1 bn fund budget? Got leverage?
City eyes reserves to balance its budget
$8.6 million sought; disaster costs cited
By Matthew T. Hall
STAFF WRITER
San Diego officials want to use $8.6 million from city reserves to balance a $1.1 billion general fund budget that’s out of whack halfway through the fiscal year, in part because of two local disasters.
http://www.signonsandiego.com/uniontrib/20080126/13.html
America’s Finest City has a government 2nd to none, literally.
Professor,
Holy cow! Your city has a budget deficit as large as the state of AZ. I cannot imagine how SD will dig out of it but I guess I’ll do my part when I spend my tax rebate on a SD vacation in the summer.
“It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place”
H.L. Mencken
2008 San Diego County Economic Roundtable:
Causes and Consequences of the
Housing Downturn
James D. Hamilton
Department of Economics UCSD
http://www.sandiegoatwork.com/pdf/lmi/Economic_Roundtable/JHamilton_ppt2008.pdf
If you can open .pdf files without crashing your computer, this presentation has some fantastic graphs. A quick glance at the New Home Sales graph shows clearly the unprecedented steady and massive increase in the national level of new home sales in the U.S. from the tail of the early 1990s recession through 2005. Coincidentally, Alan Greenspan’s 18 year tenure at the Fed ran from 1987 through 2005.
Regarding the slide entitled: “So far, national economy has continued to
grow despite drag from housing”
Watch out for the trend in ‘Change in inventories’!
“Problem today:
• Mortgage securitization is broken– what’s going
to replace it?
• Serious problems financing loans that don’t
qualify for purchase by Fannie or Freddie
(subprime, jumbo)
• Significant defaults already even though
incomes still growing and real estate price drops
are modest
• What happens if economy goes into recession
and we see big real estate price drops?”
This is for SD Surfer. I wasn’t the only one looking at this.
http://macro-man.blogspot.com/2008/01/stopped-out-before-entry.html
The world has changed in the last year!
“Frodo lives”
No matter how much your current annual income is from your trade or profession, start looking for new skills in your new career! I do not think their will be much of a need for lawyers, brokers of insurance, finance or real estate, tech reps & etc. And I am not suggesting that we all become farmers.
You’all need a back-up plan in the event that things get real serious.
Forget about buying a house at a reasonable rate under your current income, maybe we should start thinking about long term survival until things get better!
Learn something that you can exchange for income in the “brave new world”
I’ve always thought things were “real serious”!
LC,
Is your employer looking at the effectiveness of Loss Control and wondering if it’s worth the money? I’m in your field and recently came to realize I need to diversify myself in order to be ready for the future.
One nugget from this week, I ran into an agent that has a book of business in assisted living businesses. This industry, while not really exciting, has issues that are just starting to be addressed, and will be growing for the next 30-40 years. Apparently many are self insured for WC because of the issues and the costs.
So for me, branching into the sales area is a possibility, or maybe fee based consulting. For many others, working in the industry will present many opportunities in the future. The thought of giving grandma a bath is really more than I want to think about, but for many, this will be their future.
Lip, I spent 20 years in loss control with major line insurance companies in Texas and California. As a profession, its a waste of time. I transferred over to insurance broker and that hasn’t been totally successful. I have decided in my spare time to re learn all of my math from many years age, and return to college to pick up from the begining my studies in chemistry and physics…unless you know if their is a need for a trade, like plumbing or electrical.
why buy when you can rent?
the rent on this place is $2400
http://newyork.craigslist.org/que/fee/551220089.html
the 2nd link is to buy basically the same place in this building for $800k plus monthlies of $700
oh and your backyard is a railyard and the front of the building faces the on ramp to the 59th street bridge
http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=864519&OhDat=1/26/2008%2012:00:00%20AM;
Your Payments
Mortgage Amount:
$715,500.00
Down Payment :
$79,500.00
Mortgage Payment:
$4,522.00 per month
Total Monthly Payment:
$5,218.00 (with maintenance & taxes)
My quarterly update of what’s going on in the housing construction hardware business: The lastest “Boots on the ground” survey of the where we are.
As most of you how read here know, I work in the construction hardware business for a national manufacturing firm. I have posted from time-to-time our business environment to give an indication of what’s happening from a supply-side perspective.
Here’s the latest. Sales volumes are running at about 20-30% of peak volumes in 2005-2006. They have not stopped, and I don’t anticipate us to loose all our sales; people continue to build, just a much lower volumes. When you read reports about 14-24 months of inventory to clear, keep in mind that we are still putting houses into the supply chain. I am seeing some stabilization in net outflows at this level, but it could be a false bottom. We had been tapering down, month-by-month since around mid 2006.
Our current staffing has been reduced by about 40% over the high-water mark, when the radio had advertisements everyday from AD KESSLER, Dolf Da-Roos, Carlton Sheets, and scores of other “sales artists” about how to get RICH in Real Estate with no money down.
My company has about half-dozen manufacturing plants in the US and Canada. In November we closed our smallest facility and relocated the supplies and equipment to other facilities. Our Florida plant got the bulk of it. During this past year, we have started to import a very small number of parts from China. We are a heavy user of steel, so shipping costs are a concern. Also, most of our parts require some type of building code approvals, so out-of-country manufacturing is limited due to inspection requirements by QA institutions. This provides some stability to our US markets. Nonetheless, sales are down enough that we have run our first couple of months in the RED since I have been there (6.5 years), and anyone here longer than 20-25 years can recall. (There are only a few old-timers here locally). Most can’t recall business this slow.
What can i say? We did 8 years of sales in 4 years. Manias never work out well.
We have lots of vacant inventory here in Florida and the only people available to fill up the units can’t afford the listed price. We have some adjustments to make.
We have cut back in my company in all areas, sales included. That may be a strategic miscalculation, but i doubt we would increase business even increasing the sales budget. These are not normal times. The only way to increase volumes is to steal customers from our competitors. They, in turn, are trying to steal away ours.
What’s the easiest way? Cut our margins to the bone. How can we cut anymore? WE are already losing money.
This month we did some more trimming of staff. This is included in the 40% of prior staffing numbers I mentioned earlier. Unlike most businesses, our costs are NOT heavily skewed toward employee count. Most of our fixed costs are in materials and equipment, already. We can’t control material costs, which had been rising in a market of declining sales. The customers just want lower prices from their vendors.
It’s a tough environment.
As dismal as this may sound, I think we may be stabilizing at near zero profit.
It’s why our stock price has fallen dramatically since 2006. The builders are looking worse, but we are down close to 2/3 of our high. It has taken some counter-trend rallies even when the other indexes have fallen, so just like the homebuilders, some traders may think we’ve been beat up enough. Current pricing is at 2001-2002 levels, after reaching a peak in 2006. It could be a “dead cat bouce”, but there is some stabilization. We countered the market several times when the big volume drops were happening. Is it an indicator of bottoming out? I can’t say. Not enough time to call it a “trend”. We could continue back down, or just crawl along at current valuations for some time.
I will post again about my own business in another month or two. To date, I am still employed and costing the firm money on a monthly basis, but I have taken on some of the tasks of the formerly employed persons, so I am staying busy helping us take some short-term losses (we hope). With the cuts, we may be back in the Black, at current sales levels, but who wants to invest in a business that is only marginally profitable? I guess it’s like this year’s election choices. You give us a shot, because Everyone else stinks too.
Later.
-D.
Interesting report, D. Thanks and best of luck.
I also will chime in with thanks. It is great to hear boots-on-the-ground reports, so thanks for taking the time to write it.
Perhaps the only truly trustworthy news, without bias currently…
Is anecdotal “boots on the round” reporting.
Thanks!
“… We can’t control material costs, which had been rising in a market of declining sales….”
Are you passing the increased material cost on or ‘cutting margin’ ?
Let’s see………our customers are Lennar, WCI, Beazer, Maronda, KB Homes,Pulte……….hummm??
No, I think not.
“which had been rising in a market of declining sales….”
“had been”? Are you saying these cost have stablized?
Our major costs are Steel.
It had been rising dramatically from 2001 to 2006, took a dip, went back up, and is still very high, though declining somewhat in the most recent past.
I doubt it will make a difference. It is still high relative to where we were pre-bubble.
I was talking to a good friend of mine last night who works at IndyMac and has for 13+ years, said he was sweating the lay-offs but thats another story.
When I brought up the interest rate freeze and asked if they had done any volume he surprised me with his answer. Last week they had just froze rates on another Billion worth of GSE paper. I have until now been firmly in the camp of all this nonsense the Government was doing would have little to no effect. Looking at it now if IndyMac did another Billion how much have they done before? How much has BofA, CFC, WaMu and a host of others done?
Can’t tell ya how much this bothers me and I am very curious as to what Ben and many others think of this. These actions will not have a net zero effect, they wont stop declines either but I now believe they will have some impact and the more I hear the more I believe it could be substantial.
Looking forward to any comments on this.
I agree with you. I do think it will slow the price declines simple supply and demand. It will make our crash more like Japan where it takes 10 years as opposed to 3-5.
Here’s my comment:
Soon, perhaps a little later than sooner with the rate fixing, people will go from being willing to pay the mortgage because it’s affordable (fixing rate) to unwilling because they see they are majorly upside down. Real estate prices are falling.
I said a lot on this last week and was slapped around pretty good. So I will leave it at that…
Most of the listings I see here are for overpriced new turds, but Chicago is starting to feel it when the relatively nice places get discounted, too:
http://chicago.craigslist.org/chc/rfs/552151442.html
Meanwhile, just north of where I used to own, the 800K “deals” keep a-comin’:
http://chicago.craigslist.org/chc/rfs/551646836.html
(”Motivated seller!” — laugh.)
Double lot in a great location for commuting to downtown. There’s a decent YMCA there too and at least a few ok restaurants (McNamaras).
The corridor along Irving is holding up better than the corridor further north along Montrose. Six Corners - about half a mile west of here - is on the skids though. Far enough away that it probably wouldn’t matter, but the immediate Six Corners area is looking rough nowadays - lots of empty stores and condos that aren’t selling.
I’m pretty sure this one in Arlington Heights started over $1M.. down to $780K
http://chicago.craigslist.org/nwc/rfs/552203414.html
Hey, that one was for rent too! They were asking $3,500/mo. HA!
Just saw a truly astonishing television commercial… for the guys in the gold jackets. “Gold isn’t just a color for us. It’s a standard. So much of my job is things you never see. The research and negotiations. So you never walk into a house you’re not interested in. Because… time is golden.”
Ack.
For 6%, you’d better show some more value added to the process than that.
Happy Saturday.
Psychobabble 101:
For the 1st time in most Americans lives, they are being bombarded with the idea that Gold Bullion is a safe haven, like say buying a home from the man in the Gold jacket?
The Gold Jacket People gave us the infamous “Suzanne Researched this” ad, unwittingly showing their true colors in the process. If you know anyone who trusted a realtor’s “research” in 2005-2006 and bought, ask how that’s working out for them.
“Douglass National, with $58.5 million in total assets and $53.8 million in total deposits as of October 22, 2007, was closed today by the Office of the Comptroller of the Currency, and the FDIC was named receiver.”
http://www.fdic.gov/news/news/press/2008/pr08007.html
I find the closing of this bank intriguing, as it’s such small potatoes…
Remember, what you know is unlike possessions, they can not be taken away from you!
Learn something useful in our “brave new world”.
While I am not an economist, even I can see that the ground has shifted.
Even though I fly desk now my younger days were spent as a mechanic and I still have my tools.
I am amazed at the yuppie and hipster men around me that can’t change a car tire, fix a bike, or repair a toilet. It should be interesting because this world only needs so barristas, waiters, and check-out clerks.
Bar codes have dulled so many young minds…
It is time to nationalize the excess debt.
$5.5T added in mortgage and consumer debt over the last 7 years. Prices up 18% (core CPI) or more (headline).
We simply can’t afford the interest on that debt, let alone continue to spend at the same pace that was adding $8000 a year, per household, in additional debt.
Party is over, and someone has to pay.
choices….
1.
No bailout. Let the consumers default, banks go insolvant, FDIC account drained, Freddie and Fannie insolvant and liquidated… $5-10T in losses that ultimately get passed along to the Chinese and oil states that really “own” all the dollars. Global depression.
2.
Some sort of bailout.
2a. Govt. action to keep house prices from falling, like guanateed loans that are going to fail and cost govt. money, or no interest govt. loans for down payment that only gets paid back if/when you sell for a profit, or massive govt. loans to companies like Countrywide that will fail and the loans won’t get paid back. This indirectly nationalizes the debt.
2b.
Let prices fall. The banks and GSE go insolvant. The govt. then steps in and liquidates the assets, making depositors and bond holders “whole” by printing a few trillion dollars. Again, we are indireclty nationalizing the debt. However, those consumers that do not default are just as much in debt as ever. Those that didn’t get into debt in the first place get nothing except inflation and tax burden.
OR,
2c.
Quit playing touchy feely, and get straight to business.
Nationalize the debt through TRUELY huge cash infusions combined with very storng usuary laws to stop that debt from just coming back.
1) $2 trillion handed out to citizens on the basis of their income. If you make upto median income (as reported AGI on 2006 1040(A/EZ)) of $50K, you get that amount of payout. If you made more than medain, then you reduce your payout by 10-25% or so of the overage. That reduction is highly dependant on just how much it would cost.
If you have more than 1 year’s income, the money goes to pay down your debt. Less than 1 year’s income total debt, you get a check for the amount.
Debts get paid down to reduce amount of defaults. Upside down people are brought back above water so they can refi. Savers get cash to compensate for inflation this will trigger. Renters that want to buy get cash for a down payment.
2) Strong usuary laws greatly reducing the amount of interst and fees that can be charged (including payday loans and rent-to-own). Break up the banks and brokerages. Change how appraisals are done from comp market price to fundamental value (rent, construction, affordability).
3) Massive government spending cuts and tax increases to allow govt. to actualy pay down their debt.
50% cut in the Navy. 50% cut in the Air Force. 50% cut in homeland security and TSA. ($150-200 billion a year savings).
Tort reform to make it harder to prove malpractice to drop malpractice insurance prices. This could slice 20% from medical costs (including Medicare, could save Medicare $60 billion a year).
Eliminate the cap on social security contributions without eliminating the cap on benefits (taking in $150 billion extra a year). The overage is not added to the totally fictious trust fund… it goes directly into the general fund.
There are $500 billion a year in cuts. Others are possible.
The net result is that debt gets transferred to the government, and people are forced to cut down on spending since they won’t have access to as much debt. Without access to new debt, the Chinese and oil states will not be able to loan the trade deficit back to us. They would have to buy stuff from us (other than debt) or allow exchange rates to adjust.
This will be highly disruptive to our economy short term as the economy based on retail and debt generation is unwound. But in the long run, this is going to happen anyway. We can’t keep spending 10% more than we make forever. Depression, indirect bailout, or direct bailout, it has to end.
Does anyone else think the increase in the GSE conforming loan limit could have the perverse effect of actually further slowing the rate of used home sales, by giving sellers false hope that knifecatchers will come out of the woodwork, now that jumbo loan financing is no longer necessary to obtain a jumbo-the-elephant $730,000 mortgage? Unless loan underwriting standards are debased to 2005 levels, there is a very small share of the California population which can actually afford to assume a $730,000 debt, and so far as I know, the vast majority of this slice of the population is already comfortably housed.
Clarification:
“unless loan underwriting standards on loans which qualify for GSE purchase…”
According to this, the new limit could lead to higher rates.
http://tinyurl.com/2jr98z
That’s a must-read!!
Bigger loans are more likely to be re-fi’ed, so all “conforming” loans will be priced higher to protect the loan buyers. Don’t you love the law of unintended consequences?
“increase in the GSE conforming loan limit could have the perverse effect of actually further slowing the rate of used home sales”
I’ve given up on that game, all I know is that the collapse will go on (and I know that for all the reasons that have already been brought up). Whether the collapse gets sped up or slowed down is a bit of a moot point. It’s time to stop worrying and learn to love the bomb.
Unless, of course, you want to call or write your Senators…it’s still not *completely* a done deal.
I haven’t given up on that game.
I do think that raising the conforming limit will slow things by about 3-4 quarters, because some folks that would have panicked will be suckered into thinking that the floodgates have been reopened. I think 3-4 quarters corresponds to the learning curve of those folks.
The ones who need to sell will still sell by dropping price / be foreclosed on. It is the need-to-sell folks that are going to set the new comps, which in turn will educate those who waited on the increased limit.
Prof, IMHO the actions to raise GSE limits will further destabilize the market.
If you are listing at 900K with no substantive offers and the GSE raises limits to 730K, you then receive an offer for 820K (incl cash downpayment, full doc); are you going to turn it down? No friggin way.
The individual offering her house at 820K will then be forced to lower her price (if she wishes to sell).
This action creates a lower price stabilizing bar. Essentially it knocks about 15% off a Million dollar listing. The reason is that somebody bought a house for 400K, can sell for some profit further lowering comps. But it creates a market.
Historically actions meant to protect prices have had inverse effects.
It might, except for the elephant hiding under the living room rug.
The red hot spring sales season in the San Diego used home market appears to be starting early this year. There were over 200 new listings since 1/24 (Thursday) with 116 new listings just yesterday. I am expecting inventory to build quickly from its current level of 18,110 to above 20,000 over the next few months and stay there until next fall as the market drives prices down to affordable levels. (This is not a crystal-ball-based prediction — just an educated hunch about what will happen going forward this year.)
Meanwhile, the median used SFR list price shown on ziprealty.com is currently at most $499,000. I can only see the first 200 homes listed at $500,000 or less, all of which are priced between $499,000 - $500,000. The median has dropped below this band of 200 homes for the first time I have noticed. This should be very interesting to watch over the next few months, as for-sale inventory piles in with few qualified and interested buyers coming in to the market.
“There were over 200 new listings since 1/24″
Call them up and tell them that they are not supposed to list until AFTER the superbowl. Sheesh, get with teh program, people, if you don’t do it right, you could scare away the Easter Bunn…err, I mean, “The Spring Selling Season” again.
There is another 34 new listings as of today. Some of these new listings will inevitably be priced right, and they will be the new comps. The ones priced at 2005 levels can sit on inventory indefinitely until the would-be seller delists them.
This is sickening. Some FB’s facing foreclosure are even LEAVING THEIR PETS BEHIND IN THE HOMES, letting them starve to death. If you had little sympathy for FB’s before reading this, you will have no sympathy going forward.
http://news.yahoo.com/s/afp/20080125/ts_alt_afp/uspropertyfinanceanimals
Attention Phoenix Pet Owners
There’s a Pet Extravaganza & Adopt-a-thon in Anthem, AZ today, starting 10 am THIS MORNING until 4pm. Hope to see you there.
http://www.pacc911.org/
The article doesn’t say whether the police track the bastards down and arrest them for cruelty. I feel bad for the people and pets losing their homes, but not for people leaving pets behind or locking them in up to die. What kind of people are these anyhow, and why did they get pets in the first place, if they had no interest in their welfare?
I forgot to mention that the appalling Rush Limbaugh was making fun of this story on his program the other day; this being the same human blob who showed a clip of a lobster being cooked alive to the delight of his television studio audience (in the 1990s), all laughing hysterically (some probably were dittoheads afraid to stand out by not laughing). His popularity seems to have dramatically fallen over the last decade, but five minutes of his radio program are more than enough to prove that ass-kissing is still a favorite pastime of his followers.
Please, if you know of a recent forclosure in your neighborhood try to check the house and back yard for abandoned animals!
I cannot fathom why they would take the trouble to lock a dog or cat in a closet, but not to just turn it in to the city shelter or humane society.
Fox News Channel biz shows are on. It probably goes without saying, but Cavuto is just shameless.
He is spouting off that the temporary rise in jumbo loan limits, etc. means that this is THE best time to buy your “dream home.” The lone dissenter, Gary Kaltbaum (appropriately teleconferencing in from Arizona), opined that the housing downturn may very well last for ten more years. Cavuto responded incredulously, essentially making the point that it won’t happen because it just won’t.
The black guy Charles chimed in some garbage about people being “too cute” about housing, they were going to miss the bottom, priced out, yada, yada. . . the same crap that Lereah gave up spewing.
One of the women explained that she was going to look at residences with a Manhattan RE agent tomorrow. Sorry, cupcake, some of us prefer to hear the business knowledge of folks who actually avoid overpaying hundreds of thousands of dollars for an apartment.
I do not get Fox Business Channel b/c Dish Network does not carry it, but I sure hope that Dave Ramsey is not being changed by his daily exposure to these bad influences.
Interesting how Rupert went headfirst into financial reporting @ exactly the wrong time, with both faux news and the wsj?
are you kidding? nobody loves anything so much as a good bloodbath!
rupert’s instincts are as good as ever!
NY times had a article about the Fox Business Channel ratings a few weeks ago - they have like 5,000 people a say watching (LOL!!) Probably every member of the Bush Administration….
More people come to this blog than watch that BS channel!
Cavuto, eh…? Funny, cause I remember they had a piece on the Cavuto report in early 2005 where they were going on about how many savvy, young, single women were snapping up houses and how this was such a wonderful thing…
On a related note, I got an email update from my class alumni association a few weeks ago…lots of marriage annoucements, babies, etc….but there was one woman classmate whose update said she decided to finally “put her finance skills to work and recently purchased a condo”. I did not particularly like this woman, so I had to chuckle when I read her update.
Ramsey’s been getting lots of calls on his radio show about how a recession is coming and he’s been beating the notion off with a stick. He is correct that we haven’t had that negative GDP print yet–but that may only be because the inflation numbers were cooked.
As for Cavuto, Jon Stewart skewered him this week when he pointed out that the name “CAVUTO” is larger than graphic of the mainland US that it crowns.
“Ramsey’s been getting lots of calls on his radio show about how a recession is coming and he’s been beating the notion off with a stick. ”
I have not listened to his radio show much in the last year, simply because I have been busy when it airs in Phoenix. I caught his Fox Business television show once or twice when travelling and visiting someone with FBN (f’d borrower network? kidding) on their cable system. The TV show was some of his usual fare, but I really wanted to see him to go off and call the credit card companies snakes, etc. on Murdoch’s network.
He is not going to be able to ignore a severe recession, considering that his radio show brings him some pretty tough situations even during boon times. Dave’s debt-free/pay cash message has helped many people secure their finances. I understand that he would not want to panic people, and would encourage regular mutual fund contributions all the way to DOW 5,000. I just do not want his good character changed by these biz channel chuckleheads.
In order to lower the consumer’s debt load and boost his spending, we need to make it easier to let consumers go into much deeper debt by raising the mortgage loan limit from 417,000 USD to 730,000.
Allowing the consumer to go even deeper into debt, rather than forcing prices to become affordable, is going to hurt this economy, not help it.
The consumer is not going to start spending again till his debt load reduces, IMO.
Raising the loan limit is a pure lobbyist-inspired attempted bailout of the National Association of Realtors.
I’d LOVE to hear someone in Arizona tell us just how out of control the condo market is in that state. I just flew on USAirways and I was reading that airline’s magazine. I was blown away when I saw no less than 15 huge ads for Arizona condo projects, many of which seem way too ambitious. I’ve listed them all here. Feel free to give us the truth about how they are selling and whatnot. BTW, I love how these developers are trying to sell “lifestyle” and other ego-gratifiying nonsense.
SeeSuperstitionMountain.com
AquaterraMesa.com
LiveAtWestgate.com
CamelviewOptima.com
CenterPointAz.com
CarinoVillas.com
TerraVistaCondos.com
PlazaLoftsKierland.com
WelcomeToArtesia.com
MosaicTempe.com
HaydenFerryLakeside.com
ThunderbirdPaseoCondos.com
SignaturePlaceCondos.com
CebtruyPlazaPHX.com
LandmarkLifestyle.com
“LiveAtWestgate.com”
If you lived here, you could be surrounded by football enthusiasts for the next week. And next Sunday, it might be a bit hectic around this complex. After that, not much excitement unless walkability to the adjacent NHL arena is a big plus for you.
I read one amusing article about some downtown Phoenix loft/condo building where the residents lost their parking spaces (lot adjacent to building, but separate property) due to some error or deceit by the developer.
“ThunderbirdPaseoCondos.com” This was once a very average apartment complex located next to a hospital in Glendale. Actually, the heli-pad for the hospital is just across a small street from the complex. Combine that with the ambulances arriving, you get the idea. It strikes me as a prime candidate for repartmenting. It is fundamentally a $500 to $600/month apartment complex, despite its condo “upgrades.”
In the outer suburbs, I have seen some new complexes built as condos turned into rentals. Basically, new apartment buildings being used as apartments. It was not a huge leap, although I never checked into whether these new complexes had actually sold any units before converting.
I’m at 56th and Redfield. Exactly 1/4 mile north of same, Banner Thunderbird hospital.
They are trying to sell those 700 sqft condos for more than my 1800 sqft house just appraised for.
“I’m at 56th and Redfield. Exactly 1/4 mile north of same, Banner Thunderbird hospital.”
Yep, this complex would be a so-so rental for some of the Thunderbird hospital employees. It would be convenient for them, but otherwise blah. I don’t live in Glendale, but I used to drive around this area quite a bit. At some point (2005?), I noticed that they had covered up the word “Apartments” with “Condominiums.” They kept the word “Luxury,” though.
I listened to some RE shills touting Phoenix RE on weekend radio show back in ‘06. An older-sounding lady asked for some last-minute advice as she was driving to this Thunderbird Paseo to buy a condo with her extra house equity as an “investment.” After realizing that she was not waiting (they obviously wanted a crack at representing her and snagging a commission), they turned her into an example of a smart investor who “believed” in Phoenix area RE. They told her that she could easily rent her unit to ASU West students. I felt like driving over there and performing an intervention for this lady, but I realized that I would look like a nut.
It is insane. Lots and lots of condo projects. Some nearing completion and some just getting started. $3-4K a month to own a place you could rent for $1000 a month. Insanity.
But, the pushers keep talking anout all the 25 year olds, few years out of college, making $80K+ a year, just waiting to snap them up.
For the amazing lifestyle….
1) Not nearly enough people with the ability to buy them.
2) The few that can are probably not that dumb.
I spoke to a NYC condo developer friend of mine recently to ask him why so many condos continue to be built despite the obvious downturn. (His company, BTW, has stopped building because their bids on convertible properties were coming in 30% too low. They’re smart.)
His take: First, many of the condos being built now have been under development for a while, and they’ve reached the point of no return: the projects have to be finished. As for those condos that are just now breaking ground, the main developer has no “skin in the game” because he takes a “developer’s fee” of around 5% of the appraised value of the project. His fee is paid to him from the financing that is collected. At the same time, the developer may put up some of his own money as equity: typically 5%!! Since he CAN NOT lose, why not build a condo tower?
OK, so where does the developer get the financing from? Well, a lot of it is from private equity outfits, who raise money from private sources to invest by bragging about their recent returns. But the private equity outfits also have no risk in funding these projects because they, too, take a management fee from their investors. So until their investors start to see loses (and they will — someday), the money keeps flowing. That’s why there seems to be an obvious delay in the building bust.
–
For all you inflationists and gold/silver bugs…
George Ure: “Thanks to Ben & the Printers, I’m expecting to see silver over $50 and gold well over $2,000 long before April and maybe as early as my birthday in late February.”
http://www.urbansurvival.com/week.htm
Are you feeling OK, George? Maybe, an icepack on your head might cool it down. You must not believe in price changing the supply-demand equation. We are NOT in 1970s environment as far as the Longwave is concerned. Gold is just a currency play and most of the weak dollar has already played out.
BTW, I sold naked December 1,500 Calls on gold at $981 (after $9 per contract commission) a pop on Friday (I had GTC orders for two weeks). I have been short December 700 Puts for the past 6 months.
“Ben’s Printers” are not working, George, and that is why he went to the politicians to do something in a hurry to give one positive quarter in a long recession during 2008-09.
Jas
PS: George Ure is a friend to lives in Texas.
Jas I think you are relatively intelligent. Why do you give a link to a site that is a time sponge?
Facts, Bro..just the facts.
–
Sorry, next time I will skip the link. BTW, I disagree with GU, a well-meaning man, on most subjects.
I have been recommending gold since 1997 as insurance and not as a speculative play.
Jas
Did you short oil at $60 too?
Jas,
Other blogs give you enough rope to hang yourself, but Ben won’t oblige you…
These are your words that you posted on Calculated Risk: please eat them.
“The financial leadership in this country CANNOT be trusted!”
“Certainly it is less trustworthy than the political leadership of Nazis in Germany.”
My father lived in occupied Europe during World War 2, and had frequent nightmares about the nazis, until the day he died.
You have no idea what EVIL really is.
Alad,
jas has made a jackass of himself on CR, trolling desperately for attention and hijacking threads with bizarre and repetitive postings. He’s been banned there before as a nuisance, but now they let him post as a side-show, the geek who bites off chicken heads to amuse the serious posters. Or perhaps it’s just pity.
In any event, he’s just roadkill. Just avert your eyes.
spike,
I almost wonder if it’s some sort of cruel joke, as he lives in Tehachapi, and there’s nothing there, but prisons…
Maybe he’s a convict, trolling from inside the walls?
Tehachapi! Driving through there the other day my dogs were totally fascinated by all the windmills, they couldn’t take their eyes away, thought they were gonna freak out. Strange place.
Always windy out there. I used to go to Red Rock Cyn in the El Pasos, nice in the winter and spring unless its windy. Supposed to be lots of Gold out there too.
Interesting thing happened at post office this morning. Asked for forever stamps. Clerk Told me I should buy two because this was their last bunch and they didn’t have any more and didn’t know if they were getting more in. So this is how the post office is going to get out of this scheme just quit making them. So you may want to get them awhile they last.
Order them online.
Here is one for you…see this all to often in our area. We live in an affluent area north of Atlanta. Homes typically in the $550K to $700K range. Whenever you dig into a local foreclosure on one of these high priced homes this is often what you find.
- Purchased within the past two years
- Purchased with 100% financing
- Minority couple
- Mercedes and Lexus in the driveway
- Own a “wishful thinking business” with the most “mickey mouse” websites that I have every seen…real estate, mortgage brokerage, and my all time favorite business adviser and investment banker. Give me a break.
Here is my all time favorite one
Where greed meets stupidity this is what happens….
Couple buys house for $640K Jun 2006 with $646K Mortgage
Couple Lists house for $789K Oct 2007 Give me a break
Couple goes into foreclosure Jan 2008
Couple Cuts price to $699K Jan 2008
Zillow Value on house $625K Jan 2008
The Rise & Fall of the Great Pyramids of Albania…
“The pyramid scheme phenomenon in Albania is important because its scale relative to the size of the economy was unprecedented, and because the political and social consequences of the collapse of the pyramid schemes were profound. At their peak, the nominal value of the pyramid schemes’ liabilities amounted to almost half of the country’s GDP. Many Albanians—about two-thirds of the population—invested in them. When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed. Albania’s experience has significant implications for other countries in which conditions are similar to those that led to the schemes’ rise in Albania, and others can learn from the way the Albanian authorities handled—and mishandled—the crisis.”
http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm
USA:
1. Real estate pyramid scheme
2. Armed to the teeth
Could this happen here?
“Could this happen here?”
Could this happen in China? Millions of Chinese have put enormous funds into their stock market.
Not exactly a pyramid scheme, but close.
OT: Attack dog politics does not become Billary.
There are many serious and thoughtful liberals and Democrats who support Mr. Obama and John Edwards, and who are seeing Mr. Clinton in a new way and saying so. Here is William Greider in The Nation, the venerable left-liberal magazine. The Clintons are “high minded” on the surface but “smarmily duplicitous underneath, meanwhile jabbing hard at the groin area. They are a slippery pair and come as a package. The nation is at fair risk of getting them back in the White House for four years.”
That, again, is from one of the premier liberal journals in the United States. It is exactly what conservatives have been saying for a decade. This may mark a certain coming together of the thoughtful on both sides. The Clintons, uniters at last.
http://online.wsj.com/article/SB120120952618514493.html?mod=googlenews_wsj
But what will these liberals say when Obama and Edwards are no longer in the race? They will come running back to the Clintons as fast as they can.
We need democrats back in control of this government ASAP. Obama would be “swift boated” so fast by the republican spin-meisters. This would help John McCain or Mitt get elected and that would be a travesty!
Obviously, a whole bunch of wicked financial badness is going to occur between now and election day, in November…
It sets it up nicely for a dark horse to come from far back and win going away, easily.
But who is that dark horse?
Ron Paul?
I voted for him today in the early voting in Florida. I don’t think he will make it, but I like the things he says. For me, anyone but McCain is good.
I voted for Ron Paul yesterday (Arizona is my permanent residence and I cast an early ballot myself). I donated more money to his campaign today. He’s trying to raise $8.4 million by February 5. He’s at $3.5 million YTD and raised nearly $20 million in the last quarter of 2007.
I think Giuliani will drop out after losing Florida. Ron Paul will not win the nomination but certainly will spread the word of small government and personal responsibility, which the FBs need to hear. I’m switching my party to the Libertarian Party after the February Arizona primary and I’m going to be helping selected Libertarian Party contests. However there are some congressmen in the Demopublican party who are consistent on voting against spending and taxing. I will do what I can to re-elect them.
You just might be right, however you know who is given the credit for the best decade in most peoples memory.
I just don’t see it happening.
I feel very bad for the next President as its likely they will be a one termer. Things are going to be in chaos well into the next President’s term.
Where’s the dirt? No, seriously. There was some juicy dirt on Clinton early on in the primaries, although he managed to shrug it off. But where’s the dirt on Obama? Except for the fact that some yahoos think he’s a muslim, I’m not seeing a lot there.
I don’t buy this ‘Hilary is the only electable democrat’ idea. For one thing, I don’t like her. For another thing, she doesn’t speak to me (except in that naggy, “your generation owes our generation” mommy complex kind of way). For another thing, SO many people in this country hate her and don’t want another Clinton.
Obama actually has a lot of President Clinton’s positive traits (background, decent speaker-though maybe not as good as Bill, moderate politics). Hillary lacks these, sorry.
I expect the Clinton tag-team to do some more “Swift Voting” tactics, as they emulate Karl Rove.
You are thinking along the same lines as I have been thinking. For instance, will Bill play Hill’s version of Karl Rove going forward if she gets elected?
Gator,
I never understood why people so hate Bill Clinton, but I do now. Hilbil is running on her 35 years of “experience” and the media lets her get away with claiming this. They are tag-teaming Obama, attacking him with falsehoods regarding his stance on Iraq for instance, floating rumors that he is a Muslim and attended a madarassa, and every other dirty trick they might have learned from Rove. S. Carolina race is truly ugly, with it’s race baiting.
And Hilbil is embarassing women everywhere…she can’t stand on her own two feet and run as a candidate…she has to lean on her hubby for support, and when the going gets tough, she bursts into tears.
Hilbil is no Anne Richardson, a woman shrewd and tough enough to stand on her own. You’re watching a dishonest and hysterical attack team in action…this while the country truly needs competent leadership.
Their low-road plan of attack appears to have some holes in it, at least so far as South Carolina voters are concerned, where the high-road approach carried the day. We need a president who is above the politics of race and gender, and that person is not HC.
Obama dominates charged SC primary
By DAVID ESPO and CHARLES BABINGTON, Associated Press Writers
14 minutes ago
COLUMBIA, S.C. - Barack Obama routed Hillary Rodham Clinton in the racially charged South Carolina primary Saturday night, regaining campaign momentum in the prelude to a Feb. 5 coast-to-coast competition for more than 1,600 Democratic National Convention delegates.
“The choice in this election is not about regions or religions or genders,” Obama said at a boisterous victory rally. “It’s not about rich versus poor, young versus old and it’s not about black versus white. It’s about the past versus the future.”
http://news.yahoo.com/s/ap/south_carolina_primary
never understood why people so hate Bill Clinton
It’s his smugness, arrogance, and narcissm I hate.
However, with the help of the Republican-led Congress in 1994 to 2000, he enacted welfare reform, which cut a lot of fat, signed in free trade agreements, signed in the capital gains tax break on real estate, and at least did not threaten my civil liberties. As for his personal life, I think the Repugnants made major fools of themselves by his womanizing. In general, I dislike Bill Clinton. If he had at least 10% humility, maybe he would have had no problems with the Republicans.
“We need democrats back in control of this government ASAP. ”
No, we need honest, competent leadership. The dems back in control…yeah, right. Doing such a fine job in Congress…schmucks.
The demos were not in control of the government between 1994 and 2000. The Congress was majority Republican. If it was majority Demo, there would not have been welfare reform and taxes would have been raised to the 60% level. Be careful what you wish for (lest you be a commie).
These yahoos are years late to that party.
Now, stop me if you’ve heard this one:
http://www.youwalkaway.com/
*retch*
I can’t seem to get a post on here. Someone Don’t like what I have to say? Just checking.
test
Sorry if this is a repost…
http://online.wsj.com/public/article_print/SB120111917285710781.html
Housing Slump
Starts to Hit
Stronger Cities
Supply Grows, Prices Weaken
In Northwest, North Carolina;
Manhattan Looks Vulnerable
By JAMES R. HAGERTY
January 24, 2008; Page D1
It’s getting harder to hide from the housing bust.
Tight credit, fragile consumer confidence and a weakening economy are slowing sales and depressing prices even in some places — such as the Pacific Northwest and North Carolina — that until recently had avoided the housing slump afflicting most of the country.
Warning to folks with both BofA and Countrywide accounts: You may lose your FDIC protection after they merge if your totals exceed the FDIC limit.
I have the max in both Bank of America and Countrywide. Now that Countrywide is being purchased by BofA, I worried that that may leave my money uninsured.
I can’t get a definitive statement, but it appears that I’ll effectively lose FDIC coverage for my Countrywide accounts once the takeover is complete. My recourse would be to sell the CDs early (with a penalty) and move them elsewhere.
I wrote Anna Eshoo asking her to add protection to this “stimulus bill” to protect people in my situation. (Of course, I’m not expecting a result, because people who save money are apparently the most hated group in America. Congress spends a lot of time trying to eliminate them.)
testCountrywide CEO bails without his golden parachute
Countrywide Financial Corporation (NYSE: CFC) Chairman and Chief Executive Officer Angelo Mozilo says he will forego $37.5 million in cash severance payments, post-closing consulting fees and other perks such as private airplane use when his company is absorbed by Bank of America…Mr. Mozilo will not receive any cash payments in the merger or upon any related termination of employment other than amounts that he has already earned in full…Mr. Mozilo remains a “substantial stockholder” and an employee of Countrywide and his common stock and employee equity awards will be treated in the merger in the same manner as those of all other shareholders and employees, Countrywide says.
“I believe this decision is the right thing to do as Countrywide works toward the successful completion of the merger with Bank of America,” says Mr. Mozilo.
The company says others were overestimating the CEO’s severance package recently, with some estimates putting it as high as $115 million
(From the Central Valley Business times)
http://centralvalleybusinesstimes.com/stories/001/?ID=7673
http://tinyurl.com/2ey6sw
I was curious what people thought would be happening to this end of the rental market. $25k/month for 4000 sq feet.
I don’t almost always reply to posts however I will in this instance. WoW