Bits Bucket And Craigslist Finds For January 29, 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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Fraud on a scale never seen brfore.
Clayton Holdings blows the whistle.
http://www.nytimes.com/2008/01/27/business/27subprime.html?_r=1&oref=slogin
“Investment banks, for their part, have said they provided adequate disclosures, and they even kept some of the securities on their books. They have taken more than $100 billion in write-downs as a result.”
That’s called caught holding the bag when the music stops.
Requiem for a heavyweight economy?
…caught holding the bag when the music stops.
That’s called a mixed metaphor
“At the heart of the subprime meltdown is the inability to get information,” said Howard Glaser, a mortgage industry consultant.
___________________________________________________________
Doesn’t it all come back to lenders giving huge mortgages to anyone who can fog a mirror? They didn’t care about verifying information. Maybe that’s the heart of the problem. Or maybe I am just oversimplifying.
Right on samk . . . there are many levels of blame, but the lenders have the biggest piece IMO. Instead of verifying information like in the good old days, they: 1) never asked for it, 2) made it up themselves, 3) coerced someone else to lie about it, or 4) disregarded it.
So “inability to get information” is the biggest cop out I’ve heard so far.
Can anyone hints on the identities of the fourteen ‘mystery companies’ allegedly under Federal investigation?
BULLETIN
U.S. STOCKS CLOSE WITH GAINS, BETTING FED WILL CUT RATES
Feds open subprime mortgage probe in 14 companies: report
By Sue Chang
Last update: 3:52 p.m. EST Jan. 29, 2008
SAN FRANCISCO (MarketWatch) - Federal investigators have opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the subprime mortgage crisis, The Wall Street Journal reported on its Web site Tuesday. None of the 14 companies were named in the report.
http://www.marketwatch.com/news/story/feds-open-subprime-mortgage-probe/story.aspx?guid=%7B2A2E4663%2DA0CC%2D4589%2D9858%2DF90D593337BD%7D
U.S. Probes 14 Companies In Subprime Investigation
By Evan Perez
Word Count: 406
http://online.wsj.com/article/SB120163969101526197.html?mod=hpp_us_whats_news
All the “arrows” are still pointing down in Northern California. Inventory at record highs, prices dropping, foreclosures rising. On 60 minutes last Sunday, a real estate agent had a list of foreclosures shown as colored dots on a map. He forecasted all the NOD’s (notice of default, or the first stage) would roll to NOT’s (notice of trustee sales), then to REO’s (real estate owned…by the lender). That seems to be a given, but the most telling comments was his statement that in 90 days, there would be a whole new crop of NOD’s to replace the ones listed on his map.
When is this madness going to end? Is there a bottom in sight?
–
Look for serious drop in prices once AAPL and GOOG are down 50% from their recent highs. They are already down 36% & 26%, respectively. CSCO & INTC are down 25-30%. That is serious evaporation of the phony “wealth.”
Jas
WOW. Is this true? Everyone’s been counting on googleaires to buy their house in SV!
People should be watching the Wilshire 5000, not the DOW.
The stock market (almost) always goes up… (esp. on FOMC meeting days!)
http://www.wilshire.com/Indexes/Broad/Wilshire5000/
Annualized rate of return on Wilshire 5000 Index since Oct 9, 2007 all-time high through yesterday (Jan 28, 2008):
Days = (31-9)+30+31+28 = 111
((13,660.71/15,806.69)^(360/111)-1)*100 = -37.7 pct annualized rate of decline
The stock market is supposed to climb a wall of worry, but recently it has been sliding down a cliff of speculative euphoria.
It’s sliding a slope of hope.
I invested a modest amount in YHOO at $23 and my trailing stop took effect at $30. $600 gain. Today it tanked and is about $18 per share. I’m glad I stopped that gambling.
Of course foreclosures are rising. Jobs are being outsourced. Companies are laying off, and the FED is lowering interest rates which drives up the cost of gas, energy, electricity, food etc… It weakens the dollars leaving less money to pay the mortgage payment. And why do they want to pay a mortgage payment that keeps going up on a houset hat keeps dropping in value? They are upside down and just want to start over.
If the Feds lower the interest rate below the inflation rate…exactly how is this supposed to work out? i’m blown away by that possibility.
The goal is prevent safe savings (”War On Savers”) and force people to speculate, thus inflating another Bubble somewhere so the Wall Street Crooks can get rich fleecing the sheeple. In the end, the sheeple and taxpayers get stuck with the aftermath as the middle class fades into history.
If the Fed cuts rates to 3% I will have taken a 40% haircut on my income. I just revised my 2008 budget and “slashed ” all non-essential spending.
Now I read that they want the Fed to cut to 2.25%.
I cut out all non-essential spending when they cut to 1.25% and I survived. I realize they are trying to force people back into the stock market so we can share in their losses , but no thanks!!
I fail to see how forcing people like myself to cut out all discretionary spending will help our economy
Aren’t we already below the infaltion rate for Fed Funds? I don’t give a damn on what they tell us inflation is. You go out to the stores and try to buy things then you would know, eggs, milk, bread, meat, cereal, and every other grocery item has appreciated in price by atleats 20% since last year.
Here is a link to the story that Jingle is referencing. just watched it this morning. Great piece, very blunt.
House Of Cards: The Mortgage Mess
“60 Minutes” Reports On How The Subprime Loan Crisis Is Shaking Markets Worldwide
http://www.cbsnews.com/stories/2008/01/25/60minutes/main3752515.shtml?source=mostpop_story
RE: When is this madness going to end? Is there a bottom in sight?
Housing is in a new paradigm when a global economy means you can lose your job in a nano-second and never even see it coming.
Interestingly, the tat and flash Gen XYZ’ers don’t seem to give a ratz azz. SHTF?
Just run home to mummy and daddy.
“Interestingly, the tat and flash Gen XYZ’ers don’t seem to give a ratz azz. SHTF?
Just run home to mummy and daddy.”
Not me. Soundly in Gen X and not dependent on anyone else. My parents will likely be dependent on me!! And, I’m not going to rescue some Baby Boomer from their oppressive mortgage and fund their retirement. Let them eat cake!
Fraud on a scale never seen before.
Clayton Holdings blows the whistle
http://www.nytimes.com/2008/01/27/business/27subprime.html?_r=1&oref=slogin
I guess the whole mess was predecated on a belief that property prices were going into orbit. In the senario where prices had continued to climb, we would see almost no losses and all the FB’s would just refinance every two years piling on ever more debt to repay the old. Gosh that sounds like a classic ponzi scheme!
“I guess the whole mess was predecated on a belief that property prices were going into orbit. ”
It was also predicated on the false belief that ‘if they bought a newly constructed house that the value could not fall below the purchase price’.
Good Morning All! A Miami Real Estate Blogger/Agent who has been telling it like it is down here was just sued for $25 Million dollars by a major developer. He was fired from his job as well. The developer contends that this blogger has been “devastating” for the building market. Perhaps the insane overbuilding, greed, fraud and fake lending might have had more of an impact?…..Really a desperate move and shows a total lack of confidence in his own tower…..Let’s hope free speech is still respected in the “land of the free and home of the brave………
Reminds me of the suit against Mike Morgan by Lennar. That’s how free speech is squelched by corporate fascism these days, with money and legal threats.
I can only hope that i’ve done my part, to mess with every aspect of the housing bubble, especially the fraudulent auctions…
“I don’t give people hell. I just tell the truth about them,and they think it’s hell.”
- Harry Truman
Dang, that’s my life. I gotta put that up on the wall in my office.
Too bad they don’t make presidential candidates like that anymore.
This will be happening with greater frequency. Even when the defendant “wins,” he/she still loses. Plaintiffs who lose civil cases should be made to pay the legal bills. It’s beyond absurd to claim that a blogger is responsible for destroying a local real estate market, or even an individual development.
My husband was once sued by a developer in Arizona because he testified before the local zoning board about the light-pollution (and damage to astronomy) a proposed development would cause. Because the zoning board agreed with my husband and turned down the application for a variance, he was sued for (hold on to your hats, folks!) $640 million. The developer folded when my husband’s employers, with their endlessly deep pockets, countersued. As my husband said at the time, you take it seriously when someone sues you for $6400, or even $640,000, but $64M is just a number, designed to intimidate you into shutting up.
If the person starts a legal defense fund, please let us on this blog know about it. I’d send a few bucks to help out someone getting sued for telling the truth.
I only know of one fund - the human-fund
How do you even file a suit like that? You’d think someone downtown would just be like “Uh, huh? You want to suit because someone called your mommy a poopy-head? I see. NEXT!”
Does Florida have an anti-SLAPP law? California does. Here’s the Wikipedia definition of the anti-SLAPP law http://en.wikipedia.org/wiki/SLAPP
Expensive to defend if you don’t have a deep-pockets friend willing to help. I’m content to hold local projects up to ridicule by others - although I think I’ll review some past posts…
It’s a pretty common endgame to “earn” through litigation what you can’t earn through business as usual.
I’d be curious to know what legal theory the developer is suing under.
If it’s libel/slander, then the developer would have to show specific lies told by the blogger about that particular developer.
If the theory is tortious interference with business or contractual relations, then the developer would have to show that the blogger made specific statements to specific people that damaged the developer’s business. General statements to the world on a blog probably wouldn’t do.
There are other piddling legal theories available I can think of, but they are of the “shot in the dark” variety.
Oh, and unless there are facts we are not aware of, I would think the blogger has a good claim for attorneys’ fees and sanctions based on the lawsuit being frivolous.
I’ve never heard of Florida having a version of California’s anti-SLAPP law. That’s a pretty unique piece of California law. But there are other things the blogger might consider.
Would a lawyer take a case like this, speculating to eventually be paid by a judgement against a plaintiff who is probably whining his way to bancruptcy?
http://blog.miamicondoinvestments.com/2008/01/29/opera-tower-llc-tibor-hollo-sues-me-for-25m/
question for all, sorry if a bit off-topic …
I’m wondering why nothing is done to fight the central banksters in their War on Savers. I’m seeing many initiatives in my country were consumers team up (usually through some kind of website / club) in order to get big discounts on consumer electronics, gas at the pump, healthcare insurance etc. Why doesn’t this work to unite savers and turn the screws on the banks so that they have to offer realisitic rates on savings accounts? After all, they are playing with OUR money at OUR risk (just look at SG in France …), and without this money they are not a bank anymore. Or has the current banking system evolved so far from reality that they no longer need our savings deposits (when you talk with the bank manager, you kind of get that impression)? Does anyone know of initiatives in this direction, or why it doesn’t work?
There was a system in Netherlands for bypassing banks (kind of online brokerage for private loans) but it was stopped by the minister of finance because the website was considered to be engaged in banking activities, for which they need an expensive license etc. But I’m not so much interested in bypassing the banks, they can play their part as long as they play fair.
The recent credit/subslime turmoil has resulted (at least in Europe) in even lower rates on savings accounts, while risk for savers is up AND inflation (expectations) are way up; this does not compute… Our rates are around 3-3.5% for 1-3 month deposits / savings accounts etc. and 3.5-4.5% at best for 1-3 year deposits. The gain for the longer term choices is tiny compared to the inflation and default risk on the principal. And taking taxes into account, there is no way to beat even the official inflation rate (3.1% for EU). And this week Uncle Ben will make things even worse
“Or has the current banking system evolved so far from reality that they no longer need our savings deposits (when you talk with the bank manager, you kind of get that impression)?”
This is so true, nhz. They’re only intrested when you place your money in one of their funds, in which they can hide whatever they want.
I think you only can pressure them in the long run by chasing the highest yields. As long as they are assured by the FDIC european equivalents it doesn’t matter what bank.
Is Credit Europe listed at DNB in the Netherlands?
I think Credit Europe is listed yes, and you can get 0.5-0.75% higher rates from these foreign banks. But FDIC in Netherlands (like most of Europe as far as I know) is only 20K euro. For me as a small business owner (no pension / wellfare entitlements etc.) that doesn’t get me very far
If you spread the capital over multiple banks because of risk, each of them requires an additional payment account / setup fee for which they charge 50-100 euro per year plus sometimes additional phony costs; that eats most of the gains from higher rate (assuming 20K maximum deposit).
You don’t know about prosper.com? I guess it’s not as well-known as I thought. It’s an online private loan site, in which one can participate as either a borrower or a lender. I think there’s one other similar site, but can’t remember the name.
I signed up quite awhile ago (as a lender) but I couldn’t find a borrower that seemed able to pay back the loan, plus their sob stories turned me off. Maybe it has improved? There is also a loan application on Facebook to loan money to your friends and family (not sure that’s a good idea).
That’s what you see in the lower credit grades, I think. Stay in AA and A and it seems like the stories make more sense. Either way, these are unsecured loans so gotta be really careful.
Why would anyone whose probability of repayment is high enough to consider lending to (which would therefore be reflected in his FICO score) use this service, when legitimate lenders would likely charge him a lower interest rate for the same loan?
I heard the name, probably the Dutch initiative is based on prosper.com. But I’m not really interested in that kind of solution; apart from the problem that these loans are unsecured, it does not change what the banks are doing and so is of marginal influence. Most savers will never go that way.
What I would like to see is using the existing channels but with more power for savers, instead of debtors/banksters like now.
Why anyone is still putting their money in banks is beyond me. My parent’s money is all in funds which appreciate 10% average long term. A little bit of cash is in the bank for shopping.
that’s OK if you started long ago and are in it for the very long run (maybe, if this recession/depression takes just a few years). Currently nearly everything is seriously overvalued, and most funds are loosing value every day, on average, as soon as there is a new panic in the market.
Why doesn’t this work to unite savers and turn the screws on the banks so that they have to offer realisitic rates on savings accounts?
In the US we have organizatons called Credit Unions. The original intent of the credit union concept is much like what you described. Unfortunately, they act more like banks these days.
Whenever banks are squeezed, they get their contributees to impose more regulations on credit unions.
Cut to below inflation… I guess it’s how you figure inflation, I would say the rate is already well below.
http://www.bloomberg.com/apps/news?pid=20601103&sid=abxUa2KBq.HU&refer=us
fed in the echo chamber:
Jim Cramer — the hyperactive, loud and opinionated host of CNBC’s “Mad Money” — is no fan of Federal Reserve Chairman Ben Bernanke. If you’d tuned into “Mad Money” any time in recent months, you might have caught one of Cramer’s outbursts against the former Princeton University economics professor. “Defend us from Uncle Ben Bernanke’s relentless march to recession,” went one rant. “You know what Bernanke is? He’s the General Sherman of monetary policy. He’s waging total war against the American economy.”
http://tinyurl.com/38hkk7
yes, just shows what a total idiot Cramer is. The only war that Bernanke is waging is the War on Savers, in order to defend the big speculators (like Cramers Wall Street friends).
The only war that Bernanke is waging is the War on Savers
The problem here is that the whole economy is unstable. If the economy collapses (a very real possibility) there will be no savings. Prepare for the future and be glad you have a little extra time to save and make plans.
I think you’re getting the cause and effect backwards. If the economy collapses - it’ll be because there was no savings, not vice versa.
A wrecked economy primarily kills “paper” savings - i.e. unrealized gains - things like overinflated stocks, unrealized home “equity” etc. Things that have *real* value - e.g. stocks with a proper P/E ratio in stable companies, homes that don’t have over inflated value, even things like gold - are not harmed so much in an economic collapse.
That being said - if the economic collapse causes a political collapse (e.g. revolution or local war) then all bets are off - even stable savings may be wiped out.
homes that don’t have over inflated value
I guess you will only find these nowadays in some very unstable or otherwise unattractive countries
(plus Germany, for those who want to move there …).
I certainly agree with your comment regarding political collapse. If some big banks collapse even relatively stable countries like mine could see serious turbulence with unpredictable outcome. Lowering rates is definitely NOT the way to solve the banking problem, on the contrary.
House&Senate Diverge… This whole ’stimulus’ package is a huge waste of time and money but we can count on the D.C. clowns to screw around with it so long that any hope they had of holding off the inevitable will have passed.
http://biz.yahoo.com/ap/080129/economy_stimulus.html
wmbz,
I heard on the radio last night that the Senate wanted to “add a few things” to the package to sweeten the deal. What’s an extra $5-10 Billion dollars anyway.
Seems like the only “sweetening” I see is to redirect the money from the working class to retirees (voters) and to make sure even the wealthiest get their share.
If you want to stop the practice of earmarking, hire Mike Tyson.
The Senate also wants to strike the provision raising the $417K cap on conforming loans.
hallelujah.
Housing market’s freeze deepens.
From the article………….
“This is worse than expected and highlights the dire straits of the housing market,” said Mark Zandi, chief economist for Moody’s Economy.com in West Chester, Pa. “The floor has fallen out of the housing market.”
http://www.chicagotribune.com/business/chi-tue_housingjan29,0,5240736.story
From that link.
“The silver lining is these bold moves,” she said. “I expect the Fed to continue lowering rates to ease the tight credit market.”
“Unfortunately, about half of the people having problems with subprime mortgage loans could have qualified for prime loans,” she said. “This reflects greed all around.”
Apparently she does not realize that low rates got us into this mess but then she cites greed. What gives… Is she another one of these educated losers with a prestigious degree who lacks common sense?
Also low rates increase oil, gas, energy, food etc… leaving less money to pay rising mortgage payments in a declining RE market.
How to send Jingle mail…………
http://www.youwalkaway.com/index.html
You beat me to posting that one.
I especially like in their ‘More Information’ page -
“2. You will immediately know the exact amount of days you have to live in your house payment free. We stay on top of your walk away plan and keep you up to date with weekly progress emails. We also will notify you if the lender is taking longer than expected subsequently giving you more time in your home payment free.”
Don’t forget to pay the internet bill or you won’t get your updated walkaway plans! Always save some credit limit for this and our most important services!
How to send Jingle mail…………
Look at all the smiling faces in the accompanying graphic art.
You’d think losing six-figures is just all a big game.
They should show somebody who’s hung themselves in the front yard tree for greater reality and emphasis.
How to Survive the New Gold Rush
“Financial advisers also warn that since gold is considered a haven in times of crisis — and is less in demand for practical uses than other commodities such as copper and oil — it tends to attract emotional, speculative investors who can amplify its price gyrations. Gold “is too narrow, it’s too volatile, and historically it hasn’t made that much money for people,” says Randy Carver, president of Carver Financial Services in Mentor, Ohio.”
http://online.wsj.com/article/SB120156082315723535.html?mod=todays_us_nonsub_pj
I love these sorts of puff-piece scaremongering claptrap nonsense, that come out of Wall Street, as it shows me just how frightened they really are.
It’s very much in their best interests to poo poo Gold, as it’s diametrically opposed to their game of fraud, as it represents pure 100% Honesty. (only in physical form, which doesn’t even rate a mention in their story, although the words “Pure-play gold investments can be extremely volatile.” might imply that?)
Gold tracks the price of fuel pretty well, therefore it is pretty volatile just like fuel prices, and because of it’s lack of dividends historically it’s been a shoddy investment vehicle. Just because it’s having a good couple years doesn’t change it’s track record over history. I’m fine with people owning gold, it’s better than blowing their money but I fail to see where that person was wrong in his quote.
The only way I would buy gold was if we went into a hyperinflation and we aren’t even near that. There is a big difference between lowering fed interest rates and doubling the amount of cash in an economy every month. Actually this might get shunned on this board but in a hyperinflation scenario land is a pretty good investment too. That’s why immigrants to U.S. from south America invest in land so much, because where they are from their money might not be worth anything the next day, but a plot of land would be.
1968: 1 ounce of Gold bought around 125 Gallons of Gas
2008: 1 ounce of Gold buys me 290 Gallons of Gas
If you don’t use gasoline, just disregard.
What’s this gasoline stuff you reference? Does it go into those yellow things with wheels and annoying horns that all of those jerks move around in?
NYC is the only place i’ve ever been, where drivers get market full value out of their car horns.
Then you’ve never spent quality time in Boston.
I grew up in el lay, where horns just don’t used much, in comparison.
I drove taxis in NYCity, loved every minute of it besides the time I got held up.
What may I ask is the shortest measurement of recorded time?
the time it takes a NY taxi horn to honk after a traffic light turns green
1968: 1 ounce of Gold bought around 125 Gallons of Gas
2008: 1 ounce of Gold buys me 290 Gallons of Gas
Which tells me that either gas is under priced, or gold is overpriced.
Both are underpriced…
It is hard to hide that land in a coffee can or evade the taxes on it.
On the other hand, you’ll never forget where you put it.
Buy gold now or be priced out forever. lmao.
Are you trying to stir amoney into bragging about the size of his private parts again?
I find it funny he has to hid behind an alternate username when comes off the hinges.
“He” = ? (How do you know it was an alternate user name?)
Well, the shoe-shine boy just told me to buy gold and do it now. That boy would be Casey Serin. Got a bulk email from him telling me to buy gold and silver, and in specific to buy his penny stock GSPG. I better do it ASAP, too, before some secret news is released. Never seen a more pump and dump email in my life. Anybody know how to report it?
But seriously, when Casey Serin starts telling me to buy gold, isn’t it time to sell??
on the other side, in many countries the registration of land ownership is so bad (I know stories from Spain and South America) that after a few years (or sometimes even upon purchase), even the owners often don’t know what is theirs …
Not to mention the notion of “squatter’s rights,” which definitely come into play in various places across Central and South America — in the shantytowns of Rio, for example.
So, are you suggesting that my action in deciding to abandon real estate as an investment vehicle in 2003 and instead choosing to purchase precious metals was a bad idea. How about lets check back with each other in 2011 as I convert my precious metals purchases into real estate purchases at rock bottom prices. Bottom line is the decision was based upon an informed decision. That is a loss in faith of both the Federal government and the lending community.
Shhh, quiet, that’s exactly my plan!
Shhh!!! same here! one ouce of gold should buy one acre of land at that time. Not desert land either!
Well the fed has two choices,
Hyperinflate or
depression
Which do you think they will choose?
both?
yes, both: they will choose the first and that will generate the second choice at a later time when (hyper?)inflation has run its course.
I have complete confidence in the Fed’s ability to produce a hyperinflationary depression, so I say “both” as well.
I think they are trying to walk the tightrope which represents the middle way. So far, so good.
There’s a world of difference being on a tightrope a few feet above the ground, vs. trying to negotiate one that’s across the Niagara River.
“…trying to negotiate one that’s across the Niagara River.”
And then imagine attempting that feat in a sh!t storm with gale force winds!
Considering that every other ad on AM radio is touting gold, perhaps gold bugs should take that as a caution flag.
Excellent point. I have considered some gold investments recently, but have backed off just because of that factor. This is the second article I have seen on Gold in the WSJ in the past month. There are ads all over cable stations, it is becoming part of the popular consciousness. When the average person becomes aware of something that is usually the time to sell, not buy.
Most of the ads tout mining stocks or etf’s or more than likely, numismatic coins, but not plain jane vanilla Gold bullion such as Krugerrands or the like, which is the only thing you want to buy.
The advertising expense is extreme, and the buy/sell spread on a 1 oz Gold Coin is only like $20, so they resort to classic bait & switch methods, riding on the coat tails of the real thing.
And the WSJ hates Gold. Read the article above and see for yourself.
Why do you think gold ETFs are a bad investment? One of things I don’t like about the gold is the problem of storage, security etc.
buy some guns\ammo and a safe.ETF’s are more for retirement ira’s.
Aladinsane. I always wondered how you sell gold. Not the stocks or ETF’s. Could you please provide some education.
Think of it this way Frank. It took 27 long years for goldbugs to be vindicated. That vindication is fleeting.
How many years has gold been used to store wealth? Why is your view limited to 27 years?
LOL. Some of mine leaked out in that timeframe.
Contrarianism for its’ own sake is foolish. Being contrarian might work for a short-term trade but long-term, fundamentals will win out. Also, considering that 99% of the public believes gold is a horrible investment means that gold buyers are the real contrarians. Of course most people are like exeter, bashers with no skin in the game.
You don’t have a clue if I have any money on the table or not. It’s not me getting inbetween you and your fantasy wallet. But history sure is.
Federal paper money has a storied history of 147 years…
Gold’s history goes back a wee bit longer~
The one common link that I have noticed about folks that ‘bash’ things they don’t really understand, is they always come across as if they have a chip on their shoulder/unhappy. No point in carrying on a conversation with them, it really is a waste of time. Nothing to gain or learn.
Thats some illogical collision you have going there. “Nobody understands so I won’t respond to them, but I’m compelled to respond anyways”
Does that work for gold only goes up too?
“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everybody gets busy on the proof.”
John Kenneth Galbraith
“…almost everybody gets busy on the proof.”
JKG was spot on. This above all is why I try very hard to never reach the point where I am convinced of my opinion on anything. In fact, I always entertain the possibility (just as Rene Descartes did long ago) that I am 100 pct wrong.
It’s why you are a “hand-wringer”.
As a fellow HW, I think it’s because of exactly what you state. IMO, an intelligent investor always asks what could go wrong and takes that into account when trying to determine entry and exit points — or hedges.
I sure hope none of the bailouts (including currency crisis) actually come to fruition, but have to plan just in case they do.
Gold ads have been prevalent for a long time now - not just recently, and not just on AM radio. I’ve seen lots of them for quite a few years on TV etc. also.
I consider it like real estate ads. They’ve been prevalent for years as well. Currently obviously it’s foolish to listen to them. But real estate ads were prevalent in 1998 as well - it wasn’t so foolish then.
Like anything, gold will go up and down as demand (and political factors) drive it. Like any investment - it has a fundamental value component (which is hard to measure with gold) and a speculative component. The latter is what’s driving it now - that doesn’t make it a bad investment though. If we end up having an economic and/or political meltdown - then gold’s fundamental value will catch up with it’s speculative value - not because of the innate value of gold, but because of the lost value of the US $ relative to gold and to other world currencies.
Meant to add - if/when it becomes apparent/obvious that an economic meltdown will not happen - the speculative component of gold will cease to have basis, and prices will indeed come back down a lot. This is what happened in the early 80’s.
Exactly packman and I remember it like it was yesterday. All sorts of boogeymen back in the late 70’s, much like today with the turrrrrrism, gunna getchya socialist etc etc. I remember the whining and tears of all the goldbugs who had insisted for years that gold is the best investment only to concede that they’re broke, penniless and jobless……. kinda like the real estate mob of 2001-2005.
I think you missed the “if” part of my statement.
As in - “if” my house never catches fire - my homeowners insurance was a horrible investment. Chances are my house will never catch fire.
But…
I can tell you the people I use as a metric to know that an asset has run its course are still completely clueless yet some of the sheeple are starting to take notice. The gold run is far from over.
Gold will be higher at the end of 08 then it was at the beginning. The herd has not jumped on board yet, many are still in denial phase and some are starting to panic about housing. I am not sure how many JSP’s have any money left over from their leverage to create a gold bubble as in the past but it still has legs.
AM radio???? give me a break, when all the casino dealers on cnbc are touting gold then we have a bubble..
Arriba, arriba…
ECB aid to Spanish banks matches Rock rescue
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 1:27am GMT 29/01/2008
Spanish banks are issuing mortgage securities and asset-backed bonds on a massive scale to park at the European Central Bank, using them as collateral to raise money at favourable rates from the official credit window in Frankfurt.
The rating agency Moody’s said lenders had issued a record €53bn (£39bn) in the fourth quarter, yet almost none of the securities have actually been placed on the open market. Most have been sent directly to the ECB for use in “repo” operations.
“The market has shut down,” said Sandie Arlene Fernandez, the author of the report.
“Few, if any, of the transactions in the RBMS market (mortgage securities) have been placed since September. Some of the banks are hoping that the market will open up again but most are just preparing these deals to use as repos, which they can do since the ECB accepts AAA-rated securities,” she said.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/28/bcnspain128.xml
Yes, but the banks must pay 4% interest to the ECB and pay back the loans and get back the “securities”.
but if they don’t pay back the loans and go out of business, the taxpayer is on the hook for the full loan amount. That’s the problem, just like with Northern Rock. And some of these banks are probably bankrupt already, there just is a delay in publishing the actual numbers. This is BAD.
Did any bank in Europe go out of business? I know, many should. But the taxpayer would save all these banks anyway, too big to fail, or because a bankrupt bank would start bank runs. No government, not even here in Germany, would allow that, in memory of the hyperinflation in 1923 and the deflation in 1929.
Rumour……………GS, MS Get Federal Subpoenas over CDOs and CMOs ……………maybe there is justice after all.
Source?
Perhaps the next administration will reinvigorate the DOJ. It doesn’t seem quite right for such a heavy vigilante burden to fall on financial market blogs…
http://www.thestreet.com/s/goldman-morgan-stanley-probed/newsanalysis/banking/10400914.html?puc=googlefi
Just saw this on Yahoo news. Blogger is being sued by developer for 25 million.
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=4226712&cl=6137996&src=news
what would they try and do to ben?
that suit will be thrown out
it’s the fault of the bloggers now. i though it was the weather,interest rates,unemployment,no doc loans etc etc
we all knew the lawyers would end up the real winners in this debacle and here they come
Classic SLAPP suit.
http://en.wikipedia.org/wiki/Strategic_lawsuit_against_public_participation
I think the blogger could countersue or win damages.
He definately should. If anyone sues ben, we will all countersue them and win!
fed risks ‘blood on the floor’ with cuts:
The Federal Reserve building is just one grand government building among many that line the Washington Mall.
Underneath a grand chandelier and in the shadow of the Great Seal of State, the 12 members of the Federal Open Markets Committee (FOMC) decide at what level to set US interest rates.
http://tinyurl.com/2kc5me
Coming, to a TV near you, “The Adventures of Sweeney Fed; the demon partners of Wall Street.”
I guess Johnny Dep’s going to have to use a bit more bleach to play Ben.
candy inflation measure:
HARRISBURG, Pa. (AP) — Hershey (HSY), the nation’s largest candymaker, is raising the wholesale price of its chocolate bars for the second time in a year as energy and commodity costs spiral higher.
Hershey defended the move, saying Monday it is more exposed to the rising cost of milk and cocoa than its competitors, which include Mars and Nestle.
The price increase, effective immediately, boosts wholesale prices about 13% on one-third of its domestic candy line, covering standard chocolate bars, king-size bars, 6-packs and vending lines. The price hike averages about 3% increase over Hershey’s entire U.S. product line.
http://www.usatoday.com/money/industries/food/2008-01-28-hershey_N.htm
Somebody mentioned yesterday how their local produce hadn’t gone up in price, and it’s the same here.
I can buy a 30 pound box of navel oranges for $6, the same price it’s been for years.
The sellers just haven’t caught on to inflation, nothing more.
won’t have any gauge of local produce here until asparagus comes in.
“won’t have any gauge of local produce here until asparagus comes in.”
How about strawberries? The pickers have been living large.
no strawberries, tree and vine froit country. I’ve heard about those strawberry pickers though!
Its those rich, nomadic, upwardly-mobile strawberry pickers who are going to snap-up all of this excess inventory and save us all… Just you watch.
Straw(berry)Man Buyers
Restaurants around here have definitely jacked their prices.
I buy Middle Eastern specialty items at a place in Edgewaterjohn’s neck of the woods, and the guy that owns the store told me his wholesale prices have gone through the roof. He buys from distributors in the EU as well as direct from Lebanon, Israel, Turkey, etc. His costs are up across the board, whatever the country of origin. He said in some cases, he can’t pass the entire cost onto his consumers, because they’d balk at the huge price increase.
Rising milk prices to be offset by cheaper labor in Mexico. Last year they closed Smith Falls ON plant, this year Reading PA.
I read somewhere that Hershey was moving more production to Mexico. I will make sure to check the place of origin on all future chocolate bars and will not be purchasing any of the Hershey “burrito bars”.
Hershey’s milk chocolate tastes like waxy mud already.
Indeed! After living on the Continent for years and getting used to those chocolates (my wife always had them around), most of the Hershey stuff we encountered here in the USA was… yep, like waxy mud! Nice description, aladinsane.
I guess it’s all what you’re used to, though. I prefer the drier, more bitter stuff myself. Many millions of Americans would beg to differ.
Russell-Stovers is made in Montrose, Colorado, in a very clean factory staffed by locals. Their stuff isn’t bad. Chocolove is great, but not sure where it’s made.
Symphony bars used to be ok, but they too now appear to be makde of wax.
Nevada Had Top Foreclosure Rate in 2007
http://tinyurl.com/399n2t
About 1.3 million homes received foreclosure-related warnings last year, up from 717,522 in 2006, Irvine-based RealtyTrac Inc. said. Foreclosure filings rose 75 percent from the previous year to 2.2 million.
Nevadans can blame many a party for this dubious #1 ranking.
Yay Nevada!!!
We’re Number One with a Bullet!
the truth about countrywide:
NEW YORK (Reuters) - Countrywide Financial Corp’s (CFC.N: Quote, Profile, Research) decision to sell itself to Bank of America Corp (BAC.N: Quote, Profile, Research) was driven in part by fear of potential crackdowns by regulators, the Wall Street Journal reported on its Web site on Monday.
http://www.reuters.com/article/ousiv/idUSN2853204020080129
Keeping up a tan is never easy, in the all-bar motel.
Countrywide also said they would report a profit in the 4th quarter. What a bunch of liars.
http://biz.yahoo.com/ap/080129/earns_countrywide.html
Agree - I am waiting for the WS/ Washington thread to voice my opinon on this LIE!
hardest hit foreclosure spots:
What could be worse than getting behind on mortgage payments? Owing your lender more than your home is worth.
That’s what’s happening to homeowners across the country, many of whom just a couple of years ago opted for interest-only or adjustable-rate mortgages. For them, just as their loans reset and interest rates rose, home values began to plummet, leaving them with negative equity; this is where their mortgage is greater than the value of their home.
http://tinyurl.com/349zy8
There is an implied notion in all these “hardest hit” foreclosure reports that if you don’t fall within that area, you’ll go unscathed. BZZZZZZZ…. wrong again. It aligns closely with the “it’s different here” mantra but as the pools of available cash for RE dry up, all areas will be come unwound.
This happened to me in the early 90s and we kept our house and kept working. It was where we lived, not our nest egg, so it didn’t actually affect our lives at all. This was in Saratoga, CA –house originally bought for $600K went down to $400K then sold in 2005 for $1.5M.
Good News:
It looks like Warren Buffett is going to bail out all of the country.
Please form an orderly line.
–
“It looks like Warren Buffett is going to bail out all of the country.”
And what give you this idea?
Maybe, he wants to get too big to fail before he dies!
Jas
I actually think it was along the lines of
Mr. Warren Buffett to Mr. Wilbur Ross
“Shove it up your A$$”
Bernanke to blow another bubble by dropping the Fed rate to less than inflation.
http://www.bloomberg.com/apps/news?pid=20601087&sid=abxUa2KBq.HU&refer=home
What happened to the guy that announced he was going to stand up to the market when he took over from Greenspan ? Bernanke is a wimp !
I remember when Bernanke took over at the FED, that many frequent posters on this blog were convinced he would take a far tougher stand regarding inflation, blowing bubbles etc. than Greenscam. I have been saying from the start that Uncle Ben is an even bigger idiot than Easy Al when it comes to monetary policy (don’t ask me how this is possible) and I think by now that should be clear to everyone
The only thing that is clear is that you are angry and mean and anxious to put blame on individuals. Bernanke came to his position with a raging bubble going, which he then popped by raising rates steadily. Then Bernanke was quite honest and open about growth expectations being extremely low for the future, possibly around two percent. It is quite fine and interesting for you to propose that the Fed should have a high base rate when economic growth for the long term is expected to be quite weak, but you need to back up your statements with more economics and less name calling and blame focus. There was a huge bubble with many players large and small and Bernanke didn’t even enter into the story until near the end.
As far as cash creation goes, that is a very complex problem. Debt is now repackaged and traded instead of being held long term. That is not going away, so the system needs some new kinds of controls and regulations. Getting back to where we were is not going to be so easy as having someone stern in position at the Fed. Trying to make the correction happen suddenly by squeezing credit harder has significant risk, and that should certianly be clear to everyone.
you are very wrong; Uncle Ben is only making the problem far bigger. Even some central bankers (not from the US of course) agree with that view. There are lots of other things the FED could/should do and the only thing they do up to now is a bailout for the big speculators (bailout being lower rates to keep stocks etc. artificially inflated to they can offload the losses to other parties like savers, taxpayers and foreigners).
Moleman, you are supporting an untenable position. Lowering rates in an inflationary environment in a desperate attempt to free up seized credit is simply throwing gasoline onto an already blasing fire.
The meanness is on Bernanke’s side of the fence.
Why doesn’t Mr. Deer-In-The-Headlights just get it over with and drop the rate to zero? Oh, pardon me, I know why. Because if he did, there would be no reason for anyone to pay attention to him anymore.
Tyson Foods jacking food prices.
http://tinyurl.com/yqjvp5
No inflation here! Bring on the rate cuts! 0% baby! To the moon!
And we thought the housing bubble was bad. Wait’ll producers of essentials REALLY get up a head of steam. We ain’t seen NOTHING yet.
On the other hand, maybe this is the best thing that could happen to America’s waistlines. Thanks for the info. First, Hershey’s (whoops, there go my Cadbury’s bars) and now Tyson’s. I like to game these c**ks**kers and not buy their stuff when they raise prices.
“I like to game these c**ks**kers and not buy their stuff when they raise prices.”
Uhhh… OK, Pat I think I’d like to buy a vowel.
Sunshine lowered their prices… long Cheezits, short chicken fingers
Ramen Noodles holding steady at $0.12 a pack, but I’m keeping my eye on it….
Ramen Noodles holding steady at $0.12 a pack, but I’m keeping my eye on it….
MGD 18 packs at 11.99 and holding.
This will heal everything. Drop rates, raise the price of food.
So do you eat or pay the mortgage payment?? You can’t eat a house… I’m eating!
I’m surprised they didn’t drop the quantities to zero before raising the prices. Oh wait, then no one would listen to them.
Technical Olympic USA declares ch. 11 bankruptcy.
http://www.reuters.com/article/marketsNews/idUKBNG25321120080129?rpc=44
Activists lobby for Spitzer’s housing aid
http://tinyurl.com/2e3wj5
Joan Roby-Davison, executive director of the Group 14621 Community Association, painted a grim picture of the situation in Rochester.
There are 700 empty buildings, and low-income workers living in decrepit structures struggle to pay rent and other bills and are one minor economic disruption away from disaster, she said.
Don’t worry Rochester, with the current condition of the housing market, lower cost housing is on its way, like it or not.
–
CFC reporting much bigger loss than expected. Wall Streeters are still behind the curve.
Jas
A while back CFC said they’d be profitable in the 4th qtr., didn’t they?? Wonder what happened.
–
The beauty of our corporate system is that you have a free option to lie at least once a quarter about future. And this can go on for several quarters as evidenced by Hopebuilders.
Jas
This ‘tear-down expert’ and ‘victim’ gets a free pass after failing miserably, walking away, leaving lenders, contractors, and suppliers holding the bag. Clearly a respectable and capable professional.
The msm apparently sees nothing wrong with this picture.
———————————————————-
After defaults, developer moves on
Prudential Palms Realty hires Phillip Chmieleski, who lost his company, as the firm’s executive vice president
By STEPHEN FRATER and MICHAEL BRAGA
stephen.frater@heraldtribune.com
michael.braga@heraldtribune.com
SARASOTA — During a trip to Florida’s east coast in 2001, Phillip Chmieleski noticed that developers were knocking down old houses on waterfront lots and building mega-mansions.
Determined to bring the concept to Sarasota, Chmieleski and his partner, Margo Bohaty, launched Sandcastles of Sarasota.
In 2003, the entrepreneurial couple set the regional record for the sale of a single-family home, collecting $13.2 million for a 7,500-square-foot mansion on Lido Shores.
But when the hyper-driven real estate market cooled in the summer of 2005, Chmieleski and Bohaty were caught holding unsold properties like countless other developers, builders and investors.
Last year, banks foreclosed on four of their loans totaling $9.8 million.
Despite the collapse of his development company and the loss of the properties he was developing, Chmieleski appears to have landed on his feet.
Helen and Scott Sosso, owners of Prudential Palms Realty in Sarasota, recently announced that Chmieleski had joined the company as executive vice president and would share responsibility for managing the brokerage group.
“Phil and I have known each other for about six years,” Helen Sosso said. “During that time, I have been very impressed with his varied abilities in sales, finance and leadership. I think he is the perfect person to help us implement the ambitious new programs we are developing in order to expand our position in the marketplace.” ———————>>
Read more:
http://www.heraldtribune.com/article/20080128/REALESTATE/801280491/1201
Wow, talk about prescient - Sandcastles??
I’m going to miss most of the day today. Too bad; should be a wild one. I have February calls but will stop out at breakeven from yesterday morning’s low. Ya’ll don’t cause too much mischief.
Dang!! I guess the questions will have to wait.
1375-1400 s&p (former support) should be resistance unless there is some kickass news that blasts it right through. Have half the calls for sale at that area (have to estimate prices)
Have fun.
“There is nothing in the dark that isn’t there when the lights are on.
Rod Serling
Nope, the boogie man is there
Wrong. There is light there when the lights are on.
Not as simplistic as it sounds, theoretical physics lecture tba.
Ever been a wild cave?
Inky black.
How do you know???
“There is nothing in the dark that isn’t there when the lights are on.”
Rod Serling
Great Rod. Thanks. After scaring me silly in my formative years, you finally get around to telling me it’s all right.
Even Rod couldn’t imagine the horror that lurks aroung through the “Dark Pools of Equity”
http://money.cnn.com/2008/01/29/news/companies/walmart_pricecuts/index.htm?postversion=2008012908
No inflation or recession here
Many believe that inflation is not the likely near-term scenario. Rather, deflation is in the cards, at least for the short-term. When debt defaults, money that was previously created is actually destroyed. The Fed probably realizes that deflation is very likely because of the massive amount of debt being destroyed these days, so the Fed is trying to avert deflation by raising rates (just as it did after lots of debt defaulted after the tech bust in 2000). The problem is that another bubble can result — although this time, where that bubble occurs is anyones guess. It’s unlikely to happen in housing because lenders will most likely not ease underwriting standards again.
did you mean “lowering”?
The Fed probably realizes that deflation is very likely because of the massive amount of debt being destroyed these days, so the Fed is trying to avert deflation by raising rates …
Call me crazy, but the opposite seems to be happening. The petulant Wall Streeters will keep pout and stomp and hold their breath if they don’t get more, more, more.
OT, but if we look at the recent news “events” backward through the lens of Bush’s political approach to everything, we see…
1.) SOTU with lots of frothy rise in the Dow
2.) Rate cut to save the Dow
3.) Unemployment lies
4.) Inflation lies
5.) Zillow magically making every property “worth” more
6.) People starting to wake up to recession
7.) Home sales and median price dropping
If we do not look at what Bush does through a 100% political lens, and realize that during 2001 he had Greenspan in the White House more in a few months than he’d ever been there in a decade, we fail to realize that killing millions in the ME and trashing the US economy were bookends of a purely political gambit to get him re-elected and “preserve his legacy.”
Unfortunately for us, he failed on the latter. Succeeding on the former is causing the disaster.
Miss Mortgage Pageant
http://www.stockmania.com/index.php?showimage=142
Very Cool -
You get a star for the day.
“Miss Mortgage Pageant”
Things in Chicago are slowing returning to ‘normal’. Last night the fiancee met up with her friend the wife of an i-banker. The friend said she and her i-banker husband purchased a $600,000 house in a tony neighborhood on the NW side of Chicago.
When my fiancee told me this stuff, I initially felt a little bad because, this couple is only in their early 30’s and they live in my dream neighborhood. But the fiancee and I decided to do some websluething and figure out the background on the purchase.
Well, i-banker and his wife bought the very nice home for about $650,000 and they put exactly 20% down. They got a $417k loan and a second for $90k-ish. Assuming a 5.75% interest rate (I assume this couple has excellent credit) they’re paying about $3,000 a month in the mortgage. I looked up the taxes and they were relatively low. All in all they’re looking at a $3,600 a month payment, which is a very reasonable payment for an i-banker’s mortgage. I-bankers should be living in houses like this.
I started to feel better for two reasons. First of all, lending standards are returning to normal. This couple could afford this home. 20% down, good credit and good income are now required. Two years ago we would have heard stories about some goofs who bought this home with no money down and lied about their income. It’s good to see high income earners buying homes that fit within their income.
Secondly, home prices are falling. This particular house wasn’t even listed on the MLS. It had long time owners with a paid off mortgage. They priced the home to sell fast and it did. They weren’t forced to cling to a ‘wishing price’ for months and months on end. A Tudor in the $600’s in Sauganash doesn’t bode well for the $800k mccrapshacks in surrounding, less tony neighborhoods, much less the $800k 3-bedroom condos in the west loop.
Yet I wonder, how many i-bankers buying $600k homes does it take to save the real estate market? Are there enough young married professionals with mid-six figure incomes to support a languishing market? It’s kind of sad when the few remaning people buying homes in November 2007 are i-bankers.
Mr. I-banker could easily lose his job too if things shake out badly enough.
No way, CME is buying NYMEX. America’s financial center is moving to Chicago.
(That was mostly sarcasm, by the way)
America’s financial center is moving to Hong Kong.
And Singapore
30 years of $3000 payments? Plus, maintenance and insurance.
Remember that the half-life of i-bankers is roughly 5 years. Half of them will be gone after that, and a fresh crop brought in to replace them for cheaper.
Better hope he survives through the periodic culls.
I think your 5 years is probably a good estimation. Add big-firm lawyers to that mix as well.
On the other hand, most of these people aren’t going to be working at McDonald’s after the stint in the big times. They’re going to be using all their contacts and finding a “less stressful” job making $75,000 - $125,000 a year. As long as they can service the loan with that, they’re fine. In the above situation, if the wife works as well, figure a household income between 150 and 200k. Probably not a big deal.
I know a couple that just bought a home for $680k on the northside of Chicago. They put approx 40% down and got a loan for exactly $417,000. Must be nice to be able to do that.
Hah hah, I was going to add lawyers to that mix.
Speaking of lawyers and bankers, finding that “less stressful” job isn’t that easy. Not super hard, just needs some effort.
However, the hard part seems to be the “downgrade” to “only” a $75K-$125K salary. These people always “live the lifestyle”, and they find it hard to downgrade (if they don’t go bankrupt first.)
I have met people who have done this successfully but there’s not a lot of them. Most do it kickin’ and screamin’ and yellin’ out for the mercy of sweet baby Jeebus!
WRONG! If this was normal, he wouldn’t have needed the second loan. For cryin’ out loud, this guy put 130K down and still needed a second loan to close the deal. I also agree that over the long haul, 360 months at 3,600K, means OUCH! Not only that, but what are the chances of going upside down.
For that much money, I would have waited.
Ooh, missed that part about the second loan. You’re smack on!
And for that you deserve a smackeroo!
In contrast; I inquired about a house (cabin on 15 acres) in my community that looked to be about 50% off similar listings. The realator said the house was a BK foreclosure and there was a “problem” with tenants. Apparently they are living there rent free as the bank doesn’t want to spend the $500 for the sheriff. The listing realator said he would only show it to me if I wrote a deposit check. My response was that I would bring some $100 bills and let him see them, lol. Never heard of such a thing. My agent said “You don’t have to offer what the bank is asking, they want to unload it”.
Stuff I have read about on here is finally creeping into the backwoods.
$650k is catching a falling knife. It may be a “good” price now but in a year they will be underwater. If they lose their job, this house gets foreclosed, bye bye $130k down payment.
If they have trouble writing a $500 check to reclaim their collateral, they have other troubles.
Sight unseen, I would not offer more than 30% of the asking price.
I-bankers buying 600K homes don’t impress me. I-bankers getting a deal at say 100-200, that’s more like it.
Reminds me of the old book “Where Are the Customer’s Yachts?”
An i-banker with a 600k home isn’t supposed to impress anyone. If anything it shows that prices and lifestyles are finally reaching some sense of normalacy. The last couple I knew to buy a million dollar home are going into foreclosure. She made $40k a year and he reported income of zero from his general contracting work. They decided they were going to make $700k rehabbing and flipping a large house in a trendy neighborhood. Well, the market turned, the ran overbudget and now they’re getting ready to file BK and lose their project to foreclosure. There is a major constrast b/w the i-banker and the flipper. 20% v. 0% down, good credit v. bad credit; good income v. unverified income. Things are starting, and I say starting, to get back to normal. Deals like the i-bankers were RARE in the last few years but now some of the fence sitters are coming off the fence, with the tons of cash they’ve been saving over the last four years. It makes me feel better to know that prices are returning to their historical norm because people are putting their own skin back into the game.
A friend of mine is so disappointed. After trying to sell their 3/1 frame house in Montgomery County (Maryland) for almost a year, they finally had a firm offer. The first firm offer, I think. Problem is…
The buyer has zero money down. Not even $1000. Zero. So he wants everything paid for by the seller. On top of that, he’s got a condo in Northern Virginia that (according to the realtor) is way upside down versus his mortgage, yet he wants and needs to sell that… and so it’s a contingency in the contract.
So my friend’s realtor had to grimace and say that there is little chance of a deal here. No wait, there is NO chance of a deal here, unless the buyer drops the condo sale contingency. But then, what are the chances he’d get financing when the bank sees that he wants to own TWO properties and can’t even save a dime when he owns just one?
they finally had a firm offer.
that particular offer sounds pretty squishy, not firm.
Is your friend asking way too much money for the place? It sounds like qualified buyers are staying away in droves.
I think the problem they are having is the 1 bathroom. There are too many houses in that neighbourhood with 2 baths, and for not too much difference in price. As for their price, seems horrendous to me ($339k or so) but in line with the rest of the wishing prices there. Things is, it probably takes two incomes to afford that house, and what working couple wants to fight over the one bathroom?
As for the offer, I guess I meant firm as in written and formal! You are exactly correct with “squishy”! I can’t see that ever going through, and I told my friend that he ought to just reject it because (1) it won’t happen anyway because the buyer can’t pull it off, and (2) while they wait on the thing to fail, they’ll be discouraging any competing immediate offers (slim chance but maybe non-zero).
With all due respect to your friend, this isn’t a “firm” offer…..it’s BS from a so-called buyer. A total waste of time and sounds like the realtor understands it.
Are they aware yet that being for sale a year means the issue is price??
Yeah, I keep telling them it’s price, and that the right price ALWAYS moves the property. But they’re “not in a hurry to sell” — famous last words. Looks like the market is helping them out with that “not in a hurry”, eh?
Thing is, they say “But we already dropped the price!” Twice, I think. But in total only maybe 10%, so what they are doing is chasing the market downwards — a tale that can be told a million times over right now in the real estate market.
Thats what most sellers are doing. The 10% of sellers with the lowest price will sell, the other 90% will walk away or be priced in.
How strange - I distinctly recall the Realtor-scum in Maryland and NoVa telling us how “prices no longer mattered” and how “everyone wants to move here.” Hmmm…. how 2005, I guess!
Case-schiller for Nov, falling off a cliff:
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_012900.pdf
looks like the gold chart, upside down.
Time to start a gold bubble blog.
It 26 ounces of gold to buy one share of the dow three years ago,
today it takes just 14 onces and falling. Gold and the dow hit one to one with in 5 years. Ride that to the bank. I say they cross at 7000.00
There was an economic paper done a few years ago that traced gold vs DJIA over the previous 100 years. The results were that every time gold and the DJIA became 1:1; you bought the DJIA. Every time the price of the DJIA was 50X greater than the price of 1 oz of gold you sold the DJIA and bought gold. In the last Century there were 5 trades. The last trade was in 2000. Sell DJIA and buy gold.
One of the more interesting observations was it missed the collapse in the 1929 recession, it got you out of gold right before the gold collapse in 1980, it got you out of the market in 2000.
I’m into precious metals for now (mostly silver), but I wouldn’t count on that 1:1. Look at a long term chart of the Dow to gold ratio:
http://en.wikipedia.org/wiki/Image:Longtermdowgoldlogtr1800.png
“I say they cross at 7000.00″ HBB is a real estate blog. I had a belly full or realty and economists telling me “real estate always goes up” and watched their integrity land in the dumpster. Now HBB gets a whole new breed of hype from Gold Bugs who seem to be getting way to much power
to continue pushing their agenda. I come here for real esatate info, not to hear “gold to the moon” crap.
Should we save the NAR a bunch of trouble and issue PR claiming that Case-Shiller has hit bottom?
Joint Economic Committee433 Cannon House Office BuildingWashington, DC 20515Phone: 202-226-3234Fax: 202-226-3950Internet Address:http://www.house.gov/jec/
Executive Summary
This paper investigates the value of employment data as real-time recession indicators. Among popular monthly labor measures, the unemployment rate is the most useful as an indicator of recession, whereas two top measures of employment growth –payroll jobs and civilian employment –have little value. Two other series, the labor force participation rate and the employment-population ratio, also provide little or no value in anticipating a recession. The best pre-recession employment indicator is actually weekly claims for unemployment insurance (UI). The paper reviews a new technique for predicting recessions, and develops an employment recession probability index. The index indicates a 35.5 percent chance that the U.S. economy is in recession, sharply up from 10 percent last month.
http://tinyurl.com/2soa83
Caution pdf
Street to Fed: 50 Point Cut Or “Bust”
http://www.cnbc.com/id/22894701/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
what was the good news that is making the dow fall?
Just for fun, I’m calling 25 points and a 200 dip in the dow.
25 and -400
I call for 75 bps (25 more bps than expected) and a self-fulfilling prophetic 200 pt rally on the DJIA.
I call the Fed does whatever and the market does its own thing regardless.
You are certainly entitled to believe in that irrefutable hyptothesis. After all, if the Fed happened to stand pat and the DJIA happened to drop by over 500 points the next day, there is no way to replay history and see what would have occurred if they had cut by 75 bps instead.
As one of my professors once brilliantly noted in class, when conducting time series analysis it is important to tell a good story, as there is only one data point (the very sequence of events as they played out over the recorded course of history).
http://www.bloomberg.com/apps/news?pid=20601087&sid=a8dPoMpJyVFw&refer=home
No Inflation huh ?
I hope market pressure doesn’t force people to use, do it yourself fertilizer.
My 2008 Predictions for Financial Catastrophe
http://seekingalpha.com/article/62056-my-2008-predictions-for-financial-catastrophe?source=yahoo
What is the logic behind Google’s 70% profit increase? Google is an advertising firm with a teaser giveaway (search service). No online advertiser did that well in the .com bust. Otherwise, I like your view of the future.
I agree that Google will not do quite as well as you think, but the rest are quite good.
It will be a very interesting year!
Looks like FM’s loan limit will be lifted.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.wRUS59ikx4&refer=home
Maybe this is old news. I haven’t been paying attention.
I now understand the way the economy works. Cheap money is pumped like crazy to create a bubble. When it starts to bust, every conceivable obstacle is removed to re inflate the bubble. When that fails, more cheap money is pumped to blow another bubble.
I get it now.
“every conceivable obstacle is removed”
Including income documentation and other obstacles the GSEs use to screen the credit quality of the loans they purchase?
“…Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December 31, up from 29.08 percent in September. It also said borrowers were at least 90 days late on payments on 17.25 percent of subprime mortgages….”
Reuters
http://tinyurl.com/2kzwdm
“Economic Stimulus Package On Its Way
Congress agreed on an economic stimulus package that would give individual taxpayers a rebate of up to $600. What do you think?
Tom Nagle,
Systems Analyst
“Perfect. That should cover my moving costs to Toronto.”
The Onion
http://tinyurl.com/yowwnr
Jackson Hole, Wyoming immune to housing downturn:
Link
Here’s a nice one. A Realtor confuses sales with inventory:
“Viehman said prices soared due to low inventory - the number of homes sold dipped 6 percent last year - coupled with continued high demand for a place in the shadow of the Tetons.”
I doubt even Jackson hole is “different” and why are they paying millions to live in the cold mountains? It’s nice in the summer, I can visit as a tourist for far cheaper.
Somebody has to set the casts on all those broken legs
Jackson Hole was magnificent 40 years ago. Skiing, mtn climbing, fishing, elk hunting to die for. Also a good nightlife. Cold avoidance isn’t everything. But I wouldn’t touch it now even if I could afford it.
Yesterday after work I decided to watch one of those financial shows on TV. I think it was called “Fast Money” or something along those lines. Anyway, towards the beginning they were showing graphs “proving” that the world economy was decoupling from the US. The proof being that the stock indexes from around the world have been dropping as of late while the US indexes gained quite a bit. The message they were trying to get across was that the US economy was good while the rest of the world was falling apart.
About 20 minutes later, they start talking about buying US stocks and looking for companies that are export-driven. All the money is being made overseas!
It got me thinking - is the attention span of the typical viewer really that small? Does anybody really pay attention to these shows?
Sadly, yes and yes.
The only one I like is Jeff Mackey? (spelling)…
I’m beginning to understand why, during her radio interview, economist and former presidential advisor Catherine Austin Fitts proclaimed 10% of the American population is prepared to move overseas at a drop of the hat.
I’m already overseas. I’m bored because my wife is doing all the buying of materials so we don’t live inside a concrete walled swimming pool (roof repairs). If I am standing around when she trys to bargain, the price doubles.
I’m overseas, here in our refuge, but I am happily contemplating a 32 hour trip home.
Nice. No overseas place was formed in the philosophy of reason, with the document called Declaration of Independence and very few have a Constitution equal to pre-1916 America (before the income tax amendment). Most have no military to protect the freedom in such nations. No philosophy of freedom and your newly adopted nations can go communist at the drop of a hat. Vanuuatu had such a promise of freedom and then it caved in. I choose to keep my U.S. citizenship. We’ll eventually get a Congress full of Ron Paul types after our socialist phase we go through the next ten years.
Ramen noodles. Years ago, a younger friend of mine (20’s) invited me to lunch at her apartment, which she shared with her husband and two small children. Her marriage was already fraying around the seams because of his alcoholism, but she wanted to reciprocate some lunches which I had provided, so we shared a convivial meal of Ramen. What has amazed me about my friend is that she consistently made the worst life choices through the years, in men and in setting up obstacles to her own life’s goals. After the first bad marriage, she married an “entrepreneur” with an STD that she eventually dreaded contracting after the moonglow of love had faded. After him, a good-for-nothing “artiste” who along with her, lived on student loans well into their thirties, achieving nothing more than a bachelor’s in art… and then not being able to find employment afterwards. She wanted to continue on in graduate school, but proceeded to have two more children with this no-good.
Her older kids were already screwed up (setting fire to their hair,etc.), so I guess she wanted a fresh start. At every turn of the road, I cautioned her about finances and the precariousness of starting another family in grad school. It didn’t help. Although we are still friends technically, our relationship has changed since she asked me for money about two years ago. I said no. That was hard to do, but I believe that if people are constantly bailed out of the consequences of their choices, they will learn nothing. What is true on an individual level is also true in this “crisis”. Somewhere along the road, a generation lost some values. It’s time to find them again.
What has amazed me about my friend is that she consistently made the worst life choices through the years, in men and in setting up obstacles to her own life’s goals.
This is why bailing out people is always a bad idea. People got that way for a reason, and simply throwing money or subsidies at them won’t help.
But banks are DIFFERENT!
Ben:
Have you ever considered selling HBB merchandise? I would love to visit open houses wearing an “It’s Different Here” hat or a “Suzanne Researched It” T-Shirt.
On another topic: I’m amused that there’s a developer advertising “opportunities” to buy multi=unit homes on the radio. They state what a great “investment” it is because you can collect rent while the value of the underlying building goes up. They also say to Hurry! Because the first 5 developments have sold out!
Most of the other get-rich-quick scamsters are trying things other than real-estate. There’s another advertiser talking about “investing” in Morgan Silver Dollars! (Most Morgans, except for a few key dates, are only worth their Silver melt cost. If it’s in absolutely perfect shape, maybe a few dollars more; but people who don’t know better may pay a huge premium for a 100-year-old silver coin.)
I collect Morgan silver dollars(taking a break now as im saving up for a house)
go to pcgs dot com and check their price guide. Even common dates in higher grades are worth a fortune.
Good luck getting rich quick with them! Of course some company that makes money putting coins in sealed plastic containers will say they’re worth a fortune….
They are a hobby rather than investment or to get rich. I did try to make some ms67 grades but my highest was ms64 so far. I did make an au50 from an 1884-s that got me $200 profit. Most of my Morgans are worth around $50 and they are pretty to look at. I would never spend much over $100 to buy one, common dates are just as pretty and also affordable. I can live without the keys.
I’m on the road a lot. Seems like a little “HBB” button would be a good conversation starter with those in the know while sitting around in airports.
LA Times
Villaraigosa addresses city’s shortfall
Analysts attributed the $155-million deficit mostly to the flagging economy. Villaraigosa proposes stark plans.
http://tinyurl.com/2rbpkm
“Villaraigosa proposed his cuts after City Administrative Officer Karen Sisson released a midyear budget report that revealed the $155-million shortfall.
Sisson said she was less concerned about the rise in expenses than the rapid decline in revenues.
“We didn’t bank on this mortgage crisis, which became a credit crunch, which has rippled through the economy in ways that no one foresaw,” she said.”
———-
No one foresaw…no one…
The city of angles has run out of them.
no hay dinero ?
The only way a city could get itself into trouble is by SPENDING the anticipated windfall from all the property tax from that new construction.
If they kept their spending levels constant until the money is actually paid, then there would be no crisis (or it wouldn’t be nearly as big.)
And bear in mind, that there really wasn’t all that much new construction that went on in L.A., compared to places like San Diego, Sacramento, Las Vegas and Phoenix.
Imagine the fiscal grief, in those locales?
There was a funny precursor to all this in Orlando area. Some new schools suddenly had EXCESS capacity!
The planners actually believed that actual people would be living in all those condos that were built, instead of the truth: that these were just purchased by existing residents to get-rich-quick and they were just buying and selling them to each other.
Yo reuven, I like your Forgotten Man post!
“Villaraigosa and other city leaders are bracing for a gap of at least $300 million, and perhaps as much as $500 million, in the fiscal year that begins July 1.”
“The county’s chief executive, William T. Fujioka, said that he was more concerned about a projected $220-million shortfall in state aid, and that cuts probably would be borne mostly by county social service agencies, and food stamps, mental health services and substance abuse programs, among others.”
Big American Cities are no place you are going to want to be in the future, the near future, that is.
No place is safe in an urban area when the SHTF. Desperate people without resources won’t have far to travel to find someplace were people have things worth taking.
The only safe places will be in BFE Montana or the center of the hood. BFE is too far an effort and nobody in the hood has anything worth taking. Everyone else be wary.
A Tucson mortgage seller finds religion:
http://www.tucsoncitizen.com/ss/opinion/75402.php
Humboldt. Someone was despairing because real estate just more and more expensive. Not anymore. According to Zillow average price in TRINIDAD down from 876K in January 07 (crazy!) to 554K today. Over 300K drop in one year???!!! Rollercoaster goes up and then down.
That was probably me. I’ll have to check Zillow. Like I said, it is amazing to me how expensive Humboldt county is for its $40K median HH income, horrible weather, and being so isolated. You’re giving me new hope! Thanks!
Heavy action in gold today; the cartel tries to step on it right before every Fed meeting, to prime the rate cut. This time it isn’t working as every time it goes negative sellers come in. Bullish.
look at this drhorton splash page: http://www.sac.drhorton.com/
“Year of the buyer”, “don’t wait for prices to go up” and my favorite “he who hesitates is lost”.
wow.
I wish D.R. would pull a D.B. Cooper, and disappear on us.
They very well may. This year might be the last year we have the chance to buy a home from some of these homebuilders.
Intresting:
“The Senate plan does not include the proposal by the House to increase the limits on “conforming” mortgages that can be bought by Fannie Mae and Freddie Mac, or insured by the Federal Housing Administration. ”
I hope this provision get’s perm dropped out of this so called economic stim package, but I have a feeling it will be added back in somewhere by some ass clown politician….
Kinda strange to be increasing the conforming loan limit right after the largest YOY decline in the median U.S. home sale price in history, don’t you think?
It’s clearly rediculouse, and not needed, this is just a move to move more of the debt burden on to the tax payers…
It is truly a masterpiece of propaganda to characterize this as a populist measure. I am not sure exactly how it will work in practice, but my suspicion is that raising the conforming loan limit will serve the primary purpose of transferring toxic mortgage debt off the banks’ backs and on to the U.S. taxpayer’s, in the form of a GSE bailout at some undetermined future point in time. Unless a return to debaucherous underwriting guidelines of 2005 and before plays out in conjunction with lifting the conforming loan limits, I don’t see how very many additional potential buyers will qualify to take out loans north of $417,000.
It affects CA and NY and FL etc. (And it must be good for us - they are the government and are here to help!)
Government is the ultimate crowd - always last to a trend. When government acts, they only exacerbate the problem resulting from the previous trend.
http://www.minyanville.com/articles/BX-ads/index/a/15692
3. A Business Decision
Last night, CBS’ “60 Minutes” took a look at the “subprime loan crisis.” You can find the full transcript here, but the following exchange between “60 Minutes” correspondent Steve Kroft and homeowner Stephanie Valdez is a highlight worth examining a bit closer; it’s significant both from an economic and, more importantly, a socionomic point of view.
STEPHANIE VALDEZ: Why pay a $3,200 payment on a 1200-square-foot home? It makes no sense.
STEVE KROFT: That’s what you agreed to do when you bought the house.
STEPHANIE VALDEZ: Fine. If the value is going up. But we’re not going anywhere. The price or the value is going down. It makes no sense because we will never be able to refinance and get a lower payment. There’s no way.
STEVE KROFT: You’re saying, essentially, that you’re going to stop making payments on it? You’re just gonna let it go into foreclosure?
STEPHANIE VALDEZ: You know, that’s the only advice we’ve gotten so far is walk away from the home. We don’t want to do that to our credit. Why can’t our mortgage company work with us?
The issue Kroft is alluding to here is what one might call “the morality of contractual obligation.” Without saying it explicitly, Kroft implies (”That’s what you agreed to do when you bought the house,”) that Valdez and her husband, by walking away from the house, are engaging in some vaguely immoral behavior. It’s a promise. They are breaking their promise. Left dangling for the viewer to arrive at is the conclusion that people who break promises are immoral.
But Valdez is outlining a perfectly rational economic argument for exiting the mortgage contract and is willing to accept the full penalty - credit impairment - for her actions. Still, Kroft carries the vague morality objection a bit further in the segment.
“Nobody seems to be saying, ‘Look, I made a contract with you. I borrowed money from you. I’m gonna do everything I can to pay off that obligation.’ People just seem to be saying, ‘Look, take the house. Good-bye. I’m leaving,’” Kroft observes to real estate agent Kevin Moran. “There was a time, I think, when people felt really bad about not paying off a debt.”
“Yeah, I think in those days, loans were made by your local banker or building and loan associations or savings and loan,” Moran replies. “They were guys you saw in the grocery store. They were on the little league team with you, the PTA, the school. And I think as mortgages became securitized and Wall Street became involved, they became very transactional and there was no relationship built with the borrower and the lender. And I think that makes it easier for someone to see it as an anonymous party at the other end of the transaction and just walk away from it.”
“Just a business decision,” Kroft says.
Implicit in this segment is that families are not entitled to make “business decisions.” But you know who is entitled? Why, businesses of course. When businesses laid off 1.5 million workers in 2007, it was purely a “business decision.” When Wall Street banks “wrote down” more than $100 billion in losses in 2007, it was purely a “business decision.”
Look for families to become more comfortable making “business decisions” of their own in 2008.
“When you see reference to a new paradigm you should always, under all circumstances, take cover. Because ever since the great tulipmania in 1637, speculation has always been covered by a new paradigm. There was never a paradigm so new and so wonderful as the one that covered John Law and the South Sea Bubble - until the day of disaster.”
John Kenneth Galbraith
Got paradigm?
New paradigm: Gold price will grow to the sky (and anyone who does not jump on the bandwagon is a handwringing pVssy).
A mind-blowing machine
In America, land of the bubbles, the next pop will be the biggest
http://www.marketwatch.com/news/story/america-land-bubbles-next-pop/story.aspx?guid=%7B60CE4669%2D6814%2D4A48%2DA555%2DBE998EC6FC58%7D&dist=MostReadHome
PAUL B. FARRELL
A mind-blowing machine
In America, land of the bubbles, the next pop will be the biggest
By Paul B. Farrell, MarketWatch
Last update: 1:12 p.m. EST Jan. 29, 2008
ARROYO GRANDE, Calif. (MarketWatch) — Three cheers! Wall Street’s got a new rally song: “I’m dreaming dreams, I’m scheming schemes, I’m building castles high.”
Actually it’s the 1919 tune that launched the roaring run-up to the ‘29 crash and the Great Depression. Remember the lyrics: “I’m forever blowing bubbles. Pretty bubbles in the air. They fly so high, nearly reach the sky. Then like my dreams they fade and die.”
http://www.marketwatch.com/news/story/america-land-bubbles-next-pop/story.aspx?guid=%7B60CE4669%2D6814%2D4A48%2DA555%2DBE998EC6FC58%7D
You realize that this is one of those “new paradigms” / “paradigm shifts”? At the moment, I’m not sure which is scarier scenario: some kind of collapse, or life on the up and down slopes of successive bubbles.
In response to questions, Johnson said suggestions that the rest of the global economy might “decouple” from the U.S. slowdown were “greatly exaggerated” and said everyone will feel the impact of a U.S. housing-led slowing.
“It’s a significant slowdown. It’s a global slowdown,” Johnson said while declining to say whether he expected it could turn into a recession.
http://www.reuters.com/article/ousiv/idUSWBT00826320080129
Wishy washy washout
http://tinyurl.com/32hks5
IMF Position paper June 2007
Reaping the Benefits of Financial Globalization
Prepared by the Research Department*
Approved by Simon Johnson
Tricom debts cover in doubt
THE solvency of broking house Tricom is in question after it was unable to cover the cost of yesterday’s trades, halting settlement on the Australian Securities Exchange for more than four hours.
…
Tricom’s most recent financial statements, lodged with ASIC in September, show total bank loans and overdrafts grew from $926 million in the year to June 30, 2006, to $2.38 billion a year later.
http://www.tricom.com.au
http://business.theage.com.au/tricom-debts-cover-in-doubt/20080129-1our.html
Hoz is fond of reminding us from time-to-time that “there are no moneys” available to prop up U.S. equities. I am posting an interesting discussion which seems to resonate with this viewpoint.
This discussion bolsters my view that it is of paramount importance for the PPT to keep the stock market propped up going forward. I should add, however, that I do not have any hard evidence that there really is a PPT propping up or even occasionally goosing stock prices — in fact, I allow that this whole idea could just be a product of my (and others’) active imaginations. Just because the stock market occasionally appears to have a floor beneath it does not necessarily imply one actually exists — the whole illusion could be due to a broad consensus of technical analysts based on a perception of imaginary economic sunspots due to the patterns in asset price movements.
If this turns out to be the case, then I expect a hard landing is in store for the stock market later this year and beyond.
Should Investors Fight the Fed?
8:33:02 AM January 29th, 2008 Permalink | Comments (39)
“Don’t fight the Fed.” “Don’t Fight the Fed.” There is no mantra more drilled into the heads of investors. Betting against the Fed, especially by staying out of the market when rates are falling or ultra low, has been a sure-fire way to lose money and certainly not make any.
But could it be that (dare I utter the four most dangerous words on Wall Street) it’s different this time?
…
What about stocks?
I put that question to Charles Biderman of Trimtabs.com, who tracks money flows. Surely, I thought, he’d say something like, “You nitwit, of course” money will go back to stocks. That’s how Charlie talks. Nitwit is one of his favorite words, and he was right (calling plenty of people “nitwits” along the way) while he was pounding the table on stocks when a few of us were flying red flags over the looming mortgage mess and its ultimate ripple effect on the economy. Even if Charlie knew in his heart that an economic upheaval was in the works, he knew what the fund flows were telling him.
So, what happens if rates fall to the point that cash makes no sense (aside from those of us who prefer the mattress — or gold?
“At some point,” Charlie says, “return ‘of’ investment becomes more important than return ‘on’ investment.”
What about not fighting the Fed? “Flow follows performance,” he says. “Also has always will. If stocks go down, money will leave equities, even if interest rate is zero. Japanese investors ignored Japanese stocks for a decade even as Japanese interest rates hovered around 1%.”
But surely, you would think, with nowhere else to put the money, in a market ruled by computer programs and speedy flow of information, after another cut or two there will be a mass rotation back into stocks.
Won’t happen this time, Charlie says, because the mortgage market isn’t what it once was. “Since August, 90% of non-conforming loans loans have not gotten funded. That translates — based upon quarterly federal reserve analysis of equity (cash) extraction from homes via cash over mortgage at sale, cash out from refi’s and home equity loans — into about $20 billion less per month going to the economy. That is equal to about 4% of the $430 billion monthly after tax take home pay of all 140 million or so on payrolls.”
He continues: “Since October, the year over year growth rate of withheld income and employments taxes has steadily slumped to about zero over the past two weeks from an average of 7.5% for the first three quarters of 2007.
“That’s a long way of saying that with individuals generating less new money, there is less new money available for investment.”
http://blogs.marketwatch.com/greenberg/2008/01/should-investors-fight-the-fed/
I wish he knew how to spell moneys.
A “trim tab” in aeronautics is the very definition of leverage. A tiny flap that accelerates an entire 747.
Without getting on the goldbugs (see above debate), I think maybe the safest investment may be food.
Okay, I know, I come from the POV that we are headed for a depression. However, if hyperinflation is in the cards first, wouldn’t stocking up on food be a wise course?
If canned beans are going to go up 100% this year because of the cost to get them to your local grocer, wouldn’t this be the best place to put your money? I am not saying all of it, nor am I saying just canned beans. Anyway, you get the point.
We can argue about the details, like hyperinflation vs. depression or job losses or even living in a car vs. driving the house to work.
HOWEVER:
You cannot go without eating. Sure, you might last a couple of days, but sooner or later living under the bridge without any food is going to be tough. Very tough.
What do you guys and gals think?
I recommend #10 cans:
http://www.mountainhouse.com/shelf_lif.cfm
Mmmmmm, yummy.
WTF you talking about, dude?
My house probably has more types of beans (think 20+) or flours or spices (think 100+) than the average supermarket.
They cost about $6 for a 10-lb bag (shopping at the “correct” places, of course.) Or I make my own.
Even if goes to $12, do you think it matters?
Naturally, I would love to own some land to grow my own vegetables and herbs but I would not panic on this front.
Of course, if you mostly eat processed stuff, you’re SOL.
Just to be clear, my point was not to be “snarky”.
My point is that you are better served by learning real cooking skills than by “hoarding” food.
Virtually every culture has evolved phenomenal skills of “stretching” (or to put it more poetically, all cooking starts in poverty and ends up in a French restaurant.)
Email me if you want details. Of course, that may mean you need to reexamine your ingrained habits but c’est la vie, mon cheri!
I’m stretching right now in the third world. Chicken on rice, pork on rice, shrimp on rice, squid on rice, fruit bits on ice …
Maybe you need how to “stretch” better?
I think the safest investment might be arms. Use them to get food. Use them to defend food.
Killing for food…it’s just a business decision.
Do you kill for Wheaties?
Interesting.. on short sale headaches from city-data real estate forum
“I’ve been the listing agent for several short sales over the last year. The listing agent is just as powerless as the buyer’s agent. It’s all on the bank. The representatives at most banks are difficult, if not impossible to reach. When you do reach them, they say they are waiting on the investors to make a decision. The loss mitigation officer is not the final say-so on the offer. You must wait for the investors to meet and give their okay. Who knows how long that can take. You think they would want to sell the property quickly and get it off their books. My guess is, that they have so many properties going into pre-foreclosure, that they don’t have the staff to keep up with them.
Also, the loss mitigation officer that you originally are in contact with, is frequently changed to a different loss mitigation officer without you even being kept in the loop. That’s when they KNOW you are representing the seller!!
I had an offer come in on one property which I forwarded to the bank and didn’t hear a word for a couple of weeks. I called and called and left messages. I finally heard back from the bank officer that he was no longer handling the file and the new loss mitigation officer was on vacation. Fast forward a couple of weeks later. . . still no call. Many calls later, about 2 months after the offer came in, the original loss mitigation officer called me to stay he had “dropped the ball” and had forgotten to give the new L.M.O. the file. (It had gotten “buried” on his desk.) Needless to say, the buyers got frustrated and went on to a new property.
If there is a 2nd or 3rd (yes, that happens) loan on the property, then double or triple your headaches, because all banks have to be in agreement for the short sale.
This process is not for the faint of heart. All parties are virtually powerless, except of course the bank and the investors. As a result, I’ve given up listing short sale properties. The amount of time involved in phone calls alone is staggering and it is the most frustrating experience even for the most experienced Realtor.
Best of luck to all. If the stars all align, you might get a great property below market value.”
A response to the 60 minutes house of cards.. (from city-data)
“Unbelievable. I knew most of it, only not about the free money, but now I understand the guy from across the street who went smiling into foreclosure!!!
This guy claimed to have owned 21 investment properties and was related to the mortgage company. He never paid the HOA and had at that time ( 1 year before the foreclosure) $ 1300 in legal fees from the HOA + $ 800 HOA fees that he never paid. He never had the utilities turned on and never had the grass cut. Nice for us neighbors….
He bought it for aprox. $ 293,000 and put it on the market for $ 379,000 but never got a buyer, that was at the beginning of 2006. Before he foreclosed on the property he took hte kitchen island, all upgraded appliances and what ever he could take from the home and left with a big smile, and told us neighbors, that he was smart because he never paid a cent on the mortgage or the rest or put a cent down. Now I understand. He probable walked away with the extra money + the appliances , etc and left us neighbors with a brand new home in distress. The grass, well you can’t call it grass anymore, and it is a corner lot so many home owners are having to look at it. Thanks to who ever helped this guy being able to get the loan!!!
I feel sorry for the innocent people who stepped in this without really understand what they were signing. Stupid maybe, everybody warns all the time, don’t sign if you don’t understand the consequences, but for a first time home owner who get an explanation by a mortgage broker who sounds very convincing… I can’t blame them from trusting the person who you should have been trusting because he handled in your name in “best” interest.”
NPR just ran another story that made we want to vomit
http://www.npr.org/templates/story/story.php?storyId=18509112
“Expert” Alvin Hall whined for about 8 minutes that the proposed stimulus handout wasn’t enough and that people need more handouts!
FBI Probes 14 Companies Over Home Loans
Tuesday January 29, 7:00 pm ET
By Alan Zibel, AP Business Writer
FBI Says 14 Companies Under Investigation for Possible Fraud in Connection With Subprime Loans
http://biz.yahoo.com/ap/080129/subprime_mortgages_fbi.html
U.S. Home Auctions lists this house on Joshua Tree Circle